Saturday, 16 December 2017

Peel’s ministry 1841-45

Peel is credited with the Conservative victory in 1841: without his leadership, many contemporaries believed that the Tories could have been assigned to permanent opposition. Peel’s parliamentary performance during the 1830s was an important element in this revival. His grasp of economics let him capitalise on the growing economic problems the Whigs faced after 1838. Nevertheless, there were other pressures at work over which Peel had little or no control. After the 1832 election, the Whigs rapidly found their dominant position eroded. Forty MPs who has supported the Reform Act moved to the Conservative benches between 1832 and 1837. Four Whig cabinet ministers resigned over Irish appropriation in June 1834, two of whom became Conservative supporters by the late 1830s and ministers in the 1840s. In addition, the Whigs were seen as unable to control the radicals that Tory propaganda played on.

Peel 2

The unexpected frequency of General Elections after 1832 also aided the Conservative cause. Peel used William IV’s invitation to form a government in late 1834 to call an election in 1835. A further election was held on William’s death in 1837. These gave those voters, concerned that the Whigs wished to push reform further and threaten their position as property-owners, the opportunity of voting Tory. The Conservatives increased their MPs by about 100 in the 1835 election and added 40 more in the election two years later. By-election successes between 1837 and 1841 further improved their position. Between 1837 and 1841, they were only 30 votes short of the Whigs and their normal voting allies. The electoral tide was running in their favour.

The emergence of an organisational structure also played an important part in reviving Tory fortunes. Peel played little part in organisational change in the 1830s and the initiative came from individuals like Francis Bonham. The Reform Act required voters to register and this provided opportunities for local supporters to organise and consolidate their party’s voting strength. Peel recognised the need for party organisation but was, at least initially, ambivalent in his attitude. He was suspicious of extra-parliamentary pressure and this meant that his relations with many local Tory organisations were not particularly close but by 1837, Peel was urging his supporters to register. The fact that Conservatives were a much better organised party in 1841 was an important factor in their victory. During the 1830s, Peel turned the Conservatives into a viable party of government and established a sense of direction and leadership. However, there were important divisions of principle between Peel and the right of the Conservative party that were to re-emerge, with disastrous consequences, after 1841.

Why is Peel’s ministry of 1841-1846 considered so successful?

When Peel took office in 1841, he recognised that the major problem facing Britain was economic, and his priority was to make the country debt-free and affluent. He set about establishing a government based on administrative effectiveness. The focus of his administration before the Corn Law crisis was on fiscal and economic reform. A prosperous country, he believed, was one where social distress and disorder would be reduced.

Although Peel had attempted to broaden the base of the Conservative Party in the 1830s, this was not evident in the election results: the election was a triumph for Protectionist Toryism.[1] The party did best in the English and Welsh counties and in those boroughs, little changed by the 1832 Reform Act. The MPs elected were largely from the ‘Tory’ wing of the party who had no interest in change and little sympathy for reform. Above all many were ardent Protectionists. Tory votes had been cast in favour of a party that was most likely to protect landowners and defend the Established Church. Theirs was a far narrower perspective than Peel’s. Nevertheless, Peel appointed those in the party who supported his policies and beliefs to important positions. His only concession to party feeling was the appointment of a leading Protectionist, the Duke of Buckingham, to the post of Lord Privy Seal.

Peel increasingly adopted policies out of sympathy with the majority of his MPs. Public duty on behalf of the monarch and in the interests of the nation was his first priority; party came a poor second. This proved a problem particularly as the election had been fought largely on the question of Protection. The route from the electoral triumph of 1841 to the political disaster of 1846 was, in retrospect, predictable.

Economic and financial reform

The economy had slumped in the late 1830s and Peel inherited a budget deficit in 1841. Peel recognised that the only way he could remedy this was to introduce tariff reform, building on the work of Huskisson in the 1820s and to reintroduce income tax to generate the income needed to make tariff reductions possible. Parallel to his budgetary programme, Peel reformed the business practices of banks and companies. The 1842 Budget sought to restore prosperity to the manufacturing sector and so promote social stability.

Income tax[2] was reintroduced at 7d (3 per cent) in the pound on annual incomes of over £150 excluding most of the working-classes and would raise £3.7 million. Peel assured MPs that it would not be made permanent and would only be retained for three years. This significantly reduced opposition from the Whigs and from within the Conservative ranks. Customs duties were reduced on about 750 items and maximum duties on imported raw materials, partially manufactured goods and manufactured items were set at 5 per cent, 12 per cent and 20 per cent respectively. Duties on imported timber and all export duties on manufactured goods were abolished. Peel argued that reduced import duties would both encourage trade and provide cheaper goods for British consumers stimulating demand. Changes were made to the scale of duties on corn reducing the level of tax paid and as a result, Buckingham resigned from the Cabinet. These proposals were controversial especially to Protectionists who saw the proposals as an abandonment of protection for farming and to Free Traders who did not think Peel had gone far enough. They were, however, popular and certainly politically astute.

The 1842 Budget did not produce immediate improvements in trade or employment. The economy remained sluggish throughout 1842 and trade did not revive until late 1843. By 1844, however, there was clear evidence that the economy was recovering helped by good harvests in 1843 and 1844 and by a boom in railway investment. Government finance moved into profit and 1844 and further changes took place in the 1845 Budget. The estimated budget surplus of around £3.4 million for 1845-1846 was sufficient for Peel to dispense with income tax but he argued that it should be renewed for a further three years to allow further reductions in tariffs. This, Peel argued would result in greater economic prosperity. There were further reductions in tariffs. All surviving import and export duties on raw materials, like cotton and coal, were abolished. Duties on colonial sugar from the West Indies and foreign sugar were both reduced. Further reductions followed and when Peel fell in 1846, Britain was almost a free-trading country.

Peel’s economic liberalism had its origins in the 1820s. At its heart were the notions of ‘sound money’ through low levels of taxation and freeing of trade to produce a balanced budget. Without monetary control and stability there would be inflation and this, Peel maintained, would limit economy growth. He thought it was necessary to restrict the Bank of England’s power to issue money ‘to inspire just confidence in the medium of exchange’. The Gold Standard linked sound money to cheap government and low rates of direct and indirect taxation. If businessmen and industrialists were given freedom to exploit the market, Peel suggested this would increase profitability, improve employment and lead to economic growth for everyone’s benefit.

Peel considered the Bank Charter Act 1844 as one of his most important achievements. Its aim was to establish a more stable banking system by preventing the excessive issuing of paper money that had led to some crises in the past. Between 1826 and 1844, over-issue by provincial banks had caused the failure of a quarter of all banks entitled to issue their own notes. The 1844 Act defined the position of the Bank of England in the British economy very carefully. The Bank could issue notes to the value of its gold reserves to a limit of £14. No new English provincial bank was allowed to issue its own notes. The Act recognised 279 banks with note-issuing powers and Peel aimed to reduce their rights of issue and concentrate them within the Bank of England. The effect of the 1844 Act could have limited the scope of banks to finance economic growth but the new gold discoveries (in California and Australia) from the late 1840s increased the Bank of England’s reserves enabling an increase in the issue of notes. Without this, the economic expansion of the 1850s and 1860s that Peel is often credited with would not have occurred.

The repeal of the Bubble Act in 1825 freed joint-stock companies from the regulations that had prohibited their growth for over a century.[3] The result was increased often speculative investment in projects of every sort: docks, gas and water companies and especially after 1830, railways. Many of these companies collapsed because they were poorly organised or fraudulent and many people lost their savings. William Gladstone,[4] President of the Board of Trade introduced the Joint Stock Companies Act in 1844. The Act established the Registrar of Companies and all companies with more than twenty-five members and freely transferable shares were required to register. Company directors had to submit fully audited accounts to the Registrar. This Act helped protect the public from unscrupulous companies and created a more responsible climate for company development.

Poor Law and factory reform, 1842 and 1844

Peel believed that social reform was linked to successful economic conditions. These would enable economic growth, create new jobs and so stimulate consumption. Government support for social reform was lukewarm and Peel was sceptical of the value of direct government intervention in solving social problems. Free market answers were more effective. He recognised that government could not abdicate all responsibility in the ‘social question’ but, like many contemporaries, believed that its role should be severely limited and definitely cost-effective. Peel supported the Whig government when the Poor Law Amendment Act was passed in 1834. In 1842, the operation of Poor Law was tightened to reduce excessive costs while Peel argued, without reducing the generosity and fairness of the system of relief, compared to other countries.

Although Peel’s government was not known for its support for social reform, publication of reports from committees originally set up by the Whigs in the late 1830s and extra-parliamentary pressure from radicals as well as Tory politicians, led to two important acts being passed. The Mines Act 1842, which banned women and children from working below ground, was not a piece of government legislation. Factory reforms introduced by the government caused much controversy. In 1843, Sir James Graham, the Home Secretary--who had defected from the Whigs in 1834--sought to reduce the hours worked by women and children. This was linked to proposals for compulsory schooling provided largely by the Church of England. Nonconformists did not intend to allow the Church of England to take control of all factory schools and organised widespread opposition and the Bill was withdrawn. The following year it was reintroduced without its education clauses. The legislation was in effect the first health and safety act in Britain. All dangerous machinery was to be securely fenced off and no child or young person was to clean mill machinery while it was in motion and failure to do so was a criminal offence

There was a well-organised campaign inside and outside Parliament to restrict the maximum working day for all to ten hours and include this in the Factory Act. Peel disagreed: he was prepared to pass laws preventing exploitation of children and women but he argued adult males were free agents and the law should not interfere with market forces. The Commons did not agree with Peel’s position and Ashley’s Ten Hours’ amendment was carried with the support of the Whigs and Protectionist Tories. It was only Peel’s threat of resignation that persuaded Tories to overturn the amendment. The passage of the Factory Act established a maximum working day of twelve hours.

[1] Protectionist Tories argued for retaining the Corn Laws to protect British farming

[2] Income tax had previously been introduced by William Pitt during the French wars as a wartime tax. In 1816, against the wishes of the Tory government of Lord Liverpool, Parliament had voted against its continuance.

[3] Joint-stock companies raised capital by issuing shares. Investors purchased these shares and received a dividend from the profits made by the company based on the number of shares they owned. It was the failure of the South Sea Company in the early 1720s that led to the Bubble Act.

[4] William Ewart Gladstone (1809-1898) was in office every decade from the 1830s to the 1890s and was Liberal Prime Minister on four occasions (1868-1874, 1880-1885, 1886 and 1892-1894). He was Vice-President and then President of the Board of Trade between 1841 and 1845 and supported Peel over the repeal of the Corn Law.

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