Chapter 9: Economic Policies and Free Trade Flashcards
What principles did Lord Liverpool’s government work on?
Laissez-faire, as they believed it was not the role of government to regulate wages or prices; thus the economy would function by the law of supply and demand and not by state interference.
How was their a lack of consistency in Liverpool’s government’s beliefs in Laissez-faire principles?
As the government was willing to intervene to prevent the fall in the price of corn to protect their own interest.
What did the government’s belief in Laissez-faire principes mean for Britain in the 1820s?
It translated into an active economic policy of Free Trade and a rejection of mercantilism.
What were the Free Trade Budgets of 1824 and 1825?
They were important in the history of economic policy as they were the first to apply the principles of free trade. Customs uties were lowered on raw materials used in the textile and metal industries, prohibitions on manufactured goods entering Britain were abolished and protective duties reduced. Raw wool could be expoted for the first time.
What was the Reciprocity Act of 1823?
It encouraged trade treaties with other countries on the basis of mutual tariff reductions.
What was the effect of the Free Trade measures of the 1820s?
They stimulated industry and trade, and brought lower prices in manufactured goods and an increase in the volume of British exports and shipping. They reduced smuggling and took Britain decisively in the direction of Free Trade.
When did the ‘commercial upturn’ end?
1825
When the commercial upturn ended, what happened?
There was a heavy criticism of Huskisson’s free trade theories and of the Liverpool Government’s economic policies. The optimism of the previous years vanished, banks failed, businesses went bankrupt and there followed the usual distress among the labouring classes whose wages were reduced/became unemployed.
Once the worst of the economic crises was over, what act did the Government pass?
The bank act of 1826, which made it legal for banks other than the Bank of England to operate as joint-stock banks. These could issue notes and had a more robust foundation than the small private banks, which had quickly gone to the wall in a crisis.
Once the commercial upturn of 1822-25 began to deliver healthy revenues, what became possible?
To reduce indirect taxes, starting with duties on foreign timber in 1821.
In 1823, what excise duties were abolished or reduced as a result of the commercial upturn?
On windows, servants, horses, and carriages.
In 1824-25 what import duties were reduced?
On wool, coal, rum, silk, cotton, linen, paper glass earthenware metals.
Who was behind the free trade measures?
Huskisson and Robinson.
Who are Huskisson and Robinson compared to?
Peel and his reform of the criminal law.
