VII.

THE FINANCES OF ENGLAND 1793-1815.

FROM PORTER'S PROGRESS OF THE NATION, SECTION IV.

CHAPTER I.

In order to give an intelligible account of the financial state of the kingdom at the beginning of the present century, it is necessary to explain briefly the system which had been brought into operation by Mr. Pittt during the preceding three years.

In November, 1797, that minister had recourse to what he was pleased to call "a perfectly new and solid system of finance." The public expenditure of that year amounted to twenty-five and a half millions, of which sum only six and a half millions were provided for by existing unmortgaged taxes, leaving nineteen millions to be raised by extraordinary means. In the then condition of the money market, it was felt to be impossible to borrow such an amount in the ordinary manner, that is, providing by new taxes for the payment of only the permanent annual burthen occasioned by the increased debt; and a new impost, calculated to produce seven millions, was sanctioned by parliament, which impost was to be continued until it should, in conjunction with the produce of the sinking-fund, repay the twelve millions that would be still deficient. This new system of finance might have been entitled to the character given of it by Mr. Pitt, if it had not been probable - nay, certain that in the following years an equal expenditure must be met by similar means, until the seven millions would prove inadequate even for the payment of the annual interest of the sums for which the tax was imposed, when it would become part of the permanent burthens of the country. This new impost, to which the name of " triple assessment " was given, was in fact an addition made to the assessed taxes, "in a triplicate proportion to their previous amount — limited, however, to the tenth of each person's income.'

The adoption of this, or some similar plan of financial arrangement, was hardly a matter of choice with the minister, by whom

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the funding system, as ordinarily practised, could not have been any further pursued at that time. Unfortunately for the success of the principle which it was thus sought to establish, the mode in which it was proposed to raise the seven millions of additional revenue was highly unpopular, and indeed it has always excited dissatisfaction on the part of the public to be called on for the payment of any tax from which they have not the power to protect themselves, by abstaining from the use of the taxed commodity. It is this consideration which has always made our finance ministers prefer indirect to direct taxation, and which led, during the progress of a long and expensive war, to the imposition of duties that weighed with destructive force upon the springs of industry. The financial difficulties by which the government was then embarrassed may be known from the fact that a loan of three millions was raised in April, 1798, at the rate of £200 three per cent. stock, and 5s. long annuity for each £100 borrowed, being at the rate of six and a quarter per cent., and that the triple assessment," which was calculated to produce seven millions, yielded no more than four and a half millions. In the following December the triple assessment was repealed, and in lieu of it an income-tax was imposed at the rate of 10 per cent. upon all incomes amounting to £200 and upwards, with diminishing rates upon smaller incomes, down to £60 per annum, below which rate the tax was not to apply. This tax was estimated to produce ten millions; it was called a war tax; but, when the minister proceeded to mortgage its produce to defray the interest of loans to a large amount, such a name appeared to be little better than a delusion. Like the triple assessment, the produce of the income-tax fell greatly short of its estimated amount, and yielded no more than seven millions, a large part of which was quickly absorbed to defray the interest of loans for which it was successively pledged. In 1801, after deducting the sums thus chargeable on it, this tax produced only four millions towards the national expenditure. In proposing a loan of twenty-five and a half millions for the service of that year, it was considered inexpedient to mortgage the income tax any further, and new taxes were imposed, estimated to yield £1,800,000 per annum. In March, 1802, peace was made with France, and in the same month notice was given by the Chancellor of the Exchequer, Mr. Addington, of his intention to repeal the income-tax, which was felt to be highly oppressive, and had become more and more odi

ous to the people. In effecting this repeal, and at the same time to keep faith with the public creditors, to whom its produce had been mortgaged to the extent of fifty-six and a half millions of 3 per cent. stock, additional taxes were imposed upon beer, malt, and hops, and a considerable increase was made to the assessed taxes, besides which an addition, under the name of a modification, was made to the tax on imports and exports, previously known under the name of the convoy duty.

At this time the aggregate amount of permanent taxes was thirtyeight and a half millions, exactly double what it had been at the breaking out of the war in 1793. During those nine years, taxes to the amount of £280,000,000, exclusive of the cost of collection, had been levied from the people; and a few words are necessary in order to account for the seeming contradiction implied in the fact, that, notwithstanding this ruinous rate of expenditure, many of the great interests throughout the country wore the outward appearance of prosperity. A nation engaged in an expensive war, which calls for the systematic expenditure of large sums beyond its income, may be likened to an individual spendthrift during his career of riot and extravagance; all about him wears the aspect of plenty and prosperity, and this appearance will continue until his means begin to fail, and those who have fattened upon his profusion are at length sent away empty. The enormous expenditure of the government, joined to the state of the currency (as already explained), necessarily caused a general and great rise of prices; as regarded agricultural produce, this effect was exaggerated by the ungenial nature of the seasons. Rents had risen throughout the country in a far greater degree than the necessary expenditure of the land-owners, who thence found their situations improved, notwithstanding the additional load of taxation. The great number of contractors and other persons dealing with the government had derived a positive benefit from the public expenditure, and, being chiefly resident at the seat of government, they were enabled greatly to influence the tone of public opinion. The greater command of money thus given to considerable classes occasioned an increased demand for luxuries of foreign and domestic production, from which the merchants and dealers derived advantage. There were, besides, other classes of persons who profited from the war expenditure. These were the producers of manufactured goods, and those who dealt in them, and

who found their dealings greatly increased by means of the foreign expenditure of the government in subsidies and expeditions, the means for which were furnished through those dealings; the manufacturers were at the same time beginning to reap the advantages that have since been experienced in a more considerable degree from the series of inventions begun by Hargreaves and Arkwright, and which acted in some degree as palliatives to the evil effects of the government profusion.

As in the case of the spendthrift, while all these causes were in operation, there was an appearance of prosperity, and those who were profiting from this state of things were anxious to keep up the delusion. That it was no more than delusion will be at once apparent to all who examine below the surface, and who inquire as to the condition of poverty and wretchedness into which the great mass of the people were then plunged. In some few cases there had been an advance of wages; but this occurred only to skilled artisans, and even with them the rise was wholly incommensurate with the increased cost of all the necessaries of life. The mere laborer he who had nothing to bring to market but his limbs and sinews - did not participate in this partial compensation for high prices, but was, in most cases, an eager competitor for employment, at the same or nearly the same wages as had been given before the war. Nor could it well be otherwise, since the demand for labor can only increase with the increase of the capital destined for the payment of wages; and we have seen that capital, so far from being suffered to accumulate, was dissipated by the government expenditure more rapidly than it could be accumulated by individuals. In London and its vicinity the rates of wages are necessarily higher, because of the greater expense of living, than in country districts; and it is asserted, from personal knowledge of the fact, that at the time in question there was a superabundant supply of laborers constantly competing for employment at the large government establishments, where the weekly wages did not exceed 15s., while the price of the quartern loaf was Is. 10d., and the other necessary outgoings of a laborer's family were nearly as high in proportion. If we contrast the weekly wages at the two periods of 1790 and 1800, of husbandry laborers, and of skilled artisans, measuring them both by the quantity of wheat which they could command, it will be seen that the former could, in 1790, purchase eighty-two pints of wheat, and in 1800 could procure no more than fifty-three pints, while the skilled artisan,

who in 1790 could buy one hundred and sixty-nine pints, could procure in 1800 only eighty-three pints. To talk of the prosperous state of the country under such a condition of things involves a palpable contradiction. It would be more correct to liken the situation of the community to that of the inhabitants of a town subjected to a general conflagration, in which some became suddenly enriched by carrying off the valuables, while the mass were involved in ruin and destitution.

It may be objected to the view here taken, but which is founded upon facts that hardly admit of controversy, that, had the condition of the country been such as is represented, we must have sunk under the greater efforts we were so soon after called on to sustain; and there is every reason to believe that, but for the invention of the spinning-jenny, and the improvements in the steam-engine, which have produced such almost magical effects upon the productive energies of this kingdom, it would have been impossible to have withstood the combination with which, singlehanded, we were called upon to contend. The manner and degree in which these powerful agents have enabled us to withstand and to triumph over difficulties unparalleled in the history of the world, have been shown in a preceding section of this inquiry.

CHAPTER II.

THE public expenditure of England during the war which was begun in 1793, and continued (with short intermissions in 1801 and 1814) until the final overthrow of Napoleon in 1815, was conducted throughout upon a truly gigantic scale. In 1792, the last year of peace, the entire public expenditure of the kingdom was £19,859,123, which sum included £9,767,333 interest upon the public debt. In 1814 the current expenditure amounted to £76,780,895, and the interest upon the debt to £30,051,365, making an aggregate sum of £106,832,260 paid out of the public exchequer for the disbursements of that one year. This is the largest annual outlay ever made; that of the previous year was within one million of the same amount.

It is hardly possible to conceive that the public expenditure could have been long continued upon this scale of magnitude; the state of exhaustion under which the country was made to suffer, during the first few years of the peace that followed, sufficiently attests the truth of this opinion. The financial efforts of the government