Life of Edward Earl of Clarendon — Volume 02

by Sir Henry Craik

We have now to turn to another aspect of the work of this session, which concerned Clarendon much more directly, and which aroused in him not mere doubts of its expediency, but direct and deeply-felt conviction of its pernicious tendency. It is a matter which it is worth examining with some care, because it struck at Clarendon's fundamental theory of administration, and aroused in him an antipathy which may easily be misunderstood if we do not apprehend exactly what it involved.

In no sphere of administration did more difficult problems emerge after the Restoration than in that of Finance. It was then, as it always must be, the pivot upon which all constitutional questions turned; and it was this which had given to Parliament the lever by which the monarchy had been overturned. When the Restoration took place, it was natural that some of the older usages in regard to finance should be revived. Cromwell had dictated their course to those feeble figments of Parliamentary representation which he had allowed to exist, and had crushed out any financial liberties which they might be supposed to possess. A regular system of assessment, by the quarter or the month, had been laid upon the counties. The real responsibility for this had rested with local functionaries acting under the direct orders of the executive; and its regularity caused it to be submitted to without resistance. Excise had been established, as we have seen, during the Civil War, as a temporary expedient, destined to be permanent; and any sudden alteration of this would have led to financial confusion. The old system of subsidies, of which a certain number were voted according to the exigencies of the time, and the power of the Government to influence Parliament, had been abandoned. When the Restoration came, these subsidies were for a while resumed. But at the same time a regular revenue of £1,200,000 was granted to the Crown, and provision was supposed to be made for it by assigning certain taxes, and the produce of the Excise, for the purpose. But this was found to be inadequate to realize the stated income, and that income was found inadequate to meet the increasing expenditure, especially when the defence of England's commercial interests had to be maintained by a large and costly fleet. When the enormous and unprecedented grant of £2,500,000 was made to the Crown for the Dutch war, it was provided that it should be realized, not by the old method of subsidies, but by twelve quarterly assessments extending over three years. Clarendon's aim was by no means to place the Crown in a position of financial irresponsibility. He realized that Parliament had a place in the Constitution as well as the Crown, and had no desire to minimize the financial independence of Parliament, or to free the Crown from the necessity of regular resort to Parliament for such special and extraordinary grants as might be necessary. But he thought that the Crown should be provided with a regular revenue to meet ordinary expenses; and that it should be required to apply to Parliament only for any increase of that revenue if special exigencies should arise. But the revenue, so granted, should belong to the Crown, which should be free to administer it according to the judgment of the Ministers of the Crown. Parliament possessed the prerogative of making the grant, and thereby of imposing conditions upon it. But once made, the Ministers of the Crown were to be responsible for its application. Any maladministration would be subject of punishment by the Crown, or, if need be, of impeachment by the Parliament.

The abandonment of the system of subsidies almost necessarily led to another far-reaching change. Separate subsidies had formerly been granted by Parliament in respect of the nation, and by Convocation in respect of the Church. The right of making independent grants was a doubtful privilege for the Church, and would, had it continued, have caused endless confusion to the Exchequer. It was abandoned by consent. No statute abolished it. It was an old usage, but rested upon little more than usage; and it was abolished, once and for all, not by statute, but by arrangement between Sheldon and the leaders of the Church, on the one hand, and Clarendon and Southampton on the other. It was an instance of the abandonment of an ancient principle, sanctioned by the usage of centuries and intimately bound up with the relations between Church and State, by no action of the legislature, but solely by the action of the Crown. At the same time, by an almost more startling extension of the prerogative, the clergy were compensated by being allowed to take part in the election of Parliamentary representatives.

The method by which the grants given by Parliament could be made available for national expenditure had been found easy and convenient. For this purpose the help of the bankers, who were generally goldsmiths of high standing, was invoked. Clarendon gives us a detailed account of the usage. Half a dozen of the leading monied men of the city were summoned to the council chamber. They knew the amount of grant made by Parliament, and were asked to what extent they were prepared to make advances upon this amount. They did so in reliance upon the faith of the King and the Lord Treasurer, and upon the certainty that any failure to fulfil its obligations on the part of the Exchequer would inevitably lead to national loss of credit, and consequent bankruptcy. If the current rate of interest was 6 per cent., they advanced the money at 8 per cent., and counted on the 2 per cent. to recoup them. Clarendon thought the rate fair, and found the method eminently convenient. But the bankers relied solely upon the good faith and prudence of the Minister. There was nothing to prevent the King making an assignment of the revenue, as it came in, to purposes other than the reimbursement of the bankers. The only guarantee against this was the good faith of the responsible Minister and the certainty that the Crown must submit its case to Parliament should the need of further grant arise. The King had to adapt his expenditure to his revenue; but the application of revenue to any particular branch of the expenditure was, in Clarendon's view, a matter for himself and his responsible Ministers.

On more than one occasion in the past grants from Parliament had been expressly assigned to specific purposes, and such an arrangement had unquestionably much to commend it. But a long time often intervened between the making of a grant and the realization of revenue. Money had to be procured at once, and before the tax yielded revenue new needs had arisen, and new expenditure had to be incurred. The system of appropriating supplies would undoubtedly make the financial administration more mechanical, circumscribe the responsibility of Ministers, and cripple the power of the Crown in applying revenue towards pressing objects. Unforeseen savings—though these, indeed, were not an item of much importance in the financial administration of Charles's reign—could not, under such a system, be applied to new exigencies without a further warrant from Parliament. The whole system of appropriation, however defensible on the modern maxims of sound finance, was inconvenient in working, and tended to increase the dependence of the Crown on Parliament, and to diminish at once the discretion and the responsibility of Ministers of the Crown.

It was during the Parliament at Oxford in 1665 that this fundamental change in the financial system was pressed forward by the personal jealousy of that clique at Court which sought the ruin of Southampton and Clarendon. Specious arguments could easily be brought forward against the greed and extortion of the bankers, who were realizing fortunes by the loose financial administration which made the King's revenue pass through their hands, and subjected it to a heavy toll upon which they throve. Once revenue was assigned to a specific object, the credit of the Crown, it was alleged, would be enormously enhanced, and it would be perfectly easy to establish a State bank, on the model of that in Amsterdam, which would be a perennial source from which money might be drawn as required. And this facility of supply would be joined with purity of financial administration; Parliament would know exactly what was done with the money that it voted; leakages would be stopped, and peculation would cease to be possible.

The arguments were at once specious and inviting. But in truth the real motives which prompted the new proposals were jealousy of Southampton and Clarendon and personal ambition. The prime mover was Sir George Downing, that turbulent and versatile political adventurer, who had run through the whole gamut of political tergiversation, and who, as envoy to Holland, had long worried Clarendon by the pertinacity with which he had provoked the jealousy of the Dutch and had done all in his power to precipitate the war. He had contrived to secure appointment as one of the Tellers of the Exchequer, was in close confederacy with Bennet, now Lord Arlington, and was scheming with him to oust the influence of the Chancellor and the Treasurer. His perquisites, as Teller of the Exchequer, were lessened by the assignment of taxes to the bankers in return for their advances, and as the proceeds of the taxes did not pass through the Exchequer, the percentage to the Tellers was thereby diminished. The position of Lord Southampton was difficult to assail. "His reputation was so great, his wisdom so unquestionable, and his integrity so confessed, that they knew in neither of those points he could be impeached." [Footnote: Life, iii. 2.] The King was still faithful to his Treasurer, and insinuations as to his increasing age and unfitness for active business did not shake his confidence. But Southampton's enemies were strengthened by the support of Ashley, who, though his advancement was due to his relationship to Southampton by marriage, was beginning to feel that he might well rid himself of the ladder by which he had climbed, and that he himself would be a very competent Treasurer. It was only when he perceived that his confederates might not aid this ambition that he became more lukewarm in his support of their schemes.

There was at least one convenience in the present system. The facile humour of the King led him to assign revenues to suitors who had no very creditable claims to reward. It was convenient to him to shift to the Chancellor and the Treasurer the odium of refusing to endorse these grants. Their watchful jealousy against inroads upon the national resources increased the number of their enemies; but it saved the King from the irksome burden of refusal. It was speciously urged against this that the root of all the financial difficulties was

"the unlimited power of the Lord Treasurer, that no money could issue out without his particular direction, and all money was paid upon no other rules than his order; so that, let the King want as much as was possible, no money could be paid by him without the Treasurer's warrant." [Footnote: Life, iii. 5.]

It was a persuasive argument for Charles's ears. The popular pretence went only a little way. The real aim—and this it was that attracted the King— was that personal authority should be eliminated, and that he should no longer be subject to the galling supervision of the two Ministers, whose bull-dog honesty was so often inconvenient. Meanwhile the minds of the members of the House were cunningly prepared for the reception of the new design, by invectives against the bankers. They were "cheats, bloodsuckers, extortioners." Their enemies "would have them looked upon as the causes of all the King's necessities and of the want of monies throughout the kingdom." [Footnote: Ibid., p. 7.]