Challenges at home: financial weakeness

• Elizabeth faced a number of financial challenges at home when she became queen
• Financial weaknesses in 1558

  • The Crown was £300,000 in debt and had an annual income of only £286,667
  • Over £100,000 in Crown debts was owed to foreign moneylenders (the Antwerp Exchange), which charged a high interest rate at 14%
  • Mary Tudor had sold off Crown lands to pay for wars with France, so the Crown's income from rents was falling
• Why Elizabeth needed money

  To remain secure on the throne, as she could use it to reward her supporters
• Since the 1540s, the Crown had debased (devalued) the coinage, by reducing its silver and gold content, in order to make more money to fight wars against France. This resulted in inflation, as the value of the currency fell.
• What Elizabeth could do to solve her financial problems in 1558

  1. Raise taxes to boost the Crown's income

  2. Improve the quality of money by increasing the gold and silver content in the coinage
• The Crown refers to the government, which means the monarch and her advisers (Privy Councillors)
• How monarchs could raise money

  • Rents and income from their own lands (Crown lands)
  • Taxes from trade (known as customs duties)
  • Special additional taxes, known as subsidies, which had to be agreed by parliament
  • Profits of justice (fines, property or lands from people convicted of crimes)
  • Loans (sometimes loans were "forced", meaning they were compulsory and never repaid)
  • Inflation (where prices rise because coins were worth less, so people charged more for what they sold)
• In spite of Elizabeth's careful management of Crown finances, there was limited reform. Parliamentary grants were raised locally, with many landowners acting as Lord Lieutenants and Justices of the Peace, pocketing some of the proceeds before the rest was sent to the Crown. This meant that ordinary people faced a heavier financial burden while the wealthy benefitted.
• Elizabeth did not raise taxes but instead hoarded her income and cut her household expenses by half.
• Like her predecessors, she sold Crown lands, raising £120,000.
• By 1574, the queen could claim that the Crown was out of debt for the first time since 1558.