Exchequer

EXCHEQUER. An English name for an accounting depart ment, used of private as well as of public institutions, but more commonly of the government office receiving and having the care of the public revenues. (Lat. Scaccarium, a chess-board or, deriv atively, a counting table and, from that, an accounting depart ment.) As the name of a Government department, we cannot say whether "Exchequer" is older than the i 2th century. The Treas ury, with which it was in practice joined, dates from before the Conquest and those officers of the Exchequer who were drawn from the Treasury staff can be traced back to Domesday. The word came quite early to be applied to the two jointly, the "lower" Exchequer, or "Receipt," closely connected with the per manent Treasury, being an office for the receipt and payment of money, while the "upper" Exchequer (the scaccarium proper) was a court sitting twice a year to regulate accounts and closely related to the Curia Regis, and is thus probably on the Norman pattern. The lower Exchequer was conditioned in its develop ment by the use of tallies (see TALLY) ; the upper, as its name implies, was based on the use of the abacus, or counting-board, for reckoning, such a contrivance being almost universal before the introduction of Arabic numerals, which did not become com mon in England till the 16th century. Our earliest information about the Exchequer itself, apart from that afforded by the pipe rolls, rests on a treatise (Dialogus de Scaccario) written in the latter part of the reign of Henry II. by Richard, bishop of London and treasurer of England. His father, Nigel, bishop of Ely, had been treasurer to Henry I., and nephew of that king's great finan cial minister, Roger, bishop of Salisbury. Nigel is said to have reconstituted the Exchequer after the troubles of Stephen's reign upon a model inherited from his uncle.

The Angevin Exchequer.

The sessions seem at first to have been confined to the actual times when the court sat at the "chess-board," round which were grouped the "barons," officials and accountants. At the head of this table were the great officers of State ; except the treasurer, who sat on the right with the Exchequer clerks below him : on the left was the calculator, and at the bottom appeared the officials whose accounts were to be audited. Of the officers of State, the justiciar was normally the president, in the king's absence; the chancellor was responsible, as keeper of the seal, for all writs and summonses ; the two chamberlains, lay colleagues of the treasurer, shared with him the duty of receiving money and keeping the records and other contents of the Treasury ; the marshal, a subordinate of the con stable, was responsible for the custody of prisoners and of the accountants' vouchers. The treasurer charged accountants with their debts and dictated the great roll of accounts ("pipe roll"), which was written by his scribe, the chancellor's scribe copying from this a duplicate (the "chancellor's roll"). The calculator worked out the sums on the Exchequer table (abacus) by means of counters. Other subordinates were the Magister Scriptorii and the chancellor's clerk (later chancellor of the Exchequer) who settled the form of all writs and summonses, charged the sheriff with all fines and amercements, and acted as a check on the treasurer in the composition of the pipe roll.

In

the lower Exchequer (the "Receipt"), the staff was divided between the treasurer and chamberlains, the clerical members being under the former, the lay under the latter. The money brought in by the royal accountants was counted by the "four tellers," weighed by the "pesour" (a knight) and assayed by the "melter," receipts being recorded by means of wooden tallies cut and split by the tally cutter, one half going to the payer while the other was retained at the Exchequer to prevent fraud. Record of moneys issued was mainly secured by filing the warrants for payment (writs under the great seal) as they were honoured. Early in Henry II.'s reign written records of the tallies (rudi mentary receipt rolls) began to be kept in addition to the originals; issue rolls were also used later for money paid out, but the old tally and warrant system continued throughout the his tory of the department. At the Receipt the treasurer was repre sented by a clerk (later clerk of the pells), and each of the cham berlains by a knight (later the "chamberlains of the receipt") ; these three had joint control of the Treasury. In both upper and lower Exchequers were ushers.

The business of the ancient Exchequer was mainly financial, though some judicial business connected with the accounts was also done. The principal accountants were the sheriffs, who were bound, as the king's chief financial agents in each county, to give an account of their stewardship twice a year, the state of their accounts being "viewed" at Easter, when they made their first "proper," and audited on the pipe roll at Michaelmas. The fixed revenue consisted of the farms of the king's demesne lands within the counties and of certain boroughs which paid annual sums as the price of their liberties. Danegeld, though regarded as fixed revenue, was infrequently levied of ter Henry II.'s accession, but there were rents of assarts and purprestures, mining and other royalties. The casual revenue consisted of the feudal incidents (escheats, wardships and marriages), of the profits of justice (amercements, and goods of felons and outlaws) and of fines or payments made by the king's subjects to secure grants of land, wardships and marriages, and of immunities, and to hasten (or sometimes to delay) justice. Besides these there were the revenues arising from aids and scutages of the king's military tenants, tal lages of the Crown lands, customs of ports and special "gifts," or general assessments made on particular occasions. For the collec tion of all these the sheriff was primarily responsible, though in some cases debtors and accountants dealt directly with the Exchequer and were bound to make their appearance in person on the day when the Sheriff accounted.

The farms of demesne lands were originally for the most part paid in kind (though payments in assayed silver are found in Domesday Book), but at some date, possibly in the administra tion of Roger of Salisbury, the inconvenience of the earlier arrangement led to payment in cash. The rapid deterioration of a small silver coinage gave rise to attempts at maintaining the value of cash payments, first by a scale reduction for wear, then by substitution of payment by weight for payment "by tale," and finally by the reduction of payments of most farms of the shire to their pure silver value by means of an assay. The casual revenue was still paid by tale, and for the determination of its amount it was necessary for the Exchequer to receive copies of all grants made in the Chancery on which rents were reserved or fines payable : these were known first as contrabrevia and later as originalia. The profits of justice were notified by the delivery of similar "estreats" from the justices' records from an early date; and, while for certain minor casualties the oath of the sheriff was at first perhaps the only security, later they were frequently determined by means of inquisitions. Exchequer busi ness might be transacted anywhere in England; the original meet ings were at Winchester, later they took place at Westminster as a rule but occasionally, even in the 14th century, elsewhere.

Developments in the 13th and 14th Centuries.—The Angevin "course" remained the ideal of the Exchequer for six cen turies : and its lineaments were never completely effaced, though the vast increase of business soon meant that the machinery had to be stretched if it was not to break down. Great officers of State ceased to attend personally: even under Henry II. we gather that all, except the treasurer and chancellor, had deputies: and under Henry III. the chancellor was represented by his clerk who became "chancellor of the Exchequer." On the other hand new officials emerge, notably the four permanent official barons and the king's and lord treasurer's remembrancers. Two "memoranda rolls" of these remembrancers survive for John's reign and show that the Exchequer already sat regularly except during vacations, that memoranda were made of business reserved for attention at subsequent sittings, and that this business had begun to be arranged systematically. During the 13th century their functions, originally very similar, became gradually differentiated, the memoranda rolls developed so that they formed a complete record of a large part of the Exchequer business, and by the Ordinance of 1323-26 the remembrancers' precise duties were defined. Henceforward the king's remembrancer was more particularly concerned with the casual, the treasurer's with the fixed revenue: the former put all debts in charge, while the latter saw to their recovery, when they had found their way on to the great roll. Hence the preliminary stages of each account, the receiving and registering of the king's writs to the treasurer and barons and the drawing up of all particulars of account, lay with the king's remembrancer, and he retained the corresponding vouchers, a collection which, though much diminished, is still one of excep tional size, diversity and interest. The treasurer's remembrancer exacted the "remanets" of such accounts as had been enrolled, as well as reserved rents and fixed revenue, and so became closely connected with the clerk of the pipe. Before the end of the century these three offices had separated into different de partments.

Judicial Procedure at the Exchequer.

We must turn aside here to mention a 13th century development at the Exchequer which was only indirectly concerned with accounting. By about 125o convenience had led to the establishment of something like separate machinery, and definitely separate records for legal cases which arose out of accounts and which, in the earliest times, we find among the ordinary memoranda. In the case of Jewish affairs we have a curious mixed arrangement by which, though receipts from Jewish sources passed through the ordinary machinery of the lower Exchequer, there was apparently no recognized organization for audit. In these circumstances a special Scaccarium Judaeorum, whose records are known to us as the Jewish plea rolls, dealt with most of the financial business, other than that of actual receipt, and at the same time acted as a court for the trial of all cases, both Crown and civil, in which Jews or Jewish business were concerned. The point of contact with the Exchequer was that, all Jews and their property being at the absolute disposal of the Crown, no case arising from their business was without a potential interest for the royal financial administration. Parallel to this was the organization of a depart ment of pleas which, while it had nothing to do with financial business covered by the ordinary machinery of the memoranda roll, and nothing with normal "pleas of the crown," relieved pressure by taking cognizance of the increasing bulk of dis putes arising out of the conduct of the royal accounting together with all cases affecting Exchequer officials. The Scaccarium Judaeorum ended with the expulsion of the Jews in 129o, but the Exchequer of Pleas, though it continued to be staffed by Exchequer officials, became a court of civil pleas like any other and was ended only by the Supreme Court of Judicature Act of 1873.

Other Modifications in Exchequer Machinery.

To return to the 13th century—the increasing length and variety of accounts led to various other efforts at reform besides those already men tioned. Even before Henry II.'s death, two problems had become apparent : the great roll had to be cleared of "desperate," or bad, debts in the twenty-eighth and thirty-third years, and the rapidly increasing number of amercements in the various courts was clogging the whole machinery. The 13th century saw a strenuous effort to meet the new conditions : its stages are marked by the reforms of 1236-42 (no statute), and the statutes of 127o and of Rhuddlan in 1284; its termination by the codification of Exchequer practice (already well established in many respects) in the Stapledon Ordinances, 1323-26. By 1242 the farms of the counties and boroughs had been re-valued and the demesne lands removed from them and let to farm for a term of years ; the estreats were no longer entered on the great roll in detail, the sheriff being charged on each estreat roll and only actual payments recorded on the great roll itself ; while a new form of tally allowed the sheriff to pay large totals into the Exchequer in his own name instead of having to get a tally for every small debt. This simplified work at the Exchequer enormously: the machinery had stretched. The statute of 1270 codified the new procedure with regard to estreats; that of 1284 dealt with farms of counties, the new form of tally and, after earlier experiments, established a special "exannual roll" in which desperate debts were recorded, in order that the sheriff might be reminded yearly without their overloading the pipe roll.

But these were not the only changes in the 13th century. Thus, we note the appearance of a new system of anticipating revenue, sheriffs being frequently ordered to pay out locally the greater part of their receipts; and the "assignment" of tallies for moneys not yet paid in became common and was a feature of Exchequer procedure throughout its subsequent history. Again, under Henry III. and his son a large accession of financial business arose from the "foreign accounts," that is to say, the accounts of national services which, naturally, were not included among those of the counties and which under Henry II. had not formed part of Exchequer business; for in his reign such expenses as appeared on the pipe roll were paid by sheriffs or by bailiffs of "honours," and the spending departments frequently drew their supplies only indirectly from the Exchequer, though in the course of the following (13th) century the Exchequer gradually acquired partial control of these national accounts. Finally we have to record the appearance before 1242 of "escheators," and from then onwards the accounts of these and of the officials of the customs, subsidies and wardrobe also occupy an increasingly important position in the national revenue. During the reign of Edward I., the wardrobe account became unmanageable, since it not only financed the household, army, navy and diplomatic service, but received money direct from accountants without its passing through the Exchequer. (See WARDROBE.) Enough has been said to show that the 13th century was a period of rapid growth in many directions, and the reform of 1323-26, referred to above, codified and rounded off those already in existence. It greatly increased the number of "foreign ac counts" by making the great wardrobe (the storing department), the butler, purveyors, keepers of horses and clerk of the "hana per" of the chancery (who took the fees for the great seal) and the various ambassadors, directly accountable to the Ex chequer. At the same time the sheriffs' accounts were expedited by further simplification of the great roll, and by the appointment of a special "foreign apposer" to take the account of the "green wax," or estreats, so that two sides of the sheriff's account could be dealt with simultaneously. An extra baron was also appointed to cope with the increase of business but this was only a tem porary expedient and the fifth, or cursitor baron, does not appear as a permanent official until James I.'s reign. The whole busi ness of foreign accounts was transferred to a separate building where one baron and certain auditors spent their whole time in settling the balances due on the accounts already mentioned, as well as those of royal lands not let to farm, of Wales, Gas cony and Ireland, of aids (clerical and lay), of temporalities of vacant bishoprics, abbeys, priories and dignities, of silver and tin mines, of ulnage and so forth. The balances on these were accounted for in the Exchequer itself, and arrears still entered on the pipe roll, but the preliminary accounts were filed by the king's remembrancer, and the actual accounts enrolled separately by the treasurer's remembrancer on the "roll of foreign accounts," a supplement to the pipe roll.

Reform in the rest of the 14th century apparently worked along the lines laid down in 1323-26, with the addition of some attempts about 136o to draw up something like a balance sheet of revenue and expenditure—a notion foreign, in general, to mediaeval accounting methods.

End of the Mediaeval Period.

The next important change came at the end of the 15th century, following a period during which assignment and other expedients for patching up the royal finances ran wild and the issue roll ceased to exist. It was inaugu rated by Henry VII., who introduced summary methods of audit in certain connections, while carefully and personally supervising receipt and expenditure. In the next reign the dissolution of the monasteries led to the setting up of independent financial bodies —the Courts of Augmentations and of First Fruits—with wide powers and with new methods: and although these, in became departments of the Exchequer, a new act set up in 156o, in addition to the exchequer auditors, two new and independent "auditors of the prests" (predecessors of the commissioners for auditing public accounts, who were set up in 1785), to take certain specified accounts, such as those of clerks of the works, the treasurer of ships and the master of the ordnance, the clerks of the hanaper and of the great wardrobe and (later) the customs. These new authorities followed improved methods of auditing, though it was only by degrees that the various stages of "de claring" an account were worked out and the final stage of devel opment was not reached until the treasurership of Juxon (1636-41). By the end of the 17th century a system had been evolved of "declaring" at the Treasury accounts presented in triplicate, one (on paper) being returned to the office of the auditors, while of the other two (on parchment) one went to the accountant and one was passed for enrolment through the offices of the two remembrancers to that of the clerk of the pipe, in order to secure the levying of any "remanets" or "supers" by process of the Exchequer.

Modern Developments.

It will be observed that by this device the connection with the old Exchequer machinery was maintained, though in effect the control over public accounting, asserted with so much trouble in the 13th and 14th centuries, passed from it to the Audit Office. Similarly when, in the 17th century, the other great step towards modern methods was ac complished by the putting of the office of treasurer into com mission, the old machinery of the lower Exchequer, with its tallies, receipt rolls and a multitude of added apparatus, continued to function under the direction of the new body. This survival of the old machinery continued for 15o years and there were even additions of new administrations to which the name of Exchequer attached; there was, for instance, an Exchequer court of equity, established in the reign of Elizabeth, whose registrar was the king's remembrancer; and in the same reign there was added to the Exchequer's departments one for the audit of land revenue. It was not until the 19th century that a series of acts swept away one by one all these departments leaving only the name of the Exchequer and those of one or two of its officials as relics of the past.

Of these acts the most important from our point of view was that of 3 and 4 William IV. cap. 99; this by removing the sheriffs' accounts from its competence ended the series of pipe rolls and in effect destroyed the last vestige of that Scaccarium with which the tale began. (H. JE.; M. H. M.) The Exchequer Act, 1834, swept away the cumbrous mediaeval procedure and the expensive sinecures that had survived at the exchequer till then. A simplified system of accounting was adopted; the great triple-locked chests in which the public money had been put away became unnecessary when accounts were opened at the Banks of England and Ireland for the Consolidated Fund ; and for the work which remained to be done a single comptroller of the exchequer with a small clerical staff sufficed, the comptroller's duty being to see that sums were issued from the Consolidated Fund only to the amounts and for the purposes authorized by parliament.

For a long time the greater part of the issues from the ex chequer had been made not by way of final payment to the people entitled to public money, but by way of advances to the pay masters of the departments concerned (the paymaster general of the Forces, the treasurer of the Navy and others), though a few payments (chiefly salaries and pensions) had continued to be made direct from the exchequer. After 1834 these direct pay ments ceased, and all issues from the Consolidated Fund were made to the paymasters and similar intermediaries. In 1836 the paymaster general of the Forces, the treasurer of the Navy and the treasurer of the Ordnance were amalgamated into one post, and in 1848 this post was combined with the paymaster of civil services into a single paymaster general for all voted services. Since then departments have drawn upon the paymaster general for their expenditure as if he were their banker; the drafts are often for advances to officers (sub-accountants) who are respon sible for making the actual payments.

Exchequer and Audit Department, 1866.

The business of authorizing issues from the exchequer in conformity with par liamentary authority, whatever its constitutional importance, did not make work for a separate department. As a result of the rec ommendations of the Select Committee on Public Moneys (1856 57), while the functions of the exchequer were maintained sub stantially as under the act of 1834, the department was amalga mated with the audit department by the Exchequer and Audit Departments Act, 1866. In the constitutional system the same kind of independence was required of the comptroller of the ex chequer as of the head of the audit office, who had to conduct the appropriation audit and discover ex post facto whether the ex penditure of public departments had been in conformity with the terms of the parliamentary votes placed at their disposal.

At the head of the new Exchequer and Audit Department was placed a Comptroller General of H.M.'s Exchequer and Auditor General of the Public Accounts. He is appointed by, but is not a servant of the Government ; he is a statutory officer with respon sibilities primarily to parliament, but also, in respect of some of his functions as auditor, to the Government.

The Consolidated Fund.

All the revenue and the proceeds of loans and other public receipts (with certain very restricted exceptions) have to be paid to the Consolidated Fund (originally created by an Act of 1787). Consequently all the expenses of Government have to be met from that fund, which is in the hands of the exchequer; whence balances to its credit at the Banks of England and Ireland (formerly at the Head Office in Dublin, now at the Belfast Branch) are commonly called the exchequer balances. Issues cannot be made from the exchequer account at the Bank of England without the consent of the comp troller and auditor general, and that consent he gives only by authority of parliament. Parliament is thus in a position to stop the machinery of Government by refusing supplies, and can there by enforce its will on the Government. But for the intervention of an independent officer, the Government might go on spending in defiance of a parliamentary refusal of supplies, leaving the illegality to be reported long after on completion of the audit.

In order to safeguard certain services from the hazards of a political vote, permanent statutory authority is given for the exchequer issues required for them. These, known as Consolidated Fund services, include the national debt charges (interest, ma turities and sinking fund), the king's civil list, the salaries and pensions of the judges, and some other items. The issues for the internal debt are the more effectually safeguarded in that they are made direct to the Bank of England (or of Ireland) without passing through the hands of the executive Government at all.

"Ways and Means" and "Supply..

The rest of the ex penditure is provided for by annual votes. When parliament votes and appropriates money, it is really attaching conditions to the issue of money from the exchequer. In parliamentary pro cedure the two processes, the authorization of issues and the ap propriation of the sums to be issued, are kept distinct. The former is initiated in Committee of Ways and Means, and the latter in Committee of Supply. The resolutions in Committee of Ways and Means have in themselves no operative effect. The comp troller and auditor general will only allow issues from the ex chequer on the authority of an act of parliament. An act (called the Consolidated Fund Act) is always passed before the 1st April (when the new financial year begins) authorizing the issue of a sum equal to the vote on account and any other vote previously passed in Committee of Supply. The credit or power given by act of parliament to the Government to draw money from the exchequer is commonly called "Ways and Means." Appropriation Act.—It is a constitutional convention that the issue of money from the exchequer is never authorized by this procedure without the purposes to which it is applicable being prescribed by parliamentary votes. The votes are regarded as operative even when they are no more than resolutions re ported from Committee of Supply. But that is only so up to the end of the session, and therefore before the prorogation by which the session is ended there must be an act (the Appropriation Act) giving statutory authority for all the votes in supply. The Appropriation Act grants Ways and Means exactly sufficient, with those authorized by the Consolidated Fund Act (or Acts, for there are sometimes several), to meet the expenditure authorized by all the votes in supply of the session, and it then proceeds to direct the appropriation of the issues from the exchequer in ac cordance with the votes (set out at length in schedules). It is the regular custom always to grant Ways and Means equal to the supplies voted. But there is no constitutional reason why the Ways and Means should not be less.

The Treasury (fortified with a "royal order" under the king's sign manual) applies to the exchequer for issues of money as and when required, and, in applying, specifies the particular vote or Consolidated Fund service for which each sum is destined. But this is a mere expression of intention; the treasury is not bound actually to spend those particular suns in the manner indicated. They are merely advances to the paymaster general. The Gov ernment must conform strictly to parliamentary authority, as ex pressed in the acts charging the Consolidated Fund and in the votes in Supply, but only in its expenditure as a whole, and this conformity is enforced by the comptroller and auditor general not through his control of exchequer issues but through his sub sequent audit. In complying with an application for issues from the exchequer, he is concerned only to know that statutory au thority exists for the total amount of the issues applied for.

Parliamentary "Doles..

Parliament may be regarded as doling out money to the Government by means of the Consoli dated Fund Acts and the Appropriation Act, each successive in stalment giving the Government so many months of life. The responsibility of the Government to parliament is so well recog nized that the very purpose of exchequer control, as the consti tutional sanction of parliamentary government, is apt to be f or gotten or overlooked. Occasionally a Government (like the Lib eral Government engaged in 1910 in a conflict with the House of Lords) may deliberately ask for Ways and Means in small in stalments in order that the House of Commons may keep a hold over a possible alternative Government, but this is rare.

Apart from its constitutional purpose exchequer control pro vides incidentally a very convenient index of the state of the public finances. As all receipts from revenue and loans are paid into the exchequer, and the money for public expenditure is is sued out, the exchequer receipts and issues at any stage of the financial year show substantially the financial position up to date. Since the practice is to indicate the sources of the receipts under the principal heads of revenue (customs, excise, death duties, stamps, income tax, supertax, etc.) and the application of the issues to the several Consolidated Fund services and votes, it is possible to compile a detailed account showing the progress of each head of revenue and expenditure. But this account would differ from a true account of revenue and expenditure on account of variations in the balances held on the one hand by the revenue departments and • awaiting payment into the exchequer, and on the other hand by the paymaster general and the sub-accountants of all the public departments and awaiting expenditure.

The Annual Balance.

For the purpose of calculating the surplus or deficit for the year, revenue and expenditure are cal culated on the basis of exchequer receipts and exchequer issues. The justification for this convenient practice (which makes the surplus or deficit finally ascertainable on the very day the financial year ends) is that balances are invariably kept down as low as is practicable. In fact a change in balances when it occurs may be regarded as a real financial requirement of the public service on the same footing as actual expenditure, and it is quite right to budget for such a change. To show the amount of the surplus or deficit, the receipts and issues on capital account (such as the raising and repayment of loans, and expenditure chargeable by special acts to loans) are shown separately from those items which properly belong to the revenue and expenditure of the year. The new sinking fund (1923) is included in the expenditure, and since 192o any further net sum applied from revenue to the re duction of debt has been similarly treated. Formerly a surplus used to be applied to the redemption of debt after the financial year in which it was realized, and this was not included in ex penditure.

On any voted service the Government cannot spend more than parliament has allowed and may spend less, and any foreseen excess is covered by supplementary votes, accompanied by grants of the corresponding Ways and Means. On the votes as a whole there are invariably savings, the total of which is substantial. Therefore a part of the Ways and Means is not needed, and in the absence of parliamentary appropriation cannot be put to any legitimate use. The practice is to "surrender" these balances to the exchequer. Where possible this is done by a process called "write-off." The exchequer is deemed to issue a sum equal to the balance to be surrendered, and at the same time the paymaster general is deemed to have paid an equal sum from the vote to the exchequer. The settlement is effected by book entries without any actual payment. The result is that the exchequer issues approxi mate to the true expenditure from votes.

The issues for the purposes of any vote on which the savings in the year are substantial are kept down approximately to the amount actually needed ("short issue"), but where the savings are small the whole amount voted is usually issued. The sur render of balances by write-off can only be completed in the following financial year when the audit has disclosed the exact amount of the savings.

The discrepancy between the account of revenue and expendi ture derived from the exchequer receipts and issues, and the true account disclosed by the ultimate audit, while by no means negligible, is not ordinarily large. But during the World War and for some years afterwards the inclusion of huge commercial ac counts in the financial system resulted in exaggerated differences. The following comparison shows the position for a series of years (in f millions) :