Confronting the National Debt: The Aftermath of the French and Indian War

THE BRITISH NATIONAL DEBT

Great Britain’s newly enlarged empire meant a greater financial burden, and the mushrooming debt from the war was a major cause of concern. The war nearly doubled the British national debt, from £75 million in 1756 to £133 million in 1763. Interest payments alone consumed over half the national budget, and the continuing military presence in North America was a constant drain. The Empire needed more revenue to replenish its dwindling coffers. Those in Great Britain believed that British subjects in North America, as the major beneficiaries of Great Britain’s war for global supremacy, should certainly shoulder their share of the financial burden.

The British government began increasing revenues by raising taxes at home, even as various interest groups lobbied to keep their taxes low. Powerful members of the aristocracy, well represented in Parliament, successfully convinced Prime Minister John Stuart, third earl of Bute, to refrain from raising taxes on land. The greater tax burden, therefore, fell on the lower classes in the form of increased import duties, which raised the prices of imported goods such as sugar and tobacco. George Grenville succeeded Bute as prime minister in 1763. Grenville determined to curtail government spending and make sure that, as subjects of the British Empire, the American colonists did their part to pay down the massive debt.

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