FINANCES OF GREAT WARS

Dominion, Volume 9, Issue 2612, 6 November 1915, Page 6

FINANCES OF GREAT WARS

HISTORIC FIGURES

(By Sylvain Mayer, K.C., in the "West-

minster Gazette.")

In view of the enormous sum now being raised by loan and taxation, and tho extraordinary absence of any dislocation of trade, it is interesting to compare tho financial conditions existing before and during the Napoleonic wars. In 1793. the tax revenue was about £20,000,000, and by ISIS it had been raised to over £72,300,000—the largest until the Crimean 'var. It was at the end of 1795 that Pitt. proposed to impose an income tax of two shillings in the pound on all incomes of and above £200, and of graduated amounts between £60 and £201). This , was estimated to produce £10.000,000 a year. Hie tax was opposed as inquisitorial and as a grievous confiscation, but it was carried in the Commons by a large majority, and in tlie Lord; without a division, and came into operation on April 5, 1799. Nothing but the wonderful progress (industrial and political) and prosperity of this country can explain the different. manner ' in which Mr. M'Kenna's recent Budget proposals in the British Parliament have been received, involving as they do an income tax graduated up to seven shillings in the pound. No one has ventured to suggest either injustice or confiscation— nor are there many, if any, wlio think it.

What would .Pitt- and his colleagues liavo thought of our, present rate of expenditure, and the increase in our national debt? In 1793 our national debt stood at £294,000,000. It rose in 1815 to £813,171,132. Tliis increase, though large, did not all represent money borrowed by the State. Great mistakes (at least that is tho opinion' of modern financiers) were made when the money was raised. Tlie stock was issued at prices between £57 and £60 at three per cent., thereby throwing a great and unjustifiable burden on posterity. A great drain on tho specie from the Bank of England began after 1794, and the_ exchange, became unfavourable in 1795. The Bank pressed for gold. Tho stock of coin and bullion owned by it was reduced to £1.272,000, from tho £8,500,000 at which it stood in tho previous year. A Bill was passed prohibiting the Bank from issuing cash, except in sums below £1, until six months after tho war. As a matter of fact, it was not until 1819 that cash payments were resumed. Tho position is very different now, notwithstanding tho enormous demands made on the public exchequer, and tho immense purchases from America.

In 1810 the premium on gold was £8 7s. Bd. per cent.; in 1813 it had,risen to £29 4s. Id., and the most that .could bo obtained in gold for a five pound Bank of England note was £3 10s. In 1815 tho gold premium got less, and the £5 not produced £4 6s. Commercial ruin followed. Banks which had grown np under the issue of paper money wore collapsing in all directions in 1816. The Master of tho Mint wrote, "Trado is gone, contracts aro gone, paper credit is gone, • and there is nothing but stoppage, retrenchments, and bankruptcy." If wo may reports from tho Central Empires it looks very much as if both Germany and Austria will bo in a far worse position after this war than we were in 1816. both in' regard to their currency and their general trade. ,

Thore is just one other point that must not ho overlooked when a comparison is being made between Pitt's time and our own. Between 180S-ISIB tho average price of wheat was 100s. a quarter. In the summer of 1813 it touched 171s. Before Christinas it.had dropped to 755. All this points to a total dislocation of trade. But- bread troubles did not cease evon in 1815, for in the spring of the following year wheat fell to 525. 6d., only to riso again in December to 103s. We ought, indeed, to bo thankful to the foresight of tho present Prime Minister and his late colleagues, a.nd to the superb work v of our Navy, that, notwithstanding the magnitude of the present straggle, we havo beon spared from the hardship and suffering endured in the time of the Napoleonic wars.