"How Much Credit Does The Younger Pitt Deserve For The "National Revival" Of The Years 1784-1793?"
William Pitt the Younger has the distinction of being the youngest Prime Minister this country ever had, being only 24 and recently out of university when he took office in December 1783. He is also remembered as the Prime Minster responsible for the "National Revival", which saw a restoration of the country’s finances and international reputation, and a return to economic prosperity and political stability. That such an improvement in the fortunes of Britain took place is not doubted, but the question concerning Pitt is how far was this revival due to his policies and leadership of the country, and how far he simply came into office at the right time, when the situation was bad but was about to get very much better of its own accord.
The main reason why the period before Pitt was remembered as such a bad time was the loss of America. Defeat at the hands of the colonists of the Thirteen States had been a major humiliation for Britain, badly damaging national morale, but when Pitt came to power there were more practical problems to be faced on the international scene. Britain had become diplomatically isolated in Europe - the French and Spanish had fought with the Americans against Britain in the war, and there was conflict with the Dutch and Russians. This isolation was emphasised by an alliance between the Dutch and French threatening Britain’s trading position. Without a friend in Europe, Britain also faced economic problems from the loss of her colonies : America had been the largest market for British manufactured goods, reserved for British exporters, and now the new United States was able to trade with who she wished.
Britain’s problems were also severe domestically. It had been through a time of great political instability, and many, especially the king, wanted a return to stability as soon as possible. The economy was badly hit by the years of war, and this was very evident in the government finances, which were in a very poor state. The National Debt had increased from £127m in 1775 to £242m in 1782, and revenue into the government was actually falling, due largely to trade lost from the American colonies. In 1783, just before Pitt came to power, government expenditure was £10.8m above income and payments on debt was crippling the country - there was even the fear of national bankruptcy as confidence plunged downwards.
This was the situation that Pitt inherited - a demoralised, isolated country with crippled finances and a threatened trade position. He was appointed as Prime Minister in December 1783 by George III, replacing an unlikely coalition of the long serving Lord North, and the Rockingham Whigs. This coalition had been forced on George as the only means of sustaining government, but he hoped that Pitt could break their control over Parliament and establish a stable government. The coalition remained in control of the House of Commons and felt they would have little trouble in forcing Pitt to resign and George to re-appoint them. Pitt was ridiculed because of his age and only slight experience of ministerial office. Therefore, if Pitt were to create the stable government needed to steer the country towards renewed prosperity he would first need to get control of Parliament. He used the three months before the election to get a good reputation and a measure of support in Parliament, impressing many with his clear headed debating skills, persuading many independent MPs to join him. He had little time to prove his mettle, but he came through the difficult first weeks and in the election of 1784 his government won a stunning victory over their opponents and gained the large and dependable Parliamentary majority needed for strong government. He had partly won the election with his reputation as a "new broom" - a vigorous reformer, who could bring the country to success again, and so he had to use his potential 7 years in stable office to solve the problems built up.
William Pitt’s main aims when he came to real control in 1784 were to reduce the National Debt and to improve the administration system. He saw both of these as vital to the prosperity of the country, and immediately started to enact policies to solve them. The first problem he attacked was the smuggling trade in tea. This was a major import and the high duties charged on it meant a substantial smuggling trade had developed, obviously depriving customs and the legitimate tea companies of much valuable income. Estimates, which are obviously very difficult with an illegal trade, put smuggled imports of tea at as much as a fifth of all imported. Pitt’s response to this was a novel one - he reduced the duties on tea massively, trebling the value of imports into the country by the East India Company. This policy not only removed much of the profitability from the smuggling trade but had positive effects on Britain’s colonial position, as the tea trade in China spearheaded an expansion of British interests in the Far East, compensating for the loss of the American colonies. This is a very good example of the kind of original policies that Pitt became well known for, improving Britain’s position in the world and directly attacking the problems that held her back.
The reduction in tea duty obviously did not help the government’s budget deficit as it reduced revenue, and so Pitt brought in a range of new taxes to help restore the government’s revenue. One of the most famous - and original - of these was the Window Tax. This was aimed, like many of Pitt’s taxes, to fall on the well-off far more than the poor, but proved to be unpopular and had to be withdrawn. Taxes were put on such luxury items as hackney carriages, hair powder and even dogs and met with considerable resentment, never raising much revenue. Few were as unpopular as the tax on shops, which again had to be withdrawn. However, the government’s finances did improve substantially during the period of Pitt’s premiership before the wars of the 1790s began. By 1792 net income was 47% higher than 1783, and the Exchequer had a surplus of £1.7m.
Pitt also did much in his first months to solve the developing crisis with the National Debt. When he came in, the size of the debt had doubled in only 10 years and as much as half the government’s revenue was swallowed up in repayments on it. A worrying feature of this was the proportion of unsecured, or unfunded, debt. To get people to lend money the government bonds were issued at discounts of up to 20%, an extremely high level. By 1784-5 Pitt had managed to get the discount down to only 5%, showing the amount of investors with enough confidence in the stability of the government and prosperity of the country. Once that situation was resolved, Pitt came up with a policy to actually reduce the size of the debt - the Sinking Fund. This was a system where a proportion of any surplus in the budget would be automatically used to pay for portion of the National Debt. This did meet with initial success and some of the debt was paid off in the 1780s, although the system became useless by 1793, with expenditure for war. Its fiscal effects were not dramatic but its real value could be more in the confidence in the government that it gave to investors and members of Parliament.
Another major part of the well known and successful policies of Pit is his commitment to some tariff reductions. The idea of tariff reductions to help an economy was a relatively new one, and went against much of traditional thought on international trade. Pitt seems to have been influenced to an extent by economic theorists, especially Adam Smith, whose book Wealth of Nations was read by Pitt at university, who expounded their theories on free trade being economically beneficial to an economy. He tried unsuccessfully to incorporate Ireland into a free trade area, an unusual defeat, but later successfully negotiated a similar treaty with France, the Eden Treaty of 1786. This opened up French markets to British manufacturers, something of great benefit as industry in Britain was already efficient and so well placed to benefit from an extension of free trade. This new move towards free trade, which would become one of the dominant policies of the nineteenth century, was not based on a doctrinal belief of Pitt’s but rather common sense and self interest. After all, the treaty also marked Britain’s move back into the European system as relations with France improved.
Indeed, improving foreign relations was another goal of Pitt, and another area where a lot of improvement was needed. Pitt sent emissaries all over Europe trying to negotiate trade agreements, but with limited success. However, one major area where he was, at least in the short term, successful, was the formation of the Triple Alliance, of Britain, the United Provinces and Prussia in 1787. This brought Britain’s prestige much higher in Europe than it had been, and helped defeat the Spanish in 1790 when they tried to take trade in the North Pacific. This was another policy where economic benefits were felt as a result - the added security the Alliance brought meant that armed forces expenditure could be trimmed, helping to reduce government expenditure further. The Alliance did not last long - it fell apart in 1793 as Prussia joined in the dismemberment of Poland, but it left Britain more respected and important diplomatically, a significant revival.
So far, all the improvements in Britain’s fortunes brought by Pitt’s government in the 1780s have been changes in the economic structure or related to foreign relations, but he also had plans to reform the very structure of government and the civil service. Reform of the administrative system was one of his priorities when he came to power, and it was one of the most important changes he brought to the country. For many years, the granting of offices in the administration had been a major plank of the patronage system, where the king kept some control over politics. They would be used for rewarding service or as part of a promise for future loyalty, and they were very plentiful. Because the system had grown up to suit political rather than administrative needs, it had become hugely inefficient, making government less effective and far more expensive. Pitt knew that the system was protected by the powers of the establishment that had created it, and so decided that a radical assault on the unneeded posts would be unwise. After all, he still depended to a large extent on royal support for the retention of power - he was willing to create new peers to help Pitt’s government stay on its feet - 119 peers were created or advanced in Pitt’s premiership. Anyway, Pitt had come to power largely because the king preferred him to the previous ministry, and if the monarch felt his power under threat he could do this again. Therefore Pitt took a very sensible policy of bypassing patronage rather than assaulting it. In 1786 a commission recommended the scrapping of 180 redundant offices, but rather than doing this, he simply waited until their occupants died or retired and did not replace them, effectively dissolving the post. In this way 28 of the offices had gone by 1792, and nearly all of them by Pitt’s death in 1806. The reduction in the number of redundant administrative posts did have beneficial effects for government finances, an important part of the revival, but more significant was the effect it had of reducing the powers of the monarch in government, making the country more democratic. By the time the Regency began in 1812 the patronage system was nearly destroyed, the crown deprived of its "means to reward service" so important in eighteenth century politics.
Therefore, the country did see a significant national revival in even the first few years of Pitt’s premiership. However, we have to ask how much of this was due to the policies of Pitt’s government. It has to be remembered that Pitt was not a great reformer - constitutionally he was a conservative, making no attempts to change the system of cabinet government, the established church, the royal prerogative or parties. He did preside over a great revival in the finances of the government, but much of this was due to a general pickup in economic activity, little of which was due to specific government economic policies. In 1790 the Inspector-General of Imports and Exports wrote to Pitt "the vast increase of the trade of this country since the termination of the last war must be a matter of astonishment even to those who are the best acquainted with the flourishing state of our manufacturers and our internal industry". This was partly the result of the stability Pitt’s government brought but was really the first stages of what became the Industrial Revolution, a process with origins far before Pitt. Another part of the perceived failing of Britain’s fortunes before Pitt was the loss of the American colonies and the economic problems this was expected to bring, but in the event the United States continued to trade with Britain as we were the most advanced trading nation, most suited to their needs, and Britain still needed America’s raw materials, especially cotton. By 1785 British exports to the states were back to the levels they were at in the early 1770s. This contributed greatly to Britain’s economic prosperity because of the customs income that returned.
So, was Pitt simply lucky in inheriting the country when he did? The situation he faced was certainly better than it seemed. The economy, national morale and international reputation of the country were all battered by the war and with peace would all increase under stable leadership. The financial reforms he put in place helped the revival of government income far less than the economic upturn for which he could claim little credit. His abilities certainly helped solve immediate short term crises when he came to office, especially relating to the national debt, but the economy of the country was basically sound and needed only sensible, stable governing to grow and prosper. The provision of this was perhaps his greatest contribution. The National revival would almost certainly have happened without Pitt, but his sensible, clear headed policies and personality were the best suited to take full advantage of the potential that he inherited.
John W Derry, Politics In The Age Of Fox, Pitt And Liverpool, (Macmillan, 1990)
Eric J Evans, The Forging of the Modern State : Early Industrial Britain 1783-1870, (Longman, 1983)
F. O’Gorman, The Whig Party and the French Revolution, (Macmillan, 1967)
Glyn Williams and John Ramsden, Ruling Britannia - A political history of Britain 1688- 1988, (Longman, 1990)