Chapter LV: Section VI: Finance and Foreign Trade (1)

1. Act abolishing Tenure by Knight Service, etc., 1660--2. Navigation
Act, 1660--3. Proposals for Free Export of Gold and Silver, 1660--4.
An Attack on the Navigation Acts, c. 1663--5. Free Coinage at the
Mint Proclaimed, 1666--6. The East India Company and the Interlopers,
1684--7. Foundation of the Bank of England, 1694--8. The Need for the
Recoinage of 1696--9. Speech by Sir Robert Walpole on the Salt
Duties, 1732--10. Pitt's Sinking Fund Act, 1786--11. The Suspension
of Cash Payments, 1797--12. Pitt's Speech on the Income Tax,
1798--13. Foreign Trade in the early Nineteenth Century, 1812--14.
Debate on the Corn Law, 1815--15. The Corn Law of 1815--16. Free
Trade Petition, 1820--17. The Foundation of the Anti-Corn-Law League,
1839--18. The Bank Charter Act, 1844--19. Debate on the Corn Laws,
1846.

This section illustrates various departments of Government policy: taxation and revenue (Nos. 1, 9 and 12), public debts (Nos. 7 and 10), fiscal and trade policy (Nos. 1, 2, 4, 6, 13-17, 19), the coinage (Nos. 3, 5 and 8), and the national Bank (Nos. 7, 11, and 18). The specimens of revenue policy begin with the Act by which Charles II abandoned feudal dues in exchange for a general and hereditary excise (No. 1). The principle involved in this transaction may be compared with Sir Robert Walpole's remarks on the question of justice in taxation (No. 9) and with Pitt's speech on introducing the Income Tax in 1798, which also gives a survey of the whole financial position and a defence of the policy of paying for wars out of hand (No. 12). The opposite policy, of war-loans, had been adopted earlier, and the French wars of the seventeenth and eighteenth centuries established the funding system. An outline is given of the Sinking Fund by which it was supposed that this national liability could be reduced while it was being created (No. 10). The foundation of the Bank of England (No. 7) was an important step in the policy of national loans as well as an encouragement to the growth of capital and capitalist industry. The French wars at the end of the eighteenth century produced a crisis in the management of the Bank's reserve; an official report explains the causes of the panic which led to the suspension of cash payments and also shows the deliberate policy by which the suspension was continued till 1819 (No. 11). This was the first controversy of great importance on the subject of currency since the seventeenth century, when the government of Charles II had adopted the policy of allowing free export and free coinage of Gold and Silver (Nos. 3 and 5). The gradual deterioration of the coinage which led to the recoinage of 1696 is illustrated by a contemporary description (No. 8). The Bank Charter Act (No. 18) shows the financial aspect of rapid national expansion in the nineteenth century and the method adopted to give stability to credit by limiting the issue of unsupported paper currency, in the period before the triumph of the cheque system.

The Navigation Act of Charles the second's reign (No. 2) formed part of a system by which the State set itself to encourage particular industries and took a part in the struggle for commercial leadership. (See also Nos. 4 and 6.) The complications of this policy with considerations of revenue and particular interests rapidly increased, while the manufacturing export trade became more important (No. 13). A reaction led by the Economists had begun in the latter part of the eighteenth century. In the nineteenth century the battle raged over the special protection successfully claimed by the Agricultural Interest in the depression at the end of the Napoleonic wars (No. 15). The debates and petitions (No. 14, No. 16, No. 19) bristle with the new Political Economy. They also give an indication of the new social class created by the Industrial Revolution and of the struggle of the landowners with the North of England manufacturers who founded and financed the Anti-Corn-Law League, the most successful of all political associations for an economic object (No. 17).

AUTHORITIES

The most important modern authorities on taxation and finance are:
Dowell, _History of Taxation and Taxes_; Seligman, _The Income Tax_;
Kennedy, _English Taxation_,1640-1799: on currency and banking, Shaw,
_History of the Currency_; Andréadés, _History of the Bank of
England_; Thorold Rogers, _The First Nine Years of the Bank of
England_; Bagehot, _Lombard Street_: on commercial and fiscal policy;
Day, _History of Commerce_; Levi, _History of British Commerce_;
Hewins, _English Trade and Finance_; Beer, _The Old Colonial System_
and _British Colonial Policy_; Hertz, _The Old Colonial System_;
Ashley, _Surveys_; Cunningham, _Growth of English Industry and
Commerce, Modern Times_, and _Rise and Decline of the Free Trade
Movement_; Bruce, _Annals of the East India Company_; Holland, _The
Fall of Protection_; Morley, _Life of Cobden_; Trevelyan, _Life of
Bright_; Nicholson, _The English Corn Laws_. Smart, _Economic Annals
of the Nineteenth Century_, analyses economic debates, legislation
and conditions in the early nineteenth century.

Bibliographies in Cunningham, _op. cit._, Day _op. cit._, Cambridge
Modern History, Vols. VI and X, and Grant Robertson, _England Under
the Hanoverians_.

_Contemporary._--Parliamentary Paper, XXXV, 1869, gives a summary of
public revenue and expenditure, 1688-1869. Important documents for
financial history are contained in the seventeenth century Treasury
Papers (ed. Shaw). The Advice of the Council of Trade on the
Exportation of Gold and Silver, 1660, is in McCulloch's Collection of
Tracts on Money. The official history of the suspension of cash
payments is in the Reports of Committees on the Restriction in
Payments, 1797 (XI), on the High Price of Gold, 1810 (III), and on
Cash Payments, 1819 (III).

A collection of literary authorities on monetary questions was made
by McCulloch, "A Select Collection of Scarce and Valuable Tracts on
Money"; it includes Petty's Quantulumcunque, Isaac Newton's
Representations, etc. For contemporary opinion on taxation and
finance, see Petty, Taxes and Taxation Price; Observations on
Reversionary Payments, and The State of the Public Debts; Smith, The
Wealth of Nations, and the Speeches of Pitt (Everyman Series), and of
Cobden (edited Bright and Rogers). For foreign commerce consult The
Diary and Consultation Book of Fort St. George (ed. Pringle), and
Reports of Commons Committee on Orders in Council, 1812, together
with the pamphlet literature on Colonial policy (see Cunningham _op.
cit._ and McCulloch's Select Collection of Tracts on Commerce).

1. ACT ABOLISHING TENURE BY KNIGHT SERVICE, ETC. [_Statutes, 12 Charles II, 24_], 1660.

It is hereby enacted that the Court of Wards and Liveries and all Wardships, Liveries, Primer-Seizins, and Ouster-le-mains, values, and forfeitures of marriages by reason of any tenure of the King's majesty or of any other knight's service, and all mean rates and all other gifts, grants, charges incident or arising for or by reason of wardships [etc.], be taken away and discharged. And that all fines for alienation, seizures, and pardons for alienations, tenure by homage [etc.], also Aide pur file marrier et pur farer fitz chivalier, and all other charges incident thereunto, be likewise taken away and discharged, as from February 24, 1645. And that all tenures by knight's service of the King, or of any other person and by knight service in capite, and by socage in capite of the King, and the fruits and consequents thereof--be taken away and discharged.

And all tenures of any Honours, manors, lands, tenements, or hereditaments of any estate of inheritance at the common law, held either of the King or of any other person or persons, bodies politic or corporate are hereby enacted to be turned into free and common socage to all intents and purposes.

[Purveyance and Pre-emption abolished.]

XIV. And now to the intent and purpose that his Majesty, his heirs and successors, may receive a full and ample recompence--there shall be paid unto the King's majesty his heirs and successors forever hereafter in recompence as aforesaid the several rates [etc.] following:--

[1s. 3d. a barrel of beer sold above 6s. a barrel.
3d. a barrel of beer sold at 6s. or below 6s. a barrel.
2d. a gallon of spirits imported.
3s. a barrel of beer imported.
1d. a gallon of aqua-vitae, etc.]

2. NAVIGATION ACT [_Statutes, 12 Chas. II, 18_], 1660.

An Act for the encouraging and increasing of shipping and navigation.

For the increase of shipping and encouragement of the navigation of this nation wherein, under the good providence and protection of God, the wealth, safety and strength of this kingdom is so much concerned; be it enacted by the King's most excellent majesty, and by the lords and commons in this present parliament assembled, and by the authority thereof, that from and after the first day of December one thousand six hundred and sixty, and from thenceforward, no goods or commodities whatsoever shall be imported into or exported out of any lands, islands, plantations or territories to his Majesty belonging or in his possession, or which may hereafter belong unto or be in the possession of his Majesty, his heirs and successors, in Asia, Africa or America, in any other ship or ships, vessel or vessels whatsoever, but in such ships or vessels as do truly and without fraud belong only to the people of England or Ireland, dominion of Wales or town of Berwick-upon-Tweed, or are of the built of and belonging to any the said lands, islands, plantations or territories, as the proprietors and right owners thereof, and whereof the master and three-fourths of the mariners at least are English.

And it is further enacted by the authority aforesaid, that no goods or commodities that are of foreign growth, production or manufacture, and which are brought into England, Ireland, Wales, the islands of Guernsey and Jersey, or town of Berwick-upon-Tweed, in English-built shipping, or other shipping belonging to some of the aforesaid places, and navigated by English mariners, as aforesaid, shall be shipped or brought from any other place or places, country or countries, but only from those of the said growth, production or manufacture, or from those ports where the said goods and commodities can only, or are, or usually have been, first shipped for transportation, and from none other places or countries.

3. PROPOSALS FOR FREE EXPORTATION OF GOLD AND SILVER [_McCulloch, Tracts on Money,1856, pp. 145_], 1660.

Advice of his Majesty's Council of Trade, concerning the Exportation of Gold and Silver in Foreign Coins and Bullion.

[Concluded Dec. 11, 1660.]

... Supposing that it were of absolute necessity to restrain all money and bullion, once imported, to be kept within this kingdom. It then came under consideration whether either the laws hitherto made in that behalf are, or that it be possible to make a law, adequate to prevent the exportation thereof.

And here we were convinced, by experience, that the laws of this kingdom (hitherto made) have been of no effect to the end thereby designed; and looking abroad, as there are nowhere more strict and severe laws against the exportation of coin and bullion than in Spain and France, we found all to be to as little purpose.

We then, thirdly, enquired what loadstone attracted this metal by force of nature to itself, against all human providence or prevention; and soon found that it was alone the present course of trade and traffic throughout the world....

And therefore, in the fourth place, we discovered that, as it is impossible by any laws to restrain money and bullion against the use that traffic finds for the same; so also the adhering to this principle of restraining thereof discourageth, as well all natives as foreigners, to import any money or bullion--where the exportation thereof is forbidden them.

From whence, fifthly, the many advantages (thereby given away clearly to the stranger from the English) present themselves; for the stranger, knowing we must be furnished in one of these places for our occasions, make us pay dearly for our accommodation.

So that, to wind up all that has been said, the result of the several reasons and arguments herein summed up seemed to be this: that time and experience instruct, and the present state of traffic throughout the world require, that, for the increase of the stock of money in these your Majesty's kingdoms, some way of liberty for the exportation, at least of foreign coin and bullion, should be found out, and put in execution; which hath produced the humble advice offered in the preceding paper.

4. AN ATTACK ON THE NAVIGATION ACT[384] [_P.R.O. Colonial Papers, Vol. XXXVI, No. 88_], _c._ 1663.

_To the King's Most Excellent Majesty._

_The Humble Remonstrance_ of John Bland, of London, Merchant, on the behalf of the Inhabitants and Planters of Virginia and Maryland.

Most humbly representing unto your Majesty the inevitable destruction of these colonies, if so be that the late Act for increase of trade and shipping be not as to them dispensed with; for it will not only ruinate the inhabitants and planters, but make desolate the largest, fertilist, and most glorious plantations under Your Majesty's Dominion; the which, if otherwise suspended, will produce the greatest advantage to this nation's commerce and considerablest income to Your Majesty's revenue, that any part of the world doth to which we trade. [Rejoinder to argument that the Dutch prohibit English trade with their Indian Dominions. The American colonies are in need of customers. Why should the Dutch be prevented from dealing with them?]

Virginia and Maryland are colonies, which though capable of better commodities, yet for the present afford only these, tobacco chiefly, then in the next place corn and cattle, commodities almost in every country whatever to be had; withal they are such commodities, that except purchased in these plantations so cheap as not elsewhere so to be had, none would ever go thither to fetch them, no, not we ourselves. Which being so, then certainly it cannot stand with wisdom to hinder the Hollanders from going thither.

Then again, if you keep thence the Hollanders, can it be believed that from England more ships will be sent than are able to bring thence what tobacco England will spend? If they do bring more, must they not lose both stock and block, principal and charges?...

A further prejudice doth evidently attend the commerce by this Act, not only in debarring Hollanders from trading to these colonies, but thereby we do likewise debar ourselves; for, by the Act, no English ships can load any goods in Virginia and Maryland to transport to any country but our own territories.... I demand then, if it would not be better to let our English ships, loading in those colonies, to go whither they please, and pay in the places where they do trade (if it will not be dispensed with otherwise), the same customs to your Majesty as they should have done in England, or give bills from thence to pay it in England? Certainly this would be more beneficial to the commerce, and security both for the ships and goods, and advantageous to your Majesty; for whilst they are coming to England they might be at the end of their intended voyages and obtain a market, which haply in England could not be had....

If that notwithstanding what is by the foregoing particulars declared, it may seem reasonable that the Act shall stand in force.... Then let me on behalf of the said colonies of Virginia and Maryland make these following proposals which I hope will appear but equitable; and I dare undertake for them, that they will be very well satisfied, that those few tobacconists that have engrossed that trade into their hands, shall still continue in it without moving further against them therein.

First, that the traders to Virginia and Maryland from England shall furnish and supply the planters and inhabitants of these colonies with all sorts of commodities and necessaries which they may want or desire, at as cheap rates and prices as the Hollanders used to have when the Hollander was admitted to trade hither.

Secondly, that the said traders out of England to these colonies shall not only buy of the planters such tobacco in the colonies as is fit for England, but take off all that shall be yearly made by them, at as good rates and prices as the Hollanders used to give....

By way of accommodation this I propose. Let all Hollanders and other nations whatsoever freely trade into Virginia and Maryland, and bring thither and carry thence whatever they please, and to counterpoise the cheapness of their sailing, with dearness of our ships, to pay a set duty and imposition that may countervail the same; and when what they paid formerly will not do it, let it be doubled and trebled, as shall be thought meet, yet still with this caution, that it may not make it as bad as if they were totally prohibited.

In the next place, that all English ships that do go thither to trade, and carry goods to any other country besides England, may be freed of any custom there, more than some certain duty to the use of the colonies....

[Footnote 384: Quoted in _The Virginia Magazine of History and Biography_, Vol. I, pp. 142-145.]

5. FREE COINAGE OF BULLION AT THE MINT PROCLAIMED [_Statutes, 18 Chas._ II, 5], 1666.

Whereas it is most obvious that the plenty of current coins of gold and silver of this kingdom is of great advantage to trade and commerce ... be it enacted ... that whatsoever person or persons, native or foreigner, alien or stranger, shall from and after the twentieth day of December one thousand six hundred sixty and six, bring in any foreign coin, plate or bullion of gold or silver, in mass, molten or alloyed, or any sort of manufacture of gold or silver, into his Majesty's mint or mints within the kingdom of England, to be there melted down and coined into the current coins of this kingdom, shall have the same there assayed, melted down and coined with all convenient speed, without any defalcation, diminution or charge for the assaying, coinage or waste in coinage: so as that for every pound troy of crown or standard gold that shall be brought in and delivered by him or them ... there shall be delivered ... a pound troy of the current coins of this kingdom, of crown or standard gold.

6. THE EAST INDIA COMPANY AND THE INTERLOPERS [_Diary and Consultation Book of Fort St. George, Ed. Pringle Series I, Vol. III, p. 49_], 1684.

_To Sir John Wetwangs, Commander of ship Royal James._

His Majesty the King of England our Sovereign Lord having granted the Honourable East India Company full power and authority to enter into any ship or vessel, and to make seizure of the same, that shall be found in these parts of the East Indies, contrary to his royal will and pleasure,[385] ... we therefore, the Agent and Council of Fort St. George, for the said Honourable East India Company, do ... (there being now an Interlopers' ship, the _Constantinople_, merchant, John Smith, master, at Covelon), require you immediately to repair aboard your ship, weigh anchor, and set sail for that port of Covelon, and there seize upon the said Interlopers' ship and bring her into this Road of Madras.... Dated in Fort St. George the sixth day of June, 1684.

WILLIAM GYFFORD.
JOHN BIGRIG.
ELIHU YALE.
JOHN NICKS.
JOHN LITTLETON.
JOHN GRAY.

[Footnote 385: New Charter granted Aug. 9, 1683.]

7. FOUNDATION OF THE BANK OF ENGLAND [_Statutes, 5 & 6, Wm. & Mary, 20_], 1694.

An Act for granting to their Majesties several rates and duties upon
tunnage of ships and vessels, and upon beer, ale, and other liquors,
for securing certain recompences and advantages in the said act
mentioned, to such persons as shall voluntarily advance the sum of
fifteen hundred thousand pounds, towards the carrying on the war
against France.

XIX. And be it farther enacted by the authority aforesaid, that it shall and may be lawful to and for their Majesties, by commission under the great seal of England, to authorize and appoint any number of persons to take and receive all such voluntary subscriptions as shall be made on or before the first day of August, which shall be in the year of our Lord one thousand six hundred ninety four, by any person or persons, natives or foreigners, bodies politic or corporate.

XX. And be it further enacted, that it shall and may be lawful to and for their Majesties, by letters patents under the great seal of England, to limit, direct, and appoint, how and in what manner and proportions, and under what rules and directions, the said sum of twelve hundred thousand pounds, part of the said sum of fifteen hundred thousand pounds, and the said yearly sum of one hundred thousand pounds, part of the said yearly sum of one hundred and forty thousand pounds, and every or any part or proportion thereof, may be assignable or transferable, assigned or transferred, to such person or persons only as shall freely and voluntarily accept of the same, and not otherwise; and to incorporate all and every such subscribers and contributors, their heirs, successors, or assigns, to be one body corporate and politic, by the name of the governor and company of the bank of England, and, by the same name of the governor and company of the bank of England, to have perpetual succession, and a common seal.

XXVIII. Provided, that nothing herein contained shall any ways be construed to hinder the said corporation from dealing in bills of exchange, or in buying or selling bullion, gold, or silver, or in selling any goods, wares, or merchandize whatsoever, which shall really and _bona fide_ be left or deposited with the said corporation for money lent and advanced thereon, and which shall not be redeemed at the time agreed on, or within three months after, or from selling such goods as shall or may be the produce of lands purchased by the said corporation.

8. THE NEED FOR THE RECOINAGE OF 1696 [_H. Haynes, Brief Memoirs Relating to the Silver and Gold Coins of England (in Lansdowne MSS, 801, British Museum_), _fs._ 33-48].

The silver money of England as well as the coins of all other countries are liable to abuse by these three following methods:

1st, by alteration of the standard appointed by public authority.

2nd, by melting them down and converting the metal to other uses.

3rd, by exporting them into foreign countries, to carry on a trade.

And by all those methods was the whole stock of the cash of this kingdom excessively impaired before the late grand coinage.

For 1st. the standard of our silver moneys appointed by the Government was notoriously violated. By standard is here meant that particular weight and fineness in the silver moneys which was settled by Queen Elizabeth and continued all her time, and after it, through the reigns of all her several successors down to her present Majesty, and was lately confirmed by Act of Parliament....

These were the just weights, and the legal fineness of our silver moneys coined with the hammer, of which sort the far greater part of the cash of the whole kingdom did consist; but they were very liable to be clipped and diminished in their weight, because very few of these pieces were of a just assize when they first came out of the Mint. So many pieces, I suppose, were by the Moneyers cut out of a bar of standard silver, as did pretty exactly answer the pound weight Troy; and the tale of the pieces required in that weight, by the Indenture of the Mint: but though all the pieces together might come near the pound weight or be within remedy; yet divers of them compared one with the other were very disproportionable, as was too well known to many persons, who picked out the heavy pieces, and threw them into the melting pot, to fit them for exportation, or to supply the silver smiths.

[Pieces of hammered money, "though never clipped, did many of them in their weight and value want or exceed the legal standard." Crowns varied from 5s. 3d. to 4s. 9d., half-crowns from 3s. to 2s. 4d., etc.]

According to the best observation of Goldsmiths[386] and others the clipping of our coins began to be discoverable in great receipts a little after the Dutch war in 1672, but it made no great progress at first for some years: and the silver moneys of Queen Elizabeth were very little diminished.... But the yearly loss by clipping made terrible advances every year from 1686.... In the later end of 1695[387] the public loss upon all the clipped money then actually current (if one may judge of the whole by the foregoing table) was at least 45 per cent. by mere clipping and light counterfeit pieces, which upon the whole running silver cash of the kingdom amounts to 2,250,000l.[388] ...

The whole kingdom was in a general distraction by the badness of the silver coin and the rise of guineas, for no one knew what to trust to; the landlord knew not in what to receive his rents, nor the tenant in what to pay them. Neither of them could foretell the value of his moneys to-morrow. The merchant could not foresee the worth of his wares at two or three days distance, and was at a loss to set a price upon his goods. Everybody was afraid to engage in any new contracts, and as shy in performing old ones, the King subsisted his forces in foreign parts at the disadvantage of seven or eight per cent. interest and five per cent. premio for money borrowed here, besides the loss by the Exchange abroad: and how to provide for the next year's expense, was a mystery.

[Footnote 386: _Ibid._ folio 38.]

[Footnote 387: _Ibid._ folio 40.]

[Footnote 388: _Ibid._ folio 48.]

9. SPEECH BY SIR ROBERT WALPOLE ON THE SALT DUTIES [_Parliamentary History (Cobbett), Vol. VIII, Col. 943_], 1732.

_House of Commons. Debate on Sir Robert Walpole's motion for Salt Duties. February 9, 1732._

Sir Robert Walpole stood up and spoke as follows:--

Mr. Speaker,

As there is nothing his Majesty has more at heart than the giving all possible ease to his subjects; so, whenever he is necessarily obliged to desire assistance from them for the immediate support of the government, he desires that they would choose those ways and means for raising the annual supplies, which are least burthensome to the people, and which makes the load fall equally upon the subjects in general. When money is to be raised for the public good, for the security of all, he thinks that every one ought to contribute his share, in proportion to the benefit that he is thereby to receive.

As to the manner, sir, of raising taxes upon the people, it is a certain maxim that that tax which is the most equal and the most general, is the most just, and the least burthensome. Where every man contributes a small share, a great sum may be raised for the public service, without any man's being sensible of what he pays; whereas a small sum, raised upon a few, lies heavy upon each particular man, and is the more grievous, in that it is unjust; for where the benefit is mutual, the expense ought to be in common. Of all the taxes I ever could think of, there is not one more general nor one less felt, than that of the duty upon salt. The duty upon salt is a tax that every man in the nation contributes to according to his circumstances and condition in life; every subject contributes something; if he be a poor man, he contributes so small a trifle, it will hardly bear a name; if he be rich, he lives more luxuriously, and consequently contributes more; and if he be a man of a great estate, he keeps a great number of servants, and must therefore contribute a great deal. Upon the other hand, there is no tax that ever was laid upon the people of this nation, that is more unjust and unequal than the Land Tax. The landholders bear but a small proportion to the people of this nation, or of any nation; yet no man contributes any the least share to this tax, but he that is possessed of a land estate; and yet this tax has been continued without intermission for above these 40 years.

10. PITT'S SINKING FUND ACT [_Statutes, 26 Geo. III, 31_], 1786.

An Act for vesting certain sums in commissioners, at the end of every quarter of a year, to be by them applied to the reduction of the national debt.

[£250,000 is to be set apart quarterly out of the sinking fund.]

IV. Provided always, and be it enacted by the authority aforesaid, that if at any time it should happen, that at the end of the year ending the fifth day of January, one thousand seven hundred and eighty seven, or at the end of any future year, computed as aforesaid, after provision shall have been made for all payments for which monies are previously to be set apart or issued according to the directions of this act, the said surpluses, excesses, and overplus monies, composing the sinking fund, shall not be sufficient to make good as well all such deficiencies as shall have arisen during such year, as the payment of the sum of two hundred and fifty thousand pounds then due, in every such case, the amount of such deficiency or deficiencies, whether the same shall have arisen in any preceding quarter or quarters within such year, or in the quarter ending on the fifth day of January on which such year shall end, shall not be carried forward as a charge on the said sinking fund at the end of the next succeeding quarter, but shall be made good out of any aids or supplies which shall be or shall have been granted by parliament for the service of the then current year; and the amount of such deficiency or deficiencies so to be made good, shall be issued to the governor and company of the bank of England, in the manner hereinafter directed, within ten days after monies sufficient to answer the same shall have been paid into his Majesty's receipt of exchequer, on account of any such aids or supplies.

V. And be it further enacted by the authority aforesaid, that the monies so set apart, at the end of any quarter of a year ending as aforesaid, or of any year computed as aforesaid either for the payment of the sum of two hundred and fifty thousand pounds due at the end of such quarter, or of any part thereof, or for making good such deficiency or deficiencies as aforesaid, shall forthwith be issued and paid to the governor and company of the bank of England, and shall by them be placed to an account to be raised in their books, and to be intituled, The account of the commissioners appointed by act of parliament for applying certain sums of money annually to the reduction at the national debt: and that as well all such monies, as any other monies which shall be paid to the governor and company of the bank of England by virtue of this act, to be placed to the said account, shall be applied by the commissioners hereinafter appointed towards the reduction of the national debt, in the manner hereinafter directed, and to no other intent or purpose, and in no other manner whatever.

X. And be it further enacted by the authority aforesaid, that all monies whatever, which shall be placed from time to time to the account of the said commissioners by virtue of this act, shall be applied by them either in payments for the redemption of such redeemable public annuities as shall be at or above par, in such manner and at such periods as shall be directed by any future act or acts of parliament, or to the purchase of any public annuities below par in the manner hereinafter directed.

11. THE SUSPENSION OF CASH PAYMENTS [_Reports of Committees on Bank of England, 1797 and 1826, in Reports 1826 (III), pp. 142 and 255-256_], 1797.

The alarm of Invasion [in 1796-1797] which, when an immediate attack was first apprehended in Ireland, had occasioned some extraordinary demand for cash on the Bank of England, in the months of December and January last, began in February to produce similar results in the north of England. Your Committee find, that in consequence of this apprehension, the farmers suddenly brought the produce of their lands to sale, and carried the notes of the County Banks, which they had collected by those and other means, into those banks for payment; that this unusual and sudden demand for cash reduced the several banks at Newcastle to the necessity of suspending their payments in specie, and of availing themselves of all the means in their power of procuring a speedy supply of cash from the metropolis; that the effects of this demand on the Newcastle banks and their suspension of payments in cash, soon spread over various parts of the country, from whence similar applications were consequently made to the metropolis for cash; that the alarm thus diffused not only occasioned an increased demand for cash in the country, but probably a disposition in many to hoard what was thus obtained; that this call on the metropolis, through whatever channels, directly affected the Bank of England, as the great repository of cash, and was in the course of still further operation upon it, when stopped by the Minute of Council of the 26th of February.[389]

* * * * *

Your Committee find, that the Court of Directors of the Bank did, on the 26th October 1797, come to a Resolution, a copy of which is subjoined to this Report.

Your Committee, having further examined the Governor and Deputy Governor, as to what may be meant by the political circumstances mentioned in that resolution, find, that they understand by them, the state of hostility in which the nation is still involved, and particularly such apprehensions as may be entertained of invasion, either in Ireland or in this country, together with the possibility there may be of advances being to be made from this country to Ireland; and that from these circumstances so explained, and from the nature of the war, and the avowed purpose of the enemy to attack this country by means of its public credit, and to distress it in its financial operations, they are led to think that it will be expedient to continue the restriction now subsisting, with the reserve for partial issues of cash, at the discretion of the Bank, of the nature of that contained in the present Acts; and that it may be so continued, without injury to the credit of the Bank, and to the advantage of the nation.

"_Resolved_, that it is the opinion of this Court,[390] that the Governor and Company of the Bank of England are enabled to issue Specie, in any manner that may be deemed necessary for the accommodation of the public; and the Court have no hesitation to declare that the affairs of the Bank are in such a state, that it can with safety resume its accustomed functions, if the political circumstances of the country do not render it inexpedient: but the Directors deeming it foreign to their province to judge of these points, wish to submit to the wisdom of Parliament, whether, as it has been once judged proper to lay a restriction on the payment of the bank in cash, it may, or may not, be prudent to continue the same?"[391]

[Footnote 389: The Minute of February 26, 1797, suspended the obligation of the Bank of England to pay coin for its notes.]

[Footnote 390: Copy of a Resolution of the Court of Directors of the Bank of England at a meeting on Thursday, October 26, 1797.]

[Footnote 391: The Bank of England resumed cash payments, 1819.]

12. PITT'S SPEECH ON THE INCOME TAX [_Speeches of William Pitt, edited W.S. Hathaway, 1806, Vol. III, pp. 282-333_], 1798.

I shall begin by stating what has been voted as the amount of the supply under the head of the services for the navy, with the exception of what is necessary for the transport services. All these accounts have this day been laid before us; and it appears that the total sum for the ordinaries and extra-ordinaries of the navy and transport services amounts to 13,642,000l., being the same sum, within a very small amount, as was granted in the course of last session, and which I have the satisfaction of assuring the committee is likely to prove sufficient for the whole expenses of the navy, without leaving any necessity for augmentation. The next head of expense is the army, in which the estimates amount to 8,840,000l. ... Under the head of ordnance services, including the expenses which have not been provided for, there has been voted the sum of 1,570,000l. The next article is that of the miscellaneous services. The plantation estimates have already been voted, but there are other minuter parts of these services which have not yet undergone a discussion in this house. The amount will be rather less than it was last session. I state it [at] 600,000l. To this is to be added the usual sum voted towards the redemption of the national debt, above the annual million, which is 200,000l. There are other sums, which are generally voted under the head of deficiency of grants. Among these is a sum due for interest on treasury and exchequer bills paid off, amounting to 565,000l.; the discount on prompt payments upon the loan, amounting to 210,000l.; the interest on exchequer bills circulated within the year, and charged upon the succeeding year, 300,000l.; in addition to this, there is the deficiency of the land and malt in the act passed two years ago, amounting to 300,000l. These sums swell the total of the supply to 29,272,000l. This total, sir, does not differ in any material degree from the amount of the supply of last session.

[He then estimates prospective sources of revenue:

Land and malt taxes 2,750,000l.
Lottery 200,000l.
Produce of the consolidated fund 1,500,000l.
Import and Export taxes 1,700,000l.
-------------
6,150,000l.]

The remainder of the sum is that which must be raised either by a tax within the year, in the same manner as the assessed tax bill of last year, or by a loan. It will be to be considered, how the committee will divide that remaining sum between them. The sum to be provided for is upwards of twenty-three millions. Gentlemen will recollect that, in the debates upon the subject of the assessed taxes last session, two fundamental principles were established as the rule by which we should be guided in providing for the supplies for the service of the year. These were, first, to reduce the total amount to be at present raised by a loan; and next, as far as it was not reducible, to reduce it to such a limit, that no more loan should be raised than a temporary tax should defray within a limited time. In the first place, the tax acceded to by the House last session[392] was for the purpose of providing for the supplies of the year; and in the next place, for the purpose of extinguishing the loan raised in that year. From the modifications, however, which that measure underwent after its being first proposed, the produce of it was diminished to a considerable extent. Other means indeed were adopted to remedy the deficiency which was thus occasioned. The voluntary and cheerful efforts which, so honourably to individuals and to the country, came in aid of the assessed taxes, and the superior produce of the exports and imports beyond the estimate, brought the amount of the sums raised to that at which they had been calculated. The different articles were estimated at seven millions and a half, and this sum was fully covered by the actual receipts under the distinct heads. It gives me, indeed, the most heartfelt satisfaction to state, that notwithstanding the difficulties which the measure encountered from the shameful evasion, or rather the scandalous frauds by which its effects were counteracted, the total amount which was expected has yet been realized. The meanness which shrunk from fair and equal contribution has been compensated to the public by the voluntary exertions of patriotism. The produce of the assessed taxes, under all the modifications, and all the evasions, is four millions. I had taken it at four and a half after the modifications. The deficiency is supplied by the excess on head of voluntary contributions....

Satisfactory as it must be to review the circumstances to which we owe those advantages, and the benefits which the mode of raising the supplies to a considerable extent adopted last session has produced, it is unnecessary for me to state that, however the principle may deserve our approbation, it is still much to be desired that its effects should be more extensive, and its application more efficient.... Every circumstance in our situation, every event in the retrospect of our affairs, every thing which strikes our view as we look around us, demonstrates the advantages of the system of raising a considerable part of the supplies within the year, and ought to induce us to enforce it more effectually to prevent those frauds, which an imperfect criterion and a loose facility of modification have introduced; to repress those evasions so disgraceful to the country, so injurious to those who honourably discharge their equal contribution, and, above all, so detrimental to the great object of national advantage which it is intended to promote. In these sentiments, our leading principle should be to guard against all evasion, to endeavour by a fair and strict application to realize that full tenth, which it was the original purpose of the measure of the assessed taxes to obtain, and to extend this as far as possible in every direction, till it may be necessary clearly to mark the modification, or to renounce, in certain instances, the application of it altogether. If then, the committee assent to this principle, they must feel the necessity of following it up by a more comprehensive scale and by more efficient provisions. They will perceive the necessity of obtaining a more specific statement of income, than the loose scale of modification, which, under the former measure, permitted such fraud and evasion. If such a provision be requisite to correct the abuses of a collection, to obviate the artifices of dishonesty, to extend the utility of the whole system, it will be found that many of the regulations of the old measure will be adapted to a more comprehensive and efficient application of the principle. If regulations can be devised to prevent an undue abatement, and to proportion the burden to the real ability, means must be employed to reach those resources which, _primâ facie_, it is impossible under the present system of the assessed taxes to touch. While inaccuracy, fraud, inequality, be grievances which it is desirable to remedy, it will be an additional satisfaction, that when compelled to adopt means to prevent the defects of which we complain, we shall be enabled likewise to improve and to extend the benefits we have obtained. The experience which we have had upon the subject, proves that we must correct and remedy, in order to secure the advantages which the measure is calculated to afford. It is in our power to make them our own. I think I can show that whatever benefit the principle upon which we have begun to act, is fitted to bestow, may by a liberal, fair and efficient application, be carried to an extent far greater than has yet been obtained, an extent equal to every object of great and magnanimous effort, to every purpose of national safety and glory, to every advantage of permanent credit and of increased prosperity.

Impressed then with the importance of the subject, convinced that we ought, as far as possible, to prevent all evasion and fraud, it remains for us to consider, by what means these defects may be redressed, by what means a more equal scale of contributions can be applied, and a more extensive effect obtained. For this purpose it is my intention to propose, that the presumption founded upon the assessed taxes shall be laid aside, and that a general tax shall be imposed upon all the leading branches of income. No scale of income indeed which can be devised will be perfectly free from the objection of inequality, or entirely cut off the possibility of evasion. All that can be attempted is, to approach as near as circumstances will permit to a fair and equal contribution.... The details of a measure which attempts an end so great and important, must necessarily require serious and mature deliberation. At present all that I can pretend to do is, to lay before the committee an outline of the plan which endeavours to combine every thing at which such a measure ought to aim. This outline I shall now proceed to develop to the committee as clearly and distinctly as I am able.

* * * * *

The next point for consideration then, is the mode of contribution which shall be adopted. On this head it is my intention to propose that no income under 60l. a year shall be called upon to contribute, and that the scale of modification up to 200l. a year, as in assessed taxes, shall be introduced with restriction. The quota which will then be called for ought to amount to a full tenth of the contributor's income. The mode proposed of obtaining this contribution differs from that pursued in the assessed taxes, as instead of trebling their amount, the statement of income is to proceed from the party himself.

[A detailed estimate of income from different sources follows. One-fifth is deducted to allow for the remission of taxation on incomes under 60l. and graduation under 200l. from 1/120 to 1/10.]

For the sake of greater clearness I will recapitulate the heads in the same order that I have followed:--

The land rental, then, after deducting one-fifth,
I estimate at 20,000,000l.

The tenant's rental of land, deducting two-thirds
of rack rent, I take at 6,000,000l.

The amount of tythes, deducting one-fifth 4,000,000l.

The produce of mines, canal navigation, etc.,
deducting one-fifth 3,000,000l.

The rental of houses, deducting one-fifth 5,000,000l.

The profits of professions 2,000,000l.

The rental of Scotland, taking it at one-eighth
of that of England 5,000,000l.

The income of persons resident in Great Britain
drawn from possessions beyond seas 5,000,000l.

The amount of annuities, from the public funds,
after deducting one-fifth for exemptions
and modifications 12,000,000l.

The profits on the capital employed in our
foreign commerce 12,000,000l.

The profits on the capital employed in domestic
trade, and the profits of skill and industry 28,000,000l.
------------
In all 102,000,000l.
------------

Upon this sum a tax of 10 per cent. is likely to produce 10,000,000l. a year, and this is the sum which is likely to result from the measure, and at which I shall assume it.

* * * * *

I trust that it will not be necessary for me to go into any detail of argument to convince the committee of the advantages of the beneficial mode adopted last session, of raising a considerable part of the supplies within the year.... It will be manifest to every gentleman on the slightest consideration of the subject, that, in the end, the measure of raising the supplies within the year is the cheapest and the most salutary course that a wise people can pursue; and when it is considered that there is a saving of at least one-twelfth upon all that is raised, gentlemen will not suffer a superstitious fear, and jealousy of the danger of exposing the secrecy of income, to combat with a measure that is so pregnant with benefits to the nation. If gentlemen will take into their consideration the probable duration of peace and war, calculated from the experience of past times, they will be convinced of the immeasurable importance of striving to raise the supplies within the year, rather than accumulating a permanent debt. The experience of the last hundred, fifty, or forty years, will show how little confidence we can have in the duration of peace, and it ought to convince us how important it is to establish a system that will prepare us for every emergency, give stability to strength, and perpetual renovations to resource. I think I could make it apparent to gentlemen that in any war, of the duration of six years, the plan of funding all the expenses to be incurred in carrying it on, would leave at the end of it a greater burden permanently upon the nation than would be sustained, than they would have to incur for the six years only of its continuance, and one year beyond it, provided that they made the sacrifice of a tenth of their income. In the old, unwise, and destructive way of raising the supplies by a permanent fund, without any provision for its redemption, a war so carried on entails the burden upon the age and upon their posterity for ever. This has, to be sure, in a great measure, been done away and corrected, by the salutary and valuable system which has been adopted of the redemption fund. But that fund cannot accomplish the end in a shorter period than forty years, and during all that time the expenses of a war so funded must weigh down and press upon the people. If, on the contrary, it had at an earlier period of our history been resolved to adopt the present mode of raising the supplies within the year; if, for instance, after the peace of Aix-la-Chapelle, the scheme of redemption had been adopted and persevered in to this time, we should not now, for the seventh year of the war, have had more to raise from the pockets of the people than what we have now to pay of permanent taxes, together with about a fourth of what it would be necessary to lay on in addition for this year. Fortunately, we have at last established the redemption fund: the benefits of it are already felt; they will every year be more and more acknowledged; and in addition to this it is only necessary, that instead of consulting a present advantage, and throwing the burden, as heretofore, upon posterity, we shall fairly meet it ourselves, and lay the foundation of a system that shall make us independent of all the future events of the world.[393]

[Footnote 392: The Triple Assessment, based on the individual's previous payment to the various taxes on expenditure which Pitt had grouped together as the Assessed Taxes.]

[Footnote 393: The income tax was recast in 1803, when Schedules of different sources of income, instead of a general return, were introduced. It was again revised in 1806. In 1816 it was repealed. Peel reintroduced it in 1842 for three years, and it then became permanent.]

13. FOREIGN TRADE IN THE EARLY NINETEENTH CENTURY [_Committee on Orders in Council, Reports 1812 (III)_, _pp._ 38, 40, 41, 132-133, 522-523], _c._ 1812.

[Evidence of Joseph Shaw, Chairman of Birmingham Chamber of Foreign Commerce and exporter of hardwares.]

Have you had occasion to make any estimate, founded upon your own inquiries, of the number of workmen employed in the Birmingham manufactory[394]--and the neighbouring towns? I never particularly estimated for the whole of them, but in the year 1808 I took an estimate of the people employed in the American trade.... Those that could be ascertained to be (as nearly as could be) exclusively employed in the American trade were 50,000, exclusive of the nail trade, which employed from twenty to thirty thousand [of whom two-thirds were engaged in the American trade].

* * * * *

Can you state to the Committee, from your observation, what proportion the foreign trade generally bears to the trade for home consumption?... I should think it was considerably more than one half, including the United States.

Do you think it would amount to two-thirds? I should think not far from it.... Do you think the foreign trade is equal to two-thirds of the whole manufacture?--When the foreign trade is the same as in the year 1810, not in its present state; it is now very different....

* * * * *

To what cause do you ascribe the diminution of your trade to the Continent?--The risk of sending goods into many ports of the Continent is too great....

* * * * *

Then it is the French, Berlin, and other decrees that have produced this diminution of your trade to the Continent?--To my own particular trade. I cannot say how it is as to others.

[Evidence of John Bailey, exporter and home factor of Sheffield goods.]

What are the principal articles manufactured at Sheffield?--They are very numerous, I can present a list of them to the House; the principal articles are cutlery, files, edged tools, saws, and a great variety of other heavy articles.

* * * * *