Introductory

THE details of the annual Exchequer receipts and issues ¹ may be approached either analytically or historically : ² they may be examined in their present implications or expounded by reference to their origin and development. If the latter method be adopted the items and amounts suggest contrasts which serve to indicate the main changes in the history of public finance. The historian would probably first apply to the figures the distinction between tax and non-tax revenue, and he would discover the fact that the former now enormously exceeds the latter. He would recall that in the Middle Ages the maxim that “ the king should live of his own” was constantly appealed to as a guarantee against taxation in normal times. The theory was that the king had non-tax sources of revenue, consisting chiefly of the rents of Crown lands, the feudal dues, and the profits of justice, which supplied him with sufficient income to discharge the ordinary functions of government. Taxation was regarded 2as exceptional ; a device only to be resorted to when special circumstances, such as the expenses of a war, demanded it. This distinction between revenue strictly so-called (which was a non-tax annual income) and taxation (which was an extraordinary charge imposed by Parliament at irregular intervals) survived until the seventeenth century. But it was already becoming a little blurred during the Tudor period, for a variety of causes contributed to make the non-tax revenue inadequate. While the expenses of government were growing progressively heavier the yield of the various sources of revenue was shrinking. For instance, the grants of Crown lands to individuals, in order to reward their services or to secure their support, tended to outrun the rate at which land reverted to the Crown by forfeiture or escheat. Consequently, the annual rental was not maintained. Fines and fees were usually fixed in amount and with the rise in prices in the sixteenth century they depreciated in value. The inevitable result was a more frequent use of taxation. Financial embarrassment was at the root of most of the difficulties experienced by James I and Charles I, and the attempts of the latter to discover new sources of income were largely responsible for the friction between him and Parliament which led to the Civil War. In that struggle the traditional system was destroyed. Crown lands were extensively sold during the interregnum and the feudal dues were abolished at the Restoration. Meanwhile new experiments had been made. In 1643 John Pym introduced the excise, a form of tax well known on the Continent but regarded with great disfavour in England. Accepted as a war tax, it gained for itself a permanent place, and provided a revenue which compensated for the loss of the feudal dues.