In nineteenth century Europe, there was a span of almost uninterrupted peace from 1815 until 1914, a state of calm that was perhaps taken for granted by those who experienced it. During those hundred years, the European powers fought each other for only 18 months, while if we look back at previous centuries, almost 70 years of each one was spent at war. In the long run, however, the foundation of this international balance - the self-regulated market - turned out to be a fragile utopia. In a nutshell, it can be said that peace (and in more general terms, civilisation) collapsed in the 19th century because the four pillars upon which it rested collapsed. Those pillars were the balance of power between nations, the international gold standard, the Liberal State, and finally, the self-regulated market, which was able to produce unprecedented levels of economic well-being.
The methods that were used to ensure political stability and the balance of power in Europe continued to work like a relay. From 1815 to 1846, peace was guaranteed by the armies of the “Holy Alliance”: after Napoleon’s defeat, the backlash against the bourgeois movements that emerged from the revolution appeased any flare ups that repeatedly crossed Europe.
As the strength of this backlash waned, it was replaced by the growing thrust of industrialisation. Prussian ‘haute finance’ provided the social and economic means to European power, and after the Franco-Prussian war, a balance of power was created that no one dared challenge.
Haute finance was an elite form of private or merchant banking that emerged in France in the early nineteenth century. It revolved around the movement of large sums of capital, functioning like a social support system since it effectively regulated states and worked in harmony with them. Thus a sort of flexible yet stable organisation was established which was closely linked to – yet independent from – the Central Banking system.
