6 - The Rise of the Fiscal State in Sweden, 1800–1914

Summary

Introduction

In the period 1800–1914, Sweden developed from a rather poor agrarian society to a modern industrializing nation with growth rates at the top of international standards of the time. In the same period, the Swedish state was modernized and its fiscal basis transformed in a way that corresponded to the new structure of the economy and to the new demands put on the state. Thus, in the beginning of the nineteenth century, the state was heavily dependent on a tax base whose origins were largely medieval. Land rents for the state administration and the provision for the military forces were provided locally and primarily due in kind. This system created a stable basis for the state but was not very flexible. It was complemented by temporary taxes mainly levied at wartime. Such pressures on state finances also induced short-term lending by different means. At the end of the period, the fiscal basis had shifted completely. On the one hand, there were income taxes and indirect taxes on monetary streams, and on the other hand, state borrowing was long term with a large funded debt.

This chapter will present the major trends in the relation between economic growth and the finance of state activities. It will also present the traditional fiscal structure of the early nineteenth century and give a particular emphasis on the construction of the new fiscal basis in the second half of the nineteenth century.