The Age of George III
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During the period 1812-22, it could be said that England suffered more, economically, socially and politically, than during the French Wars. Consequently there were a number of manifestations of discontent and distress, in the shape of riots and disaffection, which epitomised the 'Condition of England Question'.
In 1815, the national debt stood at £834 million, the interest on which was a heavy burden to taxpayers. The following year, the Government decided to retain Income (or Property) Tax temporarily, even though it had been introduced as a wartime emergency tax. Nicholas Vansittart, the Chancellor of the Exchequer, put the Government's case in the House of Commons:
This tax would press less on the lower orders of society than any tax which could be devised... It was a tax more upon the rich than upon the poor... When the act was revised, it would be found the least oppressive and the least objectionable of any tax that had ever been imposed... A small portion of the property tax would be less burthensome than those taxes on consumption, which, though less immediately felt, were ultimately more burthensome and less productive... No minister had pledged himself to its indispensable continuance ... it was continued only for the purpose of defraying the extraordinary charges occasioned by the war in the first years of peace. (Parliamentary Debates, 1st Series, vol.33, (1816) cols.240, 425-433
There was great opposition to the government's proposals. The petition to parliament from the Corporation of London against Income Tax said:
The petitioners have learnt with the most serious alarm, that it is the intention of His Majesty's ministers, in violation of their assurances, and the solemn faith of parliament, to propose to the House the continuance or modification of the tax upon income, commonly called the property-tax... Painful experience has only served the more strongly to root upon their minds a conviction of its injustice, vexation and oppression ... the manner in which the said tax is carried into execution, by means of an odious, arbitrary and detestable inquisition into the most private concerns and circumstances of individuals, is still more vexatious, unjust and oppressive, hostile to every sense of freedom, revolting to the feelings of Englishmen, and repugnant to the principles of the British Constitution; ... the petitioners are deeply sensible of the depressed state of the agricultural interests, and of the ruinous effect of such a burden thereon; ... the manufacturing and trading interests are equally depressed, and equally borne down with the weight of taxation ... and they confidently hoped, that by such reductions in the public expenditure... and the abolishing of all unnecessary places, pensions and sinecures, there would have been no pretence for the continuation of a tax subversive of freedom, and destructive of the peace and happiness of the people. (Ibid., cols.433-434)
The government was defeated by a huge majority and in 1816, Income Tax was repealed, keeping Pitt's promise. This was unfair because the burden shifted to indirect taxation which fell proportionately more heavily on the poor. These taxes were used to pay off the interest on the national debt, effectively going into pockets of the rich who had loaned money to government, and who were not hit now by income tax either. Repeal also caused problems for the government in terms of revenue, as Lord Castlereagh told the Prince Regent in a letter on 18 March 1816:
Lord Castlereagh has with much regret to inform your Royal Highness that the Property Tax has been rejected by the House of Commons by 238 to 201 - majority 37. The calculation of the Treasury this morning was that we should carry it by 40, but this was defeated by numbers of the friends of the Government going away and some going against, whose support had been calculated upon... This defalcation leaves us with but 12 millions of clear revenue to meet this year's expenditure of 30 millions, and taking the future peace establishment at 20 millions a year, there will exist a serious deficiency of means to meet the charge. (The Letters of George IV, 1812-30, vol. 2. A. Aspinall (ed.) C.U.P., 1938 p.160)
Concurrently, Britain was still off the Gold Standard, suspended as a war emergency measure in 1797, when the Government released the Bank of England from the obligation of paying cash for its notes. In 1811, the 'Bullion Report' commented on the wartime inflation:
There is at present an excess in the paper circulation of this country, of which the most unequivocal symptom is the very high price of bullion, and next to that, the low state of the continental exchanges; this excess is to be ascribed to the want of sufficient check and control in the issues of paper from the Bank of England; and originally, to the suspension of cash payments, which removed the natural and true control... Your Committee therefore ... report it ... as their opinion that the system of the circulating medium of this country ought to be brought back, with as much speed as is compatible with a wise and necessary caution, to the original principle of cash payments at the option of the holder of Bank paper. (English Historical Documents, vol. II (1783-1832) A. Aspinall and E.A. Smith (eds.) Eyre & Spottiswoode, 1959 pp.593-594)
Following the findings of the Bullion Committee in 1819, Peel announced the Government's decision to restore cash payments on 1 May 1821.
A leaflet (1819) supporting the restoration of the gold standard. Click on the image for a larger view
In consequence of the evidence and the discussions upon it, his opinion with regard to this question had undergone a material change... He had called upon the House to affirm the necessity for the adoption of a metallic standard... Every sound writer on the subject came to the same conclusion, that a certain weight of gold bullion, with an impression on it, denoting it to be of that certain weight, and of a certain fineness, constituted the only true, intelligible and adequate standard of value... It was idle, while such distress existed, to speak of national prosperity... That the excess of commercial speculation, which led to such evils, was the consequence of an over issue of paper currency, was a fact not to be disputed. A check upon that issue was the only cure that could be applied, and it must be applied by the establishment of a metallic standard of value. (Parliamentary Debates, 1st Series, vol.40, (1819) Cols.677-683)
However, the fiscal intentions of the government were unpopular, as this 1819 petition from between four and five hundred London merchants, shows:
Your petitioners have reason to apprehend, that measures are in contemplation with reference to the resumption of cash payments by the Bank of England which in the opinion of your petitioners will ... tend to a forced, precipitate and highly injurious contraction of the circulating medium of the country.
The consequences of such contraction will, as your petitioners humbly conceive, be to add to the burthen of the public debt; greatly to increase the pressure of the taxes; to lower the value of all landed and commercial property; seriously to affect both public and private credit; to embarrass and reduce all the operations of agriculture, manufactures and commerce, and to throw out of employment (as in the calamitous year of 1816) a great proportion of the industrious and labouring classes of the community. (Ibid., col.599)
The operation of the Gold Standard was strongly attacked during the economic crisis of 1822, but it was defended by Huskisson:
The proposition was made for a depreciation of the standard of the currency... How strange must be the condition of this country, if it can only prosper by a violation of national faith and a subversion of private property - if it can only be saved by a measure, reprobated by all statesmen and all historians - the wretched but antiquated resource of barbarian ignorance and arbitrary power, and only known among civilised countries, as the last mark of a nation's weakness and degradation... If you once lower your standard it will become a precedent that will be resorted to on every future emergency or temporary pressure... When men find that, in England, there is no security in pecuniary contracts, they will seek that security elsewhere. If we once embark in this career ... England, depend upon it, will rapidly descend, and not more rapidly in character than in wealth, to the level of those countries, in which, from ignorance or barbarism, such expedients are not yet exploded. (Annual Register, vol.64 1822 p.111)
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