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Flashcards in The Home Front Deck (55):

When was income tax introduced?



Why was income tax introduced?

-The continued war with the French and the need to subsidise Austria and Prussia put unprecedented pressure on the treasury
-The introduction of inheritance tax, the suspension of gold payments and reduction in import duties improved tax revenue but expenditure was still growing faster than revenue.


What did Pitt do in 1792?

Reduced the national debt from £243 million to £170 million


Did income tax affect everyone?

No, only those earning over £60 a year. The national average wage was well below this.


Why was the Bank of England founded?

Initially to manage the national debt. It was also a means of raising money


How did annuities and consols differ from normal bonds?

-No fixed period of repayment
-Govt. did not have to pay back the capital investments
-Investors received an interest payment every quarter
-Very tradable during periods of low inflation
-Issued during times of financial need such as during the Crimean and First World War
-First introduced in the 1750s


Why did the new middle class industrialists find government bonds appealing?

-Having a guaranteed return over a fixed period was seen as a sound investment
-New bond issues attracted a lot of willing investors


How did Britain fund its wars fro 1815-1914?

Through taxation and small increases to national debt


Why were British-Colonial wars fairly cheap?

-Britain could often conscript from the local population
-The enemy was often few in numbers and poorly equipped


What did the scale of WW1 mean for the government financially?

They had to increase national debt as well as taxes


From 1914-18 how much did the national debt rise?

National debt went from £625 million to£7,800 million from 1914-1918


Where did the government borrow money from in WW1?

-From British and international institutions via government bonds
-Also borrowed directly from other governments, notably the USA


How did the government use taxation to combat the level of national debt in 1918?

Size of the debt by 1918 was such that 25% of taxation income was being used to make the interest payments on the debt.


How did the public aid in funding WW1?

-War Bonds: Cost from £5 so that normal people could invest if they had spare money- investment bonds bought during the war on the understanding that the government would pay back with interest once the war had ended. Interest initially 5% but moved 3.5%
-War Savings Certificate Accounts: Bought from the Post Office, you could buy stamps for 15 shillings and sixpence on the understanding you would get back £1 in five years.
-First war in which people were personally asked to fund the war effort.
-The amount raised demonstrate the people's trust in the government and their willingness to help the war effort


What happened regarding taxation in WW1?

-All three chancellors of the exchequer- Lloyd George, McKenna, Bonar Law- increased the rate of income tax, from 3.75% in 1914 to 30% in 1918.
-They also introduced a tax on business profits which reached 80% by the end of the war


How many people paid income tax during WW1 and why did this number change?

-In 1914 only 1.5 million people paid income tax, by 1918 it was 7.7 million
-This was largely due to the lowering of the exemption bracket from £160 to £130


What did the Bank of England to aid the war effort in WW1?

-Bank of England stopped issuing gold in exchange for bank notes and kept the gold as emergency reserve.
Also issued more banknotes than it had gold to back up, which meant that the economy could continue to function and the government make payments
-It also created inflationary pressure which made borrowing more expensive


What did the threat of French invasion lead to in the UK?

The creation of militia units: Part-time and not eligible for Foreign Service, the militia units performed useful duties throughout the war and served as a base from which to recruit regulars.


What were cavalry militias known as and what happened to them?

-Known as either "fencibles" or "yeomanry"
-Word fencible is derived from defensible and means temporary units that, by terms of enlistment, cannot serve abroad.
-Popular in the 1790s but most disbanded following the Peace of Amines 1802


Who did most of the militia work after 1803?

The yeomanry who were part time


What was the main role of the yeomanry and what did they allow regular units to do?

-The main role of the cavalry militia was to control civil unrest
-They allowed regular units to travel abroad with they army by taking over their duties


Infantry units were styles "fencibles" and what else?

-"Volunteers" or "militia"


How did the militia find men?

-Each county was given a quota to fulfil and any shortfalls were made up for with impressment


What was the point of the yeomanry?

They trained for a few hours in order to protect their county from invasion


How were militia units funded in the 1790s?

Privately through wealthy individuals or by popular subscription


Following the defeat of Napoleon what happened to militia units?

Most were disbanded but some continued and were able to provide a policing role when necessary, such as at the infamous "Peterloo massacre" in 1819 when violence broke out and 11 were killed. The yeomanry were viciously slated by the press.


What was the Militia Act of 1852 and how did it change the reservists role in national defence?

-The reservists became a more structured part of national defence
-This was in response to the fear of a French invasion and the lack of planning for this by the military authorities.
The Act provided for a militia force of 80,000 men to be enlisted voluntarily or by ballot.
The ballot was not conscription, as there were ways around it.
There were also enough volunteers to fill the ranks.
What was important was that the militia was forming a recognised part of home defence in peacetime as well as during the war.


Regarding national defence, what happened in the 1860s?

In addition to the militia, a volunteer movement grew up from the 1860s onwards.
This was popular as many saw it as both patriotic and enjoyable.
Volunteer units were freed from the discipline of the militia and the army leaders began to see them increasing as a corps of irregular troops whose skills with a rifle would provide a useful skirmish line for the professionals.


How were the reservists affected by reforms?

Both the Cardwell and Childers reforms drew the reservists closer to the army until Haldane made them an integral part of defence policy in the early 19th century.


When was the Defence of the Realm Act passed?

Within four days of the declaration of war in August 1914


How did DORA change the relationships between the government and the society?

Throughout most of the 19th century, people had largely been left alone to live as the wanted.
This changed as the government passed laws to tackle social problems, but, by 1914, the government still had a fairly laissez-faire attitude (opposes government intervention) to the affairs of its subjects.
Extra powers that the government took at the start of the war helped them affect people’s everyday lives.
It became an offence to fly a kite, light a bonfire, or buy binoculars.
Any talk about military affairs in public was banned.


How did DORA take measures to aid the economy?

In order to reduce absenteeism due to drunkenness, pub opening times were cut and landlords were told to water down the beer to reduce the alcohol content.
Drinkers were not permitted to buy beer in rounds.
Introduction of the British Summer Time was done in order to provide more daylight for agricultural work in the evening.


What was the Munitions of War Act?

the Munitions of War Act of 1915 resulted in direct government control of the munitions industry with strict rules about what workers could and could not do.
Trade unions agreed to abide by the conditions of the Act for the duration of the war.


How did the government control the conduct of the workers during WW1? (6)

•Strikes were prohibited, and workers could not leave employment in a war industry without consent of their employer.
•No worker could refuse to take on a new job no matter what the pay, nor could a worker refuse to do overtime, even if it was unpaid.
•Skilled jobs could be broken down into smaller component parts and done by unskilled workers, a practice called dilution.
•In addition to this, the government could direct workers to work in specific industries in specific areas of the country.
•In return, wages were to be protected and pay rises could be offered, but only with the agreement of the government.
•Workplace disputes would be solved by the compulsory arbitration and those workers found contravening the Munitions Acts would be tried by special munitions tribunals.


How was the coal industry controlled by the government?
What about the transport and mining industries?

Coal industry also came under some form of government control.
The profits of coal mines were fixed for the duration of the war to 1913 levels.
Any surplus went to the Treasury.
Coal mines remained in private ownership, but the appointment of a coal controller in February 1917 suggested that full nationalisation would occur should the mines not comply with the guidelines.
Transport industry was also subject to government control.
Like the mining industry, profits were set at their 1913 levels, but also like the mining industry, individual companies continued to run their own services for much of the war.


Why did British industry experience a crisis in the first few months of WW1?

During the first months of the war, British industry experienced a crisis as young men, many of them skilled, flocked to join the armed forces.


What were recruiting sergeants instructed to do in 1915?

By 1915, recruiting sergeants were instructed not to recruit men from reserved occupations.
These were miners, shipbuilders, farmers, merchant seamen, drivers and workers in the munitions industry.
Some men who had already joined up were recalled to take their place at work.
It was felt that they could have more impact at home than on the front line.
As the war went on, more and more from reserved occupations were called into the army.


How many women in the munitions industry 1914 - 1918?

Women working in the munitions industry increased from 82,859 in July 1914 to 947,000 by November 1918.


Number of female civil servants, clerics, and those in the transport industry?

Over 200,000 women became civil servants during the war and 500,000 others did clerical work for private firms.
Transport industry also took on women:
117,000 by the end of the war.


Total number of women employed in comparison to 1918?

In 1914, 5.9 million women were employed:
By 1918 that had risen to 7.3 million, which was an increase of 22.5%.


Why was food supply such a problem for Britain during WW1?

In 1914, 60% of Britain’s food was imported.
This meant that merchant shipping was very important for British supply.
It also meant that any drop in domestic food production could have a big effect on food supply.
The strain on merchant shipping caused by unrestricted U-boat warfare was having an effect on the food supply.
By the end of 1916, there were food shortages and long queues of annoyed people.


How did the government attempt to tackle the issue of food (WW1)?

Massive shipbuilding programme to ensure imports of food continued to flow.
Second was the setting up of a food agency to introduce rationing.


What was the relationship between farms and the government?

The food agency was given sweeping powers to supervise food production.
Livestock farmers were encouraged to turn to food crops.
The government guaranteed to keep the prices of these goods artificially high to encourage farmers to produce.
Every farm came under the control of the Board of Agriculture.
Done to ensure that the farmer was making the best use of the land.
Wages of male landowners were set up at a national minimum to keep workers on the farm rather than joining the services.


What was the WLA and when was it created?

From 1917, the creation of the Women’s Land Army (WLA) provided women labourers to take the place of men who were needed to fight.
Only 16,000 women joined.


When and why was compulsory rationing introduced? How did it work?

Compulsory rationing was introduced in January 1918.
Voluntary rationing had been tried before but without success.
Staples like meat, butter, margarine and sugar were all rationed, with each person being allowed a certain amount a week.
Bread was not rationed and the price of a loaf was subsidised by the government.
Meant that although a varied and rich diet was not possible under rationing.
Availability of bread meant that people would not go hungry.


How and why did the government control alcohol consumption?

Alcohol was the cause of loss of working time, along with being responsible for incidents of civil disorder.
The Intoxication Liquor Act was passed on 31st August 1914.
Gave the authorities the right to limit the opening hours of pubs.
Advised landlords to water down beer to stop customers buying rounds of drinks.
Beer consumption halved by 1918 and consumption of spirits was less than a half.
Convictions for drunkenness had gone from 3,388 per week in 1914 to 449 per week in 1918.


How many goods were taxed during the French Wars?

At least 21 goods and services including salt, beer spirits, windows, servants and dogs.


By 1815, how much had income tax raised?

£155 million


How else did the government fund the French wars?

The government also borrowed huge sums of money from merchants and bankers in the City of London. The powerful capital markets gave Britain a considerable advantage over France


How did the government fund the Crimean War?

-Paying for the Crimean War wasn't an serious problem as it was relatively short, limited in scope and occurred when Britain was at the height of its economic power.


How much of the Crimean War was funded by government borrowing and why?

Around half of the war's costs was met by government borrowing because Sir George Cornewall Lewis, who became Chancellor in 1855, believed that heavy taxation was more damaging to the economy than borrowing and thus he borrowed. This was in contrast to the previous Chancellor, Gladstone who believed in balancing the budget and reducing taxes.


How much did the Boer War cost? How were these costs met?

£217 million
In 1901, Chancellor of the Exchequer Michael Hicks Beach put a tax on refined sugar, imposed a levy of 1s. on exported coal and raised income tax by 2d in the pound. But the war's cost was mainly met by borrowing by means of bonds and consols- only a third was met by taxation.


How much tax revenue did EPD raise during WW1?

EPD, which rose to 80% in 1917, provided a quarter of the total tax revenue in the war period.


How much of war expenditure was met from public borrowing in WW1?

Over 30%


Explain international finance during WW1

Britain was wealthy enough to provide loans totalling £1,825 to its allies. However, it was also forced to raise loans in the USA to pay for vital US supplies. By November 1918, Britain had amassed debts to the USA of about £1,000 million