by Gladstone. In the early part of the eighteenth century, during the long period of peace and 1721-42 prosperity which marked Walpole's administration of affairs, no mean financial genius had been shown. Walpole had remodelled the revenue in various ways. He had tried to reduce the Debt. He had improved the mode of collecting certain duties, such as that on tea. By establishing "warehouses," where the imported article might remain in "bond," paying the duty only when removed for sale, he had been enabled at once to lower the tax, and to increase its yield; for he had diminished smuggling. He had been anxious to extend the same reform to wine and tobacco. But he had been compelled to yield before an unpopularity aroused by the connection with his measure of the odious name of excise. A customs duty, payable on importation, was, by his scheme, to be replaced by an excise duty, paid when the article was about to be consumed. In spite, however, of such anticipations of the reforms in the machinery of collecting the taxes, which were afterwards brought to successful completion by financiers, like Peel and Gladstone, Walpole's customs policy was framed in accord with the principles of the Mercantile System; and forty years of war, and of bad finance, sufficed to undo much of the improvement he had introduced. 32. The reform of English finance began again with Pitt. 1781 Towards the close of the century, Pitt, imbued with Free Trade principles, which he had learnt from Adam Smith, began the work afresh. He tried to establish a balance between expenditure and revenue; and he took some effective steps 1801 towards this end. But his repute has suffered from the faith which he, like many others less able than himself, reposed in the delusive juggle of a sinking. fund, by which the debt was to be reduced with surprising speed by the mysterious force of compound interest. He also showed an anxiety to lower excessive duties. He succeeded in making them simpler by substituting a single tax on each commodity for the varied number, which had been imposed from time to time with little reference to what had taken place before, or to any regular system. During the early period of his tenure of office, while peace was preserved, his finance was guided by such enlightened principles. But his efforts were rudely checked by the War, and by the overpowering need of raising revenue from every source by every means. The Debt was enormously increased. From two hundred and forty millions it rose to nine hundred. The annual expenditure grew from nineteen millions, of which the charge for the Army and Navy amounted to six, and that for the Debt to nine and a half, to a hundred millions, of which the Army and Navy absorbed fifty-six, and the Debt thirty-two millions. After the war was over Huskisson enjoyed, and used, the more favourable opportunity for re- 1823formed finance. He relaxed the Navigation Laws. 1827 The revolt of the American Colonies had made a change necessary, if trade was to be pursued between England and the States; and before the time of Huskisson himself some special exceptions to the restrictions of the Laws had been allowed. A principle of mutual “give and take," then recognised, was now extended. In return for facilities granted by foreign nations for importing goods into their countries, England yielded some part of that monopoly of the carriage of goods to English territory, which the Navigation Laws had retained for English ships. Concessions were also given to the Colonies. Nor was this the one example of Huskisson's more liberal policy in international trade. He aimed at substituting restrictive for prohibitive duties. He paved the way, in short, for the further advances to Free Trade, which his successors were to make. 33. With the adoption of Free Trade, this history ends. Peel followed in his steps. He tried also to abolish duties on the raw materials of manufacture, as 1842 he declared in 1842, in his first Budget speech. His Repeal of the Corn Laws was thus in a real sense the continuation of his fiscal policy. Mr. Buxton has remarked in his "Finance and Politics,"* that "Peel found the tariff with over a thousand articles subject to duties; and left it with but half the number." 1853 By the budgets of 1853 and 1860 Gladstone closed 1860 the work. The many unfruitful taxes on numberless commodities were reduced to duties which were so light as not to encourage smuggling, and were levied on a few articles very generally consumed. Such duties were raised for purposes of revenue alone, and did not aim at protecting goods produced at home from the competition of foreign articles. They were accordingly placed on goods which were not products of the country, such as tea, or coffee, or tobacco; or, where foreign commodities, like wine, competed with home-produce, such as beer, an excise duty was imposed on the beer, equivalent to the customs duty on the wine. The intention, at any rate, of the authorities was plain. Trade was to flow in * Vol. i., p. 63. natural channels, so far as Government could secure this aim, by abstaining from interference. Artificial encouragement was at least no longer to be consciously bestowed. Thus was proved untrue the prophecy made less than a century before by Adam Smith, who declared that it was 66 'as absurd" to "expect" that the "freedom of trade" should ever be entirely restored in Great Britain as it was to "expect that an Oceana or Utopia should ever be established in it." The Repeal of the Corn Laws was followed, in 1849, 1849 and 1854, by the total abolition of the Navigation 1854 Laws; and the Budgets of 1853 and 1860 completed the work of reform. The Mercantile System disappeared; the era of Free Trade was opened in its stead. The economic events, which have happened since, are too recent to be treated in these pages, and with the middle of the nineteenth century this history may fitly end. In the next and final chapter we shall examine the ideas of that new school of economic science, to whose influence was largely due the acceptance of the principles of which Free Trade was the illustration. * "Wealth of Nations," Bk. IV., chap. ii. CHAPTER X. THE INDUSTRIAL REVOLUTION AND THE NEW ECONOMICS. CONCLUSION: THE RISE AND PROGRESS OF 1. A serious difficulty of economic history is the connection of causes and effects. The study of economic history is beset by more or less serious difficulties; but no problem presents itself more often, or is less easy to solve, than that of parting from the tangled mass of facts the threads connecting causes with effects. Events follow, and seem related to, one another. But to decide that one event is the sole cause of another, or that the consequences of a particular movement can be separated from their surroundings, is often impossible, and is generally hazardous. To produce a certain result many causes have usually been at work, of which some have joined, and others have clashed, with one another; and the precise portion of the total effect, which should be assigned to any one, may be imagined, but can rarely be ascertained. The diligent examination of historical records, however, diminishes the chance that an important influence will be neglected. It affords the means of bringing together events in orderly |