The British Fiscal-Military State During the American War of Independence

In his fifth Philippic, delivered in 43BCE, Cicero cautioned against ceding Outer Gaul to Mark Antony, as it would present an enemy of Rome with ‘the sinews of war, a limitless supply of money’. Cicero’s dictum underscores the foundational principle of John Brewer’s fiscal-military state: the idea that the mobilisation of wealth is not just important but a necessity for sustaining any form of conflict. Since Brewer’s 1989 The Sinews of Power: War, Money and the English State 1688-1783, historical studies on the fiscal-military state have expanded both in their temporal and spatial scope, quickly outgrowing the confines of its initial focus, transforming from an exclusively British phenomenon into a universal subject of study. My work, however, returns to the original subject of Brewer’s analysis: Britain. It does so because, given its breadth, there are places where Sinews of Power lacks detail, with a noticeable lacuna being the treatment of the American War of Independence. I seek to fill in this gap left in Sinews, charting how the American War put pressure on the fundamental elements of the British fiscal-military state, outlining how the war stretched it, putting pressure on its economy and bureaucracy.

 The conflagration in North America brought with it an upsurge in military spending. The British state found itself scrambling for new, reliable income streams as taxes could only make up 20 per cent of the extra expenditure needed to maintain the war effort. Borrowing, therefore, had to make up the difference. Indeed, this was far from unprecedented, as across the three previous eighteenth-century wars Britain participated in, it relied on borrowing to secure 75 per cent of its additional funds; the American War was no exception.

'Combat naval devant la Chesapeake, 3 September 1781 (Théodore Gudin, Public domain, via Wikimedia Commons)

A rising national debt strained the existing system of public credit. Uncertainty amongst creditors meant that it became increasingly difficult for the British state to secure the loans it needed. Lenders insisted on unfavourable terms or demanded considerable inducements in the form of annuities added to the debt. This put pressure on a linchpin of the British fiscal-military state: its access to credit. By stretching its fiscal apparatus, the war threatened the British state’s continued status as a fiscal-military powerhouse.

Compounding the issue of the growing fiscal demands of the war was tax evasion. Patrick O’Brien estimates that some 40 per cent of the British population remained outside the effective tax base. Smuggling proved a popular way to defraud British revenue, with a 1783 report commenting that rates of smuggling had increased by a ‘very alarming degree’ during the American War. While the overall impact of illicit practices of this sort on the state’s revenue is uncertain, these practices, especially when paired with the state’s weakening credit, placed significant strain on the British fiscal-military state.

Mounting wartime costs compelled the British state to seek new sources of revenue. In 1779, Lord North introduced a general increase of 5 per cent on customs and excises, affecting duties on coal, malt, hops, and salt. A year later, duties on malt were increased again, and in 1782, duties on salt and tobacco were also raised. The American War, therefore, tested the British fiscal-military state as it necessitated an expansion in the scope of taxation in order to reconcile government revenue with rising military expenditure. The British state found itself constantly on the back foot, adapting to the fiscal exigencies of war.

 While the British state was grappling with the need to balance its budget through expanded taxation, its bureaucracy was also contending with its own set of challenges. During the American War, the state - particularly its bureaucratic components - was far from a toothless creature but was just as far from being an efficient Leviathan. It more closely resembled a cumbersome giant: ambitious in its strides forward yet frequently stumbling over itself. The remits of the Navy, Victualling, Ordnance, and Treasury boards often overlapped, resulting in interdepartmental competition as the various boards vied for transports. The asymmetry in accessible credit further exacerbated this situation, with the Navy Board struggling to compete with other departments consistently. While efforts were made to rectify these issues – such as the transfer of the responsibility of transporting provisions from the Treasury to the Navy Board in 1779 – the British fiscal-military state remained inconsistent, advancing at times and regressing at others, with interdepartmental competition remaining a problem until the end of the war.

The fiscal-military organisation of the British state would not survive beyond the conflict, with Brewer dating the cessation of the British fiscal-military state to 1783. The American War proved pivotal, with Brewer emphasising how the war brought the limitations of the British state’s fiscal capacities to the fore. Yet, Brewer’s chronology is problematic as the fiscal-military state is defined predominantly in institutional terms; that is to say, defined by the constituent institutions that, when aggregated, comprise the fiscal-military state. This suggests that the war’s conclusion transformed said institutions, causing the British state to lose its fiscal-military status. Such a presumption burdens future historiography with the a priori assumption that the war brought fundamental material changes to state institutions leading to the reorganisation of the British state away from fiscal-military lines. This is problematic as, despite the ignominy of losing thirteen of its American Colonies, the British state and economy were far from moribund, with the state being more than capable of servicing its outstanding debt. The fiscal-military state could, and likely should, have survived well into the nineteenth century. The war was not the political and economic disaster that broke the British fiscal-military state. Rather, it served to bring about a change in attitude, drawing attention to the extraordinary costs of maintaining such a system. The British fiscal-military state collapsed because few were willing to defray its upkeep, replacing it with a more hands-off, laissez-faire approach to governance.

Returning to Cicero’s maxim then, it may be true that the ‘sinews of war’ are built off a limitless supply of money, but for that money to be effectively employed, the state must address the dual obstacles of credit and revenue generation on the one hand, and the need for bureaucratic efficiency on the other. The American War underscored these challenges, illuminating the intricacies of war financing and state governance in times of conflict.

Patrick Gale is a Laidlaw Scholar at University College, London. He initially studied under the tutelage of the late Dr Aaron Graham. He would like to acknowledge the support of Professor Margot Finn during his research.