Pages v-xlvi

Calendar of Treasury Books, Volume 18, 1703. Originally published by His Majesty's Stationery Office, London, 1936.

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In this section


William III died at 8 o'clock on Sunday morning of the 8th of March 1701-2 and at 3 o'clock in the afternoon Anne was proclaimed Queen. The Parliament had opened on the 30 December 1701 previously and continued to sit until the 25th May 1702 under the powers of the Act 7-8 Wm. III, c. 15, which prolonged for six months the life of Parliament on the death of the Sovereign. On the following day both Houses attended the Queen at St. James's with their addresses, in which the Commons for their part assured her that they would to the utmost assist and support her on the throne, enable her to prosecute the reducing of the exorbitant power of France, maintain the Protestant succession and "effectually provide for and make good the public credit of the nation."

In her speech to both Houses made two days later, 11 March, Anne reminded the Commons that the revenue for defraying the expenses of the Civil Government had expired with William's death. "I rely entirely upon your affections" she added "for the supplying it in such a manner as shall be most suitable for the honour and dignity of the Crown."

At the time the House of Commons was engrossed in the two weighty problems of provisions of Supply for the war and provision for the Deficiencies of Parliamentary Funds. Without postponing these larger questions it turned aside instantly to consider a motion for a supply to be granted to her Majesty for the better support of her Household and of the honour and dignity of the Crown.

As preparatory to the consideration of this question the House called upon William Lowndes, who besides being a Member of Parliament was Secretary to the Treasury, to lay before it an account of the Civil List funds comprised in the Act 12-13 Wm. III, c. 12, the Act which represented the final stage reached by Parliament under William III towards the solution of the Civil List problem.

Lowndes duly submitted this account on the 14th March as follows

Neat produce of the Civil List funds for one entire year from 25 Dec. 1700 to 25 Dec. 1701.
l. s. d. l. s. d.
Hereditary Excise 212,061 13 5
Post Office 75,127 14 8
First Fruits 3,746 4 4
Tenths of the Clergy 12,240 0 0
Fines for Alienations 3,672 13 5
Post Fines 2,276 0 0
Wine Licence revenue: per estimation 8,000 0 0
Sheriffs' proffers 1,061 17 6
Compositions in the Exchequer 18 7 0
Seizures of uncustomed and prohibited goods 32,567 10 8
Revenue of the Duchy of Cornwall 8,727 4 5
Land revenue within the Principality of Wales 4,543 4 5
Fines of leases and rents of other lands 173 8 4
4 per cent. Duty in specie in Barbados and the Leeward Islands 19,025 4 10
383,241 3 2
Temporary Excise 212,061 13 5
Additional Subsidy of Tonnage and Poundage 306,520 7 9
518,582 1 2
901,823 4 5
The said Branches of Excise are liable to a payment of 3,700l. a week for 5 years to repay 820,000l. borrowed and the interest thereof : which weekly payments if computed for one year do amount to 192,400 0 0
then rests 709,423 4 5

Memorandum. During the said year there was an extraordinary importation of merchandizes liable to the said Subsidy, in expectation of a war : which cannot be hoped for in another year.

The produce of seizures in the said year was increased above 20,000l. more than usual upon occasion of French wines from St. Sebastian.

William Lowndes.

As this account runs from December to December it is not possible to compare it exactly with the yearly Michaelmas to Michaelmas Revenue and Expenditure accounts printed in the Introduction to the preceding volumes of this Calendar. Those accounts show annual incomes for the Civil List as follows

l. s. d.
March 16991700 March 683,954 1 1
March 17001701 March 704,339 4 6
March 17011702 March 508,330 13 7

But for the year selected viz. 1700-1, which of course was the then last preceding year, the two sets of figures approximate so closely as to make Lowndes's statement perfectly sound and reliable and therefore as good a guide as the House of Commons could require.

On the face of it the statement seemed to prove that the Act of 12-13 Wm. III, c. 12 (which purported to provide a yearly Civil List revenue of 700,000l. in all for the Crown) was successfully carrying out the intention of the House ; and was actually producing a clear revenue of 700,000l. for the support of the Civil List or as it was styled "the Household and the honour and dignity of the Crown."

Without raising the question of the Expenditure side of the Civil List the House assumed that the 700,000l. per an. would be an ample provision for such expenditure in toto and contented itself with the mere renewal of the grant of supply. The motion was considered in grand Committee of the whole House on Saturday the 14 March, the day on which Lowndes's account as above had been submitted. The Committee reached a decision in the succeeding session and reported on the following day, Tuesday 17 March. The Committee's Resolutions were agreed to unanimously as follows

(1) that towards the Supply to be granted to her Majesty for the better support of her Majesty's Household and of the honour and dignity of the Crown, the same revenues which were payable to his late Majesty King William, of blessed memory, during his life, be granted and continued to her present Majesty Queen Anne during her life.

(2) that the said revenues be continued from the death of his late Majesty.

The Bill for carrying these Resolutions into effect was introduced on the 19th March and had a swift and uneventful passage through the Commons save in one respect. On the occasion of the second reading the House ordered that it be an instruction to the Committee that the Crown revenue be not alienated. The Commons Journals do not contain this order but it is preserved by Luttrell (v. 155) and reflects for us the unrelenting bitterness aroused by William's grants of lands.

The Bill passed the Commons on the 26th March and the Lords on the following day and received the royal assent on the 30th.

Thus in a matter of only three weeks Parliament had made for Anne what it considered to be a just and generous Civil List provision, such a provision as had only been grudgingly arrived at in William's case after two thirds of his reign was spent in chaffering and discontent. It was probably due to the haste of the proceeding that Parliament did not avail itself of this opportunity of reviewing the whole subject of the Civil List, and especially of the ambit of Civil List expenditure, with the object of separating from it such items as were essentially national in their nature, as for example the salaries of Judges and of Ambassadors and of the ordinary Civil Services and so forth. To leave all those items charged on the Civil List whilst making for it the hard and fast provision which had been tentatively arrived at in the Act 12-13 Wm. III, c. 12 was to subject these purely national services to the possibility and risk of starvation if, after all, the Civil List funds did not yield as expected. This was exactly what had happened under William and it accounted for the fact that he had died with his Civil List so heavily in debt. In the end Anne herself was destined to suffer in exactly the same way but her popularity saved her from the reproach of being permanently in debt to her own servants. In her case Parliament tardily provided for the accrued deficit of the Civil List Funds a simple act of justice which it had denied to William.

The very first year of Anne's reign revealed the weakness of the procedure thus adopted of providing a hard and fast Civil List revenue on a partial forecast of its sufficiency. The figures of the revenue printed below p. cxxxi show that in the year Michaelmas 1702 to Michaelmas 1703 the total corpus of the Civil List funds only produced 543,725l. 11s. 8d. And, to make the position more trying for herself, the Queen had subscribed or made a "donative" of 100,000l. out her Civil List income towards the national cost of the war. To make such a donative out of an insufficient revenue simply increased the first year's debt on her Civil List and increased the burden for the succeeding years by the amount of accruing interest ; simultaneously it increased the personal hardship to such of her servants and pensioners and such civil officers as had to go unpaid.

The Act of 1 Anne c. 1 "for the better support of her Majesty's Household and of the honour and dignity of the Crown" recites that the Commons of England in Parliament assembled, well knowing that the security, peace and prosperity of the realm are concerned in supporting the honour of the Crown of England by settling a revenue suitable to the necessary expenses of the same . . and with hearts inflamed with a dutiful affection and being desirous of settling upon your Majesty for the expenses of our Civil Government a revenue equal at least to the revenue enjoyed for that purpose by any of your royal predecessors : it then proceeds to grant to the Queen for life (1) the Temporary Excise as granted initially by 12 Car. II c. 23 and 6d. per barrel of vinegar as granted by 10 Wm. III, c. 23. (2) Tonnage and Poundage as finally continued by 9 Wm. III, c. 23. (3) the revenue of the Post Office and the Small Branches as set out in the Act 12 Wm. III, c. 10 (viz. First Fruits and Tenths ; Alienation Office fines for writs of covenant and writs of entry ; Post Fines ; Wine Licence revenue ; sheriffs' proffers ; compositions in the Exchequer ; seizures of uncustomed and prohibited goods ; Duchy of Cornwall revenue, rents of lands in England and Wales ; fines of leases ; but excepting the 4frac12; per cent. Duty in Barbados and the Leeward Islands). It then proceeds to extend to the whole period of the Queen's life the liability of the Excise to a weekly "deduction of 3700l." to be applied to the service of the Bankers' debt and to the public use.

The Act of course contains no grant of the Hereditary Excise. That particular source of revenue was in the Crown of England for ever and was not grantable by Parliament. As being the acknowledged property of the Crown, Parliament had no right to grant it and had still less right to charge it with any liability or to hypothecate it as security for any anticipation or advance. There is no need here to repeat the account of the long and crooked process by which this strict legal and constitutional position was abrogated by the Act of the year 1700 (12-13 Wm. III, c. 12, for appropriating 3700l. weekly out of certain branches of the Excise : see pp. xxxiii-xxxv of the Introduction to Vols. XI-XVII of this Calendar). But from the form of the re-iteration of the 3700l. per week appropriation clauses it is clear that the House of Commons had in its mind, but only half expressed in its words, that the Excise and the Small Branches were to be for the support of the Royal Household and of the Honour and Dignity of the Crown. The necessary accompanying innuendo (viz. that the remainder of the Civil List Revenue or in other words the Subsidy of Tonnage and Poundage was to be devoted to the ordinary Civil Government or Civil Service of the country) was not drawn. It is not anywhere expressed in the Act. But nevertheless by implication this Act of 1 Anne c. 1 contained a suggestion of the process by which finally the purely Regal State Civil List was cut away from the ordinary Civil Government Civil List.

That this constitutional development did not take place during the reign of Anne was due mainly to the haste with which this Civil List was passed at the commencement of her reign.

The Act practically perpetuated or stereotyped the constitutional muddle or compromise which had been evolved by long years of strife and intrigue under William. In all probability if the whole question had been re-opened at the commencement of her reign harmony would have been destroyed as between Parliament and the Executive. The time was not yet ripe for a further constitutional advance in the matter of the Civil List.

There are two other points which emerge from a close perusal of this Civil List Act of 1 Anne. In the first place it contains no assurance either specific or general of a parliamentary guarantee as to the totality of the Civil List revenue. It does not promise Anne a revenue of 700,000l. per an. It does indeed refer to the Act of 9-10 Wm. III, c. 23 which had in effect promised that revenue to Wm. III but it refers to it only by way of a passing allusion to the appropriation clause therein. It is of course possible that the statement of account which William Lowndes had submitted to the House led it to suppose that the Civil List revenues showed an average yield of 700,000l. or slightly more : and in granting them over again in the same terms and subject to the same charges and appropriations the House probably thought that it was in effect granting a revenue of 700,000l. to the Crown.

But certainly in the Act itself the House did not pledge itself to that figure. It did not covenant that the grant should produce so much. So that when later the accumulated yearly deficiency was found to be pressing on the Queen's executive it was as a matter of patriotism rather than of covenanted obligation that the House resumed the consideration of the Civil List revenue.

The second point concerns two specific reservations expressed in the Act. The Four and a Half per cent. revenue raised in Barbados and the Leeward Islands was removed from the Civil List and was decreed to be applicable only to the defence of those islands. This matter had arisen on a petition from the agents, planters and merchants concerned in the island of Barbados and is explained by the proceedings of the House thereupon during this month of March (see C.J. XIII, pp. 800, 813, 818, 828). But in view of the fact that this particular revenue had always from the days of Charles II been considered as the King's revenue, and as such had figured in the Parliament's own estimate of Civil List revenue it was incumbent on the House of Commons to recoup the Crown for the loss of this branch before dictating to the Queen that she should virtually surrender it. Nothing of this sort was done or, apparently, even contemplated by the House.

But there is another and far more important aspect to this matter.

The petition in question from the Barbados agents, planters and merchants, had been presented to the House of Commons on the 16th March, 1701-2. It asserted ex parte that the 4 per cent. Duty was granted by Act of Barbados in September 1663 "for the reparation and building of fortifications and defraying all other public charges incident to the government there."

In this naked form the statement was not true but the House accepted it and addressed the Queen that the said revenue (subject to an annuity to the Earl of Kinnoul) might be applied (i.e., appropriated) to the fortifications and public uses of Barbados and the Leeward Islands. In reply the Queen promised that she would give directions accordingly.

In this silent frictionless manner a constitutional change of vital importance had been accomplished. At the moment of its institution the exact nature and function of the Four and a half per cent. revenue had not been defined. The Barbados Act of 1663 contained a long recital as preliminary to the grant of the Duty but the grant itself did not contain and was not followed or accompanied by any clause of appropriation.

"Forasmuch as nothing conduceth more to the peace and prosperity of any place and the protection of every single person therein than that the public revenue thereof may be in some measure proportioned to the public charges and expenses ; and also well weighing the great charges that there must be of necessity in maintaining the honour and dignity of his Majesty's authority here, the public meeting of the Sessions, the often attendance of the Council, the reparation of the forts, the building of a Session House and a prison, and all other public charges incumbent on the Government ; do in consideration thereof give and grant unto his Majesty his heirs and successors for ever ...the said export duty.

Furthermore, this recital completely ignores the proprietory interests and debts of the Earl of Marlborough, the Earl of Carlisle and Lord Willoughby, although those interests and debts had been a main motive in the long negotiations which had resulted in substitution of royal for Proprietory government in Barbados and finally in 1663 in this grant of a revenue to the king. On the resumption by the Crown, Charles II himself appears to have accepted the rough and ready principle that half the revenue or profits should go to the local administration or Governor and the remainder should be available for the claims and debts of the original patentees and their creditors.

This was practically the understanding in 1662 and 1663, i.e. before the grant of a specific revenue. In November 1662 Lord Willoughby, claiming under a contract with the Earl of Carlisle (the patentee proprietor of Barbados and the Leeward Isles), was confirmed in the office of Governor for the King, i.e. as royal Governor for the remaining seven years of his contract with the Earl of Carlisle but on the understanding that he would retain one half the profits. This arrangement (which was in reality the condition attaching to Lord Willoughby's lease from the Earl of Carlisle) was defined and fixed by an order in Council of 13 June 1663 under which the profits from the Leeward Caribbee Islands were divided into two moieties, one moiety to the Governor, the other moiety to provide an annuity of 500l. for two lives to the Earl of Marlborough, a perpetual annuity of 500l. to Lord Kinnoul (as successor to the Earl of Carlisle and to be increased to 1000l. when all creditors were paid) ; and the balance to pay off the claims of the patentees' creditors and then to revert to the Crown.

Three months after this order in Council the island of Barbados voted the revenue of Four and a Half per cent. to the King without any specific clause of appropriation and without the slightest reference to apportionment so ordered. Within the next few months the Leeward islands followed Barbados and granted an identical revenue in similar form.

If this arrangement meant anything at all or was understood to mean anything at all at the time, it could only be that the administrative cost of the islands including the upkeep of fortifications were to come from the Governor's moiety and would be retained locally and that the other moiety would be remitted to London to meet the claims of creditors and proprietors. And when at various subsequent stages the Duty was put to farm and finally put under the management of the Customs Commissioners in London the farm or management arrangements could only apply to the remitted moiety.

The constitutional danger in such a slipshod arrangement lay in the failure to appropriate the remitted moiety from the time that it should become a free, or largely a free, fund, i.e. after the liquidation of the debts due to creditors and annuitants. From the moment the administration of the remitted portions of the Four and a Half per cent. came under the administration of the Customs Commissioners in London the moneys realised from it passed into the Exchequer as part of the ordinary Customs receipts and although not classed as part of the Subsidy of Tonnage and Poundage they tended naturally to become or to be looked upon as part of the King's Civil List. In the year 1700-1, for instance, the receipts from the Four and a Half per cent. Duty amounted to 16,887l. 11s. 5d. which was paid into the Exchequer by the Customs Cashier, but was taken to account in the Exchequer as an item of the Civil List or King's revenue under the heading of "Small Branches." Out of this sum 11,833l. 0s. 9d. was expended on Civil List items. In the following year the payments into the Exchequer by the Customs Cashier on the head of the Four and a Half per cent. were 12,295l. 8s. 5d. and the whole of this sum (together with a repaid balance of 1009l. 5s. 5d. making together 13,304l. 13s. 10d.) was expended on Civil List items as follows :

l. s. d.
Treasurer of the Chamber 3,269 13 4
Keeper of the Great Wardrobe 2,658 3 4
Paymaster of the Works 1,365 13 1
Royal Gardens 408 4 0
Master of the Horse for liveries of the Stables 800 0 0
Foreign Ministers 919 5 5
Pensions and annuities payable at the Exchequer 1,000 0 0
Royal bounties 300 0 0
Secret Service 600 0 0
Privy Purse 1,200 0 0
Contingencies 783 14 8
13,304 13 10

It is easy to realise how invidious and improper it could appear that one single local Plantation revenue should be used for such expenditure. The fact that the Earl of Kinnoul's annuity was met out of the King's Civil list generally only confirmed the invidiousness of the principle involved. By instantly and readily adopting the advice contained in the Address from the House of Commons Queen Anne remedied what might have grown to an abuse in London and what would certainly have continued to rankle as a grievance in Barbados. In the year following upon the change in the year covered by the present instalment of calendar the expenditure side of the Four and a Half per cent. Duty took on quite a different complexion. The account of the Duty for that year is as follows

Four and a Half per cent Duty. l. s. d. Per Contra. l. s. d.
Cash paid into the Exchequer by the Receiver General of Customs 12,091 1 2 Pension to Mrs. Tillotson 150 0 0
Annuity to Visct. Duplin as assignee of the Earl of Kinnoul 1,000 0 0
paid to Sir Bernard Granville on his salary as Governor of Barbados 600 0 0
paid to the Treasurer of the Ordnance for Ordnance stores for Barbados 5,769 3 9
balance in cash 4,571 17 5
12,091 1 2

This account ends with the following significant Memorandum "This revenue in the late King's time was part of the funds settled for the Civil List : but since his death is set apart to the payment of the perpetuity to the Earl of Kinnoul and for supplying the Leeward Islands with stores etc. for their defence."

In this quiet unobtrusive way a constitutional reform of the greatest importance had been effected. The House of Commons in effect asserted the principle, and the Crown conceded the principle, that Colonial revenue was granted for and should be applicable to colonial administrative purposes. But it is not to be supposed for a moment that such an assertion was deliberate or was intended to be the enunciation of a principle of constitutional law. The House was simply remedying a local and temporary grievance or anomaly, it was not raising the abstract principle of Colonial taxation. Having remedied the grievance the House dropped the subject. In other fields the Crown was still left in possession of its revenue of Quit Rents in various Colonies on the mainland of America and likewise of the Plantation Duty under the Act of 25 Car. II, c. 7a Customs tax levied in America and remitted annually to England. The Plantation Duty had been imposed by the House of Commons and from the moment of its inception the revenue from it had formed part of the King's Civil List and if in this particular instance of the Barbados revenue the House of Commons had contemplated a review of the principle of Colonial taxation it would have to commence not with the Four and a Half per cent. Duty but with the Plantation Duty.

The attitude of the House was just as illogical in the matter of the second constitutional innovation asserted in the Civil List Act of 1 Anne c. 1. The Act contained a limitation on grants of Crown lands. This limitation is contained in clause 5 of the Act and provided that no grant should thenceforth be made of Crown Lands for longer periods than 31 years or 3 lives.

The inception of the idea or purpose to declare Crown Lands unsaleable in future can be traced to a debate in Committee on Supply which took place on the 27th Feb. 1701-2. This debate is not referred to in the Journals of the House but Luttrell V. 147 has preserved a note of it.

Yesterday the Commons were in a committee upon the Supply, there being 300,000l. yet to raise. Several propositions were made [such] as 6d. per gallon more on wine ; a poll [tax] for [persons of] quality and that every person worth 500l. per an. pay 4l. a year to his Majesty ; that the Crown lands be sold for the good of the public. But the Committee came only to this resolution that the House be moved that a clause be added to some Bill to prevent the alienation of any Crown lands.

From Anne's reign onwards this limitation became a settled point of constitutional policy on the side alike of the Parliament and the Crown. The enactment was due of course to the intense feeling which had been aroused by William's grants of Irish lands. The illogicality of the position adopted by the House in this matter consisted in the fact that the provision applied only to Crown lands in England, Wales and Berwick on Tweed. It did not and could not concern Ireland at all. Furthermore, the recital of the clause in question contains by innuendo a serious distortion of historical fact.

"Whereas the necessary expenses of supporting the Crown or the greatest part of them were formerly defrayed by a Land Revenue which hath from time to time been impaired and diminished by the grants of former Kings and Queens of this realm, so that her Majesty's land revenues at this present can afford very little towards the support of her Government. ...

This recital ignores the fact that the disappearance of the land revenues of the Crown as an effective item of the Civil List dated from the sale of the fee farms of the Crown under Charles II. In the year 1663 the Crown Lands had produced a rental of nearly 35,000l. paid into the Exchequer under the head of "Receivers General" and all credited to the Civil List. But after the Act of 1670 for sale of fee farms of the Crown not only did the Exchequer receipts from Crown rents dwindle to nothing but many counties were unable to meet their fixed county charges (which from the days of Edward VI had been fixed on the fee farms) and in a slow trickling stream one after another of the county liabilities had to be assumed by the Exchequer. In every case this assumption of liability fell on the Civil List not on the Exchequer in general.

The point of this correction of statement consists in the fact that the sale of fee farms under Charles II had been dictated by Parliament and had been provided for by Act of Parliament and that its sole motive was to ease the strain on national finance, and to find money for the nation, not for the Civil List : and that having for war purposes voted the extinction of Crown rents the House of Commons did not make good to the Civil List the resulting deficit.

In the case of the Irish lands the House of Commons behaved in exactly the same way towards William III. After raising a political storm of unparalleled fury the House annulled William's grants of those lands but did not thereupon annex them to the Crown for ever for the support of the royal state. By the same Act which resumed the lands the House of Commons disposed of them in payment of army debts. That is to say it did the very thing what it forbad the King to do.

In this case therefore of the Crown Lands, as in the case of the Barbados Four and a Half per cent Duty, there is the same conspicuous incongruity between the false premises of the recital or of the historical reason alleged for the enactment and the ultimate beneficent outcome of it. In each case the result achieved was a permanent and harmonious contribution to constitutional advancement and time has gently drawn a veil over the historical misrecital.

Supply for Liquidation of Parliamentary Deficiencies

As already stated the Parliament which made provision for the Crown at the opening of Anne's reign was William's last Parliament. It had legally continued in session for six months after his death. When William opened it on the 31st December 1701, he had made a pointed reference to the debt of Deficiencies remaining on the administration.

I cannot but press you to take care of the public credit, which cannot be preserved but by keeping sacred that maxim that they shall never be losers who trust to a parliamentary security.

It is always with regret when I do ask aids of my people : but you will observe that I do ask nothing which relates to any personal expense of mine. ...

And since I am speaking on this head I think it proper to put you in mind that during the late war I ordered the accounts to be laid yearly before the Parliament ; and also gave my assent to several Bills for taking the public accounts that my subjects might have satisfaction how the money given for the war was applied. And I am willing that matter may be put in any further way of examination [so] that it may appear whether there were any misapplications and mismanagements or whether the debt that remains upon us has really arisen from the shortage of supplies or the deficiency of the funds.

Although in their reply to the King's speech the Commons made no reference to the subject of debt they lost no time in taking up the matter. Within the first week of their session they decided to renew the Commission of Accounts and the Commission for Army Debts ; they formally guaranteed loans for 600,000l. for the Navy and 50,000l. for the Army and, quite independently of the subject of Supply, they ordered
"that an account of the debts of the nation, unprovided for, both principal and interest, be laid before this House."

This order was made on the 7th January, 1701-2, and on the 10th January William Lowndes, the Secretary to the Treasury, laid before the House an account of the Deficiencies of Parliamentary funds since his Majesty's happy accession to the Crown.

The account is printed in extenso in the Journals, C.J. XIII, pp. 667-9. Briefly it is as follows

l. s. d.
Exchequer Bills Deficiency 615,165 4 7
First 3s. Aid (8/9 Wm. III, c. 6) " 423,099 0 0
Duties on Paper and Parchment (8 Wm. III, c. 7) " 15,400 0 0
Malt Duties (8-9 Wm. III, c. 22) " 695,226 5 8
Third Quarterly Poll (9 Wm. III, c. 38) " 229,270 17 0
Coffee and Tea "
Hawkers and Pedlars "
Duties on Leather (8-9 Wm. III, c. 21) " 504,438 0 0
Third 3s. Aid (10 Wm. III, c. 9) " 25,823 2 9
Salt Duties and Additional Stamp Duties (9 Wm. III, c. 25) " 70,872 11 1
2,579,295 1 2

Several items in this statement call for careful scrutiny. This is notably the case with regard to the first item viz. Exchequer Bills. The more detailed statement which Lowndes made for this item is as follows :

Exchequer Bills.
l. s. d.
Bills issued out of the total 2,700,000l. authorised by the two Acts 8-9 Wm. III c. 6 (for 1,500,000l. Bills) and 8-9 Wm. III c. 24 (for 1,200,000l. Bills) 2,699,990 0 0
Bills renewed under the Act 12 Wm. c. 1, being 263,750l. for principal in Bills and 67,819l. 4s. 9d. for interest thereon 331,569 4 9
interest on all Bills to date 365,755 4 9
total liability 3,397,314 9 6
Total Bills cancelled being 2,196,641l. 15s. 1d. of Bills actually paid and withdrawn and 263,750l. of Bills renewed 2,460,391 15 1 leaving a liability for Bills outstanding 571,167 9 8
total interest paid 265,755 4 9 leaving a liability for interest due 100,000 0 0
total outstanding liability 671,167 9 8
funds in sight to meet the liability 56,002 5 0
Deficiency 615,165 4 7

The funds out of which the redemption or cancellation had been effected were particular branches of Supply granted by the House ad hoc. They comprised five separate items viz.

Funds out of which the Bills were cancelled. Cancellation Principal. Cancellation Interest.
l. s. d. l. s. d.
On the Capitation Act 581,101 10 4 22,301 12 2
On the Tonnage and Poundage 689,757 0 0 65,335 11 11
On the 12d. Aid 404,772 0 0 13,910 3 6
On the Second 3s. Aid 161,886 4 9 21,518 15 1
On the One Third of the fourth 3s. Aid 346,125 0 0 74,869 17 2
2,196,641 15 1 197,936 0 0

The question of the possible deficiency of the Redemption Fund for the Exchequer Bill issue had already engaged the attention of Parliament.

In January 1697-8 a Commons Committee had presented to the House an estimate of the probable deficiency on the fund. (C.J. XII, pp. 30-1). According to that estimate, in order to meet 1,500,000l. of Exchequer Bills authorised by 8-9 Wm. III, c. 6 and 100,000l. of accruable interest thereon the said Act had only provided the Capitation tax, which appeared likely to produce no more than 660,000l. This would leave a deficit of 940,000l.

For the second issue of 1,200,000l. Bills authorised by 8-9 Wm. III, c. 24, the Redemption Fund provided by Parliament consisted of two portions (1) the 12d. per estimated to produce 500,000l. but which was unlikely to produce more than 404,000l. as against 500,000l. of Bills and 33,000l. of accruable interest. On this portion therefore there was a prospective deficit of 129,000l. (2) The second portion of the fund was the Tonnage and Poundage granted by the same Act 8-9 Wm. III, c. 24 and which was intended to operate as cover for the balance.

In the matter of the first issue the estimate of the Committee was borne out by the ultimate figures of revenue receipts. According to the Revenue figures printed on pp. 292, 310, 332, 356, 380, 410 of the Introduction to Vols. XI-XVII of this Calendar the Capitation tax actually produced the following sums

l. s. d.
Michaelmas 1696 Michaelmas 1697 211,703 15 2
" 1697 " 1698 319,454 19 10
" 1698 " 1699 58,567 0 6
" 1699 " 1700 4,601 9 9
" 1700 " 1701 6,569 3 2
" 1701 1702 12,231 3 7
613,127 12 1

With regard to the second issue of Bills the abovesaid Committee could not possibly in 1697-8 have formed any forecast of the yield of the Tonnage and Poundage grant. But from the Revenue returns printed as above it appears that the fund had yielded the following proceeds :

l. s. d.
Michaelmas 1696 to Michaelmas 1697 73,076 2 2
Michaelmas to Michaelmas 1697-8 246,517 1 6
" " 1698-9 317,429 8 8
" " 1699-1700 117,573 3 0
" " 1700-1 9,601 13 4
" " 1701-2
767,197 8 9

Within the same period the 12d. Aid had produced the following sums :

l. s. d.
Michaelmas 1696 to Michaelmas 1697 105,201 16 7
" 1697 " 1698 286,102 14 10
" 1698 " 1699 25,307 3 0
" 1699 " 1700 1,703 18 8
" 1700 " 1701 44 0 4
" 1701 " 1702 264 4 10
418,623 18 4

Thus the combined Redemption Funds allotted by the House for the cover of a combined total of 2,700,000l. Exchequer Bills actually produced less than 2 millions for redemption or cancellation alone, without reckoning interest or working costs or circulation expenses.

Total actually realised of the Supply for Redemption.
l. s. d.
613,127 13 1
767,197 9 9
613,127 13 1
1,993,452 15 11

The outcome of the Committee's investigation in 1697-8 had been the reinforcing of Supply for this particular Exchequer Bill liability. Ultimately the additional Supply took the form of two grants (1) the second 3s. Aid 9-10 Wm. III, c. 10 and (2) the fourth 3s. Aid, 12-13 Wm. III, c. 10. The first of these Acts took over certain uncleared Parliamentary liabilities. The second Act devoted one third of the total expected proceeds to the liquidation of the Exchequer Bill issue.

In the case of the second of the two Acts the sum actually raised came very near the anticipated figure.

l. s. d.
Receipts from the third part of the fourth 3s. Aid.
Michaelmas 1700 to Michaelmas 1701 26,895 6 8
" 1701 " 1702 443,486 10 7
470,381 17 3

This figure is very near the third part of the total 1,484,015l. 1s. 4d. which a three shilling Aid was estimated to produce.

With regard to the first of the two Acts here in question, viz. the second 3s. Aid the actual ultimate position cannot be deduced from the Revenue figures. The debt appropriations in that Act are most vague and extremely complicated. But fortunately we have a succinct statement from Lowndes himself given in to the House on the 4th March 1698-9. (Commons Journals XII, p. 549.)

"There was a credit given, on the Aid of 3s. in the pound upon land anno 1698 for 1,400,000l., and it was thereby enacted that after the sums therein mentioned should be satisfied or transferred, the loans for the remaining part of the said 1,400,000l. might be made in Exchequer Bills or in money to buy Bills and that such Bills should be cancelled : which remainder doth amount to 238,819l. 16s. 11d.

By the help of this figure we are now enabled to present an authoritative statement of the deficit in the Redemption Fund of the Exchequer Bill issue. This statement is not an estimate, as was Lowndes's account. It is based upon the actual figures of revenue receipts which were not available at the time when Lowndes submitted his estimate to the House.

From these Revenue figures it is certain that at the time when Anne's first Parliament (William's last Parliament) took up this question of the deficit of the Parliamentary fund for Redemption of the Exchequer Bill issue, the total actual proceeds of all the five sources of Supply granted by Parliament for the redemption were as follows :

l. s. d.
Capitation tax 613,127 13 1
Tonnage and Poundage 767,197 9 9
12d. Aid 418,623 18 4
Second 2s. Aid 238,819 16 11
One third part of the fourth 3s. Aid 470,381 17 3
2,508,150 15 5

Thus on Lowndes's figure of total Bills issued and reissued there was a deficit as follows

l. s. d.
total issue and re-issue 3,031,559 4 9
total Redemption Fund receipts 2,508,150 15 5
523,408 9 3

It will be understood that such deficiency was on principal account only without counting a penny for interest.

There is another point to be noticed in considering William Lowndes's figures as submitted to the House on the 7th January 1701-2. The sum which he put down for interest was for interest pure and simple, i.e. it represented the interest of 5 pence a day per 100l. which the Bills themselves earned during their currency, during the time they were actually in the hands of the public, (not in the hands of tax collectors or in the Exchequer). But no one knew better than Lowndes himself that this was not the whole story ; and that it omitted the additional cost of providing for the convertibility of the bills and the mere office costs of running the operation. I have already referred to this matter sufficiently on p. cxlviii of my preceding Introduction. By the time that the Deficiencies Act of the first year of Anne passed into law these operating costs and convertibility costs exceeded 300,000l. and they certainly formed no part of the estimate of deficit on which the Parliament legislated. If this figure be added to Lowndes's figure of 365,755l. 4s. 9d. for interest then the total deficit was

l. s. d.
on principal account 523,408 0 0
on interest account 365,755 0 0
on working costs and convertibility account 300,000 0 0
1,189,163 0 0

As against this, the figure which the Deficiencies Act 1 Anne, c. 2 finally adopted for this head of Exchequer Bills was 515,165l. 4s. 7d. which was simply Lowndes's figure of the absolute deficit regardless of unpaid accruable interest and regardless of convertibility fees paid or payable to the Trustees for Circulation and regardless of the office costs of administration. If the House gave any thought at all to these items it may possibly have supposed that sufficient provision had been made for them in the 40,000l. granted for such Circulation expenses by the Act for the sale of Irish lands (11 Wm. III, c. 2). But as against this it is certain that the House had been apprised of the formidable nature and of the details of these fees and costs. A paper submitted by Lowndes three years before, in January 1697-8, showed a total of 171,743l. 18s. 4d. paid up to that date in fees to the Trustees for Circulation and in office expenses. (C.J. XII, p. 51).

So that there was no excuse for the House overlooking so very essential an item of working cost.

The remaining items in Lowndes's paper presented on the 7th January 1701-2 are simpler in their nature and can be presented more briefly.

(2) The loans on the first 3s. Aid.

The Act for this 3s. Aid (8-9 Wm. III, c. 6) was the same Act which had authorised the first issue of 1,500,000l. in Exchequer Bills. In addition to that issue, and quite irrespective of it, the Act had authorised loans to the amount of 1,500,000l. to be taken in at the Exchequer at 8 per cent. interest, guaranteed by Parliament and on credit of the total product of the tax after deducting the Capitation item of it (which as already explained was appropriated to the Exchequer Bill issue). The tax was payable anno 1697 and the loans were taken in immediately the tax was authorised. As the tax proceeds came in they were applied instanter to the repayment of the loans and by the date of this return of Lowndes 1,076,901l. had been paid out by way of principal only towards the total loans of 1,500,000l. This left 423,099l. of principal still unpaid.

To the statement of this item Lowndes adds a memorandum that there are arrears of about 8000l. standing out on this Aid. The arrears of the tax have been applied to interest as fast as they could be recovered and the further sum of 33,847l. 18s. 5d. was supplied for payment of one year's interest out of the funds of the year 1701.

I find it quite impossible to check these figures from the Revenue and Expenditure returns.

The figure for this item of deficit which the House adopted in the Act 1 Anne, c. 2 is 415,099l. which appears to be the above figure of 423,099l. less 8000l. arrears.

(3) The third item of Deficiencies in Lowndes's return concerned the Duties on paper, pasteboard, vellum and parchment granted by the Act of 8 Wm. III, c. 7, for 2 years. This Duty was on paper (not on stamps or stamped paper) and the 8 per cent. loans authorised by Parliament to be taken in on it was only 30,000l. Out of that sum the tax receipts only extended to repay 14,600l. leaving a deficit of 15,400l. loans outstanding. One year's interest on the loans on this Act was provided separately out of the funds of the year 1701.

In this case the figures of the Revenue and Expenditure return are identical with Lowndes's estimate.

(4) The fourth item of Deficiencies concerns the Malt Lottery tickets issued on credit of the Malt Duties granted by the Act 8-9 Wm. III, c. 22.

This complicated and involved transaction is explained generally in my preceding Introduction, pp. cci-ccvi.

Lowndes's statement of the liability or Deficiency hereon as at 7 January 1701-2 is as follows :

l. s. d.
10l. tickets issued 1,217,930 0 0
thereof satisfied or paid 660,000 0 0
leaving still unsatisfied 557,930 0 0
interest for 2 years thereon at a halfpenny per diem for each 10l. ticket 116,166 5 8
Benefit tickets issued 45,810l., whereof satisfied 24,680l., leaving still unsatisfied 21,130 0 0
total deficiency 695,226 5 8

In this case as in the two preceding items, an interest payment covering 7 quarters and amounting to 37,788l. 1s. 0d. was provided out of the funds of the year 1701.

The figure which the House adopted for this item in the Deficiencies Act was 579,060l. which represents Lowndes's figure for the 10l. Tickets and the Benefit Tickets, omitting a specific item for interest but instead thereof adopting the phrase "and interest at a half penny per diem per 10l."

In the case of this item also it is quite impossible to check Lowndes's estimate by the Revenue and Expenditure returns.

(5) The fifth item of Deficiencies concerned the third Quarterly Poll of 9 Wm. III, c. 38. This Act authorised loans of 500,000l. in all, of which one half at 7 per cent. and the other half at 8 per cent. interest. Before the proceeds of the tax were known it was estimated as likely to yield 323,469l. 16s. 7d. According to the Revenue returns it ultimately produced only 300,750l. 18s. 11d.

The loans actually issued on it amounted to 499,820l. 17s. 0d. and the repayments provided by the tax as it came in had only amounted to 270,550l. at the time when Lowndes made his return. This left a deficit of 229,270l. 17s. 0d. but the figure adopted by the House in the Deficiencies Act is 212,770l. 17s. 0d. The House arrived at this figure by deducting from Lowndes's deficit the sum of 16,500l. estimated as arrears standing out in the tax, on the assumption that they would ultimately prove to be collectable.

As against such forecast or estimate the deficit ultimately resulting was

l. s. d.
loans 499,820 17 0
less actual receipts 300,750 18 0
deficit 199,069 19 0

as against Lowndes's figure of 229,370l. 17s. 0d., but of course this omits the figure of accrued interest which is, to-day, not calculable.

(6) The sixth item in the account does not add up as part of the final total : but Lowndes includes the item in order to give an explanation of it.

Coffee, Tea, Hawkers &c.
The Duties on Coffee and Tea were granted until the 1st May 1701, and those on Hawkers and Pedlars until the 21st June 1701, to pay the interest of the Irish Transport debt, the principal only of which debt being payable by the forfeited estates in Ireland there is no provision for payment of the growing interest.

Memorandum : by a clause in the Act for sale of forfeited estates in Ireland it is provided that the principal and interest of the Exchequer Bills and of the tallies and orders on the first 3s. Aid and of the Tickets called the Malt Tickets and of the tallies and orders on the Third Quarterly Poll shall be taken as sterling money in the purchasing the said estates. But it does not yet appear how far the said [Transport] debt and deficiencies will be lessened thereby.

(7) The seventh item of Deficiencies concerned the Duties on leather which had been granted by the Act 8-9 Wm. III c. 21 in order to shoulder the undischarged liability of 564,700l. resting of the loans on Coal Duties instituted by the Land Bank Act 7-8 Wm. III, c. 31.

For this purpose the Leather Duties were granted for 3 years, a term which expired on the 22nd April 1700 and by the time of that expiry they had only paid off 60,262l. of the principal of the loans leaving still unsatisfied the principal sum of 504,438l. which is the figure adopted in the Act with the added words "plus interest at 7 per cent."

In the case of this item the sum of 52,966l. had been supplied out of the funds for the year 1701 to meet 18 months' overdue interest. As to this item, the revenues show that the total yield of the Leather Duties during the 3 years they were in force amounted to 207,936l. 11s. 3d.

To this there is to be added the sum of 52,966l. contributed out of the funds of the year 1701, thus making a total of 260,902l. 11s. 3d.

On the other side of the account the interest on the 564,700l. loans on Coals at 7 per cent. would amount to 239,234l. for the 6 years 1696-1701-2. There would therefore be available for extinction of principal only a matter of 20,000l. odd. But if we had the full details of the Exchequer account of this item it would be easy to agree Lowndes's figure and to accept his statement that 60,262l. of principal of the coal loans debt had been paid off.

In this case the Revenue returns certainly seem to me to carry out Lowndes's estimate.

The remaining two items in Lowndes's estimates are of smaller importance. The third 3s. Aid granted by 10 Wm. III, c. 9 for Disbanding the Army had authorised loans to the amount of 1,400,000l. at 7 per cent. Out of that sum, charged upon the Register, only 1,363,228l. 13s. 0d. of principal had been repaid leaving a Deficiency of 36,771l. 7s. 0d. In this case Lowndes estimated the outstanding tax arrears at 10,948l. 4s. 3d. leaving 25,823l. 2s. 9d. as the possible ultimate deficita figure which the House adopted.

The final item did not concern repayment of principal money lent. It constitutes therefore to some extent a novel feature in a Deficiency Bill. The Salt Duties and other Duties which had been granted by 9 Wm. III, c. 25, were expected to produce a yearly fund of 150,000l. as interest on the 2,000,000l. advanced by the East India Company and Traders. For the two years ended Michaelmas 1701 this East India fund had proved deficient to the extent of 70,872l. 11s. 1d. The House adopted this figure as a Deficiency and inserted it in the Act of 1 Anne, c. 2. In the similar case of the Bank of England annuity the Treasury had the power to pay any deficiency out of the Exchequer, which meant out of other Supply or out of the next Supply to be granted. The same procedure could have been applied (and will later be found to be applied) by the Treasury to this East India trade annuity so that there was no special compulsion on the House of Commons to deal with this item in a Deficiencies Bill. Theoretically a Deficiencies Bill related not to debt service but to the amortization of debt, to the repayment of principal borrowed under parliament's specific guarantee of principal repayment.

From the above analysis it will be seen that the difference between Lowndes's total Deficiencies figure (2,579,295l. 1s. 2d.) and the figure finally adopted by the House (2,338,628l. 15s. 5d.) is explained by the various items of tax arrears enumerated above and which were expected to rank as good assets. Otherwise, the House adopted the Treasury estimate figures without grudging and if ultimately the process of tax collection falsified the estimate it was simply a repetition of the experience of generations of Treasury and Parliamentary finance. The same excuse however cannot be extended to the miscalculation about the Exchequer Bill issue. It rested with the Treasury to insist on the inclusion of the items of interest and circulation costs and the omission of the latter of these items can hardly have been an oversight. Possibly if the Treasury had pressed this item it would have revealed too nakedly the ruinously expensive nature of the Exchequer Bill flotation.

The problem of finding Supply to serve as a Sinking Fund for these Deficiencies was comparatively simple. The totality of Duties which had been granted by the first Deficiencies Act of 8-9 Wm. III, c. 20, had accomplished their task. They had liquidated the Deficiencies which accrued prior to 1696 and now stood practically free and uncharged, and therefore available to perform the same function of liquidating such Deficiencies as had accrued since that date. Anne's Parliament therefore had no need to cast about for supply. All that was necessary was to renew for a further period the corpus of funds granted by the Act of 8-9 Wm. III, c. 20, the first Deficiencies Act. This was accordingly done. The Act of 1 Anne, c. 7, renewed for 4 years from 1 Aug. 1706 to 1 August 1710 the various funds which had been granted or continued by the preceding Act 8-9 Wm. III, c. 20, viz. the Customs Duties (Tonnage and Poundage, Wines, Tobacco and Additional Duties), Stamp Duties, House Duties and Duties on Whale Fins and Scotch Linens. The proceeds of the Duties for the extended period of 4 years and any surplus from the First Deficiencies Act were to be a general fund for liquidating the above second list of Deficiencies. The Fund thus established is referred to in the Treasury records as the Second Mortgage. Its operations and the gradual accomplishment of the liquidation of these Deficiencies will be shown in the succeeding yearly statements of Revenue and Expenditure.

Supply for the War

When William met his last Parliament on the 31st Dec. 1701 he informed it that he had concluded several alliances against France and that other treaties were depending. As soon as they returned to their House the Commons unanimously resolved to enable his Majesty to make good all the alliances he had made or should make. On the 6th January Secretary Vernon by the King's command laid before the House the text of four treaties which he had made.

(1) with the King of Denmark and the States General of 15 June 1701 with secret articles of the same date.

(2) with the Emperor and the States General of 7 Sept. 1701.

(3) with the King of Sweden and the States General of 26 Sept. (7 Oct.) 1701.

(4) with the States General of 11 Nov. 1701.

These treaties were considered by the Commons on the 9th January in Committee of the whole House.

The first of these treaties promised to Denmark a subsidy of 300,000 Crowns per an. during the war, to be paid in good Bank money at Hamburg and on his side the King of Denmark undertook to contribute 3000 Horse, 1000 Dragoons and 8000 Foot (and on conditions a further 4000). The English King and the States General were [between them] to pay the levy money and transport and recruits of this Force, and likewise to pay and entertainment on the same footing, grade for grade, as the Forces of the States General.

The second treaty imposed on England no specific monetary obligation by way of subsidy.

The third treaty promised to Sweden the payment forthwith of 200,000 Imperial [or Rix] dollars by Great Britain and the States General, to be treated as part of succours demandable.

The fourth treaty contained no money clause.

Furthermore William and the Emperor and the States General had agreed to furnish the following quotas of men.

the Emperor 96,000 men, viz., 66,000 Foot and 24,000 Horse and Dragoons.

the States General 102,000 men, viz. 82,000 Foot and 20,000 Horse and Dragoons.

England 40,000 men, viz. 33,000 Foot and 7,000 Horse and Dragoons.

According to Luttrell the Grand Committee agreed to the English quota on the 9th January. The report however was not made until the following day Jan. 10. On that day the House agreed to the English quota of 40,000 for the land Forces and to a further 40,000 for sea service.

The vote for sea service Force which followed thereupon took the usual stereotyped form viz. a grant of 4l. per man per month of 4 weeks for the 40,000 seamen including the Ordnance Sea Service. Thus the naval war vote for the year 1702 was fixed at 2,080,000l.

As far as the Navy was concerned this vote was purely the effective war vote. It left untouched the three items of Navy (current) debt, Navy Ordinary and Navy Works Extraordinary. These three items were estimated as follows :

l. s. d.
Navy debt as at 31 December, 1701 1,264,722 2 0
Navy Ordinary (the Admiralty Office, Navy Office, nucleus crews etc., of ships in harbour and the six Yards for the year 1702) 129,314 10 3
Extraordinary Works (repairs etc., for the year 1702) 163,686 0 0
total 1,557,722 12 3

This made the total Navy requirements up to 3,637,722l. 12s. 3d. for the year 1702.

Of these details only the Naval ordinary estimate was voted, viz., on the 14th January ; making a total Navy vote of 2,209,314l. 10s. 3d. The Navy debt being only a current debt was left unvoted. It would naturally be liquidated and re-created in the normal course of each financial year. Furthermore the item of extraordinary works would in all probability be swallowed up in the larger problem or item of war wastage and repairs, as the war proceeded.

The army estimates presented a much more complex problem. The Home Establishment, styled Guards and Garrisons, and representing the 4 Troops of Household Guards, a few standing Regiments (5 of Horse, 2 of Dragoons and 5 of Foot), and a list of 19 tiny garrisons at strategic points and round the coast, and the Companies in America, all this formed a stereotyped item like the Navy Ordinary. It was voted almost as a matter of course on the 3rd February on the estimate of 350,000l. which included 5000 men to serve on board the Fleet and the provision for Half-pay Officers.

Turning to the composition and cost of the Expeditionary Force of 40,000 men, representing England's contribution to the total Allied Army, the House of Commons called for an account of the existing Regiments including those on the Irish Establishment and those lent to Holland and temporarily in Dutch pay. These accounts were submitted to the House by the Earl of Ranelagh, Paymaster General of the Forces, on the 14 January and 21 January. The 12 Battalions on loan in Holland showed a total of 9,968 men at an establishment charge of 172,821l. 8s. 4d. To these were to be added

l. s. d.
6 Regiments of Foot 5,004 men at 78,484 8 4
5 Regiments of Horse 1,972 men at 113,803 19 2
3 Regiments of Dragoons 1,355 men at 48,817 15 0

This enumeration accounted for 18,339 (intended to be 18,328) men (exclusive of staff) as the purely British portion of the total 40,000 men which was to be the English contingent for the war. The estimate for this Force (including 12,000l. for General Staff and 12,000l. for Contingencies) amounted to 437,927l. 11s. 1d. But this estimate contained no provision for forage, waggon money, hospitals and medicaments. An additional sum of 28,584l. was allowed for levy money, thus bringing the total estimate for the Subject Troops or English contingent to 466,511l. 11s. 1d. The remaining 21,672 men (to make up the 40,000 men) were to be foreign troops and to be maintained at the charge of Great Britain as follows :

Danish. 4 Regiments of Horse 1,760 men.
6 Regiments of Foot 4,376 men.
Prussians. 1 Regiment of Horse 410 men.
3 Regiments of Foot 2,112 men.
Hessians. 1 Regiment of Horse 320 men.
1 Regiment of Dragoons 370 men.
3 Regiments of Foot 2,324 men.
10,000 men still to be raised viz., 812 Horse and Dragoons and 9,188 Foot 10,000

The annual cost of these 21,672 Foreign Troops, completing the English Contingent of 40,000 men was to be as follows :

l. s. d.
Danish Troops (including the subsidies of 400,000 guilders to the Danish King) 155,637 2 6
Prussian Troops 44,901 7 6
Hessian Troops (including the 140,000 guilders subsidies to the Landgrave of Hesse) 70,976 18 6
the 10,000 other Foreign Troops to be raised (including 400,000 guilders for the more speedy obtaining the same) 196,892 12 6
General Staff for the Foreign Troops 10,000 0 0
total for the 21,672 Foreign Troops 478,408 1 0
Bread waggons for the 40,000 men 20,000 0 0
total for the 18,328 British or Subject Troops 466,511 11 1
total for the British quota of 40,000 men 964,919 12 1

The passing of this composite estimate by the House was swift and practically unanimous.

The Committee Resolutions, taken on the 23rd and 26th January 1701-2 are not entered in the Journals of the House but are preserved in Luttrell. With trifling amendments they were adopted by the House on the 27th January. In a series of 10 Resolutions the House agreed to the composition of the Battalions and to the items for the General Staff, Contingencies and Levy money mainly for the Subject Troops. The concluding eleventh Resolution was as follows

that a sum not exceeding 700,000l. be granted to his Majesty for defraying the charge of the 40,000 men that are to act in conjunction with the Forces of his Allies until the 25th December 1702.

At first sight it would seem as if the House had cut down the estimate for the total 40,000 men from 964,919l. 12s. 1d. to 700,000l. But this would be quite a misleading inference. The Foreign Troops were not then entirely in pay, 10,000 of them were not even raised and all of them were to come on to the Establishment only from the time of effective entry "from the day the said Troops shall begin their march towards the frontiers of the States General." So that in all probability there would be less than nine out of twelve months for the full estimate to operate in the financial year 1702. The vote was therefore probably ample as a forecast, and having voted the total number of men the House clearly left to the executive (the King, the Paymaster General and the Secretary at War) the composition of the Battalions etc. A specific detailed estimate after the pattern of the stereotyped estimate for the Guards and Garrisons was manifestly impossible at the outset of the forthcoming war.

It only remains to make clear one technical point with regard to this Estimate and Vote for the 40,000 men. The Subject Troops would naturally be paid in strict accordance with the routine for English Army payments, this is to say by the customary items for subsistence, offreckonings and clearings with all the minor complications of respits and musters. For the Foreign portion of the composite Force of 40,000 men such a method of accounting was out of the question. The only available method was to hand over sums in block and on account to the various Paymasters of the foreign contingents, the Danes, the Hessians, the Prussians. It will therefore be found throughout this volume of calendar, and indeed throughout the long war of the Spanish Succession, that the payments under the head of this particular for the Foreign Forces vote take the form of

(1) x for Subsistence etc. of the Subject Troops

(2) y on account of pay of the Foreign Troops

but as a rule both items are included in the same Treasury warrant or letter of direction, as both items fall under the same head or voteto wit (in the case of the year 1702) under the vote of 700,000l. for the 40,000 men. Such warrants or letters of direction occur in the present volume almost weekly when once they commence.

These Foreign Forces comprised in the 40,000 men were employed and paid entirely by Great Britain. Quite distinct from them were those Foreign Forces towards the cost of which Great Britain made a contribution in the form of a subsidy and in accordance with treaty obligations. Towards these obligations the House of Commons on the 10th February voted the following sums

200,000 Rix dollars in full of all sums stipulated by the two Treaties with Denmark dated 3 December 1696 and 15 June 1701.

75,000 Rix dollars for 2 quarters' subsidies ended 16 December 1701 under the second of the above treaties.

17,500 Rix dollars for payment of 6 months' interest on 700,000 Rix dollars borrowed by Wm. III for making good the treaties entered into with the Kings of Denmark and Sweden.

100,000 Rix dollars upon account of succours provided by the King of Sweden pursuant to the Treaty with that Crown dated 7 October 1701.

27,000l. sterling for making good the Treaty between Wm. III, the States General and the King of Sweden.

At the then prevalent rate of exchange of the Hamburg Rix dollars the above Votes totalled about 117,766l. sterling.

The remaining votes taken on the same day for Danish Forces (levy money, pay and transport) fell on the British Establishment of the 40,000 men.

It will be seen from the accounts printed below pp. cvii and cxv that the total sum paid within the year for Subsidies to Foreign Princes was 105,461l. 16s. 0d.

The only remaining head of war expenditure which the House had still to provide was that of Ordnance Land Service. As already explained the vote for Ordnance Sea Service was included in the total omnibus Navy Vote of 4l. per man per month and no separate estimate for Navy Ordnance was usually submitted to the House.

For the Land Service of the Ordnance it was customary to submit formal and detailed estimates. In the present case these were called for on the 17th January, a Saturday, and on the following Monday the 19th they were submitted by Sir Henry Goodrick.

This estimate was as follows

l. s. d.
For arming 2,000 Horse, 1,328 Dragoons and 5,000 Foot 15,862 16 0
For tents for them 2,872 16 0
Ammunition for the Army (of 40,000 men) consisting of 33,000 Foot and 7,000 Horse, and the whole charge of the Train of Artillery, amounts according to the Estimate to 34,806l. 0s. 3d. whereof for the present supplying and fitting out the said Train 19,438 18 6
The charge of proper Officers, ministers, etc. belonging to the said Train 10,630 12 6
The charge of horses and waggons for the same 15,000 0 0
Contingencies for the same 2,000 0 0
For the Ordinary of the Office [of Ordnance], comprising salaries, rents of the storehouses and repairing storehouses, barracks, platforms, carriages, as likewise the expense of Gunners' stores in the several Garrisons and keeping the stores in repair and other incident charges 28,273 13 9
For 200 tons of saltpetre for supplying the Stores 10,400 0 0
total 104,478 16 9

This summary estimate was followed on the 21st January i.e. within two days by a detailed estimate of each item.

The resolution on this estimate was not taken until the 5th February when the items were cut down as follows :

l. s. d.
For ammunition and supplying and fitting out the Train of Artillery for the year 1702 13,000 0 0
For Officers and attendance [sic for attendants] belonging to the said Train 9,000 0 0
For horses and waggons for the said Train 12,000 0 0
For Contingencies for the said Train 1,000 0 0
For the Ordinary of the Office of Ordnance for the year 1702 28,273 13 9
For supplying the stores of the said Office with 200 tons of saltpetre 7,700 0 0
60,973 13 9

In this case the cutting down of the estimate is to be construed in the same sense as in the case of the estimate for the Foreign Troops portion of the 40,000 men. The House provided supply such as it considered ample for the contingent expenses of the nine months likely to incur on the basis of the Estimate.

In this way, before the death of Wm. III, the House had voted Supply for the war as follows with unanimity without any traceable criticism or opposition and all within the space of three or four weeks.

l. s. d.
Navy 2,209,314 10 3
Guards and Garrisons 352,000 0 0
the 40,000 men 700,000 0 0
Ordnance 60,973 13 9
3,322,288 4 0
Add Subsidies to Foreign Princes 117,766 0 0 3,540,054 4 0

To make this war vote complete there only needed the two items of Transport and Levy money. Both these items were incalculable as a forecast or at the outset, because the requirements could hardly be forecasted in advance.

When Anne's reign opened therefore the bulk of the War Vote had already been fixed and it only remained for the Parliament to carry through its investigation into Ways and Means. In reality the question of Supply was practically reduced to the War Vote. For when Parliament renewed the Civil List it simply prolonged an existing series of Customs Duties, Excise Duties, and hereditary revenues. That is to say, no new taxation or revenue source needed to be found. Similarly, as I have pointed out already supra pp. xxx-xxxi when Parliament passed the Deficiencies Act the provision required was already in existence and all that the House had to do was to prolong for a further 4 years the Duties, (Customs, Stamps and House Duties), which had been employed in the operation of liquidating the liabilities in the first Deficiencies Act of 8-9 Wm. III, c. 20. Although therefore Anne's Parliament cheerfully was facing a budgeted expenditure of

l. s. d.
Civil List 700,000 0 0
Deficiencies 2,338,628 15 5
War Vote 3,322,288 4 0
6,360,916 19 5

the total of the New Supply required to be found was practically restricted to the third itemthe War Vote of 3,540,054l. 4s. 0d. (i.e. the above 3,322,288l. 4s. 0d. plus 117,766l. for Subsidies ut supra p. xxxviii).

Whenever it approached the problem of Supply the House of Commons usually had a babel of proposals presented to it, but in reality very little choice. The sheet anchor of Supply at the opening of the 18th century was always a Land Tax. The second resource was indifferently Excise or Lotteries and annuities. In the present instance the House almost inevitably adopted these two sources as offering the line of least resistance. On the 12th February, whilst William was still alive, the Committee of Supply resolved on a 4s. Land Tax and two days later tacked on to this proposal the further proposal of a 4s. Capitation tax, a universalised form of Poll Tax, and the Bill went through in this composite form. The Land Tax side of this composite grant imposed a tax of 4s. in the on land and other equivalent but varying taxes on stock in trade, money at interest, annuities, pensions, stipends, salaries, fees and perquisites, whether civil or ecclesiastical. The capitation side of the grant was a flat rate tax of 4s. per person of the population except children and paupers.

The 4s. Land Tax was rated at and expected to produce 1,931,979l. 19s. 0d. and as a rule on the basis of such a fund the House would authorise and guarantee loans up to 1,800,000l. to be taken in on it. The yield of the Capitation side (or as it was styled in the Act "Divers Subsidies") could not be forecasted with certainty but it seems clear that the House expected it to yield at least 800,000l. For in its final form the Act for the Land Tax and Subsidies (1 Anne c. 6) authorised a totality of 2,600,000l. loans to be taken in on it.

In this connection it is very instructive to note how far the expectation of the House was justified or falsified by the actual tax receipts.

From the Revenue returns printed infra p. xciv, it appears that the receipts from this tax in the financial year 1702-3 were as follows

l. s. d.
Land Tax 1,565,527 16 4
Capitation or Subsidies 238,659 11 3
1,804,187 7 7

On this head therefore within the year in question there was a shortage of supply of 800,000l. if judged by loan money alone, and possibly more than that sum if judged by mere budget forecasts.

The second head of Supply eventually adopted was a Duty on Malt. The proposal for this Duty was adopted by the Committee of Supply on the 21 Feb. 1701-2 and it covered a Duty of 6d. per bushel on malt, 10s. per barrel on mum, 4s. per hogshead on cider and perry.

In the case of this source of Supply the produce of the grant exceeded the estimate. The Act for these Duties (13 Wm. III, c. 5) authorised loans to the amount of 600,000l. to be taken in on credit of it.

The Revenue Returns printed below pp. lxxii and cxiv, show that in the financial year 1702-3 the tax produced 645,344l. 0s. 7d. and that out of this sum only 346,603l. 9s. 6d. of principal money of loans was repaid, and that a balance of 232,185l. 2s. 9d. was applied to expenditure. So that this particular head of tax had produced for the year's requirements

l. s. d.
Loans 600,000 0 0
Balance 232,185 2 9
832,185 2 9

But of course this ultimate outcome was hidden in the future and the Committee of Supply, the Committee of the whole House, had only its own forecast to go by. So far as it could judge it had provided a total Supply of 3,200,000l. (viz. 2,600,000l. by the Land Tax and Subsidies and 600,000l. by the Malt Duty) towards a war vote or Estimate of 3,540,000l. 4s. 0d. What figures were actually before the Committee we do not know. But Luttrell furnishes a little light by his note of the Committee proceedings on the 27th February 1701-2 which has been already quoted supra, p. xvi, viz. that on that day there still remained 300,000l. yet to raise. This certainly shows that the expected yield of the Land Tax and the Malt Duties was put at a precise figure. In itself this figure as to Supply shortage was probably well founded. But there is no further trace of it in the proceedings of the House up to the close of the Session on the 25th of May, 1702, nor is there any evidence of a real determination on the part of the House to reinforce Supply. The only additional source of Supply which is contemplated was a Duty on the buying, selling or bargaining for shares in any Joint Stocks of Corporations, but it did not resolutely pursue the project. The idea or principles of such a tax was adopted by the House of Commons on the 2nd April and on four separate occasions the plan was discussed in Committee of Supply. But by the end of the session no further progress was made with it and the project fell through.

The war provision of Supply therefore for the year 1702-3 was ultimately limited to the Land Tax and the Malt Duties. In view of the fact that although the war was impending and inevitable all through the Session's debates it was not actually declared until the 5th May, the House may quite justifiably have calculated on only a broken period of say nine months' war expenditure. To a great extent the figures, as follow, of actual receipts and expenditure on the war for the year justify the House. They show that the estimate of Supply was pretty close and reliable.

Sources Of Actual War Expenditure 1702-3.
Navy. Army. Ordnance. Treaty. Subsidies.
l. s. d. l. s. d. l. s. d. l. s. d.
Customs 1,673 2 8 9,753 5 7
French Goods 1,490 13 7 24,474 15 7 2,113 4 2
French Ships 145 17 0 3,805 2 10 342 14 0
44 15 0
Plantations Duty 170 4 0 528 17 3
22d. Duty 9,796 19 7 0 5 9
Cinders Duty 172 7 5 146 7 2 107 3 6
15% Duty 9,193 12 7 6,185 1 4
Queen Anne's Donation 33,008 4 11 426 15 9 23,923 0 0
Malt Duty 43,522 17 7 20,000 0 0
Hackney Coaches 1,077 18 5 641 9 7 2,535 8 10 22 1 6
Prizes 6,120 19 9 116 11 3 20,514 4 10
64,479 9 1
2,000 0 0
Arrears of Taxes 414 7 1 41 12 9 71 19 0
Re-minted Money 15 11 0
3,700l. per week Excise 30,690 1 11
Loans on Malt 4,164 15 4 5,176 9 11 30,000 0 0
198,490 14 8
Loans on the sixth 4s. Aid 586,067 9 1 302,166 7 4 56,000 0 0 21,500 0 0
500,000 0 0 12,715 12 6
48,449 1 10
200,000 0 0
Loans on Subsidies 47,441 16 0 68,865 3 9
100,000 0 0
Loans on Coals 113,764 15 4 64,016 17 0 9,497 19 9 37,738 9 10
20,000 0 0 229,061 9 1
Loans on Malt 280,157 12 5 10,502 0 3 20,306 0 0
100,000 0 0 117,164 4 1
71,870 3 3
Contributions for Annuities 36,732 13 9 38,045 6 10
Tallies already imprested on the fifth 4s. Aid and still in hand 474,315 14 8
1,787,433 4 3 1,634,373 12 7 147,400 3 9 123,683 4 6

The total of these items is

l. s. d.
Navy 1,787,433 4 3
Army 1,634,373 12 7
Ordnance 147,400 3 9
Treaty Subsidies 123,683 4 6
3,692,890 5 2

But at the end of the year the three chief Paymasters had tallies in their hands as follows

l. s. d.
Paymaster of the Navy 241,684 5 4
paymaster of the Forces Abroad 28,773 0 1
Paymaster of Guards and Garrisons 71,682 8 10
342,139 14 3

So that the actual expenditure on the services during the year Michaelmas 1702 to Michaelmas 1703 was

l. s. d.
3,692,890 5 5
342,139 14 3 less in hand
3,350,750 11 1

This expenditure had been derived from two sources

(1) direct taxes.

(2) loan money.

l. s. d. l. s. d.
(1) Direct Taxes.
Fifth 4s. Aid 1,565,527 16 4
and Subsidy 238,659 11 3
Sixth 4s. Aid 185,823 16 11
1,990,011 4 6
(2) Loan Money.
On the 3,700l. per week of the Excise 30,033 5 9
On Malt 239,206 19 11
On the sixth 4s. Aid 1,729,923 10 9
On the Subsidies 216,307 0 5
On Coals 484,079 11 0
On the Exchequer in general 600,000 0 0
Contributions on Annuities 73,777 19 7
3,338,328 7 7
Addtallies in the hands of the Departmental Paymasters at the commencement of the year 474,315 14 8
5,802,655 6 9
(1) Loan money repaid during the year 1702 out of the produce of direct taxes imposed for the supply of the year 1702-3 :
Fifth 4s. Aid principal 1,791,866 10 9
Fifth 4s. Aid interest 64,896 7 6
Sixth 4s. Aid principal 148,500 0 0
Sixth 4s. Aid interest 8,227 10 0
2,013,490 8 3
(2) Tallies remaining in the hands of the Departmental Treasurers or Paymasters at the end of the Financial year 1702-3, i.e., at Michaelmas, 1703 342,139 14 3
2,355,630 2 6
Balance representing net application of direct or indirect tax money and loan money to the purposes of the War 3,247,025 4 2

The final balance to make this sum up to 3,350,750l. 11s. 1d. was obtained from the various petty sources enumerated above p. xlii.

The upshot of this tabular statement is elucidating. It shows that there was no co-ordinating force either in the House of Commons or in the Treasury which compelled a meticulous balancing of the Budget in whole or in part.

The House had voted 3,540,054l. 4s. 0d. for the war. The Treasury authorised expenditure amounting to 3,350,750l. 11s. 1d. but actually the Navy went short of its vote by nearly half a million, (2,209,314l. 10s. 3d. voted, 1,787,433l. 4s. 3d. issued), the Army exceeded its vote by over half a million (1,052,000l. voted, 1,634,373l. 12s. 7d. issued), and the Ordnance exceeded its vote by over 80,000l. (60,973l. 13s. 9d. voted, 147,400l. 3s. 9d. issued).

The Navy shortage could only be carried forward as a debt or an addition to the debt on the current service of the Navy. So that the apparent rough and ready approximation to a balanced budget was deceptive. The actual deficit which would be bound to declare itself later on could not have been less than 600,000l., not counting possible current arrears on all pays, wages, sustenance and on subsidies to foreign princes under the treaties with the Allies.

But most remarkable of all is the item of exceedings on the Army vote. The House of Commons had voted only 40,000 men for the war and had made provision for only that force. But at the same time the House had guaranteed to support any further alliances or treaties which William should think fit to make. The Dutch were very pressing that Great Britain should increase her contingent and when Anne came to the throne and Marlborough had a free hand in Holland he made a treaty with the Dutch for an additional force of 20,000, half of them to be paid by Great Britain and half by the States General. In the English Treasury accounts these troops were always referred as the Troops of Augmentation or the Additional 10,000 men. As this addition to the British quota had been made after the examination of the Estimates and the voting of Supply for the financial year 1702-3, the curious result was that in the first year of Anne's reign no Parliamentary provision at all was made for these 10,000 additional men : and when Marlborough raised the men, and when Godolphin signed warrants for the payment of their subsistence they were both acting unconstitutionally except and in so far as they were covered by the general guarantee contained in the terms of the Address of the House assuring the Crown that they would honour any further treaties that should be thought necessary to be made.

To-day such a situation would be easily met by Supplementary Estimates as and when the occasion arose. But the device of a Supplementary Estimate was unknown at Anne's accession.

The moneys which the Lord Treasurer Godolphin thus unconstitutionally authorised to be issued on account of the 10,000 additional men were as follows

l. s. d.
Out of Queen Anne's Civil List donation 1,920 5 8
Out of Prizes 2,000 0 0
Out of loans on the sixth 4s. Aid 23,889 15 9
Out of loans on the Subsidies 15,730 0 0
Out of loans on Coals 14,269 3 8
Out of loans on Malt 21,870 3 3
Out of Contributions for annuities 10,213 4 6
Total 99,892 12 10

It will be noticed at once that this sum by no means accounts for the total exceedings of the Army Vote. It still leaves an excess of half a million on that Vote. But in the following year the House of Commons took no notice of either the one sum or the other. It was never asked to vote the specific sum of 99,892l. 12s. 10d. for the past year's unprovided expenditure on the new Force of 10,000 additional men ; nor was it furnished with a statement of the Army exceedings.

In exactly the same way the first year's deficit on the Civil List Funds was not brought to the notice of the House. Queen Anne had gone short on her first year's Civil List revenue by

l. s. d.
700,000 0 0 expected Civil List revenue
543,725 11 8 actual receipts
156,274 8 3 shortage

and this was without counting the Queen's subscription of 100,000l. to the war out of her Civil List.

This particular deficit ran on, and it was only when the further deficits of later years made the Civil List position absolutely impossible that the House investigated the question and made a lump provision for the accumulated Civil List deficits of several years. Departmental debts or exceedings were treated in the same way. They ran on from year to year as floating debt hampering the services until they became so irksome that they had to be tackled. Thereupon they were tackled in the lump. The procedure was exactly the same which the House of Commons had been obliged to adopt in the case of the two Deficiencies Bills in order to honour its own guarantee of Treasury loans on Supply.

None the less this rapid survey of the financial operations of the first year of Anne's reign makes a remarkable showing. In a war which was to England as crucial and as glorious as any in her history the House of Commons had provided for the peace expenditure, for the accumulation of Parliamentary Loan Deficiencies and for the war, all three, out of current revenue. The only addition to the long term debt, what we should style today the funded debt, which the year showed or which was taken to the account of the year, was the tiny sum of 87,630l. derived from the sale of annuities. All the other borrowing during the year was simply the normal borrowing on Supply repayable out of Supply. Such borrowing was liquidated within the twelvemonth and it was practically only a financial device for anticipating Supply. As such it was a more innocent and honest device than the latest form of Treasury Bill borrowing of to-day. It was actually borrowing only on current revenue and involved no contingent liability on any future generation, because both principal and interest were intended to be and were in fact liquidated out of current revenue within the twelvemonth. It would not be possible to find either in Holland or in France a parallel to this clean finance in the same period of history.