subsidy to 10%. French goods became liable to surtaxes, first of 25%,
afterwards of 50%; those of other countries had to pay similar charges
of smaller amount. Spirits, wines, tea and coffee were taxed at special
rates. How great was the expansion of the fiscal system may be best
realized from the fact that during the comparatively short reign of
William III. (1689-1702) the land tax produced L19,200,000, the customs
L13,296,000, and the excise L13,650,000, or altogether L46,000,000. In
the last year of the reign, the opening one of the 18th century, the
returns from these taxes respectively were: land tax (at 2s.), L990,000,
customs L1,540,000, excise L986,000, or a total exceeding three and a
half millions. The removal of the regular export duties in respect of
(a) domestic woollen manufactures, (b) corn, was the only alleviation of
taxation, and in both cases it was due to special reasons of policy.

Quite as remarkable as the growth of revenue is the sudden appearance of
the use of public loans. In earlier periods a ruler had accumulated
treasure (Henry VII. left L1,800,000) or had pledged "his jewels or the
customs or occasionally the persons of his friends for the payment" of
his borrowings. Edward III.'s dealings with the Florentine bankers are
well known; but it was only after the Revolution that the two conditions
essential for a permanent public debt were realized, viz.: (1) the
responsibility of the government to the people, and (2) an effective
market for floating capital. At the close of the war in 1697 a debt of
L21,500,000 had been incurred, over L16,000,000 of which remained due at
William III.'s death. Connected with the public debt is the foundation
of the Bank of England (see BANKS AND BANKING), which more and more
became the agent for dealing with the state revenue and expenditure;
though the exchequer continued to exist until 1834 as a real, even if
antiquated institution.

Thus it is clear that by the end of the 17th century the new influences
which date from the Civil War had brought into being all the elements of
the modern financial system. Expenditure, revenue, borrowing to meet
deficiencies are all, in a sense, developed into their present-day form.
Increase in amount and some refinements in procedure, combined with
improved views of public policy, are the only changes that occur later
on.

Regarded broadly, the 18th and 19th centuries exhibit several distinct
periods with definite financia