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however, much too low). England was then well on the way to become an industrial instead of an agricultural country. The imports for 1800 were valued at 28,257,000Z. and the exports at 34,881,000l., but the trade of Ireland was not included in these totals. In shipping our predominance was fully established, although the United States was beginning to become a formidable rival. The registered vessels belonging to the British Dominions numbered 19,772, representing 2,037,000 tons. Some basis for a rough estimate of the wealth of the country at that time was furnished by Pitt in the speech in which he introduced the Income Tax in December 1798. He stated that the various incomes on which a general income tax should be paid might be moderately estimated at 102,000,000. This calculation was arrived at after deductions of percentages from the various gross incomes to represent exemptions under 601. and abatements up to 2007.; it did not include the earnings of labourers or the incomes of small capitalists, which Lord Auckland estimated as amounting to another 100,000,000l.
On this basis, then, the entire national income of Great Britain amounted to about 200,000,000l. per annum. Pitt estimated that the income tax of 10 per cent. on all incomes would bring into the Exchequer 10,000,000l., but this was not realised. In February 1800 Pitt announced that the supply he deemed necessary for both civil and military purposes was 39,500,000l., the principal items of military expenditure being as follows:-navy 12,619,000Z., army 11,370,000l., ordnance 1,695,000l., subsidies to German princes 2,500,000l., and expenses of Russian troops 500,000l. It is necessary to bear the foregoing details in mind in order to appreciate the magnitude of the financial sacrifices which our forefathers made in their magnificent struggle with France. The population of France at that time numbered 24,000,000; and, when Napoleon was at the height of his power, France had under her immediate control between fifty and sixty millions of people, or about half the population of Europe.
The total sum voted for expenditure on armaments in 1800 was 25,684,000l., equivalent to, say, 21. 78. 5d. per head of the estimated population. After the Peace of Amiens there was a substantial decline in the army and
navy estimates; but with the rupture of peace in 1803 a vast programme of expenditure was again entered upon. In 1804 the army estimates rose to 19,143,000l. and the navy estimates to 11,715,000l., while the charge for ordnance was increased to 2,052,000l. The cost of armaments gradually increased until 1812 (when the American war broke out), when the aggregate was 42,737,000l. The expenditure during the three succeeding years advanced rapidly until 1815, when the total charge was 77,925,000l., an amount equivalent to 5l. 19s. per head of the estimated population. During the sixteen years 1800 to 1815 the aggregate expenditure on the army was 299,498,000Z., on the navy 258,895,000l., and on ordnance and miscellaneous items 95,801,000l., a total of 654,194,000l., or say 40,900,000l. per annum. One source of expenditure, which bore heavily upon our national resources during the war, consisted of the loans and subsidies granted to foreign countries. The aggregate amount paid under these heads during the twenty-two years 1793-1814 was 46,289,4597., about two-thirds of which total were expended in the latter half of the period. Some idea of the burden of expenditure may be gathered from the fact that it represented, on the average, a sum equivalent to about half the total annual value of our foreign trade throughout those years.
It would be difficult to praise too highly the masterly manner in which the statesmen who directed the foreign policy of Great Britain in those eventful years administered the national finances. It would be equally difficult to pay too great a tribute of admiration to the financial sacrifices which the people made in order to carry out that heroic policy. The principle adopted throughout was to provide as large a sum as possible by means of annual taxation; and they did not shrink even from an income tax of 10 per cent., or 2s. in the pound. There was, of course, a limit to the taxable capacity of the nation, which could not be exceeded by the most heroic methods of finance; and it was impossible to provide the whole of this vast war expenditure out of revenue. After the battle of Waterloo the National Debt amounted to 902,039,000l.; but it must be borne in mind that, owing to the large discount at which the Government issues were made, the actual sum received was nearly
200,000,000l. less than the total of the debt. The annual charge for the debt in 1815 was 32,645,000l. In 1815 the population of the United Kingdom numbered 19,218,000, so that the amount of debt per head was 477., while the annual charge in respect of the service of the debt was over 17. 14s. per head. The magnitude of this charge will be grasped when it is borne in mind that the national wealth at that time was not more than 2,800,000,000l. In other words the National Debt amounted to a sum which was equivalent to nearly one-third of the national wealth; while the annual charge for the service of the debt amounted to about 15 per cent. of the national income. Immediately after the conclusion of the war strenuous and effective efforts were made to reduce the National Debt; and by the beginning of 1819 the amount had fallen to 791,867,000l.
From 1815 until the outbreak of the Crimean war in 1854, the navy estimates fluctuated between six and eleven millions. For 1855-6 they amounted to 19,654,000Z.; but, as peace was concluded early in 1855, the amount expended was only 13,459,000l. After the Russian war the expenditure on the navy declined again until in 1870 it reached the low level of 8,969,000l. For the succeeding two decades it varied between ten and twelve millions; and by 1890 the total had advanced to 14,560,000l. After the alliance of 1895, France and Russia entered upon a vigorous policy of naval construction; and, in order to maintain our relative position, it was necessary in 1897 to increase our naval expenditure to 22,271,000l., of which total 5,292,000l. represented shipbuilding contracts. Two years later the South African war began to exercise an influence upon the navy estimates; and in 1901 the total expenditure reached 30,000,000l. Although the understanding subsequently effected with France and the destruction of the Russian Navy relieved us from the pressure of naval construction from those quarters, a new and more formidable rival to our sea-power arose. Germany entered the field of naval expansion with her famous Navy Act of 1900, which is referred to in an earlier part of this paper. During the decade 1901-10 our navy estimates fluctuated between 31 and 37 millions; and the fortymillions limit was passed for the first time in our history by the estimates for 1910-11. A further substantial
advance was shown by the estimates for 1911-12, which provided for an expenditure of 44,882,0477.
The army estimates since 1815 have, of course, fluctuated in accordance with foreign and colonial policies and the wars in which we have been engaged. From 1815 until the outbreak of the Crimean war the army estimates were generally under ten millions. In 1855 they rose to 20,811,000l. On the restoration of peace, Mr Gladstone, Mr Disraeli and Lord John Russell organised a movement in favour of the reduction of expenditure on armaments, which was practically accepted by the House of Commons; and the army and navy estimates together for the year 1857 only reached 20,699,000l. The Indian Mutiny and the China war rendered a continuance of the policy of retrenchment impracticable; and for the succeeding five years expenditure attained a high level. From 1890 to 1898 the army expenditure varied between 13 and 20 millions, the general tendency being in the direction of the higher total, which was attained in 1898. The South African war naturally exercised an abnormal influence upon army expenditure during the four succeeding years. Peace was concluded on May 31, 1902; but the army estimates for 1903-4 amounted to 36,728,0007., and provided for 236,000 men. The personnel was gradually reduced until 1910-11, when the estimates amounted to 27,760,000l., and the numbers to 184,000 men. The estimates for 1911-12 amount to 27,690,000l. and provide for an establishment of 186,000 men.
It will be observed that the cost of both army and navy has increased during the past fourteen years at a very much more rapid rate than the numbers of the personnel. In 1896-7 the navy estimates provided for 91,500 men and a total expenditure of 22,271,000l.; the 1911-12 estimates make provision for 134,000 men and a total expenditure of 44,882,0477. During the fifteen years, therefore, the personnel has increased to the extent of 46.6 per cent., while the expenditure has grown to the extent of 101.5 per cent. A very substantial portion of the increased expenditure is, of course, due to the greater sums provided in the latter estimate for shipbuilding and naval works. In 1896-7 Lord Lansdowne's army estimates provided for 156,000 men at a total cost of 18,156,0007. ; while Lord Haldane's estimates for 1911-12 provide for
186,000 men and a total expenditure of 27,690,000l. Here again we find a disproportion between the increase of numbers and the increase of expenditure. An expansion of 19.2 per cent. in the numbers has been accompanied by a growth of 52.5 per cent. in the cost. This can be accounted for in some measure by the increase of the pay vote, an increase of 1,800,000l. in the cost of the Territorial army, and one of 1,600,000l. in the Works vote, the last being due to the abolition of the loan system.
It is impossible to say what proportion of the total increase of outlay on maintaining the army and navy may be ascribed to the world-wide diminution in the purchasing power of gold and the increased cost of living that has taken place within the past fifteen years; but there is ground for the belief that the great Service Departments have been affected by this economic influence at least as largely as all other public spending bodies.
The civil expenditure has grown at quite as rapid a rate as the expenditure on armaments. The total civil expenditure of the United Kingdom for 1897-8 amounted to 47,158,000l.; the 1910-11 estimates for these services were 77,283,000l., an increase of 30,125,000l., or 64 per cent. The increase of expenditure on armaments during the same period was 27,866,000l.; so that it will be perceived that the actual amount of the civil expenditure has grown even more rapidly. More than one-half of the growth of civil expenditure is due to old age pensions (9,250,000l.), and to public education, which has increased by 7,100,000l. Attention may also be directed to the growth of Local Government expenditure in recent years. In 1895-6 local expenditure amounted to 92 millions sterling; in 1907-8 the total had increased to 165 millions, but of course these figures include receipts from loans. There are now about 25,000 local spending bodies in England and Wales; and the outstanding debt at the end of 1907 amounted to 494,500,000l. The aggregate debt of the Local Authorities of the United Kingdom now exceeds 550,000,000Z.
But national expenditure must, like individual expenditure, be judged in relation to the wealth and income of the spender; and in the general consideration of this question there has been an almost universal dis