Question 4

What measures did Peel take to help the British economy?

Introduction

Paragraph One

Peel’s measures to rectify the crisis:
Took measures to promote free trade
Huskisson had removed many tariffs in 1820s but Whigs took no further action (1200 items still subject to tariffs)
Peel influenced by the ‘Manchester School’ (Cobden and Bright) – British industry strangled by tariffs
Argued that tariffs made raw materials more expensive and thus higher production costs
Foreign countries resented Great Britain’s tariffs and less inclined to trade
Duty on imported corn – food dearer – hit the poor
Removal of tariffs would make exports cheaper and stimulate industry and employment
Budgets of 1842 and 1845 removed many tariffs
Result – trade revival, increased employment, cheaper food
An age of prosperity began which lasted until 1875

Paragraph Two

Bank Charter Act 1844
Problem – all banks could issue bank notes without limit
Danger of over-issue and lack of gold to back notes
Some banks collapsed in time of slump
Peel knew trade could only flourish if currency was stable so:
- no new banks could issue notes
- limits put on existing banks
- Bank of England could issue notes up to £14 million; beyond that they had to be backed by the Bank’s gold reserves
Result – currency became very stable and London world’s leading monetary centre

Paragraph Three

The Companies Act 1844
No control on formation of companies
1830s many dubious companies went bankrupt or dishonest directors ran off with investors’ money
All companies to be registered and present proper accounts
Some success but did not apply to companies that had to get parliamentary approval eg railways – some of the biggest fraudsters involved

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