ABSTRACT
WH E N Walpole feil from power in F ebruary I 7 42 the dark clouds of war were again gathering over Europe. England had declared war on Spain in October I 7 39, butthiswas at first little more than a colonial interlude. With the sudden Prussian invasion of Silesia in December I 740, which obliged England to come to the aid of Austria, and the official outbreak of war between England and Francein March 1744, the issues became much more complex and dramatic, recalling the terrible years of the I 69os. Advocates of the Old System of foreign policy were happy to seeEngland once more in league with the United Provinces and Austria to curb French power, and only gradually realized that the war aims of the allies were quite different from those of the early I 70os, that the spirit of the Dutch, who remained neutral until 1744, was broken, while Austria's real enemy was now not France, but Prussia. One thing remained constant and obvious, however: war was cripplingly expensive. Until I 744 new English government longterm loans were relatively small, and 3% stock remained at par or just below it. When France officially entered the conflict against her in March I 744, and the real struggle began, the 3%s at once sank to 92-3, and the scale of long-term borrowing sharply increased. Larger and !arger loans became needed each year. By the end of 1747 Henry Pelham, who was First Lord of the Treasury from I 743, was seriously questioning, like his brother in 1761, whether England could fight foranother year.1
