CHAPTER X: WHIG ENGLAND
SECTION1: WAR FINANCE
The Whigs in Parliament were confronted with wars against France and Spain, which could have destroyed them and restored the Stuarts, reversing the work of the Revolution of 1688. It could have substituted a military despotism for the rule of a “commercially minded aristocracy and an aristocratic mercantile class.”
As a result, England became committed, as part of the Whig Settlement, to war with France. The Spanish had dominated Europe in the 16th century but were sinking by the 17th. However, they were still looking to conquer Italy.
Holland was beyond its peak of power, but William’s accession to the throne assured her of English support.
The English ruling class had considerable interest in conflict, and a change in the balance of power was in favour of England.
Spanish colonies in America were targets, as Spain was too weak to prohibit foreigners from trading with the colonies.
The Augsburg war (1689-1697) and the War of Spanish Succession (1701-1713) were trading and colonial wars.
As yet, private companies intervened, but there was early pressure for the English state to build a colonial empire that arrived 50 years later.
The technical character of war had been revolutionised. The pike disappeared in favour of the fixed bayonet, which could be fired without unfixing. Artillery was greatly improved, and fortification and sieges suffered.
Armies moved slower, dragged down by elaborate equipment and vast baggage trains. The secret of Malborough as a General was his ability to break with tradition and move forces quickly in the field with speed and cunning.
The main reason for the change in the mode of war was that it was so costly. Financiers made fortunes lending money and these financiers were the Whigs. A triumph of Whiggery?
After 1688, Government credit remained poor, and, in 1694, in order to raise a loan of £ 1.2 million, concessions were offered and interest was 8%.
It was at this time that the financiers incorporated themselves into the Bank of England. The government empowered it to raise money, develop bank notes, discount bills, make advances on commodities and buy precious metals.
It was not long before this credit money, made by the bank itself, became the coin in which the Bank of England lent to the state and paid on account of the state the interest on the public debt. So the Bank gave with one hand and took back more with the other.
Gradually, the Bank of England “became inevitably the receptacle of the metallic board of the Country and the centre for all commercial credit,” Marx ( Das Capital).
The Whig financial clique met with opposition from the goldsmiths, who tried to outsmart the Bank of England by producing notes when coinage was short, which exceeded the Bank of England reserves.
The Tory squires had attempted to launch a rival Land Bank.
Resources of the state mobilised behind the Bank of England to defeat these developments, and the Bank of England subsequently became even more powerful.
It was not dissimilar to the confiscation of the church lands during the Reformation, in that it created a vested interest whose safety and profit lay in supporting the existing regime.
Credit expanded capital and quick profits, both in stocks and commodities. For example, the import of saltpetre, an important ingredient of gunpowder, was the foundation of large fortunes at this period.
National debt grew. The Augsburg war cost £18 million, the Spanish Succession War £50 million. By 1717, the debt stood at £54 million. In 1739, after 20 years of trying to liquidate via the Sinking Fund, it was still £47 million.
The Seven Years’ War (1756-1762) cost £82 million, of which £60 million was raised by loans. On the eve of the American War, the national debt stood at £126 million. At its end in 1782, it was £230 million. The Napoleonic Wars took the debt from £237 million to £859 million.
The answer was rapid increasing taxation, transferring wealth continuously from the masses to the minority who profited by these wars.
Even more important, it formed an immense concentration of capital, which ultimately formed a vast pool that made the Industrial Revolution possible.
The holders of bonds issued by the government for these loans were the possessors of capital resources on the strength of which they could, while enjoying income from them, obtain credit to undertake new enterprises.
The growth of the national debt therefore meant the growth of fluid capital.
Some was used rashly - the South Sea Company, the Darien Scheme and Laws Mississippi Scheme all resulted in wild speculation that went wrong. When the crash came in 1720 (as it must inevitably do in Capitalism), fraud was uncovered. The Whigs and the Prince of Wales were criminally involved.
Thousands were ruined, and, at one stage, it was proposed in the House of Lords that the directors be sewn in sacks and thrown into the River Thames.
Financial crises in 1763, 1772 and 1793 followed, but the banks stood firm and even profited.
However, these crises were the result of too rapid growth that marked the 17th century. Added to this, wars in Europe took their toll with higher taxes and war weariness. The Whigs were not anxious to make peace, as war kept them in power, but internal feuds were playing a part in English politics.
Once the Tories were in office, their official command of patronage and corruption enabled them to gain a parliamentary majority.
The Treaty of Utrecht stands at the beginning of a long period of peace and profit. England’s export trade expanded by 50%. American and West Indian planations grew in wealth, producing sugar, timber, tobacco and rice. India was plundered, and Far East fortunes were made by trade and graft.
Holland declined and France recovered, but England now led European commerce, and the conditions necessary for the establishment of the Empire were created.
The Treaty of Utrecht was the work of the Tories, but it was the last thing they did for 50 years, and it ushered in the heyday of the Whigs.