England underwent a financial revolution in the 1690s, as attempts by its Whig governments to raise money for the nation’s war efforts led to a series of changes in the management of government revenue. The most important development was the establishment in 1694 of the Bank of England. Its loans allowed government borrowing to increase from around £1 million in 1688 to £16.7 million in 1697, and £54 million in 1720, and its collaboration with the Treasury ensured that interest rates declined from 14 per cent in the early 1690s to between 6 and 8 per cent in the late 1690s, and 3 per cent by the 1730s.1 Such successes were a product of the state-backed guarantees that the bank provided, its pioneering use of paper money as a mechanism for releasing credit into the economy, and the diverse range of investment opportunities it provided.2 Indeed, not only could individuals deposit money in the bank itself, but the tickets and tallies it issued became tradable commodities.
This ensured that existing lenders could quickly cash in their loans, and there were ready opportunities for new investors. As a result, the Bank of England solved many of the government’s financial problems through ensuring that, in the words of P. G. M. Dickson, ‘debts that were permanent for the state [became] liquid for the individual; subject only to the risk of capital loss if
market prices fell’.3
These changes in England’s financial infrastructure had a number of political consequences.
Partnered with improvements in the collection of tax revenue, the expansion of borrowing caused a substantial increase in annual government expenditure, which climbed from £1.8 million in 1688 to
£6.2 million in 1695, and after 1710 remained consistently over £5 million.4 Access to such financial resources played a vital part in securing British successes in the Wars of the Grand Alliance and Spanish Succession, and enabled the English and, later, British state to fund larger and more permanent bureaucracies and armies. This, in turn, helped to protect the state from threats both at home and abroad. At the same time, the transferability of government bonds, and the market this created, produced a shift in the relationship between the populace and the state. As Karl Wennerlind has argued, whereas the government’s credit had previously been ‘dictated by the interactions between the monarch and a small number of powerful financiers’, it became increasingly reliant on the public’s perception of the state’s ‘current capacity to service the interest payments and its imaginary ability to repay the debt in some distant, theoretical future’.5 Public opinion, as a consequence, started to function as ‘the arbiter of public credit’, and polemicists responded with a series of attempts either to support or undermine confidence in the government’s financial management.6
Such patterns of argument did much to shape political debate in the Walpolean era. For the Court Whigs, the key task was to demonstrate the ways in which, under their management, England’s new financial infrastructure had contributed both to the political and economic strength of the nation.7 With regard to the former issue, writers emphasised the support that the culture of borrowing had given to English liberties. As one writer noted, the ‘national Debt was contracted […] for the Preservation of our most excellent Constitution from Popery and Slavery. This encouraged the best Subjects at the Revolution to venture their Lives and Fortunes in maintaining a long and expensive War.’8 In relation to economic matters, Court propagandists maintained that it was financial reforms that had helped to transform England into a wealthy nation. Thus the London Journal argued that bank notes and South Sea bonds had served usefully as money, that getting into debt had become a ‘business itself’, and that banks supported the circulation of wealth by ‘enabling dead money to be gathered into stocks’.9 These arguments were given further strength by another strand of Court Whig discourse which emphasised that England’s much-celebrated liberties were a relatively modern innovation. Lord Hervey, for example, writing in his Ancient and Modern Liberty Stated and Compared (1734), argued that
’Till the Restoration there was no such thing as Liberty; That after the Restoration was nothing compared to the Strength it gain’d at the Revolution; and the Strength it then acquired, is so far, in my Opinion of Things, from being now impair’d, that it never flourish’d in such full Vigor as in the happy and prosperous Reign of his present Majesty.10
In making such claims, writers drew on the ideas of Spelman and Brady, as well as James Harrington’s Baconian account in Oceana (1656) of the changes instigated by Henry VII in patterns of property ownership.11 Thus the London Journal rejected Whiggish glorifications of Old England, maintaining instead that the ‘Ancient Constitution’ was the product of an ‘Over-balance of Lands, vested in the King, the Nobility and the Church’. This ensured that the commons lived the lives of
‘Beggars and Slaves’.12 Such a state of affairs had only been ameliorated through the actions of Henry VII who, by allowing the lords to alienate their land, had started the process whereby the balance of property shifted to the people. In the present, the author estimated, this latter group held above 17 parts in 20 of the land ‘besides their vast Wealth in Money, Stock &c.’ and, as a result, ‘by
the Modern Constitution the People are strong’ and England was a nation of ‘Rich Men and Freemen’.13 Hervey, meanwhile, offered a similar view of the modern era: ‘[England’s] Possessions abroad are unattack’d, and her Commerce so unrival’d, so unobstructed, and so flourishing, that the Imports and Exports were never higher, nor our Credit in greater Prosperity.’14 The age of public debt for such writers, therefore, was also the age of liberty and wealth.
The most prominent critique of this sort of analysis was that developed by Lord Bolingbroke. From the mid-1720s onwards, Bolingbroke was engaged in a campaign to unite dissident Whigs and Tories into an anti-Walpolean Patriot party.15 This was no easy task. The sympathy shown by many opposition Whigs for Dissent, coupled with the anti-clericalism and Erastian tendencies of some Whig propagandists, was anathema for staunchly Church of England Tories and made combined action on religious issues impractical.16 Cooperation was possible, however, in relation to Court financial practices, and Bolingbroke developed a series of stinging attacks on the national debt, stockjobbing and the nation’s trading companies, arguing that these institutions were undermining both the constitution and England’s commercial interests. Historical analysis played a key part in this commentary, most notably through Bolingbroke’s Remarks on the History of England (1743), a work assembled from a series of essays first published in the opposition journal the Craftsman between September 1730 and May 1731.17 For Bolingbroke, England’s history was structured around an ongoing conflict between the ‘Spirit of Liberty’, which sought to advance the nation’s interests, and a
‘Spirit of Faction’, that expressed only ‘personal and private Interests’.18 To develop this theme, he drew both on Rapin’s analysis of the ‘ancient constitution’ and Harrington’s discussion of the balance of property. His debt to Harrington is most apparent in his account of Henry VII. Here, despite emphasising that the Tudor king’s actions were shaped by the ‘Spirit of Faction’, he endorsed the Harringtonian claim that Henry’s reforms had caused the balance of property to pass from the nobility to the commons. To an extent, such a position distanced Bolingbroke from Rapin. Indeed, whereas the Frenchman viewed Henry’s influence as entirely pernicious, Bolingbroke not only emphasised the long-term benefits of his actions, but repeated Bacon’s Tacitean assertion that Henry’s avarice made him a highly successful promoter of ‘Husbandry, Manufactures [and] general Commerce’.19 Bolingbroke’s key point, however, was that reforms enacted by Henry served to re-establish the basic
‘Principles of Government, which had prevail’d amongst our Saxon Ancestors’ and which had been at the heart of Rapin’s analysis.20
Once this argument was formulated, the reigns of Elizabeth and James could be dealt with in a relatively straightforward manner. Thus, as Harrington had done, Bolingbroke maintained that Elizabeth’s awareness of the people’s newfound power led her to court their affections, and he went on to demonstrate this through an analysis that owed much to Rapin. Ideas of economic statecraft were key to his argument, and he emphasised that the Queen’s popularity was, in part, a product of her success in promoting commerce, and, through eliminating the debts amassed by her predecessors,
‘restoring the Credit of the Crown’.21 However, while Elizabeth’s sensitivity to the balance of property led to a victory for the ‘Spirit of Liberty’ and national affluence, James failed to follow her example. This explained a number of Stuart England’s key features, also discussed by Rapin: the rise of government debts; the decline of commerce; the return of the ‘Spirit of Faction’; and, as a result, the emergence of the political crisis that eventually led to the collapse of the monarchy in the 1640s.
For Bolingbroke, both Elizabeth’s successes and James’s failures had important consequences for modern politics. English history, he argued, produced numerous examples of ‘Causes of the same Kind laid again, and producing Effects of the same Nature’.22 Walpole’s regime, like James’s, he
maintained, was driven by the ‘spirit of faction’. Indeed, the Remarks explicitly presented the ‘Spirit of Stockjobbing’ that had come to characterise the modern age as a form of faction, noting that both worked ‘to advance the Interest of a few worthless Individuals, at the Expence of the whole Community’, and that both threatened trade and liberty.23 Britain, therefore, was not experiencing new forms of wealth and freedom as the Court Whigs maintained, but rather old varieties of poverty and corruption. Moreover, Jacobean history provided a good guide as to what was likely to happen when a self-interested and factious government ruled over a nation where the balance of property lay with the people: ‘Jealousy, Discontent, Tumult’ and, potentially, ‘open Resistance, and [the] Deposition of the Prince’.24