CHAPTER 2

THE DEVELOPMENT OF PUBLIC FINANCE INSTITUTIONS

I-Introduction

Early Public Finance

a. Ancient Finance :
The idea of financing public goals and activities is as old as the organization of public
authority
The Slave Societies
society where the fundamental class conflict is based on the division of people into masters
and slaves, with slaves being the dominant producing class, and ownership over this
complete commodification of the human being controlled by masters.

 Expenditures
 Revenues
 Budgeting
 Borrowings
 Auditing

b. Medieval Public Finance (395 A.D.-1500) :

The development of medieval public finance closely followed the changes in the political
structure of the state during the middle ages.
Feudalism
was essentially the system of economic relationship based upon land tenure, among the
king, the lord and the vassals.

II- The Breakdown of Feudalism

Beginnings of Capitalism

a. The Rise of Central Government(1300-1500)

b. Beginning of Capitalism

1. Mercantilism- refers to those policies especially protectionist and monetary which

the European states pursued during the 16th, 17th, and 18th centuries in their efforts
“to enrich a great nation by trade and manufacturers than by the improvement and
cultivation of land rather by industry of the towns than that of the country.
 Taxation
 Budget and Expenditure