The current struggles with inflation encompass some of the highest rises in living memory, but current rises pale in comparison to the exceptional case of the year 1800 when inflation reached a dizzying 36% in Britain. This is the highest known figure in British history.
The explanation given for this incredible rise was that the 20 years of Napoleonic Wars had drained the country’s resources and an ever-increasing demand provoked by the industrial revolution. The economy struggled to supply ample arms, food and fuel to the army and navy, and shortages emerged across all sorts of everyday goods. This drove up the price of clothing, beverages, candles, coal, animal meat, dairy and cereals so that the common person dealt with rises across most of the items they would ever seek to purchase.
Such goods had been increasing in price for decades as an increase in population and a decrease in mortality rate meant an increase in demand. Given the incredible rises, wages struggled to keep up, so how did the government analyse the situation at the time?
Correspondence to Earl of Liverpool from the Office for Trade offers an insight into the tension on the streets. The Office representative describes crowds of people at Bishopsgate protesting about the price of bread, gathering and shouting in the streets of London.
Further correspondence (below) to the Earl describes the mood of the country at large.
There are various pleas to control prices, both in the Liverpool Papers and in correspondence to Prime Minister William Pitt, the Younger, including pleas about the spiralling cost of meat and the price of salt needed for fishermen wishing to conserve fish. As well as petitions from various industries, one can also see an increasing ideological battle over the right course of economic actions.
Two members of the House of Lords, Lord Buckingham and Lord Grenville, wrote to Pitt about the inflation crisis, warning the prime minister not to attempt to bring in legislation to reign in prices.
In the letter above, Lord Buckingham states that the best that can be achieved is to “regulate a measure but which all grain and flour shall be sold”, but there should be no attempt to then control market prices.
Lord Grenville agrees and even provides some inspiration for his principles in Adam Smith’s Wealth of Nations, which had been published 24 years earlier. Lord Grenville describes how he and Pitt were sceptical to the theory of the free market, but ultimately came around to it.
With the government discussing the grander narratives of economics, the population had to push through the inflation crisis. Output and growth were still up, and consequently many were making the profits needed to ride out the inflationary crisis.
Labour in the northern cities central to industrial output actually saw real wages rise, as demand for labour was so high, but the average worker in London saw their real income fall. This particular inflation crisis would be short and painful, as a massive fall in inflation in 1803 would see prices adjust, but such fluctuations would continue throughout the 19th century.
This article first appeared on the British Library’s Untold Lives Blog.