It can be argued that financial engineering is what enabled their trading operations to begin with. Long distance voyage was an extremely risky venture and only a ruling king/queen had money and risk appetite to finance it. The joint stock corporation enabled spreading of that risk across thousands of investors and East India Company was one of the first joint stock corporation. What's more one could sell their equity holdings in exchange for cash so one wouldn't have to wait for years before getting return on investment.
We tend to forget the financial engine along with changes to contractual laws to only focus on daring voyages, military etc.,. But of course all of that had to be financed.
The OP claimed that the cause of the decline was a "transition from manufacturing to financial engineering", seemingly oblivious that the article was discussing the 19th century.
You seem to be implying that the presence of finance institutions in the 16th century supports the OP's thesis. That predates the industrial revolution, so obviously mere presence of financial institutions is not any kind of sign can't mean there's a "transition from manufacturing to financial engineering". If anything, those financial institions are a prerequisite for a rapid industrialization.
Of course UK has been a major financial hub (banking and insurance) for centuries. Look at the history of the Rothchilds for instance. You can not be a naval power without a finance sector. It is way too risky and expensive.
Of course they had financial institutions. The OP was making a far bigger claim than that: "They transitioned from manufacturing to financial engineering".
Sorry, but if there is one claim you can't make about 19th century Britain, it's that they transitioned away from manufacturing.
After WWII there were several phases of deindustrialization in the UK.
- 45-55 the postwar boom took hold, manufacturing switched from weapons to electrical equipment (GEC), lighting (Thorn) cars (Rover, Austin…) and so on
- 55-65 wealth spread to the working class finally and the 30s slums were cleared (council houses and high rise flats). all this domestic growth hid the rise in other countries - far east, india and so on - which ate into traditional manufacturing export markets with low costs. the consumer was happy with low cost imports, better housing, and service industries - the Beetles - took off
- 65-75 poorly conceived loss making statist interventions to try to defend uncompetitive domestic primary industry coal (NCB), steel (British Steel) and secondary manufacturing (British Leyland), shipping … these were easy for unions to capture and bled the nation dry
- five years of economic disaster ushered in Thatcher, killed the unions, released the City and by 1985 services had eclipsed industry once and for all
In this potted history, the economic transformation of the UK from manufacturing to services was total by the late 90s. Similar economies … France, Germany have chosen a more managed mixed economy placing more value on job security and wide employment. Let’s see how that works out for Starmer and Reeves.
The London Stock Exchange was founded in 1773.. Amsterdam saw its first stock market appear in the early 1600s. But the modern stock exchanges only emerged later during this era in London and New York.
Banks became more important for financing industrial growth, as entrepreneurs and business owners needed more capital. The Bank of England was created in 1694 to fund wars, and was given a monopoly on joint stock banking in 1708.
Once the great minds of the country understood that there are easier ways of multiplying their wealth (trade, colonisation, wars..), one can imagine the shift in their priorities - from investment in engineering to financing agents of wealth creation.
