The financial settlement

The financial impact of the Nine Years War

  • William brought England into the Nine Years War on the side of the Dutch.
  • Spending increased drastically.
  • Average annual expenditure on the war £5.4 million. 
  • The average tax revenue was £3.6 million.
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The revolution in Crown finances

  • To pay for the war, a land tax was introduced in 1692 and yielded £1 million in the first year.
  • New taxes on imported items such as tea, tobacco, and alcohol/ 
  • Still not enough to meet the shortfall in funding the war, so the Crown resorted taking out long-term loans from merchants and City traders and paying them back with interest.
  • In 1693 William received a loan from investors of £108,000 and paid the loan back at an interest rate of 10%.
  • Other loans were arranged in 1694, and in 1697 a 'malt lottery' was created, whereby benefits were paid to investors from excise taxes on malt.
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The Bank of England, 1694

  • The Bank of England was created in 1694. 
  • This was a vehicle to secure loans for William. 
  • Investors in the Bank were given the authority to deal in bills of exchange, which were given by the bank as £100 bills.
  • These were effectively Bank notes, and in exchange for depositing their money, investors were given proceeds from excise duties.
  • This system of public credit led to the creation of the national debt, which stood at £16.7 million in 1698. 
  • Repayment took up around 30% of the Crown's annual revenue. 
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The Civil List, 1698

  • The Civil List was passed in 1698.
  • This gave William a fixed income of £700,000 per year to meet the expenses of his government, including the salaries of civil servants and judges, as well as meeting the expenditure of the royal household. 
  • King and Parliament had to meet regularly in order to renew the Civil List for the following year.
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Parliamentary control of finance

Concerns among MPs about the huge sums of money being spent on the war led to a number of parliamentary commissions being set up. 

  • In 1690, William agreed to the Public Accounts Act and the first commissions were set up in 1691.
  • The commissions were the forerunner to modern-day select committees within Parliament.
  • They had the power to interrogate ministers and call for papers from the government.
  • The commissioners published reports which could expose corruption and waste at William's court. 
  • The scrutiny was carried out with unprecedented attention to detail. Meetings took place daily and interviews were regularly carried out, although government officials would often obstruct the process. 
  • The commissions became increasingly used to attack unpopular government ministers in the second half of the 1690s, and high profile MPs, such as the Speaker, Sir John Trevor, were expelled for financial malpractice. 
  • The commissions were renewed each year until 1697 when William blocked more from being established.
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