Abstract

Abstract:

Finance is often considered a constraining or compelling force in war. This article examines an alternative role of finance in war, asserting that investors can inform states about adversarial intentions and resolve under certain conditions. This signaling mechanism can reduce information asymmetry between states and decrease the probability of conflict. In the context of these theoretical expectations, I examine the case of Austria and the Rothschild Bank in the nineteenth century. I find that instead of being a constraining force on Austrian foreign policy, the Rothschilds helped inform Austria and other European powers during interstate crises. The information provided by the Rothschilds helped Europe avert war in several cases during the nineteenth century.

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Additional Information

ISSN
1527-8034
Print ISSN
0145-5532
Pages
pp. 223-249
Launched on MUSE
2020-06-04
Open Access
No
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