The Guard at Austerlitz by Georges Rohner. Napoleon’s 1805 victory was followed by military disaster. Image: Bridgeman Art Library.
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How Britain won Waterloo with biscuits, spies and the City

Banking on victory: Simon Heffer reviews three tomes on Britain’s war with Napoleon.

Citizen Emperor: Napoleon in Power 1799-1815
Philip Dwyer
Bloomsbury, 800pp, £30

Wellington: the Path to Victory, 1769-1814
Rory Muir
Yale University Press, 728pp, £30

Britain Against Napoleon: the Organization of Victory, 1793-1815
Roger Knight
Allen Lane, 720pp, £30

As we endure the torrent of books of varying quality recalling the events in Europe of a century ago, we are blessed with others of exceptional quality that examine the peril that Britain was in two centuries ago. This year may be about the memories of Sarajevo in 1914 and the cataclysm that followed, but in 1814 Europe was already wearied by war, its dynamics were changing and a century of relative calm in Britain was about to be ushered in by the British triumph at Waterloo in June 1815 and the final defeat of Napoleon.

These three works of exemplary scholarship tell different aspects of the story. Citizen Emperor is the second volume of Philip Dwyer’s biography of the Corsican general and deals with his years of power between 1799 and the defeat at Waterloo. Rory Muir’s life of Wellington is the first of two volumes, finishing on the eve of Waterloo – the ultimate cliffhanger – and will be followed by a second volume to mark the bicentenary of the battle and also covering the remainder of Wellington’s life as a politician and statesman. Roger Knight’s work is of less conventional form but is perhaps the most intriguing of the three: he examines not the military heroics that brought Napoleon to his knees but the way in which Britain prepared for the final onslaught against him. Although both the biographies clarify men whose realities have been deeply obscured by myths and legends, Knight’s work is truly ground-breaking in showing how Britain, a country that had prided itself on the encouragement of individualism, made a collective effort for victory that was not seen again in such intensity until 1940.

Knight was deputy director of the National Maritime Museum and wrote a magisterial life of Nelson for his bicen­tenary in 2005. In Britain Against Napoleon he describes the tension between a France that had the strongest army in Europe and a Britain with the strongest navy. So long as the English Channel belonged to the Royal Navy there was nothing to fear; but an invas­ion would leave the country at the mercy of the French, a land where revolution was still smouldering.

The threat lasted from 1793 until 1815, with only brief interruptions. The society that sought to resist it was no tyranny and was therefore subject to changes of government. England was outnumbered and, it feared, could be outgunned. The principal commodity needed to counter the threat was not so much manpower as money, raised by the City of London and used to stoke the fires of the Industrial Revolution to make weaponry and ships. Knight argues that several times between 1796 and 1798, and again in the years after 1807, Britain came close to being unable to afford to fight the war because of financial exhaustion and sometimes lacked the focus to fight it because of political upheaval – not least in 1812 when the only British prime minister to have been assassinated, Spencer Perceval, lost his life for reasons unconnected with the international emergency.

Britain was fortunate that in the late 1780s Pitt the Younger had made it his business to renew and refresh an army diminished by defeat in the war against America. By the time war broke out, the navy was at the peak of its power, contrasting with a French fleet in poor repair, riddled with mutinies and largely in port. By 1793 he had also sought to improve domestic and international communications for the purpose of economic efficiency, but this infrastructure would also help mobilise the war effort as part of this improvement was focused on the Post Office. All this meant that when war came, actions in the Baltic and the Iberian peninsula could be conducted smoothly because of Britain’s command of the ocean and well-organised supply lines.

There were two means of dealing with manpower shortages. Men were impressed (or press-ganged) for the navy, which caused particular bouts of civil unrest in the mid-1790s; and large numbers of foreign mercenaries were signed up to the army – “Russians, Poles, Germans, Italians . . . we had one Cinghalese,” an officer of the 60th Regiment noted in 1799. There were also French who changed sides, loyalties being fluid in the immediate aftermath of the revolution. The militia was beefed up but at times it was hard to provision it; and when shortages caused the price of food to rise in the mid-1790s, the soldiery took part enthusiastically in the food riots that followed.

The organisation of war rested first and foremost with a civil service that Knight describes as “patchwork” in the 1790s: some of it efficient, other parts “useless”. As the war went on, however, the offices of transport, customs and excise and agriculture sharpened up their acts, ensuring revenue was raised, people were fed and supplies and men moved to where they needed to be. To suppress restiveness at home, the government also ensured the populace had food; and to assist the war effort, British intelligence operations were developed and expanded.

Soldiers and sailors were efficiently fed, even if not very well. Knight quotes a sailor in 1812 telling his wife that the beef that came in their rations had been in salt for seven years. Knight also gives some astonishing facts about the provis­ioning of the services during expedition to fight the French in the West Indies in 1801. This required 83,428 tons of biscuits, and it was quite usual for 30 head of live cattle to be carried on the main gundeck of a ship as it sailed across the Atlantic.

The effort not just of organisation but of keeping the country together in the face of mortal peril, was too much for Pitt. His surgeon wrote that Pitt “died of old age at forty-six, as much as if he had been ninety”. Although his death ushered in a period of instability, the Duke of Portland’s admin­istration was confident enough to commit itself to helping drive the French out of the Iberian peninsula in 1808, which required vast expense and another enormous logistical effort. The threat of invasion at home had not diminished either: Martello towers were put up around the coast, dockyards built and modernised, volunteer battalions formed. There was a huge – but temporary – expansion in the civil service to keep on top of so many demands.

In the private sector, the industries supplying the army and navy made what Knight calls “spectacular advances” during the war. The warship-building business went into overdrive, so much so that supplies of timber became short; between 1803 and 1815, 84 per cent of ships were built in private as opposed to royal dockyards. This caused towns such as Great Yarmouth to become rich out of the war. Although taxation rose to pay for all this, so too, thanks to the good office of the City, did borrowing. High import duties on goods from the East Indies also helped. In 1811 total government expenditure was £85m, just over half of it (£43m) going on army, navy and ordnance. Luckily for the British, Napoleon’s decision to overstretch himself in Russia was the beginning of the end for him, and Britain’s resources lasted until total victory – with the country’s economy and mercantile life modernised as a by-product.

Looking at all this from the defeated emperor’s perspective, Philip Dwyer, in a book of meticulous research and beautifully detailed descriptions of Napoleon’s military adventures, brings home the full horrific cost of the march on Russia. With 300,000 Russians dead defending their homeland, he reckons a million died between June 1812 and February 1813, with “the remnants of the army continuing to die from wounds, disease, malnutrition and exhaustion”. It was the near-culmination of a glorious career that had begun with a coup d’etat in 1799, the end of the French Revolution, the coronation of an emperor and the formation of a dynasty – placed on what was modestly called “the first throne of the universe” – and the triumph of Austerlitz. Dwyer points out that this battle, six weeks after Trafalgar, helped “obliterate” the memory of that defeat, not least because news of Nelson’s victory was not released until after Napoleon’s.

Yet it was a short passage from the disaster in Russia seven years later to Napoleon’s defeat in 1814 and his confinement on Elba, whence he escaped under the noses of the Royal Navy in February 1815, believing France wanted him back. Dwyer depicts his subject as a gambler: Napoleon is said to have pronounced “the die is cast” as his ship sailed off to the mainland.

His book ends with a suitably poetic account of the defeated emperor, a month after Waterloo, turning up at HMS Bellerophon and putting himself under the protection of the British; as the ship departs from the Brittany coast, it is his last sight of France, with St Helena and the arsenic-laden wallpaper awaiting him.

Although Rory Muir’s first volume on Wellington ends before the great battle, it is, like Dwyer’s biography, extensively researched and anchored in fact, and gives an invaluable picture of the duke in his early years that will be unfamiliar to many who know only of his military exploits. Muir has researched his subject for 30 years and it shows. He goes into great detail about the peninsular war, which was fought over control of the Iberian peninsula, but is also revelatory about his subject’s career in India between 1796 and 1805.

Wellington returned from India, aged just 35 and already a major-general and a knight. In dealing with His Majesty’s enemies on the subcontinent, he had shown himself cool-headed, intelligent and a good tactician who was developing into a decent strategist. One senses from Muir’s account that what Arthur Wellesley – as he then was – learned out there were the skills that would lead him to be recognised within a few years as the finest soldier in the army. As Muir makes clear, he was helped in his rise by the appointment of his brother Richard, the Earl of Mornington, as governor-general soon after his arrival there. Once Wellesley moved centre-stage, he never left it.

To Muir, whose second volume – to judge by his first – cannot come soon enough, we are especially indebted for one useful bit of myth-busting. Wellington never said that the Battle of Waterloo was won on the playing fields of Eton: the words were put into his mouth by a French journalist, Charles de Montalembert, after the duke’s death. Wellington hated Eton and lasted only three years there before his mother was advised that the boy would come to very little and he should be educated elsewhere. It sounds all too similar to Winston Churchill at Harrow a century later and provokes further thoughts on the real seeds of, and the best training for, greatness.

Simon Heffer writes for the Daily Mail and his books include “High Minds: the Victorians and the Birth of Modern Britain” (Random House, £30)

Simon Heffer is a journalist, author and political commentator, who has worked for long stretches at the Daily Telegraph and the Daily Mail. He has written biographies of Thomas Carlyle, Ralph Vaughan Williams and Enoch Powell, and reviews and writes on politics for the New Statesman

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

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The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt