5.4 how important were williams wars in the development of a financial revolution?

Question 1

6 themes as to how important were williams wars in the development of a financial revolution?

Answer 1

nine years war
restructuring of government finances
public expenditure scrutiny
commissions
bank of england 1694
recoinage

Question 2

who was the nine years war between

Answer 2

france vs league of augsburg

Question 3

why did the nine years war come about

Answer 3

fear france would dominate european policies

Question 4

why was the nine years war such a shift in politics

Answer 4

transformation in british foreign policy (compared to james2)
risk on williams behalf to commit millions of pounds and thousands of troops to the cause
war strained king and parliament relations

Question 5

why was louis at an advantage to william

Answer 5

he had divine right behind him

large numbers of troops

Question 6

when and why and how did support wain for william

Answer 6

post 1691
parliament became less suportive
only voted him funding for 10,000 troops
merchants were getting frustrated at hostilities around north sea trading roots

Question 7

what did william do in the face of little parliamentary support

Answer 7

william recruited 68,000 men at cost of £2.8 million through borrowing from bank of england (newly formed)
william continued to face opposition in parliament and consequently took many strategic decisions himself
entered peace talks 1696 but france refused to accept him as king

Question 8

how did the nine years war end

Answer 8

both sides bankrupt 1697
william facing increasing opposition from tories and non-junto whigs
wanted army reduced in size to 7,000 and taxes used for the war should be reduced
settement finally reached = Treaty of Ryswick september 1697

Question 9

settlement under treaty of Riswick

Answer 9

french abandon claims to land in germany and holland
louis accept william as king
french made gains in north america

Question 10

what was the average expenditure during nine years war

what was the average tax revenue during the nine years war and how was this higher taxation level achieved

Answer 10

£5.4 million
£3.4 million
-excise taxes on tea, tobacco and alcohol
- land tax
- royal income doubled
- landed elite most likely to pay tax and as it was easy collected suggests they approved of the war? as anti catholic?

Question 11

how was the shortfall in funding of the nine years war bridged

Answer 11

new system of public credit
crown take out a long term loan from merchants and city traders
repay them with interest
effectively selling off the governments debt
this would become national debt
was a secure debt as underwritten by parliament
1698 stood at £16.7 million, repayments accounted for 30% of the governments revenue

Question 12

civil list act what was it and when

Answer 12

1698 = a financial settlement
king given a civil list income of 700,000 pa with any surplus granted at parliaments consent
money for williams government, civil servants and royal household
all military and naval expenditure the responsibility of parliament
civil list had to be voted on every year so king and parliament had to meet regularly

Question 13

how public scrutiny of government finances began

Answer 13

concern from back benchers over money being spent on war
led to parliamentary commissions being set up to investigate government expenditure
commissioners would then publish reports exposing corruption / waste

Question 14

what could the newly set up parliamentary commissions do and why was this important?

Answer 14

power to interrogate ministers
power to scrutinise government papers and spending
= holding government to account

Question 15

what was the act called which set up the parliamentary commissions

Answer 15

Public accounts act 1690

Question 16

why did william agree to the public accounts act 1690?

Answer 16

he saw it as the price he had to pay to ensure funding for his wars

Question 17

when was the first commission set up and when did they end

Answer 17

1691

1697 (because the war had ended

Question 18

how was it ensured the commissioners remained neutrak

Answer 18

each commissioner paid £500 (a lot of money so hard to bribe)
were responsible to parliament rather than the king

Question 19

evidence to show the commission was effective

Answer 19

went into huge detail
meetings took place daily and interviews were regularly carried out
gov officials would often try to obstruct the process
many reports were left unfinished but it was made clear who had obstructed the report
william was generally happy to listen and it compelled him to shrink the army down from 10,000 to 7,000
speaker was exposed for accepting bribes
towards the end lost some of its weight as it began to attack unfavourable minsters rather than check finances

Question 20

who came up with the idea of the bank of england and in general which party supported it

Answer 20

Whig Chancellor Charles Montagu

had large whig support

Question 21

financial borrowing leading up to the establishment of the bank of england

Answer 21

1692 - parliament becomes interested in schemes of long term borrowing
1693 - tontine loan to the crown
banks and merchants raised loans for government by offering depositors guaranteed interest underwritten by parliament
william then needed a loan of £1.2m at 8% Montagu suggested establishing bank of england which would incorporate all lenders into a single financial institution

Question 22

how would the bank of england work

Answer 22

purpose was to raise capital and attract investors

all loans underwritten by parliament at a guarenteed interests (so risk free)

Question 23

how was the bank of england established (under law)

Answer 23

Royal charter granted the passage of the tonnage act 1694
bills of exchange issued to depositors
initially given as £100 but soon turned into smaller denominations (eg £5)

Question 24

apart from the bank of england, how else did the crown try to raise money

Answer 24

lotteries with winners drawn at random

Question 25

recoinage act

when and why

Answer 25

1696

to counter inflation as a result of coin clipping - restored confidence in coins but this didnt last long

Question 26

what was the significance of parliamentary control of finance

Answer 26

distinction between military and civil expenditure
parliament controlled military (way to hold crown at ransom in future?)
king had no choice but to meet with parliament regularly
parliament able to audit government expenditure
1698 civil list meant king could never again avoid working with parlament