Attractive Sources. Tax Havens’ Emergence: Mythical Origins versus Structural Evolutions

Abstract

The article proposes a new interpretation of the development of tax havens in the 19th and 20th centuries. Few historians have addressed this issue, and the long-term narratives over the evolution of tax havens remain unconvincing and rely on several misconceptions and anachronisms. The article first examines the supposed origins of tax havens before the First World War. It contradicts the idea that the modern history of tax havens began during the financial globalization of the Belle Epoque. Indeed, movements of capital flight caused by taxation became significant only from 1914 onwards due to the rise in taxes in warring countries. The second part of the article thus focuses on the development of tax havens during the interwar years by demonstrating how offshore centres already played a crucial role in the functioning of the gold exchange standard in Europe at the time – a fact that financial history has overlooked. Finally, the article analyses the revival of the offshore economy that occurred after a period of decline from the end of the 1950s onwards. It challenges the thesis that this resurgence was deeply driven by decolonisation and highlights the process that connected the financial liberalization in rich countries to the regeneration of tax havens. This article provides the first serious long-term perspective on this subject based on extensive investigations into archives. As such, it offers a significant contribution to economic history.