after the Peace of Amiens. The Government, which had been spending fifty millions a year supplying the Fleet and Army and almost as much in subsidising foreign States to buy British munitions and uniforms, went out of business. The bottom fell out of the armament market.
The price of iron dropped from
£
20 to a ton and of copper from
£180 to £80. Other commodities fell in proportion. Exports, after a brief hectic rise, declined by seven millions, those of foreign and c
olonial produce from twenty milli
ons to scarcely ten. After so long and destructive a war the European nations were too poor to buy.
This recession was turned into a disaster by the reckless way in which British exporters poured their wares into war-ravaged or underdeveloped countries that lacked the buying-power to absorb them. The fluctuating markets of the war had developed a gambler's spirit among the rough and adventurous men pioneering in mechanical production. The speculation that attended the opening of the South American market rivalled the folly of the South Sea Bubble of a century before. The Spanish colonies—now in revolt against the mother country—were deluged with improbable wares. The multiplying power of Britain's machines was not yet matched by the capacity of her merchants to forecast markets—a matter of great difficulty in days of slow communications—or of her customers to absorb goods. It was not even matched by the pockets of her people at home. From the moment the war ended a mounting shortage of purchasing-power developed in every department of national life. By 1816 two-thirds of the Shropshire blast furnaces had shut down. Steam-manufacturers, unable to meet their wage bills, either reduced wages or discharged hands. Needing
not skilled men so much as machi
ne-minders, of which the towns at their factory gates offered an inexhaustible supply, they felt under no obligation, economic or moral, to maintain their employees. Simultaneously the labour market was flooded by thousands of ex-soldiers and sailors who, being without any income whatever, contributed no consumer-demand but, by their competition for employment, forced down wages further.
Finding itself short of money, the community turned on the Government and demanded reduction of taxation. If landowners, farmers and manufacturers could no longer enjoy war prices, they could no longer stomach war charges. So long as the war lasted, Britons had borne their burdens with patience. In 1815 a population of fourteen millions was contributing .£72,000,000 per annum or a fifth of the national income, as compared with the £19,000,000 paid in 1792 by one often millions.
The charge fell on almost every commodity. It was said that the Government owned one wheel of every coach on the road.
1
The price of glory, wrote Sydney Smith, was "taxes on the ermine which decorates the judge and the rope which hangs the criminal— on the poor man's salt and the rich man's spices—on the brass nails of the coffin and the ribands of the bride. . . . The schoolboy whips his taxed top, the beardless youth manages his taxed horse with a taxed bridle on a taxed road, and the dying Englishman, pouring his medicine which has paid seven per cent into a spoon that has paid fifteen per cent, flings himself back upon his chintz bed, which has paid twenty-two per cent, and expires into the arms of an apothecary who has paid a licence of a hundred pounds for the privilege of putting him to death."
Every year in his budget the Chancellor of the Exchequer rang the changes on these omnipresent imposts. The result was always the same. The subject paid from every pore, and the poor man, having no reserve after satisfying his bare needs, paid relatively most of all. Beer—his chief drink—contributed a sixth of the revenue; Cobbett, travelling to St. Albans on a hot day, reckoned that, in their exchange of beer for sweat, the haymakers in the Middlesex alehouses were contributing threepence halfpenny on every five-penny pot. The hardships suffered by the workers under this system —unguessed at by the rich—are described in Cooper's memoirs; of poor widows conspiring to outwit tax-collectors, who, knowing their straits, pursued them with indecent solicitations: of midnight removals of household goods to prevent distraint; "the curse upon taxes and the tax-gatherer was in the mouths of thousands." At St. Ives the populace celebrated the first Christmas of the peace by throwing a tax-collector out of the window.
2
Among those with the power to show resentment the most hated
1
Even travel in the Margate hoy was taxed, every passenger paying
2s.
on his
9s.,
us. or
13s.
ticket.
Sea-Bathing Places,
375.
See Alison,
History,
I,
78-9;
Austen, II,
293;
Clapham, I,
245-6 319-20;
Dowall,
239;
Fowler,
219;
Hammond,
Town Labourer,
102;
Simond, I,
51;
II,
290;
Smart,
4335
Woodward,
61, 324.
2
Broughton, I,
94.
See Bamford, II,
110-11;
Cobbett,
Rural Rides,
I,
78;
Colchester, II,
527-8;
Cooper,
26-7;
Halevy, II,
60;
Simond, II,
140-1;
Smart,
3, 31-6, 43-4, 53, 67,
ioo-i,
112-15, 169-70, 277-81, 341-4, 360-2, 425.
impost was the ten-per-cent Income Tax which Pitt had instituted in the hour of national peril. He had undertaken that this inquisitorial measure, as it was deemed by those who paid it, should be repealed as soon as the war ended. But the Government, faced with the charge, first of the American War and then of Napoleon's escape from Elba, and anxious to contribute some force to preserve international peace, struggled for more than a year before abandoning it. The Opposition was furious; so were the Government's supporters. The young Whig, Lord John Russell, declared that the tax's continuance would erase the last vestiges of British freedom. Why, it was
asked, should the country's mili
tary establishment be six times greater than in 1792, especially as France was disarmed and Britain now allied to all Europe. Brougham accused Ministers of plotting to alter the character of the Constitution and make it a military state. The Foreign Secretary, who was regarded as the villain of the piece, was charged with having imbibed so many Continental customs as to have forgotten England was an island.
On August nth, less than two months after Waterloo, the Prime Minister wrote to Castlereagh warning him that the financial situation was too grave for the nation to be able to shoulder further foreign commitments. The Navy and Army were the first to be pared. Within eighteen months 300,000 soldiers and sailors were turned adrift.
1
A naval officer in charge of a Sussex coastguard station received sudden orders to discharge his men in the dead of winter, though they were on a hilltop miles from anywhere. The men who had fought their way from Torres Vedras to Toulouse were given neither pension nor medal; the finest army England had ever had was dismissed without regret or gratitude.
Other wartime obligations were less easy to evade. Those who had fought England's battles could be relegated to a life of selling trinkets on the highways or sweeping the London streets,
2
but not
1
"We's all in mourning here for Mr. Nap," said the old tar to the "Oxonian" when he visited Portsmouth, "we've had no fun here since they cooped him up on board the
Bellerophon
and stowed him away at St. Helena. Where's all the girls and the fiddlers and the Jews and bumboat-women that used to crowd all sail to pick up a spare hand ashore? Not a shark have I seen in the harbour, and all the old grog-shops with their foul-weather battens up and colours half-mast."—
English Spy,
II,
184.
2
Officers of the Rifles, passing through Knightsbridge, were sometimes startled to see a tall, military-looking man picking up bones and to recognise through his rags one of the smartest and finest-looking men in theRegiment. See Anderson,
105-6,128-9;
Bell, I,
20, 35, 80,114-15. 120, 149-50, 157-8, 193-4;
Blakeney,
332, 364-7;
Castlereagh, X,
477-9J
Colchester, III,
247;
those who had lent the State cash to pay them. It was the essence of the system of financing war by borrowing that faith must be kept with the public creditor; that is, with the rich investor. The war had raised the National Debt from £252,000,000 to £861,000,000: a "poisoned dart," Napoleon boasted, left in England's vitals. The annual interest was £32,645,618, half again as much as the total prewar national expenditure, and five times more than the poor rates about which so much fuss was made.
This borrowing, added to every year and at rates lower at the end of the war than at its height, and the punctual discharge of interest, was regarded as a triumph of national strength and good faith. It profoundly impressed foreigners. So did the maintenance of "a paper currency not convertible into gold and therefore not liable to be withdrawn, and yet issued in such moderate quantities as satisfied the wants of man without exceeding them." Since Pitt's Government, by suspending cash payments, had given the privately-owned Bank of England—the principal proprietor of the National Debt— the right to issue paper currency unbacked by gold, there had been a huge increase in circulation. Yet it had been matched by the expansion in real wealth brought about by the machinery and improved farming which an enlarged currency had helped to buy into existence. "Without it Britain, under her free system, might not have defeated Napoleon.
1 Costello,
18, 65, 207-8;
Farington, VIII,
35-6;
Fortescue, X,
160;
Gardner,
262-3;
Grattan,
304;
Gronow, I,
182-3;
Lavengro,
86;
Hammond,
Town Labourer,
105;
Harris,
102;
Napier, VI,
175;
George Napier,
195;
Kincaid,
Random Shots,
251, 290;
Simmons,
379;
Smith, I,
320-2;
Trade Winds,
120;
Woodward,
60.
Yet though on the whole the Bank had exercised its privilege with patriotism and restraint, its directors, and the provincial bankers whose private note-issues had been rendered more valuable, would have been less than human had they not pursued their monopoly of creating money to a point where the increase in note-circulation exceeded the creation of real wealth. In 1810, when the House of Commons set up a Bullion Committee to investigate, £100 of paper currency was selling on 'Change for £86 10s. Yet even this modest depreciation, as the event proved, was due more to the drain of bullion to feed Wellington's army than to internal inflation. Though speculators did a roaring trade smuggling guineas abroad,
[2]
and at one time a premium of nearly thirty per cent was paid for gold, the latter started to flow back to England as soon as the war ended. Considering the Bank's opportunity, the degree of permanent inflation was extraordinarily small—a tribute both to the integrity of British bankers and the increase in national production.
In a great nation—the first industrial and trading Power in the world—a paper currency based on public credit had been successfully substituted for one based on precious metals. It had proved capable of financing not only the war but a novel multiplication of real wealth. The increased production of farm and factory Britain had needed for victory had not been retarded by any financial inability of the home consumer to buy it into existence. What was physically possible had been rendered financially possible. But, realising neither the character of the transformation through which the country was passing nor the permanent need under it for an elastic system of creating purchasing-power, the British people repudiated their wartime financial expedient as soon as the war ended. Anxious at the drain of bullion abroad, bewildered by economic disasters caused by the transition from war to peace, and resentful of the immense fortunes made by bankers, they saw in their unorthodox, revolutionary currency the cause of their troubles. The English had a sober respect, almost veneration, for gold; they despised paper. Since the latter was the creation of a Tory Government, the first demand for a resumption of cash payments came from the Whigs, one of whose leaders, Francis Horner, had presided over the Bullion Committee of 1810. It was resisted by the Government on grounds of expediency, but gradually yielded to by Ministers as the country's troubles deepened.
The clamour for a return to gold was naturally supported by the fund-holding class. The moderate inflation of the past few years had constituted a concealed tax on the fund-holder, which observers like Simond thought just, partly because the sums lent to the State during the war had been borrowed on terms highly favourable to the lender, and partly because the "funds" were unburdened by charges like those on land and farm produce. But this modest depreciation of the investor's capital in favour of the owner and producer of real wealth had constituted an intolerable charge on the property
-
less labourer, whose wages had failed to rise as quickly as prices. The new proletariat, both rural and industrial, shared neither in the enhanced profits of farmers and manufacturers nor in the fund-holder's discount and interest. Now, by artificially enhancing through a return to gold the value of the latter's claims on the taxpayer—the producer of real wealth on whom the burden of taxation ultimately fell—the Government increased the mortgage on the nation's productive capacity. For, though the payment of the annual debt charge —approximately half the revenue raised by taxation—was only a transfer of money from one pocket of the nation to another, the fund-holders or "tax-eaters" were not necessarily the same people as the tax-payers. The new policy of deflation increasingly handicapped the latter in their struggle to produce.
1
"There," wrote Cobbett six years after Waterloo, "is the Debt pulling the nation down like as a stone pulls a dog under the water."
In deference to the Government's plea that so early a return to gold was impracticable, the change over was fixed for the summer of
1818
.
The decision, however, caused an immediate restriction in circulation. Commercial paper under discount at the Bank of England—more than
^20
million a few years earlier—sank to
£115
million in
1816
and to less than
£4
million in the following year. The circulation of country banknotes dropped in proportion. The restriction coincided with a phenomenal reduction in the world's supply of precious metals and a consequent fall in global prices. Civil war in South America had dried up the chief source of bullion at the moment that Britain, with her steam-power machines and improved agriculture, had evolved a new means of multiplying real wealth. In
1816
the quantity of gold and silver raised in the Spanish colonies was only a third of what it had formerly been. In a few years the population of the mining town of Potosi fell through revolution and pestilence from
150,000
to
8000
.
Mass production—Britain's gift to the world—necessitated mass consumption. This could only be achieved through an expansive
1
"The tax-receivers have got a mortgage on the property, health, strength and skill of the rest of the community who pay the taxes, which bows their industry to the ground and deprives them of the necessary means of subsistence."—-Hazlitt,
Political Essays,
260-1.