of 1745, and threatened, unless
corrective measures were at once adopted, to bring that institution to
actual bankruptcy.

The undaunted courage and resolution of the Government, in the midst of
this accumulation of difficulties, saved the country. The writ of habeas
corpus was suspended. By an admirable mingling of firmness and
conciliation the mutiny was quelled in the navy without serious
consequences resulting to the state. To meet the financial difficulties,
an act was passed by Parliament permitting the Bank to suspend specie
payment--thus delivering the country, for a period of more than twenty
years, over to a wholly inconvertible paper currency. From these strong
measures the enemies of the country anticipated the most disastrous
results. They were, however, doomed to disappointment. Even Napoleon at
length grew weary of prophesying the bankruptcy of a nation which every
year, from this time, gave more and more effective proofs of the
stability of its finances. It was the singular fortune of Great Britain
to have at the head of its finances, at this juncture, a man, who in a
different sphere, exhibited a spirit scarcely less bold, indomitable,
and comprehensive than that of the First Consul himself. This man was
Mr. Pitt. The finances of Great Britain, even at the present day, bear
witness to the extraordinary changes instituted by this statesman. The
tax on houses, windows, etc., had failed. In 1798, Mr. Pitt, with a
characteristic fertility of invention, brought forward a bill laying a
tax on incomes. By this bill, which is the foundation of all those that
have since followed, no tax was imposed on incomes that were less than
$300; on incomes above this sum a small tax was laid, which gradually
increased until it became one tenth of all incomes over $1,000. The
income tax was designed by Mr. Pitt to be simply a war tax. According to
his plan the interest upon the national debt, which he kept funded as
far as possible, was to be provided for solely from the indirect taxes,
leaving the direct tax to meet the extraordinary expenses of the war.
The most original feature of the financial system instituted by this
statesman, however, was the sinking fund. To prevent the rapid
accumulation of the national debt, Mr. Pitt, even before the breaking
out of the war with France, had obtained from Parliament permission to
set aside six million dollars, with an addition, afterward made, of one
per cent. of all the loans mad