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Joseph Lowe.

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lowering stocks in an alanning degree, reducing the
3 per cents, in 1797, below kS. '^ Mr. Pitt now-
felt the necessity of altering his j)lan of finance, and
was led, as well by his cliaracteristic confidenci?,
as by the general increase of individual income
attendant on the war, to adoj)! ihe very bold expe-

♦ Dr. Hamilton on the National Dcbi, p, 252.
C i



iil' M(i}j:nihi(lc of our Espcnditnrc.

(liriil ol" war taxes, or, as it was officially termed,
*' raisiiiL;- a Jari;v ))roj)ortion of the sii])])lies witlun
the year." i'iie success of" this plan forms tiie
^raml feature of tlie financial history of our age :
attem})ted at first on a liinited scale, it was carried
by the imposition of the income tax, to a large
amount, and before the close of the war attained a
magnitude almost incredible.

Supplies raised tvitkin the year, being the vet produce of our
taxes, after deducting 1 8,000,000/., as the computed average of
a peace establislnnent, and excluding all loans.

War 0/179S. — During the first four years
the war taxes were in considerable, and in 1797,

tliey were carried to only - - - d^ 3,000,000

But in 1798. they were carried to - 12,000,000

1799. - . - - 17,000,000

1800. .... 16,000,000

1801. - - -■ - 17,000,000

1802. ... - 19,000,000

War o/" 1803. — The produce of our annual
supplies computed as above, with the exclu-
sion ,of loans, but after deduction of a larger
sum (22,000,000/., see Appendix,) as the pro-
bable peace establishment :



1803.


16,000,000


1810. .


45,000,000


1804.


23,000,000


1811.


43,000,000


180.5.


28,000,000


1812.


41,000,000


1806.


31,000,000


1813.


45,000.000


1807.


36,000,000


1814.


48,000.000


1808.


40,000,000


1815.


48,000,000


1809.


4-1,000,000







Respective Propoi^tion of Loans and Taj:es,
Of the total sum of 1,100,000,000/. expended
during the war, the amount added to our perma-
nent debt w^as 160,000,000/., so that the aggregate
of the supplies raised within the year, amounted
for the whole war to 640,000,000/. a surprising
sum to be obtained by a mode of taxation almost



Magnitude ofoitr Expendihn^e. 2.5

unknown in foreign countries, and carried in former
wars to a very limited extent among ourselves.

The financial history of the war may l)e divided
into three periods :

First, the tbiu' years previous to 1797, in which
our treasury was conducted as in former wars, with-
out any innovation in regard to war taxes or pa])er
money.

Secondly, the interval from 1797 to 1805, in which
we had hoth war taxes and non-convertible paper,
but M ithout greatly depreciating the one, or carry-
ing the other to an extreme.

Thirdly, the period from 1805 to 1815, in which
the amount of the sujoplies raised within the year
became enormous, and the depreciation of our
paper, particularly after 1810, formed a very serious
addition to our difficulties.

We have thus exhibited a statement of our
expenditure, which, though brief) is, we trust,
perspicuous, all complexities of redeemed and
uiu'edeemed stock, all distinctions of funded and
unfunded debt, being excluded from our calcuhi-
tion, and the charge of the war considered only
under the two great divisions of debt contracted
and expenditure defrayed in the current year.
Compared with these sums, how insignificant were
the additions made to our public burdens by former
wars. That of 1689, under King Wilham, cost
annually between 3 and 4,000,000/. and addetl in
all 20,000,000/. to the national debt. Under Queen
Anne, the flattering hopes inspired by repeated
victories, led to a longer contest and hu-gor outlav,
carrying our annual ex])enditure to 5 or (),000,000/. ;
the addition to the public debt during the war to
somewhat more than 30,000,000/. In the less suc-
cessful contest of 1710, our ex})enditure differed



^6 The Sources of our Financial Supplies.

from year to year; the addition to our j)ublic debt
aiiiomitcMl lo nearly .'3(),()()0,()00/. In that of 17^6,
the angnientcd resources of the country, and the
bold system of Lord Chatham, raised our annual
expenditure to an average of 10,(KK),()()(J/., the ad-
dition to our debt to fully r)(),(K)(),000/. The un-
ibrtunate contest with our colonies, and the war
that ensued after 1778 with European powers, was
attended with an average charge of 17,000,000/.,
and an addition to our debt of somewhat more
than 100,000,000/. The total of public debt in-
curred in the course of a century was thus
2^0,000,000/., a sum which, however large, formed
only the half of that which we have contracted in
the present age.

The Sources of our Financial Supplies. — The
next and by far the most im})ortant step in the
progress of our enquiry is, by what means and from
what sources the nation was enabled to meet such
unprecedented demands ? In the opinion of many,
the means were derived from the extension, or as
it is commonly termed, our monopoly of foreign
commerce. " The French revolution," said the
late Arthur Young*, " burst forth like a volcano,
*' and laid the mdustry, manufactures, and com-
*' merce of France, and eventually those of the
*' whole Continent, hi the dust; Britain became the
" emporium of the world, and such a scene of wealth
" and prosperity tilled every eye in this happy
" country, as the sun before had never shone
" upon." The belief of such a monopoly has, on
the part of a merely practical man, or in the pages
of a pamphleteer, nothing surprising, but we were
little prepared to find it in a publication of large cir-

* Enquirv into the Value of Money in England, 1812 ; p. 77-



The Sources of our Financial Supplies. 27

culation and acknowledged ability. * The fact is,
that the amount of our foreign commerce was not
greater, nor so great at any time during the war as
since the peace ; a point wliich may at once be as-
certained by a reference to our custom-house re-
turn of exports and imports. These documents,
however unfit to represent the balance of mer-
cantile payments from one country to another,
form good authorities for ascertaining the com-
parative extent of our business from year to year.

Our Exports according to the official value. — We
shall give the result of our custom-house return of
exports in two modes ; first, by the official value,
which means (see Appendix,) the value computed
by the weight or dimensions of inerchandize, and
at a uniform rate of price, without reference to the
fluctuations of the market.

Total Exports from Great Britain, computed according to thejixed
official standard of the Custom-house.

Average of the nine years of the first
war, viz. from the beginning of 1793 to
that of 1802 - - - a^3O,760,0OO

Average of ten years of the second
war, from 1803 to 1812, both inclusive,
leaving out 1813, the records of which
were destroyed by fire, and considering
1802 as a year of peace - - 42,145,000

But if we compare this with the eight years of
peace, of which the returns have been made to Par-
liament, we shall find a considerable increase since
1814.

Average of the total exports from
Great Britain computed officially for the
eight years, from 1814 to 1821, both in-
clusive. (See Appendix.) - - 54,200,000

'■ Edinburgh Review, No. Ixv. p. 170-, and again in No. Ixxii.
p. 458.



i28 The Sources [' otn- Fhinneidl Supplies.

TUvsc ciistoni-lioiisc rcliiriis, l)ciiiL,^ made on a
uniform plan, and calculated by the weight or
dimensions of the package, are conchisive as to the
(juantitii of our exports. It may be said, however,
ihaf, ill otlicr respects, tliey are less satisfactory;
and that although the bulk ex])ortcd at present be
greater, the value is less in consequence of the
general reduction of prices. That prices were
much higher during the war, particularly in the
latter years, admits of no doubt, but in whatever
way the calculation be made, the advantage is on
the side of peace, thus: —

Exports from Great Britain (luring the tvar, computed chiefly
from the declaration of the exporting merchants ; or, tvhen
there rvas no declaration, by a suitable addition to the official
value.

Average of the ten years from 1791
to 1801, both inclusive - - ^48,890,000

Average of the ten years from 1801
to 1810 - - - - 52,84-7,000

In peace, our exports afford an average consi-
derably larger, after making (see Appendix,)
an allowance for the reduced value of merchan-
dize.

Average of our annual exports during
eight years from ISH to 18'21, both inclu-
sive, computed chiefly from the declara-
tion of the exporting merchants. (See
Appendix.) - - - ^63,787,000

In both points of view, therefore, our foreign
connnerce is found to have been less considerable
in war than in peace : it is equally easy to sho\v,
that its profits were wholly inadequate to the sup-
port of any great share of our expenditure. Mr.
Pitt, on proposing the income-tax in 1798, com-
puted our foreign commerce to yield to the various



The Sources of our Financial Supplies. -29

persons, merchants and others, engaged in it, an
annual income of 12,000,000/., a sum, ])robably
not under-rated at the time, but which, for the sake
of giving those who diifer from us, tlie full benefit
Q^ argument, ought, we shall suppose, to ha\e been
doubled and taken during the war, at an anmial
amount of !ii4,000,000/. This, be it observed, is
not saving, but income, out of which are to be sup-
ported all the persons engaged in the business j and
if we compute the clear saving in a proportion,
which, in regard to most other branches of indus-
try, would be more than sufficiently liberal, the re-
sult will be a clear yearly gain of three millions
sterling. But what would be thought of that sum,
or of double or triple its amount, as a countei-
poise to such expenditure as ours during the late
wars ?

Of all the branches of our foreign commerce,
the greatest extension took place in that with tlie
United States : but that outlet was closed several
years before the end of the war ; and, however pro-
ductive of work to oiu' mamifactui'ers, lias never
been considered a source of pecuniary aid, accom-
panied as it necessarily is, by long credits and debts
(hfficult of recovery.

Our Colonial Acquisitions. — Our other sources
of imagined supply were the occupation of new colo-
nies, the suspension of the navigation of hostile
states, and a supposed reduction of their rival
manufactures. — Of the conquered colonies, the
princi])al were Trinidad, Demerara, Esseciuebo,
Tobago, each little advanced in culti\ati()n, each
recpiiring a large transfer of capital from this
country, and each yielduig little present reveiiiu-.
Similar disadvantages characterised, though, ni a



30 The Sources (if'ttiir Financial Supplies.

less degree, St. Lucia, Guadaloupe, Martinique.
As to the East Indies, our acquisitions, vast in point
of* territory, and considerable in regard to internal
reveiHie, have been as yet of very secondary im-
portance in respect to commerce, though, on the
continent of Europe, there prevails an opinion
that India is the grand source of our uational
wealth.

Suspension of Foreign Competition . — We come
next to a very plausible argument, the benefit sup-
posed to arise to us from the suspension that took
place during the war, of the navigation of France,
Holland, and the other states dependent on
France. The fact doubtless was, that the flag of
these countries could not appear on the ocean,
because they had not men of war to protect their
convoys ; but the transfer of navigation was made
less to British vessels than to neutrals, — Americans,
Danes, Swedes, Prussians, and to Dutch shipping,
bearing the flag of the petty ports in the north-west
of Germany. — Lastly, in regard to manufactures,
those of France have undergone no reduction since
the Revolution, and much less fluctuation than is
commonly supposed : during the last thirty vears
they have been on the same scale of gradual in-
crease as before ; that is, they have all along kept
pace with the wants of a country, increasing pro-
gressively, though not quickly, in population.

Compelled to quit their favourite ground of
foreign commerce, to what do these calculators
resort for the purpose of explaining our prosperity
during the war ? Government loans and contracts,
however profitable in vulgar estimate, are obviously
out of the question as a source of national supply.
The conunand of money, given by the adoption of



The Sources of our Financial Supplies. 31

a paper currency, is ii theme confidently urged, to
use a parliamentary phrase, both " in and out of
doors:" it was certainly of great importance, but
enough, we trust, will be advanced in a succeed-
ing chapter to show that the extent of supply, de-
rived from that source, has not yet been distinctly
comprehended. We dwell, therefore, no longer
on delusive suppositions, but proceed to what ap-
pears to us the true solution of this financial
enigma, seeking it in the increase less of our trans-
actions M'ith foreign countries, than of our pro-
ductive industry at home.

Increase of Employment during the War. — We
begin by requesting those of our readers who are
of an age to recollect the period of peace prior to
179s, to recall to mind the circumstances of that
time in as far as regarded the employment of indi-
viduals, the chance of favourable openings in tlie
different walks of industry. They will not fail to re-
member, that, though by no means an unprosperous
season, it was marked by the symptoms common in
an aara of political tranquillity, — complaints of
overstock in the genteel professions, and of inade-
quate payment in almost all of a humbler descrip-
tion. In a season of peace, salaries or wages are
adapted with scrupulous nicety to tlie sum neces-
sary for personal support, and, except in tlie case
of the inheritors of patrimony, the ])ortion of in-
come disposable for purposes of indulgence, is far
from large. Sucli has long been the case in France,
and most countries of the Continent; such, at
various intervals of the last century, was the case
in our own — a state by no means unsound or
likely to engender future embarrassment, but lead-
ing by very slow degrees to the attaiinnent of pro-
fes«?ional rank, or the acquisition of property. This



;j'2 7'//r Soinrcs of our Fnidncial Supplits.

tiun(|iiil condition, this nicdium between activity
and stagnation, was entirely altered by the war ;
the army, the navy, the pubHc offices of govern-
ment opened a career to mmnbers of every class,
and by absorbing a very large ])roportion of the
candidates for em])]oynient, created a corres})ond-
ing briskness in agriculture, trade, and professions ;
increasing the wages of the lower, and the salaries
of the higher ranks.

Capitalists also, a class retired for the most part
from active pursuits, partook of the general im-
pulse ; the pecuniary demands of government were
large, and the rate of interest experienced a gene-
ral and permanent rise. Occupation was thus
afforded to individuals of every age and of almost
every degree of capacity ; many, who from defi-
cient activity or mediocrity of parts, would, in a
state of peace, have necessarily remained unem-
])loyed, were brought by the war into situations
attended with income ; some in the pubUc serxice,
others in private employment, but ail in conse-
(pience of the extra demand created by govern-
ment. Several departments of business, such as
our fisheries, our trade with the Continent of
Europe, and that with our AVest India colonies,
were exposed to heavy losses, and the whole body
of fixed annuitants felt severely the increased ex-
pence of living. But these classes formed the
minority of the public : and even they felt, more
or less directly, through the medium of their con-
nections, the benefit of that impulse which for a
time improved the income of almost all persons in
active life, raising to the monied men the rate of
interest ; to the labouring class, the rate of wages ;
to the manufacturer, the merchant, and, in parti-
cular, to the farmer, the profits of stock.



The Sources of our Financial Supplies. 3"5

Such was the activity attendant on a state of war,
and on tlie facihty with which extended trans-
actions were managed by means of bank pajjer.
If to some our sketch appear too highly coloured,
we have merely to refer them to a comparison of
the average rate of wages and salaries in particular
periods, such as 179^ and 181^; to the increased
sales of our manufacturers and merchants ; the
rise of rent to the landlord ; the increase of profit
to his tenant.

Consequent Increase of Revenue. — All these cir-
cumstances, in particular the increased call for per-
sonal labour, had a powerful tendency to augment
the relative population of towns, as well by pro-
moting mai'riage as by drawing to them an extra
share of the country population. Now what is the
effect of an increase of town population on the
productive powers, or, in other words, on the tax-
able income of a country ? To form a due esti-
mate of this, we must point the reader's attention
to the passages hi our cliapter on Population, where,
in treating of the comparative revenue of chflerent
classes, we contrast the dexterity and dispatch
of towns, witli the slow, inefficient labour of the
country. A transfer of residence from country to
town leads to augmented ability in the individual,
to the increase of the quantity, the amelioration of
the quality, of liis work ; it raises his wages, and, by
enabling him to live better, extends the consumj)-
tion of articles productive to the exchequer. Of
tlie magnitude of the amount paid by the lowej-
orders, and the increase of public re\enue at-
tendant on increase of wages, whether in war or
peace, some idea may be formed from the follow-



ing table.



»



.11. The Sm/rrrs o/'ni/r Financial St/pplies.



AhstrnrI nf Kxrisr n»/l Ct/sfotn Hvlica in


1820, nffectitig ihe cnn


.sumption nf l/ic labouring


classes.


Malt ... -


- -i£'5,000,000


Ik-er


- 2,500,000


British spirits ...


fl,0()0,(XK)


Salt ....


1 ,.500,{XK)


Tobacco and Snuff


3,000,000


Soap - . . -


9(H),()00


Leather


600,000


Candles ...


300,000


Tea


3,000,000


Hemp . - -


200,000




20,000,000


To which may be added, Timber


1,000,000


Coals carried coastwise nearly -


1,000,000


Total ^'22,000,000



Tlie progressive increase in the productiveness
of our taxes was owing partly to higher wages,
partly to augmented population.

Increase of our Population. — We shall have
occasion, in a subsequent chapter, to show the
close connection that exists between the increase
of our numbers and the productiveness of our
taxes : at present, our statement shall be brief
Our population returns for the last twenty years
indicate an increase of no less than one and a half
per cent, annually; but to avoid the hazard of over-
rating, we shall suppose that previous to these
returns, and to the general introduction of \accin-
ation, the augmentation was less rapid, and shall
assume eighteen per cent, on the po})ulation of
1792 as the total increase during the fourteen years
that followed that date.

After these preliminary remarks, we proceed to
state arithmetically, the increase of our resources,
beginning by a table of the amount of our excisB



T)ie Sources of our Financial Sujyp/ics. 35

Juties, the operation of winch affects, as is well
known, a great variety of articles, inchiding as
w^ell the wine of the higher orders, as the malt
liquor, the s})irits, the tobacco, consumed by their
humbler countrymen.

Revenue arising J)'om the Excise during the Jbllffwing years oj'
xmr, being the gross Income, before deducting 0ie charges of
collection.

1805. .... ^23,194-,0OO

1806. .... - 24.,08 1,000

1807. ..... 24,681,000

1808. ..... 25,593,000

1809. (Orders in Council) - - - 23,471,000
1810. 25,796,000

1811. - - - - - 26,078,000

1812. (War with America) - - 23,532,000

1813. .... - 25,272,000

1814. ..... 26,471,000

1815. - - - - - 27,207,000



i^onjectural estimate of the total taxable Income of Great Britain,
at different periods, from 1792 to 1814.

Money of the
same value as
in 1792,
(Great Britain distinct from Ireland.)
In 1792 our taxable income may be com-
puted to have been .... ^125,000,000

In 1806; increase calculated in the ratio of
the increase of tlie population, viz. 18 per cent., 22,500,000



147,500,CX)0



Probable addition to national income from
the higher wages and higher profits of capital
in a state of war, . - . . 22,500,000



Total of taxable income in 1806, - 1 70,0(X),0()0



We shall now apply this mode of calculation
to the last year of the war.

In 1813 or 1814: Increase of national income
since 1806, calculated in the ratio of the in-
crease of population, 1 1 per cent.

D "i?



SC) J*/'()j)(>rii()?i (>!' our

National iiKomc ill I H(Mj us above, - i"147,500,(X)0

Add 1 I pirioiit. .... Jf;,5(X),(KX)



1 f)1-,()00,(KX)



Probable addition to national income, from
the higher wages and higher profits of capital
in a state of war, .... 24,000,000



Total of taxable income in 1813 or IHl^, in
money of 1792, .... 188,000,000

By taxable income, we understand the aggregate
income of the individuals accustomed to consume
taxed articles; and our estimate is founded chiefly
on the returns made under the property, tax, with
the addition of the computed amount of wages
and other incomes, which, though exempt from
that charge, are subject to taxes on consumption.

(See the chapter on National Capital and Re-
venue.)

We shall explain in the next chapter the fluctu-
ation in the value of money since 1792; meantime
by exhibiting our income at different dates in
money of uniform value, we simplify the estimate,
and enable the reader to mark its increase, without
the perplexity attendant on a difference in the value
of our currency.

A comparative Statement of our Public Burdens, and Taxabh
Income.
The public burdens include taxes, {tvith the expence of collec-
tion) poor-rate, and tithe. ,

Tlie same re- Our taxable in-
duced to a come comput-
Annual burdens uniform stan- ed b}' a uni-
Years. in the money dard ; viz. form standard;
of the parti- money of the viz. money of
cular year. same value as the value of
ia 1792. 1792.
1792. - a£'22,000,000 22,000,000 125,000,000
1806. - 60,000.0(X) 46,000,000 170,000,000
1814. - 80,000,000 50,000,000 188,000,000



Burdens /o our Resoicrces. SJ

The advantage of making our computation in
money of uniform value is here very a})parent. To
judge from the numerical amount, our public bur-
dens would seem to have more than tripled in the
course of the twenty -three years of war, but when
reduced to the money of 179^, the increase is
ibund to be little more than double.

It remains that we bring our reasoning to a
point, by ascertaining "the proportion borne at
different periods by our burdens to our means."^
This we accomplish by a calculation founded on
the preceding tables, but modified by some consi-
derations which shall be explained in our chaj)ter
on National Revenue and Capital. The result is
that our burdens bore to our resources,

(Great Britain distinct from Ireland.)

In 1792. a proportion of nearly - 18 to 100

1806. - of - - 27 to 100

1813. or 1814. of - 27 to 100

(See Chap. VIII. p. 269.).

Such was the proportion of our burdens to our
resources, afler including in the latter the increase
arising from the augmentation dining the war, both
of our numbers and our pecuniary means. The
additional pressure stated arithmetically, was about
nine per cent, on our national income, a charge less
great than is commonl}^ attributed to our taxes,
but sufficiently large to call for some farther ex-
planation of the remarkable circumstances that
enabled us to defray it.

Our War Taxes.— Thii amoinit of our loans,
though very dififercnt in different years, averaged,
on the whole of the war, the annual sum of
20,()(X),000/. This bold use of our credit, this free

D 3

335337



38 rrvporlioji of our

iliHuglit oil (Hir tiitmc resources, was ulniost all
expended in tlie extension of our domestic indus-
try. It may be termed a premium given to the
existing generation at the charge of posterity : it
may be comi)ared to a stream, which, though
proceeding from an unnatural and temporary
source, diffused a fertility a})proaching to luxu-
riance, so long as it continued to flow. Our
reailers have probably little difficulty in conceiving
the operation of borrowed money; — in compre-



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