Book Summary: “The Sinews of Power: War, Money and the English State, 1688-1783″ by John Brewer

Title: The Sinews of Power: War, Money and the English State, 1688-1783
Author: John Brewer
Scope: 3 stars
Readability: 3 stars
My personal rating: 4 stars
See more on my book rating system.

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Topic of Book

Brewer overviews British society in the 17th and 18th Century, arguing that it saw a rapid growth in the size and the capabilities of the state for the purpose of waging war with France.

Key Take-aways

  • Britain in the 18th Century had a much larger and more effective government than has typically claimed. Nor was it a free-trade state.
  • Before this period Britain was unusual because it:
    • Centralized very early; it was lacking in local nobles who were hostile to the power of the monarchy
    • Lacked a standing army and usually did not participate in European wars.
    • The crown did not rely purchasing loyalty from local nobles with office.
  • The Glorious Revolution of 1688 (actually an invasion by the Dutch to install William as the British king) installed a regime that simultaneously sought to preserve domestic liberties and wage war with France.
  • The result was a rapidly growing fiscal-military state checked by a powerful Parliament.
  • After 1688:
    • Britain was repeatedly at war with France.
    • State increasingly intervened in the economy to favor British trade and manufacturing.
    • Size and cost of the army, and particularly the navy, trebled in size.
    • Debts, mainly from waging war, increased dramatically.
    • Taxes, particularly indirect taxes and tariffs, increased to fund that debt.
    • The civilian administration increased in professionalism.
    • Because the crown reliably paid the interest on war debt, interest declined to the lowest levels in Europe.
  • These trends also took place within Continental powers engaged in the same wars, but only the British Parliament was the able to preserve domestic freedoms.

Important Quotes from Book

This book is about the growing powers of central government in a period more famous for its praise of liberty. It is a study of the most important changes in British government between the reforms of the Tudors and the major administrative reconstruction of the first half of the nineteenth century. But, unlike those administrative innovations, the changes of the late seventeenth and eighteenth centuries were concerned not with domestic regulation but with enhancing the government’s ability to wage war. My subject is not, however, war as such. I am first and foremost interested in investigating the effects—on government, politics and society—of Britain’s transformation into a major international power.

Much of this book is therefore concerned with such technical matters as military and civilian administration, taxation and public finances. These are topics with which readers are often unfamiliar and which, despite some outstanding detailed studies, are rarely incorporated into histories of the Stuarts and Hanoverians. My aim is to remedy this omission: to put finance, administration and war at the centre stage of the drama—where they rightly belong—without elbowing other performers into the wings.

From its modest beginnings as a peripheral power—a minor, infrequent almost inconsequential participant in the great wars that ravaged sixteenth and seventeenth-century Europe—Britain emerged in the late seventeenth and early eighteenth centuries as the military Wunderkind of the age. Dutch admirals learnt to fear and then admire its navies, French generals reluctantly conferred respect on its officers and men, and Spanish governors trembled for the safety of their colonies and the sanctity of their trade. European armies, most notably those of Austria, Prussia and the minor German states, marched if not to the beat of British drums then to the colour of English money. Under the early Stuarts England had cut a puny military figure; by the reign of George III Britain had become one of the heaviest weights in the balance of power in Europe.

Though my account is very much concerned with war, it deals with bookkeeping not battles, with ink-stained fingers rather than bloody arms. Its focus is upon administration, on logistics and, above all, on the raising of money. Its heroes, if any there are, are clerks in offices. And its perspective is neither global nor from the periphery, but from Whitehall and Westminster, very much at the centre of the core.

The late seventeenth and eighteenth centuries saw an astonishing transformation in British government, one which put muscle on the bones of the British body politic, increasing its endurance, strength and reach. Britain was able to shoulder an ever-more ponderous burden of military commitments thanks to a radical increase in taxation, the development of public deficit finance (a national debt) on an unprecedented scale, and the growth of a sizable public adminstration devoted to organizing the fiscal and military activities of the state. As a result the state cut a substantial figure, becoming the largest single actor in the economy. This was no minor adjustment in the scope and priorities of government; it was a major commitment of resources. Taxes rose to levels as high as any of those in Europe, matching those of many modern, underdeveloped states. Borrowing reached such heights that if eighteenth-century Britain had gone to the modern International Monetary Fund for a loan it would certainly have been shown the door. The creation of what I call ‘the fiscal-military state’ was the most important transformation in English government between the domestic reforms of the Tudors and the major administrative changes in the first half of the nineteenth century.

Political commentators in early modern Europe were haunted by the fear that changes in the character of warfare, particularly the emergence of large standing armies controlled by rulers, would enable monarchs and autocrats not only to subjugate their foes but to enslave their subjects.

Indeed, judged by the criteria of the ability to take pounds out of people’s pockets and to put soldiers in the field and sailors on the high seas, Britain was one of Europe’s most powerful states, one which had acquired prodigious powers over its subjects. Whatever the situation when it came to the administration of law and order, in the fiscal-military sphere the state gained a hold as never before. This grip did not, however, become the stranglehold of autocracy, which raises, of course, the question of why Britain was able to enjoy the fruits of military prowess without the misfortunes of a dirigiste or despotic regime.

The heavy-handedness of British rule increased the farther it extended beyond the metropolis. The British fiscal-military state, as it emerged from the political and military battles that marked the struggle with Louis XIV, lacked many of the features we normally associate with a ‘strong state’, yet therein lay its effectiveness. The constraints on power meant that when it was exercised, it was exercised fully. As long as the fiscal-military state did not cross the bulwarks erected to protect civil society from militarization it was given its due. Yet it was watched with perpetual vigilance by those who, no matter how much they lauded its effectiveness against foreign foes, were deeply afraid of its intrusion into civil society.

The strength of England’s emergent national institutions was partly attributable to the weakness of regionalism and particularism. The early date of political consolidation, at a time when local privilege, law and custom enjoyed only a precarious existence, meant that there were few obstacles to the growth of a national system of law and governance.

As early as the thirteenth century feudal suzerainty in England had come to resemble royal sovereignty. The royal courts handled almost all important legal cases, the royal writ ran throughout the land, the monarch had established one of the most sophisticated financial systems in Europe centred on the royal exchequer, and the crown exacted taxes from the entire realm.

This double concentration of power in king and parliament meant that from a very early date political conflict in England was highly centralized.

If the first important feature of the English state was its early centralization, the second was its decline as a European military force in the sixteenth and seventeenth centuries. In the fourteenth and fifteenth centuries England was one of the most effective states in Europe, with a much-feared army and the military capability to command a sizable ‘empire’ on the Continent. But from the mid-fifteenth century, when the artillery of Charles VII won the decisive victory of Castillon and drove the English out of almost all of France, to the year 1558, when England lost her last continental foothold at Calais, British military might underwent a marked decline. Between the end of the Hundred Years War (1453) and the outbreak of hostilities with Louis XIV in 1689, England ceased to be a major military power in Europe.

For much of the period between the late fifteenth and late seventeenth centuries England lacked a standing army. While other European nations acquired such forces, the English state relied increasingly for domestic defence on a militia or trained bands. Only foreign expeditions—the militia could not legally serve abroad—were manned with professional soldiers, drawn from bodies either of paid retainers or of foreign


But if England remained a comparatively minor military actor on the continental scene, this was not true in a British context. Indeed, between the mid fifteenth and early eighteenth century, the English state went far towards transforming itself, by a process of conquest, annexation, assimilation and union, into a British political entity.

England’s limited engagement in European military matters before the end of the seventeenth century had several consequences. One of the most important was the light fiscal load she had to bear when compared with the extraordinary administrative and fiscal pressures faced by the major belligerents in the sixteenth-century struggle between the Habsburgs and Valois and during the Thirty Years War. This, in turn, helps explain a further distinctive feature of the English state, namely the absence of a sprawling, tentacular state apparatus made up of venal office-holders.

What, then, is the significance of those three features of the English state I have chosen to emphasize? I want to argue that all three—early centralization, limited participation in European war and the absence of venality—were important in providing the British fiscal-military state with advantages over its rivals when it finally did emerge in the late seventeenth century.

This acceptance of the institutions of central government (even if it did not necessarily entail support for some of the individuals who manned it) meant that when king, lords and commons acted in unison, they were an overwhelming force. As we shall see, two of the most remarkable features of the powerfully extractive fiscal system that emerged after the Glorious Revolution were its extreme centralization and the extraordinary lack of resistance in the nation as a whole to such a high level of fiscal imposition.

The Fall of James II in 1688 inaugurated the longest period of British warfare since the middle ages. Britain was at war with France, and allies of France, in 1689–97, 1702–13, 1739–63 and 1775–83. Sometimes referred to as the ‘Second Hundred Years War’, this belligerent era culminated in the twenty-year struggle with post-Revolutionary France which ended with Wellington and Blücher’s victory at Waterloo. Though the wars in the century before 1789 were not on the scale of the titanic conflict which engulfed Europe after 1792, they marked the coming of age for the British as a major military force.

After 1688 the scope of British military involvement changed radically. Britain was at war more frequently and for longer periods of time, deploying armies and navies of unprecedented size. Protracted warfare posed logistical problems of exceptional magnitude. Wars were now conducted on a greater scale than earlier military operations. They also dwarfed eighteenth-century civilian enterprise. The state’s military role made it the most important single factor in the domestic economy: the largest borrower and spender, as well as the largest single employer. Public spending, fuelled by military costs, rose by leaps and bounds. The civilian administration supporting the military effort burgeoned; taxes and debts increased. Britain acquired a standing army and navy. She became, like her main rivals, a fiscal-military state, one dominated by the task of waging war.

Put in its simplest terms, between 1680 and 1780 the British army and navy trebled in size.

In Europe itself one of the main peacetime activities of the major states was the fiscal consolidation and administrative reform whose chief motive was not so much a desire for financial probity and good governance as a need to be prepared once hostilities renewed. In peacetime it was presumed that war was imminent or, at the very least, that government should act as if it were so.

The great military buildings of eighteenth-century England were not barracks and forts but the dry-docks, stores, roperies and building yards of the royal navy. And when we compare the distribution of military spending with that of other European powers, the priority given to the navy is obvious. With the exception of the Dutch, and the French during the American War of Independence, no other major state devoted such a high proportion of its expenditure to a floating force.

In the century between the reign of Charles II and the end of the American War the senior service grew at an even greater rate than the army. During the wars against Louis XIV it numbered some 40,000 men. By the time of the American War, the navy had more than doubled, and briefly deployed more than 100,000 men. The increase in manpower was matched by a growth of naval tonnage, which doubled between 1714 and 1760.

Most continental powers devoted the bulk of their resources to a standing army. Few devoted a large part of their military budget to the subsidization of foreign troops. Even fewer placed such a high priority on the navy. Even in those states whose proportion of total military expenditure on the navy was sometimes very high—the United Provinces at the beginning of this period and France at the end—found it difficult to sustain this commitment. While in England the importance of naval power was a virtually incontestable shibboleth, in both France and the United Provinces the navy was something of a political football, likely to be kicked by its adversaries out of play.

As an organization, the fiscal-military state dwarfed any civilian enterprise. The capital investment it demanded, the running costs it incurred, its labour requirements and the logistical problems that it posed were all of a different order of magnitude from even the very largest eighteenth-century private business.

Naval dockyards were, by the standards of the day, immense enterprises. They were the largest industrial units in the country, dwarfing their nearest rivals, the breweries and the mines.

One of the hardest tasks that naval administrators faced was the victualling and feeding of naval personnel. For much of this period, supplying a navy was more difficult than providing for land-based forces.

Civil expenditure—which effectively meant the domestic expenses of the monarch and his court, the so-called civil list—remained remarkably stable throughout this period, rising slowly from an average of just under £1 million per annum to just less than £1.5 million by the 1780s. For all the complaints of back-bench parliamentarians about the extravagances of the monarch and his court, the civil list accounted for only a small percentage (usually less than 15 per cent) of total government costs.

The real expenses lay elsewhere. Eighteenth-century English governments, like most European powers, spent their money waging war. Between 75 per cent and 85 per cent of annual expenditure went either on current spending on the army, navy and ordnance or to service the debts incurred to pay for earlier wars.

Britain’s military spending during major wars absorbed between 10 and 15 per cent of national income.

And the ease with which substantial sums were raised is attributable to three circumstances: the existence of a powerful representative with undisputed powers of national taxation; the presence of a commercialized economy whose structure made it comparatively simple to tax; and the deployment of fiscal expertise that made borrowing against tax income an easy task.

Most European armies were direct adjuncts of royal power. They were paid for and led by monarchs. Trans-national in composition, these troops were less the armies of nations than the forces of states whose diplomatic and military objectives were defined by the dynastic and territorial interests of their rulers.

Apart from the Dutch Republic, England was the only major eighteenth-century power in which the strength and funding of the army and navy were determined by ‘the estates’.

It is fair to say that during the eighteenth century the British populace remained, by the standards of their fellow Europeans, remarkably free from contact with armed forces, whether hostile or friendly. Undoubtedly the single most important circumstance affecting this situation was the virtual absence of hostilities within Britain.

Before the late seventeenth century the number of employees of central government in England was small by European standards.

This situation began to change under Charles II and James II when the state assumed control of large areas of revenue collection previously managed by private consortia of tax farmers.

After the Restoration monarchy triumphed over the whigs in 1681, Charles and James (or, at least, their ministers) embarked on aggressive schemes of administrative reform designed both to tighten the crown’s hold on the growing body of royal officials and to enhance royal revenue by increasing the yield of existing taxes. These tactics, inspired by Louis XIV’s example across the Channel, were intended to increase the crown’s independence of parliament; they may, indeed, have been designed to dispense with parliament altogether.3

The Revolution of 1688 thwarted James but it did not stop the expansion of central government. On the contrary, it was responsible for raising its pace. The Glorious Revolution embroiled England in the struggle with Louis XIV and inaugurated a quarter of a century of war with France. There was no more powerful stimulus to administrative growth. Indeed, in this period, as both Plumb and Holmes have emphasized,4 Britain’s state apparatus grew as never before. The fiscal and military departments burgeoned and new offices were established administered by committees or ‘boards’.

Between the 1680s and the Peace of Utrecht, successive administrations, whether whig or tory, built an administrative edifice whose structure survived largely unaltered until the early nineteenth century.

If the revenue departments were the largest employers of state servants, the Excise was by far the most important of the fiscal offices, and the one which underwent the greatest expansion.

The boards and departments that were either established or revamped in the late seventeenth century were almost all marked by some features which we would describe as ‘bureaucratic’. They rewarded full-time employees with salaries rather than fees and offered a career ladder of graded appointments with progressively higher remuneration which culminated in a government pension. They also expected administrative loyalty and sought to encourage an ethos of public duty and private probity. Standards were set either by the examination of entrants into government service or by schemes of training analogous to apprenticeship. They were maintained by internal monitoring and by systems of punishment and reward.

This ‘new’ administration did not replace but was added on to existing institutions. Its rules and practices were not accompanied by wholesale reform of older departments, many of which contained sinecurists, pluralists and officers whose chief source of income took the form of fees. Rather administrative innovation in Britain, as elsewhere in Europe, either worked around existing office-holders and their interests or reached an accommodation with them by combining the old and new to their mutual satisfaction.

Though the broad pattern of administrative change in Britain mirrored that of the continental powers, it nevertheless differed in a number of important ways from that of her greatest rival, France. First, the absence in Britain of a large officer class meant that there was much less resistance from entrenched office-holders to administrative growth and innovation. Secondly, the limited extent of venality meant that the effective departments of state had a lighter financial burden to carry. They did not have to fund a bevy of officiers whose chief contribution to the state was to drain its resources.

The growth of the executive in the late seventeenth century was accompanied by the emergence of professional administrators who devoted their lives to government service.

The single most important task of this bureaucracy was to raise money. It was vital, if the state were not to be driven into bankruptcy, that the administrative apparatus successfully obtain the vast sums necessary to cover the escalating costs of war.

Some of the techniques which had been tried by earlier sovereigns—selling off state or crown lands, manipulating the currency or coinage, vending public offices and honours, and levying forced loans—were recognized either as economically undesirable or as politically unfeasible after the Glorious Revolution. After 1688 the government’s options were limited to levying taxes and raising voluntary loans.

An effective tax system, providing the government with a substantial and regular income, was a necessary condition of the new credit mechanisms which, as we shall see, revolutionized eighteenth-century public finance.

Prior to the Glorious Revolution, the nation’s ordinary revenue was only one-fifth of that of France.5 But it is estimated that by the first quarter of the eighteenth century Englishmen were paying 17.6 livres per capita in annual taxes, while the equivalent figure in France was only 8.1 livres.

The effectiveness with which the British state taxed its subjects was in large part a direct consequence of a major transformation in the British fiscal system that occurred gradually between the Restoration and the mid-eighteenth century, as England moved from a fiscal system marked by heterogeneity and amateurism to a tax administration characterized by the orderly collection of public moneys by a predominantly professional body of state officials.

The chief taxes on which the crown depended for its regular or ‘ordinary’ income in the late seventeenth century were the customs (taxes on international trade, chiefly imports), the excise (duties on domestically produced commodities, especially alcoholic drinks) and the hearth tax (a graduated property tax based on the number of household hearths). The collection of all of these was farmed out to private business interests.

Put in its simplest terms, the fiscal history of the period between 1688 and 1714 was dominated by direct taxation in the form of the land tax; thereafter indirect taxes, most notably the excise, were overwhelmingly the most important source of state income.

The eclipse of the land tax was symptomatic of two developments which were of major importance to the subsequent history of the English state. The switch from direct to indirect taxation meant that the bulk of the revenue was no longer collected by a hodgepodge of amateur and local officials but by a centrally appointed body of crown employees. It also signalled the birth of the long-term national debt as more and more indirect taxes were assigned to fund government loans. In this way the preponderance of indirect taxes was inextricably linked to the growth of public credit.

The appeal of the excise, on the other hand, was that it was a comparatively discrete tax levied on a sizable but limited number of commodities—including beer, spirits, wine, cider, malt, hops, salt, leather, soap, candles, wire, paper, silk and starch—whose producers and distributors paid the tax but passed on the cost of the duties by charging consumers higher prices. It was, of course, essential to the success of excise collection that these industries were both reasonably well consolidated and capable of responding to a sustained demand for their products. But the effectiveness of the excise also depended on the skill and efficiency of its administration.

The effectiveness of its tax system provided the British state with a regular and secure income which made borrowing both comparatively cheap and relatively simple. Public indebtedness, as every politician and political pundit of the era complained, grew at a prodigious rate during the course of the eighteenth century.

In less than a century the unredeemed debt had increased fifteen-fold in current prices. This pattern of growth mirrored, in more exaggerated and distorted form, the other indices of English public finance in the eighteenth century. Every war raised the profile of public debt: each conflict produced a pattern of sharp and ever taller escarpments punctuated by the gently declining plateaux of peace.

As aggregate government borrowing increased with each successive war, so the proportion of wartime expenditure funded by borrowing rose.

In short, every war created a credit crisis, and the longer the war went on, the more severe it became.

The solution to this problem, one that was adopted by almost all administrations towards the end of a war or shortly after the declaration of peace, was to convert the short-term liability into a long-term funded debt.

For much of the period before the end of the American War English government deficit financing was a great success. In the first half of the century the secular trend in interest rates was downward, and even when nominal rates rose after 1750 the government was still able to borrow more cheaply than its chief rivals. By using incentives and douceurs—notably lottery tickets and additional annuities—the state was able to attract investors even when credit was tight.78 The one and only occasion on which the whole web of public finance threatened to unravel was during the South Sea Bubble of 1720.

The triumph of the Treasury in the late seventeenth century produced a remarkably centralized fiscal system in which all departments—both those of receipt and disbursement—were accountable to a single body, the Treasury Board. This enabled Britain to become the first major European state to keep full accounts of total government revenue and expenditure.

England’s tax system was not only exceptionally centralized, it was also uniform in its legal incidence. No English county or region enjoyed special fiscal privileges.

English fiscal uniformity applied not only to every region but to all subjects regardless of their rank. English peers, gentlemen and clerics—unlike many of their continental counterparts—enjoyed no legal exemption from the payment of taxes.

Between 1688 and 1714 the British state underwent a radical transformation, acquiring all of the main features of a powerful fiscal-military state: high taxes, a growing and well-organized civil administration, a standing army and the determination to act as a major European power. Why did this happen?

The tendency has been to regard this abrupt and radical change as an inevitable consequence of Britain’s successful involvement in the protracted and expensive struggles against Louis XIV.

Paradoxically, Louis XIV was one of the greatest allies of those who argued for all-out war against France. He also bears some responsibility for the emergence of England as a fiscal-military power. If William, aided by James, pushed England into the military arena, it was the French king who kept her there.

The circumstances of the 1690s—the threat of foreign invasion, William and Mary’s tenuous hold on the throne, the fear of domestic plots and insurrection, and the apprehensions about the fate of the Protestant religion both in Britain and Europe—were a boon to those who had long advocated an anti-Catholic and anti-French foreign policy.

The financial settlement hammered out in 1689 and 1690 meant that in future the ability of the king’s ministers to secure parliamentary consent to additional revenues was to be of vital importance to the monarch.

After 1688 the commons was not only the watchdog of government but part of the government itself. The link which connected these two seemingly disparate not to say contradictory functions was the commons’ control of finance. Public finance made the commons an essential actor in the performance of the fiscal-military state; it also enabled the lower house to take a greater part in government by scrutinizing and monitoring its processes.

Because her fiscal and military apparatus was organized anew and on an unprecedented scale, Britain was able to act as she had never done before: to become a major military power, to acquire an extensive empire and to assume a place in the front rank of European states.

It was a truth universally acknowledged in the era before Adam Smith that the government had both the right and obligation to regulate the economy for the public good. Such intervention was usually concerned to achieve one or more of three aims. First, the protection and enhancement of national wealth by securing what was termed ‘a favourable balance of trade’. To this end, the government took measures to promote exports, to limit imports, especially of finished goods, and to encourage import-substitute manufactures. Second, the support of industries and activities that enhanced England’s military power: the manufacture of iron, copper, brass and gunpowder, the provision of such naval stores as masts, tar and hemp, the building of a strong merchant marine and the ‘nursing’ of a substantial body of skilled seaman. Finally, the maintenance of good order and social harmony through the regulation of the market, the alleviation of poverty and the protection of employment.

The first two of these aims were those most directly connected with the diplomatic and military activities of the eighteenth-century state.

Throughout the late seventeenth century and eighteenth century the debate about commercial policy and the role of the state was dominated by, though not exclusively confined to, ‘mercantilist’ assumptions. The importance of a national monopoly of the international carrying trade and of colonial markets, the self-evidence of the zero-sum struggle for world commerce, the strategic and economic need for substantial holdings of bullion, the importance of encouraging demographic growth and domestic industry—these were all the clichés of their day.

Commercial wealth and naval power were seen as mutually sustaining. Flourishing trade fuelled the navy—providing funds in the form of customs revenues and manpower in the shape of able seamen, while an effective seaborne force was able not only to guard existing channels of trade but to open up new routes to commercial wealth.

Enthusiasm for this policy spread far beyond the wharfs and counting houses of British ports. A blue water strategy made sense to almost all members of commercial society and to those, including many taxpayers and country gentlemen, who preferred their wars to be cost-effective if not downright cheap. And the policy had a political as well as economic dimension. For it had the additional advantage of avoiding any increase in the size of the army. It therefore could not contribute, however obliquely, to the creation of a military force likely to threaten Englishmen’s liberties.

The Treaty of Utrecht (1713) marked England’s arrival as a major European power. But it in no way guaranteed that she would remain one. The triumph over France had only been accomplished at great cost.

The hostilities of 1739 were the beginning of the two mid-century wars which saw British military power reach its eighteenth-century zenith. Between the outbreak of the War of Jenkins’s Ear and the signing of the Treaty of Paris in 1763, Britain not only managed to check French power in Europe but also became a great colonial and commercial power. As the conflict between the great powers spread—affecting not only Europe and the Caribbean but also North America, the East Indies, West Africa and even the Pacific Ocean—so Britain gradually gained the upper hand, eventually trouncing both France and Spain and acquiring substantial overseas territories.

The key to British success was her blue water policy: the retention of a European ally or allies to divert the resources of France towards an expensive European campaign, and the establishment of naval supremacy.

In recent examinations of the structure of the eighteenth-century English economy, three connected features stand out: the rapidity of urbanization from the mid-seventeenth century, the high proportion of the population engaged in non-agricultural employment and the growth in agricultural productivity which made these two developments possible.

If excises were the largest category of tax in Georgian England, agricultural processing and its products were by far the most important source of revenue. Beer, malt and hops accounted for about 75 per cent of all excises; such products as soap, candles and leather made up much of the rest.

Nearly all of the slumps in foreign trade before the end of the American War were connected to the conduct of war. Only the recessions of 1766–70 and of 1722–3 occurred in peacetime. In 1702, 1705, 1719–21, 1726–8, 1739, 1744–5, and 1775–82 the disruption of communications, the conduct of naval warfare, and the predatory activities of enemy privateering led to a significant fall in foreign trade. In every war in this period, with the exception of the Seven Years War, hostilities produced a decline in the volume of the nation’s trade. It was therefore quite often the case that war years were characterized by the double misfortune of simultaneous trade slumps and financial crises.

Three consequences of the growth of the fiscal-military state were of particular concern to contemporaries. First, they worried about the damage inflicted by the fiscal-military state on the ‘landed interest’. Second, the emergence of a ‘financial interest’, whose wealth was derived from dealings with government—as investors, contractors and remitters—and held in the form of stocks and government securities, was viewed not only as a threat to the landed classes but as creating a lobby with a vested interest in keeping the nation at war. And finally there was general speculation on the incidence and deleterious effect of taxation on all sections of society as well as upon the economy as a whole.

The growth of customs duties during and after the wars with Louis XIV was paralleled by the proliferation of excise regulation. In addition to the excises on drink, taxes were imposed on salt (1695), malt (1697), candles (1710), leather, hops (1711), paper, printed goods and printed silks, soap, starch, and gold and silver wire (1712), silver plate (1719), and from mid-century on a variety of luxury items, including coaches, carriages, male servants, and race-horses.102 At the same time the duties on that staple of excise revenue, English beer and porter, were raised each year from 1689 to 1693 and in 1710, 1761, 1779, 1781 and 1782.

The new legislation was accompanied by a body of rules and regulations even more complex and intrusive than those which governed the customs.

The emergence of a peculiarly British version of the fiscal-military state, complete with large armies and navies, industrious administrators, high taxes and huge debts, was not the inevitable result of the nation’s entry into European war but the unintended consequence of the political crisis which racked the British state after the Glorious Revolution of 1688. Though not inevitable, these changes in government were enduring. The overweening power of the Treasury, a highly centralized financial system, a standing parliament, heavy taxation, an administrative class of gifted amateurs lacking training in the science of government but with a strong sense of public duty, government deficits and a thriving market in public securities: all these features of modern British politics began under the later Stuarts and Hanoverians. They had a profound effect on the subsequent history of the British state, enabling it to arbitrate the balance of power in Europe, to acquire its first empire and, when that was lost, to build another.

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