“The army, it was said, could not be relied on because the soldiers believed that tobacco would be raised in price.”
In the early eighteenth century, smuggling of goods into England was rife. Whole communities could be involved in it; large profits were to be made. The government of the time saw a great deal of revenue potentially available to it (in the form of taxation) going unpaid. Effectively the first Prime Minister, Robert Walpole, proposed that the tariff on wine and tobacco be replaced by an excise tax. To countervail the threat of smuggling, the tax was to be collected not at ports but at warehouses.
The Excise Bill of 1733 would have made London a free port, and doubled English trade. The second would have hugely increased the revenue, without any loss to the consumer, enough to enable Walpole to repeal the land-tax. In the case of tea and coffee alone, the change in the mode of levying the duty was estimated to bring in an additional hundred thousand pounds a year. The necessaries of life and the raw materials of manufacture were in Walpole’s plan to remain absolutely untaxed. The scheme was an anticipation of the principles which subsequently guided English finance during the later era of free trade; but in 1733 Walpole was ahead of his time. A violent agitation broke our; riots almost grew into revolt; and in spite of the Queen’s wish to put down resistance by force, Walpole withdrew the bill.
Walpole’s main drive as the dominant force in British politics was to serve the interests of landed proprietors–the country gentlemen who held the fate of ministries in their hands. Walpole was concerned to reduce the burden of taxes on land, which hit the gentry hardest, and shift government revenues to other sources. “The excise scheme of 1733 promised revenues which would permit a permanent reduction of the land tax [which stood at 4 shillings in 1727] to one shilling in the pound” The measure involved converting the customs duties on tobacco and wine into inland duties. It followed on other fiscal measures that moved in this direction – Walpole had already introduced excise duties on tea, chocolate, and coffee in 1724 (“but the transaction had meant more to the East India Company than to the ordinary consumer and voter”), and in 1732 he had revived the salt duty (a more sensitive issue, for which he was accused of “grinding the faces of the poor,” but the measure nonetheless passed easily enough through the House of Commons) So, one can see how Walpole was misled into the idea that the excise bill would not pose any great difficulties.
“Walpole’s attention had been drawn to the state of the customs’ revenue. Since 1723 he had checked the smuggling of tea and coffee by applying to them a compulsory warehousing system under government supervision (see Adam Smith, Wealth of Nations, bk. v. ch. ii.), thereby increasing the revenue derived from them by 120,000l. in seven years. No change was made in the name of the duty, and the reform passed unnoticed. He had (14 March 1733) projected the application of the same system to tobacco and wine. By so doing there would not merely be a check put upon smuggling. Under the existing complicated system of discounts, drawbacks, and allowances, with the aid of false weights and false entries, vast frauds, as he pointed out, had been detected, especially upon re-exportation. His proposal was to levy the full tax on tobacco and wine imported only when they were removed from the warehouses for sale. Where imported for re-exportation no tax was to be levied at all. The former of these two measures would, it was thought, check smuggling, because the importer ‘would never run any risk, or be at any expense to evade the customhouse officers at the first gate, when at so many more afterwards he would be equally exposed to be catched by the excise officer’ (Hervey, Memoirs, i. 184). The second would, as Walpole explained, ‘tend to make London a free port, and by consequence the market of the world.’”
As it turned out, the opposition mounted a powerful and effective campaign against the measure. Opponents revived longstanding criticisms of the idea of excise. Excise duties involved giving extensive powers of search to revenue officers, and a wide jurisdiction to magistrates and excise commissioners. The Englishman’s right to privacy on his own property, and also to trial by jury, were put at risk. An entire genre of horror stories, retailed in the press and depicted in broadsheets and prints, exploited such fears”. Moreover, merchants and traders – both those engaged in circumventing the existing customs duties and those who paid them – disliked the prospect of dealing with “officious excisemen”.
The shopkeepers and tradesmen of England were immensely powerful as a class, scarcely less so in electoral terms than those country gentlemen whom Walpole sought to gratify. Whig or Tory, there was no doubt what they thought of more excises. In the spring of 1733 petitions to Parliament and instructions to MPs flooded in from the provinces in support of a vociferous campaign in London itself. . . . In the Commons, when the City [of London] formally presented its petition against the excise on 10 April , Walpole’s majority fell to seventeen. In the Lords there seemed every likelihood of an equally damaging aristocratic revolt. . . . On the following day [Walpole] announced the withdrawal of the excise scheme in the Commons.
The change was, in technical terms, a transfer of customs to ‘excise,’ and therein the opposition saw their opportunity. Excise had at various times been levied with vexatious incidents upon most of the necessaries of life. Its very name was odious. The ‘Craftsman’ and the pamphleteers discerned in the proposals the first approach to an excise upon all articles of food and clothing. Walpole had himself given some colour to the suggestion by reimposing in 1732 (5 Geo. II, c. 6) the salt tax, which he had repealed in 1730 (3 Geo. II, c. 20). Even then, Sir William Wyndham had argued, ‘it is one step towards a general excise’ (9 Feb. 1732), and Walpole had indignantly repudiated the suggestion (Parl. Hist. viii. 960). But the course of events strengthened the public suspicion. Petitions against the scheme poured into the House of Commons. The house itself was besieged by ‘a most extraordinary concourse of people.’ The city of London prayed to be heard by counsel against the bill, and its petition was escorted by a train of coaches that extended from Temple Bar to Westminster. Discontent began to pass into disaffection. The army, it was said, could not be relied on because the soldiers believed that tobacco would be raised in price. Inside the House of Commons the ministerial majorities dwindled from sixty-one, on the introduction of the scheme on 14 March 1733, to seventeen on 10 April. On that night Walpole gave a supper to a dozen friends. ‘This dance it will no further go,’ he said, with tears in his eyes (Chatham Speeches, i. 69).
The following day the Bill was postponed – as it turned out, indefinitely. This announcement was met with exuberant enthusiasm by the public: “On the streets of London Walpole was burnt in effigy, along with Queen Caroline [his supporter… The violence of the populace caused something of a reaction on the back-benches”.
“The monument in London was illuminated, bonfires blazed in every county, and friends of the measure, if discovered, were subjected to all kinds of brutal insolence.”
More crucially, George II stood by Walpole. As a result, Walpole was able to recover from this debacle, despite the damage it caused. Walpole engineered the dismissal of his rivals and opponents at court: “The King felt compelled to remove Lord Chesterfield and Lord Clinton from their posts in the royal household forthwith. There followed further dismissals, the Dukes of Montrose and Bolton, the Earls of Stair and Marchmont, Lord Cobham and his followers. In the upper house the ministry survived with its majority barely intact; it took peerage creations as well as dismissals to restore it to health. In the Commons, recovery was swifter and more complete”.
Nevertheless, Walpole’s power had been shaken. It is true that he could probably have carried the excise bill through the House of Commons. The reason of its abandonment was, as he truly said, that ‘the act could not be carried into execution without an armed force, and that there would be an end of the liberties of England if supplies were to be raised by the sword.’
Or in other words, he feared violent resistance if he pressed ahead.
“What were the causes of the failure of the scheme, or in other words, what gave rise to the great opposition in the House, and among the general public? First, the energy and activity displayed by the opposition in the House and without. Secondly, the united opposition of the wealthy tobacco merchants, who not only used their own influence against the scheme, but furnished large sums of money to flood the country with pamphlets, placards and public speakers. Thirdly, the instilled hatred of the people to excise and everything that was connected with the name. Fourthly, the new theories of the incidence of excise which changed the views of many believers in the excise system. Fifthly, the universal belief that this was a step toward a general excise system. And lastly, the lukewarm support of many wealthy landowners who were in favour of seeing the land tax reduced to one shilling, but were very much against its abolition. One feature of the scheme that attracted many later writers was the extension of the warehouse system. In this Walpole was years in advance of his times, for it was not until the latter part of the century that Pitt succeeded in introducing to an extended degree the system that Walpole designed.’ Walpole’s aim was to improve and to extend the warehouse system to many articles of general consumption.”
An entry in the 2016 London Rebel History Calendar – check it out online