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The Lancastrian Debt Crisis

Portrait of Henry VI

In the summer of 1449, England’s truce with France broke down. The Hundred Years’ War resumed with a vengeance.  The Lancastrian regime desperately needed money to pay for the defence of their beleaguered French possessions.  But there was no money.

In November 1449, the Lancastrian government announced to a shocked parliament that royal debts had reached the staggering sum of £372,000.  A fiscal crisis that had been brewing for years now came to a head.  Worse still, it came to a head at precisely the same time as a resurgent France was in the process of overrunning English held Normandy.

The regime was in crisis.

Debts

Of course, no one can fight a war without money and, by 1449, money was the one thing that Lancastrian England lacked.  Without money there could be no armies.  Without armies England’s French possessions would surely fall.

But the truth was that royal debt had been mounting for some considerable time.  Even before Henry VI had been old enough to assume the reins of power, the previous regency government had accrued debts of £165,000 by 1433.  By 1449 it had grown to £372,000.  Given the state of royal finances, the ability of the crown to adequately fund an effective defence of its French territories was severely limited. 

The choice was simple. Either the English parliament and taxpayers had to cough up, or France would be lost.

But how had royal finances degenerated to such a parlous state?

Corruption and Mismanagement

At the time the regime’s critics attributed the dire state of royal finances to two key problems:

  1. The bloated budget for the royal household.
  2. Mismanagement of royal estates.

In both cases corruption as well as incompetence was strongly suspected.

Over the years the staffing of Henry VI’s royal household had grown as an increasing cast of favourites and hangers-on joined his court.  Henry’s household staff was supposedly limited to 53 knights and esquires.  By 1451 it had over 300.  Furthermore, since assuming power, Henry VI had issued many generous grants of land from his royal estates. Each such handout had the effect of reducing royal income.

Often it was his court favourites, especially those close to his principal minister, the Duke of Suffolk, who appeared to benefit most from this largesse.  Men like Bishop Adam Moleyns, Baron Saye and Sele, Bishop William Ayscough and, most of all, the despised Suffolk himself. 

However these troubles, serious though they may have been, were not the primary cause of the crisis.  In many ways the focus on such issues at the time only served to mask far more serious problems.

Fiscal Instability

Henry’s overspending and foolhardy generosity undoubtedly made the financial situation worse.  However, the truth was that fifteenth century English government suffered from inherent fiscal instability.  This was caused by a deep-rooted structural weakness that had nothing to do with any corruption or regal mismanagement.

Clearly the wars in France had represented an ongoing drain on finances.  Even when not actively campaigning, the English still had to pay to maintain their garrisons.  The war had been dragging on ever since Henry V’s time and contributed significantly to the regime’s historic debts.

However, the problems were far more serious even than this.  The whole premise by which the English crown was financed was deeply flawed by 1449.

Traditionally, the English crown relied upon two key sources of income.  The first was income from royal estates.  Under Henry VI this income fell because of his tendency to issue generous land grants.  Over time this steadily eroded his income.

The second key source was indirect taxation.  The largest portion of this, by a long way, depended upon the wool trade.  And it was in relation to these revenues that the regime faced long term systemic decline.

The Collapse of Royal Income

In its heyday (during the reign of Edward I), thanks to the booming wool trade, indirect taxation had raised huge sums for the royal treasury.  But, ever since the reign of Richard II, revenues had been on a downward trend. 

The truth was that the nature of European commerce was changing and, as a result, wool tax revenue after 1430 was nowhere near what it had been before.

Graph of indirect income in the reign of Lancastrian Henry VI
Indirect tax revenues from the wool trade had been following a sustained downward trend ever since the death of Henry V.

By 1449, royal debts stood at £372,000.  Fully 62% of this debt can be accounted for by the decline in indirect tax revenues that had occurred since 1430. 

Parliament’s Response

Parliament’s response to the growing financial crisis was basically to avoid taking responsibility for the problem as far as possible.  Rather than agree to raise direct taxation to pay down the debts and finance England’s war effort, parliament consistently sought to avoid paying for either.

Parliament took the view that the French wars should be financed by the king’s provinces in France.  Normandy and Gascony, not England, should foot the bill.

Parliament preferred to focus on the issue of falling estate revenues and the over-large royal household.  Surely, they reasoned, if the king could resume control of his estates and rein in the royal household budget, this would solve the problem.  Such solutions, conveniently, avoided the need to raise too much in the way of additional taxes.

Nevertheless, from time to time parliament had little option but to raise taxes.  But this was only ever done on an ad-hoc basis and then, usually, only once the need was dire.  However, the deteriorating situation meant taxes were increasingly syphoned off to service debts and plug holes in the ordinary budget rather than pay for armies.  This practice had almost certainly been going on since Henry V’s time.  It was certainly a well-established behaviour long before Henry VI was old enough to personally take up the reins of power. 

Suffolk’s Role

During the 1440s, Suffolk had become Henry VI’s principal confidante and by the end of the decade he was Henry’s Chamberlain.  Increasingly, he was seen as the driving force in Henry’s government. 

Nevertheless, Suffolk’s influence over fiscal policy was limited to non-existent during the 1430s and early 1440s.  The fiscal crisis related to problems he inherited rather than problems he created.  So, what did he do about it?

One of Suffolk’s central policies was his effort to make peace with France.  As a means of saving money, it made a great deal of sense.  Wars were expensive, so finding a permanent peace would greatly reduce financial pressures.  However, with France resuming hostilities in 1449, this policy lay in tatters.

Aside from this, Suffolk’s response to the crisis focused on raising direct taxation and consolidating loans. He was either unwilling or unable to address the issue of Henry’s bloated household budget and over-generous land grants. His strategy, then, was essentially the same policy the Lancastrian regime had been pursuing ever since Henry V’s time.

However, Suffolk’s approach was clearly problematic given parliament’s attitudes.  Furthermore, the Lancastrian practice of using lay taxation to shore up ordinary expenditure may have been necessary, but it was, strictly speaking, unconstitutional. 

Henry VI

Suffolk’s efforts to address the fiscal crisis were further hampered by Henry VI himself.  Henry largely took a back seat in the government of his realm.  It was Suffolk, not Henry, who was most visible when it came to announcing policies or negotiating new taxes with parliament.  Henry, at times, appeared to be an absentee monarch, delegating far too much to Suffolk.  He certainly did not appear to be taking a particularly active role in getting to grips with royal finances. 

All this could make it appear as though Suffolk and his associates were increasingly running the show.  Perhaps they were deliberately limiting access to the king so they could more easily influence him.  It seemed to some that the king was being manipulated by a clique of corrupt councillors, more interested in lining their own coin purses than the national interest.

However, Henry’s lack of engagement was just a symptom of his inability to cope with matters of this nature.  Suffolk stepped in to perform Henry’s public role not necessarily because he wanted to but because he had to.  The alternative was paralysis at the heart of government.

Poor Leadership

Addressing the fiscal crisis of the 1440s required a sound grasp of the financial situation and firm leadership.  Henry VI possessed neither.  Persuading parliament to levy more taxes was always going to be very problematic.  However, it became doubly so when many people feared that the government lacked a clear strategy or, worse, was in the hands of a nepotistic clique.

Henry VI, unlike his father, lacked a firm grasp of the affairs of state.  He was not especially diligent, often inconsistent, and became easily side-tracked by pet projects.  On at least one occasion Henry granted the same office to more than one person (having forgotten he’d already promised the position to someone else). 

Photograph of Eton College
Eton College was founded by Henry VI at great expense, despite mounting royal debts.  Due to Henry’s indecision and micro-management, its construction ran massively over budget and took far longer than planned.

Despite the growing debts Henry lavished money on the establishment of Eton College.  At least here he became actively engaged in the project – but unfortunately not in a good way. 

Henry proved indecisive, constantly changing plans for the construction work.  This led to continual delays and resulted in the project running massively over budget.  Contrast that with Queen Margaret’s management of the construction of Queens’ College, Cambridge.  Henry’s more practical and capable young queen oversaw the completion of her college largely on time and on budget.   

Too Little, Too Late

The simple fact was that Henry lacked the ability to get to grips with the fiscal crisis of the 1440s.  Instead, it was largely left for Suffolk to sort out.  But Suffolk was not the king.  For all his influence, he still lacked the necessary personal authority to persuade the establishment to adequately address the situation. 

Besides which, by 1449, with the French army at the gates of Rouen, it was already too late.  The debt crisis should have been addressed by the regency government during the early 1430s.  However, instead of doing so, people like Gloucester had advocated dramatically increasing the debt to pay for the war at the time.

Of course, as debts grow the cost of serving those debts grows.  So as time went by, the debt itself became an increasing drain on finances. During the 1440s the regime was spending an average of £14,000 every year purely to service its debts.  Suffolk’s debt consolidation efforts did manage to reduce this burden over the course of the decade, but not by much.

The truth was that the financial situation had become so precarious by 1449 that whatever measures Suffolk or anyone else could have taken were quite simply far too little, far too late.

War and Money

It is a simple fact that you can’t win wars without money.  Money pays for armies.  No money, no armies.  This was the dire position England faced in 1449.

Members of the English parliament later expressed shock, dismay and outrage at the humiliating English defeats that followed between 1449 and 1453.  In the space of just four years, England’s French possessions were systematically overrun.  By 1453, the Hundred Years’ War was practically over.  England had lost.  Although not the only factor, the lack of adequate financing had played a central role in this defeat.

For all the outrage expressed by the English parliament, the reality was that they themselves had to carry a large share of the blame. The defeat came in no small part because of their reluctance to raise direct taxation. 

Many parliamentarians had been quick to latch on to the nostalgic jingoism of men like Gloucester over the years.  They happily joined the populist clarion call for the regime to take stronger action to defend England’s French territories.  But when it came time to open their coin purses to pay for such dreams of glory, these same men were most reluctant to stand up and be counted.

Oppressive Taxation

Despite such reluctance, the Lancastrian regime raised more money in direct taxation throughout the 1440s than it had in the previous decade.  A total of over £167,000 was collected; 27% more than the previous decade.

Many complained about the level of taxation.  Some even labelled it as oppressively high.  Given the parlous deterioration in England’s military fortunes over the same period, many questioned where all this extra money was going. For many, it was hard to believe that corruption was not involved.

Yet, the records show that 96% of the assessed tax was successfully collected and found its way into the treasury.  The Lancastrian tax collection process was therefore quite efficient and corruption free, despite popular suspicions.  But, of course, only some of this money was ever spent on military necessity.  Much of it had to go on servicing debt and plugging the holes in the ordinary annual budget.  These were a highly necessary, but technically unconstitutional, use of these funds.

As to the complaint that English taxes became oppressively high in the 1440s, it is certainly true that they were significantly higher than they had been before.  But can this really be described as ‘oppressive’?

The French Solution

On the other side of the channel, the French king, Charles VII, faced his own financial problems.  The wars had taken their toll on France’s finances just as they had on England’s.  Charles, like Henry, also found himself presiding over a fiscal system that was not really fit for purpose.  However, unlike the floundering Lancastrians, Charles’ regime took steps to address the problem thanks mainly to his brilliant Grand Argentier, Jacques Coeur.

In 1439, the French introduced a permanent direct tax called the taille.  Its main purpose was to pay for a standing army to fight the English.  It soon became a major source of income for the French government and played a central role in financing their war effort.

Photo of statue of Jacques Coeur
The talented Jacques Coeur was the mastermind behind Charles VII’s finances.  He re-engineered the French tax system, arranged lucrative trade deals with Egypt and supplied Charles VII with the loans he needed to fight his war.

The taille raised the equivalent of over £140,000 every year throughout the 1440s.  Over the entire decade, this amounted to over 8 times the sum raised in direct taxation by the English parliament.  True enough the French population (in those parts of France that Charles controlled) was larger than the English.  But only by a factor of around 4½ to 5. 

The simple fact was that the burden on the French taxpayer was significantly higher than for the English.  Naturally, many French citizens resented paying the taille. But they paid it.

Having your Cake and Eating it too

English myopia prevented contemporary commentators from adequately explaining the fundamental causes of the financial crisis of 1449.  It was all too easy to blame Lancastrian corruption and mismanagement.  It was certainly far easier to focus on that than to face up to the need for fundamental fiscal reform.  Of course, it is perfectly legitimate to argue that the lack of any attempt at genuine fiscal reform most clearly demonstrated the Lancastrian regime’s failure. 

Suffolk’s attempts to manage royal finances amounted to little more than reactive firefighting.  He was no Jacques Coeur.  Henry VI’s disengagement from effective government cannot be seen as anything other than incompetent inaction.  He was no Charles VII.

The English parliament of this time was far from blameless.  Indeed, in many ways it was especially delusional.  Quick to criticise the regime for military failures but always painfully reluctant to supply the necessary finances to help address the problem.

The truth was that the English loved to dream romantic dreams of glory.  However, the reality was they weren’t prepared to pay for it, and they lacked a leadership remotely capable of delivering it. 

Basically, when it came to the Hundred Years’ War, English society in the late Lancastrian period just wanted to have their cake and eat it too.

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If you would like to read my other articles covering key events in the reign of Henry VI, explore the links below…

1 The Legacy of Henry V and the Infant King

2 The Parliament of Bats

3 The Minority of Henry VI

4 Jackanapes – the Rise of the Duke of Suffolk

5 Young Margaret of Anjou

6 The Treaty of Tours – Peace in Our Time 1444

7 The Downfall of Good Duke Humphrey

References and further reading

Henry VI, Margaret of Anjou and the Wars of the Roses, Keith Dockray, 2016, Fonthill Media

Lancaster & York: The Wars of the Roses, Alison Weir, Pimlico, 1998

Shadow King, The Life and Death of Henry VI, Lauren Johnson, Head of Zeus, 2020

The fiscal constitution of later medieval England: the reign of Henry VI, Alex Bryson, 2013, PhD paper, University of York

Images

Portrait of Henry VI – Anon. C16th portrait, National Trust Collection (via Wiki Commons)

Chart showing trends in royal income from indirect taxes – 1422-1449, analysis and chart by Paul Watts using data from Alex Bryson’s 2013 PhD paper – The fiscal constitution of late medieval England: the reign of Henry VI

Photograph of Eton College – by Kaihsu (Via Wiki Commons)

Photograph of Jacques Coeur’s statue –  located in the Palais du Louvre, photo by supermat, (Via Wiki Commons)

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