My name is Martin Hutchinson, and I welcome you to the inaugural Tory Stories podcast. This series seeks to act as a modest counter to the almost universal Whig version of history, observing history in the world, from the point of view of an 18th century Tory. Its particular focus will be on the industrial revolution and the Tory achievements of 1660 - 1832. Some of these will be based on books I've written such as the recently released Britain's Greatest Prime Minister: Lord Liverpool. However others will be from research for future titles as well as relevant anecdotes I come across. Without further ado, Tory Stories One: Why Lord Liverpool should be considered Britain's Greatest Prime Minister. This podcast will examine the achievements of Robert Banks Jenkinson Second Earl of Liverpool Prime Minister from 1812 to 1827. A subsequent podcast will indulge in the comparative league table exercise of comparing him with other prime ministers. In this podcast, I will go through Liverpool's major achievements, one by one. First he organized and strategized Napoleonic wars victory. At the highest strategic level, Liverpool made one call that proved crucial to the war success. He outlined the rationale for application of steady and moderate force by which Napoleon's unstable gimcrack empire could be brought down. Previous leaders during the first second, third, fourth and fifth coalitions had attempted to bring overwhelming force against France and Napoleon through a coalition of allied powers to defeat him in one campaign. This brought repeated failure, largely because in a single campaign, Napoleon was a better general than anyone the allies could muster and the theoretically superior allied forces were weakened by lack of coordination between the different powers, enabling them to be attacked piecemeal. Liverpool reasoned that Britain had a stronger and more advanced economy than France, her ability to raise money without causing a financial crisis was much greater. And her ability to call on the resources of the world through maritime trade was infinitely greater and was increased still further by Naval and colonial victories during Liverpool's period at the war office. The economy of Napoleon's empire relied excessively on looting the non-French territories under his control, which could work for only a limited time before their economic collapse left him nothing further to loot. Hence moderate pressure requiring Napolean to expend military and other resources to combat it would over time caused Napoleon's overextended empire to collapse. Napoleon's invasion of Russia was an attempt to gain additional resources to overcome this weakness. When that failed his resources were fatally weakened, and an allied coalition, if assembled carefully and well-managed might finally succeed. Liverpool's management of the economy to achieve victory was a close run thing. In June, 1813 he and Nicholas Vansittart the Chancellor of the Exchequer had several begging meetings at the Bank of England to extend the maturity of treasury bills. But once news of Wellington's victory at Vitoria reached London in early July, markets got easier and financial stability was assured. In 1813, Liverpool with Castlereagh assembled the coalition could bring enough military superiority to bear on defeating Napolean. The October 1813 Battle of Leipzig without significant British forces, but with almost all allied powers heavily subsidized by Britain's strong treasury was the triumph even more than Waterloo, that changed the history of the 19th century. And later for the Waterloo campaign, Napoleon raised 17 million francs. That was about 700,000 pounds, but Vansittart by a bond issue on the 14th of June four days before Waterloo raised 27 million pounds, nearly 40 times as much. The financial contest had become completely one-sided. Liverpool's second achievement was to manage a peace settlement that lasted 99 years. The 1814-15 Congress of Vienna and its peace settlement have generally been given a good press by historians, especially in light of the lamentable failure of The 1919 Congress of Versailles, which forgot several lessons taught by Vienna. The territorial adjustments brought 99 years without a general war European war. While the quadruple or Holy Alliance set up some principles of foreign policy that are still applicable today. Credit for the success of the Congress generally goes to Metternich and Castlereagh, but the overall British strategy for a peace without the usual spoils of victory was set up by Liverpool in a house of Lords speech of November 1813. British negotiating positions were agreed by Liverpool and Castlereagh before Castlereagh's departure for Vienna and in several letters of guidance to Castlereagh during the negotiations. Liverpool was Castlereagh's boss throughout Castlereagh's tenure as foreign minister, and, played a more detailed part in determining diplomatic strategy and tactics that he did with Wellington in determining military strategy and tactics. Liverpool also played a full part in the successful and rapid reintegration of France into the international concert of nations after 1815, facilitating the series of large financings in 1817 to 18, that enabled it to happen. Liverpool's third achievement was that he directed the British economy through the industrial revolution. Liverpool was prime minister when the British economy was going through changes both unprecedented and unequaled in world history. Jean-Baptiste Say, the French economist traveling through Britain in the autumn of 1814, described his surprise, at the plethora of steam engines being used in all kinds of applications, a liberation from the limitations of naturally occurring power sources that had been absent in his previous visit a generation before, before the war had started. In addition, the period 1815 to 20, saw massive economic disruption caused by the end of two decades of war, the largest natural failure of the European harvest in 1816 and a savage monetary deflation caused by the return to gold in 1819. Liverpool was well aware of the effect of economic factors. He had a superior economic education from his father, Charles Jenkinson, and he had Thomas Malthus and David Ricardo advising him. Liverpool and Vansittart freed the British private sector to compete by cutting non-interest public spending by around 15% of GDP over the three years, 1814 to 17. After an inevitable period of post-war retrenchment lasting two years, and exacerbated by 1816's year without a summer caused by the Mount Tambora volcano, the economy recovered rapidly in the second half of 1817, and 1818. There was then a second downturn probably caused mainly by the sharp deflation surrounding the 1819 to 21 return to the gold standard after which the economy took off producing levels of real economic growth never before seen. Overall, the Liverpool years saw substantial growth in the British economy and a significant improvement in real per capita incomes, despite the period's rapid population growth, that population growth being the fastest in British history. Liverpool's budgetary, monetary, regulatory, and trade policy were All important factors in this success. The structure of government financing provided an important additional boost to the 1820s economy. As yields on existing government debt rose during war time, instead of issuing new debt, bearing a higher interest coupon, the government had issued 3% bonds with a deep discount often at little more than 50% of par. When peace returned and the government ran a budget surplus, Britain's credit rating improved providing investors with large capital gains, some 70% of GDP overall. These capital gain profits provided the capital that financed Britain's industrial takeoff, enabling the economy to become more capital-intensive, which it needed to do without more than modest erosion of labor's share of GDP. And the next achievement was that Liverpool managed the social unrest of 1816 to 1820. EP Thompson in the making of the English working class, which is a classic book written in 1963, paid tribute to Liverpool and his contemporaries. "One is impressed with the extraordinary skill with which government between 1792 and 1820 succeeded in forestalling serious revolutionary developments and in maintaining a steady flow of reliable information as to insurrectionary conspiracies." That's what Thompson said. The early phase of industrialization put unprecedented strains on the social fabric. For Britain to industrialize resources had to be diverted from labor to capital, and that exerted downward pressure on wage rates. Moreover as Say discovered on his 1814 visit to England, at the end of the wars government debt and taxation placed another unprecedented burden on the economy. Several large groups of workers, such as handloom weavers, stocking fame knitters, and croppers, all outworkers paid by the piece and largely independent of their employer were sharply immiserated during this period by competition from factory based machinery and were consequently radicalized. Their wages were going down and down, so of course they became radicals. The result was an outbreak of machine breaking; Luddism in 1811-12 after the bad harvest of 1811, and then two periods of national unrest with plots to overthrow the governments by force in early 1817, and 1819 to 20, when economic conditions were especially harsh. Liverpool And Sidmouth, his home secretary, made active use of informers to detect widespread conspiracies, pass strong legislation, much of it, temporary to deter subversive activity, but enforce the legislation mildly to avoid making discontent worse. Two additional factors, softened social discontent, first Liverpool, and Sidmouth accepted the inefficiencies of outdoor relief, the system under the Elizabethan Poor law, and did not attempt to impose a system of workhouses as the Whigs would later impose through the 1834 Poor law. Second Liverpool recognized that organized religion and the Church of England were important factors in improving the behavior and lessening the misery of the impoverished. The church buildings act of 1818 and 1824, thus subsidized the building of hundreds of churches in industrial areas, which became important influences for social peace. One of Liverpool's key objectives was to avoid the creation of the anti-government working class consciousness that Thompson celebrates. It was a close run thing, but he succeeded. After 1819 working class radicalism first diverted to the defense of Queen Caroline in the 1820 agitation, and then died down through the prosperous 1820s. Only in 1831-32 after Liverpool's departure did a true working class consciousness arise as the Whigs encouraged radical agitation in favor of their gerrymandering reform bill, which indeed did nothing for the working classes. Liverpool's next achievement, Number five: he brought down without default or inflation the highest debt ever. There have been three occasions on which a major nation's government debt has reached 250% of GDP. Two in Britain after the Napoleonic wars and after world war two and one in Japan today. Of the three only Britain in Liverpool's time brought the debt down without default, rescheduling or violent inflation. At first glance, the British government's of Clement Attlee through roughly Edward Heath were even more successful in the forties through the seventies, reducing public debt from 250% of GDP to around 50% of GDP in 30 years. However, they achieved this by keeping interest rates at artificially low levels and allowing inflation to run into the middle or high single digits for several decades peaking at 24% in 1975. Holding government bonds in 1947 to 75 was roughly equivalent to handloom weaving in the early industrial revolution. It was completely futile and counter-productive activity. This decapitalized, the British economy, destroyed middle-class savings and made Britain's economic performance far inferior to those of its competitors. Everybody else had an economic miracle, but Britain didn't. The Liverpool government's first step after hostility ceased in 1815 was to stabilize the debt position through budget stringency. This is one of the Liverpool government's greatest achievements. Liverpool's next step was to restore full confidence in Britain's credit by returning to the gold standard, which was achieved in 1819 to 21. Initially this was massively deflationary and increased the burden of government debt in terms of GDP. It also produced a savage, but brief secondary reccession dip in 1819 to spring of 1820. However from 1819 on Britain's credit was undoubted as was the value of the currency in its purchasing power. Government debt was reduced without deflation from 260% of GDP in 1819 to 192% of GDP when Liverpool left office in 1827 on its way to below a hundred percent of GDP by the 1850s, when Gladstone became a supposedly brilliant chancellor of the Exchequer; my view is he had it very easy. Sixth, Liverpool designed two corn laws and began the move towards free trade. The 1815 corn laws were a legislative compromise, designed to cushion the effect on landowners of the transition from war to peace in which grain prices would decline and international competition intensify. Part of their rationale was strategic rather than economic. Liverpool's government wanted Britain whose population was rising rapidly to be as far as possible self-sufficient in foodstuffs in a war. The corn laws had an additional rationale in making it economically attractive to grow corn in Ireland. Thus partially weaning the Irish from dependence on the potato monoculture. The Irish corn production, so developed would mitigate the awful tragedy of the 1840s Irish potato famine, although alas not by very much. By the mid 1820s, the corn laws had become too restrictive. Corn prices had declined by two thirds leading to a massive depression in the agricultural sector in 1822 - 23. Prices in general had declined by about 40% with the return to gold, so the 80 shillings per quarter hard limit in the 1815 law was higher than grain prices were like to do reach in anything but the worst years. Hence Liverpool with Huskisson designed a new sliding scale corn law that reduced protection as prices rose with a fulcrum around 60 shillings per quarter. Regrettably Liverpool suffered his stroke before being able to introduce this and the eventual legislation of 1828 while based on the Liverpool Huskisson draft was both more protectionist and less market friendly being subject to manipulation by corn suppliers. However, any reasonably designed corn law would have prevented much agricultural distress had it still been in force after 1873. Once the shipping across the Atlantic and the railway system in America became operational, there was no way British agriculture was competitive. The campaign for free trade, which dominated the political world in the Cobden-Chevalier treaty of 1860 was begun by the 1820 house of Lords debate in which Lansdowne the Whig leader and Liverpool outlined the case for easing and removing trade restrictions. Liverpool then presided over a repeated series of tariff cuts and trade liberating measures designed in detail by Huskisson, Robinson and Thomas Wallace. This removal of restrictions was a significant contributor to the prosperity of 1820s. However, Liverpool did not favor the unilateral free trade policies followed after 1846, which hollowed out British competitiveness because they allowed other countries to undercut British exports worldwide. Number seven achievement Liverpool took Britain back onto the gold standard against strong political opposition. Britain's return to the gold standard enacted in 1819 and completed in 1821 was a brave decision. It added about 40% to the real value of Britain's heavy outstanding debt burdening future generations. It damaged the fortunes of the politically powerful country gentry who'd borrowed excessively during the war based on high grain prices. It produced a short second recessionary dip in the economy leading to widespread unrest and including the Peterloo massacre. Yet the decision reestablished British credit on rock solid foundations and allowed interest rates to remain low and capital values correspondingly high for the remainder of the century. While later legislative meddling deprived it of the automaticity of a truly free market monetary system, the 19th century gold standard was quite close to this ideal. It led to London dominating the world's financial system for the next century with incomparable benefits to British trade and the economy in general. While the monetary system established by Liverpool wasn't perfect, we've yet to find a better one. Liverpool performed a useful additional service for the British economy in stabilizing the coinage by his re coinage of 1816-17, which was along the lines designed by his father 20 years earlier. Number eight, Liverpool ended with a vigorous period of social reform. By his restructuring of 1821-23 in the cabinet, Liverpool changed the nature of his government. One such change was forced by Castlereagh's suicide, and Liverpool's determination to replace him with Canning his old friend from Oxford days. However that change Sidmouth's replacement by Peel and Vansittart's replacement by Robinson all replaced highly effective and strong if unpopular ministers with successors who were considerably more Whig historian friendly, which is why the last part of Liverpool's government has a better reputation than the earlier parts. The last five years of Liverpool's government produced a high level of achievement on several fronts, which has been celebrated by posterity. Even William Gladstone is alleged to have said "England was never better governed then between 1822 and 1830". Economically, the government lowered taxation, made substantial moves towards free trade and produced an economic upsurge that marked the take-off stage of the industrial revolution. In foreign policy, the government abandoned Castlereagh's system of European alliances for Canning's policy of isolation and global assertion; a policy that remained in force for the rest of the century. In domestic policy Peel undertook a massive program of legal and social reform that modernized British society and laid the foundation for the Victorian age. Then finally, Liverpool reformed the English banking system. The English banking system before 1825 was flawed making it both unstable and incompatible with the gold standard monetary framework. Except for the bank of England, no bank could have more than six partners. So the were by 1825, over 800 country banks and no large banks of undoubted stability. Liverpool recognized that the most critical function of banks was to act as safe havens for money, especially for poor citizens who had few alternatives. By the savings bank act of 1817, he established trustee savings banks administered by trustees, which could invest only in government securities and deposits at the bank of England. This provided an absolute haven for savings secure from the vagaries of the loan market. Trustee savings banks lasted until the 1980s and even by 1825, they had total deposits of 13.3 million more than the stamped country bank notes worth 8.8 million that caused so much trouble in the financial crash of that year. With the conventional English banking system unsound, the 1825 crisis was inevitable and was predicted by Liverpool eight months before it broke. The crisis was caused by speculation, much of it encourage by over issue of one pound and two pound notes by the country banks. Gold flowed out of the country to return only when the bank of England sharply increased interest rates. This led to a wave of bank failures. In January, 1826, Liverpool presented a paper to the bank of England, outlining a banking reform that was essentially adopted in toto. This reform made the English banking system based on the gold standard secure for the rest of the century with only one major bank failure that of Overend, and Gurney in 1866. Finally Liverpool led an outstandingly able government, including six prime ministers. His government included Sidmouth previously known as Addington Canning Robinson later known as Goderich, Wellington Peel and Palmerston. In addition, he had negotiations with Grenville in 1818, he used Aberdeen as a diplomat and his principle leftenant was Castlereagh who was unquestionably of prime ministerial caliber. Eldon, Bathurst, Melville Huskisson and Copley later Lord Lyndhurst, were all notably successful ministers in their respective departments. So in conclusion, that is a long list of substantial achievements and they were made not in the placid mid 19th century, nor in the declining mid 20th century, but at the time of Britain's greatest strategic and economic dominance, when there was a hell of a lot going on. Looked at dispassionately without Whigish prejudices, there should really be no doubt: Liverpool was Britain's Greatest Prime Minister. Thank You very much. That is the end of Tory Story podcast number one.
Why Lord Liverpool Should Be Considered Britain's Greatest Prime Minister
June 17, 2021
An examination of the major achievements of Robert Banks Jenkinson, Second Earl of Liverpool; Prime Minister 1812 - 1827.
For more information, see Martin's new book on Lord Liverpool:
Beethoven's Symphony No. 7 in A major, Op. 92 - Finale.
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© 2021 Martin Hutchinson