3B
AQA A-LEVEL HISTORY (7042)
HIS1D Stuart Britain and the Crisis of Monarchy, 1603-1702
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SECTION ONE Monarchs and Parliaments, 1603-1629
Topic 3 The finances of the Crown and attempts at reform
Key Question B: How successful were attempts to strengthen royal finance in the period 1603-29?
Attempts to reform and strengthen royal finance during James I’s reign, 1603-25
James seemingly did not appreciate that, although England was much wealthier than Scotland, the mechanisms for tapping that wealth effectively in the Crown’s interest did not exist. This necessitated the initiation of a variety of schemes with the aim of reforming and strengthening royal finance.
Customs Farmers, 1604: Direct collection of customs duties (i.e., taxes on imports and exports, otherwise known as Tonnage and Poundage) was abandoned in 1604 in favour of ‘farming out’ this duty to a syndicate of merchants. In return for an annual rent, these custom farmers were able to collect and keep the revenue generated from customs for themselves. This had the following advantages:
the King received a regular income and an additional source of patronage with which to attract loyalty and favour;
it created a wealthy group, closely linked to the Crown, who would probably be willing to make loans to the King when he found himself in financial difficulty;
for the farmer, there were considerable rewards because the Crown never demanded a price for the customs that reflected their true worth – this was because the King believed it was more important to have supporters in the merchant community than to gain the maximum income from customs duties.
The new system meant customs farmers had a vested interest in collecting the full revenue from the customs, which, in effect, created a new indirect tax. This created great unease in Parliament, which saw its control of taxation being eroded. Such fears were dramatically increased in 1606, when a merchant of the Levant Company, John Bate, was taken to the Court of
Exchequer for refusing to pay a duty on the import of currants from the Middle East. Bate claimed that the duty had not been sanctioned by Parliament and thus was not a legal tax. The judges decided the case in favour of the King because it was deemed that the monarch possessed the prerogative right to ‘regulate trade for the security of the realm’.
The Book of Bounty, 1608: In 1608, Crown expenditure had risen to £500,000, leaving an annual deficit of £73,000. Sir Robert Cecil, the Earl of Salisbury, recognised as the King’s ablest minister, was therefore moved from his position as Secretary of State to take up the office of Lord Treasurer with the brief of curbing James’s extravagant spending. His initial attempt to achieve this was by issuing the Book of Bounty in November 1608. This prohibited the Crown from simply giving away major items such as lands, customs and pensions as gifts to favourites. However, James simply started to gift cash instead (in four months of 1610 alone, he was persuaded to give away £36,000).
Salisbury’s next move was to commission a survey of Crown lands so he could generate more money from them by revising the leasing policy. However, his efforts were restricted by the ineffective nature of the royal bureaucracy and the King soon reneging upon his previous promise not to gift Crown lands to his favourites. Salisbury therefore found himself suggesting the direct transfer of Sir Walter Raleigh’s manor at Sherbourne to Robert Carr, James’s new favourite, as a way of bypassing the rules. (Raleigh had been found guilty of treason in 1604, meaning his estate was forfeit to the Crown.) For this he earned the gratitude of both Carr and the King, which was worth more to Salisbury than the long-term financial viability of the royal finances. This is just one example of how royal ministers bent the rules for James, and, it could be argued, helped enable his extravagance and over-generosity.
The Book of Rates, 1608: In the court’s verdict of the Bates Case, the judge had stated that the Crown had an ‘absolute prerogative’ to impose import duties (known as impositions). This opened the possibility to vastly expand their scope. Sure enough, impositions were levied on around 1,400 items, with no real pretence that it was in the interest of trade. To accompany this move, Salisbury issued a new Book of Rates was issued to bring the valuation of each item fully up-to-date. This was the first revision of rates since 1558, and was much-needed, as fixed valuations meant that prices didn’t tend to keep up with inflation. After the book had been published, impositions became worth an additional £70,000 per year to the Exchequer – the equivalent of a parliamentary subsidy (the main source of Crown income). In the long-term, the Crown had become dependent for half its overall income on customs duties by the end of the 1630s. However, this was a politically risky move by Salisbury, because impositions were a blatant extension of the royal prerogative which posed a direct threat to Parliament’s authority over taxation. Moreover, it was resented by many throughout the Political Nation, whether MPs or not, as entirely new custom duties were introduced on goods that hadn’t ever been taxed before.
The Great Contract, 1610: At the beginning of the 1610 session of Parliament, Salisbury announced that the Crown debt stood at £280,000, with current annual expenditure being £510,000. He hoped that this would shock MPs into granting a £600,000 subsidy to cover the King’s debts and state expenses. His request was rejected outright, but he had left himself some room for manoeuvre with the suggestion of an imaginative scheme that would replace the grant: in exchange for an annual subsidy of £200,000 from Parliament, Salisbury proposed that James would be willing to give up a range of feudal rights, such as his prerogative income from wardship and purveyance. This offer became known as the Great Contract.
When MPs discussed the offer in Parliament, it was resolved that James would only receive the subsidy if in return he agreed to address some of their grievances about impositions. In dire financial need, James agreed to an act that would legalise all existing impositions, but required him to obtain parliamentary consent before levying them in the future. This was a logical way of preserving everybody’s interests; the King kept his impositions and Parliament maintained control over taxation.
However, doubts soon began to surface on both sides. MPs became increasingly suspicious of entering into any sort of deal with the King: funding the King’s extravagance was not popular, especially as most of the money was likely to flow straight into the pockets of his Scottish favourites. On the Crown’s side, it was estimated that the King would lose around £115,000 per year from the lost sources of prerogative income, as well as an expected heavy loss on income from custom duties if Parliament took control of impositions.
Ultimately, negotiations for the Great Contract collapsed as neither side felt they were likely to secure a good deal. Its failure marked the end of James’s first Parliament, which had lasted from 1604 to 1610, and meant the ineffective existing financial system would continue unreformed, much to the future detriment of the Stuart Kings.
Cockayne’s Scheme, 1614: William Cockayne, a London merchant, wanted to break into the monopoly held by the Merchant Adventurers for the sale of unfinished cloth to the Netherlands, England’s biggest export market. In 1614, he persuaded the King to prohibit the export of this item on the grounds that this would generate employment in the finishing of cloth, which in turn would increase customs revenue by increasing the value of the product.
As it turned out, the scheme actually resulted in a decrease of customs revenue, for the following reasons:
the Dutch reacted to the attempted attack on their industry by finding new sources of unfinished cloth, so they no longer needed to buy in vast quantities from England;
unlike the Merchant Adventurers, which was an extremely wealthy and well-established syndicate of merchants, Cockayne and his backers did not have the resources to purchase all the cloth that was produced, so unemployment soared in the textile industries.
In two years, exports shipped through London went down by a third and customs revenue fell accordingly. At this point, the Merchant Adventurers were allowed to resume their control of the cloth trade, which gradually recovered but never again reached the high point of 1614.
Cranfield’s Reforms, 1618-24: In 1618, London merchant Lionel Cranfield was appointed Master of the Wardrobe and took control of royal household expenses. It was agreed that if costs fell from the existing £42,000 to £20,000, Cranfield could keep any additional savings. He was soon making a profit of over £7,000 a year. Cranfield achieved similar success in other departments such as the ordnance (supply of weapons) and the navy, where costs fell respectively from £34,000 to £14,000 and from £53,000 to £30,000. He managed this by reducing waste, budgeting and accounting more accurately and by eliminating corrupt and unnecessary officials (his investigations revealed that many of the Crown’s officials were guilty of accepting bribes, among them the Lord Chancellor, Sir Francis Bacon, who was impeached in 1621).
In 1621, Cranfield was created Earl of Middlesex and promoted to Lord Treasurer. He attempted to control the flow of royal generosity by demanding an immediate stop to the payment of pensions and insisting that no financial gift was granted without his approval. Some further savings were made, but Cranfield’s reforms could only work fully with the cooperation of the King, and James found it impossible to resist the greed of his courtiers.
Worse still, Cranfield had risen through the influence of Buckingham, the product of the very factional rivalry and corruption that lay at the heart of the problem. At least part of Buckingham’s enthusiasm for Cranfield’s reforms lay in the fact he could use the subsequent investigations to bring about the downfall of his rivals. By 1620, he had taken control of the whole system of royal patronage, relieving James of the burden of making appointments, and using it to reinforce his own power, as well as to line the pockets of his large and needy family. While he encouraged Cranfield’s efforts, he never allowed any of the financial restraints that were introduced to extend to himself, and the prosecution of Bacon was partly manipulated by Buckingham to deflect from growing attacks upon his own power.
In the end, even Cranfield failed to be immune from the lure of patronage. While Buckingham was absent on the Madrid Expedition in 1623, he tried to extend his own influence by introducing the King to his handsome nephew, Arthur Brett, hoping he would displace Buckingham as the new royal favourite. Other resentful courtiers engineered Cranfield’s downfall by encouraging James to have him impeached for bribery.
As Lord Treasurer, Cranfield achieved some impressive savings and increased royal income by about £80,000. However, he was unable to make any lasting difference because the King could not restrain his extravagant nature. In the end, even Cranfield, the would-be agent of reform, took the opportunity to become one of the richest men in the country at royal expense.
Attempts to reform and strengthen royal finance during Charles I’s reign, 1625-29
An economic depression, accompanied by poor harvests, hit England in the early 1620s. James had inherited a debt of around £400,000 from Elizabeth, but bequeathed more than double that to his son (£900,000). Under Charles, the financial problems of the Crown were magnified because of the King’s desire to enter the Thirty Years’ War on the Protestant side.
Having secured only a limited subsidy of £140,000 from his first Parliament in 1625, Charles resorted to two additional methods to add to his revenue:
he provocatively continued to collect Tonnage and Poundage after the one-year parliamentary grant had expired;
he also called for a benevolence from the Political Nation – however, as this was voluntary, very few offered the King the cash donation he was looking for and he was forced to ask for a £60,000 loan from London merchant, secured against the value of the crown jewels.
None of this was enough, and the prospect of war against Spain left the Crown in desperate need of extra revenue by 1626. Charles was forced to call another Parliament. When that went badly, he resorted to the ultimate form of prerogative income: a forced loan.
The Forced Loan, 1626: A forced loan worth two subsidies had already been levied upon the King’s richer subjects in 1625. The following year, it was decided, despite some opposition in the Privy Council, to introduce another forced loan which would amount to the equivalent of five parliamentary subsidies, but this time levied on all taxpayers. This was, in effect, parliamentary taxation that had not been agreed to by Parliament and so caused considerable ill-feeling.
To collect the forced loan, wealthy individuals were summoned to public meetings where they were individually asked to pay. This method ensured that any form of refusal would appear to be an open act of opposition to the King. Charles was also careful to make his request for money as personal as possible. It was therefore in every sense a test of personal loyalty for the Political Nation.
In an unusually short time (by the end of 1627) over £260,000 had been raised. Although this was only about 70% of what the King had hoped, it removed the threat of immediate bankruptcy from the Crown. Nevertheless, this financial advantage came at a heavy political cost. The loan was seen as attacking the fundamental right that taxation had to be agreed by Parliament, which also acted as the defender of liberties. If the King could raise such vast sums without Parliament, then it could be argued that all other liberties were at risk.
Seventy-six people across the country, including several prominent MPs such as Sir Thomas Wentworth (later the Earl of Strafford), were imprisoned for refusing to pay the Forced Loan. When the judges refused to pronounce that the loan was legal, Charles dismissed the Chief Justice of the King’s Bench, Sir
Ranulph Crewe. This led to a serious challenge to the King’s authority in the courts in 1627, when five members of the Political Nation challenged for Habeas Corpus – the right to be brought to trial if one was being held captive. It was too risky for the Crown to allow the Five Knights’ Case (as it would become known) to come to court, as the judges might release them, so the Council issued a proclamation stating that the knights had been imprisoned ‘by the special command of our lord, the King’.
It seemed that Charles was now not only taxing his subjects without consent, but he was also imprisoning them at his pleasure. Charles did not understand the effects of his actions. He believed that the nation should trust him to act in its best interests because his power derived from God. He needed money for the war and, therefore, in his eyes it was legitimate for him to raise it in any way he could, whatever the political reaction.
By 1628, the situation was again desperate. Charles raised another loan from the City of London but only after giving it the last major collection of Crown lands, worth £350,000. This ended the role of land as a major source of royal revenue and meant that in future the City would be unwilling to grant any future loans to the Crown. As foreign policy costs continued to mount, Charles would have no alternative but to call another Parliament. Unsurprisingly, he found MPs even more reluctant to agree to raise money on his behalf than they had been before. After delaying tactics from the Commons, a bill granting Charles some of the funds he had requested was passed, but only after the King had promised to give his assent to the Petition of Right, a document drawn up by Parliament to safeguard the privileges of MPs at the expense of some crucial aspects of the royal prerogative.