CHAPTER 2

THE DEVELOPMENT OF PUBLIC

FINANCE INSTITUTIONS

BY: HARPY JANE V. MAÑALAC

TRISTAN REBB C. ACORDA
I-Introduction

Early Public Finance

Ancient Finance :
The Slave Societies
 Expenditures
Several Vital Functions to protect and maintain the state
system :

1st The protection of the people, the territory and sovereignty from outside aggression
2nd The preservation of internal peace, order, and security and the administration of justice
3rd The maintenance of a state religion
4rt The maintenance of the king and his household
 Revenues
 To finance its public functions, the State had to impose and collect revenues. Ancient taxes and
revenues were generally crude and simple in form.
 Ancient government had little need for direct taxes since they levied tributes on conquered
peoples.
 The most common sources of revenue were from rulers domain and tributes from conquered
provinces.
 Budgeting
Since the ancient governments had several functions to perform, it was logical that they had to
apportion revenues for each of these functions.
 Borrowings
Public borrowing and debt management were unheard of.
 Auditing
State audit was also an ancient and respected branch of state administration.
Ancient
audit were commonly performed by executive-judicial bureaucracies like the
Ombudsman.
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
The Rise of Central Government(1300-
1500)
Three School of Thoughts:

1. Mercantilism
2. Cameralism
3. Physiocracy
 1.)Mercantilism
refersto those policies especially protectionist and monetary which the European states pursued
during the 16th, 17th, and 18th centuries in their efforts
Taxation
Budget and Expenditure