trongly resembles that in which the States
of the North are engaged against the South. The first effects of the war
appeared in the tax system.

Great changes had taken place in Great Britain since the time of the
introduction of a regular system of taxation in 1688. Land was no longer
the most important source of income to the citizen. Profits from other
sources had sprung up. Commerce had discovered the riches of the Eastern
trade, and manufactures, stimulated by new inventions, had begun to
assume an importance and exert an influence which already threatened to
revolutionize the whole condition of society. Unconsciously to itself,
the nation had reached a point where any large increase in the demands
of the state must produce a new species of taxation. The war with France
supplied the impulse required. In 1797, Government attempted to meet the
extraordinary expenses of the year by tripling the tax on houses and
windows, etc. The experiment failed. It was found that these taxes,
which had been the 'towers of strength' of a preceding generation, could
no longer be relied on in the changed circumstances that had been
brought about by time.

It was in many respects one of the darkest periods in English history.
The Austrian armies, exhausted by repeated defeats, hoped only to be
able to defend themselves if attacked. Spain and the Netherlands had
joined themselves to France. Against the power of Napoleon England stood
up alone. At this critical juncture, a mutiny broke out in the English
navy. The whole fleet in the channel refused to do duty. The fleet at
the Nore, catching the spirit of revolt, also raised the red flag. The
doctrines of the French Revolution were sedulously scattered throughout
the kingdom, and in several counties of Ireland actual uprisings had
taken place. Added to these were financial difficulties. The enormous
outlays demanded for the prosecution of the war were very naturally
weakening the public confidence in the final ability of the Government
to pay the extravagant sums it was obliged to borrow. Under the
influence of the distrust thus engendered stocks fell. Three per cents.,
which had sold at 98, went down to 53. Many of the loans effected by the
Government at this time and during the war were made with a discount of
forty per cent. on the nominal value of the stock. Gold was scarce, and
rapidly rising. The pressure on the Bank for redemption was greater than
it had been since the rebellion