(^210) Chapter Six
sonnel of the most diverse sort to keep the exchange economy run
ning as smoothly as it did. No one planned this growth, and several
sharp crises during the war years made the whole system waver. But in
each case the British government and British owners and managers
resumed activity, and the crisis passed. Three times, in particular, the
national phlegm and ingenuity combined to surmount incipient di
saster, for the public accepted an unbacked paper currency in 1797,
submitted to an income tax in 1799, and exporters found new markets
in Latin America and in the Levant when sales of British goods on the
continent of Europe were seriously restricted after 1806.
Most historians of the industrial revolution pay little attention to
the war. Those who do notice it usually argue either that the war
hindered rather than promoted British industrial development or that
it made little difference one way or the other.^48 This is a questionable
proposition. The vast increase in governmental expenditures, nearly
all for war purposes, surely affected supply and demand for every
article exchanged within the British economy.^49 Only if one assumes
that some other stimulus would have put the entire labor force to
work and endowed the formerly underemployed portion of the
British public with an effective purchasing power equivalent to that
exercised by the British army and navy, does it seem plausible to
assume that in the absence of the war the pace of British industrializa
tion would have equaled or exceeded that which actually occurred.
Abroad, also, government expenditures paved the way for British
exports. Subsidies to allied governments, totaling 65.8 million pounds
in all,^50 allowed continental officials to buy British goods to equip
their armies; and that portion of the subsidies spent within Russian,
Austrian, or Prussian territory distributed foreign exchange against
London to Berlin, St. Petersburg, and Vienna, thus allowing civilians
to purchase colonial goods and other commodities, most of which
passed through or originated in the British Isles. Without these gov-
- John U. Nef, War and Human Progress (Cambridge, Mass., 1950) perhaps ex
presses an extreme view, but W. W. Rostow, “War and Economic Change: The British
Experience,” The Process of Economic Growth, 2d ed. (Oxford, I960), pp. 144–67, comes
to a similar conclusion. Phyllis Deane, “War and Industrialization,” in J. M. Winter, ed.,
War and Economic Development (Cambridge, 1975), p. 101, concludes that the war of
17 93–1815 “does not seem to have caused more than superficial fluctuations in the pace
and content of the British Industrial revolution.” - Government expenditure in 1814 was no less that 29 percent of the estimated
GNP, according to Alan T. Peacock and Jack Wiseman, The Growth of Public Expendi
ture in the United Kingdom (Princeton, 1961), p. 37. - John T. Sherwig, Guineas and Gunpowder: British Foreign Aid 1793–1815 (Cam
bridge, Mass., 1969), p. 345.