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Published online by Cambridge University Press: 11 May 2010
The conduct of the British government's financial affairs during the Duke of Newcastle's tenure as First Lord of the Treasury has never to my knowledge been specifically investigated. This gap in our understanding of the eighteenth century is doubly puzzling: the period itself, during which Britain won a war and an empire, is pivotal in the kingdom's history; moreover, the sources for such a study are uncommonly rich for precisely those years in which the duke held the office. The lack of such an analysis, however, has not prevented several authorities from passing severe judgments on the duke's handling of financial affairs, and while these authorities speak from extensive knowledge of the Treasury and its complexities, I have come to conclude that their assessments are too harsh—a view I shall elaborate at the end of this essay. But even if the reader should conclude at that point that my flirtation with revisionism is itself ill-founded, there is yet another value in examining the Treasury under Newcastle: as in perhaps no other period we can sometimes see decisions at the Treasury actually being made, ideas being transmitted, and problems being analyzed. And above all we can see in some detail how Britain's remarkably successful governmental financial machine operated.
1 Treasury affairs before Newcastle's day are covered in Dickson's, P. G. M. magisterial The Financial Revolution in England (New York: Macmillan and St. Martins, 1967)Google Scholar. The post-Newcastle Treasury is studied in Binney, J. E. D., British Public Finance and Administration, 1774–92 (Clarendon, 1958)Google Scholar. Henry Roseveare's recent The Treasury (New York:Columbia Univ. Press, 1969)Google Scholar gives an illuminating but undetailed overview. For articles bearing on Newcastle's tenure, see the notes to this piece.
2 I have relied chiefly upon the relevant volumes of the Newcastle Papers in the [British Museum,] Add. MSS 32684–33083. Various holdings in the P [ublic] R [ecord] O [office]—especially, Treasury Board Papers (T 1); Treasury, Out Letters, Customs (T 11); Treasury, Out Letters, General (T 27); and Treasury Minutes (T 29)—have also been useful. Research for this study was made possible by grants from the American Philosophical Society and Kenyon College.
3 See, Lucy Stuart Sutherland, “Samson Gideon: Eighteenth Century Jewish Financier,” Transactions of the Jewish Historical Society of England, XVII (1951–1952), 86Google Scholar; Ward, W. R., The English Land Tax in the Eighteenth Century (London: Oxford University Press, 1953), pp. 105–06Google Scholar. Sutherland, I believe, exaggerates the dysfunctional consequences of having an admittedly anxiety-ridden man head the Treasury. Ward's perspective—the administration of the Land Tax—obscures other areas in which Newcastle was more effective.
4 Add. MSS 33039, f. 103.
5 Dickson, Financial Revolution, pp. 86, 205, 211–12, 241–42. On funding, see below, p. 6.
6 The Journals of the House of Commons, XXVII, 81.
7 PRO, T 1/403 f. 23.
8 Dickson, Financial Revolution, pp. 365, 382.
9 Add. MSS 32737, f. 5; cf., Add. MSS 32995, ff. 299–302.
10 Thus, because in wartime the Land Tax is increased. See below, p. 4.
11 PRO, T 29/33 ff. 286–87; Add. MSS 32998, ff. 384–86; Add. MSS 32909, f. 243. For navy ana victualling bills, see Dickson, Financial Revolution, p. 400.
12 I shall often use the preposition “for” in referring to a year. It is, I believe, referable to “in” because it avoids any ambiguity as to which financial year is being treated. It is financial years, not calendar years, we are concerned with; and although the two seem generally to coincide, it is not unusual for actions to be taken late in year X which in fact pertain to year X + 1.
13 Add. MSS 32996, ff. 243–44.
14 The Journals of the House of Commons, XXVIII, 1078. Such heavy use of the Sinking Fund required the anticipation of Sinking Fund revenue for periods of more than a year ahead.
15 Knollenberg, Bernhard, Origin of the American Revolution: 1759–1766 (New York: Free Press, 1960), pp. 35, 97Google Scholar.
16 Add. MSS 32873, ff. 262–63.
17 Dickson, Financial Revolution, p. 10.
18 Ibid., pp. 10–11; Ward, Land Tax, p. 80; Williams, Basil, The Life of William Pitt, Earl of Chatham (London: Longmans, Green and Co., 1914), II, 48Google Scholar; Wilson, Charles, England's Apprenticeship 1603–1763 (New York:St. Martin's Press, 1965), p. 319Google Scholar.
19 Good discussions of the general operation of funding may be found in Dickson, Financial Revolution, passim, and Carter, Alice Clare, The English Public Debt in the Eighteenth Century (London: The Historical Association, 1968)Google Scholar, passim.
20 Add. MSS 32873, ff. 262–63.
21 Add. MSS 32894, f. 370.
22 Add. MSS 32910, f. 129.
23 See, Reed Browning, “The Duke of Newcastle and the Financial Management of the Seven Years' War in Germany,” in a forthcoming issue of the Journal of the Society for Army Historical Research.
24 Add. MSS 32866, ff. 191–94.
25 Add. MSS 32925, ff. 85–86.
26 Cf. John, A. H., “Insurance Investment and the London Money Market of the Eighteenth Century,” Economica, n.s., XX (1953), 154Google Scholar.
27 For a discussion of votes of credit, see below, pp. 30–31.
28 Add. MSS 33039, f. 169.
29 Add. MSS 32894, f. 354.
30 John, A. H., “War and the English Economy, 1700–63,” Economic History Review, 2d ser., VII (1955), 342Google Scholar.
31 Add. MSS 32876, f. 247.
32 Add. MSS 32910, ff. 120–39.
33 See below, p. 13. The literature on this subject uses a variety of nouns as virtual synonyms: annuities, stocks, loan-stocks, certificates, share-certificates, shares, and—most correctly—scrip.
34 Cohen, Jacob, “The Element of Lottery in British Government Bonds, 1694–1919,” Economica, n.s., XX (1953), 242Google Scholar; Add. MSS 33040, f. 260.
35 Add. MSS 33039, f. 266.
36 See, e.g., Add. MSS 32864, ff. 44–45; Dickson, Financial Revolution, p. 220.
37 Add. MSS 32876, f. 95; Add. MSS 32885, ff. 475–77.
38 The nominal rate of interest on the annual loan was computed by dividing the total amount to be paid to creditors, as specified on the certificates, by the total face value of the stock issued. The true rate was computed by dividing the total annual expenditures required to service the loan (including interest, bonuses, and prizes) by the total amount actually raised in the subscription. The staff of Newcastle's Treasury prepared analyses of war borrowing in which both nominal and true rates were calculated (see Add. MSS 33040, f. 260). For fuller information on points discussed in this and the next two paragraphs, see Ewen, C. L'Estrange, Lotteries and Sweepstakes (London: Singing Tree, 1932), pp. 155–63Google Scholar; Cohen, Economica; and Richards, R. D., “The Lottery in the History of English Government Finance,” Economic History, III (1934–37), 57–76Google Scholar.
39 Hargreaves, E. L., The National Debt (London: E. Arnold and Co., 1930), p. 64Google Scholar; cf. Add. MSS 32897, ff. 203–204.
40 Binney, British Public Finance, p. 88.
41 Add. MSS 32890, ff. 137–51.
42 Add. MSS 33039, f. 266; Add. MSS 32891, ff. 106–107. The government could expect to pay for approximately 29–30 years on a life annuity (Cohen, Economica, pp. 243, 245). Yet the public valued them at less. Cf. Add. MSS 33039, ff. 240–41, where it is asserted that life annuities sell for a value of 14½-15 years; Add. MSS 32862, ff. 202–203, where they are priced at 15½-16 years; and Add. MSS 32870. ff. 437–38, where they are reckoned at 19 years.
43 Add. MSS 32876, f. 247.
44 Ewen, Lotteries, pp. 162–63.
45 [William Knox,] The Present State of the Nation (London, 1768), p. 13nGoogle Scholar; Sinclair, Sir John, The History of the Public Revenue of the British Empire (3d ed.; London, 1803–1804), I, 463–65Google Scholar.
46 Many people felt that to lower the interest on the national debt below 3 percent would “drive” capital out of the kingdom. Cf., Add. MSS 32736, ff. 479–80.
47 Add. MSS 32886, f. 151; Add. MSS 32910, ff. 120–39.
48 Newcastle explained Gideon's value to West: “He is always good at expedients” (Add. MSS 32901, f. 93). For an example of the respect shown Barnard by the Treasury, see Add. MSS 32861, ff. 468–69.
49 Add. MSS 32897, ff. 203–204; Add. MSS 32899, ff. 286–87. Peter Burrell, representing the Bank, endorsed Fonnereau's ideas and aided in promoting them.
50 Add. MSS 32862, ff. 202–203.
51 Add. MSS 32897, f. 502.
52 Add. MSS 32862, ff. 200–201.
53 See, e.g., Add. MSS 33039, ff. 59–63.
54 See references in note 38 above.
55 Parliamentary History, VIII (London, 1811), 1048–49Google Scholar.
56 Add. MSS 32896, f. 197.
57 See, e.g., Add. MSS 32911, ff. 46–48; Add. MSS 32884, f. 266.
58 Nor was he unwilling to fund a loan on the Sinking Fund if new revenue was simultaneously fed into the Fund. The Sinking Fund thereby became simply a convenient way to administer what was really a new fund. This is how the loan of 1755 was handled.
69 Add. MSS 32910, ff. 120–39; Add. MSS 32928, f. 185.
60 This topic is treated, with somewhat different conclusions than mine, in Ward, Land Tax, pp. 80–83.
61 Add. MSS 32886, f. 514; Add. MSS 32900, f. 55; Add. MSS 32888, f. 412.
62 Add. MSS 32998, ff. 168–69; Add. MSS 32887, f. 143; Add. MSS 32859, ff. 168–69.
63 Add. MSS 32930, ff. 93–95. Cf., Add. MSS 32874, ff. 356–58; Add. MSS 32878, ff. 457–58; Ward, W. R., “The Administration of the Window and Assessed Taxes, 1696–1798,” English Historical Review, LXVII (1952), 532CrossRefGoogle Scholar. Window taxes were less easily collected than Reade had expected (PRO, T 29/33, f. 175; PRO, T 29/34, f. 173).
64 Add. MSS 32875, ff. 79–81.
65 Add. MSS 32861, ff. 51–52; Add. MSS 32867, f. 415; Add. MSS 32913, f. 430; Ward, W. R., “Some Eighteenth-Century Civil Servants: The English Revenue Commissioners, 1754–98,” English Historical Review, LXX (1955), 37CrossRefGoogle Scholar. Cf., Add. MSS 33039, ff. 59–63.
66 Add. MSS 32887, f. 272.
67 Add. MSS 32973, ff. 393–94; Add. MSS 32874, ff. 266–67.
68 Add. MSS 32875, ff. 340–54.
69 Sinclair, Public Revenue, III, App., 167.
70 Add. MSS 32861, ff. 51–52.
71 See, Add. MSS 32913, ff. 348–50, for importance of staffing costs.
72 Add. MSS 32853, ff. 439–40.
73 Add. MSS 32863, ff. 81, 188–90, 332–33, 372–73; PRO, T 1/369, f. 46; PRO, T 29/32, f. 380; Walpole, Horace, Memoirs of the Reign of King George II, ed. Holland, Lord (London, 1847), II, 182Google Scholar.
74 See, e.g., Carswell, John and Dralle, Lewis Arnold, (eds.), The Political Journal of George Bubb Dodington (Oxford: Oxford Univ. Press, 1965), pp. 342–43Google Scholar.
75 Even so, collection could be tardy (PRO, T 1/402, f. 160).
76 Add. MSS 32875, ff. 79–81, 83–91; Add. MSS 32876, ff. 505–506; Add. MSS 32878, f. 458; Add. MSS 32879, ff. 1–2; Add. MSS 32880, f. 240; PRO, T 27/27, f. 350; PRO, T 27/28, f. 25. Lists of pensions covered by the new tax were submitted by various offices of state and court. They may be found scattered through PRO, T 1/380–82, and PRO, T 1/394.
77 Yorke, Philip C., The Life and Correspondence of Philip Yorke, Earl of Hardwicke (Cambridge: Cambridge Univ. Press, 1913), III, 52Google Scholar.
78 Add. MSS 32888, f. 316; Add. MSS 32879, ff. 60–64; Walpole, George II, III, 177; Hughes, English Historical Review, pp. 254–55; Williams, Pitt, II, 52–54.
79 Add. MSS 32894, f. 370; Add. MSS 32895, f. 82; Add. MSS 32900, ff. 357–58.
80 Add. MSS 32912, f. 145; Add. MSS 32913, ff. 288, 348–50, 430; Add. MSS 33001, ff. 292–93.
81 Add. MSS 32930, ff. 93–95; Add. MSS 32931, f. 145.
82 Add. MSS 32997, f. 295; Add. MSS 32876, f. 27. I found no explicit reference to a meeting with Gideon in November 1757. The probability is great, however, that Newcastle consulted the views of a financier he so frequently sought out at other times.
83 For more detail, see Carter, English Public Debt, pp. 12–15, and Dickson, Ftnancial Revolution, pp. 220–27, 289–90. The loan for 1759, handled largely by Legge, was inaccurately called “open” by some, including Newcastle. All the term meant, however, was that Legge had used a wider group of underwriters than usual (Add. MSS 32894, f. 370; Add. MSS 32896, ff. 237–42).
84 Sutherland, Lucy Stuart, “Samson Gideon and the Reduction of Interest, 1749–50,” Economic History Review, XVI (1946), 18–20Google Scholar.
85 Add. MSS 32853, ff. 439–40.
86 See above, pp. 11–12.
87 Add. MSS 32886, f. 151; Add. MSS 32890, ff. 137–51; Add. MSS 32896, ff. 237–42. Sutherland (Transactions, p. 86) makes what appear to me to be exaggerated claims for Gideon's influence on the terms of 1759. If anyone influenced Legge it was probably James Postlethwayte, the writer on public finance. He had served as an auditor of Newcastle's private accounts since the early 1750's, and recommended a 3 percent rate of interest for the 1759 loan. This was, of course, the surprisingly low nominal rate adopted, though Postlethwayte's proposed inducements were rejected for others (Add. MSS 33039, ff. 240–41). My thanks go to Mr. Ed Bristow for his assistance on this point.
88 Add. MSS 32887, f. 347. At a later time the duke asserted—but his memory was notoriously faulty—that friends had urged him to let Legge bear the burden of work and recriminations (Add. MSS 32890, ff. 137–51).
89 Add. MSS 32888, f. 412.
90 Add. MSS 32876, f. 137.
91 Add. MSS 32894, ff. 366–67. See below, p. 31.
92 Add. MSS 32900, f. 357; Add. MSS 32894, f. 370; Add. MSS 32895, ff. 294–96; Add. MSS 33039, ff. 326–38; Add. MSS 32899, ff. 339–40.
93 Add. MSS 32997, ff. 372–73.
94 Morgan, Victor and Thomas, W. A., The Stock Exchange (London: Elek Books, 1962), pp. 45–46Google Scholar.
95 Sutherland, Lucy Stuart, “The City of London and the Devonshire-Pitt Administration, 1756–7,” Proceedings of the British Academy, XLVI (1960), 165Google Scholar.
96 Add. MSS 32996, f. 75.
97 Add. MSS 32932, f. 322.
98 [de Pinto, Isaac,] Traité de la circulation et du crédit (Amsterdam, 1771), p. 37Google Scholar.
99 Add. MSS 32901, f. 94.
100 Add. MSS 32901, ff. 92–93, 90.
101 Add. MSS 32901, f. 102.
102 Add. MSS 32901, f. 156. Newcastle asserted at this time that he had once before authorized efforts to peg the market. The only evidence of any earlier intervention I have located is a rather obscure memorandum for West in November 1757 (Add. MSS 32901, f. 84; Add. MSS 32997, f. 295).
103 Add. MSS 32901, ff. 303, 305.
104 Add. MSS 33039, ff. 255–57.
105 In May 1759 Gideon was rewarded for his many services by having his thirteen-year-old son made a baronet. See, Add. MSS 32888, ff. 295–96; Add. MSS 32889, ff. 125–30; PRO, T 29/33, ff. 151, 158; Dickson, Financial Revolution, p. 386; Sutherland, Transactions, pp. 86–88.
106 Add. MSS 32890, f. 225.
107 Add. MSS 32884, ff. 34–35.
108 Add. MSS 32878, ff. 430–31.
109 The Journals of the House of Commons, XXVIII, 892.
110 Reitan, E. A., “The Civil List in Eighteenth-Century British Politics: Parliamentary Supremacy versus the Independence of the Crown,’ The Historical Journal, IX (1966), 324Google Scholar.
111 Add. MSS 32853, ff. 131–33. It would appear from Dickson, Financial Revolution, p. 211n, that by the 1750's Britain had abandoned votes of credit as they had been known in Walpole's day and reverted to the practice of William Ill's reign. Roseveare, The Treasury, p. 93, is misleading.
112 Add. MSS 32864, ff. 44–45.
113 The Journals of the House of Commons, XXVII, 750.
114 Ibid., XXVIII, 153.
115 Ibid., XXVIII, 1078.
116 Add. MSS 33040, f. 327.
117 Add. MSS 32894, f. 291.
118 Add. MSS 32884, f. 266.
119 PRO, T 29/33, ff. 220–21; Add. MSS 32894, f. 354.
120 Add. MSS 32901, f. 94.
121 Add. MSS 32883, f. 277.
122 This sum should not be confused with the coincidentally identical sum the Treasury had forced out.of the Bank in anticipation of the Land Tax just a few months earlier. See above, p. 3.
123 Add. MSS 32904, f. 432; Add. MSS 32905, ff. 323, 389–91; Add. MSS 32906 ff. 10–11.
124 See, Dickson, Financial Revolution, pp. 378–79.
125 Ashton, T. S., An Economic History of England: The Eighteenth Century (London: Methuen, 1955), pp. 198–99, 237Google Scholar; Dickson, Financial Revolution, pp. 12–13.
126 Pressnell, L. S., “The Rate of Interest in the Eighteenth Century,” in Studies in the Industrial Revolution, ed. Pressnell, L. S. (London: Oxford Univ. Press, 1960), pp. 207, 213.Google Scholar
127 See, Dickson, Financial Revolution, pp. 39–79, 341–64.
128 One example must suffice. In April 1759 the duke wrote: “The real cause of the misfortune is, that we are engaged in expences infinitely above our strength; and the people do not see any end of it. Expedition after expedition; campaign after campaign. No approach now, from any quarter towards peace, and an aversion to, or imputation on, those at home, who may either think of it, or talk of the necessity of it” (Add. MSS 32890, f. 140).
129 Newcastle hoped in 1754 to refund the debt at 2½ percent and to impose rigorous economy on government offices. He also threatened to dismiss the receiver general of taxes for Sussex, the notoriously incompetent William Mitford. He achieved none of these goals, though one can charitably ascribe at least the first failure to rumors of war (Add. MSS 32995, ff. 299–302; PRO, T 27/27, ff. 118 120, 123 139; PRO, T 29/32, f. 205; PRO, T 11/25, f. 167; Walpole, George II, I, 399).
130 Add. MSS 32890, ff. 137–51.
131 In 1754 the duke missed only one meeting in nine months. But of the last twenty-six meetings of Newcastle's second term he attended only four.
132 E.g., Add. MSS 32998, ff. 168–69; Add. MSS 32891, ff. 106–107. On one occasion of disagreement West even contemplated resignation (32877, ff. 168–69).
133 E.g., Add. MSS 32998, f. 169; Add. MSS 32887, f. 143.
134 See e.g., Add. MSS 33066, ff. 341–47; Add. MSS 32853, ff. 131–33; Add. MSS 33038, ff. 304, 316–19, 334–35, 362; PRO, T 29/32, f. 235.
135 Add. MSS 32894, f. 367.
136 Add. MSS 32915, f. 403; Add. MSS 32999, ff. 144–45.
137 Add. MSS 32896, ff. 237–42; Dickson, Financial Revolution, pp. 226–28.
138 Hargreaves, National Debt, pp. 61–62; Morgan and Thomas, Stock Exchange, p. 46.
139 Add. MSS 33040, f. 260; Sutherland, Proceedings, 164–73; [Almon, John,] The History of the Late Minority ([London, 1766], pp. 93–102)Google Scholar.
140 Cohen, Economica, p. 242; Dickson, Financial Revolution, pp. 226–28.
141 E.g., Joslin, D. M., “London Bankers in Wartime 1739–84,” in Studies in the Industrial Revolution, ed. Pressnell, L. S. (London: Oxford Univ. Press, 1960), p. 171Google Scholar.
