NATIONAL FINANCE 



B640 



NATIONAL FINANCE 



1850, that expansion was small in 

 rompan-..n with the subsequent 

 jji-oMth. Within Iww than:tn s . an 

 (mm tlir fining*' in thr ii, ill. .11 -- 



lisral pohry ill tin- forties it8 OX- 



purt.s '.'it u I i 60,000,000 to 



...Mi.iMN).- IViur t.. l!i. 

 War the naii.'ual inroine was com- 

 puled t.. I.,' al.oiit IL',400,000,000. 

 'I'hc national Mealth was plared at 

 some E16,000,000,000, the annual 

 export "t liritish produce was 

 l.yj:..< (00,000, and the imports 

 rearhrd a total of 709,000,000. 



Tin? effect of this immense ex- 

 pansion in in. mne, in wealth, in 

 production, and in commerce upon 

 tin- < ;si mment's income and ex- 

 ]x'ii<liturr was naturally very great. 

 While in the 17th century the 

 kind's (liHirulty in balancing a 

 budget of only 1,000,000 led to 

 his downfall, and in the middle of 

 the 18th century it was rot an easy 

 matter to make the revenue balance 

 the expenditure at 5,000,000, in 

 1850 it was found possible to raise 

 a revenue of 52,000,000 and to re- 

 duce taxation, while in 1913-14 

 t hrrr was no difficulty in providing 

 the (iovernment with a revenue 

 amounting to the then huge sum 

 of 198,000,000. 



Growth of the National Income 

 In considering the national in- 

 come, account must be had of the 

 great increase in the number of 

 people to share in it. The growth 

 of income has, however, been much 

 greater than the growth of popula- 

 tion, and the average income of the 

 British people prior to the war was 

 over 50 per head, in comparison 

 with only about 10 per head, with 

 a very small population, less than 

 two centuries before. 



The expansion in British income 

 from less than 400,000,000 a year 

 at the end of the Napoleonic wars 

 to 2,400,000,000 in 191$ came in 

 large measure from the immense 

 expansion in world income, which 

 was the direct result of the inven- 

 tions of steam and of machinery in 

 general in the latter part of the 

 18th, and the earlier decades of the 

 19th century. It also came from 

 the creation in Great Britain of a 

 free market for the goods of the 

 world, which helped greatly to 

 stimulate production by the know- 

 ledge that producers of every 

 country had an equal chance of dis- 

 posing of their produce. It came, 

 too, from the great amount of 

 capital which the British people 

 supplied to every nation that 

 offered the requisite security, and 

 from the consequent improvement 

 in means of communication. 



But great as was the influence of 

 British finance up to 1914, both in 

 war and in peace, all its previous 

 attainments were surpassed during 



It,,- CM. [I U'.n. Thr . 



thru nrnlril pi art irally unlimilr.l 



supplies of money for the mainten- 

 an. .- of ita own fighting forces, and 

 < ,-upply its allies with the sinews 



of war. 



In- the Napoleonic ware the 

 Government's expenditure gradu- 

 ally rose from about 22,000,000 a 

 year to 132,000,000, whirh was 

 equal to the disbursements of only 

 a fortnight during the period of 

 maximum expenditure in the Great 

 War. In the financial year 1913-14 

 the Government's expenditure was 

 197,492,000, from which it row- 

 in 1914-15 to 560,000,000, the 

 sum expended upon war in the 

 period from August, 1914, to the 

 end of March, 1915, amounting to 

 357,000,000. In the following 

 year, 1915-16, the total expendi- 

 ture rose to l,559,000,000,of which 

 1,400,000,000 was for war. These 

 great sums were again exceeded in 

 1916-17, when the total expendi- 

 ture was 2,198,000,000, of which 

 1,973,000,000 was for war. In 

 1917-18 the total expenditure 

 reached 2,696,000,000, of which 

 2,402,000,000 was for war. 



The war ended in November, 

 1918 ; nevertheless in the fiscal year 

 ending March 31,1919,the total sum 

 expended reached 2,579,000,000, 

 of which 2,198,000,000 was for 

 war. Nor did the warlike outlays 

 cease even then, for in the following 

 year the Government's total expen- 

 diture was 1,666,000,000, while 

 in 1920-21 it was 1,195,000,000. 

 Including the military and 

 naval outlays made in 1920-21, 

 the direct cost of the war was 

 about 10,000,000,000 sterling, 

 but, including interest on money 

 borrowed, the cost was 

 about 11,000,000,000. Of this 

 4,000,000,000 was raised by taxa- 

 tion and 7,000,000,000 by loan. 



Loans by Great Britain 

 These vast sums included the 

 loans of the British Government 

 to the other entente nations. 

 Altogether Great Britain supplied 

 her allies and dominions with . 

 loans to a total of 1,947,600.000, 

 of which 557,000,000 waa lent to 

 France, 561,400,000 to Russia, 

 476,800,000 to Italy, 193,400,000 

 to Belgium, and 144,000,000 to 

 the British Dominions. The task 

 with which, in 1921, the British 

 nation waa faced of readjusting its 

 finances, paying off its debt, over- 

 coming the financial and economic 

 consequences of the war, and 

 recovering its prosperity, was a 

 difficult one, and the estimated 

 Governmental expenditure of 

 1,040,000,000 sterling for 1921-22 

 was generally admitted to be be- 

 yond the power of the nation to 

 maintain permanently. 



To turn to the method* by whirh 

 th<- n.it ioiiitl revenue has been 

 raised, it may be raid at first that 

 until tho revolution of 16HH them 

 was no practical dintim-tiun be- 

 tween the revenue and expendi- 

 ture of the sovereign and that of 

 the state. The king had an income 

 as a landholder, greater in degree 

 but not different in kind from those 

 of his great barons, and as time 

 went on this was increased by the 

 produce of taxes voted to him by 

 Parliament and money obtained in 

 other ways. From this general fund 

 tho sovereign discharged all the 

 expenses of the state. In early 

 days the chief of these was the 

 support of his household, the 

 officials of which were the min- 

 isters who governed the country. 

 Later, as the feudal system dis- 

 appeared, he paid the soldiers and 

 maintained arsenals and ships. 



Items in the Revenue 

 The first item in the royal 

 revenue was the income from the 

 crown lands, which, in addition to 

 rent proper, included the feudal 

 dues. Next came a land tax, 

 whether called Danegeld, or scu- 

 tage, or by some other name, 

 which, in theory at least, was 

 granted to the sovereign by the 

 representatives of the people. 

 Further money came from the 

 profits of the courts of justice and 

 the sale of privileges of various 

 kinds, e.g. charters to towns. In 

 the 13th century, with the growth 

 of international trade, Edward I 

 consolidated the customs duties, 

 the ancient right of the sovereign 

 to a share of merchandise entering 

 the country. Mainly concerned 

 with wool and wine, these duties, 

 at first paid in kind, were soon ren- 

 dered in money. 



Other taxes of the 13th and 14th 

 centuries were the poll tax, which 

 was partly responsible for the rising 

 of 1381, and the hearth money. To 

 bring personal property into the 

 net, a new tax was devised in the 

 12th century, and this, at first 

 known as tallage and collected 

 only from those who lived on the 

 royal domain, became the tenth 

 and fifteenth, a more general tax 

 frequent in the 14th century. 

 Theoretically it was a tenth of the 

 incomes of persons living in towns 

 and a fifteenth of the incomes of 

 persons living outside towns, but 

 in practice after a time it became 

 fixed at 39,000, this sum or mul- 

 tiples of this sum being raised by a 

 levy on the towns and counties. 



The thrifty Tudors imposed few 

 new burdens on the country. They 

 collected the rents, feudal dues, and 

 duties on imports.and at times ask- 

 ed Parliament for so many tenths 

 and fifteenths. Other grants made to 



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