The Industrial Revolution

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CONTENTS.

PART 3. PARLIAMENTARY COLBERTISM.

XI. THE ENGLISH REVOLUTION.

209. Parliament as Supreme Judge of Public Interest. At the

Revolution, Parliament became supreme over economic affairs; but the

House of Commons was not well fitted to exercise this responsibility

judicially. Trading Companies had recourse to corrupt means of obtaining

public support, and the Crown relied on similar means. The policy of 80

regulating trade, that it might react on industry, harmonised with Whig

jealousy of France.

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210. Parliamentary Control of the Administration. The Whigs in the
House of Commons aimed at obtaining administrative authority over trading
affairs, though in this they were foiled; but by their hold on the purse-
strings, they determined on what objects money might be spent, and

controlled the administrative system. The legislative method of fostering

economic life, by bounties, proved cumbrous and costly.

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211. Parliamentary Control over Public Borrowing. The Whigs, by

organising the Bank of England, deprived the Crown of the power of

borrowing independently, and thus changed the centre of gravity in the State.

The new institution also gave facilities for commercial advance.

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212. The Parliament of Great Britain. The Whigs exercised their

new power over the plantations in a jealous spirit, as they were afraid

of any hostile competition with the mother country, or of any colonial

intercourse with the French, and specially jealous of the increase of

any sources of royal revenue which they could not control. The Scottish

Darien scheme awakened hostility and suspicion, and these could only be

set at rest by a legislative Union. The Dual Monarchy had worked un-

satisfactorily in Scotland, and the details of the actual scheme for Union

disarmed Scotch opposition generally; but the economic effects were not

obviously beneficial to the Northern Kingdom at first, though the ultimate

results have been good.

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XII. PUBLIC FINANCE.

213. Permanent Annuities. The organisation of the Bank superseded

the practice of borrowing in anticipation of particular branches of revenue;

the granting of permanent annuities gave the Government command of

large sums on easy terms, but in accordance with the Whig principle of

parliamentary control. The financial expedient proved convenient, though

there was a real danger of imposing a burden on posterity, without

compensatory benefits, and of increasing the charges on revenue; so that

Walpole endeavoured to pay off the principal by means of a Sinking

Fund.

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214. Possible Sources of Revenue. The fiscal system of the country

had been reconstituted during the Interregnum; and proposals were now

made to render it more equable and fruitful, by developing the excise, though

this was objected to both on economic and political grounds. Walpole's

fiscal reforms were intended to foster industry and commerce, so that he

might be able to dispense with the land tax; but the agitation they roused

rendered his schemes impracticable.

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XIII. CURRENCY AND CREDIT.

215. The Recoinage of 1696. The deficiency of standard coin, which

necessitated the recoinage of 1696, was not due to debasement of the

issues. The results of allowing the unrestricted export of bullion, and

the practice of free coining of hammered money, afforded profitable oppor-

tunities for clipping and sweating the coin, so as to cause great incon-

venience, and to bring about a rise of prices as calculated in silver.

Lowndes' scheme for amending the coin, with the least disturbance to

prices, was ingenious, but inconvenient, and the old denominations were

retained in the recoinage which was carried through by Sir Isaac Newton,

who also attempted to settle the difficulty about the rating of gold. 431

216. Paper-money. The necessary conditions for the introduction

of a convertible paper currency were provided by the Bank of England,

which advanced money on more favourable terms than the goldsmiths.

The credit of its notes was attacked during the recoinage; but, despite

some hesitancy on the part of the public, various paper forms of credit

came into general use, and the issue of Exchequer Bills helped to popularise

paper currency.

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217. Facilities for Trade. The Bank also facilitated the formation

and employment of Capital, and proved, as had been anticipated, to be

of great advantage to many trades; it did not divert money from pro-

ductive employments, but gave opportunities for trading on borrowed

capital.

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218. Misunderstandings in regard to Credit. The nature and con-

ditions of Credit were imperfectly recognised. Business assumed a specu

lative character, especially in connection with the Stock Exchange, and

Bubble Companies were formed for South Sea trading, and mining projects.

The Bank of England acquired experience; while Law's failure in France

gave a serious warning; and London was becoming the chief financial centre

of the world. The reaction after over-trading brought about the failure

of the Ayr Bank in 1772. The Bank of England warded off disaster in 1782,

but the expansion of trade in 1792 was followed by a crisis, which the Bank

failed to minimise. Still the conditions of issuing convertible paper were

becoming better understood..

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219. Scotch Banking. The banking system in Scotland facilitated the

formation of capital there. The Bank of Scotland issued £1 notes to the

public; it had to reduce its operations in 1704, and, after a period of fierce

competition with the Royal Bank, developed a system of cash credits, and

received deposits. The rivalry of well-conducted banks led to a general

adoption of paper money in Scotland.

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XIV. PARLIAMENTARY REGULATION OF COMMERCIAL DEVELOPMENT.

220. Commercial Relations with France and Portugal. Burleigh's

scheme of fostering all elements of Power, by regulation, had ceased to be

appropriate; the Tories would have given discriminating permission to

commerce of all kinds, but the Whigs discouraged trades which did not react

favourably on industry, and relied on indications furnished by the balance

of trade to show what was hurtful. The effort to render trade subservient to

industry led to the prohibition of French trade, and to the securing of the

Portuguese market for cloth, by admitting Portuguese wines on special

terms. This Methuen Treaty presented an obstacle to ratifying the treaty

of 1713, which would have allowed the growth of French trade, and this

policy was not abandoned till 1786.
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221. The New Attack on the East Indian Trade. The same economic

principle underlay the fresh attack on the East India Company, which imported
goods that competed in the home market with English manufactures, such
as fans, woollen cloth, and silk. There were also good grounds for criticising
the conduct of the Company with regard to the employment of its capital
and the action of its officials in carrying on private trade. The Directors
and their agents often differed as to the 'investment' and 'remittances'; and
the business was so intricate that supervision was impossible and corruption

rampant. The malpractice of the officials and the impoverished condition

of the Company rendered public intervention necessary; the smaller pro-

prietors were disfranchised, but the Company continued to manage its affairs

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under a Board of Control.

222. The Navigation Act and the Colonies. As the colonies grew, the

Navigation Act supplied a suitable mechanism for controlling their traffic,

so as to promote British industry, and to render England a staple for

enumerated commodities. Great attention was given to the West India

Islands, as a depôt for Mexican trade, and in connection with the slave trade.

In this England was chiefly interested, as it helped to secure the economic

dependence of the plantations, and the African market for manufactures.

The traffic had disastrous results on the negroes, and was of doubtful

economic advantage; but the treatment of slaves in the West Indies was

The Navigation Acts

improved by astricting them to particular estates.

were injurious to the islands, but helped to stimulate shipbuilding in New
England; while British attempts to cut off Colonial intercourse with the
French engaged in the Newfoundland fisheries, and with the French West-
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India Islands, gave rise to considerable grievance.

223. Shipbuilding, Naval Stores, and Seamanship. While providing

for the employment of shipping, the statesmen of the day maintained their

care for fishing for herring and cod, and for whaling. Bounties were given

on shipbuilding, and the colonists were encouraged by bounties to supply

hemp and naval stores. Increased attention was devoted to improving the

prospects of seamen in the Navy and Merchant Service, and to affording

better facilities for protecting ships on our coasts, by erecting light-houses

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and improving harbours and charts.

224. Marine Insurance. The practice of marine insurance had been

organised under Elizabeth, and was developed by the establishment of the

London Assurance and Royal Exchange Assurance, as well as by the con-