Published online by Cambridge University Press: 16 January 2014
Borrowing was a necessary and important part of government finance during the period from 1660 to 1688. During Charles II's reign, over twelve per cent of the government's receipts were loans paid directly into the Exchequer and, during some years, loans made up as much as one-third of the total receipts. Clearly borrowing was essential. Anticipatory borrowing, for instance, was necessitated by the very nature of government finance. With the exception of the scheduled payments made by private tax collectors, tax revenues were received by the government irregularly during the course of a year. In addition, the government's expenditure was not easily apportioned over the entire year; in most cases, large lump sums were required, and consequently it was necessary for the government to anticipate future revenue receipts by borrowing in order to meet its current expenditure obligations. Of course the government could have solved this problem by accumulating surplus revenue and using it as reserve from which large payments could be made without recourse to borrowing. But during Charles II's reign, the demands on the revenue were generally larger than the income.
Before 1688, in most cases the only guarantee a potential creditor of the government had that the loan would be repaid on time, if at all, was the vague security of the king's word. This was largely the result of the constitutional status of government finance. When Charles II was restored to the throne in 1660, there were no major changes in the constitutional status of government finance.
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