the problem in 1783

Question 1

economic hard facts

Answer 1

-first months of pity’s government, debt was £243m
1775-84= national debt increased by 91%
-annual interest on debt was £9m
1783= government expenditure exceeded income by £10.8 million

Question 2

economic soft facts

Answer 2

government had difficulty in raising loans & confidence in eventual recovery of national finances was low

Question 3

the solution

Answer 3

-target smuggling, increase custom revenue
-introduce new taxes
-collect taxes more efficiently
-extend sinking fund
-reduce government expenditure through rationalisation
-stimulate overseas trade,increase customs revenue

Question 4

target smuggling: the problem

Answer 4

-smuggling was huge, 1/5 of all imports contraband
-possible that 3 to 4m tons of tea illegally imported

Question 5

target smuggling: pitt’s approach

Answer 5

made it harder= extended right to search suspect cargoes
1748= amended “hovering act”, officials now strip search up 12 miles out of sea rather than 6 miles
makes it less profitable= reducing import duties, communication act of 1784 reduced duty on tea from 119% to uniformed 25%, followed in 1785 & 1787 reduced custom duties on wine, spirits & tobacco
made legitimate trade easier= extended system of bonded warehouses (first proposed by robert walpole in 1733), allowed imports for re-export to be stopped free tax, goods for import could be stored & duties payed when goods taken out

Question 6

target smuggling: evaluation

Answer 6

-didn’t destroy smuggling, made it far less profitable and more risky for businesses
-value of food & raw materials imports rose from £13m to £27m between 1783 & 1790’s
-tea entering through customs legitimately doubled between 1786 to 1788
-government yields increased 29% spirits, 63% wines & 39% tobacco

Question 7

new taxes

Answer 7

-most taxes were indirect
-taxes on luxury only affected wealthy, hair powder, servants, horses, ribbons & windows
- window tax graduated rise introduced to 1697 tax
other areas= tax introduced but withdrawn in face of hostility from industries affected
1784= textiles (muslim, calicos & cotton) rapidly repealed
licences for bleachers, dyers & taxes on all printed & bleach textiles abandoned 1785
coal= tax withdrawn because of op
shops= highly unpopular, brought to end in 1789

Question 8

increased efficiency

Answer 8

-consolidation fund act of 1787
-previous 103 exchequer accounts replaced by single fund account at treasury
-streamlined financial management
-made some form of national accounting possible for first time

Question 9

Sinking fund: the problem

Answer 9

1784= national debt stood at £243m with interest charges amounting to about quarter of government spending

Question 10

Sinking fund: Pitt’s approach

Answer 10

1786= Pitt wanted to reduce this by extending sinking fund, annual sums paid to reduce national debt
-existed 1716, value had been reduced by ministers raiding it for other purposes
-placed under control of a board of six commissioners

Question 11

Sinking fund: evaluation

Answer 11

-scheme worked well, £10m reduction in national debt until outbreak of war with France 1793
-reform of sinking fund more important in restoring national confidence than reducing national debt, not new but never had been used efficiently

Question 12

Evaluation financial policies

Answer 12

1793= income 47% higher than 1783, destroying profitability of smuggling, imposing new taxes & increased consumption
-Pitt was most efficient tax-gathered to ever govern England
-taxation policy was largely acceptable to tax payers, could be both unpopular & misguided
—possible (e.g window tax) may help back development of glass industry, other taxes repealed in face of hostility
-too many taxes, too easy to evade & too costly to collect

Question 13

administration: the problem

Answer 13

-very out of date
-manpower badly deployed due to patronage, offices given as rewards for political services not on merit
- to reduce expenditure, Pitt needed to increase efficiency of government & cut out waste
-radical reform would have encountered widespread opposition since system was designed to satisfy political not administrative aims

Question 14

administration: Pitt’s approach

Answer 14

• Government contracts put out to tender
  -better auditing of accounts
  -reshuffled departments & increased control of treasury
  1785= treasury commission of audit created oversee public expenditure, board of taxes reinforced by staff transfers from treasury & excise board
  1787= creation of central stationery office ensured economies in supply of stationery to departments
  -promotion based on merit
  -allowed redundant positions to lapse, not filling vacant positions

Question 15

India Act (1784)

Answer 15

-government of India by east India company archaic & inefficient
- Pitt’s act “clipped east India company’s wings”
-set up board of control, responsible to crown, leading government officials sat on board
-India act began process of extending British control

Question 16

India Act (1784): evaluation

Answer 16

-most of 180 posts public accounts commissioners recommended in 1786 should be abolished, disappeared within next 20 years
-efficient department management built up, greater degree of treasury control
-much been proposed by north originally

Question 17

Yes accurate- does merit “national revival”

Answer 17

-did increase revenue, decrease expenses & stimulate trade
-increased efficiency
-increased confidence

Question 18

Not accurate- does not bring about “national revival”

Answer 18

-new taxes failed & were withdrawn
-Pitt’s ideas based on precedent
-Pitt’s economic inheritance better than it looked in 1783 with industrial revolution placing Britain at massive advantage in trade

Question 19

Trade

Answer 19

• value of Britain’s exports rose from £12.5 million to over £20 million by 1790
  -value of Britain’s imports doubled to £20 million between 1783 to 1790, increasing revenue from import taxes & duties

Question 20

Eden treaty with France

Answer 20

-September 1786
-negotiated successfully in face of strong opposition from leading statesmen in both countries
-favourable to Britain that even foxite opposition from leading statesmen in both countries
-France reduced duties on oil, vinegar, wines & spirits
- Britain reduced on textiles, pottery, leather goods & manufactures
-either country carry goods freely during war in which other was engaged
-opposition from British manufacturers ensured silk markets excluded from agreement
Within 3 years= French manufacturers complaining treaty was unfairly weighted in favour of British manufacturers, complaint was reflection of Britain’s competitiveness in early stages of industrialisation
-treaty operated until 1792, Britain got involved in revolutionary wars, treaty didn’t last long, experiment proved to be worthwhile & huskission built on it in 1820’s with series of reciprocity treaties

Question 21

Consolidated Fund

Answer 21

Problem= complicated methods for putting money in bank accounts
Pitt ‘s approach= previous 103 exchequer accounts replaced by single fund account at treasury, streamlined financial management, made national accounting possible for first time