"Financial Revolution" And The Development Of England Politics (1660-1763)

Between the late 17th Century and the mid-18th Century, Britain’s state expenditure increased dramatically for the development of state institution, the expansion of administrative function and the enlarging war cost in this period, therefore the urgent need for money prompted the revolutionary changes of British financial system In this "financial revolution", England was not only transformed into a "tax state" completely, but also established a national debt system which laid the security guaranteed by parliamentary tax and Britain rose to a "fiscal state" gradually.The "financial revolution" does not only mean remarkable financial achievements which include the foundation of the Bank of England, the beginning of a national debt and the emergence of a stock market which were its, behind these far-reaching innovations laid the security guaranteed by a sovereign parliament within which the power of the purse was unchallengeably rooted in the House of Commons and the sound tax system. Therefore, the "financial revolution" should include three aspects:the parliamentary financial power, tax system and national debt.In the history of England, the drastic struggles between the Crown and parliament for the financial power ended with the victory of the parliament in the late 17th century, until when, however, the parliament had not yet completely controlled the national finance. The "financial settlement" in 1690, the evolution of Civil List and the development of administrative institutions of the central finance after the Glorious Revolution not only eliminated the king’s privileged income of "domain state" in the Medieval and the early Modern times, separated the royal income from state revenue, but also enabled the parliament to control and review the national revenue and expenditure, therefore the parliamentary financial power gradually improved in this process.This transformation also had an impact on the political development at the same time that it strengthened the power of the parliament and further confirmed the principle of "Parliamentary Supremacy"The tax system of England also improved greatly in the "financial revolution", and a modern tax system was set up. In 18th century, the custom, excise and the land tax had become the regular tax, and were the major source of revenue;the proportion of indirect tax which mainly included custom and excise in the revenue were increasing; the means of tax collection had been transferred from tax farming to the government tax directly, and conduct bureaucratic. Thus, compared with other contemporary European countries, England had the most efficient civil administration department in tax and financial sector. However, the tax and the expansion of the bureaucracy both made a threat to the "freedom" which had been established since the Glorious Revolution. Walpole’s excise proposal and the crisis it aroused in 1733 reflected people’s concern on this issue at that time.The modern financial system with the core of national debt is undoubtedly the most remarkable achievement in the "financial revolution":the reform and innovation of institution and loan in the Restoration laid the foundation for the emergence of a national debt after the Glorious Revolution; the national finance was in combination with personal capital as the establishment of the Bank of England and the rise of stock market, which ensured the circulation of the national debt; the good running of the national debt laid the security guaranteed by the government credit which was improved by a sovereign parliament and a sound tax system. The new financial products and system also deeply affected the society of 18th century that the contemporary political commentators disputed and criticized the innovations, and the emerging "financial interests" in the "financial revolution" were seeking for political support, whose political influence was shown in the change of government in 1710 and the following general election The rise of "financial interests’" contributed to the conflict of parties, and the political debate also promoted the development of the theory of party thought in the meantime.The "financial revolution" is a landmark in the history of Britain. It not only affected the development of political system and political thought, but also provided the economic base for Britain’s strong foreign policy. The efficient tax system and national debt enhanced the capacity of financial draw and strengthened the military power of Britain in time of wars, and accelerated it to become a "fiscal-military country". Britain won the victory in the hegemony war between Britain and France by virtue of its strong financial support; on the contrary, the dated financial system of contemporary France weakened its military power, which was the key factor leading to the collapse of the ancient regime.