I. down to us in the shortest and most compressed of sum- CHAP. maries-that the word life,' in the Act by which the revenue had been settled, must in this instance be interpreted as synonymous with reign'; that it was absurd to maintain that the revenue was to be exacted because James was naturally alive,' but that it was to be paid to his successors because he was politically defunct.' The House, convinced by Somers' arguments, adopted his position as their own. They decided, without dividing, that 'the revenue had expired.' But they did not proceed, as William probably anticipated, and certainly hoped that they would, to resettle the revenue. A long and painful experience' had convinced them that all the evils, which the country had had to endure during the last two reigns, had arisen from the imprudent haste with which the Commons had settled a revenue on the crown, and which had enabled the king to dispense with the aid of a Parliament. The Whigs, on their part, were determined that this opportunity should never be placed in the hands of another sovereign. And at the risk of incurring the king's displeasure, with the possibility of provoking his abdication, they persisted in their determination. That determination constitutes by far the most important event in the financial history of this country. It probably did even more than either Magna Charta or the Declaration of Rights, to secure the liberties of the English nation. In the 160 years which succeeded this debate, four men of first-rate financial genius at different periods administered the finances of the kingdom. It was the object of Charles Montagu, Lord Halifax, to establish the tottering credit of the nation; to organise the debt; to reform the currency; and to insure an audit. It was the object of Sir Robert Walpole to develope the trade of the kingdom, and to free it from every hindrance; while, at the same time, the pressure of taxation was concealed from the taxpayer. With these views he developed the I. CHAP. excise, and devised the warehousing system. It was the object of William Pitt-till his intentions were frustrated by war-to obtain financial concessions from foreign Governments in return for concessions of our own. With this view he negotiated the famous commercial treaty with France. It was the object of Sir Robert Peel to free trade from every possible shackle, and to raise the money required for the purposes of the State in the simplest and most direct manner. The reform of the tariff, the repeal of the corn-laws, and the revival of the incometax, were the salient features of this policy. Sir Robert Walpole's financial policy may be said to have been founded on free trade and indirect taxation. Pitt's upon reciprocity and indirect taxation. Sir Robert Peel's on free trade and direct taxation. The subse quent growth of the Revenue. During the same period, the revenue, which the nation in 1690 took into its own custody, had increased with marvellous and unexpected rapidity. At the date of the Revolution, the revenue, including the hearth money, amounted to only 1,600,000l. At the close of the reign of William III. the national income, without the hearth money, exceeded 4,869,000l. In the interval, indeed, a tax of 48. in the pound had been laid upon all lands, tenements, and other hereditaments, and on the profits of some offices; while a poll-tax, graduated according to the station of the taxpayer, and various other duties, had also been imposed. But the revenue had not merely increased from the addition of fresh duties. The old branches had concurrently been developed. The advantages of settled government, and of an improved trade, were promoting the prosperity of the kingdom; and the customs and the excise, in the place of only 577,000l. and 610,000/., were yielding substantial revenues of 1,469,000l. and 1,396,000l. Notwithstanding the repeal of the polltax, the revenue still continued to be maintained, and, in 1 Parl. Return, Sess. 1869, No. 566, part i. p. 26. the years immediately preceding 1706, it regularly CHAP. exceeded 5,200,000l. a year.1 The union with Scotland, which was agreed to in 1706, did not add materially to the financial resources of the kingdom. Scotland was a barren country, with little agriculture and little trade, and its gross income hardly exceeded 100,000l. a year. Scotland, by the terms of the union, was subjected to the same customs and excise duties as England; it agreed to raise 48,000l. of land tax for every 1,997,000l. raised in England. England, on her part, agreed that certain stamp duties and other taxes should not be extended to Scotland.2 The union did not add 2 per cent. to the national revenues, but the resources still continued to grow. The net income of the country amounted in 1720 to 6,323,000l. The eighteen succeeding years of Sir Robert Walpole's administration, during which the country uniformly enjoyed the blessings of peace, were, in a financial sense, the most prosperous which had ever been known. Walpole found the net income of the country 6,323,000l. ; the expenditure 6,002,000l., of which nearly one half, or 2,768,000l., was absorbed by the debt. In 1738, before he had been driven by the violence of party into the Spanish war, the net income of the country had been reduced to less than 5,716,000l., the expenditure to 4,724,000l., and the charge of the debt to 2,059,000l. Even when the Spanish war broke out, the revenue was not raised, during Walpole's administration, to more than 6,415,000l.; the charge of the debt never exceeded 2,100,000l. The entire expenditure of the nation never reached 7,400,000/.3 While Walpole continued in office, the cost of the 1 See the Parl. Return already quoted, part i. pp. 32-34. The gross revenues which are given in the Appendix, part ii. p. 357, averaged nearly 5,800,000l. The balances are I. CHAP. Spanish war was partly defrayed by fresh taxation. The I. land tax, which, at the commencement of the war, stood at only 2s., was raised at once to the maximum of 48. in the pound. But, after Walpole was driven from office, no material additions were made to the revenue. The war was sustained on borrowed money, and fresh sums were annually added to the amount and the burden of the debt. The revenue, after the conclusion of the war, amounted to less than 7,500,000l., the expenditure of the country exceeded 7,000,000l., and the debt alone absorbed about 3,000,000l. annually. Unfortunately, the country only remained at peace for a brief interval of eight years. War again broke out in 1756. The Seven Years War, concluded in 1763, may be said to have permanently raised the income of the country to 10,000,000l., the expenditure to 9,500,000l., and the charge of the debt to about 4,750,000l. After another short interval of peace, the American War ensued. The national income and expenditure were raised in consequence to more than 16,000,000l., the charge of the debt to more than 9,000,000l. During the twenty years of Sir Robert Walpole's rule, the expenditure had only been raised by about 1,400,000l.; the charge of the debt had been reduced by more than 650,000l. The forty years which succeeded his fall had added 9,000,000l. to the normal expenditure of the country, and 7,000,000l. to the annual burden of the debt. No material alteration in the financial position of the country was made during the succeeding ten years. The country continued at peace, and enjoyed the advantages derivable from peace. Its entire expenditure during 1791-2 (the last complete year of peace), amounted to rather less than 17,000,000l.; and considerably more than one half of this sum, or 9,310,000l., represented the charge of the National Debt. The income of the country was in the main derived from four great branches. The excise, the most productive of the four, produced 8,740,000.; the customs yielded 4,100,000l.; various stamps returned 1,460,000l., and the land and assessed taxes supplied a revenue of 3,020,000l. The country, therefore, from these great branches of the revenue alone, had an ample revenue of 17,300,000l. The war ensued. Prodigious and unprecedented exertions necessitated prodigious and unprecedented expenditure. Taxation was increased; the debt was augmented with a rapidity which would have startled previous generations. The expenditure of Great Britain in 1801 amounted to 51,000,000l. The charge of the debt alone absorbed 16,750,000l., and more than 31,500,000l. were raised by taxation. The nation was becoming gradually reconciled to burdens which would have been deemed intolerable only a few years before. CHAP. I. vonue. The union of Great Britain and Ireland in 1801 Irish Reincreased these figures, though it did not increase the resources at the disposal of the State. The revenue of Ireland amounted in 1800 to rather more than 3,000,000l. a year. The expenditure of the Irish Government, however, exceeded 6,500,000l., and in consequence the Irish Government had been, of late years, dependent on the assistance of the British exchequer. A million and a half had been remitted to it in 1798, 2,000,000l. in 1799, and 3,000,000l. in 1800. The union did not produce an immediate fusion of the British and Irish exchequers. The two countries were permitted to retain separate financial systems, and to raise their respective revenues in their own way. It was arranged that each country should bear the burden of its own debt, and that Great Britain should contribute fifteen parts and Ireland two parts of the sum required for the joint expenditure of the United Kingdom. Parliament, however, was to be free, under any circumstances, to alter these proportions after the lapse of twenty years, and if, in the interval, the |