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Joseph Lowe.

The present state of England in regard to agriculture, trade and finance; with a comparison of the prospects of England and France online

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hending how individual, and consequently public
income may be increased by giving activity to the
present age at the expence of the next. The intri-
cacy lies in a different question ; in the mode of
accountino- for our taa:es. and for the ease with
which sums of unprecedented magnitude w^ere
raised in that manner during the war. To solve
til is difficidty, some writers adopt the convenient
theory, that taxation may be made an engine for in-
creasing national wealth, as if the money expended
on an indecisive campaign were ultimately as pro-
fitable as a rate imposed for the improvement of
our streets, roads, and canals. Without becomino*
converts to this singular opinion, we have no diffi-
culty in regarding taxation, when expended at home,.
less as a privation of wealth than as an instrument
of circulation. It is evidently applied to the ex-
tension of employment, and, by increasing the in-
comes of inchviduals, enables them to find a liuid
lor answering its own demand, — the subsequent
visits of the collector.

Ta.vation considered as Circidation. — Imat^ine
the case of a contractor receiving annually 100,000/.
from the Treasury, and distributing it in an addition
to the wages, salaries, and profits of two or three
thousand persons. AVithout the war, these indivi-



Burdens to our Resources. 39

duals iiiight, and probably Avould, have had employ-
ment, but not to an equal extent, receiving perhaps
60/. annually instead of* the 70/. or 80/. given them
by the war, an addition which fully enabled them
to pay the extra charge imposed in the shape of
taxes. Or suppose the whole expenditure of the
nation, in other words, the amount disbursed on
articles, which directly or indirectly })ay taxes, to
be 200,000,000/. a year, and that in addition to
former burdens new taxes are imposed to the extent
of '20,000,000/. The effect of this heavy impost
is a correspondent rise in the price of the articles
consumed ; but as the amount received by the
Treasury is forthwith circulated among the payers
of the taxes, and applied to remunerate their exer-
tions, the latter are enabled to indemnify themselves
by an addition to the charges constituting their
respective incomes, whether in the shape of wages,
salary, or profit of stock. Possessed of this power,
the higher price paid for iirticles of consumption
becomes a matter of indifference, particularly when,
in consequence of the government demand for men
and money, the increase of their incomes exceeds
the increase of their expence. The result accord-
ingly is, that they pay 10 per cent, additional on
their consumption, and add as much, or more, to
the charges constituting their incomes.

To what amount, it may be asked, did the circu-
lation in question take place, in consequence of
taxes? To a sum very different in different years,
and increasing largely after ISOG, but forming, on
an average of the whole period of war, more than
40,000,000/. a year. In what particular mode did
file annual expenditure of that sum, and of the far-
ther 20,000,000/. supplied by loans, chiefly take
place ? In recruiting, clothing, and victualling our

D !<



40 J'ritpo/ // o/ our

militia, iirmy, and navy; in the purchase of stores,
the hiiiiditiiT of" ships of" war, the repair of" fortifica-
tions ; in contracts, pay, salaries, pensions. Even
ill tliat whicli scented strictly foreign expenditure,
our subsidies to tiie continent, luid tiie mainte-
nance of our garrisons abroad, the remittances
took place less in money than in articles of British
manufacture.

It remains to add a few remarks on tiie manner
in which these large sums were repaid to the Trea-
sury. Of our taxation, the far greater proportion
(40,000,000/.) is on articles of consumption, a
mode in which the tax, blending itself with the
price of the article, escapes, in a great measure,
the observation of the consiuner. No wonder,
therefore, that such imposts were, in a manner,
overlooked in the general rise of wages, salaries,
and profits. In like manner, the increase of stamps,
heavy as it became, was accounted a secondary
object after the great augmentation of price ob-
tained, as the war proceeded, by the venders
of property. The assessed taxes and poor-rate
being undisguised burdens, excited more animad-
version, but they w*ere submitted to as well from a
conviction of their necessity, as from the genera]
ardour in the contest with France, and her dreaded
ruler.

Computed Amount thus repaid to the Treasury. —
If we go a step farther, and endeavour to define
the amount repaid, during the war, to the public
Treasury, the plan is to revert to the estimate we
have already made of the proportion of our burdens
to our national income. Tliat proportion, (27 per
cent. f"or the country at large,) was greater in
towns, on account of the more general consump-

14.



Burdens to our Resowxes. 41

tion of exciseable articles. Now as the expend-
iture of government for the war, or, to speak more
correctly, the increased expenditure of individuals
consequent on government disburse, took place
almost entirely in towns, we shall probably not
exceed in calculating that it returned into the
Exchequer a proportion approaching to 33 per
cent., or a third of the amount that had issued
from it. This estimate justifies the following in-
ference :

Total of expenditure for the war - ^1100,000,000

Of which a third, or 33 per cent., paid back

in taxes, formed a sum of about - 3GO,000,000

a sum which goes far towards accounting for the
payment of our w ar taxes, enormous as they were ;
or, in other words, towards proving that those
pecuniary sacrifices on which tlie public received
such eloquent compliments from ministerial orators
and newspaper writers, were often little more than
a repayment of money issued from the Treasury.

The power of paying taxes during the late war
is thus to be sought, not in retrenchment on the
part of the public, but in an increase of the general
activity, and still more in that which a writer of
the present age, (as yet little known to the public,
but to whose works we shall frequently have occa-
sion to refer, Mr. 8. Gray) terms the power of
" charging and counter-charging ;" the j)ower of
individuals to augment tliose demands whicli con-
stitute their respective incomes; and thus to transfer
from one hand to another the burden of a new tax.

Absence of Foreign Co7npetition. — This aug-
mentation of charjre, tliis transfer of burden, was



^^ Proportion of our

liiciliLatod during the war by various causes, among
which is to be included the existence of similar,
though not equal demands iiom continental go-
vernments on their subjects. These demands, in
conjunction with the obstructions to intercourse
attendant on a state of war, had the effect of pre-
venting the high prices in England from being
lowered by foreign competition. Had the war
affected only France and England, had the rest of
Euro})e been exempted from the burdens of great
military establishments, such a system of increased
taxation, or, in other words, such a rapid augment-
ation of prices would have been impracticable :
our countrymen woidd have emigrated ; capital
would have been sent abroad ; foreign manu-
factiu'es would have been smuggled among us ; the
supplies for the United States and other dis-
tant markets would have been prepared on the
continent. But Holland, the only continental
country possessed of disposable capital, was sub-
jected to great oppression ; while Germany, and in
the latter years of the war, Denmark and Sweden,
were burdened with heavy military charges. Bri-
tish capital was prevented from finding its way
abroad, as well by dread of Bonaparte's despotism,
as by the profitable employment afforded it at
home. Smuggling was continued, but only in
articles (such as spirits, tea, laces,) in which it had
been carried on in peace : the number and activity
of our cruisers prevented its extension, notwith-
standing the additional temptation arising from
our augmented duties.

Our country was thus insulated commercially as
well as physically, and an amount of taxation, a
rise of prices, which at other times woidd ha\e
been ruinous, were comparatively innoxious when



Burdens to our Resources. 43

our neighbours were subjected to heavy burdens.
As soon as this point is clearly comprehended by
the enquirer ; as soon as he becomes satisfied of
the ' 7ion-ea:istence of foreign competition ; he will
find much less difficulty in the solution of our
financial problem.

Substitution of Bank Notes for Coin. — To
all those causes there remains to add the ex-
emption of our banks from cash payments ; the
effect of which, though less great than is vulgarly
supposed, was to make money almost as plenty in
war as in peace; and to increase the amount of our
circulating medium in proportion as other circum-
stances led to a rise in prices.



Thus was carried on, from year to year, a most
expensive contest, without much pressure on any
part of the public, unless the fixed annuitant, and
without a depreciation of our national capital, ex-
cept of that portion (such as the funds, or loans on
mortgage,) of which the value is permanently re-
presented by money. To many persons, and in
particular to those interested in the expenditure,
this state of things bore a favourable appearance ;
conveying to some the idea of an accumulation of
national Avealth, to others the belief that we de-
frayed all our burdens from funds arising fiom
the war. The general enhancement of commotlities
was ascribed to an abundance of money, and
deemed a symptom, or rather a proof^ of the
increase of our national wealth.

These explanations enable us to account in some
measure for a notion very })revalent on the conti-
nent, and which, in the latitude in which it is oi-
tertained, strikes every Englishman with surprise, —



44i /*r(>/)(>r/i(>f/ of oiir Bilrdens, S^r.

That we prolonged the war with a view to our pecu-
niary ailvaiitage — as if a charge, which may 1)C
true in regartl to ])articuhir classes, could, with any
degree of justice, be ajjplied to our countrymen at
huge.

The temporary stimulus afforded to productive
industry by the funding system, though never so
strikingly exemplified before, might have been
traced in various periods of the history of Europe
during the last two centuries. Was it not conspi-
cuous in the long contests of the Dutch, first with
Spain and subsequently with France, as well as in
every war that has been carried on by England
since the revolution ? In none of these, it is true,
did the amount of loans, and still less the amount
of war taxes, bear any proportion to those of the
present age ; but they supplied facts of a nature to
suffscest serious conclusions, had studies of that
description entered into the habits of our legisla-
tors. To the more cautious among them, it seem-
ed to occur that our situation w^as, in some degree,
unnatural ; that the great expenditure of govern-
ment was not compensated, on the part of the pub-
lic, by economy, or by any great share of extra
exertion. Hence an apprehension, on the part of
some, that the war must entail a burdensome in-
heritance, but at what time, or to what degree, they
did not attempt to calculate. Of the reaction to
be expected at a peace, no one appears to have had a
distinct conception. To foresee its extent was, we
admit, impossible ; but few of our public men be-
stowed a serious thought on its nature, while some
of them seemed hardly aware of the possibility of
its occurring ; so limited had been their study of
political economy as a science, so cursory their ex-
amination of corresponding periods of our history.



45



CHAP. III.

Effect of the War on the Price of Commodities.

We sliall now fix our attention on that general
rise of prices whicli took place during the war, and
continued ahnost without interruption from 1793
to 1814. As this formed one of the principal
changes in our situation, both individually and
nationally, it is fit we should investigate it with
minute attention.

Of the causes of rise during the war, tlie prin-
cipal were : —

1. Tlie great demand of men for government
service, and the consequent increase of wages and
salaries.

2. The insufficiency of our agricultiu-al produce,
caused partly by bad seasons, partly by the drain of
labour and capital for the public service.

3. The increase of taxation.

4. The addition to the cost of imported articles,
arising from the greater expence of freight, in-
surance, and other charges of transport ; and still
more from,

5. The depreciation of our bank paper after the
year 1809.

Of these different causes, the insufficiency of our
agricultural produce, and the non-convertibility of
our bank paper, are reserved for separate discus-
sion : at present, we proceed to the eflect of the
demand of men for government service.



46 Crnisci of the Rise of Prices

Proporlion nfotir Population engaged in thePvMic
Serxice. — In 1792, and tlie preceding years of peace,
llie demanil made on onr j)0})uIation for military })ur-
poses \vas ^•ery limited. \\\ 179'3, our le\ies took
place on a large scale, and in 179'5, tlie numbers
raised in three successive years were such as to
form a \'ery large establishment. Recruiting, how-
ever, continued with activity during the whole
war, until the signature of the preliminaries of peace,
in tlie autumn of 1801. — In 1803, the renewal of
hostilities was attended by a call on our population,
which led, in little more than a year, to a more
numerous establishment than we had e\er had on
foot. The decisi^•e victory of Trafalgar remo\ed
the dread of invasion ; but the continental suc-
cesses of the French, the aggrandizing projects of
Bonaoarte, were such as to admit of no reduction
on our part; and after 1808, all hearts were united
in the cause of Spanish independence. Hence a
continued demand for recruits, an increase of levy
money, and a progressive addition to the numbers
on foot, during the rest of the war.

The proportion of our population under arms
was larger in this country than in any other state
in Euroi)e. In March 1804, Lord Liverpool, then
Lord Hawkesbury, declared in Parliament, that
our army and na\y, including militia, but exclusive
of volunteers, approached to the number of 400,000,
being more than one in ten of the able-bodied po-
pulation (then computed at 3,800,000) of Great
Britain and Ireland. France, he added, had at
that time in arms about 560,000 men, or one in
fourteen of her able-bodied population. Austria
had on foot also one man in fourteen ; and Russia,
if any dependence was to be placed in the loose
returns of her population, nearly the same propor-



during the War. ly

tion. Prussia was tlic only j)o\ver whose military
force (about 240,000) bore, like ours, tlie propor-
tion of one in ten to her able-bodied males : but it
was with her a season of peace, and a number of
her soldiers were permitted, by furlough, or other-
wise, to give a part of the year to productive
labour.

It is usual to compute the proportion of able-
bodied men in a country at a fourth of the total
population. The war of 1793 lasted nine years,
and in the middle of that period (the year I797 or
1798), the po})ulation of Great Britain and Ire-
land was probably about 14,000,000, giving for the
able-bodied 3,500,000.

The war of 1803 lasted twelve years, and in
1809, the medium year, our numbers appear to
have been somewhat less than 17,000,000, trivino'
for the able-bodied a proportion of 4,200,000. The
year 1804 was in the middle of our great contest,
and his Lordship's computation may accordingly
be taken as a fair average of the numbers under
arms during the war.

It would be a task of no great difficulty to com-
pute and place in one column the number of our
able-bodied population for each year, and in an-
other the number of soldiers, seamen, and militia-
men in the ])ublic service. But the demand of
war on population goes considerably farther, and
extends into a field admitting of less accurate cal-
culation, comprising not only persons in j)ublic
offices, dock-yards, &c., but a number of indivi-
duals unconnected with government, such as manu-
facturers of arms, clothing, naval stores, builders
of barracks, contractors, and others, the list of
whom is too diversified and too mixed with the
occupations of private life to admit of any otliei-



than a t^eneral estimate. Tliis estimate we are
inclined to make, in the proportion of one lialf of
the mihtary servants of tlie jiiibhc, taking the aver-
age of the army, navy, and mihtia, at 400,000
during our twenty-three years of war, and at
^J00,000 the })ersons deriving an indirect emi)lo} -
ment from tlie war.

The number of men thus withdrawn from the pur-
suits of private industry appears toliave been on an
average (i00,000, or 15 per cent of our able-bodied
population. It is of importance to remark, that
they consisted of individuals born chiefly between
the years 177^ ^"^1 1790, a time when our popula-
tion was very considerably inferior* to our numbers
in 1800. We mention the year 1800, because in
the event of any contest occurring at present, our
recruits would, in general, consist of individuals
born about that period, and the abstraction of an
equal niunber of men from productive industry
would, of course, be less felt than during the late
war. The magnitude of the change which it at
that time produced will be put in a striking light
by a reference to our annual expenditure, keeping
out of view^ our payments for interest of debt, or
the civil service of go\ernment, and fixing our at-
tention on a

Statement



* Ricknian's Preliniiuary Observations on the Population
Return of 1821.



diiriiig the War. 49

Statement of the conjunct expense of our army, navy, and ord-
nance, from the beginning to the close of the xvar, taken from
the accounts laid before Parliament.



1791.


- £ 4,226,000


Brouglit up


^£'287,333,000


1792.


8,750,000


1804.


30,854,000


1793.


13,5I1,(X)0


1805.


36,219,000


1794.


20,247,(X)0


1806.


37,706,000


1795.


28,751,000


1807.


36,176,000


1796.


fiO, 165,000


1808.


39,778,000


1797.


27,606,000


1809.


42,073,000


1798.


25,982,000


1810.


43,246,000


1799.


27,257,000


1811.


47,968,000


1800.


29,613,000


1812.


49,739,000


1801.


26,998,000


1813.


54,872,000


1802.


23,121,000


1814.


60,239,000


1803.


21,106,000


1815.


43,282,000




£287,333,000


£809,485,000



Total exceeding 800,000,000.

To these sums there remains to add a proportion
of our subsidies ; we mean the part suppHed to our
alhes, not in money, but in stores, the manufac-
ture of which formed, of course, a farther demand
on our national labour. Combining these into one
sum, and dividing it by tlie number of years of
military expenditure, (in all twenty- three,) we find
the average annual charge for the army, navy, and
ordnance, to have been thirty -six millions, instead
of the four or five millions a year prior to 1792.

Observe next, the difference of effect on prices
in a sum raised for a military purpose, and that
which is levied for the interest of the national debt.
The latter bore, like all taxation, on the prices of
commodities ; but our military expenditure had a
double, or rather triple effect of that nature ; first,
by a drain of money ; next, by a drain of liands ;
and, thirdly, by obliging other hands to work for
those so withdrawn. It is only thus that we find it
})()ssible to explain cither the extraordinary rise of

i:



50 Cavsex of I lie liisc of Prices

i)rices ill llic w;ir, oi" llu'ir no less extraordinary fall
since the peace.

EJfcct of Taxal'um on House-keeping. — I'he
result, or, to sj)eak more })roperly, the avowed ten-
dency of most taxes, is an augmentation of })rice.
Taxes on commodities are always imposed on the
calculation of being paid by the consumer; the
supply of any article, whether a luxury, such as
wine and sugar, or a necessary of life, like corn,
salt, leather, being presumed to be in proportion to
the effectual demand, and the tax intended not as
a burden on the })roducer or v^ender, but as an ad-
dition to the price paid by the consumer. This was
strikingly exemplified in the enhancement during
the war of several articles of daily use. The su-
gar which the planter, on paying a moderate duty,
could have afforded to sell in England at (JOs. the
cwt., was raised by the effect of new taxes and war
charges to ^Os. or 7^*'. Tea which, after paying
half its original cost to the custom-house, might
have been sold at 5s. or iSs. the lb., was raised, in
consequence of being taxed 100 per cent., to 'Js. or
8*., and the salt which (see Sir T. Bernard's pam-
phlet on the employment of the labouring classes
in 1817) might, if unburdened, have been afforded
at 1/. a ton, was made, in consequence of the duty,
to cost more than twenty times that price.

Holland was the first country in Europe that
afforded a striking example of the enhancement
arising from taxation, her long and expensive strug-
gle against Spain having necessitated very hea\T im-
posts so far back as two centuries ago. Sir William
Temple, among other interesting particulars with
which he has diversified the graver matter of his
Memoirs, takes occasion (Vol. I. Chapter VH.)
to insert the following remark : " The excise in



iluring I he J far.



.5i



Holland is great, and so general, that I have heard
it observed at Amsterdam, that when, in a tavern,
a certain dish offish is eaten with the usual sauce,
thirty several excises are paid, for what is necessary
to that small service.'* — In England taxation was
comparatively light, until we became ardent par-
ticipators in continental war, at first under King
William, afterwards under Queen Anne. A long
peace, and the prudent administration of Walpole,
lessened for a time the pressure of the burden ; but
it was very sensibly increased by the wars of 17'1'^»
17«56, lyy-S*, and, above all, by those of the present
age. This is sufficiently apparent from the follow-
ing table of taxes which affect house-keeping.



Taxes on Luxuries. -

Foreign spirits, chiefly

brandy - a£'2,300,000

British spirits - 3,()00,(X)()
Wine - 1,600,0(X)

Rum - 200,000

Coffee and Cocoa 300,000

Raisins and other fruits iGO.GOO
Silk, raw and thrown 5W.000



Taxes on tlie necessaries or
comforts of life.

Assessed taxes (pre-
vious to the late
reduction) £6,500,000

Malt and Beer,
(since the reduc-
tion in 1822) 6,500,000

Sugar - 3,000,000

Tea - 3,000,000

Coals carried coast-
ways - 900,000

Soap - 900,000

Candles and Tallow 400,000

Cotton, Wool 500,000

Leather (since the

reduction in 1822) 300,000

Foreign timber 1,000,000

Bricks, tiles, stone,

slate - 400,000

Glass - 400,000

Hemp - 200,000

In all, above 3^2,000,000/., exclusive of stani])
duties and postage j also of taxes on foreign articles,

E 2



52 Cauxes uf'flif Rise af Prices

such as wool, butter, cheese, linens, drugs, all of
which have an effect more or less direct on house-
kee})ing, and were, like those enumerated above,
considerably increased during the war.

It occasionally happens, tliat, in consequence of
over supply, the market price of an article does
not rise in })roportion to the duty, but continues as
low, or nearly as low, as previous to its imposition ;
the consequence of which is to throw the new bur-
den on the producer. Such was long the case
of our West India sugar planters during the
war ; such is, in a great measure, their case at
present : it is the case, also, of a far more nu-
merous cla.ss, our farmers, who, in 1823 as in 181.5,
arc to be considered as paying a large share of
their taxes out of their capital. In general, how-
ever, there is made an addition to the price of an
article, not merely to the amount of the tax, but in a
somewhat increased proportion. Suppose a custom
duty paid on an article w^hich, on importation, is
sold to a wholesale dealer of the first class, next to
one of the second class, and, lastly, to a retailer :
the demand of a profit on, or rather of an indem-
nity for the tax, is repeated three times ; and al-
thouirh these demands are far smaller in degree
than has been asserted by the advocates for the re-
peal of taxes, they form, eventually and collec-
tively, a serious addition to the national burdens j
an addition which, joined to the charge of collect-



Online LibraryJoseph LoweThe present state of England in regard to agriculture, trade and finance; with a comparison of the prospects of England and France → online text (page 5 of 40)