‘It is now three years since any inquiry was instituted’

George Tierney (Member for Southwark) led an outnumbered and disor­ganised opposition to Pitt’s ministry in the Eighteenth Parliament. Tierney ‘established himself as the government’s most formidable adversary in the Commons’ in that Parliament.⁴ The tenor of the times may be measured by the duel Pitt and Tierney fought on Putney Heath in May 1798.

Tierney addressed ‘the finances of the country’ in his speech of 28 June 1799. It ‘is now three years since any inquiry was instituted into the magnitude of that expenditure, the application of it, or the conse­quences to which it must lead’.⁵ Tierney presented 21 resolutions to his colleagues for their consideration. He took 1793 as the base interval for government revenue and expense. Going back to 1784, he estimated the nation’s capacity to fund public debt. Tierney’s first proposition offered this premise: ‘the Amount of the Public Funded Debt existing on the 5th of January 1793 was £238,231,248, exclusive of Long and Short Annui­ties’.⁶ Resolutions 1 through 15 - that Tierney presented - supported his conclusion that ‘the sum to be raised in Great Britain, in the year 1799, may be estimated as... £59,443,558’.⁷

Based on the preceding, Tierney’s Resolutions 16 through 19 proposed formulas by which values for variables such as the interest due could be calculated, as in ‘interest payable on imperial loans’. The ultimate focus of Tierney’s resolutions was to state a formula by which the ‘total amount to be raised by taxes... for 1799’ could be computed. Not surprisingly, his approach yielded lower revenue projects; collections on Pitt’s income tax, he computed, ‘may amount to £7,500,000’.⁸

Tierney calculated that ‘the expenditure of the peace establishment can­not be estimated at less than £33,144,225’.⁹ There was a bit of shrewd politics at work.

‘The average price of peace and war’ 97 and reserve the highest offices and honours to those possessing this devel­oped talent.

Tierney stated his assumed values in Resolutions 1-15 and his interme­diately computed values (based on these assumptions) in his Resolutions 16-19. He offered his colleagues a means to forecast how much debt the country would have to bear in the near future, given the difficult progress in the War of the Second Coalition that summer. Tierney’s Resolution 20 offered his colleagues these assumptions: ‘the war to end with the year 1799’, discounts for government 3 per cent bonds were to ‘remain on an average at 70’ and, finally, that the new income tax would generate ‘£7,500,000 per annum’.¹⁰

At the conclusion of his analysis, Tierney offered these alternatives: if the war ended in 1799 ‘the sum of £35,350,000, together with interest payable thereon, would not be redeemed before the month of November, 1803’. Projecting expenditures forward would justify extending the income tax to bring in another year’s worth of revenue and permit the funding of addi­tional war expenditures through 1800. In this case, redemption of the new debt load of £53,583,000 would not ‘be completed before the month of November, 1806’.¹¹

On 1 July, Pitt previewed his responses to Tierney’s resolutions. Tierney ‘had taken into his consideration all the burthens’, Pitt argued, ‘without any counter consideration of the increased means for reducing those burthens’.¹² Further proceedings were then set down to 11 July.

The House, having on the suggestion of Mr. Pitt, resolved itself into the committee of the whole House... Mr. Pitt rose and entered into an able examination of the several resolutions proposed by Mr. Tierney, and concluded with moving certain counter-resolutions, which, after a short debate, were agreed to by the committee and ordered to be reported to the House on the 11th instant.¹³

‘Mr. Pitt’, Lloyd’s Evening Post reported, ‘insisted on the clearness and correctness of his Resolutions’.¹⁴ The nation had ‘been obliged to impose taxes to the amount of £8,000,000 within the year’, the Post continued. The nation’s ‘resources are immense’, Pitt argued, ‘and commensurate to every purpose of security and defence. It would have been impossible for the Country to pay £8,000,000 taxes without an increase of commerce’.¹⁵ After members considered Pitt’s counter-resolutions, the chair of the com­mittee of the whole House reported its concurrence with Pitt’s resolutions.¹⁶

Deconstructing Pitt’s analysis reveals that Pitt accepted the first 15 resolu­tions offered by Tierney. This was a shrewd if risky move on his part. Based on this foundation, Pitt constructed a more elaborate series of ‘what if’ analyses. For example, he ran the average of war and peace back a hundred 98 ‘The average price of peace and war’ years. Pitt also ran his debt service calculation forward to 1846. To the pound sterling, Pitt’s underlying values were identical to those Tierney reported. Having co-opted the opposition’s financial data, Pitt elaborated on the variables that Tierney included in his last six resolutions in Pitt’s Resolution 16.¹⁷

Pitt’s speech offered members his preferred variables. For example, his Resolution 27 priced the cost of war and peace with data sampled over the course of a century.

That, supposing the Price of the Three per cent.

This brief computation supplied input for the last of Pitt’s budget counter­resolutions: ‘That, supposing the same Number of Years of War to 1846, at the same Rate of Expence’, Pitt’s budget would ‘require an Increase of £17,000,000 of Permanent Taxes beyond those now existing’.¹⁹ Pitt rea­soned backwards. From the increase his government required in tax collec­tions, he inferred that private households and businesses must accept greater tax burdens. Where are we ‘to look for the means of paying an additional £8,000,000 but in the increase of our commerce?’

The government’s solvency, propped up through tax collections, would relieve pressure on the Bank of England to advance funds to the govern­ment. Bond prices would reflect lessened demand on investors. From a yield of 4.80 percent in 1796 market bond yields - captured as ‘Long Term Gov­ernment Bond Yields’ on the Bank of England’s webpage - rose to 5.90 per­cent in 1797 and peaked at 5.94 percent in the following year. The last year of Pitt’s government, 1801, saw yields that investors demanded fall to a more-normal level of 4.92 percent.²⁰ I underscore that in Pitt’s computa­tion of the ‘Price of War and Peace’ (his preferred variable) captures the financial pain the government bondholder bears, if the bondholder sells on temporary dips in market. The burdens shouldered by other stakeholders in political society were beneath Pitt’s notice.

Pitt’s majority then declined further consideration of Tierney’s motion of 20 June. On 11 July 1799 the House of Commons adopted Pitt’s resolutions via the formula: ‘The said resolutions being severally read a Second Time, were, upon the Question severally put thereon, agreed to by the House’.²¹

This unprecedented debate between leaders highlighted the risks con­fronting Great Britain and France on the battlefield.

‘The average price of peace and war’ 99 compliance of private taxpayers with extant tax regimes and the appetite of the domestic bond market for government debt. The foregoing consid­erations fulfilled Adam Smith’s dictum that a nation could fight as much war as its borrowing capacity, public and private, could fund.²² It is worth underlining that Pitt viewed everyone’s purse - whether Treasury, Bank of England, private household or private enterprise - as available to satisfy his government’s determination to defeat France.

Pitt was not troubled by the serious - and near-disastrous - multi-year lapse in Commons’ financial reporting and oversight followed by a run on the Bank of England, with attendant spikes in government bond yields. As far as Pitt was concerned, the only thing that mattered was the funding Pitt could pour into the British war machine; to add to this expense, Great Brit­ain was committed to massive subventions in support of the war machines of its allies. ‘I think it clearly demonstrated that how ever great may be our expense, our recourses are still greater’. Pitt was willing to run the ‘time in which the whole of the debt would be paid off’ out to ‘40 years’. If a near-destabilising crisis was required to back the House of Commons into a corner, thereby enabling Pitt to ram his income tax down British taxpay­ers’ throats, then that was all to Pitt’s purpose of defeating France. Any means was fair, as far as Pitt was concerned: in his Land Tax Redemption scheme (1798) Pitt dazzled Parliament; in overwhelming Tierney’s resolu­tions (1799) he bludgeoned his colleagues into submission.

Pitt’s seduction of the Bank of England and House of Commons from their ‘habits of business’, Hatsell’s phrase, served to degrade Commons’ ‘accuracy in business’, Jefferson’s phrase. It was not wartime and its necessi­ties that threatened destabilisation of Westminster’s procedural equilibrium. The threat came from Pitt’s throwing the full weight of his prestige and power into parliamentary efforts to undermine or circumvent best practices. Pitt used the whip hand at a time when the House of Commons was unable or unwilling to push back against Pitt and act responsibly. Hatsell’s Privi­leges portrayed members of the House of Commons in a noble, even heroic, light when they resisted the bullying of James Stuart at the opening of the seventeenth century. When Pitt threatened to reprise the role, Hatsell was missing in action, having retired from active duty at Clerk’s Table in 1797.