Kingdom of Great Britain, officially known as Great Britain

Walpole's foreign policy

Walpole secured widespread support with his policy of avoiding war.^[49] He used his influence to prevent George II from entering the War of the Polish Succession in 1733, because it was a dispute between the Bourbons and the Habsburgs. He boasted, "There are 50,000 men slain in Europe this year, and not one Englishman."^[50] Walpole himself let others, especially his brother-in-law Lord Townshend, handle foreign policy until about 1726, then took charge. A major challenge for his administration was the royal role as simultaneous ruler of Hanover, a small German state that was opposed to Prussian supremacy. George I and George II saw a French alliance as the best way to neutralise Prussia. They forced a dramatic reversal of British foreign policy, which for centuries had seen France as England's greatest enemy.^[51] However, the bellicose King Louis XIV died in 1715, and the regents who ran France were preoccupied with internal affairs. King Louis XV came of age in 1726, and his elderly chief minister Cardinal Fleury collaborated informally with Walpole to prevent a major war and keep the peace. Both sides wanted peace, which allowed both countries enormous cost savings, and recovery from expensive wars.^[52]
Henry Pelham became prime minister in 1744 and continued Walpole's policies. He worked for an end to the War of the Austrian Succession.^[53] His financial policy was a major success once peace had been signed in 1748. He demobilised the armed forces, and reduced government spending from £12 million to £7 million. He refinanced the national debt, dropping the interest rate from 4% p.a. to 3% p.a. Taxes had risen to pay for the war, but in 1752 he reduced the land tax from four shillings to two shillings in the pound: that is, from 20% to 10%.

Lower debt and taxes

By avoiding wars, Walpole could lower taxes. He reduced the national debt with a sinking fund, and by negotiating lower interest rates. He reduced the land tax from four shillings in 1721, to 3s in 1728, 2s in 1731 and finally to only 1s (i.e. 5%) in 1732. His long-term goal was to replace the land tax, which was paid by the local gentry, with excise and customs taxes, which were paid by merchants and ultimately by consumers. Walpole joked that the landed gentry resembled hogs, which squealed loudly whenever anyone laid hands on them. By contrast, he said, merchants were like sheep, and yielded their wool without complaint.^[55] The joke backfired in 1733 when he was defeated in a major battle to impose excise taxes on wine and tobacco. To reduce the threat of smuggling, the tax was to be collected not at ports but at warehouses. This new proposal, however, was extremely unpopular with the public, and aroused the opposition of the merchants because of the supervision it would involve. Walpole was defeated as his strength in Parliament dropped a notch.