This Little Britain Page 18

  Second, there’s lots about Britain that makes sense when we understand where we’ve come from. Our property obsession, for instance, seems to be part of our historical DNA, but there’s more to it than that. Modern Britain leads Europe in the gloomy statistics of divorce, teenage pregnancy, absent fathers and single mothers. This may be sad—but is it surprising? Other European societies all come from a past in which families were more tightly bound than ours. The family structures we have today are not so very different from those present in 1250. Being the world’s über-capitalists brought us all kinds of good things, but the strong extended family was never one of them.

  Third, it’s become an idée reçue that England has long been stultified by a rigid class structure. Really? Was there any society in Europe that has allowed more social mobility than ours has done over the last thousand years or so? All those property-dealing small farmers were aiming to better themselves. Local archives are full of just such success stories: subsistence farmers who did well, whose kids became yeomen, whose grandkids became gentry.* This was an English phenomenon much more than it was a European one.

  And last, consider this. This piece began by mentioning two societies—communist Czechoslovakia and tsarist Russia—which lacked fully developed property rights. Those same societies were oppressive, undemocratic and unfree. That’s no coincidence. On the whole, as a vast generalization across time and place, the more developed a society’s property rights, the more free that society has been. If the courts and legal system defend a person’s right to own something, then the political system tends to value that right too. The last word† goes to John Aylmer, a well-travelled Englishman writing in 1559:

  Oh England, England, thou knowest not thine own wealth: because thou seest not other countries penury. Oh if thou sawest the peasants of France, how they are scraped to the bones, and what extremities they suffer: thou wouldest think thy self blessed…The husbandman, all that he hath gotten in his whole life, loseth it upon one day. For when so ever they have war (as they are never without it) the kings soldiers enter into the poor mans house, eateth and drinketh up all that he ever hath…Now compare them with thee: and thou shalt see how happy thou art. They eat herbs: and thou Beef and Mutton. They roots: and thou butter, cheese and eggs. They drink commonly water: and thou good ale and beer.

  Meat, beer and an aversion to veg. Who knows? Perhaps those ancient property rights go some way towards explaining our diet too.

  * We owe our archives to a combination of bureaucracy, literacy, peace and a climate that doesn’t destroy paper.

  * Not to mention the inverse: gentry whose grandkids became peasants.

  † Not an unbiased one, it has to be said: this is the man who wrote ‘God is English’.

  THE MONSTER WITH 10,000 EYES

  In the late 1680s, Europe stood braced for war. An expansionist France sought to secure its own borders by dominating the lands that lay immediately beyond, most notably the Dutch Republic. In the past, England had been Holland’s firm (and Protestant) ally against the French—but now that England had, in James II, a Catholic king with a Catholic heir, that alliance looked shaky at best. The precarious balance couldn’t last for long, and didn’t. On 27 September 1688, French troops attacked across the Rhine. Fearing its imminent destruction, the Dutch Republic, gambling heavily, put together an invasion fleet and set sail for England. If the English wouldn’t support the Dutch of their own accord, then Willem, the Prince of Orange, planned to force them.

  These manoeuvres were the opening gambits in what was effectively the first world war: a long century of conflict that would stretch from Lisbon to Moscow within Europe, and from India to North America beyond. It was a war that would sow the seeds for violence right up to the present day, notably in Ireland. It was a war of global domination, fought between Britain and France. To the victor, everything: imperial, naval, commercial, financial, industrial and technological superiority. To the loser, revolution, regicide, invasion, bankruptcy and defeat.

  Because we know the outcome of this contest, it’s easy to ascribe a kind of inevitability to the way things played out. Britain’s invincible navy protected her commerce, won overseas territories and gave the country the financial strength to subsidize the constant Continental wars that so drained the French state. There’s truth in that picture, of course, yet one only has to shift perspective very slightly to give events an entirely different complexion. Britain was a small country, France a big one. Since France was allied to Spain through most of that long century of struggle, the resources ranged against British success seemed almost insuperable.

  Britain France Brit as % of France Spain Brit as % of France and Spain

  Population, million

  1700 8.6 21.5 40% 30.2 28%

  1820 21.2 31.3 68% 43.5 49%

  National income, billion 1990 dollars

  1700 10.7 19.5 55% 27.0 40%

  1820 36.2 35.5 102% 48.5 75%

  In population terms, Britain was hopelessly inferior to France; in economic terms less so, but still at a decisive disadvantage to the combined House of Bourbon.

  These resources would matter. The ‘long eighteenth century’ would see a series of major wars.* In each case, the British state ended up spending at least 85 per cent of its resources on the army, the navy, or in servicing the debts that military spending had generated. In the final three wars of the era, that figure rose to well over 90 per cent. Even in peacetime, it was rare for the state’s ordinary civil expenditure to come to more than one fifth of the total. In short, the Georgian British state was a war machine, gathering resources to fight wars or, in peacetime, paying down the debts from the last war and maintaining armed readiness for the next one. Money alone wins nothing, but simple maths would have argued that Britain was playing against impossible odds.

  To make matters worse, seventeenth-century England had possessed no more than the most rudimentary methods of public finance. English kings had long been obliged to live off their own royal estates and the occasional grudging subvention from parliament. When all this wasn’t enough, monarchs had grabbed any other means available: borrowing short term, looting monasteries, selling offices.* Though English tax collection had improved, public finance was still in the Dark Ages.

  Fortunately for the country’s future, in 1688 it enjoyed the excellent good fortune to be invaded by the ever-competent Dutch. The Dutch not only brought a new king, they brought the first truly modern system of state finance: long-term borrowing, no forced loans, repayments out of general taxation, and the whole thing monitored by a representative assembly. It was this system that William brought to England in 1688. The first long-term loan in English history dates from 1693. In 1694, the Bank of England was created. Further reforms followed, and bore fruit. In 1690, the English government had borrowed at rates of around 11 per cent. By the 1720s, borrowing rates had dropped to just 3 per cent, only a whisker above the rates enjoyed by the Dutch themselves. With an effective finance system in place, the British used it with gusto. From the Glorious Revolution in 1688 to the Battle of Waterloo in 1815, the gross national debt increased about seven times over, more than doubling as a share of national income.

  Borrowing is all very well, of course, but debts have to be repaid. As the scale of war and borrowing ratcheted up, so too did taxes—to the extent that almost everything had some kind of tax slapped on it. To quote Sydney Smith, writing in 1820, Britons were obliged to pay:

  Taxes upon everything which it is pleasant to see, hear, feel, smell, or taste. Taxes upon warmth, light, and locomotion. Taxes on everything on earth or under the earth, on everything that comes from abroad or is grown at home. Taxes on the raw material, taxes on every fresh value that is added to it by the industry of man. Taxes on the sauce which pampers man’s appetite, and the drug which restores him to health; on the ermine which decorates the judge, and the rope which hangs the criminal; on the poor man’s salt and the rich man’s spice; on the brass nails of the coffin, a
nd the ribbons of the bride; at bed or board; couchant or levant, we must pay…the dying Englishman, pouring his medicine, which has paid 7 per cent., into a spoon that has paid 15 per cent, flings himself back upon his chintz bed, which has paid 22 per cent., and expires in the arms of an apothecary who has paid a licence of a hundred pounds for the privilege of putting him to death…His virtues are handed down to posterity on taxed marble, and he will then be gathered to his fathers, to be taxed no more.

  Smith’s rant didn’t even mention the land tax and (horror of un-British horrors) the short-lived income tax. Because Britain spent more per capita on war than any of her Continental rivals, she also paid more to finance it, becoming the most highly taxed nation on earth, with a per capita tax take that far exceeded French levels.

  Highly taxed, hugely indebted, spending lavishly on war—Georgian Britain might appear as if disaster was inevitable. Yet when disaster fell, it struck France, not Britain. The French problem was threefold.

  First off, the French king in effect contracted out a huge swath of tax collection to private ‘tax farmers’, who had the right to levy the land tax, or taille, in exchange for a fixed payment to the king. The system could hardly have been better designed to incentivize venality and exploitation in the ‘farmers’—and bitterness and resentment in the ‘farmed’. By contrast, the British system relied on the first truly modern tax collection bureaucracy. Though that bureaucracy was nicknamed the ‘monster with 10,000 eyes’, at least those eyes were largely impartial, largely uncorrupt and watched everyone.

  Second, the French system was blatant, where the British one was subtle. Although Britons knew they were taxed, those taxes blended invisibly with the cost of goods they were purchasing (a Georgian stealth tax, in fact). What was more, regressive though the system often was, luxury items from carriages to hair powder bore rates of tax that were sharply higher than the rates imposed on simple necessities. In France, excise taxes fell heavily on a much narrower range of commodities, including basics such as salt. The taille itself was collected by intrusive central officers, who formed an obvious target for dislike.

  Finally, taxes levied by a parliament carried more legitimacy than those imposed by a king. It’s easily forgotten that, in 1715, almost one quarter of all adult males in England and Wales had the right to vote. (The share fell thereafter.) This wasn’t democracy as we know it, but it certainly beat anything available across the Channel. Nobody loves being taxed, but the ability to vote out those taxing you certainly eases the pain.

  In the war of resources, Britain won. The British government never once defaulted on its debts, the French monarchy did so repeatedly. The result of those French defaults was permanently higher interest rates. In the aftermath of the 1770 default, French interest rates were over 10 per cent, when British rates were barely more than 3 per cent. All that interest needed to be paid. Where British taxation went directly to fund war, French taxation was often simply paying off past financial mismanagement.

  Furthermore, as any investment banker knows, financial distress isn’t simply about paying more for your money, it’s also about being vastly more limited in your ability to access it at all. Military theorists sometimes speak of a ‘strategic reserve’, referring to troops deliberately withheld from battle so that they can be deployed when and where they’ll do most good. Likewise, the concept of ‘strategic depth’ refers to the distance of the front-line troops from the industrial heartland of the combatants, and the ease with which any attacking thrust can be absorbed by those distances—Russia being notably well endowed in that respect. The financial flexibility afforded by a decent credit rating offers something strategically akin to both reserve and depth. If more resources are needed to tip the course of a war, a strong borrower can find them. If an attacking thrust cuts deeper than anticipated, a strong borrower can muster the men, ships, guns and cash needed to repair the damage and recommit to combat.

  Britain always had that flexibility; France, when it mattered most, did not. Just as the United States is said to have won the cold war by engaging in an arms race that the Soviet Union could not afford, so too did British financial competition end up pushing the French monarchy into tax increases that the country wouldn’t bear. When, in 1788, French fiscal problems came to crisis point, the king’s attempts to solve them ended up triggering revolution and, in due course, the loss of the royal head to Madame Guillotine. That same royal head probably had other things to contemplate as it lay beneath the shadow of the blade, but its fate had been determined not merely by the citoyens and citoyennes of Revolution, but by the bankers of Threadneedle Street and the taxmen of Whitehall too.

  * Namely: the Nine Years War (1689-97), the War of the Spanish Succession (1702-13), the War of Jenkins’ Ear, which merged with the War of the Austrian Succession (1739-48), the Seven Years War (1756-63), the American War of Independence (1775-83), the French Revolutionary War (1793-1801) and finally the Napoleonic Wars (1803-15).

  * The variable standard of kingly behaviour meant that those lending money were taking something of a punt, to put it mildly. When Edward I expelled the Jews, it was no coincidence that he was expelling his major group of creditors. The Jews, however, were luckier than the French Templars. When Philip IV’s debts to the Knights Templar became too onerous, he dissolved the organization and, for good measure, had a good many of its members tortured for heresy.

  WHEAT WITHOUT DOONG

  Five million years ago, apes clambered down from the trees. A hundred and fifty thousand years ago, those early hominids had spawned a line that was recognizably human: Homo sapiens. Some ten thousand years back, humans began to develop agriculture. The old upper limit to the size of human societies was swept away. Civilization became possible.

  And then? Well, progress. Crops were improved. Ploughs were invented and refined. Farmer-power was supplemented by horse-and ox-power. Agricultural yields increased. But not much. In 1600, English agriculture was pretty typical of the rest of Europe—the same basic methods, the same range of crops, the same approximate level of productivity—and that productivity wasn’t much to boast of. Approximately 70 per cent of the entire population worked the land and produced just enough food to keep the country fed. Put another way, each agricultural worker produced only enough food to feed himself (and any non-working dependants) plus about half the food needed to feed a non-agricultural worker (and his non-working dependants). Everything else in human society—religion, commerce, government, science, industry and the rest—had to fit into the narrow surplus generated by those farmers.

  Nor was that surplus particularly elastic. If the population grew, there was less food to go around. Less food meant higher death rates. At least three times in history (during Roman times, in the thirteenth century and in the sixteenth century), the English population grew to around 5.5 million, then hit its limit and fell back again, often hard and far. Economic historians have even been able to map the way the price mechanism regulated population size. When population growth was strong, inflation, representing mostly agricultural products, rose. When population growth was weak or negative, inflation was weak or negative. These days, inflation is a mere inconvenience. Back then, it meant that the price of food rose to the point where the poor could no longer buy enough to feed themselves adequately; in those days, inflation killed.

  The problem, in a word, was nitrogen. Plants (and the animals that feed off them) need three basic elements for growth: potassium, phosphorus and nitrogen. All three elements are depleted by farming, but the one that proved to be the limiting factor to output was nitrogen. Even with every attention paid to manuring fields, fallow seasons and all the rest of it, traditional farming practices had caused nitrate levels in the soil to fall to some two-thirds of what they would otherwise have been. Other problems existed, but the nitrogen problem was central.

  The predicament seemed eternal, unchangeable. In 1798, an Anglican parson, Thomas Malthus, called attention to it, declaring in his famous E
ssay on the Principle of Population:

  The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race…sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population.

  It seemed fair comment; a bleak but accurate summary of human history so far.

  But Malthus was wrong, his words already seventeen years out of date. Because in 1781, something strange began to happen. The ancient relationship between population and prices began to fail. The late eighteenth century was a time of rapid population growth. True to past form, from 1751 onwards, rising population pressure had run hand in hand with higher prices. In 1781, population growth and inflation had both reached their highest levels since at least 1540. The old savage limits on how far a country could grow seemed all set to reimpose themselves.

  Only this time, they didn’t. As the 1780s progressed, population growth increased, while inflation inched down. In the 1790s, the rate of population growth increased yet again to unprecedented heights, while inflation actually turned negative. The old chains had finally been broken. The nineteenth century would see continued population growth and continuing gains in agricultural productivity. For the first time since the invention of agriculture, the growth and development of human society were no longer radically curtailed by its ability to grow food.