The effort to curb the abuses of that hateful class privilege forms the best feature of Pitt’s Budget of 1784. In other respects it is not remarkable. The new imposts have none of the merits attending his Commutation Act for the repression of smuggling. What is surprising is that he did not try the experiment of increasing the House Duty, an impost which fell mainly upon the rich, was easy to collect, and could be made very remunerative.[241] It was actually tried by North in 1778, apparently because it had borne good results in Holland.[242] Thus, the machinery was at hand, and only needed to be more strenuously worked. I have failed to find in the Pitt Papers the reason why the statesman did not try this expedient; still less why he imposed the niggling and irritating little taxes named above. He estimated the yield of the duties on bricks, paper, and hackney coaches at no more than £50,000, £18,000, and £12,000 respectively. Further, the tax on candles, though only of one halfpenny the pound, was certainly burdensome to the poor. On the whole, it is not surprising that a rhymester thus set forth the condition of John Bull:
One would think there’s not room one new impost to put
From the crown of the head to the sole of the foot.
Like Job, thus John Bull his condition deplores,
Very patient, indeed, and all covered with sores.
Other persons of a quasi-scientific turn sought comfort in the reflection that taxation ought, like the air, to press on the individual at all points in order not to be felt.
In truth, Pitt’s financial genius matured slowly. Possibly he thought the situation too serious to admit of doubtful experiments. Certainly he went step by step, as is seen by reference to his next Budget. Its most significant feature was the endeavour to simplify the collection of taxes. Hitherto there had been much overlapping and consequent waste of effort, owing to the existence of three Boards or Committees. The Excise Department managed the taxes on carriages, wagons, carts, and male-servants; the new taxes on horses and race-horses were under the Commissioners of Stamps; while separate Commissioners administered the imposts on houses and windows. In place of this complex, expensive, and inefficient machinery, Pitt instituted a single “Board for Taxes,” which supervised affairs more cheaply and left few loopholes for evasion. The imposts named above were thenceforth termed “the assessed taxes.”[243] In that year he also imposed taxes on female servants, shops, and attorneys. Here again his fiscal policy distinctly belonged to the old order of things, when men, despairing of finding any widespread and very lucrative tax, grumblingly submitted to duties on every article of consumption and every important action of life. The days of a few simple and highly productive taxes had not fully dawned.[244] The sequel will show that, only under the intolerable pressure of the long war with France, did Pitt work his way to the Income Tax; and the terms in which he replied to the Lord Provost of Glasgow, who in March 1798 recommended that impost, show that, while always favouring it on theoretical grounds, he doubted the possibility of collecting it systematically.
In 1785 we are still in the age of youthful hopes and experiments. We find Pitt writing to Wilberforce on the last day of September: “The produce of our revenues is glorious, and I am half mad with a project which will give our supplies the effect almost of magic in the reduction of debt.”[245] Equally hopeful is his letter to Lord Buckingham on 8th November, in which he speaks of the rise of stocks being fully justified by the splendid surplus of “£800,000 per annum at least. The little that is wanting to make good the complete million may be had with ease.”[246] Both references are to the plan of a Sinking Fund which was to work wonders with the National Debt, blotting it out in two or three generations by the alchemy of compound interest.
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The plan of a Sinking Fund was not wholly his, although it came to bear Pitt’s name. Walpole, early in his career, had started a scheme whereby a certain sum was annually set apart for forming a fund which would accumulate by compound interest and finally be available for the extinction of the National Debt. This plan came to grief, because in 1732 Walpole began to draw on his own fund rather than increase the Land Tax and annoy country gentlemen. This, we may note, is one of the perils of a Sinking Fund that, guard it as its founder may, some thriftless Chancellor of the Exchequer will insist on filching from it. That was the fate of Walpole’s fund. The scheme, however, survived, and received a new impulse in 1772, when Dr. Price, a Nonconformist minister, called public attention to it by a pamphlet on the National Debt. In this he proved by irrefutable arithmetic that a Sinking Fund, if honestly worked, must ultimately wipe out the largest debt that can be conceived. For, as he hopefully pointed out, a single seed, if its produce could be entirely set apart for sowing, would in course of time multiply so vastly as to fill all the lands where it could grow. This is true; but the simile implies singular powers of self-control in the sowers, especially if they are beset by hunger before that glorious climax is attained. Descending to the more practical domain of the money market, Price proved that a sum of £200,000, set apart annually, together with its compound interest, would in eighty-six years be worth £258,000,000. Whether the nation were at peace or at war, said Dr. Price, the stipulated sum must be set aside, even if it were borrowed at a high rate of interest; for the nation borrowed at simple interest in order to gain the advantages of compound interest. While admitting the folly of such conduct for a private individual, he maintained with equal naïveté that a State must benefit by it, even if there were no surplus of revenue and if money were dear.[247]