Introduction

Introduction

Broadly speaking, the bankruptcy of 1672 had a two-fold effect on English Governmental finance for the remainder of Charles II's reign. (1) The national income was diminished by the amount of the yearly value of fee farms sold. (2) The expenditure was increased by the amount of the interest which had to be paid upon the bankers' debt. Each of these two transactions had a peculiar character, and it is necessary to explain them before attempting a tabular resum of income and expenditure for the period covered by the present volume.

(1) The sale of Fee Farms. The fee farms represented the hitherto unalienated or unsold Crown remains of the chantry lands which had been confiscated under Edward VI. The rentals of such lands were collected by local receivers, who paid their receipts to the respective superior Receivers General of Crown lands, and the latter in turn paid their receipts into the Exchequer. In a statement therefore of yearly income received in the Exchequer the item of "Receivers General" ought to account for the full yield of these fee farms of the Crown as well as of the other Crown lands. But as a matter of fact this is not found to be the case. The amounts paid in yearly by the Receivers General do not by any means represent the total yearly yield of fee farms and Crown lands. This arises from the fact that many yearly charges were in the respective counties made upon the above source of income. Such charges were paid by the Receiver General, and were allowed to him as a credit in his account. He therefore only paid into the Exchequer the net balance of his receipts. It must not be supposed that such charges were novel and that they had been instituted by Charles II. They were mostly very ancient in date as well as in character, and covered in their totality most varied species of expenditure, payments for repairs of roads and harbours, castle guard rents, annuities to schoolmasters and ministers of the Gospel, and so on. For instance, the royal bounty of 100l. per an. to the poor ministers of the Isle of Man was a charge on the fee farm rents of Lancashire and was paid by the Receiver General of that County to the Earl of Derby, who, with the Bishop of Man, distributed it yearly to the recipients (see pp. 722-3 infra). Similarly the provision for the King's Preachers in the County of Lancashire (an institution which goes back to the reign of Elizabeth and in a different form even to that of Edward VI) was made by the Receiver General of the County paying 200l. yearly to the Bishop of Chester, who paid it away to four godly preaching ministers chosen by himself. Each county in England and Wales (or rather each Receiver General's district, which occasionally comprised several counties) had its own list of such "fixed charges" as they were called.

When the fee farms were sold it was no longer possible to meet these county "fixed charges" in the old way. Each case appears to have considered as it came up and any arrangement was made which was feasible at the moment. Failing any other alternative the charge was thrown upon the national Exchequer, and from that time onwards it will figure in the Exchequer expenditure table. This was what was done, for instance, in the above quoted case of the King's preachers (see p. 865 infra). In the case of the poor ministers in the Isle of Man the annuity of 100l. was transferred and charged upon the Excise. It therefore acted as a diminution pro tanto of the receipts from the Excise, and so figures, in effect, in the Exchequer revenue or income table. In the case of the officials of Hampton Court the charge of their ancient fees was transferred to a rent payable nomine decimae to the Crown by the Dean and Chapter of Westminsterthese nomine decimae rents being specially (in the Act for Sale of Fee Farms) reserved from sale (see p. 458 infra). In this case also, therefore, the effect of the transaction will appear as a diminution of Exchequer revenue, not as an increase of Exchequer expenditure. The whole of this subject is brought together in the index to the present volume under the head "Fee Farms (County payments)."

From such an explanation it will be at once apparent that the effect of the transaction of the sale of Fee Farm rents of the Crown is not traceable in more than a fraction of its entirety in the tables of Exchequer income and expenditure given below. Its effect appears on both sides of the balance sheet, as an item of decrease of revenue and as an item of increase of expenditure. Further it appears or figures not under one item, but under many. The main heading under which it does appear is in the item Receivers General in the table of income. Prior to the transaction of the sale of fee farms of the Crown the Receivers General had paid into the Exchequer the following sums :

If this be taken roughly as an average net income of certainly over 12,000l. a year the diminution of income is at once apparent on turning to the table below, p. xx. From 1673 onwards the item of Receivers General yields only between 1,000l. and 1,500l a year.

But as has been already explained such a figure by no means represents the total diminution of income which the executive had to face as a consequence of the sale of fee farms. So far as I am aware no tabular statement of the transaction as a whole was ever drawn up. The statement printed below, pp. 111-2, is at once incomplete and unworkable for the reason that the transaction was not complete in 1673. The sales continued until 1679. The account in question may be condensed as follows :

From its form it will be seen that this account of April, 1673, is an estimate of the probable yield of the transaction rather than an account of its actual yield.

As a matter of fact the amount of rents thrown on to the market seems to have been too great for instant absorption. The purchase price had to be reduced from 18 to 17 years and then to 16 years for rents in possession, and finally a rebate of something like a quarter's rental had to be made from the 16 years' purchase. Even with these reductions it was impossible to force the sale, and in the end the executive was driven to (almost forcibly) apply the unsold remainder to the liquidation of debt. The loan of 60,000l. from the City, the banker Lindsay's debt of over 36,000l., and the Customs Farmers' advance money of over 187,000l. on balance, were liquidated in this way. (All the details of these several transactions are brought together in the index to the present and preceding vols. of the Calendar under the respective heads of London loan, Lindsay, J., Customs Farmers, 1671.) A final element of confusion in this very complicated transaction of the sale of fee farms was introduced by Charles's own easy-going good nature. Under the guise of fictitious sales he freely gave away blocks of fee farm rents to individuals. Treasurer Danby himself, for instance, benefited largely from such royal bounty (see pp. 541-3 infra). In their totality these grants are brought together in the index under the heading Fee Farm (grants).

Among the Duke of Leeds' MSS. at the British Museum there is one volume (Addit. MS. 28,073) devoted to the subject of the sale of fee farms. This volume contains entries of each particular contract, but in an exceedingly confused form and not strictly chronologically. With much trepidation I have attempted a re-arrangement of the entries according to counties and an abstraction of the whole as follows. If the account is complete then the conclusion to be drawn is that the total annual value of fee farms sold was something over 50,000l. (fn. 1)

The second result of the stop of the Exchequer by means of which Charles's income was lessened is easier of explanation than the transaction just described. It was not until 2 years after the stop that Charles was able to keep his promise and arrange for the payment of 6 per cent. interest on the bankers' debt. On the 23 July, 1674, a great seal was issued providing 140,000l. for 2 years' interest to the goldsmiths, viz. from 1 Jan., 1672, to 1 Jan., 1674 (see the warrant for this great seal on p. 540 infra). In calculating the sums due to each banker compound interest was allowed, that is to say, the 6 per cent. interest due at the first half-yearly period, June, 1672, was added to the principal debt as from that date, and so similarly the interest dividends due at Jan., 1673, June, 1673, and Jan., 1674. By this means Charles kept faith with the bankers as far as their interest was concerned. But this payment so arranged in 1674 was only a provisional and interim arrangement pending the permanent settlement of a specific fund for charging the interest upon. When in 1677 Charles allocated such a fund and granted the bankers annuities on the Excise, the same arrangement of allowing compound interest on the unpaid instalments of interest due from 1 Jan., 1674, to 1677, was again adopted. The unpaid instalments of interest for these 3 years, 1674-7, were added half yearly to the principal sum. In this way the amount of the principal debt owing to the bankers was by the year 1677 increased by the amount of 5 years' compound interest, viz., 2 years from 1672 and 3 years from 1674. It was on this enhanced or increased sum of principal debt that the annuities granted to the bankers in 1677 were calculated. In his own time and in his own way, therefore, Charles kept his word with the bankers as to the payment of their interest. It is necessary to emphasise this, as the idea is constantly disseminated that Charles played fast and loose with the bankers and that they were robbed of their interest after having been robbed of their capital ; whereas in matter of fact the arrangements for the payment of their interest were scrupulously honest. From the moment that the bankers received their annuities their payment was ensured and became only a matter of official routine. Tallies were made out half-yearly at the Exchequer drawn on the Excise, the tallies were delivered to the bankers and were paid by the Receivers or the Commissioners of Excise at the Excise Office. It only remains to point out two merely technical features in this transaction. (1) As the interest money was paid at the Excise Office it does not appear as an expenditure item in the Exchequer expenditure. It figures in the national balance sheet only by way of diminution of the receipts from the Excise. (2) In each banker's grant of annuity there was a covenant inserted that he would within a twelve month assign to his own creditors pro rata shares or parts of his own annuity in the proportion of the deposits of those creditors. When these assignments had been made accordingly and duly enrolled, the individual depositors or customers of the bankers became entitled to their own annuity on the Excise and received their tallies in their own name. They thus became investors in the first funded national debt of this country.

The two transactions which have been described above represent in their combined effect a diminution of Charles' income as follows :

Bearing in mind, therefore, on the one hand that this diminution of effective income would have to be faced, and on the other hand that Charles was committed irrevocably to the second Dutch war, it would seem that the task of the Lord Treasurer was a hopeless one. It may be safely asserted that such task would have been indeed worse than hopeless if the Lord Treasurer's staff had remained long in the hands of Lord Clifford. Such of the Treasury records in the present volume as cover the short period of his treasurership bear witness to the merely personal ability of this worthless, unscrupulous gamester, but of any broader administrative ability there is not a trace. His utter recklessness is amply vouched for. In Sept., 1673, Sir William Temple writes to the Earl of Essex, Lord Lieutenant of Ireland, as follows : "A little before he [Clifford] left the Treasury, upon [the occasion of] a letter [which] it seems your lordship had written to desire his inspection into that [the Treasury] of Ireland before he left the [white] staff, and an expression in it that without some methods the King would be forced to run out [exceed his income] there [in Ireland, he, Clifford] fell into a fit of raillery before the company that was there, saying among other things, my Lord of Essex would be taken for a gentleman that is resolved to live within his compass ; the good man must needs have his bread and butter meet ; but he's out of the story : we run out [exceed our income] here [in England] and he must run out there in spite of his teeth : with a good deal more of this kind which was told me by one that was there and heard it all. For aught I hear he practised as he preached, for one of his best friends told me he might be arraigned for the bounties he used in the disposal of the King's money about six weeks before he left the staff ; and all has gone at that rate that I hear by a state of the revenue lately brought in, the King will owe at the end of this month 500,000l. more than he will have to realise, and all since the stop in the Exchequer."

Ample confirmation of this gossip is furnished by the long list of money warrants and letters of direction which Clifford signed in the few days prior to the 19th June, 1673 (infra pp. 161-82).

On the latter date Clifford was succeeded as Lord Treasurer by Sir Thomas Osborne, then Viscount Osborne, of Dunblane. Anticipating his later creations (as Viscount Latimer in Aug., 1673, and as Earl of Danby in June, 1674), it is convenient to speak of him consistently as Danby.

Within an incredibly short space of time Charles's finances took on another aspect under the guidance of the new Lord Treasurer. Owing to the fact that the larger administrative side of Treasury work was shaped not in the Treasury Chambers but at the Privy Council, it is not to be expected that the more statesmanlike and comprehensive aspect of Danby's administration of the Treasury should be revealed in the Treasury records calendared in the present volume. In the Privy Council he gave his advice inter pares for a regulation of expenses : at the Treasury Chambers he merely transacted the routine side of Treasury work, signing warrants, writing letters, passing accounts, considering claims, and so forth. But throughout the record of even this merely mechanical routine work there shines the illuminating sense of a statesman consistently sound, clear headed, businesslike without ever condescending to be brilliant. That this was the impression produced by his personality upon the business community is evident from the speedy restoration of the credit of the Navy which had taken place under his tenure of the office of the Treasurer of the Navy, and it is still more evident in the view of his contemporaries as to his administration of the higher office of Lord High Treasurer of England. With the second Dutch war on his hands, towards which the Parliament had granted an inadequate supply, he still succeeded in restoring credit so far as to be able to borrow money at 8 per cent., whereas previously 10 per cent. had been paid for loans to the Government. He not merely paid the seamen in ready money, whereas previously for years they had been paid only in tickets or part tickets and part money, but he also furnished the stores with cash to enable them to make purchases at cash value instead of at 40 per cent. enhanced prices for deferred payment. And when he subsequently came to settle the claims of householders for the quarterings and nursing of sick and wounded seamen he was particularly solicitous to protect the householders from the fraud of speculators who had bought the quartering tickets at a discount. Finally he never rested until he had made a completely honest, even a generous, provision for the interest due to the bankers. In doing all this Danby was struggling not merely against the natural financial difficulties of his position, but also against the violent opposition of interested factionsa faction about the Court on the one hand which resisted his efforts at economy (see Lord Conway's letter to the Earl of Essex, dated 1674, Mar. 31, among the Essex Papers), and on the other hand a Parliamentary faction which sought his downfall.

But apart from Danby's businesslike and administrative capacity it has up to the present remained a mystery how he managed to accomplish so much. The following tables of revenue income lift the veil from this mystery and furnish a perfectly natural explanation. There is evidence in the economic life of England in the seventeenth century of that same cyclical recurrence of depression and expansion which characterises the economic life of the modern world. In the middle of its career Cromwell's Government had felt the benefit of such a period of mercantile expansion. The Restoration took place at the moment of the lowest depression following on that expansion, in fact that depression made the Restoration possible. If the course of the cycle had been normal, revival and expansion would have ensued in or about 1666 ; but two unrelated causes contributed to postpone it. In the first place Cromwell had financially bled the country to death in his ambitious policy to be strong at once abroad and at home. The financial embarrassment of Charles's Government was in some measure due to this exhaustion of the country, as witnessed in the diminished yield of the taxes. In the second place the mere accidents of the extraordinary expenses connected with the Restoration (the disbandment of the Commonwealth Army and the pay of arrears to the Navy) and the subsequent plague, fire, and Dutch war and the depletion of the currency by the exchangers all acted as forcible deterrents to postpone the return of economic expansion. The revival which should have come in 1666, therefore, only made itself felt in 1672. One contributory cause of the revival was doubtless the temporary dispersal of currency medium and of capital which resulted on the stop of the Exchequer. Prior to the stop, not merely investors' capital, but also the currency itself, had been engrossed in the hands of the bankers, and the breaking down of that dam turned both currency and capital into other and more fructifying channels.

I am not concerned with the external evidence of this revival. I am only concerned with its effect on Charles's finances and on Danby's administration. In a word, it brought Charles's income up with a bound and made him for the moment solvent. For the first time since the Restoration Charles actually received the income which Parliament had voted him in 1660. In the following tables it will be noticed that the Customs yielded over 400,000l. in 1674, and over 700,000l. in 1675. In the year Mich., 1670, to Mich., 1671, the Customs had yielded 162,000l. Similarly the Excise (which is if anything a surer indicator of internal trade activity) yielded over 750,000l. in 1674 and about 500,000l. in 1675. Its prior yield had been from 250,000l. to 300,000l. per an. These increases, therefore, much more than counterbalanced the loss of income from the sale of fee farms. As a result Charles's fixed, settled or hereditary revenue, which had been fixed in 1660 at 1,200,000l., but which had never before 1672 amounted to more than 900,000l., rose in 1674 and 1675 to over 1,400,000l. This of course is quite independent of the money which Charles received from Louis XIV, as that money was not paid into the Exchequer nor accounted for there.

These simple figures furnish the key to the mystery of the financial success of those years of Danby's Treasury administration which are covered by the present volume of Calendar. In the following tables I give in accordance with the plan consistently followed in these introductions the figures of Exchequer income and expenditure for the period in question, and the chief accounts of departmental expenditurethe latter of course in a condensed form.