Calendar of Treasury Books, Volume 9, 1689-1692. Originally published by His Majesty's Stationery Office, London, 1931.
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Introduction, Part 4
For the following year, 1693, the powers of the Commissioners for Public Accounts were continued by a fresh Act, (fn. 1) which was introduced into the Commons on the 13th January, 1692-3, passed the Lords without amendments, and received the royal assent on the 14th March, the last day of the Session. The Houses reassembled on the 7th November, 1693, and within the first week of their meeting a fresh departure in constitutional usage was made by the Commons. The Commissioners were employed in direct connection with the Navy estimates for the forthcoming year as assistants to an embryonic Estimates Committee. On the vote of going into supply for the Navy, (fn. 2) the Commissioners were ordered to bring in an account of what moneys had been granted by the House for the Navy during the war, and what part thereof the Navy had actually received. (fn. 2)
The required statement was brought in on the 16th November, and the House ordered that a copy should be sent to the Treasury Lords for their objections thereto. Quite independently the House of Lords took identical action. The statement which the Commissioners thus submitted (fn. 3) and the destructive criticism which the Treasury Lords thereupon made on it are preserved in the archives of the House of Lords and are printed in extenso in Historical MSS. Reports, House of Lords, New Series I., pp. 12-29.
The whole paper is too long to quote, but it is a most instructive chapter in the history of the growth of Parliamentary audit of appropriations. The honours of the discussion rested with the Treasury Lords, but so much at least can be said for the Commissioners that they had been set a task of forbidding difficulty. The ordinary revenue (the King's revenue or the peace establishment revenue) was supposed to provide for the naval "ordinary" : whether or not it provided for the Summer and Winter Guard was in doubt, for the attitude of the House wavered on the point : but at any rate the ordinary or peace revenue was unequal to meet the ordinary expenditure charged on it, even if it had not been clogged by being made a fund of credit for borrowing upon for the war, supra, pp. lxxii, lxxx : it was therefore much more unequal to the provision of the collateral contribution which the House expected it to make to the naval estimates in 1689 (see supra, p. cxxvii).
But apart from this subordinate question as to which body was more correct in their statements of Navy grants, the Treasury or the Commissioners, the suggestion obtrudes itself that a much more promising line of development would have been taken if the House had called for the statement from the Treasury Lords in the first place (thereby associating the Treasury with the whole series of Commons' Estimates Committees) and had then submitted the account to the Commissioners of Accounts as a traversing body (thereby associating the Commissioners directly with the audit of appropriated moneys).
In the course of the following month, December, 1693, the Commissioners delivered in their third annual report, covering the revenue receipts and issues for the year from Michaelmas, 1692, to Michaelmas, 1693. This report is printed in extenso in the House of Lords MSS., New Series I., pp. 60-92. When compared with the authentic Treasury revenue figures printed below, p. cciv, there is again the same slight discrepancy of detail and of total, but as in the case of the preceding year's report the account is a painstaking and praiseworthy attempt at a presentation of the national balance sheet and displays no party bias. The Commissioners confine themselves exclusively to the (fn. 4) cold figures.
For the following year, 1693-4, a fresh Act was passed on similar lines for taking and stating the public accounts. For some unexplained reason, however, the Bill was not introduced until near the expiry of the Session. It was read on the 4th April, 1693, received the royal assent on the 22nd April, the day of prorogation. In addition, the old Commissioners were not re-elected en bloc as previously. A new body, limited to seven in number, was chosen by ballot as follows, viz. :
There certainly appear to have been complaints against the preceding body of Commissioners. (fn. 5) But it is also permissible to infer a growing consciousness on the part of the House that the Commissioners were an expensive body which, so far as concerned its annual account, was in part duplicating the accounts side of Treasury work by merely compiling accounts, whilst not fulfilling its own ideal function of traversing or auditing such accounts. Quite clearly the House was groping its way towards the truer conception. Early in the 1694-5 Session the new or second body of Commissioners of Accounts was asked to lay before the House accounts of the payments to the Fleet, Army, Allies and forage for the year 1693-4. (fn. 6) The required statement was delivered in on the following day, and it comes very near the true idea of an appropriation scrutiny. Similarly, when in the following January, 1694-5, the Commons called for a state of the revenue and Civil List for the preceding year, 1693-4, (fn. 7) they referred to the Treasury for this, at the same time referring to the Commissioners of Accounts for a traversing statement and for a statement of issues. The Treasury statement, which was given in in response to these orders, was an admirable analytical statement of the [King's or civil] revenue and of the debts thereon and of the issues thereout for the financial year, Michaelmas, 1693, to Michaelmas, 1694. (fn. 8) The Commissioners' statement, on the other hand, consisted firstly of a brief abstract of revenue only without details, (fn. 9) followed, secondly, ten days later, by their detailed report of income and issues. (fn. 10)
This report is not preserved in the archives of the House of Lords, but fortunately a copy is available in British Museum Additional MS. 17756. (fn. 11) It simply reproduces the features of its last two predecessors and calls for no further comment. This is the case likewise with the succeeding yearly Report, that for the financial year, Michaelmas, 1694, to Michaelmas, 1695.
For that year, viz. the financial year, 1694-5, a slight change was made in the personnel of the Commission. The names inserted in the Bill were Robert Harley, Sir Thomas Clarges, Hen. Boyle, Paul Foley, Charles Hutchinson, Sir Thomas Pope Blount and Sir John Thompson. (fn. 12) But with this exception the procedure was similar to that of the 1693-4 Commission. Their report, containing the general state of the receipts and payments of the public revenue for the year, 1694, Michaelmas, to 1695, Michaelmas, was presented to the House on the 12th December, 1695, and is printed in extenso in the House of Lords MSS. Reports, 1695-7, pp. 156-189. In addition to this the Commissioners, by order, presented a state of the debt of the nation, which is printed in the Commons Journals, Vol. XI., p. 360.
In this Session, therefore, of 1695 no further constitutional advance was made towards the solution of the problem of evolving a true Public Accounts Committee. The Treasury was not asked for a statement of the public accounts and the Commissioners were not employed in its due function of traversing such account for the checking of appropriations.
Appropriation Of Supply And Parliamentary Guarantee For Loans On Supply
The device of appropriation of supply arose from suspicion on the part of the members of the House of Commons that the money they granted was not being spent on the purposes for which it was intended. As a constitutional device it did not originate with the revolution of 1688. It had already been in use under Charles II. The Act of 1668, 20 Car. II., c. I, for raising 310,000l. by Duties on Wines etc. appropriated the money to be raised thereby to the setting out of a fleet "this summer and for paying seamen on this expedition and to no other purpose whatsoever," and such money was to be kept in the Exchequer distinct from all other moneys. (fn. 13)
During the proceedings on this Bill in the Commons an attempt was made to fix a part of the [King's ordinary] revenue arising from Tonnage and Poundage "for setting out a fleet every year." But the motion for this was lost on a division. (fn. 14)
Seven years later, in 1675, the same idea was put forward, but in a more drastic form, and a Bill was brought in for appropriating the Customs to the use of the Navy. The Bill never got beyond the second reading, (fn. 15) but in place of a separate Bill it was resolved by the House to annex it to the Bill for supply for building the twenty ships. (fn. 16) In its turn this latter Bill was lost by the adjournment on the 22nd of November, 1675.
Resolved that the supply for building the ships shall be made payable into the Receipt of the Exchequer and be kept separate, distinct and apart from all other money whatsoever and appropriated and applied for the building and towards the guns, rigging and other furnishing of the twenty ships and to no other use : and that penalties shall be inflicted on the officers of the Exchequer, Navy and Ordnance and all other persons respectively through whose hands any part of the said supply shall pass in case the said supply or any part thereof shall be otherwise diverted or misapplied : and that the account for the said supply shall be transmitted to the Commons of England in Parliament. (fn. 17)
For special supply such as this Charles readily accepted the idea of appropriation, and although he would probably not have allowed the House to dictate as to the appropriation of the ordinary revenue ("his own") he was willing to adopt the idea as a voluntary Act on his own part. He offered, and for most of the remainder of his reign actually strove, to appropriate the Customs to the Navy and at all times he was ready to postpone the pure civil list part of his expenditure to the expenditure on the fighting forces.
But although the idea of appropriation was in this way well known at the time of the Revolution of 1688, that Revolution made a great change in the application of the device. When once money, any particular supply, had been paid into a separate account in the Exchequer, it became possible to hypothecate that money as a special fund of credit. That is to say, the Parliamentary sanction and provision for borrowing on supply became a business proposition as soon as the incoming fund was earmarked or made distinct. That fund became thereupon instantly possible as a credit fund, loans could be obtained on it because their liquidation would take place out of it as the money came in to the Exchequer. In this way and for this reason it will be found that post Revolution appropriation clauses in Acts of supply go hand in hand with credit arrangements, with borrowing and repaying clauses. The money of a particular supply was to go, as it were, into a separate box or bag and Parliament undertook the responsibility for loans on that supply by promising that such loans should be repaid out of the moneys in that box or bag, and that if the money in that bag proved insufficient the House of Commons guaranteed to turn into it the contents of some other bag. Thereby such supply became a fonda basis or bottom of credit.
In truth this device had more formative influence and more invigorating effect on the credit of William's Government than had the establishment of the Bank of England. Very few people cared to lend on the security of the Exchequer in general, for such a security was no security at all. Repayment might come this year, next year, sometime, never. But loans on a particular fundon the Land Tax or on the Poll, etc., etc.were certain to be repaid in the order as they stood on the register of loans, as soon as the money of such tax came into the Exchequer, There was a prospect of repayment within a reasonable time and the tallies of loan and orders of repayment ran less risk of depreciation than would be the case if the fund were an uncertain and distant one or an unappropriated one. Furthermore, this duplex device of guaranteed borrowing upon appropriated supply was of as great importance from the constitutional point of view as it was from the financial point of view. The solemn guarantee by Parliament of repayment of loans on supplythe removal of the burden of this guarantee from the shoulders of the Kingmeant that Parliament had in principle taken over the complete responsibility for the financial solvency of the State ; that supply would be reinforced where it fell short and that loans unpaid on a deficient fund would be transferred to the register of a solvent fund or of a new fund, in both which cases the new requisite supply was not begged by the King as a favour (as Charles II. had had to beg it, and often in vain), but rested on the shoulders of the House of Commons as its own concern, as a matter very closely touching its own honour. The very first supply granted to William by the Convention Parliament (viz. the Present Aid, I William and Mary, c. 3) contained this Parliamentary guarantee for loans, the orders of repayment were thereby to be registered in course and were to be paid in the order of the date of the tally of loan. The first Land Tax which the same Parliament granted (I William and Mary, c. 20) carried these Parliamentary arrangements further : loans were to be taken in on credit of the fund so granted ; a register of loans was to be kept in the Receipt of the Exchequer ; repayment was to be made in the order or sequence in which the loans stood on that register and the orders of repayment were made negotiable ; they were to be assignable by endorsement.
Up to this point there had been no specific clause of appropriation, although the first Poll (I William and Mary, c. 13) was granted specifically "for the reducing of Ireland," and although a further Act of the same Session (I William and Mary, c. 28) had hypothecated or rather earmarked part of the King's revenue to the payment of the debt to the Dutch and the arrears owing to Charles II.'s servants.
But in the second Session of the Parliament suspicion was aroused that grants had been misapplied, as I have already shown (supra, pp. cxxxiii, cxxxvi, cli). This suspicion was not due to partisanship or misrepresentation, but to ignorance to the inadequate means of ministerially guiding and informing the House. And whereas on the one hand it resulted quite naturally in the appointment of the Commissioners of Accounts, so on the other it resulted quite as naturally in the adoption of a strict appropriation clause. The second Land Tax (I William and Mary, Sess. 2, c. I) appropriated 400,000l. out of it to the Navy and ordered that the Treasurer of the Navy should keep a distinct account of that money and should pay no part of it for any other purpose and that the warrants or Navy bills for such payments should express on the face of them that they were drawn for such appropriated purpose : further, no tallies of pro or anticipation were to be made out on this supply and an account was to be rendered direct to the House itself (not to the Exchequer or the Treasury) of all payments under this appropriated clause.
In the same breath the House made provision for the loans which had remained unsatisfied on the first Land Tax by reason of that Act falling deficient. Such unrepaid loans, up to a total of 300,000l., were transferred to the register of this, the second, Land Tax.
In the succeeding Land Tax Act (the Additional Aid, I William and Mary, Sess. 2, c. 5) still further progress was made in the financial side of these loan arrangements. The receipts from the tax were to be divided into two parts : the one part, consisting of a third, was appropriated to the repayment of loans ; the other two-thirds part was appropriated to the purpose of the former Act.
With many differences of form these mechanical arrangements recur in successive Acts of Supply throughout the reign. The Excise Act, 2 William and Mary, Sess. I, c. 3, which granted the Temporary Excise to William and Mary for life, appropriated part thereof as a fund of credit for raising or borrowing 250,000l. and ordered that until December, 1693, three-fourths of the receipts from this Excise should be paid separately into the Exchequer every week and should there be kept distinct and apart. If reference be made to the Excise accounts printed below it will be seen how meticulously and punctiliously the Executive carried out the arrangements thus prescribed. The same arrangements were made in the succeeding Act (2 William and Mary, Sess. I, c. 4), which granted Tonnage and Poundage for four years, saving that in this case the hypothecation of the fund for the purpose of borrowing was increased to 500,000l. : similarly the Act for the Additional Excise (2 William and Mary, Sess. 2, c. 10) appropriated certain sums for the building of ships for the Navy, this part to be covered by one-third the proceeds of the tax, the remaining two-thirds being to cover a clause of credit for the borrowing of 1,000,000l.
So much for the evolutionary side of this earliest form, during William's reign, of short loan machinery. Its operation can be traced in brief in the figures of moneys borrowed and moneys repaid in the table of revenue below (p. cciv seq.). But for the formative or embryonic period 1688-1691 the fuller details of the loans are very illuminating. They are afforded in a return made up to the 27th June, 1690, which the Treasury prepared for the House in October, 1690. This return shows how poor and unsatisfactory the loans were until the guarantee of Parliamentary appropriation intervened and then how instantly forthcoming the required loan money was as soon as such guarantee had been given :
Statement Of Loans On The Public Revenue And Taxes Between 5th November, 1688, And 27th June, 1690. (fn. 18)
It would be tedious to enumerate the succeeding Acts of Supply which after 1690 followed this pattern of joint appropriation clause and credit or borrowing clause. As a financial device it was simple and obvious. On the strength of a guarantee of appropriation, private individuals lent money on the ingathering taxes, and as the taxes came in, the orders of loan were paid off in the sequence in which they stood in the register of loans. This was the earliest form of short term borrowing. But as the reign progressed the consciousness that the practice of Parliamentary supply was becoming normalised and thereby the national credit was becoming stabilised, enabled William's Government to make two innovations in financial machinery. By the first expedient, that of annuities, the lenders were induced to leave their loans standing instead of claiming repayment the moment the tax money trickled into the Exchequer. By the second expedient, that of Exchequer Bills, provision was made for what was in effect a prolongation of credit on a fund, by the substitution of Exchequer Bills or Bills of Credit in place of the time honoured tallies and orders of loan. By making the Exchequer Bill negotiable by endorsement, the temporary debt became a floating debt not for a set prescribed period but so long as the Bill remained circulating or afloat in the hands of the public. The latter of these devices falls just outside the limit of the present instalment of Calendar, but the former, the issue of annuities as the first form of long term national borrowing, was instituted as early as 1692. The Act 4 William and Mary, c. 3the Act for the Additional Exciseis the first instance in the history of Parliamentary supply of a grant of supply which exceeded the life of the Sovereign. The duties in the Act were granted for 99 years from 1692-3, January 25. The proceeds were to be kept apart and distinct and were to be a fund of credit for the borrowing of a million, the repayment of which was to take the form of annuities for 99 years instead of the instantaneous repayment of principal as and when the growing moneys of the duties came into the Exchequer. By making these annuity interests assignable the merely mechanical side of the device was completed and the modern system of funded long term borrowing was at last born into the world of English national finance.
The Public Debt
At the back of or as a corollory to all the above mechanical devices of finance there existed an implied guarantee, to wit, the guarantee of the House of Commons that if any of the grants of supply proved deficient or insufficient to liquidate the loan obligations charged upon them, the House would make good the deficiency by reinforcing supply.
At the outset the method adopted by the Commons for honouring this obligation was to transfer the unrepaid borrowing of one grant of supply to the fund of the next grant of supply made or to be made. The terminology or procedure will be found abundantly exemplified in the present instalment of Calendar, for the wording of privy seals for imprests to the services followed faithfully the wording of the various Acts of supply. In this way the unliquidated balance of borrowings on the Quarterly Poll of 1691 (3 William and Mary, c. 6), amounting to no less a sum than 735,391l. 18s. 5d., was by the Act for the first 4s. Aid transferred to and placed upon the register of that Aid by the Act of 4 William and Mary, c. 1, and was made repayable out of that new fund of supply in the order or sequence in which the orders of loan stood charged upon the Poll in the books in the Exchequer. For the first half of William's reign this arrangement may be considered as quite normal. But in 1697, just outside the limits of the present instalment of Calendar, an attempt was made to clear up all outstanding deficient funds by providing special funds for the liquidation or amortization of the deficiencies. The fund thus established by the Act of 8 and 9 William III., c. 20, was virtually a species of Sinking Fund with the single difference that its purpose was the extinguishment of floating debt rather than permanent or annuity debt. (fn. 19) The deficient funds which this Act covered and provided for were as follows [some of them of course lie outside the present instalment of Calendar] :
It will be found from subsequent instalments of this Calendar that this first Sinking Fund or Amortization Fund (or First Mortgage Fund as it was subsequently styled) was in operation until 1706, and that by that time the periodic allocations to it had liquidated and extinguished all the above detailed Parliamentary deficiencies.
In order to complete the account of liabilities remaining undischarged and burdening the executive it is necessary to add finally the ever-growing debts in the chief departments, to wit that of the Civil List as well as those of the fighting services.
Fortunately in 1695 the Commissioners of Accounts compiled such a statement of departmental debt as at Michaelmas of that year. This account has been preserved and is printed in the Commons Journals, Vol. XI., p. 360. It is as follows :
Note also that the duty on salt and that on tonnage will not answer what those funds were granted for by near 140,000l. per an., and the deficiency thereof being ordered to be paid out of the revenue unappropriated will by so much postpone [the ordinary payments due to] the Civil List.
|[The above account shows a total Departmental debt at Sept., 1695, of||2,911,339||14||7|
|And an estimated loan deficiencies debt of||1,953,606||3||8]|
The above statement of Departmental debts as drawn up by the Commissioners of Accounts should be taken in conjunction with a statement of the ordinary revenue as drawn up by the Treasury Lords. This statement, which covers the financial year from Michaelmas, 1693, to Michaelmas, 1694, is printed in the Commons Journals, Vol. XI., pp. 204-209, and taken together the two statements fully elucidate the financial arrangements and embarrassments of the early part of William's reign.
Customs are divided into a three-fourths part and a one-fourth part. The three-fourths are constantly paid into the Exchequer and applied towards payment of the principal money borrowed thereon and the interest thereof. The remaining one-fourth part bears the charges of management, the residue of it being applicable to the Civil List. The pensions charged on the Customs amount to 6,783l. 5s. 1d. per an. These form part of the Civil List.
Excise.The Excise granted in fee and that enjoyed for life are called the Hereditary and Temporary Excise. Both these branches stand charged with costs of management, with repayment of principal moneys borrowed thereon and interest thereof and with the bankers' debt, which is 1,333,873l. 14s. 7d., for satisfaction of which Charles II. granted as perpetual interest 80,032l. 8s. 1d. per an., the said perpetual interest is 11 years in arrear [at Michaelmas, 1694], representing a further sum of 940,380l. 14s. 11d.
In addition, these two branches of the Excise jointly or severally stand charged (by force of particular grants or patents or warrants) with pensions and other yearly payments which form part of the Civil List, amounting to 79,069l. 15s. 2d. per an.
Post Office.The clear revenue for the year 1693-4 over and above charges of management was 59,972l. 14s. 9d. There is a yearly charge of 21,200l. (by special grants) upon this revenue : which forms part of the Civil List. There is in addition a temporary debt of 19,205l. 9s. 2d. arising by tallies of anticipation.
Small Branches and Casualties.[These small sources of revenue are not enumerated. They represent the ancient kingly revenue, and were as follows : Receivers General of Crown Lands including the Duchy of Cornwall during the absence of an heir apparent ; sales of land, sales of wood and fines of leases of Crown Lands ; First Fruits, Tenths and Temporalities sede vacante ; Hanaper and Post Fines and Fines on Alienations ; rents reserved on concessions, lighthouses, lotteries and rent of Bombay ; issues of sheriffs of counties and cities ; Fines in the Exchequer and King's Bench and seizures and compositions in the Exchequer ; escheats and forfeitures, rents of lands seized and redemptions of lands ; wrecks ; baronet fees ; sale of the farthings and halfpence.]
The total receipts from these small branches in the year 1693-4 was 77,435l. 11s. 5d. The receipts from the particular Customs duty styled Coinage Duty as being granted specially for the charge of the free coinage of silver is not included, being appropriated to the Mint. Also the revenue of Wine Licences is not included, being in farm for ten years from 1691, Lady day, and 30,000l. having been advanced thereon, of which 21,000l. remained unrepaid at Michaelmas, 1694.
[Under this head the Treasury Lords might have added that since the sale of fee farms under Charles II. the revenue from Crown Lands which appear in the Exchequer declarations under the head of "Receivers General," had become insufficient in many counties to bear or meet the fixed county charges for support of schools or mending of roads and ports, etc., etc., which from ancient times had been placed thereon by the benevolence of successive Sovereigns. Whenever this happened the unliquidated balance sooner or later had to be met out of the Exchequer in General.]
|On the Alienation Office||1,800||0||0|
|On the Duchy of Cornwall||5,330||0||0|
|On the Crown Land revenue of Wales||2,500||0||0|
|On First Fruits and Tenths||12,450||0||0|
|On the Lotteries||3,992||2||6|
As far as revenue appropriations are concerned, this Treasury statement yields no further particulars. In reading this statement it is necessary to bear in mind two important principles. Firstly : in strict parlance it should be incorrect to speak of appropriations on the Civil List. The King's revenue or Civil Government revenue or Peace Establishment revenue was one huge complex appropriation, the total yield from such and such funds, whatever that yield might happen to be, year after year, being intended by Parliament to enable the King to meet the charge of the ordinary or peace establishment of the country. The allocation of the complex total to the various heads of expenditure, Royal Household, ambassadors, secret service, etc., etc., was constitutionally still a matter entirely for the King's decision. He could prefer one branch before another, or vary the distribution of his revenue, as he chose or as his Lord Treasurer advised him. But Parliament could not constitutionally interfere in such allocation or distribution. It could not legally and constitutionally fix appropriations on any of the funds of the Civil List. And it was only because William had given way to an act of usurpation on the part of the Parliament and had agreed to mortgage part of the Customs and part of the Excise as a fund for guaranteed borrowing thereon that as a result these portions of his revenue became appropriated under specific Parliamentary guarantee for the repayment of floating or temporary loans. This matter has been already sufficiently stigmatised, and nothing further need be said in condemnation of the action of the House of Commons. But with regard to the working of this first principle of illegal appropriations fixed on the Civil List it stands to sense that as one appropriation liquidated itself or worked itself out and another and later one took its place, the Parliamentary appropriations on the Civil List will vary from year to year. Those described in the above quoted Treasury statement refer only to the year 1693-4. The exact status of each revenue item of the Civil List year by year, the actual extent and nature of the appropriation load or charge upon it, can only be learned from the successive yearly Customs and Excise accounts as printed below.
The second principle to bear in mind in attempting to sublimate or to obtain a clear view of the King's ordinary revenue and expenditure, his Civil List revenue and expenditure in the old and true sense (as distinct from the modern Civil List concept) is that just as there was no normal or fixed limit of revenue so there was no normal or fixed limit of expenditure. In one year the funds composing the Civil List revenue would yield much more or much less than in another year ; and in exactly the same way the expenditure in any one or other of the offices (the Robes, the Works, etc.) might be and was much more or much less in one year than in another. Indeed it would be permissible to say that in these intermediate years 1688 to 1707, during which the Civil List revenue was still the Civil Government revenue and not the Kingly State revenue, the main function of the Treasury was to fit together these two incommensurables ; to meet a fluctuating expenditure out of a fluctuating revenue.
In the case of the Treasury return in question, covering the financial year 1693-4, the actual Civil expenditure is given as follows (fn. 20) :
The financial summation of all this tangled mass of revenue, anticipations, borrowings and debts will be found below (pp. cc-cci). But speaking for the moment only of the system of temporary borrowing on funds as an elaboration and perfecting of the older Exchequer system of tallies of anticipation and paper orders, it will be instantly conceded that an improvement of financial machinery had taken place, as well as an advance in constitutional practice.
In their entirety the above detailed successive devices or measures of Parliamentary guarantee for loans on supply and appropriation of supply combined with separate and distinct accounting in the Exchequer for hypothecated funds and appropriated funds, and finally with rigorous insistence upon repayment in the order or course of the Exchequer register of loans do sufficiently account for the rehabilitation of the national credit under William III. and for the comparative ease with which the country bore the terrific strain of the wars against Louis XIV. Something must, of course, be conceded as to the growth of the nation's wealth in 1690, when compared with 1660, but after due allowance for this factor, it still remains true that the great difference between Charles's finance and William's finance was that the latter was Parliamentary and guaranteed by the nation, whilst the former was merely kingly and personal. No national system of finance could have been built on the narrow basis of a merely personal Government or a merely kingly executive ; but when Parliament took hold of the financial reins and voted supplies in accordance with estimates and gave its guarantee for properly authorised loans, the basis was laid for that broad system of national finance which is distinctive of the modern world democracies. The idea that the rehabilitation of national credit and finance under William III. was due to the establishment of the Bank of England is simply empty verbiage. The Bank of England lent its entire share capital to the State, but in this respect it did no more than the new East India Company did or than the abortive Land Bank would have done. But beyond this the Bank did little or no service to the State during the period covered by the present instalment of Calendar. In the matter of the exchanges and the remitting of money to William's armies abroad, the Bank was beaten out of the field by the private exchange houses and in the matter of loans on supply it hardly even entered the field. The Act of 1707 definitely associated the Bank with the operation of circulating Exchequer bills and thereby laid the basis for that close co-operation between the Bank and the British Executive (as represented by the Treasury), which has become the outstanding feature of our modern financial system. But prior to that Act the Bank was purely a business concern enjoying no organic touch with the Executive and at times even out of sympathy with it. The present instalment of Calendar is proof how little recourse the Treasury had to the Bank for its services and how offstanding the attitude of the Bank was in the matter of advances to the State. The Great Whig Institution myth which we owe to Macaulay is simply so much hyperbole.
Financial Summary Of The First Seven Years Of William's Reign
|Outstanding departmental debt||2,911,339||14||6|
This total represents the expenditure of England on ordinary or peace establishments and on war for the years 1688 to 1695. For a seven year period it yields an average yearly expenditure of 5,442,183l. 6s. 6d., which is probably fourfold of Charles II.'s yearly expenditure.
It is not easy to apportion this expenditure as between the ordinary, or, let us say, the peace establishments and the pure war charge. That portion of the ordinary or peace revenue which is styled the civil affairs part, and which covered the Civil List proper, judges, civil service pensions and bounties, ambassadorial service and secret service, varied greatly (see supra, p. cxciv), but can be stated succinctly. It was as follows :
But besides the above purely Civil items, the ordinary or peace expenditure included provision for the standing Army (Guards and Garrisons), the Navy Ordinary and Summer and Winter Guard and Ordnance. The normal peace figure for these items was never fixed in William's reign, and any figure is bound to be arbitrary, but taking their total at the 600,000l. which Parliament had initially in mind, then an average or normal of the peace revenue for William's reign would have been :
|Guards, Navy and Ordnance||600,000|
|Annual total expenditure||5,442,183|
|Annual peace expenditure||1,240,861|
|we obtain a figure of||4,201,322|
Of this total cost it is astonishing to find, infra, p. cci, that as much as 76 per cent. was provided by annual taxation, leaving only 24 per cent. in long term borrowings of any type. This remarkable result is of course due mainly to the fact that long term borrowing was unknown at the commencement of William's reign and that the technique of such a new form of public finance was only gradually and tentatively evolved as the strain of the war grew more and more impossible.
Total Of The National Debt As At Sept., 1695
(1) The first experiment in the form of long term borrowing (which as explained, supra, p. clxxxiv, must be kept most sharply distinct from the borrowing procedure of ordinary bills of supply) was the issue of annuitiesthe so-called first tontine of the year 1693. Under the Act of 4 William and Mary, c. 3, reinforced by the Act of 5 William and Mary, c. 5, a capital sum of 1,000,000l. was realised by the sale of annuities at the rate of 10 per cent. up to 1,700l. and 7 per cent. thereafter if with or including certain survivorship rights and advantages or alternatively at the rate of 14 per cent. for single lives without such survivorship rights.
In the following year, 1694, a further sum of 300,000l. was realised by the sale of annuities under the Act 5 William and Mary, c. 20, the rates in this case varying from 14 per cent. to 12 per cent. and 10 per cent. for one, two or three lives, according to election.
In addition to these two annuity issues, a small sum was realised from the conversion of part of the issue. Some of the single life annuities were converted into 96 year annuities certain, in consideration for divers additional payments representing 4 to 5 years' purchase. Up to Michaelmas, 1695, these conversions had yielded a further sum of 117,448l. 0s. 6d.
(2) The second form of long dated borrowing was the borrowing of the subscribed capital, viz. 1,200,000l., of the Bank of England under the Act 5 William and Mary, c. 20. Nominally this represented an annuity sum of 100,000l. per an., redeemable on the 1st August, 1705.
In addition to these purely funding type of borrowing it must be borne in mind (1) that there was an ever growing deficit in each of the great service departments (see supra, p. clxxxvii) ; (2) that the repayments of temporary loans on supply were perpetually falling behind ; and (3) that the accumulation of transferred deficiencies of supply to meet the floating indebtedness of successive borrowing or credit clauses was necessitating the first Sinking Fund scheme which I have described, supra, p. clxxxv.
|Total revenue raised within the period||38,095,283||5||5|
|Long term debt, departmental debt, unrepaid temporary borrowings, Sinking Fund deficiencies||9,206,122||4||10|
The figure of nearly 29 millions thus arrived at represents the contribution made out of yearly taxation or yearly revenue towards the total administrative cost of the country and the total war expenditure.
In other words, strained as were the nerves and sinews of the country, narrow as were its financial and taxation resources, the country paid off 76 per cent. of the total war expenditure and internal expenditure out of yearly tax revenue. Both relatively and absolutely this represents a finer achievement than we accomplished in the great war with incomparatively greater resources and with a vastly more complete equipment of financial knowledge and loan technique.
|Long term debt, &c., &c., as above||9,206,122||4||10|
|Bankers' debt (principal only)||1,333,873||14||7|
|Total National debt||10,539,995||19||5|