The great and unprecedented war expenditure from 1801 to 1815 upset all the calculations of Pitt and Castlereagh as to the amount of Irish contribution to Imperial expenditure, and rendered the financial arrangement of the Treaty of Union one which the resources of Ireland were totally inadequate to bear. The actual provisions of the financial article of the Treaty as regards the mode of adjusting the accounts between the two countries seem to have been interpreted in a favourable way by the various parliamentary committees, while in the actual settlement of the accounts there was no desire to treat Ireland otherwise than fairly. But events which British statesmen had not foreseen crushed Ireland under a weight of taxation and justified the opinions and prophecies of Grattan, Foster, and other Irishmen. Pitt acted as if he believed the French War would not last long, and consequently that the joint expenditure of the United Kingdom would decrease and the debt charges of Great Britain diminish. But as Grattan said in 1819, "The truth is, the necessary and inevitable expenses of the war were beyond all possibility of calculation and foresight, and Ireland was not able to follow you."806
We have seen that in the years immediately preceding the Union the total Irish expenditure under the independent Parliament had been greatly swollen by the cost of the French War and the Irish rebellion. It is interesting to take the fifteen years before the Union, three of which were years of war alone and four years of war and rebellion combined, and compare the total expenditure during these years with the total Irish expenditure during the fifteen years following the Union, fourteen of which were years of war. In the first period Irish expenditure was £41,000,000 a small enough sum according to modern ideas if we take the circumstances of the time into account, but a huge amount in the eyes of the Irish Parliament. But in the second period we leave small figures behind us, for from 1801 to 1816 the total expenditure of Ireland amounted to £148,000,000, or more than three and a half times the sum expended during the previous fifteen years.807 Of this £148,000,000 Ireland raised in taxes £78,000,000, or £47,000,000 more than she had raised by this means during the fifteen years preceding the Union; the remainder she obtained by borrowing, so that only 49 per cent of the whole Irish expenditure was met by taxation, whereas during the same period Great Britain raised by taxation 71 per cent of her enormous expenditure. Thus, in spite of the greatest efforts, the total revenues, exclusive of borrowing, raised by Ireland during these years were less than half the amount of the expenditure which she was supposed to meet. It is interesting to notice that in 1815, the year when the Irish revenue reached its highest point, and when the increase of Ireland's net product from taxation was, as compared with the year 1800, no less than 128 per cent, a greater ratio of increase than Great Britain produced in any similar period, this increased revenue was only 38 per cent of the whole Irish
The inability of Ireland to raise a larger sum by taxation led to a huge increase in her national debt. Between the years 1801 and 1817, while the total British debt less than doubled itself, the Irish debt almost quadrupled, having grown from £32,215,223 to £112,634,773, as against an increase in the British debt from £489,127,057 to £737,422,469.809 Parliament realised that it was inexpedient from an economic point of view to raise Irish taxation even within measurable distance of British, as such an increase of taxation would diminish the yield. Indeed, there was reason to believe that the point at which the limit of Irish taxation was reached had been already overstepped, as during certain years subsequent to the Union some of the taxes had shown a decreasing yield. The taxes of 1801 produced £400,000 less than those of 1800; the year 1802 showed a deficiency, as compared with 1801, of a similar amount; and in the two years 1804 and 1811 the produce of the taxes fell short of their estimated yields by large amounts,810 and this took place although the duties on spirits, tobacco, tea, and malt had been doubled. As Irish revenue could not be increased to a sufficient extent by taxation, the only way of defraying expenses was by borrowing. Loans could be raised less expensively upon the credit of Great Britain than upon that of Ireland, so that after the Union it was the natural inclination, apart from all reasons of necessity, to defray exceptional expenditure by borrowing, whereas before the Union the Irish Parliament had borrowed as little as possible, and only in the last resort. As a result of the complete exhaustion of Ireland during the war, the
The fact that Ireland was able to meet only a small part of her whole expenditure by taxation shows that her relative ability to contribute to Imperial expenditure did not increase in the same proportion as that of Great Britain, and that whether the proportion of twoseventeenths was fair or not at the time of the Union, as events turned out, it proved to be far too large during the succeeding years.
During these fifteen years subsequent to the Union the whole Irish revenue was raised by means of customs, excise, stamp duties, and non-tax revenue; there was no direct tax in the nature of income tax such as existed in Great Britain. The rise of revenue was due partly, and chiefly, to the augmentation of existing duties, but also to some increase in the consumption of dutiable commodities. In 1812 the total revenue raised in Ireland amounted to £5,696,841; of this a little over £1,000,000 was produced by stamps and non-tax revenue, and the whole balance was rased in nearly equal proportions by customs and excise.811 Between 1801 and 1812 the duty per gallon on home-made spirits in Ireland was gradually increased from 2s. 4 1/2d. to 5s. 1 1/4d. During the same period the rates of duty on brandy and rum were raised from 8s. 7 1/2d. and 6s. 8 3/4d. to 12s. 7 1/2d. and 10s. 3 1/2d. per gallon respectively. In 1801 superior teas had paid 35 per cent ad valorem, and cheap teas 20 per cent; but in 1812 the duty on all teas stood at 96 per cent. The malt duty was raised from 1s. 6 1/4d. to 2s. 6 3/4d., an additional duty of 2s. 8d. per cwt. was placed on sugar in 1801, and another additional duty of 3s. 6d. in 1806, while the duty on tobacco
The exemption of Ireland from the income tax was a boon to the Irish tax-payer at a time when the rate in Great Britain was 2s. in the pound on all incomes over £150. Ireland was also exempt from the land tax and the inhabited house tax; she was not required to pay excise duties charged in Great Britain on certain articles, such as beer, bricks, candles, calicoes, glass, hops, salt and soap; while other articles, such as spirits, tea, tobacco, wine, and foreign salt, paid lower rates in Ireland than in Great Britain. Except during the earlier years of this period, Ireland was always in arrears with her contribution, but no great pressure was brought to bear on her to make up these arrears, no interest was charged on them, and just before the amalgamation of the Exchequers in 1817 £2,000,000 was wiped off the Irish account. Great Britain treated Ireland with consideration in all matters of finance during the sixteen years subsequent to the Union. The financial arrangements which had been made by the Treaty of Union seem to have been carried out in a way that was as little oppressive as possible to Ireland, and we have Lord Plunket's testimony to the justice and impartiality with which Irish interests were safeguarded by the Imperial Parliament.813 By 1815 Englishmen realised that the war had affected the financial arrangements of the Union in such a way that the Irish revenue
The Parliamentary Committee which sat in 1815 to enquire into the debt charges of Great Britain and Ireland devoted much of its report to the state of the Irish debt, and the question how far Parliament would be justified in consolidating the Exchequers according to the provision laid down in the seventh article of the Act of Union.814 The report stated the actual values of the Irish and British debts, and estimated that their proportions were about 2s. to 12 1/2d., or a larger proportion for Ireland than that of her contribution to Imperial expenditure. But the majority of the members of the committee held that Parliament would be interpreting the financial article of the Treaty of Union in its proper spirit if it abolished the systems of separate Exchequers and proportional contributions. They thought that on the whole it was expedient that the debts and expenditures of the two countries should be consolidated in order to
The resolutions were agreed to, and a Bill was brought in for consolidating the debts and public revenues of the two kingdoms and became law in the following July. This Act 817 provided that all revenues in Great Britain and Ireland were, from and after January 5th, 1817, to constitute one general fund, called the Consolidated Fund of the United Kingdom; and that fund was to be charged with and indiscriminately applied to (1) the service of the British and Irish debts, (2) the civil list,
The actual result of the consolidation of the Exchequers was to stop the impending bankruptcy of Ireland, and place her in a comparatively solvent position. At the time of the consolidation Ireland had to meet separate charges to the amount of £6,500,000, and she was liable to contribute to the joint expenditure of the United Kingdom £4,700,000. Her total liabilities were, therefore, £11,200,000, and as her revenue for the year was only £5,560,000, she had a deficit of £5,640,000.818 If the consolidation had not taken place, this deficit must have been met by additional borrowing; but under the new arrangements, although Ireland paid over her whole revenue to the Imperial Exchequer, she was from this time relieved from the necessity of piling up new liabilities on account of her annually recurring deficits. To put it in another way, under the Union arrangements the proportions of the respective contributions of Great Britain and Ireland to Imperial expenditure were 7s. 1/2d. to 1, but under the arrangement of 1817 Ireland simply paid over her whole revenue, which amounted to rather more than £5,500,000, while Great Britain became liable for the remaining £83,753,000 of Imperial expenditure. Thus the actual proportions under the new arrangements were fifteen for Great Britain to one for Ireland, or Ireland only paid half the amount that had been fixed by the Act of Union as her fair share. And it is important to notice that in spite of this tremendous decrease in Irish liabilities, Ireland continued as before to pay as much as she was able to raise, so that there was no relief from taxation. The country was saved from bankruptcy, but no relief could be given to individual taxpayers. Since the amalgamation of the British and Irish Exchequers, Great
The pressing question in 1817 was the amalgamation of the Exchequers in order to save Ireland from bankruptcy. The unification of taxation was regarded as expedient, but for some years little was done in this way. But from this time we have to cease regarding Ireland as a separate country for fiscal purposes, for she becomes an integral part of the United Kingdom fiscally as well as legislatively, except for such exemptions and abatements from the general taxation as Parliament might allow her on account of her comparative poverty. Once the Exchequers were consolidated it was no longer necessary to levy customs and excise duties in the country where the dutiable article was consumed. Section 8 of article 6 of the Act of Union had provided that all duties charged on the importation of foreign or colonial goods into either country should, on their export to the other, be either drawn back or the amount, if any should be retained, placed to the credit of the country to which they were exported, so long as the expenditure of the United Kingdom was defrayed by Great Britain and Ireland by proportional contributions. But when, in 1817, the systems of separate Exchequers and proportional contributions disappeared, there was no reason why these fiscal regulations should be continued, and in 1826 new regulations were accordingly framed. All payment and repayment of duties in the cross-Channel trade were to cease, except in the case of articles subject to different rates of duty, and since the year 1826 accounts of the quantities of articles shipped from Great Britain to
The Act which consolidated the Exchequers did not in itself provide for a unification of taxation between Great Britain and Ireland; but the resolutions of the Chancellor of the Exchequer passed by Parliament in 1816 had included such a unification, while article 7 of the Treaty of Union distinctly laid down that a system of indiscriminate taxation might be adopted on the amalgamation of the British and Irish debts if Parliament thought such a policy expedient. At no period indeed since 1817 has absolutely indiscriminate taxation existed, for even at the present day certain taxes paid in Great Britain do not extend to Ireland, and so the clause of Article 7 of the Treaty of Union providing for exemptions and abatements in favour of Ireland has never been altogether ignored. From 1817 to 1853 comparatively little was done in the way of raising Irish taxation to the level of British, because although British statesmen regarded complete fiscal Union as the ideal to be aimed at, they had a distinct grasp of what was possible and what was not possible in the matter of Irish taxation, and therefore realised the uselessness of raising it beyond a certain
Thus, with the exception of the heavy tobacco duties
The small benefit which Ireland reaped from the fiscal reforms of the first half of the nineteenth century was simply due to the economic conditions which prevailed in the country. But although the advantages which she gained from the new financial policy were insignificant compared to the advantages conferred on the people of Great Britain, taxation per head did decrease slightly in spite of the large additions to the tobacco duties, and this is particularly interesting because such a decrease of taxation does not occur again; on the contrary, as far as can be seen from rather inadequate figures, taxation per head in Ireland has risen steadily from 1853 to the present day. The period from 1817 to 1853 was, financially speaking, a favourable enough one for Ireland. Unfortunately, any benefit which might have been conferred on her was rendered impossible by the terrible potato famine of 184647, when two millions of the Irish people were swept away by death or emigration. Just as the country was thoroughly exhausted from the effects of the famine, the whole financial policy adopted towards Ireland changed, and Irish taxation began to be rapidly assimilated to British at a time when great prosperity had come to Great Britain and the reverse to Ireland. The repeal of the corn laws had stimulated the commercial prosperity
The new system was begun by Gladstone when Chancellor of the Exchequer. In his speech in 1853 recommending the extension of the income tax to Ireland,825 he said that in his opinion the time was come for Ireland to support this tax, and he argued that it could not hurt the country, as it would fall solely on the richer classes. The fact that it was these classes which were at present subject to poor rates far heavier in their burden than those prevailing in Great Britain was not mentioned, and it was this rather specious argument that induced Parliament to agree to the measure. As a set-off to the new imposition Gladstone wiped off the Irish debt, called the consolidated annuities, which had been incurred for poor
The imposition of the income tax was not the only additional taxation laid on Ireland in 1853. In that year Gladstone began increasing the spirit duties in the country, with the view to eventually assimilating the Irish and British rates. The rate was first raised from 2s. 8d. to 3s. 4d. per gallon, and Gladstone denied that it was amongst the rights of man that the Irishman should be
The greatest increase in the permanent taxation of Ireland took place between 1853 and 1860, an increase which the Financial Relations Commission of 189496 estimated at 2 1/4 millions per annum. Excluding non-tax revenue, the taxation per head in Ireland rose from 13s. 11d. In 184950 to £1 5s. 4d. in 185960, this rise being due to the simultaneous increase of taxation and decrease of population; while in Great Britain, although the Crimean War had added to the expenditure, taxation per head only increased from £2 7s. 8d. to £2 10s., and in 186970 sunk to £2 5s. 9d.831 Since 1860 the chief additions made to the payments of the Irish people have been in the region of local taxation, and owing to the great decline in population the revenue of Ireland has remained fairly stationary until the last two years, when a considerable increase has taken place owing to the imposition of additional taxation all
The central point in Irish finance has been, and still is, the declining population of the country. It is the enormous increase in the population of Great Britain which has been one subsidiary cause of the great increase of the revenue of the United Kingdom. In Ireland the revenue showed no upward tendency between 1860 and 1896, for any increases of taxation that were made were counteracted by a decrease of the population from 5,821,000, to 4,571,000. This decrease has been chiefly owing to emigration, but also to a decreasing birth and marriage rate; and it has continued steadily since 1896, although rather less rapidly. This steady decline of the Irish population is, however, chiefly important in connection with local taxation, and is the main cause of the terrible pressure of the rates in the western and southern districts of Ireland.
One of the most interesting features of the financial relations between Great Britain and Ireland during the last three-quarters of the nineteenth century is the great increase which has taken place in the expenditure on Irish services relatively to the expenditure on British services. Excluding the expenses of collecting the taxes and managing the postal services, which may be regarded as properly Imperial, the increased charge of civil government
The reasons for this huge expenditure on Irish services lies in the political and social condition of Ireland and the fact that the government is really not conducted on a peace footing. A large number of soldiers is always kept in the country their cost is reckoned as Irish services while the Royal Irish Constabulary is in reality a standing army and the most expensive police force in the world. Mr. Lough estimates that in 1895 the cost of the Irish constabulary was 6s. 7d. per head of the Irish population, and that there was one policeman for every 257 people. In
The great revolution in fiscal policy, already touched upon, which was commenced by Huskisson in 1824 and carried on to a far greater extent during a long period of
At the present day Ireland is quite able to support her own population from the corn and meat she produces and at the same time to export a considerable surplus. On the other hand, the Irish population consumes, in proportion to its wealth, a large amount of tea, tobacco, and spirits, and a small amount of beer. Looking at the matter dispassionately, it must be acknowledged that our present fiscal system, which raises practically no revenue from foreign food stuffs,837 but does raise a very large revenue from spirits, tea and tobacco, is hardly advantageous to the people of Ireland, however beneficial it may be to the inhabitants of England. In the eighteenth century Ireland suffered from the protective policy of England; in the nineteenth she has suffered from the free trade policy of the United Kingdom. The fiscal situation of Ireland is the inevitable result of the contrast in economic conditions between herself and Great Britain. In matters of taxation, as well as in other matters, the interests of the greatest number have to be consulted, and in the United Kingdom the greatest number belong to the urban and manufacturing classes.
It would probably be impossible to devise a system of taxation which would be equally beneficial to the inhabitants of urban and rural districts, but there are signs of a growing idea that the inequality of advantage to Ireland arising from a different incidence of taxation to that which takes place in Great Britain does entitle her to special consideration in fiscal matters. A system of taxation which has been devised in the interests of a manufacturing country cannot be suited to the inhabitants of a poor agricultural country, where economic conditions and habits of living are in many ways so different. The phenomena which we see in the present financial relations of Great Britain and Ireland must be seen in the fiscal relations of any two countries or districts, one manufacturing and the other agricultural, subject to the same financial system. For example, Prussia is at present confronted with the difficult problem of giving equal benefits in her customs system to the inhabitants of her manufacturing and agricultural districts, while in Austria-Hungary harmony is only maintained by the method of compromise; thus Austria allows the free importation of Hungarian food stuffs, and Hungary in return permits Austrian manufactures to be imported duty free while both the manufactures and food stuffs of foreign countries are taxed on importation into all parts of the empire. But nothing exactly analogous to the financial relations between Great Britain and Ireland can be found in the fiscal relations of two practically independent countries like Austria and Hungary, or even in a federal State like the United States of America, where only common expenses are defrayed out of the central Treasury. Nor can an exact analogy be found in the financial relations of the different districts of a unitary State like Prussia, although a consideration of Prussia's present tariff difficulties shows that the financial phenomena existing in Ireland are by no means so unique as is sometimes supposed.