LORD LIVERPOOL’S administration, at the close of the great French war, contained perhaps not a single member endowed with less originating power than Mr. Vansittart, the Chancellor of the Exchequer. The twenty-three years during which that struggle had raged almost without intermission had seen many men in succession attempting, after their own fashion, to sustain the enormous and rapidly increasing burden under which the resources of England were strained to exhaustion. Mr. Pitt, who, in spite of all that may be said, was great as a finance minister, even in his errors, Mr. Addington, Lord Henry Petty, and Mr. Spencer Perceval had, one after another, tried their ingenuity, not in restoring order to the finances, for they all found any such purpose far beyond their powers, but in holding England back from the brink of national bankruptcy. When, in 1812, Mr. Perceval was assassinated, and Lord Liverpool became the First Lord of the Treasury, it was not supposed that so weak an administration could long sustain the weight of the public interests ; and Mr. Vansittart seems to have been placed at the head of the Exchequer rather in the expectation that the position would not be permanent, than with any idea that he might become the most important member of the government. Nominally, indeed, the financial policy of the country was under the control of the Prime Minister, and the whole administration was responsible for its direction. But Lord Liverpool was himself not a great man, and Lord Castlereagh, whose ability was really considerable, gave, as could scarcely have been otherwise, his whole attention to his own department of foreign affairs. Nevertheless, weak as it was in 1812, this administration brought the war to its conclusion, placing Great Britain in a position more powerful and commanding than she ever had held before, or probably will ever hold again. But the close of this long struggle, and the settlement at last effected by the treaty of Vienna, changed with great rapidity the task of the English government. Questions of internal policy sprang into surpassing interest and prominence ; and while Lord Liverpool and Lord Castlereagh were still occupied in maintaining British influence on the Continent at the same point to which they had raised it in 1815, the movement had already begun among the people, which, fifty years later, ended in the official avowal of the uselessness and mischief of the traditional foreign policy of Great Britain.
Mr. Vansittart was not a person of so much consequence that it has been thought worth while to publish his papers ; and we cannot now learn whether he was in any way conscious of the enormous duties which the close of the war threw upon him, — duties which would have overtasked Pitt himself, and which Huskisson and Peel made the foundation of their great reputations, while a host of inferior men were buried under the weight. Even now it is impossible to draw up a clear statement of the condition of English finances in 1816. It is impossible to determine with certainty even the simplest of all the facts, — the amount of the debt. If, therefore, the following account of English financial affairs appears unintelligible to the reader, there is only one consideration to be offered in its excuse. This account is difficult to understand, and may contain errors ; but there can be no possible doubt that a clear and positive statement would be quite unworthy of belief.
The Parliamentary Paper No. 443 of the session of 1858 gives an official return of the amount of the public debt of the United Kingdom for every year since that debt has had an existence. There is excellent reason to doubt whether the sums given are in the majority of cases more than approximations to the truth ; but there seems to be no reason to expect greater exactness from any other source. The following may, therefore, be assumed as a fair statement of the national debt of Great Britain in 1816, the first year after the return of peace.
Great Britain. Ireland. Total.
Funded Debt. £ £ £
Bank of England, at 3%...... 11,686,800 11,686,800
Bank of Ireland, at 5%..... 2,169,231 2,169,231
South Sea Company, at 3%.. 14,814,085 14,814,085
Five per cent Annuities.. 136,181,688 10,579,485 146,761,173
Four per cent Annuities... 74,935,719 789,785 75,725,504
Three and half per cents.... 10,740,014 10,740,014
Three % Reduced Annuities.. 164,701,456 164,701,456
Three % Consolidated Annuities 382,447,774 382,447,774
Three % Consolidated Annuities
(Germany)........ 5,731,192 6,731,192
Three per cent Consolidated Annuities
(Portugal)........ 534,712 534,712
Bank Annuities (1726), at 3%... 1,000,000 1,000,000
Total... 792,033,426 24,278,515 816,311,941
Unfunded Debt.
Exchequer Bills........ 41,441,900 41,441,900
Treasury Bills (Ireland).... 2,497,808 2,497,808
Debentures......... 787,400 787,400
Total... 42,229,300 2,497,808 44,727,108
Grand Total... 834,262,726 26,776,323 861,039,049The nominal capital was, therefore, about eight hundred and sixty million pounds; and in January, 1816, six months after Waterloo, the three per cents stood at sixty in the market. It must, however, be stated at the outset, and always borne in mind, that the funded debt of Great Britain cannot be rightly represented by a statement of the nominal amount of capital supposed to be involved. One nation borrows money, and, by the terms of the contract, engages to repay the whole sum lent, and fixes a time for the repayment. Another nation borrows without the profession of any intention ever to return the capital at all ; and Great Britain’s whole funded debt was contracted in this manner. In technical language, the government sells annuities, and no purchaser is either in law or in equity entitled to demand more than his stipulated annual interest upon the sum which he has lent. No man can ever claim of right any part of the principal of the public funds. It is true, however, that there are two sorts of annuities, which must be clearly distinguished. The perpetual annuities, to which class the mass of the funds belong, are also called redeemable, because, whenever they rise above par in the market, and it becomes profitable to pay them off by borrowing the money at a lower rate of interest, there is nothing in the contract which forbids the operation ; and accordingly this has been regularly done, until the whole debt is now consolidated in three per cents, and may at any time be reduced still lower, should these rise above par. But the terminable annuities are not redeemable, and depend on an entirely different principle.
These terminable annuities are of two kinds, — those for lives and those for a term of years. They bear a higher rate of interest, calculated according to special tables, so that the life annuities terminate absolutely with the life of the holder, and the others at some fixed time, according to the specified terms of the contract. The so-called long annuities, for instance, were fixed to terminate in 1860. This system of terminable annuities has, therefore, the advantage of securing the extinction of the loan at a very moderate annual charge, so that the tax-payers are unconscious that they are in fact paying off every year a portion of the capital, as well as the interest of the debt. This was at one time a favorite scheme in English finance, and there were several forms of terminable annuities, the principle of the self-extinguishing character of the debt remaining the same throughout. Although this plan of borrowing is accompanied by a higher rate of annual charge than is necessary when borrowing on a perpetual annuity, it was usually made very light by granting the annuity for a long term of years. Thus, an annuity for a hundred years is the same thing to most persons as an annuity forever ; and it is also nearly the same by calculation, its value at four per cent being twenty-four and a half years’ purchase, and therefore only a half-year’s purchase less than an annuity forever. It has been contended that the whole debt ought to have been contracted in this form, and possibly, if the government had begun with this purpose in its mind, it might have succeeded ; but in practice the public naturally prefer, where the choice is given them, the perpetual investment. These terminable annuities were also objected to, reasonably or not, on the ground that they encouraged the popular tendency to improvidence.
The unfunded debt, too, is not fairly represented as capital. Exchequer bills were habitually used to some extent, in anticipation of revenue that could not be immediately collected. Far the larger portion, however, was really so much debt, which had to be ultimately paid off or funded. Large sums were usually voted upon these bills towards the conclusion of each session of Parliament, particularly in time of war, to answer exigencies of the public service.
It is, therefore, the charge of the debt alone which is the true measure of the liabilities of Great Britain. The same authority which has been already quoted states this charge to have been, in 1816, as follows : —
Great Britain Ireland. Total.
Funded Debt. £ £ £
Interest on Capital....... 27,233,994 1,044,928 28,278,922
Long Annuities....... 1,359,436 1,359,436
Short Annuities....... 230,000 230,000
Life Annuities...... 199,845 199,845
Bank Annuity........ 16,731 16,731
Exchequer Annuities..... 43,677 44,924 88,601
Total... 1,832,958 61,655 1,894,613
Interest of Stock for Redemption
of Land Tax........... 3,815 3,815
Management......... 284,674 284,674
Total... 29,355,441 1,106,583 30,462,024
Unfunded Debt.
Exchequer Bills (Interest)... 1,971,699 124,890 2,096,589
Debentures (Interest)..... 39,370 39,370
Exchequer Bills issued in anticipation
of Taxes (Interest)....... 47,635 47,635
Total... 2,058,704 124,890 2,183,594
Grand Total... 31,414,145 1,231,473 32,645,618
We may begin, therefore, with the assumption, that the capital of the national debt amounted, in 1816, to the sum of £861,040,000, bearing an annual burden of £32,645,618.
The regular annual expenses of the government amounted to nearly the same sum as the charge of the debt. The whole amount required to be raised by taxation, in the year subsequent to the war, was about £61,000,000. Many years afterwards, when the popular cry for economy had exercised its full power, and circumstances had allowed a considerable reduction to be effected in the charge for interest of the debt, the annual expenditure of the country sank so low as £47,000,000 ; but the first peace budget was one of more than sixty millions sterling.
This immense burden was levied on a population which probably did not exceed twenty million souls ; and of this number fully six millions were Irish. But Ireland was bankrupt. So bad was her financial condition, that, after every effort, she found herself unable to meet by taxation even the charge of her debt. That charge amounted, in 1815, to £6,370,000 ; while the net revenue paid into the Irish exchequer was little more than £5,000,000. It was not to Ireland that the people of Great Britain could look for the faintest assistance in the support of their common credit.
There remained a population of fourteen millions in England, Scotland, and Wales, and of this number it is hardly rash to say that one half contributed little to the payment of taxes. The warehouses were choked with goods, for which no market was to be found. The price of grain had fallen from five and six pounds sterling the quarter down to two pounds and a half, bringing distress to every farmer in the kingdom. More than £6,000,000 were annually raised, by local taxation, for the support or relief of the poor in England and Wales alone. Under these circumstances, it seems a liberal allowance to suppose that the whole weight of an annual taxation of £60,000,000 fell practically upon not more than ten millions of people ; and from these, in 1815, the government had actually succeeded in grinding £72,000,000. But even allowing that the whole fourteen millions contributed in just proportion, the burden of taxation is terrible to consider, when the vast mass of poverty and pauperism is taken into the account.
The income returns of Great Britain for the year 1815 give the following result : —
Customs...........£10,487,522
Excise............£26,562,432
Property Tax......£14,318,572
Assessed Taxes.....£6,214,987
Land Tax...........£1,079,993
Stamps.............£5,865,413
Post-Office........£1,548,000
Miscellaneous........£366,867
Total....£66,443,786To this total, about £5,000,000 is to be added on account of Ireland, which still had an exchequer, and even a currency, distinct from that of Great Britain. It must also be mentioned ; that the distinction between customs and excise was merely nominal, and did not indicate the nature of the taxes. The transfers from one to the other head seem to have been arbitrary ; and, as the same article frequently paid both an excise and a customs duty, it was more convenient that one board should collect the whole.
More than half the revenue was produced by the excise and customs. It was, therefore, of paramount importance that these two branches should be carefully fostered ; simplified, and systematized. When Mr. Pitt assumed the control of the finances, after the American war of independence, he found the customs in a state of such inextricable confusion, that the most experienced merchants were unable to foresee what would be the amount of duty affecting the articles they were importing, or to know the course to be followed in entering or clearing their vessels. In the midst of a chaos of contradictory statutes, irreconcilable systems, and arbitrary regulations, the inheritance of a century of bad government, the clerks of the custom-house ruled with supreme authority over the whole commerce of Great Britain. Among the measures by which Mr. Pitt gained his right to be considered the greatest of English administrators, the one which did away with this state of things was by no means the least in value. In 1787 he succeeded in carrying through Parliament an act abolishing all the existing duties, and substituting in their place single duties on each article, according to a regular tariff, which was still further assisted by a reform in the method of transacting business in the custom-house.
But the new system had scarcely produced all its beneficent results, when the French war broke out ; and for twenty-three years Parliament piled one customs law upon another, until the old confusion reigned in the custom-house as absolutely as ever before. The same article paid duty repeatedly, — now to the customs, now to the excise. The laws were without a system, and impossible to class under any imaginable plan. There were bounties or drawbacks upon half the articles of commerce or production. Fees were multiplied to excess. Five hundred different statutes regulated the customs alone. A complete and vigorous measure was urgently required for the consolidation of the customs laws ; and the example of Mr. Pitt made the neglect of the step by any subsequent government all the more obvious and inexcusable.
This, however, was a part of the situation which lay nearest the light, and was most easily reached. It concerned only the form of collecting the taxes ; and the real difficulties of the case extended throughout the whole length and breadth of the system of taxation itself. There seems to have been scarcely a fragment of the English revenue laws which was not marked by peculiar faults of its own, besides sharing in the radical vices that lay at the foundation of almost all of them. The principal exceptions which modern writers appear to have made in this sweeping condemnation of the old system are those of the house and land taxes, and the property or income tax, as the most economical and the most just that existed. But these required a degree of reform and alteration which would almost have converted them into new taxes.
It is unquestionable that the nation, apart from the form of its burdens, was very much over-taxed. The most ordinary and necessary articles of consumption were overloaded with burdens. The case of the salt duties was a notorious example of this evil. The natural cost of salt was less than eightpence the bushel, while the law required fifteen shillings on each bushel, raising its price to about twenty-two times its value. The same objection ran through most of the excise duties. This was, however, comparatively a simple difficulty ; and although it needed prompt and effective correction, no very high intellectual power was required to arrive at the remedy, so long as the question of protection was not involved.
But it was rare indeed that the question of protection could at that time be kept out of any projected improvement in English taxation. Protection coiled like a tangled cord around and over and through every portion of British finance. The reformers, who, with no enmity to the long-established principle of protecting home industry, still wished to relax a little here and there the strain of taxation, which was tearing the very muscles out of the bodies of their poorer fellow-countrymen, tugged now at one projecting evil of the vast system, and now at another ; but wherever they came, they found the whole mass, confused and chaotic as it was, bound hard and fast in the inextricable meshes of protection. Some alarmed interest sprang out of the darkness to cry shame, and to excite popular hatred against them at the very moment when they were hoping at last to have found a chance of stirring the phlegmatic government and the wretchedly indifferent Parliament into taking a step which could by no possibility harm any living creature.
Everything was protected. Every petty interest of the country had its rag of protection, — not merely against the genius or activity or superior circumstances of a foreign rival, but against allied branches of industry at home. Tiles complained if slates were untaxed. Wool was jealous of cotton. The brain of the Chancellor of the Exchequer was racked by hopeless efforts to maintain a proper equilibrium between home industries, while protecting them all against the foreigner. The irresistible logic of the principle was really carried out to that extent from which tamer modern protectionists shrink. One part of the United Kingdom was protected from the other. The products of English industry were protected from the rivalry of Ireland, and the manufactures and produce of Ireland were only admitted under suitable precautions into England. It is true, that the policy was, in this particular case, pursued with somewhat superfluous energy, since not only were heavy duties exacted for the protection of manufactures which actually existed in Ireland, but also for that of some which did not exist at all, and never had existed, and which a moderate degree of knowledge of the subject would have shown never could exist ; so that the Irish people enjoyed, through a long series of years, the most favorable of possible opportunities for observing the operation of a thoroughly efficient protective system of their own choice.
Nor was this all. Besides the protection granted to each industry against its neighbor, besides that which built a wall between the different states of the same empire, and besides that which guarded them all against the foreigner, the British system undertook to protect one foreign nation from another ; and this was even regarded as a masterpiece of statesmanship. A brilliant example of this form of protection was furnished in the case of Portugal. For an entire century, down to 1831, the British people were condemned to drink the vintage of Portugal, in order to protect both countries against the superior attractions of French wine.
But even as regarded the ordinary and almost universally accepted practice of protecting home industry against the foreigner, the system of 1816 was far in advance of the mild conceptions of 1866. The statesmen of that day shrank from no consequence of their theory. It was not enough to lay protective duties of sixty or a hundred per cent on rival enterprise. It was not even enough to tax at the rate of fifty per cent as a manufactured article the very mummies that were imported from Egypt, lest they should interfere with the British product. If the principle was good at all, it was held to be good to the extent of absolute prohibition ; and as, on the one hand, the law required that the Englishman who had been so unlucky as to die could only go to his grave in a windingsheet of British woollen, so it was enacted, that any man, duke or beggar, who might be suspected of wearing or possessing even a silk handkerchief of foreign manufacture was liable to have it taken from his neck or his pocket, or to have his house entered and ransacked from garret to cellar. There was an element of the most intolerable tyranny inherent in the very nature of the prohibitive laws.
It might be supposed that difficulties and confusion enough would have resulted from such a revenue system. But in point of fact, there was nothing peculiarly strange or remarkable in it. Similar principles lay at the base of almost every financial theory at that time, and the countries of Europe, and even of America, accepted them as their rule of action. It was here that the British system began to show itself in its own strength ; but it was only when the colonial and navigation laws were added to the over-taxation and to the eccentricities of ordinary protection, that confusion became confounded, and absurdity ran riot in the English statute-book. The principle which then lay at the bottom of the colonial system was, that the colonies existed for the benefit of the mother country ; and the successful protest of the North American Colonies, in their war of independence, had not yet succeeded in convincing Great Britain of the radical error of this theory. No ships but British ships could enter the ports of a British colony, and no market but the English market was open to the colonists. The West Indian sugar-planter was obliged to send his produce to England for sale. He might perhaps have gained something had he refined it before shipment ; but the British refiner would have suffered, and the British mercantile marine must have the benefit of the bulkier freight. In return, he was obliged to receive only British goods, or goods which had passed through Great Britain. But the West Indian colonies were dependent upon the nearer ports of the United States for many of the very necessaries of life ; and the negroes died of hunger when those ports were closed. This necessity of obtaining food was alone the cause of a slight relaxation in the law, by which a limited trade was permitted in certain articles, from certain ports, by a certain class of vessels, with the United States. On the other hand, if the price of colonial sugar was twice or more than twice that of the foreign, as was sometimes the case, the British public was required to pay the additional tax of several millions sterling annually for the benefit of the colonial system.
The timber trade with the Canadian colonies was a still more curious example of British protection and its complications. It was undisputed that the timber of Norway was not only the easiest to procure and the cheapest, but also much the best in the market. But the interests of the colonies required protection, and the British marine was accordingly built of inferior material. The reformers demanded the abolition of this mischievous system, and called upon the shipping interest to join in obtaining its repeal. The ship-owners refused. They resisted desperately every attempt to reopen the Norway timber trade ; and their argument was, that, as the naval power of Great Britain demanded a numerous merchant marine as its basis, and as the timber trade with Canada supplied an enormously bulky freight, and required long and frequent voyages, it would be a violation of the very first principles of British policy to allow their ships to be built of the best timber. The liberal members of Parliament, irritated at this extravagant taxation of the nation for what they considered a gross piece of jobbing, tried to reduce the argument to the absurd, and indignantly declared that Parliament had better at once enact by law that the Newcastle colliers, instead of bringing their coal direct to London, should sail “north about” to their market, and make a preliminary tour around the United Kingdom. The answer to the attempted sarcasm was quick and decisive. The ship-owners retorted, without hesitation, that, although it must indeed be admitted that the Newcastle colliers were allowed by law to choose the shortest and easiest route to London, still it was not to be supposed that even here the shipping interests had been overlooked. The laws practically forbade the use of the inland and cheapest transit from the nearer mines, with the single object of encouraging and developing the coastwise shipping in the interest of the national marine.
A protective system so logically perfect, so rigid in its obedience to a single purpose, so universal in its scope, so minute in its application, contains elements almost of grandeur. The ruling class of England appeared in it as the masters of the world. Around them and in harmony with them stood the English nation. The colonies existed for their benefit. Allied nations were made use of for their purposes, and the rest of mankind were their enemies. It is literally true, that, if the British Parliament had at this time possessed the power to protect the interests of the people of the United Kingdom and its colonial dependencies by causing every other existing nation to be annihilated from the surface of the earth, an enactment to that effect would have been only the logical sequence of its whole system of legislation.
It is of course impossible even to conjecture what was the actual cost to the citizen of this indirect taxation. But there is one means of showing how grievously it pressed upon the public, and how intolerable it would have been if the power of the government could have enforced it.
There is a strange law of finance, which has fixed a limit to indirect taxation, and decreed that, where the line is passed, a new agent shall intervene for the protection of a misgoverned people and the vindication of the laws of statesmanship. At a certain point, the smuggler appears and rescues the nation from its burdens. The extent to which smuggling is carried is, therefore, the measure of bad revenue systems.
In England in 1816 there was no limit to the activity of the smugglers. From Kent to Dorset and Devonshire, the whole line of the coast swarmed with them, and wherever they came the sympathies of the people were with them. Coast guards were multiplied in every direction. The army itself was employed in the service of the custom-house. The severity of the penalties was terrible ; yet any gentleman in London could, at ten days’ or a fortnight’s notice, obtain any prohibited article from the Continent, at thirty per cent advance upon its cost there. Foreign silks were prohibited ; but, in spite of the prohibition, they were to be seen in every haberdasher’s shop in England, and in the very Houses of Parliament. Mr. Hume, the well-known member for Aberdeen, when arguing once against the absurdity of those protective laws, “produced his bandana handkerchief before the very eyes of the House, and, having triumphantly unfurled the standard of smuggling, blew his nose in it, and deliberately returned it to his pocket.” The only vindication of the offended majesty of the law attempted by the Chancellor of the Exchequer consisted in reminding Mr. Hume that any member of the House had an absolute right to seize that bandana handkerchief and export it to a foreign country. “Upon every information laid under this prohibitive law,” said Mr. Huskisson in 1826, “ the chances are, that the informer and the constable have bandanas round their necks, and that the magistrate who hears the charge has one in his pocket.” Another prohibited article was Scotch whiskey, and Mr. Hume took again the occasion to inform the House that he had at that moment smuggled Scotch whiskey in his cellar, and he defied the whole power of the government to prevent his having it.
These were, however, only luxuries. The case was much worse when it concerned the great articles of consumption among the people. Salt paid its duty of two-and-twenty times its value on fifty thousand tons annually ; but it was supposed that twice as much more was consumed which paid no duty at all, or only the moderate one which made the profit of the smuggler or the thief. Soap was smuggled to nearly as great an extent as salt. By this universal evasion, fraud, and violence, the whole national character was perverted and degraded.
But even the spectacle in England was a harmless comedy in comparison with the results of this same system in Ireland. If armies of four or five hundred smugglers, supported by the population, fought pitched battles with the coast guard and revenue officers on the chalk downs of Sussex and Hampshire, and were not always defeated, there reigned all over Ireland, from Dublin to Kinsale, a state of actual civil war, which was waged by the peasantry, with horrible cruelty, by assassinations and savage deeds of violence that are still remembered with vivid force in that unhappy country, and which were met and repressed, so far as force could repress them, by equally exasperating acts of legalized cruelty and military violence. Here it was the excessive duty on spirit that was intolerable to the population ; and yet this duty was but five shillings and sixpence on the gallon, while more than twice the charge was borne in England without serious difficulty. Financially, the result was, that about three million gallons paid the tax, and about seven millions were distilled and consumed in defiance of the law. Politically, the attempt to enforce the tax resulted in making Ireland more than ever a danger and disgrace to Great Britain.
Such were some of the results of over-taxation and of an overstrained protective system. It is obvious that the very highest and most statesmanlike qualities were required in the government that was to attempt the task of reform. But it is not to be supposed that this was the only field for the activity of reformers in the financial affairs of the country. The operation of the taxes on the welfare of the people is only one side of financial science. The administrative system under which the revenue is collected and expended, if not first in actual importance, is certainly first in order of time among financial problems ; for it is useless to expect economy and foresight from a wasteful and blundering treasury, whose errors are not the mere mistakes of an incompetent chief, but are the inevitable result of false principles.
It is absolutely impossible to furnish anything like a fair picture of the system under which the finances of Great Britain suffered at the beginning of this century. The student, who has labored month after month to comprehend it, turns away at last with despair, and abandons the attempt as not worth, even if successful, a tenth part of the mental effort that is required to fathom it. There was no beginning, no middle, and no end. There was a bottomless ocean of accounts, without a system, without connection, and without result. There were innumerable departments and bureaus, independent of each other, and accountable to no one. The mysteries of the exchequer were portentous. Few Englishmen, even then, had any conception what functions were exercised by such mediaeval creations as the Department of the Pells, the Pipe Office, and the Tally Court, the calm abodes of happy sinecurists, whose duties of inconceivable clumsiness had long been assumed by the Bank of England and other offices, but who were still permitted to perform by deputy an imaginary routine. If any one should still be unwisely curious to penetrate these forgotten absurdities, he must consult the reports of Parliamentary commissions from 1824 to 1834, which resulted in their abolition. England, Scotland, and Ireland had each its own exchequer, repeating these costly eccentricities inherited from the Middle Ages.
Leaving this part of the investigation as of merely secondary importance, the main inquiry must be directed to the method of administering the treasury. This was an inheritance from Mr. Pitt. When he had remodelled, in 1787, the whole system of English finance, his great object was, not only to restore order and method where only confusion had existed, but to secure the ultimate redemption of the public debt. His idea seems to have been, that, if a sufficient portion of the permanent revenue were to be set aside and appropriated by law to the payment of the annual interest and a certain part of the principal of the debt, the result would be, not only to simplify the accounts, but to furnish an additional guaranty for the national credit. He therefore divided the whole of the revenues of the country into two branches, applicable to two distinct classes of payments. The first comprised all the permanent taxes, united into one consolidated fund, and this was by law appropriated to the payment of the permanent charges of the national debt and the civil list. The second comprised the taxes voted by Parliament only for the year, and was left for the charges of the army and navy, and the civil expenditure of the government.
Mr. Pitt’s famous sinking fund was the supplement to this plan. His original scheme was, that one million sterling should be applied annually from surplus revenue, and should accumulate at compound interest until the whole debt should be extinguished.
These large and ingenious arrangements answered all Mr. Pitt’s wishes for the first five years. His success was such as to place him unquestionably at the head of all living statesmen. But then the French war broke out, and no possible financial scheme, except the simplest, could have resisted the pressure of the next twenty-three years. In a surprisingly short time all Mr. Pitt’s elaborate structure crumbled to pieces. Yet not only he, but all his successors, clung to the hollow shells of the two funds with an obstinacy as remarkable as their conduct of the war itself. For every new loan that was raised, Parliament carefully set aside some new tax to meet the annual charge, and appropriated it to the consolidated fund, as though that fund still had some inherent virtue which would insure the payment of the national obligations in case all the rest of the system should become bankrupt, or as though every tax, of whatever description, was not just as much pledged to the payment of the interest of the debt as though fifty acts of Parliament had reasserted the fact. This, however, was only a cumbrous form of management. The sinking fund had became a most pernicious burden on the nation. Every loan that was contracted, however ruinous the terms, was increased by the amount of a certain proportion of the whole, which was set aside as a part of the sinking fund. In other words, it was expected to pay off the debt by borrowing money at a time when the nation’s credit was at its lowest ebb. Under this treatment, the sinking fund rapidly grew to gigantic proportions. It was perfectly evident that the debt also increased in a similar or a greater ratio ; but nevertheless the government actually introduced a measure, which became law, restricting the operation of the fund, on the ground that it would pay off the debt too rapidly. Nothing could shake the infatuated faith of the British people in the magical efficacy of these two funds. The argument against them was simply met by the assurance that, whether right or wrong, the confidence of the public and the respect of foreign nations were so largely founded on a belief in the efficacy of the system, that the national credit would not stand the shock of abandoning it.
However effective this answer may have been during the dark years of the war, when the salvation of England depended on her credit, it seems as though the return of peace should have deprived it of further force. Yet the two funds continued to flourish with unabated energy. The original scheme of Mr. Pitt had long been lost, and little of his project remained except the names and the mistakes. The system had ceased to be comprehensible. The public accounts were a chaos, and the budget speeches seem really to have been made with the intention of adding to the confusion.
Parliament never knew, nor could know, what was the exact relation between the income and expenditure of the year ; and when unreasonable radicals supplicated for a balance-sheet, they were answered as though such an innovation were big with revolutionary dangers. The fact of the total want of a balance-sheet seems to modern minds so incredible, that it may be well to quote a passage from the report of a select committee on the public accounts, made to Parliament in 1822, six years after the time now spoken of.
“ The principal and most prominent defect in the present form of the accounts is, that they neither do, nor can, exhibit any balance between the income and expenditure of the year. The income side of the account shows the amount collected from the subject and the amount paid into the exchequer within the year..... The expenditure-sheet has not been framed on this principle; and, with respect to some of the chief heads of the service, such as the army and the ordnance, instead of containing a statement of the issues made from the exchequer, it gives the amount of payments by the distributing public officers, to whom the moneys required for their respective services are issued from the exchequer. The account of incomes and the account of expenditure, therefore, are accounts of different kinds, and no true balance can be struck by comparing them together.”
No man, whatever industry he might possess, could come to an undisputed conclusion upon the financial situation of the country. Mr. Hume asserted, in 1821, and no less an authority than Mr. Ricardo indorsed the statement, that not only was there a difference of some millions between the budget and the annual accounts, in regard to the reduction of debt, but even on so simple a matter as the deficiency of the consolidated fund there were three public accounts, all signed by the same person, all relating to the same period, and all presenting a different result.
If Mr. Hume, whose Scotch sagacity and indefatigable patience have never been equalled, and Mr. Ricardo, who was the first political economist of his time, abandoned in despair the attempt to unravel the complications of the consolidated fund, which was then the principal part of the financial system, the chance is small indeed that any man in the present day can arrive at a better result. The budget speeches were almost silent in regard to it, and the information given by the official accounts was apparently only such as the humorous disposition of the public accountant incited him to furnish by way of a riddle for the amusement of over-zealous members of the House of Commons. If the difficulty even were explained, it is doubtful whether most people could understand the explanation. The nature of the fund has already been described. Certain taxes were appropriated to certain purposes. So long as the taxes were sufficiently productive for those payments, the system worked tolerably well. But there were sometimes years when the taxes fell off, and their amount was not sufficient to meet the charges put by law upon the fund. When this happened, the government borrowed the amount of the deficiency from the Bank, pledging exchequer bills in return, and pledging the next quarter’s receipts of the fund to meet and pay these exchequer bills. The deficiency meanwhile might or might not be reckoned as a part of the annual deficiency, or a deduction from the annual surplus. The Chancellor of the Exchequer enjoyed a wide latitude of conscience on that point, and it was sometimes very convenient to be able to shut his eyes to a deficit of seven or eight million pounds, with which of course neither he nor the House nor the country had anything to do, since it concerned only the consolidated fund. The consolidated fund existed for the very purpose of providing for the national debt, without allowing the matter to enter into the range of common questions of supply. There was, therefore, much to be said in favor of the official view of the question.
But the transaction did not always end even here. The fund borrowed, as a sort of independent corporation, the amount of its arrears from the Bank. Let us suppose ten millions to have been borrowed in this way. The Bank received the taxes composing the resources of the fund as fast as they were collected. Let us suppose a quarter’s income, or say eight million pounds, to have been nearly received, constituting the guaranty for the debt owed by the fund. The government now stepped in and borrowed this eight million for its immediate wants, thus exhibiting the strange anomaly of first creating a fund for no other purpose than to secure the payment of debt, then allowing that fund to create a debt of its own, and, finally, itself borrowing, as an advantage to the public, its own money, which was already doubly pledged, and substituting its own bonds as the security for the security of the security for the national securities.
Is it to be wondered at that the cleverest men in England were mystified when these transactions were put before them piecemeal in separate accounts, and they were asked to guess the riddle ? It was notorious, that the Chancellor of the Exchequer himself, whose experience at least was ample, did not understand the very explanations which he himself made to the House, far less the accounts that came to him from his own department. The officers of the Exchequer openly confessed that they could not comprehend the accounts which they made out, and to which their names were signed. The public knew nothing but its taxes.
There was another evil incident to this confused condition of the finances. The functions of the Exchequer were assumed by the Bank of England ; and in the absence of a powerful mind at the head of the government, the Bank had become almost the exclusive director of the financial policy of the country. The management of the Bank was not so remarkable for ability at this time as to make such an arrangement a great advantage. Mr. Ricardo went so far as to say that it was totally ignorant of the principles of political economy. When the House of Commons decided, in 1819, to return to specie payments, the Bank presented a remonstrance which contained a remarkable paragraph, appealing to its duties to the community at large, “whose interests in a pecuniary and commercial relation had, in a great degree, been intrusted to its discretion.” This assumption of authority, on the part of a mere subordinate office, was treated by Mr. Peel as a melancholy truth, the fault of Parliament itself, and of the government which had thus allowed its functions to fall into the hands of a private corporation.
If an energetic reform was required in the system of taxation and in the administration of the public property, it was certainly not less necessary to subject the expenditure to the most rigid scrutiny. A thoroughly economical government is among the rarest blessings ever vouchsafed to a nation, and a long period of war does not tend to teach or to encourage the habit of frugality. Besides, the English system of government and of society was essentially an extravagant one, and only the most resolute popular opposition could make the ruling party conscious of this fact.
There were two great branches in the national expenditure, which were about equal in amount. There was, in the first place, the regular annual interest on the national debt, funded and floating, which amounted to more than £30,000,000 sterling ; and this was, for the time, beyond the reach of economy. But even here there was much to be done. It was necessary to fund a large amount of the exchequer bills. It was necessary to look sharply to the management of the debt by the Bank. Above all, it was the part of a good finance minister so to adapt his measures as to encourage popular confidence in the national credit, in order to hasten the moment when a reduction of interest should be possible on the most burdensome of the public securities. This in itself involved a whole system of finance, and demanded ability of the highest order.
The second branch of the expenditure was divided into several heads. There were the civil expenses of government, the army, the navy, the ordnance, and a miscellaneous division which embraced a variety of appropriations as well for internal improvements as for other purposes.
The most immediate want was, of course, a large measure of reduction in the armaments, to be followed by an elaborate reform in the various departments. During some years of the war, the expenditure on this account had risen to more than seventy millions, exclusive of foreign subsidies. The question of what should be the proper peace establishment was one of especial difficulty to a generation which had scarcely known any condition but that of war ; and it was made still more embarrassing by the disturbed state of Ireland, requiring it to be treated like a conquered country, as well as by the immense colonial possessions of Great Britain, which seemed to demand protection on account of their exposed positions and the mixture of races.
The civil expenditure of the government had also been allowed to flourish in unchecked extravagance during the war. There was a rich field for reformers and radicals in the extirpation of those numerous sinecure offices whose quaint names and obsolete functions were little known to the public, except so far as the regular annual parliamentary accounts established the fact that there were still men who drew the salaries attached to them. The whole amount of the civil expenditure did not, indeed, form a very large proportion of the public burdens. Two or three million pounds covered the whole charge. But, large or small, it was too heavy for the taxpayers, who were justly indignant if a single shilling were unnecessarily added to the enormous sum which they were obliged to pay. There was the more excuse for the most rigid economy, since the privilege of possessing a constitutional monarch and an aristocratic court was by no means obtained for nothing. His Majesty’s household cost the nation more than a million sterling annually, with no visible return, since the King was blind and insane, and lived in close confinement at Windsor. How much the Prince Regent cost, Heaven only knows. He drew £65,000 a year by way of pension on the consolidated fund ; but as he was perpetually in debt, and as the country was perpetually called upon to pay his debts, it is not easy to discover where the expense ended. Besides the King and the Prince Regent, there were fifteen royal princes and princesses who drew pensions, varying from £35,000 downwards, from the consolidated fund alone, making an aggregate of rather more than £250,000 annually, on account of the royal family ; in return for which the nation not only failed to obtain a magnificent court, but was obliged to satisfy itself with one which was particularly offensive to its tastes.
It was, however, the British theory to pay public servants well, except where they were not paid at all. Perhaps nothing would have stung the average British mind more sharply, than the idea that the representatives of his country abroad were unable to maintain as high a scale of expense as those of France, Russia, and Austria. The example of Prussia and the United States of America was of no effect, except to place those countries low in the British estimation. It was certain, however, that the gratification of this fancy added largely to the national expenditure ; not so much, perhaps, from the actual salaries paid, as by the scale of expense which was encouraged, and the habit of lavishing large sums for small objects. The most burdensome form in which this practice showed itself was in the shape of pensions, superannuation allowances, and similar charges, either for life or in perpetuity ; which, considering the fact that the salaries themselves were in most cases so liberal, seem to have been somewhat superfluous, and by no means calculated to impress any lesson of economy upon the servants of the crown. The precise amount of all the different classes of pensions after the war cannot easily be ascertained, if, indeed, it is at all possible to collect them from the published accounts of so many various departments throughout the three kingdoms ; but they formed one of the most serious items of expense with which the government had to deal, and those connected with the army and navy gave occasion, in 1822, for an effort on the part of Mr. Vansittart to diminish their burden, which was the last of many financial operations effected by him, and which made his name long notorious.
We have now passed in review, rapidly, and no doubt superficially, but at as much length as is possible, the financial difficulties with which England at the close of the war had to struggle, so far as they related to the revenue. It would have been fortunate for her if these had been the only evils bequeathed to her by the war. Serious as they were, although they demanded the most laborious attention, the exercise of the highest order of intellect, and the most resolute perseverance, there remained still another evil, which lay behind them all, and demanded an immediate remedy.
Considering the length and the violence of the strain to which the resources of England had been subjected, it is rather a matter of surprise that her currency had not become utterly worthless, than that it should have suffered a certain degree of depreciation. The Bank had suspended specie payments in 1797 ; but for more than ten years after that time the Bank paper remained on a par with gold, or at a very slight discount. It was only in 1809 that the price of bullion began to maintain itself at a permanently higher rate, which continued till the close of the war. In 1810, the average depreciation of the currency was 13½ per cent. In 1814, it was 25 per cent, and this was its lowest point. In 1815 and 1816, the Bank paper gained credit, and averaged 167/10 per cent discount. Towards the close of the year 1816 the currency rose without the necessity of legislation, until it stood on a par with gold. Unfortunately, however, the mere fact that the Bank notes were of the same value as gold was by no means equivalent to a return to specie payments. The country had gone through a period of depreciation, and, if this were allowed to continue, was certain to be demoralized by it. Already the agricultural interest complained because the farms, leased at a time when corn sold at six pounds the quarter, could no longer be made to pay the extravagant rental thus fastened upon them. The business classes, the merchants, the bankers, the retailers, naturally timid in the face of measures likely to affect their interests, trembled with fear at the thought of commencing business upon a system entirely new to all but the oldest among them. Every month that the return to a specie basis was delayed strengthened the ultimate opposition to the measure, and encouraged the party which maintained that promptness was dangerous, and that it was necessary by act of Parliament to prevent the nation’s too easy progress up an ascent so difficult that few nations have ever succeeded in climbing it.
The history of the process by which Great Britain succeeded at length in restoring its original standard of value is one so important, so instructive, but also so complicated and disputed, that it cannot be dealt with in a few sentences. It requires an entire chapter to itself. It called into full play the best ability in England, and for many years after the result was accomplished a perpetual dispute was maintained in regard to its justice and its effects. Among the many financial difficulties which surrounded the government of that day, this was the one which a high statesmanship would have considered the most pressing, for it lay at the basis of all transactions involving an exchange of values, as well between the government and its subjects as between every individual and his neighbor.
With this last difficult problem of the currency our survey of the financial situation of Great Britain may be considered completed. Yet something remains to be said in regard to the men upon whom the vast labor fell of restoring order in the national affairs, and of creating the new formulas by which the economy of the nation was destined in the future to be represented. For it is obvious that between such a condition as has been described and that which England enjoys at present there is not a difference of degree, but of kind. It is a complete revolution that has taken place, and not merely a modification. Only fifty years have passed, and there has been no break of continuity ; a steady and natural process of development has been always going on, always irresistibly tending towards one result, until at length we find that the principles upon which the government of England acts are the direct reverse of those which it considered essential in 1816. Mr. Huskisson, Mr. Peel, and Mr. Frederick Robinson were all in the government at the close of the war, and supported Mr. Vansittart’s measures so far as they were called upon to do so; yet these were the very men by whom the subsequent policy was created and developed. There appears to be something that needs explanation in this curious copartnership.
Lord Liverpool’s followers comprised a considerable majority of the House of Commons, and usually followed their leader without useless remonstrance, wherever their orders directed. But nevertheless the government itself contained two classes of members so strangely differing in character that their successful co-operation may well be a matter of surprise.
Lord Liverpool’s own opinions were naturally sound and liberal upon economical questions, though he wanted the force of personal character to stamp them upon his administration. Nor indeed was there even in men like Lord Castlereagh, Mr. Vansittart, and Mr. Rose any such devotion to antiquated prejudices as might be supposed from the condition of the departments they directed. Mr. Vansittart was not a man gifted with the blind Toryism of Lord Sidmouth, or the narrowminded perverseness of Lord Eldon. He was simply a thoroughly incompetent man. It would scarcely be worth the while to dwell upon his qualities at any length, if it were not that he was almost a perfect representative of the old school of financiers, — the school of Perceval and Addington, — a school which had sprung from Mr. Pitt’s side when his better days had passed, and which lent the influence of narrow minds to encourage and aggravate the mistakes of a great one. English finance has not even yet entirely cleared itself from the traditions of this period.
Mr. Vansittart had served long in the treasury, and had stored his mind with all the intricate knowledge of financial machinery that a laborious subordinate can always so readily learn. Mr. Pitt, no doubt, was an object of his unbounded admiration. But the qualities which he would admire in Mr. Pitt would probably be precisely those which caused him, with all his genius, to create nothing which has endured. Men like Mr. Vansittart and his contemporaries in office thought it little that Mr. Pitt had aimed at magnificent results, that his ambition led him into a superb attempt to pay off the national debt, and that to effect his purpose he had created, with scarcely any assistance from precedent, a great and admirable system where none existed before. What dazzled the eyes of Mr. Pitt’s successors was, that the machinery invented by him was rich in detail and ingenious in expedients. That every loan should have its special tax, that every tax should go to a special fund, that each fund should be so constructed as to balance and support the other, — that there should be wheels within wheels, and springs beneath springs, until the whole structure was elaborated to a point of theoretical perfection, — this it was that seemed wonderful to the men that had seen its creation and had received it from the hands of its dying inventor. The results of such an education were most disastrous to England, for there arose a race of so-called financiers ; — men who drew their political economy from the traditions of the Exchequer, and their financial knowledge from the Stock Exchange ; men whose highest idea of a policy was the skill to place a loan at a half per cent better terms than its predecessor had obtained ; men who to effect this tried to mystify the public, and to avail themselves of all the complications in which the official accounts were so rich ; men who in the struggle to obtain means for carrying on the war forgot that there were laws which regulated the limits of taxation, to go beyond which was a folly and a crime ; and finally, men who, in their zeal to raise money, entirely disregarded the fact, that the first duty of a finance minister is to exercise some degree of economy in spending it.
As a Chancellor of the Exchequer, Mr. Vansittart’s incapacity was scarcely a matter of dispute. But he possessed, from long experience, the kind of tact and business knowledge which gives men influence in the House of Commons, and frequently enabled him to meet with success the attacks of the Whig opposition. There was in his character a fund of good nature and a cordial indifference to abuse which attracted sympathy, and protected him when opposition members howled in his face, that “the present distresses were occasioned by having a miserable, miscalculating, puny Chancellor of the Exchequer, who did not know the resources of the country, owing to the ignorance and want of power of his little mind.” Although a heavy burden to the Ministry of which he was a member, he long retained his office, and only retired to the honorable ease of the House of Lords in 1822, after having been ten years at the head of the finances.
Of the liberal wing of the administration Mr. Huskisson was by far the ablest member, and indeed it is not too much to say that, within his own sphere of economical subjects, he was not surpassed by any man then in public life. The extent of his knowledge, the soundness of his judgment, the breadth of his views, and his natural instinct, leading him always to stand just so far in advance of his contemporaries as to inspire them with confidence in the safety and moderation of his guidance without obliging them to accept paradoxical or unpopular truths, — these qualities combined to give Mr. Huskisson a personal weight which only needed the support of high office to prove itself in great administrative reforms. But, unfortunately, he was no politician, and in consequence had so managed his party course as to throw away the power he had a right to claim, until at forty-six years old he still found himself buried out of sight as Chief Commissioner of Woods and Forests, when he might and should have been in a commanding position in the Cabinet.
The political blunders of Mr. Huskisson had thrown a younger and much weaker man into the foreground. Mr. Frederick Robinson, the Vice-President of the Board of Trade, rapidly rose to be President of that Board, Chancellor of the Exchequer, Secretary for the Colonies, and Prime Minister. Mr. Frederick Robinson, Lord Goderich, or Earl of Ripon, by whichever name we may choose to call him, was a man of considerable abilities and a decidedly liberal turn of mind; but as a statesman he was particularly happy in having two great men at his side, Mr. Canning and Mr. Huskisson. With their assistance he accomplished great results, without it he found the burden of a high position intolerable. At the return of peace he was still in a subordinate office, but even there his influence was thrown, not without effect, on the side of progress and reform.
It cannot be said that this was the case with Mr. Peel, who was the Chief Secretary for Ireland at this time. Mr. Peel’s power consisted, not so much in the opinions which he held and advocated, as in his capacity for changing them at the right moment. Few statesmen of his rank have changed their political creed so much and on so many points ; perhaps not one has ever, like him, succeeded through all changes in retaining popular confidence and esteem. At the close of the war he was an extreme Tory ; and although he was ultimately influenced greatly by his association with Mr. Huskisson, it was a very long time before he became a convert to those opinions on questions of trade which have made his reputation eclipse that of his teacher. It is one of the most curious facts of modern English history, that he who in 1817 was the ally of Lord Sidmouth and Lord Eldon should have become the disciple of Cobden and the model of Gladstone.
The ablest of all the statesmen of this period was certainly Mr. Canning. But, unfortunately both for himself and for the country, Mr. Canning had allowed the wave of political success to sweep over him, and to carry Lord Castlereagh on its crest. It was not until Lord Castlereagh’s death, in 1822, that Mr. Canning’s influence obtained the control of the administration, and began to set in action the progressive energies of the nation.
All these men belonged to the Tory party. The old Whig opposition had little to offer that was better, if so good, and what little it had was soon lost. The ablest of the Whigs in the field of financial science was Mr. Francis Horner, who, as chairman of the famous Bullion Committee, had treated very roughly the strange absurdities of Mr. Vansittart. The report of that committee, of which he was for the most part the author, was made in 1810, and in spite of the triumphant vote by which, in 1811, Mr. Vansittart carried his resolution, that “the promissory notes of the Bank of England have hitherto been, and are at this time held to be equivalent to the legal coin of the realm,” Mr. Horner’s argument practically settled the question, and made his opponent’s name an object of standing ridicule down to this day, — a result the more annoying, since Mr. Vansittart was not himself the real author of the resolution. It is safe to say that, if Mr. Horner had lived, his influence on the financial and commercial policy of England would have been very considerable ; but his death, which took place in 1817, broke short a most promising career, and, combined with that of Sir Samuel Romilly, deprived the Whig opposition of all its best vital force.
For it cannot be said that Mr. Henry Brougham’s brilliant qualities at all supplied the place of Mr. Horner’s sound intellect. Mr. Brougham busied himself with economical questions, as he did with every other topic ; but before and above all, he was a politician, and a selfish one. A man of far greater worth, from every point of view, was Mr. Ricardo, whose position as a member of Parliament often enabled him to infuse into the debates a spirit of philosophy which is rare enough in the best of legislative assemblies. He, however, did not enter Parliament till 1819 ; and his death, in 1823, took place before the new theories of internal policy were fairly developed. Another person, who came into public life at the same time, but whose career lasted through all the vicissitudes of free trade down to a very late day, was an eminently useful and energetic reformer, whom the English public laughed at and abused during his whole life, but discovered after his death to have been one of those rare, bold, indefatigable, and scrupulously honest characters, whose existence makes amends for a world of Parliamentary nobodies. This was Joseph Hume, a thorn in the side of each successive ministry, a sort of selfconstituted tribune of the people, with an eye for abuses and a tongue for dilating upon them that made him at once the terror of ministers and of the House, which fled from his speeches with some reasonable excuse. Mr. Hume was, however, a man of broad and statesmanlike views, which is more than can fairly be said of Mr. Cobbett, though the latter was even more active in his denunciation of the evils that were so strongly stamped upon the system of internal government. In fact, the popular feeling was too strongly directed upon political grievances to allow of its giving any deep attention to difficult financial and commercial questions, the connection of which with its own objects was not always obvious ; and popular orators, like Cobbett and Hunt, exercised only an indirect and very modified influence upon the development of those liberal and progressive economical theories which neither Whig nor Tory could claim as exclusively their own property, but which each party made use of in its turn.
Thus it will be seen how small was the number of prominent men who, in 1816, could exercise an influence in favor of reform. And in this respect it is only right to do justice to Lord Liverpool and Mr. Vansittart. Neither they nor their opponents considered finance as a field for party divisions. Mr. Vansittart’s want was one of capacity, not of will. It is a curious fact that he, though administering a system in which protection was carried to absurdity, was yet in his opinions a free-trader, as was also Lord Liverpool. Both of them were far in advance on this point of the public opinion of their time ; for the popular wishes so far as concerned finance were solely directed to the reduction of taxation, and the knowledge of financial theories was extremely slight even among the wealthiest of the middle class. This was shown in regard to the income tax. Fifty years later the income tax was a popular measure, since it threw upon the holders of property an immediate burden which otherwise must have been borne by the poor. In 1816 the property tax was thoroughly unpopular, not only among the rich, but among the poor whom it relieved, and who actually allowed themselves to be persuaded that the heavy duties on corn, tea, beer, and tobacco were preferable to one which they did not feel ! It was necessary, therefore, that the small body of political economists who saw in advance that free trade, whether suitable or not for other nations, was the only possible policy for England, should begin at the very foundation, and educate even those for whose special benefit their measures would immediately operate. There was no basis of existing public opinion upon which they could stand.
If, then, we attempt to sum up the results of this long inquiry into a condition of affairs now forgotten, we shall find that Great Britain, then a nation of twenty million inhabitants, was burdened with an annual charge of more than £30,000,000 of debt, to which was added more than £20,000,000 of ordinary expenditure ; that her administrative system was in the highest degree cumbrous, expensive, and inefficient ; that her revenue was drawn indiscriminately from every available source, without regard to the disastrous results upon national industries and the national character, and in violation of all the acknowledged principles of political economy ; that her expenditure was extravagant, and without any sufficient check in public opinion ; that her currency was deranged, and the standard of value fluctuating in such a manner as to stimulate powerful interests towards resistance to any return to the former specie basis ; that her principal officers were unequal to the effort which a return to sound financial and economical principles would have required ; that Parliament, with the exception of a very few of its members, was incompetent to deal properly with such a state of affairs, and too apt to be influenced by personal and political motives ; and, finally, that the people were themselves ignorant of the true nature of the difficulties under which they were laboring, and the few really progressive minds in England were obliged to trust to those natural popular instincts which in the end usually decide rightly in regard to the interests of the people.
It was not surprising that some of the most patriotic and excellent Englishmen were in alarm lest their country should succumb under this accumulation of difficulties. And yet a few years of peaceful development enabled it to support the burden of the debt with an ease which is a just subject for pride ; it purged the administrative system of its abuses, and made it comparatively simple, economical, and efficient ; it created a wholly new system of revenue, founded on sound laws, and interfering to the least possible extent with the industry and character of the people. If it has not restricted the expenditure, and reduced the debt so far as was possible and right, this is merely because the people themselves, in their wealth, became indifferent and extravagant ; it restored, without any concession to interested clamor, the ancient and only sound basis to the currency ; it educated a race of statesmen who, in regard to economical subjects, were certainly not inferior to any in the world ; it placed in Parliament numbers of men who, whatever their faults may have been or may now be, were, and are now, better acquainted with those laws of financial science — ignorance of which has become inexcusable in legislators — than the members of any other legislative assembly in Europe ; and, finally, it has diffused among the people a degree of acquaintance with the true bearing of their own interests, which has strangely modified their national tendencies, and will ultimately wholly break down the ancient barriers of insular prejudice and exclusiveness.
The process by which these results have been effected, and the consideration of what has still been left incomplete, must be a worthy subject of careful study ; but it involves so great a variety of topics, and so wide a range of doubtful or disputed conclusions, that, unless rigidly restricted within the proper limits of the regions that belong purely to finance, the discussion would soon extend itself beyond any ordinary capacity of endurance, and lose the interest which belongs to it of furnishing instruction to other nations placed in circumstances more or less similar.
* From the North American Review for April, 1867.