The reign of Henry VII: finance, economy and trade

Why solvency was so important to Henry VII, how the King obtained revenue and managed his finances. The economic development of England, especially the expansion of the cloth trade and the start of overseas exploration.

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The economy

Henry had inherited a bankrupt throne, yet he had to pay for the ordinary expenses (day-to-day expenses that were to be met from the king's regular revenues). In the early years of his reign they were unable to fund the extraordinary expenses (One-off expenses for wars, coronations...) of the king. Henry bqueathed a solvent treasury, which is clear evidence of competent financial management. Some historians have criticised Henry VII for being a greedy Monarch. Solvency (the monarch needed to balance his books by making sure he covered his expenses with his income. In doing so, he remained solvent) was important but less important than the development of administrative techniques that increased the power of the crown and, therefore, reduced the possiblity of large-scale rebellions. Henry appointed zealous agents to collect revenue, he double checked every thing in government and spied directly or through trusted men on this agents. Initially, Henry relied on the Exchequer (a system that ran royal finances and employed its own officials), and sub-contracted financial management to the exchequer however is was considered to be slow and less efficient. Gradually Henry decided to return to the system that Richard III had relied on, the Chamber system (financial management was part of the royal household and under the supervision of the King). From 1493, the land revenue receivers accounted to the court of the General Surveyors. Their careful supervision and thorough investigation increased the revenue fron crown lands. Annual income rose from £11,700 to £42,000.

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Sources of revenue

Ordinary revenue

- Custom duties were granted by parliament for life, they were granted by parliament for life.

- Crown lands, Revenues from lands confiscated under acts of attainder. (most important source of revenue).

- Feudal dues derived from the King's historical role as landowner who granted lands to his tenants-in-chief, escheats (inheritance tax), wardship, marriage dues (in their was an heiress) and Profits of justice (fines imposed by the King's courts).

Extraordinary revenue

Parliamentary subsidies, loans could be raised speedily from richer subjects, benevolences these were loans forced with the threat of sanction and were not repaid, bonds and recognisances, feudal obligations, clerical taxes (the church assembly matched each parliamentary subsidy.

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The domestic economy

At the end of the 15th century, England was an agricultural country. This meant that the harvest had the most economic influencing activity in the realm. The 1490's were a golden decade with 5 out of 10 harvests providing plentiful. The growing profitability of wool encouraged enterprising landowners to enclose (rearranging open fields into separate fields with fences or hedges) and to engross farms (amalgamating small farms into one larger one).Industry was dominated by the wool and cloth "industry". It remained cottage industry (small-scale. Other industries included mining tin, lead and coal; metal working; leatherwork; shipbuilding and paper building. England was a trading nation, however between 90 and 95% of trade was internal. England's primary trading relationship was with Burgundy because of the European cloth trading centre in Antwerp. In 1493 a drastic embargo on trade with Burgundy was politically necessary because Maximilian had backed Perkin Warbeck. There was relatively little crown-directed economic growth or change over the reign of Henry VII. It seems that he was interested in reforming the coinage for both economic and political reasons. He introduced a shilling piece which was the first ever coin to have a true portrait of the King. In 1485 and 1489 Henry passed Navigation Acts, these specified that English ships and crew had to be used in certain trades to encourage English shipping and shipbuilding. Henry did little for the English navy, in 1488 they only had five ships. Eleven less than Edward VI.

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