The end of the Seven Years’ War provided a set of unique opportunities as well as a set of serious problems to George III and his ministers. The opportunities lay in the possibilities of administrative and financial reforms long contemplated by the King and his first minister, Lord Bute. The problems left from the war were closely related to these opportunities but apparently irreconcilable with them. The huge burden of war debt had to be reduced but the King also wanted to reduce the high level of taxation. Continuing confidence in the financial credit of the country largely depended on this. The dilemma for the armed forces, the most expensive arm of the state, was that if both the debt and taxation were reduced, it might not be possible to afford an adequate peacetime military and naval establishment. This was particularly relevant to the Navy as much of the fleet was worn out by long service and in need of repair or rebuilding. This was going to prove a long and expensive task. What was needed was a careful balancing of security and economy.

This and the following chapter will examine the Navy’s administration from the Peace of Paris in 1763 to the Falkland Islands crisis in 1770. It will focus on the fiscal and logistical problems of demobilization, the establishment of the peacetime Navy, and the various reforms and innovations introduced at this time. In particular it will be clearly demonstrated that despite the appearance of strict economy, security was always the first priority and the Navy was never starved of cash. It will also be shown that, despite smaller grants for naval supplies and a substantial reduction in the Navy’s debt, expenditure on the repair of the fleet was carried on at a high level. It will also be demonstrated that the demobilization and laying up of the fleet was a carefully managed process and that no charge of neglect or incompetence can be levelled at the naval administrations between 1763 and the Falkland Islands incident in 1770.

The process by which both security and economy was achieved was by an ingenious blend of established procedures, new innovations and careful management.