The gradual way in which the several provinces were brought
under the general tax system, and the equally gradual extension
of Roman citizenship, account further for the irregularity and
increased weight of the taxes; as the absence of publicity and
the growth of autocracy explain the sense of oppression and the
hopelessness of resistance so vividly indicated in the literature
of the later Empire. Exemptions at first granted to the
citizens were removed, while the cost of local government which
continually increased was placed on the middle-class of the
towns as represented by the decuriones, or members of the
municipalities.
The fact that no ingenuity of modern research has been able to construct a real budget of expenditure and receipt for any part of the long centuries of the Empire is significant as to the secrecy that surrounded the finances, especially in the later period. For at the beginning of the principate Augustus seems to have aimed at a complete estimate of the financial situation, though this may be regarded as due to the influence of the freer republican traditions which the reverence that soon attached to the emperor’s dignity completely extinguished.
In addition to its value as illustrating the difficulties and defects that beset the development of a complex financial organization from the simpler forms of the city and the province, Roman finance is of special importance in consequence of its place as supplying a model or rather a guide for the administration of the states that arose on its ruins. The barbarian invaders, though they were accustomed to contributions to their chiefs and to the payment of commodities as tributes or as penalties, had no acquaintance with the working of a regular system of taxation. The more astute rulers utilized the machinery that they inherited from the Roman government. Under the Franks the land tax and the provincial customs continued as forms of revenue, while beside them the gifts and court fees of Teutonic origin took their place. Similar conditions appear in Theodoric’s administration of Italy. The maintenance of Roman forms and terms is prominent in fiscal administration. But institutions that have lost their life and animating spirit can hardly be preserved for any length of time. All over western Europe the elaborate devices of the census and the stations for the collection of customs crumbled away; taxation as such disappeared, through the hostility of the clergy and the exemptions accorded to powerful subjects. This process of disintegration spread out over centuries. The efforts made from time to time by vigorous rulers to enforce the charges that remained legally due, proved quite ineffectual to restore the older fiscal system. The final result was a complete transformation of the ingredients of revenue. The character of the change may be best indicated as a substitution of private claims for public rights. Thus, the land-tax disappears in the 7th century and only comes into notice in the 9th century in the shape of private customary dues. The customs duties become the tolls and transit charges levied by local potentates on the diminishing trade of the earlier middle ages. This revolution is in accordance with—indeed it is one side of—the movement towards feudalism which was the great feature of this period. Finance is essentially a part of public law and administration. It could, therefore, hold no prominent place in a condition of society which hardly recognized the state, as distinct from the members of the community, united by feudal ties. The same conception may be expressed in another way, viz. by the statement that the kingdoms which succeeded the Roman Empire were organized on the patrimonial basis (i.e. the revenues passed into the hands of the king or, rather, his domestic officials), and thus in fact returned to the condition of pre-classical times. Notwithstanding the differing features in the several countries, retrogression is the common characteristic of European history from the 5th to the 10th century, and it was from the ruder state that this decline created that the rebuilding of social and political organization had to be accomplished. On the financial side the work, as already suggested, was aided by the ideas and institutions inherited from the Roman Empire. This influence was common to all the continental states and indirectly was felt even in England. Each of the great realms has, however, worked out its financial system on lines suitable to its own particular conditions, which are best considered in connexion with the separate national histories.
Running through the different national systems there are some common elements the result not of inheritance merely but still more of necessity, or at the lowest of similarity in environment. Over and above the details of financial development there is a thread of connexion which requires treatment under Finance taken as a whole. As the great aim of this side of public activity is to secure funds for the maintenance of the state’s life and working, the administration which operates for this end is the true nucleus of all national finance. The first sign of revival from the catastrophe of the invasions is the reorganization of the Imperial household under Charlemagne with the intention of establishing a more exact collection of revenue. The later German empire of Otto and the Frederics; the French Capetian monarchy and, in a somewhat different sphere, the medieval Italian and German cities show the same movement. The treasury is the centre towards which the special receipts of the ruler or rulers should be brought, and from it the public wants should be supplied. Feudalism, as the antithesis of this orderly treatment, had to be overthrown before national finance could become established. The development can be traced in the financial history of England, France and the German states; but the advance in the French financial organization of the 15th and 16th centuries affords the best illustration. The gradual unification operates on all the branches of finance,—expenditure, revenue, debt and methods of control. In respect to the first head there is a well-marked “integration” of the modes for meeting the cost of the public services. What were semi-private duties become public tasks, which, with the growing importance of “money-economy,” have to be defrayed by state payments. Thus, the creation of the standing army in France by Charles VII. marks a financial change of the first order. The English navy, though more gradually developed, is an equally good illustration of the movement. All outlay by the state is brought into due co-ordination, and it becomes possible for constitutional government to supervise and direct it. This improvement, due to English initiative, has been adopted amongst the essential forms of financial administration on the continent. The immense importance of this view of public expenditure as representing the consumption of the state in its unified condition is obvious; it has affected, for the most part unconsciously, the conception of all modern peoples as to the functions of the state and the right of the people to direct them.
On the side of receipts a similar unifying process has been accomplished. The almost universal separation between “ordinary” and “extraordinary” receipts, taxation being put under the latter head, has completely ceased. It was, however, the fundamental division for the early French writers on finance, and it survives for England as late as Blackstone’s Commentaries. The idea that the ruler possessed a normal income in certain rents and dues of a quasi-private character, which on emergency he might supplement by calls on the revenues of his subjects, was a bequest of feudalism which gave way before the increasing power of the state. In order to meet the unified public wants, an equally unified public fund was requisite. The great economic changes which depreciated the value of the king’s domain contributed towards the result. Only by well-adjusted taxation was it possible to meet the public necessities. In respect to taxation also there has been a like course of readjustment. Separate charges, assigned for distinct purposes, have been taken into the national exchequer and come to form a part of the general revenue. There has been—taking long periods—a steady absorption of special taxes into more general categories. The replacement of the four direct taxes by the income tax in France, as proposed in 1909, is a very recent example. Equally important is the growth of “direct” taxation. As tax contributions have taken the places of the revenue from land and fees, so, it would seem, are the taxes on commodities likely to be replaced or at least exceeded by the imposts levied on income as such, in the shape either of income taxes
