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Article Excerpt
Discussions of sovereign immunity assume that the Constitution contains no explicit text regarding sovereign immunity. As a result, arguments about the existence--or nonexistence--of sovereign immunity begin with the English and American common-law doctrines. Exploring political, fiscal, and legal developments in England and the American colonies in the seventeenth and eighteenth centuries, this Article shows that focusing on common-law developments is misguided. The common-law approach to sovereign immunity ended in the early 1700s. The Bankers' Case (1690-1700), which is often regarded as the first modern common-law treatment of sovereign immunity, is in fact the last in the line of English common-law decisions on sovereign immunity. After (and in part because of) the Bankers' Case, settling claims against the Crown became a function of Parliament, swept up within its newly won powers over finance and appropriations. After examining comparable developments in the American colonies and during the Confederation period and the formation of the Constitution, the Article demonstrates that the Appropriations Clause embedded in the Constitution the principle of congressional supremacy--and a resulting lack of judicial power--over monetary claims against the United States, a point recognized by early cases and commentators. As such, the Appropriations Clause provides a textual basis for the federal government's immunity from suits on claims seeking money damages.
TABLE OF CONTENTS INTRODUCTION I. ENGLISH ANTECEDENTS A. Sovereign Immunity in England Before 1776 B. Financing Government: The Foundation of Parliament's Constitutional Preeminence 1. The Gathering Storm: Finance Before the Stuarts 2. The Stuarts and the Struggle for Parliamentary Supremacy 3. Finance After the Stuarts C. The Bankers' Case and Its Aftermath II. THE AMERICAN EXPERIENCE WITH APPROPRIATIONS A. Following the English Example: Colonial Legislatures and the Control over Appropriations B. Post-Revolutionary' Legislative Supremacy over Appropriations C. The Appropriations Clause 1. The Constitutional Convention 2. Ratification Debates D. Closing the Loop: The Appropriations Power and Sovereign Immunity CONCLUSION
INTRODUCTION
At a certain level of abstraction, historical arguments for and against sovereign immunity have a common quality. Those who use history to argue against the existence of a constitutional basis for sovereign immunity point to procedural devices by which the Crown could be sued--such as the petition of right, the monstrans de droit, and the traverse of office (1)--to infer that sovereign immunity did not exist in absolute form in English common law from the Middle Ages on; the argument by extension is that no such doctrine existed in the U.S. Constitution at the time of the founding. (2) For those who argue for reading sovereign immunity into the Constitution, by contrast, the limitations of these devices--including the need for the Crown's formal consent to suit, the lack of remedies for the torts of the Crown, and the cumbersomeness and infrequency of suit (3)--point toward an immunity in English law that cemented itself in the interstices of the Constitution. (4) These opposing positions share three commonalities. First, appeals to historical evidence often distill a complex history into a monolithic "yes" or "no" answer to the question of American sovereign immunity. Second, historical arguments focus principally on the common law, (5) ignoring English political and financial history that also bears on the question. Third, both sides agree that the appeal to history is necessary because the Constitution itself is silent on the existence--or nonexistence--of sovereign immunity. (6)
In this Article, we seek to dislodge these assumptions. In the American system, the permutations created by three independent variables (federal vs. state immunity, damages vs. injunctive relief, and suits against the sovereign vs. suits against officials) yield eight distinct categories of immunity. (7) This Article focuses on the central category: suits brought against the United States for damages. Incorporating contemporaneous developments in English politics and economics, and in American colonial history, we provide the context in which to understand the constitutional foundation for this type of federal sovereign immunity. (8)
In doing so, we recover an early understanding of sovereign immunity--suggested by St. George Tucker (9) and Joseph Story (10)--that the immunity of the United States from damage actions has an explicit source in the Constitution: the Appropriations Clause, which bars the expenditure of money "but in Consequence of Appropriations made by Law." (11) Among Americans who knew the history of Parliament's rise to political preeminence and recollected the resistance of colonial assemblies to royal governors, (12) the Clause was a political given. Its "power of the purse" was intended as the counterweight to the President's "power of the sword." (13)
The move made by Tucker and Story was to recognize that the third branch of government--the judiciary--fell within the reach of the Appropriations Clause. Their move is plausible, but hardly required. There is an evident distinction between entering a judgment against the United States and appropriating its funds; the lack of the latter power does not necessarily imply the lack of the former. (14) Indeed, although courts have occasionally noted the link between the Appropriations Clause and federal sovereign immunity, (15) the references are sparse, short, and usually not substantive. Academic commentary is similarly thin; the few scholars who have considered the connection have generally failed to be impressed with it. (16)
The burden of this Article is to show that the connection between sovereign immunity and the appropriations power is stronger and closer than is usually believed. Part I examines the histories of sovereign immunity and appropriations in England; it focuses particularly on the seventeenth century, when the ideas of parliamentary sovereignty, fiscal control, and sovereign immunity underwent significant development and ultimately intersected in the Bankers' Case. (17) The Bankers' Case, a set of lawsuits that wound through the English courts from 1690 to 1700, figures prominently in accounts of some opponents to sovereign immunity because it permitted an action that arose from a breach of contract by the Crown. (18) We describe the way in which the Bankers' Case must be understood against the backdrop of Parliament's rise to preeminence in the English constitutional order--a rise rendered successful only by Parliament's control over appropriations. Part II examines the analogous American history during colonial times, at the time of the Constitutional Convention, and during the early years of the Republic. We demonstrate that, during the eighteenth century, the constitutional preeminence of legislatures in determining governmental appropriations--a preeminence that the Appropriations Clause embedded in the Constitution-supplanted the common law as the basis for sovereign immunity. We conclude by considering the implications of this thesis for the doctrine of sovereign immunity.
I. ENGLISH ANTECEDENTS
This Part begins by sketching England's five-hundred-year history of sovereign immunity prior to the American Revolution. We then describe a more contested constitutional conflict--supremacy between the Crown and Parliament--whose outcome turned on the question of government finance. We end by describing how these two currents in English legal, political, and economic history merged at the start of the eighteenth century into a principle of legislative supremacy over appropriations--a principle that requires a reinterpretation of the standard account of sovereign immunity in England.
A. Sovereign Immunity in England Before 1776
Compressing the history of English sovereign immunity into a few pages is a difficult task, made easier only by a number of excellent prior treatments. (19) The main lines of the history are clear enough, although some judges and scholars have not been sufficiently attentive to its nuances and context to extract modern salience.
We begin with an uncontested point: from the thirteenth century forward, it was possible to sue the Crown. In the earliest days, when the lines of adjudicatory authority blurred in a soup of "proto-courts"-councils such as the early Parliament and quasi-administrative tribunals over which the King himself sometimes presided--all requests for royal justice, including requests to bring suit against the Crown, began as petitions that passed before the King and Chancellor. (20) Over the course of the centuries, the process for bringing suit against private individuals became routinized; obtaining a writ--the document necessary to commence a case in one of the three common-law courts (Common Pleas, King's Bench, and the Exchequer)--was no longer a matter of royal grace but a ministerial function handled within the Chancery. (21) The same became true for invoking the jurisdiction of the Chancery, which operated the alternate system of justice known as equity. (22)
Bringing suit against the Crown, however, never lost the original quality of a respectful request for royal aid. Because the King's courts were constituted by, and therefore regarded as inferior to, the King himself, the notion that courts could as a routine matter entertain suits against the King was unimaginable. (23) But subjects could always petition the King for his permission to hear their claims against him. (24) Soon distinctions among petitions emerged. On the one side were petitions issued as a matter of royal grace or discretion; on the other were petitions of right. (25) Petitions of right claimed, in essence, that the petitioner's interests had been injured in such a way that, had the action involved a private defendant rather than the Crown, the petitioner would have had a legal claim. The petition of right asked the Crown to submit itself to the laws that applied to private persons. With the standard notation, "Let right be done," (26) the King usually endorsed such petitions. Indeed, the well-known phrase "The King can do no wrong" did not carry, as it did in later days, (27) the implication that the King was immune from legal process; to the contrary, the aphorism meant that the King was incapable of being a party to injustice and would therefore consent to suits when his actions harmed the legal interests of a subject. (28) Although obtaining permission to sue the Crown was never as routine as obtaining a writ to sue a private party, (29) suits against the Crown were unremarkable.
Equally uncontested is the elasticity of the judicial system in fashioning processes for resolving these suits. Although the petition of right emerged as an early mechanism for holding the Crown accountable, it possessed certain shortcomings. For instance, a petition of right only authorized a commission to investigate the merits of the claim; if the commission found in favor of the petitioner's right, the petitioner still needed to take additional steps to bring the case into court. (30) The Crown enjoyed procedural advantages not available to ordinary litigants. (31) Indeed, because of the delays and complexities in the petition of right, the courts developed other, streamlined processes for the most common disputes involving the Crown. As these processes--the monstrans de droit, the traverse of office, and the writ of liberate--became popular, (32) the petition of right fell into disuse. (33) At the start of the eighteenth century, in the Bankers' Case, the House of Lords blessed yet another process--the issuance of a writ against the barons of the Exchequer--when neither the monstrans de droit nor the traverse of office was available and the petition of right was not requested. (34) Indeed, by the mid-eighteenth century, Blackstone declared confidently that "the law ha[d] provided a remedy" to subjects should the Crown "invade their rights, either by private injuries, or public oppressions." (35)
But this history, which appears to refute the existence of a foundational English (and, by extension, American) immunity in the years before the American Revolution, tells less than the complete story. First, the Crown retained a special place in the legal order. Although the monstrans de droit did not require the Crown's consent, (36) the petition of right--a more generally useful remedy--did; and however liberally it might have been granted, consent was never a given. (37) In addition, the writ of rege inconsulto provided a means for the Crown to suspend proceedings against it; (38) sometimes judges waited for a command from the Crown to proceed with a case. (39) More generally, although views of the Crown's constitutional prerogatives changed through history, (40) the King always had a sphere of independent authority on which neither Parliament nor the courts could intrude. (41) Nor did ordinary rules of law always apply to the King Blackstone argued that contract actions against the King succeeded not as a matter of legal right but only because "no wise prince will ever refuse to stand to a lawful contract." (42) Blackstone further admitted that some "public oppressions" of the King lay beyond legal remedy. (43) Likewise, Locke (and Blackstone, who followed Locke's reasoning) thought that tort suits against the King were impermissible because their potential for mischief to the "peace of the public, and security of the government" outweighed the need to compensate individuals injured by the King's personal wrongdoing. (44)
Second, nearly all of the cases in which the Crown was amenable to suit involved "real actions"--the branch of the common law that dealt with rights in real property. The Crown's willingness to be a defendant in these actions was both logical and necessary. In medieval England, land was the measure of wealth, status, and power. (45) Smith, who held land in fee (in other words, free of feudal obligations to others), would grant Jones possession of the land in return for Jones's agreement to provide rents or other services to Smith; thus, Smith became the lord and Jones the vassal. (46) In turn, Jones would subdivide possession of the land between Green and Black in exchange for their agreement to provide Jones rents or services; Green and Black became Jones's vassals, and Jones their mesne lord. Green and Black might then do the same to others. The "incidents of tenure," or obligations that ran between lords and vassals, established a latticework of relationships that wove together the economic, social, and political fabric of English feudal life. At the top of the pyramid was the Crown, of whom all land was originally seised (according to the prevailing political theory). (47) It was essential that the Crown be a party to these real actions, for otherwise it might be impossible to determine proper feudal relationships. In some cases, the Crown might have a direct interest in a dispute over tenure. (48) In other cases, the principal dispute lay between private parties; the interest of the Crown was remote or contingent. (49)
Over time, however, the incidents of tenure gave way; and after Parliament abolished the last incidents in 1660, (50) the most common ground for suit against the Crown no longer existed. Although other real actions remained, (51) no general theory of sovereign liability existed. The Crown was subject to an action for the payment of money in some early cases. (52) But because the common law did not develop a general theory of contractual obligation until the seventeenth century, (53) these cases do not support an overarching view of the Crown's liability for breach of contract. (54)
Third, in a way that our modem sensibilities have difficulty comprehending, procedural form dominated substantive thinking at common law. (55) The question was never whether the sovereign should be liable, the question was whether a form of action existed to hold the sovereign liable. (56) The monstrans de droit and the traverse of office streamlined real actions against the Crown; they provided neither monetary recovery nor a procedure to sue the Crown generally. After these remedies developed, the petition of right-a broader but more cumbersome form that could in theory have been the procedural vehicle for recovering money from the Crown--fell into desuetude, not to be resurrected until the nineteenth century. (57) We have already mentioned the lack of any writ by which the Crown could be held responsible for its torts. (58) Thus, although procedures existed to hold the Crown accountable in specific situations, no generally applicable process held the Crown responsible for its wrongdoing. Given the lack of ready procedure, any modern effort to tease from the historical material a general, substantive theory of sovereign liability is misguided.
Finally, the few cases in which damages might have been awarded against the Crown involved a restriction that is of critical, although overlooked, importance: they were filed in the Court of Exchequer. Like all royal courts, the Exchequer began as an administrative wing of the Crown. (59) But unlike the other royal courts, the Exchequer never completely lost its duality as agency and court. In its administrative capacity, the Exchequer served as the treasury into which royal revenue flowed and from which funds were disbursed. In its judicial capacity, the Exchequer served as the tribunal that held accountable those who collected revenue, and that adjudicated the liability of those who did not provide revenue that the Crown argued was due. Because it controlled the revenue, the Exchequer was the logical place for a subject to file a monetary claim against the Crown. (60)
By locating claims against the Crown in the Court of Exchequer, the legal system effectively made these claims a part of the machinery of government finance. We now turn to the history of financing the English government, and show how the struggle between the Crown and Parliament for fiscal control, which became the cornerstone on which modem constitutional democracy was built, requires a reinterpretation of sovereign immunity.
B. Financing Government: The Foundation of Parliament's Constitutional Preeminence
Chapter 12 of the Magna Carta seems an unlikely fountainhead for either modem constitutional democracy or modem sovereign immunity. By agreeing that "[n]o scutage nor aid shall be imposed on our kingdom, unless by common counsel of our kingdom," (61) King John limited the Crown's power to raise revenue and injected the "common counsel" (that is, Parliament) into the process of financing government. But Chapter 12 also harbingered a power struggle that ended, more than 475 years later, with Parliament wresting control of government finance from the Crown. With such power came political supremacy.
1. The Gathering Storm: Finance Before the Stuarts
In the beginning, Chapter 12 affected only a portion of government finance. Until the eighteenth century, the Crown had two basic sources of revenue. The first was the hereditary revenue, which included rents from Crown lands and other income. (62) Some of this revenue was the Crown's by right; the new monarch inherited it. (63) The remainder of the hereditary revenue was vested upon the King or Queen for life upon accession to the throne. (64) The Crown was expected to "live of its own"--in other words, to use the hereditary revenue to pay for both the expenses of the royal household and the costs of government, including support of the navy. (65)
If an expense could not be met from the hereditary revenue, the Crown needed to rely on the second source of funding: taxes. These were the "aids" that, under the Magna Carta, required Parliament's approval. (66) As a general rule, "taxes were intended as exceptional grants to meet the extraordinary necessities of the crown." (67) These necessities typically involved wars. (68) Although it occasionally appropriated funds only for specific purposes, (69) Parliament rarely sought to control how the King used tax revenues. (70)
Over time, the Crown's hereditary revenue was unable to keep pace with inflation, increasing emoluments, an expanding civil service, and the rising costs of government. (71) As a result, the Crown began to apply more frequently to Parliament for funding. (72) Taxes that the Crown had previously justified as necessary for an extraordinary circumstance were often applied to meet the ordinary, ongoing expenses of government. (73) In the time of Henry VII (1485-1509), English subjects complained that the government deceptively raised threats of war to obtain parliamentary grants that it used for other purposes. (74)) But Henry VII and the subsequent Tudors were generally able to avoid provisions in the grants that appropriated money for specific purposes. (75) Under Henry VIII (1509-47), tax revenue paid for such standard items as stables, gifts, and the household expenses of princesses Mary and Elizabeth. (76) By the reign of Elizabeth I (1558-1603), the Crown paid a large percentage of regular, peacetime government costs out of tax receipts. (77)
Had it not been for its role in granting funds to the Crown, Parliament-the prototype of the modern democratic legislature--might well have ceased to exist. As it was, Parliament met irregularly, convening when the Crown, facing a financial crisis, called it into session. (78) The financial circumstances needed to be dire, for convening Parliament was often an unhappy event for the Crown. As early as the thirteenth century, Parliament established the principle that it would discuss its grievances against the Crown before approving a levy; and within a century, it insisted that the Crown agree to remedy these grievances. (79) Parliament's control over extraordinary grants thus became the source--indeed, the only source--of its power over royal action. In reality, even this degree of control depended largely on the popularity and political skill of the Crown. (80)
2. The Stuarts and the Struggle for Parliamentary Supremacy
The accession of the Stuarts upon the death of Queen Elizabeth set the stage for the political storyline of seventeenth-century England: the emergence, by century's end, of Parliament's constitutional preeminence over the Crown. (81) The struggle between the Stuarts and Parliament ranged over many issues, including religion, the degree of Scottish independence, and the divine rights of kings. (82) But there was, above all, the problem of money. The Crown's precarious finances and Parliament's increasing willingness to assert control over royal action through control of the purse eventually propelled Parliament into a predominant position. (83)
The Crown was deeply in debt when James I (1603-1625) came to the throne, and his failure to maintain Elizabeth's tradition of frugality exacerbated matters considerably. (84) Hopes that the rising debt might be paid from future budget surpluses or generous parliamentary grants were neither realistic nor fulfilled. (85) The conundrum facing the Stuart kings was that "[p]arliamentary discussion of grants carried the distasteful corollary of attempted extension of parliamentary power, which eventually might, and ultimately did, lead to parliamentary control of appropriation." (86) For instance, the Commons of 1621 and 1624 sought to dictate key aspects of foreign policy and military strategy. (87) The latter forced James to accept the Subsidy Act of 1624: an appropriation scheme that required money granted for war to be paid to treasurers, appointed by and responsible to Parliament, who would ensure that the funds were spent as Parliament specified. (88)
Upon his accession, Charles I (1625-1649) had repeated disputes with Parliament over money. The Parliament of 1625 sought to exercise its power of the purse by limiting the duration of Charles's grant of customs duties to one year. (89) Likewise, the Parliament of 1626 refused to vote supplies for war against Spain until Charles addressed its grievances (to which Charles responded by dissolving Parliament and resorting to arguably unconstitutional revenue-raising mechanisms). (90) Most significantly, the Parliament of 1628 forced Charles to accept the Petition of Right, by which he acknowledged that no person could be compelled to make a "Guift[,] Loane[,] Benevolence[,] Taxe or such like Charge without comon consent by Acte of Parliament." (91) Sometimes described as one of the three most important constitutional documents circumscribing monarchial power, (92) the Petition of Right theoretically hogtied the King's legal authority to raise money on his own.
Whatever its historical significance, however, the Petition of Right had no impact on Charles's behavior. (93) The Parliament of 1629 ended in turmoil. Unhappy with the session, challenged for allegedly violating the Petition of Right, and refusing to have his royal officers questioned, Charles summarily ordered Parliament to adjourn and dissolved it eight days later. (94) It would be the last Parliament for eleven years. (95)
Teetering on the brink of constitutional irrelevance, Parliament was saved only by Charles's eventual inability to finance his government. He faced inflation and increasing costs of governing. (96) The costs of maintaining the military had risen dramatically. (97) Scotland was an additional drain on royal finances. (98) Charles had become caught in a cycle of deficit financing; past obligations paid from current revenue left little for present expenses and necessitated borrowing against future income. (99)
Charles tried various means to generate revenue to compensate for the lack of parliamentary grants. (100) He instructed his lawyers to find devices to raise revenue. (101) He reinstituted compulsory knighthood for certain land-owners, thus requiring them to pay fees. (102) He resurrected ancient forest rights and fined those who could not prove title. (103) He granted monopolies and special favors. (104) In 1635 he extended the collection of ship money, which was traditionally levied against seaports to supply ships and funds for the navy, to inland counties. (105) And in 1636 he used the same levy again, demonstrating that ship money was no longer a wartime measure, but a questionable, and potentially permanent, tax. (106)
Ship money and other fundraising artifices caused widespread ill will in England. (107) From Charles's perspective at the time, however, they were successful. He restored financial solvency, (108) and increases in taxes and reductions in expenditures even produced a surplus beginning in 1637. (109) Had England been the only country for Charles to rule, he might have retained control, ruled as an absolute monarch, and consigned English democracy to the dustbin of history. (110) But England was not Charles's only country.
In 1638 Scotland rebelled in the face of the effort of Charles and bishops of the Church of England to "Anglicanise" the Scottish Church. (111) In 1639, in what came to be known as the First Bishops' War, Charles organized an army without having consulted Parliament and marched to the Scottish border. (112) After brief skirmishing with the Scottish rebels, Charles agreed to their demands and withdrew. (113) The underlying issues were not resolved, and Charles was finally forced to summon Parliament to approve the aid necessary to coerce the Scots. (114) Because Parliament refused to provide funds until its grievances were redressed, however, Charles summarily dissolved it after three weeks, earning it the title of the Short Parliament. (115) He then embarked on another campaign against Scotland without parliamentary support. (116)
The army Charles sent against Scotland for the Second Bishops' War was underfunded, mutinous, poorly armed, and, by the time of the fighting, out of pay. (117) Facing such a force, the Scots attacked into England. On August 28, 1640, they won the Battle of Newburn and then captured an undefended Newcastle and its London coal trade. (118) The fighting ended with an agreement that required England to pay 850 [pounds sterling] a day for the Scottish army's keep until a permanent settlement was reached. (119) This agreement also left the Scottish army in possession of some English counties as security for the payment. (120)
Without a parliamentary grant, Charles could not pay the Scots, "and if he failed to keep his engagements and they elected to march on London, there was no armed force strong enough to stop them." (121) Therefore, he had no choice but to call Parliament into session. (122) Already in a weak position, Charles lacked the personal and political skills to preserve the Crown's financial independence or, ultimately, his own life. (123) Parliament met on November 3, 1640, and did not dissolve until 1660 (the Long Parliament). (124) That twenty-year period saw an Irish Rebellion; two English civil wars; the execution of Charles I; wars with Scotland, Ireland, the Dutch Republic, and Spain; the near-dictatorial rule of Oliver Cromwell; and the rise and fall of both the Commonwealth (1649-53) and the Protectorate (1653-60). (125)
In its initial phase, from 1640 until 1642, the Long Parliament showed that it well understood the source of its political power and took action that put it more firmly in possession of the purse. (126) It enacted legislation that precluded the King from assessing ship money, (127) restored the boundaries of the royal forests, (128) outlawed compulsory knighthood, (129) and limited customs duties to those approved by Parliament. (130) With this legislative package, "[t]he Long Parliament had now succeeded in preventing [the King] from obtaining any more money without common consent ... and ... in making itself indispensable in the State." (131)
After Cromwell's death in 1658 and a brief period of confusion, the Cavalier Parliament of 1660 restored the Stuarts to the throne. Charles II (1660-85), the son of Charles I, received from Parliament "the royal title, the royal property, and nominally the royal prerogative." (132) In return, he promised a general amnesty, freedom of religion, security of property acquired during the disturbances, and back pay for the army. (133) In addition, he acknowledged as valid the parliamentary acts of 1641 and 1642 that, among other things, had given Parliament the power of the purse. (134)
For the time, this power remained a limited one. The Cavalier Parliament still "meant that the king should 'live of his own.'" (135) Parliament did not direct how Charles II should spend his permanent revenue (the hereditary income and lifetime grants). (136) And with some exceptions, (137) it did not direct how the Crown should spend the temporary supplies it granted.
Nevertheless, Parliament's changes in the terms under which Charles II was to "live of his own" created a new arrangement whose full implications would be realized thirty years later. In 1660 Parliament abolished the last of the feudal incidents that produced revenue for the Crown. (138) Parliament replaced this ancient hereditary revenue with a hereditary grant of excise duties; (139) then, it replaced the remainder of the Crown's revenue with other excise duties and with customs duties that it bestowed on Charles II for life. (140) With Charles's acquiescence to this financial settlement, which was estimated at 1,200,000 [pounds sterling] per year, (141) Parliament "possessed an indisputable sovereignty in legislation and taxation." (142) For now, however, "the disbursement of revenue was still within the domain of Prerogative." (143)
For a number of reasons--among them, that he was a man "who liked his fun, thought Puritanism no religion for a gentleman, and acted accordingly" (144)--Charles II was unable to govern on his revenue and often requested additional supplies from Parliament. (145) Parliament typically controlled Charles's expenditures by keeping the supplies inadequate rather than specifying the authorized uses of the money. (146) In 1665, however, when it granted a supply for a war against Holland, Parliament included an appropriation clause that required the entire sum to be spent on the war. (147)
As a result of his ongoing financial difficulties, Charles resorted to mortgaging the realm's future. Charles obtained loans from numerous financiers against his promise to repay them out of the revenue for future years. In 1667, to forestall these financiers' demands for immediate repayment, Charles issued a proclamation under which "his Majesty [would] hold firm and sacred" his "inviolable" obligations to repay these loans. (148) He ordered the Chancellor, Treasurer, and officials in the Exchequer to "observe the same, as they [would] be answerable to his Majesty at their utmost perils." (149) After making good for five years, however, Charles's desperate need for money to finance a war with Holland led him to order a "stop" on the Exchequer--a suspension of payments to the bankers. (150) The matter was resolved in 1677, when Charles granted the bankers annuities paying six percent per annum in perpetuity, (151) to be paid out of the hereditary excise that Parliament had granted. (152) But the Crown again stopped payment in 1683, and payments remained in arrears when the Bankers' Case commenced in 1690. (153)
3. Finance After the Stuarts
With the Bankers' Case, the questions of parliamentary supremacy, fiscal policy, and sovereign immunity collided. Before we examine that case, however, it is necessary to relate briefly the political and fiscal history of the rest of the seventeenth and eighteenth centuries. When James II (168-588) came to the throne, his hereditary revenue, plus the lifetime revenue granted on his accession, amounted to 1,500,000 [pounds sterling] per year; Parliament then granted James further revenues for a term of years that brought his income above 1,900,000 [pounds sterling]--an amount that was sufficient, in James's frugal hands, to make the Crown financially independent of...
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