Part II. is divided into two Branches, viz.:--

(1) Philosophy. (2) Mathematics.

The nature of the examination may be indicated by the following requirements in Branch (I):--

Written (i.) An essay in French on a philosophical subject. (ii.) An examination in physical and natural science.

Oral (i.) Interrogation on philosophy and philosophical writers. (ii.) Interrogation on contemporary history. (iii.) Interrogation on physical science. (iv.) Interrogation on natural science.

V. Co-ordination with Teaching.

The syllabus of the examination is that prescribed for the higher classes in the Government secondary schools.

The candidate may submit his _livret scolaire_, or school record, which will be taken into account.

VI. Examiners.

The Board of Examiners (or "jury") consists of (i.) University examiners being members of a faculty of letters or faculty of sciences; (ii.) secondary teachers, active or retired, selected by the minister of public instruction. The Board consists of from four to six examiners, of whom, when the number is even, half are chosen from either category.

VII. Nature of Examination and General Remarks.

The written portion of Part I. extends over from 9 to 10 hours in all (not on a single day), in periods of 3 or 4 hours each; the written portion of Part II. extends over from 6 to 9 hours. The oral examination for each part lasts 3/4 hour on the average, and is public.

TABLE III.--SCOTLAND: SCHOOL-LEAVING EXAMINATION

I. Name of Examination.

Scottish school-leaving examination (established 1888). (See pamphlet on the "Leaving Certificate Examination" issued by the Scottish Education Department, 1908.)

II. Minimum Age for Entry.

17 on 1st of January following the year in which the candidate passes the last of the written examinations.

III. Length of Course of Study.

4 years.

IV. Subjects.

Candidates must pass in four subjects on the higher grade standard, or in three subjects on the higher grade standard and two on the lower. A pass in drawing is accepted in lieu of one of the two lower grade passes. A pass in Gaelic is reckoned as a pass on lower grade. All candidates must have passed in higher English and in either higher or lower grade mathematics. The remaining subjects may be either science with one or more languages (Latin Greek, French, German, Spanish, or Italian), or languages only. But where two or more languages other than English are taken, the candidate's group must include either higher or lower grade Latin. A pass in Spanish, Italian, or science (in which subjects there is only one examination) is reckoned as a pass on the higher grade standard.

V. Co-ordination with Teaching.

Schools are inspected, and the course of instruction must be approved by the Scottish Education Department, but the examinations are conducted by external examiners with whom teachers are not associated.

VI. Examiners.

The examiners are appointed by the Scottish Education Department.

VII. Nature of Examination and General Remarks.

The examination consists of a written examination and an oral examination, on which stress is laid. The length of the examination varies with the subjects selected. The periods of examination vary from 1 to 2-1/2 hours. If the candidate selects on the higher grade, English, Latin, mathematics, and French, the examination extends over 19-1/2 hours.

TABLE IV.--UNIVERSITY OF LONDON SCHOOL EXAMINATION, MATRICULATION STANDARD

I. Name of Examination.

School examination, matriculation standard (established in 1902).

_Note_--A higher school-leaving certificate is awarded to pupils who (i.) have pursued an approved course of study for a period of years at a school or schools under inspection approved by the University; and (ii.) being matriculated students, have passed the "higher school examination" in at least three subjects at one and the same examination.

II. Minimum Age For Entry.

The minimum age of entry is 15, but if the candidate is under 16 he must remain at school until he is 16 years of age in order to be qualified for the school-leaving certificate, and cannot be registered as a student of the University until he has reached that age.

III. Length of Course of Study.

The curriculum of each school is considered on its own merits.

IV. Subjects.

Pupils must satisfy the examiners in not less than five subjects, as follows:--

(1) English.

(2) Elementary mathematics.

(3) Latin, or elementary mechanics, or elementary physics--heat, light and sound, or elementary chemistry, or elementary botany, or general elementary science.

(4) and (5) Two of the following subjects, neither of which has already been taken under section (3). If Latin be not taken, one of the other subjects selected must be another language, either ancient or modern, from the list, and languages other than those included in the list may be taken if approved by the University, provided that the language is included in the regular curriculum:--Latin, Greek, French, German, ancient history, modern history, history and geography, physical and general geography, logic, geometrical and mechanical drawing, mathematics (more advanced), elementary mechanics, elementary chemistry, elementary physics--heat, light and sound, elementary physics--electricity and magnetism, elementary biology--botany, elementary biology--zoology, general elementary science (chemistry and physics).

V. Co-ordination with Teaching.

Schools under approved inspection, and course of instruction approved by the University.

The papers are ordinarily set on the matriculation syllabus, but papers may be specially set more closely in accordance with the school curriculum provided that the syllabus proposed is approved by the University as at least equivalent to that for which it is substituted.

VI. Examiners.

The examiners are ordinarily those appointed by the University for the ordinary matriculation examination.

VII. Nature of Examination and General Remarks.

The examination extends over at least 18 hours, and includes an oral examination in modern languages.

Practical.

The laboratory examination may be used in subjects like physics, chemistry, geology, zoology, botany, anatomy, physiology, to test powers of manipulation and knowledge of experimental methods. In some cases (e.g. in certain honours examinations) the examination may be prolonged over one or more days, and may test higher powers of investigation. But such powers can only be fully tested by the performance of original work, under conditions difficult to fulfil in the examination room or laboratory. At the French examinations for the _prix de Rome_ the candidates are required to execute a painting in a given number of days, under strict supervision (_en loge_).

In medicine the clinical examination of a patient is a test carried out under conditions more nearly approaching those of actual work than any other; and distinction in medical examinations is probably more often followed by distinction in after life than is the case in other examinations.

Thesis.

For the doctor's degree (where this is not an honorary distinction) a thesis or dissertation is generally, though not invariably, required in England. Of recent years the thesis has been introduced into lower examinations; it is required for the master's degree at London in the case of internal students, in subjects other than mathematics (1910); both at Oxford and London, the B.Sc. degree, and at Cambridge the B.A. degree, may be given for research, although the number of students proceeding to a degree in this way is at present relatively small. In certain of the honours B.A. and B.Sc. examinations at Manchester and Liverpool, candidates may take the written portion of the examination at the end of the second year's course of study and submit a dissertation at the end of the third year. Theses are generally examined by two or more specialists.

5. _Competitive Examinations._--The arrangement of students in order of merit led naturally to the use of examinations not only as a qualifying but also as a selective test, and to the offering of money prizes (including exhibitions, scholarships and fellowships) on the results. In 1854 selection by examination as a method of appointment to posts in the English public service was first substituted for the patronage system, which had caused grave dissatisfaction (see Macaulay's speech on the subject, _The Times_ of the 25th of June 1853). The first public competitive examination for the Royal Military Academy, Woolwich, took place in 1855, and in 1870 the principle of open competition for the civil service was adopted as a general rule. (For further details see CIVIL SERVICE.)

In the Wurttemberg civil service candidates are admitted to a year's probation after passing a theoretical examination, at the conclusion of which they must pass an examination of a more practical character (A. Herbert, _Sacrifice of Education_ ..., 1889, p. 111).

In the award of scholarships, &c., it should be definitely decided whether the scholarship is to be awarded (1) for attainment, in which case the examination-test pure and simple may suffice, or (2) for promise, in which case personal information and a _curriculum vitae_ are necessary. To take a simple instance: a candidate partly educated in Germany may obtain more marks in German at a scholarship examination than another who is more gifted, but whose opportunities have been less; the question at once arises, are the examiners to take the circumstances of the candidate into account or not? It is understood that at the colleges of the older universities such circumstances are considered. It must again be decided whether the financial circumstances of candidates are to be taken into account; are scholarships intended as prizes, or as a means of enabling poor students to obtain a university education? In some cases wealthy students have been known to return the emoluments of scholarships. In many universities of the United States there is a definite understanding that emoluments shall only be accepted by those needing them. It would not be difficult to ask candidates to make a confidential declaration on this subject on entrance and to establish in Great Britain a tradition similar to that of the United States, and steps in this direction have been taken both at Oxford and Cambridge (Lord Curzon of Kedleston, _University Reform_, p. 86).

A special allowance may be made for age. In certain scholarship examinations held formerly by the London County Council a percentage was added to the marks of each candidate proportionate to the number of months by which his age fell short of the maximum age for entry. The whole subject of entrance scholarships at English schools and universities, and especially their tendency to produce premature specialization, has recently been much discussed.

6. _The Organization and Conduct of Examinations._--The organization and conduct of examinations, in such a way that each candidate shall be treated in precisely the same way as every other candidate, is a complex matter, especially where several thousand candidates are concerned. The greatest precautions must be taken to ensure the secrecy of the examination papers before the examination, and the effective isolation of individual candidates during the examination. The supervision should be adequate to remove all temptation to copying. The hygienic conditions should be such as to reduce the strain to a minimum. The question of the mental fatigue produced by examinations has been studied by certain German observers, but has not yet been fully investigated.

7. _Marking, Classification and Errors of Detail._--In applying a single test in a qualifying examination it would be sufficient to mark candidates as passing or failing. But examinations consist as a rule of a number of tests, each one of which is complex; and a mark is recorded in respect of each test or portion of a test in order to enable the examining body to estimate the performance, considered as a whole, of the candidate. At Oxford the marks are not numerical, but the papers are judged as of this or that supposed "class," and various degrees of merit are indicated by the symbols [alpha], [beta], [gamma], [delta], to which the signs + or -may be prefixed, according as they are above or below a certain standard within each class. At Cambridge, numerical marks are used. The advantage of numerical marks is that they are more easily manipulated than symbols; the disadvantage, that they produce the false impression that merit can be estimated with mathematical accuracy. Professor F.Y. Edgeworth, in two papers on "The Statistics of Examinations" and the "Element of Chance in Competitive Examinations" (_Journal of the Royal Statistical Society_, 1888 and 1890), has dealt with the subject, although on somewhat limited lines. His investigations show clearly that with candidates near the border-line of failure, which must necessarily be fixed at a given point (subject to certain allowances, where more than one subject is considered), the element of chance necessarily enters largely into the question of pass and failure. The fact may be stated in this way:--the general efficiency of the test being granted, it is true to say that the large majority of those who pass an examination will be superior in efficiency to those who fail; but a few of those who fail may be superior to a few of those who pass. These errors are not peculiar to the examination system, they are inherent in all human judgments. It is necessary to allow for them in considering the failure of an individual candidate as an index of inefficiency.

The element of chance, which prevails in the region on either side of the border between pass and failure, obviously prevails equally on either side of the border between "classes," where candidates are classified; it has been suggested by Dr Schuster that numerical order should accompany classification so as to avoid the creation of an artificial gap between the last candidate in one class and the highest in the next. Edgeworth's objection to such an argument is that the number of uncertainties is far less when candidates are classed than when they are placed in ostensible order of merit.

The difficulties of comparison of marks are further complicated when students take different subjects and it is necessary to compare their merit by means of marks allotted by different examiners and added together. In a pass examination the question has to be considered how far, if at all, excellence in one subject shall compensate for deficiency in another, a question which is indeterminate until the precise object of the whole examination is formulated. In the competitive examination for the Indian civil service, places are allotted on the aggregate of marks obtained in a number of subjects selected by the candidate from a list of thirty-two. The successful candidates are compared a year later on the results of another examination in which there is again a choice, though a much more limited one. The order of merit in the two examinations is, as a rule, very different.

Two further points may be noted. An examiner may have underestimated the time required to answer the questions which he has set; this will be obvious if with a large number of candidates (say 300 or 400) none approaches the maximum mark. In this case the maximum should be reduced. Again, it is generally recognized to be undesirable to give marks for a smattering. In order to avoid this various devices are adopted. The simplest is to award a proportion of marks (say 10 to 15, or even 20%) for "general impression." In some examinations, unless say 20% or more marks are obtained for a particular subject, no credit is given for the paper in that subject. Latham (_The Action of Examinations_, 1877, p. 490) describes other numerical adjustments used to meet this difficulty, especially that used in English civil service examinations. The numerical results of the civil service examinations are reduced so as to conform to a certain symmetrical "frequency-curve," of which the abscissae represent percentages of marks between definite limits and the ordinates the number of candidates obtaining marks between those limits. C.E. Fawsitt (_The Education of the Examiner_, Royal Philosophical Society of Glasgow, 1905) shows that frequency-curves deduced from actual investigation of class-marks are not symmetrical, but have two maxima corresponding to the performance of "non-workers" and of "workers." In pass examinations of a well-known character there is a maximum just beyond the pass mark, this being the point of efficiency at which many students aim.

8. _The Object and Efficiency of Examinations, and their Indirect Effects._--In order to estimate the efficiency of an examination as a test, the precise question should be asked in each case--what is it intended to test? Much of the evil attributed to, and resulting from, examinations is due to the fact that this question has not been definitely put, and that a test legitimate for certain purposes has been used for others to which it is unsuited. Examinations are suited in the first instance for the purpose for which they were originally designed in medieval universities--the test of technical and professional capacity; it has never been proposed to abolish qualifying examinations for doctors, pharmaceutical chemists, &c.; the tests applied are (or should be) direct tests of capacity carried out under conditions as nearly as possible like those of actual practice. If a student can auscultate correctly, or make up a prescription, at an examination, he will in all probability be able to do so in other circumstances.

Examinations as tests of the knowledge of isolated facts are necessarily of relatively small value, because the memory of such facts is transient; and memorization of a large number of facts for examination purposes is generally admitted to be specially transient; the "knowledge-test," considered apart from a test of capacity, is in fact not a test of permanent knowledge, but of the power of retaining facts for a length of time which it is impossible to estimate and which with some candidates extends over a few weeks only. When used as tests of "general culture," examinations, in the view of Paulsen, based on a study of German education, not only fail in their purpose, but tend to destroy the faculties which it is desired to develop (_Geschichte des gelehrten Unterrichts_, ii. 684 et seq.); to prepare ready answers to the numberless questions which an examiner may ask on a large variety of subjects is to paralyse the natural and free activity of the mind (cf. A.C. Benson on the results of English secondary classical education, _From a College Window_, 3rd ed., 1906, pp. 154-177). If pushed to its logical conclusion the view of Paulsen must, it is submitted, lead to the complete abandonment at examinations of tests of "knowledge" as distinguished from direct tests of capacity. Thus isolated questions on details of grammar would disappear from papers on the mother-tongue and on foreign languages, in which the test would consist mainly or entirely of composition and translation. Erudition would be tested by the power of writing, at leisure, a dissertation on some subject selected by the examiners or the candidate or, in the case of a teacher, by the delivery of a lecture on the subject. At the French _agregation_ candidates are given twenty-four hours for the preparation of a lecture of this kind. Such examinations would test the "skill in the manipulation of facts which is the true sign of a trained intelligence" (cf. K. Pearson, "The Function of Science in the Modern State," _Ency. Brit._ 10th ed. xxxii. Prefatory essay). They might possibly be supplemented by easy oral examinations to test both range of knowledge and readiness of mind. But in the case of a pupil who had passed through a good secondary school it would be as safe to rely for supplementary information under this head on the testimony of his teachers, as it is to rely on their evidence with regard to the fundamental and all-important element on which no examination supplies direct information--personal character.

The main arguments of those opposed to the examination system may be summarized as follows: (i.) Examinations tend to destroy natural interests and exclude from the attention of the pupil all matters outside the purview of the examination (they would not do so if examinations were so limited in character that preparation therefor could absorb only a fraction of the pupil's time); (ii.) they tend to cultivate a personal judgment where no personal basis of judgment is possible (this argument, directed mainly against the Oxford essay system, applies not to examinations in general, but to the character of the subjects set for essays); (iii.) competitive examinations on the home and Indian civil services scheme tend to diffuse mental energy over too many subjects (but see (xviii.) below); (iv.) examinations, especially competitive examinations, tend to become more and more difficult, difficulty being confused with efficiency--this has shown itself with the Cambridge mathematical tripos, in which for years questions of increasing difficulty were set on relatively unimportant subjects, until the examination was reformed (reply: all examinations should be overhauled periodically); (v.) they tend to paralyse the powers of exposition, all statements of knowledge being thrown into a form suitable, not for an uninstructed person, but for one who already possesses it, the examiner (this tendency should be counteracted by definite training in composition); (vi.) the sample of knowledge and capacity yielded at an examination is frequently not a fair sample; it is liable to extreme variations in a favourable sense, if the candidate happens to have prepared the precise questions asked; in an unfavourable sense, if the candidate is suffering from misfortune or from accidental ill-health, the latter, owing to the periodic function, occurring much more frequently in the case of women than of men--[the reform of examination methods may remove to a great extent the element of chance in questions set; in a competitive examination it is impossible to allow for ill-health; in a qualifying examination it is difficult to make any allowance unless the examination is definitely conducted in whole or in part by the teachers, and the past record of the candidate is taken into account (cf. Paulsen, _The German Universities_, pp. 344-345)]; (vii.) examinations of several hundred candidates at a time cannot be rationally conducted so as to be equally fair to the individuality of all candidates; the individual test is the only complete one (it is admitted that examinations on a large scale necessarily involve a margin of error; but this error may be reduced to a minimum, especially by a combination of oral and practical with written work); (viii.) the multiplicity of school examinations required for different reasons produces confusion in our secondary education (there is a growing tendency to admit equivalence of "school-leaving" and entrance examinations; thus entrance examinations of Oxford, Cambridge and London, and the Northern Universities Joint Board are interchangeable under certain conditions); (ix.) the multiplicity of examinations tends to "underselling" (the success of the London examinations in medicine proves that a high standard attracts candidates as well as a low one; possibly intermediate standards may be killed in the competition; it is by no means obvious that a uniform system of examinations would conduce to efficiency); (x.) examinations produce physical damage to health, especially in the case of women-students (on this point more statistical evidence is needed; see, however, Engelmann quoted by G. Stanley Hall, _Adolescence_, 1905, ii. 588 et seq.); (xi.) examinations have in England mechanically cast the education of women into the same mould as that of men, without reference to the different social functions of the two sexes (the remedy is obvious); (xii.) it is unjustifiable to give a man a university position on the results of his performance in the examination room, a practice common in England though almost unknown on the continent; a just estimate of a man's powers in research or for teaching can only be properly based on his performance. The present system merely leads to the transmission of the sterile art of passing examinations. (At Oxford and Cambridge many fellowships are now awarded on the results of examination; it is sometimes stated, in defence of this system, that young men cannot be expected to carry out research in classics or philosophy.)

On the other hand, the defenders of examinations reply that (xiii.) examinations are necessary in order to test the efficiency of schools to which grants of public money are given (this argument has become somewhat out of date owing to the recent substitution of "inspection" for examination as a test of the efficiency of schools; a combination of inspection and examination is also sometimes used); (xiv.) they serve as a necessary incentive to steady and concentrated work[4] (the reply made to this is that the incentive is a bad one, and that with efficient teachers it is unnecessary); (xv.) they show both student and teacher where they have failed (unnecessary for efficient teachers); (xvi.) though possibly harmful to the highest class of men, they are good for the mass (reply: no system which damages the highest class of men is tolerable); (xvii.) they are indispensable as an impartial means of selecting men for the civil service; (xviii.) in a difficult examination like the first class civil service examination the qualities of quickness of comprehension, industry, concentration, power of rapidly passing from one subject to another, good health, are necessary for success, though not tested directly, and these qualities are valuable in any kind of work (this appears to be incontrovertible); (xix.) examination records show that success in examinations is generally followed by success in after-life, and the test is therefore efficient (it does not follow that certain rejected candidates may not be extremely efficient); (xx.) as a plea for purely "external examinations," teachers cannot be trusted to be impartial and it is better for a boy to "cram" than to curry favour with his teacher (Latham).

The brief comments in brackets, appended above to the arguments, merely indicate what has been said or can be said on the other side. It can scarcely be doubted that in spite of the powerful objections that have been advanced against examinations, they are, in the view of the majority of English people, an indispensable element in the social organization of a highly specialized democratic state, which prefers to trust nearly all decisions to committees rather than to individuals. But in view of the extreme importance of the matter, and especially of the evidence that, for some cause or other (which may or may not be the examination system), intellectual interest and initiative seem to diminish in many cases very markedly during school and college life in England, the whole subject seems to call for a searching and impartial inquiry.

SOURCES OF INFORMATION.--The works mentioned above, and T.D. Acland, _Some Account of the Origin and Objects of the New Oxford Examinations for the Title of Associate in Arts_ (London, 1858); Matthew Arnold, _Higher Schools and Universities in Germany_ (1874); Graham Balfour, _The Educational Systems of Great Britain and Ireland_ (2nd ed., Oxford, 1903); W.W. Rouse Ball, _Origin and History of the Mathematical Tripos_ (Cambridge, 1880); Adolf Beier, _Die hoheren Schulen in Preussen und ihre Lehrer_ (1902-1906) (in progress); Cloudesley Brereton, "A New Method of awarding Scholarships," _School World_, 1907, p. 409; G.C. Brodrick, _A History of the University of Oxford_ (London, 1886); F. Buisson, _Dictionnaire de pedagogie_ (1880-1887); Lord Curzon of Kedleston, _Principles and Methods of University Reform_ (1909); J. Demogeot and H. Montucci, _De l'enseignement superieur en Angleterre et en Ecosse_ (1870); H. Denifle, _Die Universitaten des Mittelalters bis 1400_ (Berlin, 1885); F.Y. Edgeworth, "The Statistics of Examinations," and "The Element of Chance in Competitive Examinations," _Journal of the Statistical Society_, 1888 and 1890 respectively; H.W. Eve, Lecture "On Marking," in _The Practice of Education_ (Cambridge, 1883); Charles E. Fawsitt, _The Education of the Examiner_ (Royal Philosophical Society of Glasgow) (Glasgow, 1905); J.G. Fitch, "The Proposed Admission of Girls to the University Local Examination," _Education Miscellanies_ (1865), vol. x.; W. Garnett, "The Representation of certain Examination Results," _Journ. Statist. Soc._ (Jan. 1910); G. Stanley Hall, _Adolescence_ (London, 1905); Sir W. Hamilton, _Discussions on Philosophy_ (London, 1853); P.J. Hartog, "Universities, Schools and Examinations" in the _University Review_ (July 1905); P.J. Hartog and Mrs A.H. Langdon, _The Writing of English_ (1907); Auberon Herbert (edited by), _The Sacrifice of Education to Examination_, Letters from "All Sorts and Conditions of Men" (1889); _Influence of Examinations_, Report by a Committee, British Association Reports for 1903, p. 434. and for 1904, p. 360; John Jebb, _Remarks upon the Present Mode of Education in the University of Cambridge_ (4th ed., 1774); Henry Latham, _On the Action of Examinations_ (Cambridge, 1877); H.C. Maxwell Lyte, _A History of the University of Oxford to the Year 1530_ (London, 1886); W.A.P. Martin, _The Lore of Cathay_ (Edinburgh and London, 1901); J.B. Mullinger, _The University of Cambridge_ (Cambridge, 1873); _How to pass Examinations successfully_, by an Oxford Coach; Mark Pattison, _Suggestions on Academical Organization_ (Edinburgh, 1868); Friedrich Paulsen, _The German Universities and University Study_ (London, 1906) and _Geschichte des gelehrten Unterrichts_ (Leipzig, 1896); George Peacock, _Observations on the Statutes of the University of Cambridge_ (1841); _Programme des examens du nouveau baccalaureat de l'enseignement secondaire_, Delalain freres, Paris; Hastings Rashdall, _The Universities of Europe in the Middle Ages_ (Oxford, 1895); Rein's _Encyklopadisches Handbuch der Padagogik_ (2nd ed., 1902, &c.), articles "Prufungen" (by F. Paulsen), &c.; Third Report of the Royal Commissioners on Scientific Instructions, 1873; J.E. Thorold Rogers, _Education in Oxford_ (1861); M.E. Sadler, "Memorandum on the Leaving Examinations ... in the Secondary Schools of Prussia," in Report of Royal Commission on Secondary Education, vol. v. p. 27 (1895); C.A. Schmid, _Geschichte der Erziehung_ (Stuttgart, 1884, &c.), and _Encyklopadie des gesammten Erziehungs- und Unterrichtswesens_ (2nd ed., 1876-87), articles "Prufung," "Schulprufungen," "Versetzungsprufungen," &c.; Scholarships, various papers on, by H.B. Baker, A.A. David, H.A. Miers, M.E. Sadler and H. Bompas Smith, and others, British Association Report, 1907, pp. 707-718; Arthur Schuster, article on "Universities and Examinations" in the University Review (May 1905); W.H. Sharp, _The Educational System of Japan_ (Office of the Director-General of Education in India) (Bombay, 1906); Special Educational Reports, issued by the Board of Education, _passim_; A.M.M. Stedman, _Oxford: its Life and Schools_ (London, 1887); I. Todhunter, _Conflict of Studies_ (1873); William Whewell, _Of a Liberal Education_ (London, 1845); Christopher Wordsworth, _Scholae academicae_ (Cambridge, 1877); Etienne Zi (or Siu or Seu), _Pratique des examens litteraires en Chine_ (Shanghai, 1894). Private information from Professor M.E. Sadler and Mr A.E. Twentyman. (P. J. H.; A. Wn.)

FOOTNOTES:

[1] W.W. Rouse Ball in his _History of the Study of Mathematics at Cambridge_ (1889), p. 193, states that he can find no record of any European examinations by means of written papers earlier than those introduced by R. Bentley at Trinity College, Cambridge, in 1702.

[2] It should be mentioned that the professors of chemistry of a number of German, Austrian and Swiss universities, have, by agreement, instituted an intermediate examination in that subject which students are required to pass before beginning work on the doctoral thesis. The examination of the students is conducted by the teachers concerned.

[3] See E.E. Brown in _Monographs on Education in the United States_ (ed. by N.M. Butler, 1900, i. 164), and T. Gregory Foster and H.R. Reichel, _Report of Mosely Educational Commission_ (1904), pp. 117-119 and 288-289.

[4] The Oxford commissioners of 1852 reported that "the examinations have become the chief instruments not only for testing the proficiency of the students but also for stimulating and directing the studies of the place" (_Report_, p. 61).

EXARCH ([Greek: exarchos], a chief person or leader), a title that has been conferred at different periods on certain chief officers or governors, both in secular and ecclesiastical matters. Of these, the most important were the exarchs of Ravenna (q.v.). In the ecclesiastical organization the exarch of a _diocese_ (the word being here used of the political division) was in the 4th and 5th centuries the same as primate. This dignity was intermediate between the patriarchal and the metropolitan, the name patriarch being restricted after A.D. 451 to the chief bishops of the most important cities (see PATRIARCH). The title of Exarch was also formerly given in the Eastern Church to a general or superior over several monasteries, and to certain ecclesiastics deputed by the patriarch of Constantinople to collect the tribute payable by the Church to the Turkish government. In the modern Greek Church an exarch is a deputy, or legate _a latere_, of the patriarch, whose office it is to visit the clergy and churches in the provinces allotted to him. The title of exarch has been borne by the head of the Bulgarian Church (see BULGARIA), since in 1872 it repudiated the jurisdiction of the Greek patriarch of Constantinople. Hence the names of the politico-religious parties in the recent history of the Near East: "Exarchists" and "Patriarchists."

EXCAMBION (a word connected with a large class of Low Latin and Romance forms, such as _cambium_, _concambium_, _scambium_, from Lat. _cambire_, Gr. [Greek: kambein] or [Greek: kamptein], to bend, turn or fold), in Scots law, the exchange (q.v.) of one heritable subject for another. The modern Scottish excambion may consist in the exchange of any heritable subjects whatever, e.g. a patronage or, what often occurs, a portion of a glebe for servitude. Writing is not, by the law of Scotland, essential to an excambion. Chiefly in favour of the class of cottars and small feuars, and for convenience in straightening marches, the law will consider the most informal memoranda, and even a verbal agreement, if supported by the subsequent possession. The power to excamb was gradually conferred on entailed proprietors. The Montgomery Act, which was passed in 1770, to facilitate agricultural improvements, permitted 50 acres arable and 100 acres not fit for the plough to be excambed. This was enlarged by the Rosebery Act in 1836, under which one-fourth of an entailed estate, not including the mansion-house, home farm and policies, might be excambed, provided the heirs took no higher grassum (O.E. _gersum_, fine) than L200. The power was applied to the whole estate by the Rutherford Act of 1848, and the necessary consents of substitute heirs are now regulated by the Entail (Scotland) Act 1882.

EXCELLENCY (Lat. _excellentia_, excellence), a title or predicate of honour. The earliest records of its use are associated with the Frank and Lombard kings; e.g. Anastasius Bibliothecarius (d. c. 886) in his life of Pope Honorius refers to Charlemagne as "his excellency" (_ejus excellentia_); and during the middle ages it was freely applied to or assumed by emperors, kings and sovereign princes generally, though rather as a rhetorical flourish than as a part of their formal style. Its use is well illustrated in the various charters in the Red Book of the exchequer, where the addresses to the king vary between "your excellency," "your dignity" (_vestra dignitas_), "your sublimity" (_vestra sublimitas_) and the like, according to the taste and inventiveness of the writers. Du Cange also gives examples of the style _excellentia_ being applied to the pope and even to a bishop (in a charter of 1182). With the gradual stereotyping of titles of honour that of "excellency" was definitively superseded in the case of sovereigns of the highest rank, about the beginning of the 15th century, by those of "highness" and "grace," and later by "majesty," first assumed in England by King Henry VIII. Dukes and counts of the Empire and the Italian reigning princes continued, however, to be "excellencies" for a while longer. In 1593 the bestowal of the title of _excellence_ by Henry IV. of France on the duc de Nevers, his ambassador at Rome, set a precedent that was universally followed from the time of the treaty of Westphalia (1648). This, together with the reservation in 1640 of the title "eminence" (q.v.) to the cardinals, led the Italian princes to adopt the style of "highness" (_altezza_) instead of "excellency." In France, from 1654 onwards, the title of _excellence_ was given to all high civil and military officials, and this example was followed in Germany in the 18th century.

The subsequent fate of the title varies very greatly in different countries. In Great Britain it is borne by the viceroy of India, the lord-lieutenant of Ireland, all governors of colonies and ambassadors. In the United States it is part of the official style of the governors of states, but not of that of the president; though diplomatic usage varies in this respect, some states (e.g. France) conceding to him the style of "excellency," others (e.g. Belgium) refusing it. The custom of other republics differs: in France the president is addressed as _excellence_ by courtesy; in Switzerland the title is omitted; in the South American republics it is part of the official style (Pradier-Fodere, _Cours de droit diplom._ i. 89). In Spain the title of _excelencia_ properly belonged to the grandees and to those who had the right to be covered in the royal presence, but it was extended also to high officials, viceroys, ministers, captains-general, lieutenants-general, ambassadors and knights of the Golden Fleece. In Austria the title _Exzellenz_ belongs properly to privy councillors. It has, however, gradually been extended by custom to all the higher military commands from lieutenant-field-marshal upwards. Ministers, even when not privy councillors, are styled _Exzellenz_. In Germany the title is borne by the imperial chancellor, the principal secretaries of state, ministers and _Oberprasidenten_ in Prussia, by generals from the rank of lieutenant-general upwards, by the chief court officials, and it is also sometimes bestowed as a title of honour in cases where it is not attached to the office held by its recipient. In Russia the title is very common, being borne by all officers from major-general upwards and by all officials above the rank of acting privy councillor. Officers and officials of the highest rank have the title of "high excellency." Finally, in Italy, the title _eccelenza_, which had come to be used in the republics of Venice and Genoa as the usual form of address to nobles, has become as meaningless as the English title of "esquire" or the address of "sir," being, especially in the south, the usual form of address to any stranger.

In the diplomatic service the title of excellency is technically reserved to ambassadors, but in addressing envoys also this form is commonly used by courtesy. (W. A. P.)

EXCHANGE, in general, the action of mutual giving and receiving objects, interests, benefits, rights, &c. The word comes through the French from the Late Lat. _excambium_ (see EXCAMBION). The present article deals with the theory and practice of exchange in monetary transactions, but this may conveniently be prefaced by a brief statement as to the law relating to the exchange of property and other matters. In English law exchange is defined as the mutual grant of equal interests, the one in consideration of the other. The ancient common law conveyance had certain restrictions, e.g. identity in quantity of interest, fee-simple for fee-simple, &c., entry to perfect the conveyance, and an implied warranty of title and right of entry by either party in case of eviction. Such exchanges are now effected by mutual conveyances with the usual covenants for title. Exchanges are also frequently made by order of the Board of Agriculture under the Inclosure Acts, and there are also statutes enabling ecclesiastical corporations to exchange benefices with the approval of the ecclesiastical commissioners. The international exchange of territories is effected by treaties. The exchange of prisoners of war is regulated by documents called "cartels" (Med. Lat. _cartellus_, diminutive of _carta_, paper, bill), which specify a certain agreed-on value for each rank of prisoners. The practice superseded the older one of ransom at the end of a war. By the Regimental Exchanges Act 1875 the sovereign may by regulation authorize exchanges by officers from one regiment to another. (For "labour exchanges" see UNEMPLOYMENT.)

Exchange in relation to money affairs denotes a species of barter not of goods but of the value of goods, a payment in one place being exchanged for a payment in another place. The popular statement of the theory of exchange represents four principals involved in two transactions. A and B are two persons residing in one place different from the domicile of C and D; A sells goods to C; B buys goods from D; A sells his claim on C to B, who remits it to D in satisfaction of his debt, and D receives the cash from C, so that, assuming the two transactions to be of equal value, one piece of paper satisfies the four parties to these two transactions, and the trouble, expense and risk of sending money from both places are avoided. The piece of paper which performs the service may be a telegraphic order, cheque or bill of exchange. In this elementary proposition there would be no difficulty of exchange, as the full value of A's claim on C would be paid for by B, who is under the necessity of sending in exactly similar amount of money to D; but it can be seen that in actual practice the claims of one place on another place would not be exactly balanced by the necessities of the one place to meet obligations in the other place; thus arises the complication of exchange, which may best be described as the price of monetary claims on distant debtors.

Supposing, for example, that A in London had a claim on C in Edinburgh amounting to L100, and that B in London did not require to remit more than L90 to D in Edinburgh, it is evident that B in London must be offered some inducement to take over the whole of A's claim. B might give A L99:19:0, and could then, after satisfying his debt to D, have L10 to his credit in Edinburgh, which he could retain there at interest until he had incurred further liability to D, or he could have the balance of L10 returned him in coin at an expense, say, of sixpence; this would leave B with a profit of sixpence on the transaction, and, assuming that these figures are reasonable, exchange on Edinburgh in London would be one shilling discount per L100. Supposing the necessities of B induced him to offer A only L99:14:0 for his L100 claim, A would then prefer that C remitted him L100 in coin, which, on the above scale of expenses would cost 5s. and A would receive L99:15:0 net. On these premises, exchange on Edinburgh in London cannot fall below 1/4% discount, and the same circumstances prevent it from rising above 1/4% premium, for B, in no case, would pay more for A's claim than L100 plus the cost of sending coin to Scotland. If this basis is appreciated, all exchange problems between different countries can be mastered, and the quotations in the daily papers of cable payments, sight drafts (cheques) and long bills are then understood and supply an interesting indication of the state of international financial relations. As shown above, the balance of indebtedness must eventually be remitted by coin, and consequently when exchange in any city is quoted at one or other of the limit points given in our example as 1/4% discount or 1/4% premium, this exchange immediately acquires a very serious importance, because with the development of modern monetary systems under which enormous trade is carried on with a most moderate foundation of actual coin the weakening or strengthening of that foundation is a very vital matter.

While the understanding of the theory is essential for any facile interpretation of an exchange, there are of course innumerable details of practice which require to be known to identify the limit points of exchange in any particular city. The limit points can only be taken advantage of by banking experts, and, although we assume a trader remitting his indebtedness in coin when he is asked to pay too high a price for his bill of exchange, in actual affairs the banker will supply the cheque or bill and himself will do the professional business of sending away bullion. Similarly, we have represented one trader drawing on another trader and selling his draft to a third trader who remits the draft to a fourth. In actual practice, however, No. 1 draws on No. 2 and disposes of his draft to a banker; No. 4 draws on No. 3 and sells his draft to a banker; because, speaking generally, whenever goods are shipped, the shipper immediately requires his money; he draws a bill against the goods, and it is the function of a banker to help, as a sort of debt-collecting agency, by buying these drafts; and the bank, being a mart for all forms of remittance, gets an immense variety of demand for cable payments, cheques and bills on all centres. This does not affect the theory, for it must be remembered that the banker is a necessary link between the buyer and seller of exchange, because the seller can only sell what he has and the buyer must have exactly what he wants.

To return to the question of limit points: if a universal currency system existed, with the same monetary standard that is used in England, and the coinage kept in a proper condition of weight and fineness, and the coin readily supplied to meet every reasonable claim--if, in fact, the pound sterling were the prevalent coin and the English banking system obtained everywhere, then we should find all exchange quotations as simple as our case of London and Edinburgh, that is to say, all exchanges would be quoted at par or a premium or a discount. The limit points in any place of the exchange on London would represent simply and obviously the cost of the transmission of the coin. These limit points would vary at each place according to the distance from London, the cost of freight, the risk involved in the transmission and the local rate of interest. On the continent of Europe some advance has been made in the direction of a universal coinage. Countries subscribing to the Latin Union have agreed on the franc as a common unit, and Belgium, Switzerland, France and Italy quote exchange between themselves at a premium or discount. Greece, Spain and other countries are also parties to the arrangement, but their currencies are in a bad state, and the exchange quotations involve a considerable element of speculation. We have, however, to deal with another factor in international finance, namely, the enormous variety of currency systems; and we have then to discover, in each case, the exchange which represents par and corresponds to our L100 for L100 in the London-Edinburgh example. The United States furnishes perhaps the easiest problem, and we must find out how many dollars in gold contain exactly the same amount of the precious metal as is contained in one hundred sovereigns. The answer is 486-5/8, and the arithmetic is a question of the mint laws of the two countries. Gold coin in the United States contains one-tenth alloy and in England one-twelfth alloy. Ten dollars contain 258 grains of gold, nine-tenths fine. One pound contains 123.274 grains of gold, eleven-twelfths fine, consequently L100 is worth $486-5/8, or, to be exact, $486-2/3, and when cable payments between London and New York are quoted at 4.86-5/8 for the L1 sterling, exchange is about par. As a cable payment is an immediate transfer from one city to another, no question of interest or other charge is involved. Owing to the cost of sending gold as detailed above, the New York cable exchange varies from about 4.84 to 4.89-1/2; at the former point gold leaves London for New York, and at the latter point gold comes to England. Besides insurance, freight, packing, commission and interest, there must also be considered the circumstance that coin taken in bulk is always a little worn and under full weight, and in the process of turning sovereigns into dollars, the result would not bear out the calculation based on the mint regulations: consequently, when taking gold from London, the demand would first fall on the raw metal as received from South Africa or Australia to be minted in the United States, then on any stock of American coin the Bank of England might have and be willing to sell by weight (which would be accounted by tale in New York), and lastly the demand would be satisfied by sovereigns taken by tale from the Bank of England and converted by weight in America.

The instance of the American quotation may be further taken to explain some of the numerous points which the study of the exchange involves. In the first place, it will be noted that we have quoted the price in dollars. In London, business in bills, &c., on New York is quoted either in pence or in dollars, that is to say, payments are negotiated for so many dollars either at 49-3/16 pence per dollar, or at the equivalent rate $4.88 for the pound. In practice it is much more convenient to quote in London in the money of the foreign country, as it makes comparison with the foreign rate on London very simple. Some foreign countries quote exchange on London in pence, and then, of course, in relation to those countries the same practice will obtain in England, but the majority of the exchange quotations on London are in francs, marks, gulden, lire, kronen or other foreign money. Another point which must be explained is the reason why exchange varies between what we have called the limit points; why there is sometimes so much demand for bills on London and why at other times so many bills are being offered. Similar causes operate on other exchanges, and if we develop the New York case we shall provide explanations for exchange movements in other countries.

At one time the financial relations between England and America were as follows. England was the principal creditor of the United States, and the latter country had to remit continually very large amounts in payment of interest on English money and profits on English investments, in payment for shipping freights, for banking commissions, insurance premiums and an immense variety of services, besides paying for the large imports which crossed the Atlantic from English ports. In the fall of the year these payments would be more than offset by the enormous exports of food-stuffs, cotton, tobacco, &c., so that during the first half of the year exchange would be at or about the limit of 4.89-1/2 and gold would have to be sent from New York to supplement the deficient quantity of bills. In the autumn the produce bills would flood the exchange market and gold would be sent from London as exchange got to the other limit point of 4.84. These conditions are still very potent, but latterly another element has entered into the position, and the new development is so powerful as to reverse sometimes what we may call the natural and legitimate movement in the exchange. This new element is the more intimate banking and financial relationship which has been established between the two countries. As American conditions have become more stable, with better security for capital and an assured feeling about the currency of the United States, bankers in London have gladly allowed their banking friends in New York and other large cities to draw bills on London whenever there was a good demand for sterling remittances. We have, therefore, to consider a fresh type of bill of which the drawer has no claim on the drawee, but, on the other hand, incurs a debt to the drawee. To take a very usual method, a banker in Wall Street, New York, will advance money to stockbrokers, investors and speculators against bonds and shares with a 20% margin. He deposits this security with a trust company in New York which acts both for the American and English banker. The Wall Street banker then draws a bill at 60 days' sight or 90 days' sight on the banker in Lombard Street and sells this draft to supply the money he lends the stockbroker. Two or three months hence the New York banker must send money to London with which to meet the bill, so that, whereas, in the case of a commercial bill, the produce is despatched and in due course the consignee must find the money for the bill, in the case of a finance bill, as it is called, the bill is drawn and in due course the drawer must send the value with which it is to be honoured. In any event the acceptor, the London banker, has to pay the bill, so that it will be easily understood that relations of the greatest confidence are necessary between the drawer and drawee before finance bills of this class can be created.

The profit arising from the transaction we have sketched is realized by the separate parties in this way. The New York banker lends money for three months, say, at 5% per annum, he pays a commission of 1/32% to the trust company which has custody of the security, a charge equivalent to 1/8% interest per annum. He draws on London at 90 days' sight and sells the bill at 4.83-5/8, the cable rate being 4.87-3/4, the buyer of a three months' bill making the allowance for the English bill stamp of 1/2 per mille and the London discount rate of 3%. The drawer of the bill must also pay a commission of 3/16% to the London banker who accepts the draft; this is equivalent to another 3/4% per annum in the rate of discount, so that money raised in this way costs 1/8% for the trust company, 3% the London discount rate, about 1/4% for bill stamps, and 3/4% for London commission--altogether, 4-1/8%; and, as the money is loaned at 5%, there appears to be 7/8% profit to the drawer of the bill. This, however, is on the assumption that the cable rate is still 4.87-3/4 when the bill falls due for payment and that the drawer would have to pay that price to telegraph the money to meet the draft. But exchange on London can go up or down between 4.84 and 4.89-1/2, and if at the end of the three months the cable rate is 4.84 the New York banker will be able to cover his bill at almost the same rate at which he sold it and will only be out of pocket to the extent of the commissions and stamps, so that the accommodation will only cost him 1-1/2% and his profit will be 3-1/2%. If he has to pay more than 4.87-3/4 for his cable at the maturity of the bill his profit will be less than 7/8%, and he may even be a loser on the transaction.

It is obvious, then, that a high rate of interest in New York, with a high rate of exchange on London and a low rate of discount in England, would induce the creation of these finance bills. The supply of these bills would prevent New York exchange reaching the limit point at which gold leaves the United States, and the maturity of these bills in the autumn would ensure a demand for the produce bills and possibly prevent exchange from falling to the other limit point at which London has to send gold to New York.

We have pointed out the essential difference between these finance bills and what we have called produce bills, but there is another very striking difference, that of the question of supply. These finance bills are obviously very difficult to limit in their amounts; produce bills are, of course, limited by the extent of the surplus crops of the United States and by the demand for the produce in Europe, but so long as it is mutually satisfactory to the big finance houses in both countries to draw on credit granted in London, so long may these accommodation bills be created, and the pressure of the bills in New York may depress exchange so much that gold leaves London at a time when it is required in other directions. In such a case the embarrassment caused by this artificial drain of the gold reserve would much more than offset the amount of the commission earned by the accepting houses. The Bank of England may have to raise its rate of discount at the expense of the entire home trade; probably, also, with the rise in the value of money, consequent on the diminished resources, all investment securities fall in value and more onerous terms must be submitted to by the government, corporations and colonies, in the issue of any loans they may require. It will, therefore, be appreciated that, although these finance bills may be perfectly safe, their excessive creation is viewed with great disfavour, and considerable apprehension is felt when the adventures of speculators in New York make great demands for loans against stocks and shares, and, through the instrumentality of these finance bills, shift the burden on to the shoulders of the London discount market. The effect of this is to level money rates as between New York and London, and in the process the pressure falls on London and the relief goes to America. Eventually, of course, the bills must be met and funds sent for that purpose from across the Atlantic, but in the meanwhile the disturbance of the gold supply is an inconvenience.

We have explained the process of employing credits granted in London to finance Wall Street; there are, also, many other types of bill to which the acceptor lends his name on the assurance that he will in due course be supplied with the funds required to meet the acceptance. In the case of the produce bills, a London banker will accept the bills in order that they may be more easily marketable than if they were drawn direct on the actual consignee of the cotton, tobacco or wheat. The consignees in Liverpool, &c., pay a commission for this assistance and reimburse the London bank as the produce is gradually disposed of. The transaction appears slightly more complicated when English bankers accept bills for produce shipped from the United States to merchants living in Hamburg, Genoa, Singapore and all other great ports, but the principle is the same, and the influence of such business on the exchange affects, in the first instance, the quotation between America and London, but afterwards, when money must be sent to London with which to honour the bills, the exchanges with Germany, Italy or the Straits Settlements bear their share in the eventual adjustment, the spinners, tobacco manufacturers and corn factors requiring drafts on London where so much of the trade of the world is financed.

We shall have to consider later the reasons which ensure to London this peculiar and predominant position. We have so far used the American exchange as an example to explain causes which produce fluctuations in all the principal exchanges on London and to show the points between which fluctuations are limited. The fact that America is still developing at a much greater rate than the Old World makes an important distinction between the financial position in New York and the financial position of the big capitals in Europe. There is not in America the huge accumulation of savings and investment money which the Old World has collected, so that whereas Europe helps to finance the United States, the latter country has so many home enterprises that she can spare none of her funds to assist Europe. It would not be possible for London to draw on New York such bills as we have described as finance bills, for they could never be discounted there except on the most onerous terms, and there is nothing in America which corresponds to the London money market.

We have to deal with dollars and cents in America, with francs in France, with marks in Germany, and different money units in nearly every country; but, given the mint regulations, the theoretical par of exchange and the theoretical limit points are arrived at by simple arithmetic. An exhaustive statement with reference to every country would involve an amount of tedious repetition, so that for the purposes of this article it is more instructive to consider the essential differences between the important exchanges than to go into the details of coinage, which would appeal rather to the numismatist than to the exchange expert.

The United States, offering as it does a vast field for profitable investment, must annually remit huge amounts for interest on bonds and shares held by Europeans; coupons and dividend warrants payable in America are offered for sale daily in London, and at the end of the quarters the amount of these claims, coupons and drawn bonds is very large, and a considerable set off to the indebtedness of Europe for American produce. It is often asserted that the United States is rapidly getting sufficiently wealthy to repurchase all these bonds and shares; but whenever trade conditions are exceptionally good in the States, fresh evidence is forthcoming that assistance from London and Europe is essential to finance the commercial development of the United States. This illustrates a feature common to all new countries, and the effect is that they make annual payments to the older countries and especially to England.

A government loan or other large borrowing arranged abroad will immediately move the exchange in favour of the borrowing country. A tendency adverse to the United States results from the drafts and letters of credit of the large number of holiday makers who cross the Atlantic and spend so much money in Europe. When remittance is made of the incomes of Americans who have taken up their residence in the Old World the exchange is affected in a similar manner.

In one respect the United States stands far superior to most of the older countries. There are no restrictions on the free export of gold when exchange reaches the limit point showing that the demand for bills on London exceeds the supply. New York (with London and India) is a free gold market, and this is undoubtedly one of the reasons why money is so readily advanced to the United States, and the finance bills, to which we referred above, would not be allowed to the same extent were it not for the fact that New York will remit gold when other forms of remittance are insufficient to satisfy foreign creditors. When exchange between Paris and London reaches the theoretical limit point of 25.32 (25 francs 32 centimes for the L1 sterling), gold does not leave Paris for London unless the Bank of France is willing to allow it. By law, silver is also legal tender in France, and if the State Bank is pressed for gold a premium will be charged for it if it is supplied. Gold may be collected on cheaper terms in small amounts from the great trading corporations or from the offices of the railways, but a large shipment can only be made by special arrangement with the Bank of France. Similarly, in Germany, where a gold standard is supposed to obtain, if a banker requires a large amount of gold from the Reichsbank he is warned that he had better not take it, and if he persists he incurs the displeasure of the government institution to the prejudice of his business, so that the theoretical limit point of 20 marks 52 pf. to the pound sterling has no practical significance, and gold cannot be secured from Berlin when exchange is against that city, and Germany has, when put to the test, an inconvertible and sometimes a debased currency. There is no state bank in the United States, and no government interference with the natural course of paying debts. On the other hand, when monetary conditions in New York indicate a great shortage of funds, and rates of interest are uncomfortably high, the United States treasury has sometimes parted with some of its revenue accumulations to the principal New York bankers on condition that they at once engage a similar amount of gold for import from abroad, which shall be turned over to the treasury on arrival. As these advances are made free of interest the effect is to adjust the limit point of 484 to about 485, and the United States treasury seems to have taken a leaf out of the book of the German Reichsbank, which frequently offers similar facilities to gold importers and creates an artificial limit point in the Berlin Exchange. The Reichsbank gives credit in Berlin for gold that has only got as far as Hamburg, and sometimes gives so many days' credit that the agent in London of German banking houses can afford an extravagant price for bar gold and even risk the loss in weight on a withdrawal of sovereigns, although the exchange may not have fallen to the other limit point of 20.32. In England the only effort that is made to attract gold is some action by the Bank of England in the direction of raising discount rates; occasionally, also, the bank outbids other purchasers for the arrivals of raw gold from South Africa, Australia and other mining countries. Quite exceptionally, for instance during the Boer War, the Bank of England allowed advances free of interest against gold shipped to London.

Many of the principal banking houses in all the important capitals receive continually throughout the day telegraphic information of the tendency and movement of all the exchanges, and on the smallest margin of profit a large business is done in what is called arbitrage (q.v.). For instance, cheques or bills on London will be bought by X in Paris and remitted to Y in London. X will recoup himself by selling a cable payment on Z in New York. Z will put himself in funds to meet the cable payment by selling 60 days' sight drafts on Y, who pays the 60 days' drafts at maturity out of the proceeds of the cheques or bills received from Paris, and this complicated transaction, involving no outlay of capital, must show some minute profit after all expense of bill stamps, discount, cables and commissions has been allowed for. Such business is very difficult and very technical. The arbitrageur must be in first-class credit, must make the most exact calculation, and be prompt to take advantage of the small differences in exchange, differences which can be only temporary, as these operations soon bring about an adjustment.

The European exchanges with which London is chiefly concerned are Paris and Berlin, through which centres most of the financial business of the rest of Europe is conducted; for example, Scandinavia, Russia and Austria bank more largely with Berlin than elsewhere. Italy, Switzerland, Belgium and Spain bank chiefly in Paris. European claims on London or debts to London are settled mostly through Germany or France, and consequently the German and French rates of exchange are affected by the relation of England with the rest of the Continent. The exchanges on Paris and Berlin are therefore most carefully watched by all those big interests which are concerned with the rate of discount and the value of money in London.

If the Paris cheque falls to 25.12, gold arrivals in the London bullion market will be taken by French bankers unless the profit shown by the exchange on some other country enables other buyers to pay more for the gold than Paris can afford. If the Paris cheque falls still further, it would pay to take sovereigns from the Bank of England for export, and so much would be taken as would satisfy the demand to send money to France, or until the consequent scarcity of money in London made rates of interest so high in England that French bankers would prefer to leave money and perhaps increase their balances. As between London and Paris and Berlin the greatest factor operating the exchanges is the relative value of money in the three centres. There is no great excess of trade balance at any season in favour of Germany or France and against England. On the other hand the banking relations between those countries are very intimate, and if funds can be very profitably employed in one of these places, there will be a good demand for remittance, and exchange will move in favour of that place, that is to say, exchange will go towards that limit point at which gold will be sent. The great pastoral and agricultural countries like South America, Egypt and India are in a position to draw very largely on London when their crops or other products are ready for shipment. In the early months of the year gold goes freely to South America to pay for the cereals, hides and meat, and in the autumn Egypt and India send such quantities of cotton and wheat that exchange moves heavily in favour of those countries, and gold must go to adjust the trade balance. During the rest of the year the gold tends to return as these countries always require bills on London or some form of payment to meet interest and dividends on European money invested in their government debts, railways and trading enterprises, and to pay for the European manufactures which they import. Exchange then moves in favour of England, and the Bank of England can replenish its reserve. Over the greater part of the world the rate of exchange on London is an indication simply of the trade balance. The greater part of the world receives payment for food stuffs, and has to pay for European manufactures, shipping freights, banking services and professional commissions.

The greatest complication in exchange questions arises when we have to deal with a country employing a silver standard, and, fortunately for the development of trade, this problem has disappeared of late years in the case of India, Ceylon, Japan, Mexico and the Straits Settlements, and now the only important country using silver as a standard is China. When the monetary standard in one country is only a commodity in another country we are as far removed from the ideal of an international currency as can be imagined. We can fix no limit points to the exchange and we cannot settle any theoretical par of exchange. The price of silver in the gold-using country may vary as much as the price of copper or tin, and in the silver-using country gold is dealt in just as any other metal. In both cases the only metal of constant price is the metal which is used as the money standard. The easiest method of explaining the position is to consider that any one in a gold-using country having a claim in currency on a silver-using country has to offer for sale so many ounces of silver, and vice versa the exporter in a silver-using country sending produce to London has to offer a draft representing so many ounces of gold. This introduces a very unsatisfactory element. To take a practical example:--a tea-grower in China has raised his crop in spite of the usual experience of weather and labour difficulties and the endless risks that a planter must face; the tea is then sent to London to take its chance of good or bad prices, and at the same time the planter has a draft to sell representing locally a certain weight of gold; now, in addition to all the risks of weather and trading conditions, and the chances of the fluctuations in the tea market, he is compelled to gamble in the metal market on the price of gold. Some years ago when a large number of important countries employed a silver standard it was seriously suggested that a fixed ratio should be agreed internationally at which gold and silver should be exchanged. This advocacy of bimetallism (q.v.) was especially persistent at a time when silver had suffered a very great fall in price and the prominent exponents could generally be identified either as extremely practical men who were interested in the price of silver, or as very inexperienced theorists. The difficulty of the two standards was successfully solved by discarding the use of silver, and the chief silver-using countries adopted a gold standard which has given greater security for the investment of foreign capital, has simplified business and brought about a large increase of trade.

In the case of a country of which the government has been subject to great financial difficulties, gold has been shipped to satisfy foreign creditors so long as the supply held out, and the exchange with such a country will continue to move adversely with every fresh political embarrassment and any other economic cause reflecting on the national credit. With the collapse of the monarchy in Brazil the value of the milreis fell from 27d. to 5d., and all the Spanish-American countries have from time to time afforded most distressing examples of the demoralizing effects on the currency of unstable and reckless administration. In Europe similar results have been shown by the mistrust inspired by the governments of Spain, Greece, Italy and some other states. The raising of revenue by the use of the printing press creates an inconvertible and depreciating paper currency which frightens foreign capital and severely taxes the unfortunate country which must make payment abroad for the service of debt and other obligations. With the tardy appreciation of the old proverb that "honesty is the best policy" nearly every country of importance has made strenuous efforts to improve the integrity of its money.

Exchange quotations are not published from many of the British colonies, as their financial business is in the hands of a comparatively few excellently managed banks, which establish, by agreement, conventional exchanges fixed for a considerable period, notably in the case of Australia, New Zealand and South Africa. The Scottish and Irish banks supply similar examples of a monopoly in exchange.

The following table taken from the money article of a London daily paper indicates the exchanges which are of most interest to England:--

_Foreign Exchanges._

+-----------------------+-----------------+----------------+----------------+ | | June 14. | June 15. | June 16. | +-----------------------+-----------------+----------------+----------------+ | Paris, cheques | 25 f. 18 c. | 25 f. 18 c. | 25 f. 18 c. | | " Mkt. discount | 2-1/2-5/8 p.c. | 2-1/2-5/8 p.c. | 2-1/2-5/8 p.c. | | Brussels, cheques | 25 f. 23 c. | 25 f. 23-1/2 c.| .. | | Berlin, sight | 20 m. 48-3/4 pf.|20 m. 48-3/4 pf.| 20 m. 48 pf. | | " 8 days | 20 m. 46-1/2 pf.|20 m. 46-1/4 pf.|20 m. 45-1/2 pf.| | " Mkt. discount | 3-7/8 p.c. | 3-7/8 p.c. | 3-7/8 p.c. | | Vienna, sight | Holiday |24 kr. 02-1/4 h.|24 kr. 02-3/4 h.| | Amsterdam, sight | 12 fl. 13-1/8 c.|12 fl. 13-1/4 c.| .. | | Italy, sight | Holiday | 25 lire 15 c. | .. | | Madrid, sight | " | 27 ps. 68 | .. | | Lisbon, sight | " | .. | .. | | St Petersburg, 3 ms. | 94 r. 10 | 94 r. 10 | .. | | Bombay, T.T. | 1s. 4d. | 1s. 4d. | 1s. 4d. | | Calcutta, T.T. | 1s. 4d. | 1s. 4d. | 1s. 4d. | | Hong-Kong, T.T. | 2s. 1-1/16d. | 2s. 1-1/16d. | 2s. 1-1/16d. | | Shanghai, T.T. | 2s. 10-3/4d. | 2s. 10-5/8d. | 2s. 10-5/8d. | | Singapore, T.T. | 2s. 4-1/16d. | 2s. 4-1/16d. | 2s. 4-1/16d. | | Yokohama, T.T. | 2s. 0-3/8d. | 2s. 0-3/8d. | 2s. 0-3/8d. | |*Rio de Jan'ro, 90 days| 16-9/16d. | 16-9/16d. | 16-17/32d. | |*Valparaiso, 90 days | | | | | Coml. | 14-3/8d. | 14-3/8d. | 14-1/4d. | |*B. Ayres, 90 days | 48-1/8d. | 48d. | 48d. | +-----------------------+-----------------+----------------+----------------+ * These rates are telegraphed on the day preceding their receipt.

In the case of Paris and Berlin it will be noticed that the local rate of discount is also given, as the value of money in these centres, in relation to the value of money in London, is the most important factor in a movement of the exchange. Vienna has become important owing to the improvement in the financial position of Austria, and still greater improvement is shown in the case of Italy, whose currency stands in the above list better even than that of France. Spain, which should stand at about the same rate, still has a depreciated paper currency. Lisbon stands also at a discount, as the milreis should be worth 53-1/4 pence.

In Russia the exchange showing 94.10 roubles to L10 is carefully and cleverly controlled in spite of the bad internal position. The India exchanges move slightly, as the currency is firmly established at the rate of 15 rupees to the L1. Hong-Kong quotes for the old Mexican dollar and a British trade dollar; Shanghai for the tael containing on an average 517-1/2 grains of fine silver. The Straits Settlements have fixed their money on a gold basis at 2s. 4d. per dollar, on the lines of the arrangement made in India. In Japan there is a gold standard, and par of exchange is 2s. 0-1/2d. for the yen. Brazil, Chile and Argentina have a depreciated paper currency, and the last quotation of 48d. is for the gold dollar equal to five francs, but there is a premium on gold in the River Plate of 127.27-1/2% and for the present a gold standard is re-established on this basis. The letters T.T. with the eastern exchanges signify telegraphic transfer or the rate for payments made by cable. The very important New York rates are always given in another part of the daily paper with other details of American commercial interest.

These rates are all quotations for payments in England, and all over the world the exchange on London is the exchange of the greatest importance. This unique position was gained originally, probably, through the geographical position of the United Kingdom, and has been maintained owing to several reasons which secure to London a peculiar position by comparison with any other capital. Britain's colossal trade ensures a supply of and a demand for English remittances. Even when goods or produce are dealt in between foreign countries a credit is opened in London, so that the shipper of the produce can offer in the local market a bill of exchange which is readily saleable. With the highly developed banking system a large amount of deposits is collected in London, and the result is that bills of any usance up to six months can be immediately discounted, and the proceeds, if required, can be handed over in gold. There are in London a great number of wealthy banks and banking houses whose reputation and solidity allow any one of them to accept bills for amounts varying from one to ten millions sterling, whereby large commissions are earned.

These four advantages, namely, a free gold market, a huge trade, an enormous accumulation of wealth, and a discount market such as exists nowhere else, have made London an unrivalled financial centre, and consequently bills on London are an international money and the best medium of exchange.

AUTHORITIES.--_A B C of the Foreign Exchanges_, by George Clare; _Foreign Exchanges_, by Goschen; _Arbitrage_, by Deutsch; _Arbitrages et Parites_, by Ottomar Haupt; Swoboda, _Arbitrage_ (12th edition), by Max Fuerst. (E. M. Ha.)

EXCHEQUER. The word "exchequer" is the English form of the Fr. _echiquier_, low Lat. _scaccarium_, and its primary meaning is a chess-board (see CHESS). As the name of a government department dealing with accounts it is derived from the exchequer or the "abacus" by means of which such accounts were kept, such a contrivance being almost universally in use before the introduction of the Arabic notation. In England the department or court of accounts was named originally "the tallies" from the notched sticks or tallies which constituted the primitive means of account-keeping (which were only abolished in 1826), and was only subsequently, probably in the reign of Henry I., named the exchequer from the use of the abacus. Both the name and the general features of the institution may reasonably be attributed to Norman influence, since we find both in Normandy and in the Norman kingdom of Sicily, as well as in Scotland and Ireland; the two latter cases being directly due to English example. As a court of law the exchequer owed its existence in England, as elsewhere, to the necessity of deciding legal questions arising from matters of account, and its secondary activities soon overshadowed its original functions.

We cannot say whether the exchequer, as known in England, is older than the beginning of the 12th century. The treasury, which may be regarded as one of its constituents, dates from before the conquest, and the officers of the exchequer who were drawn from the treasury staff can be traced back to Domesday. But our earliest information about the exchequer itself, apart from that afforded by the pipe rolls (see RECORD), rests on a treatise (_Dialogus de Scaccario_) written about A.D. 1179 by Richard, bishop of London and treasurer of England. His father, Nigel, bishop of Ely, had been treasurer of Henry I., and nephew to that king's great financial minister Roger, bishop of Salisbury. Nigel is said to have reconstituted the exchequer after the troubles of Stephen's reign upon the model which he inherited from his uncle. The Angevin, or rather the Norman, exchequer cannot be regarded in strictness as a permanent department. It consisted of two parts: the lower exchequer, which was closely connected with the permanent treasury and was an office for the receipt and payment of money; and the upper exchequer, which was a court sitting twice a year to settle accounts and thus nearly related to the Curia Regis (q.v.). We dare hardly say that either exchequer existed in vacation; indeed the word (like the word "diet") seems to have been limited at first to the actual sitting of the king's court for financial purposes. The Michaelmas and Easter exchequers were the sessions of this court "at the exchequer" or chess-board as it had previously sat "at the tallies." The constitution of the court was that of the normal Frankish curia. The king was the nominal president, and the court consisted of his great officers of state and his barons, or tenants-in-chief, and it is doubtless due to the fact that the exchequer was originally the curia itself sitting for a special purpose that its unofficial judges retained the name of "barons" until recent times. Of the great officers we may probably find the steward in the person of the justiciar, the normal president of the court. He sat at the head of the exchequer table. The butler was not represented. The chancellor sat on the justiciar's left; he was custodian _ex officio_ of the seal of the court, and thus responsible for the issue of all writs and summonses, and moreover for the keeping of a duplicate roll of accounts embodying the judgments of the court. On the left of the chancellor, and thus clear of the table, since their services might be required elsewhere at any moment, sat the constable, the two chamberlains and the marshal. The constable was the chief of the outdoor service of the court, and was responsible for everything connected with the army, or with hunting and hawking. The two chamberlains were the lay colleagues of the treasurer, and shared with him the duty of receiving and paying money, and keeping safe the seal of the court, and all the records and other contents of the treasury. The marshal, who was subordinate to the constable, shared his duties, and was specially responsible for the custody of prisoners and of the vouchers produced by accountants. At the head of the table on the justiciar's right sat, in Henry II.'s time, an extraordinary member of the court, the bishop of Winchester. The treasurer, like the chancellor a clerk, sat at the head of the right-hand side of the table. He charged the accountants with their fixed debts, and dictated the contents of the great roll of accounts (or pipe roll) which embodied the decisions of the court as to the indebtedness of the sheriffs and other accountants. These persons with certain subordinates constituted the court of accounts, or upper exchequer, whereas the lower exchequer, or exchequer of receipt, consisted almost exclusively of the subordinates of the treasurer and chamberlains. In the upper exchequer the justiciar appointed the calculator, who exhibited the state of each account by means of counters on the exchequer table, so that the proceedings of the court might be clear to the presumably illiterate sheriff. The calculator sat in the centre of the side of the table on the president's left. The chancellor's staff consisted of the _Magister Scriptorii_ (probably the ancestor of the modern master of the rolls), whose duties are not stated; a clerk (the modern chancellor of the exchequer) who settled the form of all writs and summonses, charged the sheriff with all fines and amercements, and acted as a check on the treasurer in the composition of the great roll; and a scribe (afterwards the comptroller of the pipe), who wrote out the writs and summonses and kept a duplicate of the great roll, known as the chancellor's roll. The constable's subordinates were the marshal and a clerk, who, besides the duty of paying outdoor servants of the crown, had the special task of producing duplicates of all writs issued by the Curia Regis. The treasurer and chamberlains, being colleagues, had a joint staff, the clerical or literate members of which were servants of the treasurer, while the lay or illiterate members depended on the chamberlains. Hence while the treasurer and his clerks kept their accounts by means of rolls, the chamberlains and their serjeants duplicated them so far as possible by means of tallies. Thus the great roll was written by the treasurer's scribe (the engrosser, afterwards the clerk of the pipe), while the payments on account and other allowances to be credited to the sheriff were registered by the tally cutter of the chamberlains.

In the exchequer of receipt the staff was similarly divided between the treasurer and chamberlains; the treasurer having a clerk who kept the issue and receipt rolls (the later clerk of the pells) and four tellers, while each of the chamberlains was represented by a knight (afterwards the deputy chamberlains), who controlled the clerk's account by means of tallies, and held their lands by this serjeanty; these three had joint control of the treasury, and could not act independently. The other serjeants were the knight or "pesour" who weighed the money, the melter who assayed it, and the ushers of the two exchequers. It should be noted that all the lay offices of the treasury in both exchequers were hereditary. Henry II. had also a personal clerk who supervised the proceedings personally in the upper, and by deputy in the lower, exchequer.

The business of the ancient exchequer was primarily financial, although we know that some judicial business was done there and that the court of common pleas was derived from it rather than from the curia proper. The principal accountants were the sheriffs, who were bound, as the king's principal financial agents in each county, to give an account of their stewardship twice a year, at the exchequers of Easter and Michaelmas. Half the annual revenue was payable at Easter, and at Michaelmas the balance was exacted, and the accounts made up for the year, and formally enrolled on the pipe roll. The fixed revenue consisted of the farms of the king's demesne lands within the counties, of the county mints, and of certain boroughs (see BOROUGH) which paid annual sums as the price of their liberties. Danegeld was also regarded as fixed revenue, though after the accession of Henry II. it was not frequently levied. There were also rents of assarts and purprestures and mining and other royalties. The casual revenue consisted of the profits of the feudal incidents (escheat, wardship and marriage), of the profits of justice (amercements, and goods of felons and outlaws), and of fines, or payments made by the king's subjects to secure grants of land, wardships or marriages, and of immunities, as well as for the hastening and sometimes the delaying of justice. Besides this, there were the revenues arising from aids and scutages of the king's military tenants, tallages of the crown lands, customs of ports, and special "gifts," or general assessments made on particular occasions. For the collection of all these the sheriff was primarily responsible, though in some cases the accountants dealt directly with the exchequer, and were bound to make their appearance in person on the day when the sheriff accounted.

We gather both from tradition and from the example of the Scottish exchequer that the farms of demesne lands were originally paid in kind, by way of purveyance for the royal household, and although such farms are expressed even in Domesday Book in terms of money, the tradition that there was a system of customary valuation is a sufficient explanation, and not of itself incredible. At some date, possibly under the administration of Roger of Salisbury, the inconvenience of this arrangement led to the substitution of money payments at the exchequer. The rapid deterioration of a small silver coinage led to successive efforts to maintain the value of these payments, first by a "scale" deduction of 6d. in the L for wear, then by the substitution of payment by weight for payment by tale, and finally by the reduction of most of such payments to their pure silver value by means of an assay, a process originally confined to payments from particular manors. Only the farms of counties, however, were so treated, and not all of those. The amount to be deducted in these cases was settled by the weighing and assaying of a specimen pound of silver in the presence of the sheriff by the pesour and the melter in the lower exchequer. The casual revenue was paid by tale, and for the determination of its amount it was necessary to have copies of all grants made in the chancery on which rents were reserved, or fines payable. These were known first as _contrabrevia_ and later as _originalia_; the profits of justice were settled by the delivery of "estreats" from the justices, while for certain minor casualties the oath of the sheriff was at first the only security. At a later date many of them were determined by copies of inquisitions sent in from the chancery. All this business might be transacted anywhere in England, and though convenience placed the exchequer first at Winchester (where the treasury was), and afterwards usually at Westminster, it held occasional sessions at other towns even in the 14th century.

The Angevin exchequer, described by Richard the Treasurer, remained the ideal of the institution throughout its history, and the lineaments of the original exemplar were never completely effaced; but the rapid increase both of financial and judicial business led to a multiplication of machinery and a growing complexity of constitution. Even in the time of Henry II. we gather that the great officers of state, except the treasurer and chancellor, commonly attended by deputy. In the reign of Henry III. the chancellor had also ceased to attend, and his clerk acquired the title of chancellor of the exchequer. To the same period belongs the institution of the king's and lord treasurer's remembrancers. These at first had common duties and kept duplicate rolls, but by the ordinance of 1323 their functions were differentiated. Henceforward the king's remembrancer was more particularly concerned with the casual, and the lord treasurer's remembrancer with the fixed revenue. The former put all debts in charge, while the latter saw to their recovery when they had found their way on to the great roll. Hence the preliminary stages of each account, the receiving and registering of the king's writs to the treasurer and barons, and the drawing up of all particulars of account, lay with the king's remembrancer, and he retained the corresponding vouchers. The lord treasurer's remembrancer exacted the "remanets" of such accounts as had been enrolled, as well as reserved rents and fixed revenue, and so became closely connected with the clerk of the pipe. Before the end of the 14th century these three offices had already crystallized into separate departments.

In the meantime the increasing length and variety of accounts, as well as the growth of judicial business, had led to various efforts at reform. As early as 22 Henry II. it became necessary to remove from the great roll the debts which it seemed hopeless to levy, and further ordinances to the same end were made by statute in 54 Henry III. and in 12 Edward I. By this last a special "exannual roll" was established in which the "desperate debts" were recorded, in order that the sheriff might be reminded of them yearly without their overloading the great roll. But the largest accession of financial business arose from the "foreign accounts," that is to say, the accounts of national services, which did not naturally form part of the account of any county. These did not in the reign of Henry II. form a part of the exchequer business. Such expenses as appear on the pipe roll were paid by the sheriffs, or by the bailiffs of "honours"; payments out of the treasury itself would only appear on the receipt and issue rolls, and the "spending departments" probably drew their supplies from the camera curie, and not directly from the exchequer. In the course of the 13th century the exchequer gradually acquired partial control of these national accounts. Even in 18 Henry II. there is an account for the forests of England, and soon the mint, the wardrobe and the escheators followed. The undated statute of the exchequer (probably about 1276) provides for escheators, the earldom of Chester, the Channel Islands, the customs and the wardrobe. During the reign of Edward I., the wardrobe account became unmanageable, since it not only financed the household, army, navy and diplomatic service, but raised money on the customs independently of the exchequer. The reform of 1323-1326, due to Walter de Stapledon, in remedying this state of things, greatly increased the number of "foreign accounts" by making the great wardrobe (the storekeeping department), the butler, purveyors, keepers of horses or of the stud, the clerk of the "hamper" of the chancery (who took the fees for the great seal), and the various ambassadors, directly accountable to the exchequer. At the same time the sheriffs' accounts were expedited by the further simplification of the great roll, and by appointing a special officer, the "foreign apposer," to take the account of the "green wax," or estreats, so that two accounts could go on at once. Another baron (the 5th or cursitor baron) was appointed, and the whole business of foreign accounts was transferred to a separate building where one baron and certain auditors spent their whole time in settling the balances due on the accounts already mentioned, as well as those of castles, &c., not let to farm, Wales, Gascony, Ireland, aids (clerical and lay), temporalities of vacant bishoprics, abbeys, priories and dignities, mines of silver and tin, ulnage and so forth. These balances were accounted for in the exchequer itself, and entered on the pipe roll, but the preliminary accounts were filed by the king's remembrancer, and enrolled separately by the treasurer's remembrancer as a supplement to the pipe roll.

The next important change, about the end of the 15th century, was the gradual substitution of special auditors appointed by the crown, known as the auditors of the prests (the predecessors of the commissioners for auditing public accounts), for the auditors of the exchequer. Accounts when passed by them were presented in duplicate and "declared" before the treasurer, under-treasurer and chancellor. Of the two copies, one, on paper, was retained by the auditors, the other, on parchment, was successively enrolled by the king's and lord treasurer's remembrancers, and finally by the clerk of the pipe, to secure the levying of any "remanets" or "supers" by process of the exchequer.

Besides the two great difficulties of the postponement of financial to legal business, and of preventing the sheriffs from exacting the same debt twice, the exchequer was, as has been seen, hampered in its functions by the interference of other departments in financial matters. Its own branches even acquired a certain independence. The exchequer of the Jews, which came to an end in 18 Edward I., was such a branch. In 27 Henry VIII. the court of augmentations was established to deal with forfeited lands of monasteries. This was followed in 32 & 33 Henry VIII. by the courts of first-fruits and tenths and of general surveyors. These were reabsorbed by the exchequer in 1 Mary, but remained as separate departments within it. But the development of the treasury, which succeeded to the functions of the camera curie or the king's chamber, ultimately reduced the administrative functions of the exchequer to unimportance, and the audit office took over its duties with regard to public accounts. So that when the statute of 3 & 4 William IV. cap. 99, removed the sheriff's accounts also from its competence, and brought to an end the series of pipe rolls which begins in 1130, the ancient exchequer may be said to have come to an end. (C. J.)

In 1834 an act was passed abolishing the old offices of the exchequer, and creating a new exchequer under a comptroller-general, the detailed business of payments formerly made at the exchequer being transferred to the paymaster-general, whose office was further enlarged in 1836 and 1848. And in 1866, as the result of a select committee reporting unfavourably on the system of exchequer control as established in 1834, the exchequer was abolished altogether as a distinct department of state, and a new exchequer and audit department established.

The ancient term exchequer now survives mainly as the official title of the national banking account of the United Kingdom. This central account is commonly called the exchequer, and its statutory title is "His Majesty's Exchequer." It may also be described with statutory authority as "The Account of the Consolidated Fund of Great Britain and Ireland." This account is, in fact, divided between the Banks of England and Ireland. At the head office of each of these institutions receipts are accepted and payments made on account of the exchequer; but in published documents the two accounts are consolidated into one, the balances only at the two banks being shown separately.

Operations affecting the exchequer are regulated by the Exchequer and Audit Departments Act 1866. Section 10 prescribes that the gross revenue of the United Kingdom (less drawbacks and repayments, which are not really revenue) is payable, and must sooner or later be paid into the exchequer. Section 11 directs that payments should be made from the fund so formed to meet the current requirements of spending departments. Sections 13, 14, 15 lay down the conditions under which money can be drawn from the exchequer. Drafts on the exchequer require the approval of an officer independent of the executive government, the comptroller and auditor-general. But the description of the formal procedure required by statute cannot adequately express the actual working of the system, or the part it plays in the national finance. The simplicity of the system laid down by the act of 1866 has been disturbed by the diversion of certain branches or portions of revenue from the exchequer to "Local Taxation Accounts," under a system initiated by the Local Government Act 1888, and much extended since.

While the exchequer is, as already stated, the central account, it is not directly in contact with the details of either revenue or expenditure. As regards revenue, the produce of taxes and other sources of income passes, in the first instance, into the separate accounts of the respective receiving departments--mainly, of course, those of the customs, inland revenue and post office. A not inconsiderable portion is received in the provinces, and remitted to London or Dublin by bills or otherwise, and the ultimate transfers to the exchequer are made (in round sums) from the accounts of the receiving departments in London or in Dublin. Thus, there are always considerable sums due to the exchequer by the revenue departments; on the other hand, as floating balances are (for the sake of economy) used temporarily for current expenses, there are generally amounts due by the exchequer to the receiving departments; such cross claims are adjusted periodically, generally once a month. The finance accounts of the United Kingdom show the gross amounts due to the exchequer from the departments, and likewise the amounts payable out of the gross revenue in priority to the claim of the exchequer. On the expenditure side a similar system prevails. No detailed payments are made direct from the exchequer, but round sums are issued from it to subsidiary accounts, from which the actual drafts for the public services are met. For instance, the interest on the national debt is paid by the Bank of England from a separate account fed by transfers of round sums from the exchequer as required. Similarly, payments for army, navy and most civil services are met by the paymaster-general out of an account of his own, fed by daily transfers from the exchequer.

This system has two noticeable effects. Firstly, it secures the simplicity and finality of the exchequer accounts, and therefore of all ordinary statements of national finance. Every evening the chancellor of the exchequer can tell his position so far as the exchequer is concerned; on the first day of every quarter the press is able to comment on the national income and expenditure up to the evening before. The annual account is closed on the evening of the 31st of March, and there can be no reopening of the budget of a past year such as may occur under other financial systems. The second effect of the system is to introduce a certain artificiality into the financial statements. Actual facts cannot be reduced to the simplicity of exchequer figures; there is always (as already explained) revenue received by government which has not yet reached the exchequer; and there must always be a considerable outstanding liability in the form of cheques issued but not yet cashed. The suggested criticism is, however, met if it can be shown that, on the whole, the differences between the true revenue and the exchequer receipts, or between the true (or audited) expenditure and the exchequer issues, are not, taking one year with another, relatively considerable. The following figures (000's omitted) illustrate this point:--

_Expenditure._

+-----------+----------+--------------+------------ | Year. |Exchequer | Audited | Difference.| | | Issues. | Expenditure. | | +-----------+----------+--------------+------------+ | 1888-1889 | L85,674 | L86,070 | L+396 | | 1889-1890 | 86,083 | 86,033 | - 50 | | 1890-1891 | 87,732 | 87,638 | - 94 | | 1891-1892 | 89,928 | 90,125 | +197 | | 1892-1893 | 90,375 | 90,164 | -211 | | 1893-1894 | 91,303 | 91,530 | +227 | | 1894-1895 | 93,919 | 93,818 | -101 | | 1895-1896 | 97,764 | 97,667 | - 97 | | 1896-1897 | 101,477 | 101,543 | + 66 | | 1897-1898 | 102,936 | 103,010 | + 74 | +-----------+----------+--------------+------------+ | Total for |L927,191 | L927,598 | L+407 | | 10 years | | | | +-----------+----------+--------------+------------+

_Revenue._

+-----------+----------+--------------+------------+ | Year. |Exchequer | Actual | Difference.| | |Receipts. | Revenue. | | +-----------+----------+--------------+------------+ | 1888-1889 | L88,473 | L88,038 | L-435 | | 1889-1890 | 89,304 | 89,416 | +112 | | 1890-1891 | 89,489 | 89,282 | -207 | | 1891-1892 | 90,995 | 91,428 | +433 | | 1892-1893 | 90,395 | 90,181 | -214 | | 1893-1894 | 91,133 | 91,265 | +132 | | 1894-1895 | 94,684 | 94,873 | +189 | | 1895-1896 | 101,974 | 102,031 | + 57 | | 1896-1897 | 103,960 | 104,089 | +129 | | 1897-1898 | 106,614 | 106,691 | + 77 | +-----------+----------+--------------+------------+ | Total for | L947,011 | L947,294 | L+273 | | 10 years | | | | +-----------+----------+--------------+------------+

_Surplus._

+-----------+----------=--------------+------------+ | |Exchequer |Diff. between | | | Year. | Accounts.| Actual Rev. | Difference.| | | | and Aud. Exp.| | +-----------+----------+--------------+------------+ | 1888-1889 | L2,799 | L1,968 | L-831 | | 1889-1890 | 3,221 | 3,383 | +162 | | 1890-1891 | 1,757 | 1,644 | -113 | | 1891-1892 | 1,067 | 1,303 | +236 | | 1892-1893 | 20 | 17 | - 3 | | 1893-1894 | -_170_ | -_265_ | - 95 | | 1894-1895 | 765 | 1,055 | +290 | | 1895-1896 | 4,210 | 4,364 | +154 | | 1896-1897 | 2,473 | 2,546 | + 73 | | 1897-1898 | 3,678 | 3,681 | + 3 | +-----------+----------+--------------+------------+ | Total for | L19,820 | L19,696 | L-124 | | 10 years | | | | +-----------+----------+--------------+------------+

The third column in the above shows the price which has to be paid (in the form of discrepancies between facts and figures) for the simplicity secured to statements and records of the national finance by the present system embodied in the term exchequer. Probably few will think the price too high in consideration of the advantages secured.

The principal official who derives a title from the exchequer in its living sense is, of course, the chancellor of the exchequer. He is the person named second in the patent appointing commissions for executing the office of lord high treasurer of Great Britain and Ireland; but he is appointed chancellor of the exchequer for Great Britain and chancellor of the exchequer for Ireland by two additional patents. Although, in fact, the finance minister of the United Kingdom, he has no _statutory_ power over the exchequer apart from his position as second commissioner of the treasury; but in virtue of his office he is by statute master of the mint, senior commissioner for the reduction of the national debt, a trustee of the British Museum, an ecclesiastical commissioner, a member of the board of agriculture, a commissioner of public works and buildings, local government, and education, a commissioner for regulating the offices of the House of Commons, and has certain functions connected with the office of the secretary of state for India. The only other exchequer officer requiring mention is the comptroller and auditor-general, whose functions as comptroller-general of the exchequer have been already described.

The ancient name of the national banking account has been attached to two of the forms of unfunded national debt. Exchequer bills, which date from the reign of William and Mary (they took the place of the tallies, previously used for the same purpose), became extinct in 1897, but exchequer bonds (first issued by Mr Gladstone in 1853) still possess a practical importance. An exchequer bond is a promise by government to pay a specified sum after a specified period, generally three or five years, and meanwhile to pay interest half-yearly at a specified rate on that sum. Government possesses no general power to issue exchequer bonds; such power is only conferred by a special act, and for specified purposes; but when the power has been created, exchequer bonds issued in pursuance of it are governed by general statutory provisions contained in the Exchequer Bills and Bonds Act 1866, and amending acts. These acts create machinery for the issue of exchequer bonds and for the payment of interest thereon, and protect them against forgery.

Some traces may be mentioned of the ancient uses of the name exchequer which still remain. The chancellor of the exchequer still presides at the ceremony of "pricking the list of sheriffs," which is a quasi-judicial function; and on that occasion he wears a robe of black silk with gold embroidery, which suggests a judicial costume. In England the last judge who was styled baron of the exchequer (Baron Pollock) died in 1897. In Scotland the jurisdiction of the barons of the exchequer was transferred to the court of session in 1856, but the same act requires the appointment of one of the judges as "lord ordinary in exchequer causes," which office still exists. In Ireland Lord Chief Baron Palles was the last to retain the old title. A street near Dublin Castle is called Exchequer Street, recalling the separate Irish exchequer, which ceased in 1817. The old term also survives in the full title of the treasury representative in Scotland, which is "The King's and the Lord Treasurer's Remembrancer in Exchequer," while his office in the historic Parliament Square is styled "Exchequer Chambers." (S. E. S.-R.)

BIBLIOGRAPHY.--For the early exchequer Thomas Madox's _History and Antiquities of the Exchequer_ (London, 1711) remains the standard authority, and in it the _Dialogus de Scaccario_ of Richard the Treasurer (1179) was first printed (edited since by A. Hughes, C.G. Crump and C. Johnson, Oxford, 1902). The publications of the Pipe Roll Society (London, 1884 et seq.), the Pipe Rolls and Chancellor's Roll, printed by the Record Commission (London, 1833 and 1844), and H. Hall's edition of the _Receipt Roll of the Exchequer 31 Henry II._ (London, 1899) should also be consulted. A popular account is in H. Hall's _Court Life under the Plantagenets_ (London, 1901), and a careful study in Dr Parow's thesis, _Compotus Vicecomitis_ (Berlin, 1906). For the 13th and 14th centuries H. Hall's edition of the _Red Book of the Exchequer_ (London, Rolls Series, 1896) is essential, as also the Public Record Office _List of Foreign Accounts_ (London, 1900). Later practice may be gathered from the similar _List and Index of Declared Accounts_ (London, 1893), and from such books as Sir T. Fanshawe's _Practice of the Exchequer Court_, written about A.D. 1600 (London, 1658); Christopher Vernon's _The Exchequer Opened_ (London, 1661), or Sir Geoffrey Gilbert's _Treatise on the Court of Exchequer_ (London, 1758), as well as from the statutes abolishing various offices in the exchequer. H. Hall's _Antiquities of the Exchequer_ (London, 1891) gives many interesting details of various dates. For the Scottish exchequer _The Exchequer Rolls of Scotland_ (Edinburgh, 1878 et seq.) should be consulted, while Gilbert's book noted above gives some details on that of Ireland. See also Appendix 13 to the great account of _Public Income and Expenditure from 1688 to 1869_, in three volumes, prepared for parliament by H.W. Chisholm (1869); and for sidelights on the working of the office from 1825 to 1866 the reminiscences of the same author (the last chief clerk of the exchequer) in _Temple Bar_ (January to April 1891).

EXCISE (derived through the Dutch, _excijs_ or _accijs_, possibly from Late Lat. _accensare_,--ad, to, and census, tax; the word owes something to a confusion with _excisum_, cut out), a term now well known in public finance, signifying a duty charged on home goods, either in the process of their manufacture, or before their sale to the home consumers. This form of taxation implies a commonwealth somewhat advanced in manufactures, markets and general riches; and it interferes so directly with the industry and liberty of the subject that it has seldom been introduced save in some supreme financial exigency, and has as seldom been borne, even after long usage, with less than the ordinary impatience of taxation. Yet excise duties can boast a respectable antiquity, having a distinct parallel in the _vectigal rerum venalium_ (or toll levied on all commodities sold by auction, or in public market) of the Romans. But the Roman excise was mild compared with that of modern nations, having never been more than _centesima_, or 1%, of the value; and it was much shorter lived than the modern examples, having been first imposed by Augustus, reduced for a time one-half by Tiberius, and finally abolished by Caligula, A.D. 38, so that the Roman excise cannot have had a duration of much more than half a century. Its remission must have been deemed a great boon in the marts of Rome, since it was commemorated by the issue of small brass coins with the legend _Remissis Centesimis_, specimens of which are still to be found in collections.

The history of this branch of revenue in the United Kingdom dates from the period of the civil wars, when the republican government, following the example of Holland, established, as a means of defraying the heavy expenditure of the time, various duties of excise, which the royalists when restored to power found too convenient or too necessary to be abandoned, notwithstanding their origin and their general unpopularity. On the contrary, they were destined to be steadily increased both in number and in amount. It is curious that the first commodities selected for excise were those on which this branch of taxation, after great extension, had again in the period of reform and free trade been in a manner permanently reduced, viz. malt liquors, and such kindred beverages as cider perry and spruce beer. The other excise duties remaining are chiefly in the form of licences, such as to kill game and to use and carry guns, to sell gold and silver plate, to pursue the business of appraisers or auctioneers, hawkers or pedlars, pawnbrokers or patent-medicine vendors, to manufacture tobacco or snuff, to deal in sweets or in foreign wines, to make vinegar, to roast malt, or to use a still in chemistry or otherwise. It may be presumed that the policy of the licence duties was at first not so much to collect revenue, though in the aggregate they yielded a large sum, as to guard the main sources of excise, and to place certain classes of dealers, by registration and an annual payment to the exchequer, under a direct legal responsibility. The excise system of the United Kingdom as now pruned and reformed, however, while still the most prolific of all the sources of revenue, is simple in process, and is contentedly borne as compared with what was the case in the 18th, and the beginning of the 19th century. The wars with Bonaparte strained the government resources to the uttermost, and excise duties were multiplied and increased in every practicable form. Bricks, candles, calico prints, glass, hides and skins, leather, paper, salt, soap, and other commodities of home manufacture and consumption were placed, with their respective industries, under excise surveillance and fine. When the duties could no longer be increased in number, they were raised in rate. The duty on British spirits, which had begun at a few pence per gallon in 1660, rose step by step to 11s. 8-1/4d. per gallon in 1820; and the duty on salt was augmented to three or fourfold its value.

The old unpopularity of excise, though now somewhat out of date, must have had real enough grounds. It breaks out in English literature, from songs and pasquinades to grave political essays and legal commentaries. Blackstone, in quoting the declaration of parliament in 1649 that "excise is the most easy and indifferent levy that can be laid upon the people," adds on his own authority that "from its first original to the present time its very name has been odious to the people of England" (book i. cap. 8, tenth edition, 1786); while the definition of "excise" gravely inserted by Dr Johnson in the _Dictionary_, at the imminent risk of subjecting the eminent author to a prosecution for libel--viz. "a hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid"--can hardly be ever forgotten.

The duties of excise in the United Kingdom were, until the passing of the Finance Act 1908, under the control of the commissioners of inland revenue; they are now under the control of the commissioners of customs; the amount raised, apart from changes in the rate, shows a fairly constant tendency to increase, and is usually regarded as one of the best tests of the prosperity of the working classes.

The _spirit duty_ is levied according to the quantity of "proof spirit" contained in the product of distillation, and the charge is taken at three different points in the process of manufacture, the trader being liable for the result of the highest of the three calculations. What is known as "proof spirit" is obtained by mixing nearly equal weights of pure alcohol and water, the quantity of pure alcohol being in bulk about 57% of the whole. Owing to the high rate of duty as compared with the volume and intrinsic value of the spirits, the whole process of manufacture is carried on under the close supervision of revenue officials. All the vessels used are measured by them and are secured with revenue locks; the premises are under constant survey; and notice has to be given by the distiller of the materials used and of the several stages of his operations. Though the charge for duty is raised at the time when the process of distillation is completed, the duty is not actually paid until the spirits are required for consumption. In the meanwhile they may be retained in an approved "warehouse," which is also subject to close supervision.

The _beer duty_ dates from 1880, in which year it was substituted for the duty on malt. The specific gravity of the worts depends chiefly on the amount of sugar which they contain, and is ascertained by the saccharometer.

Excise _licences_ may be divided into--(a) licences for the sale or manufacture of excisable liquors, (b) licences for other trades, such as tobacco dealers or manufacturers, auctioneers, pawnbrokers, &c., (c) licences for male servants, carriages, motors and armorial bearings, and (d) gun, game and dog licences. Nearly the whole of the licence duties is paid over to the local taxation account.

The _railway passenger duty_, which was made an excise duty by the Railway Passenger Duty Act 1847, applies only to Great Britain. It is levied on all passenger fares exceeding 1d. per mile, the rate being 2% on urban and 5% on other traffic.

The other items which go to make up the excise revenue are the charges on deliveries from bonded warehouses, and the duties on coffee mixture labels and on chicory.

For more detailed information reference should be made to Highmore's _Excise Laws_, and the annual reports of the commissioners of inland revenue, especially those issued in 1870 and 1885. See also TAXATION; ENGLISH FINANCE.

EXCOMMUNICATION (Lat. _ex_, out of, away from; _communis_, common), the judicial exclusion of offenders from the rights and privileges of the religious community to which they belong. The history of the practice of excommunication may be traced through (1) pagan analogues, (2) Hebrew custom, (3) primitive Christian practice, (4) medieval and monastic usage, (5) modern survivals in existing Christian churches.

1. Among pagan analogues are the Gr. [Greek: chernibon eirgesthai] (Demosth. 505, 14), the exclusion of an offender from purification with holy water. This exclusion was enforced in the case of persons whose hands were defiled with bloodshed. Its consequences are described Aesch. _Choeph._ 283, _Eum._ 625 f., Soph. _Oed. Tyr._ 236 ff. The Roman _exsecratio_ and diris _devotio_ was a solemn pronouncement of a religious curse by priests, intended to call down the divine wrath upon enemies, and to devote them to destruction by powers human and divine. The Druids claimed the dread power of excluding offenders from sacrifice (Caes. _B.G._ vi. 13). Primitive Semitic customs recognize that when persons are laid under a ban or taboo (_herem_) restrictions are imposed on contact with them, and that the breach of these involves supernatural dangers. Impious sinners, or enemies of the community and its god, might be devoted to utter destruction.

2. _Hebrew Custom._--In a theocracy excommunication is necessarily both a civil and a religious penalty. The word used in the New Testament to describe an excommunicated person, [Greek: anathema](1 Cor. xvi. 22, Gal. i. 8-9, Rom. ix. 3), is the Septuagint rendering of the Hebrew _herem_. The word means "set apart" (cf. HAREM), and does not distinguish originally between things set apart because devoted to God and things devoted to destruction. Lev. xxvii. 16-34 defines the law for dealing with "devoted" things; according to v. 28 "No devoted thing that a man shall devote unto the Lord, of all that he hath, whether of man or beast, or of the field of his possession, shall be sold or redeemed. None devoted shall be ransomed, he shall surely be put to death." As in Greece and Rome whole cities or nations might be devoted to destruction by pronouncement of a ban (Numbers xxi. 2, 3, Deut. ii. 34, iii. 6, vii. 2). Occasionally Israelites as well as aliens fall under the curse (Judg. xxi. 5, 11). A milder form of penalty was the temporary separation or seclusion (_niddah_) prescribed for ceremonial uncleanness. This was the ordinary form of religious discipline. In the time of Ezra the Jewish "magistrates and judges" among their ecclesiastico-civil functions have the right of pronouncing sentence whether it be unto death, or to "rooting out," or to confiscation of goods, or to imprisonment (Ezra vii. 26). There is also a lighter form of excommunication which "devotes" the goods of an offender, but only separates him from the congregation. Both major and minor kinds of excommunication are recognized by the Talmud. The lesser (_niddah_) involved exclusion from the synagogue for thirty days, and other penalties, and might be renewed if the offender remained impenitent. The major excommunication (_herem_) excluded from the Temple as well as the synagogue and from all association with the faithful. Spinoza was excommunicated (July 16, 1656) for contempt of the law. Seldon (_De jure nat. et gen._, iv. 7) gives the text of the curse pronounced on the culprit. The _Exemplar Humanae Vitae_ of Uriel d'Acosta also deserves reference. The practice of the Jewish courts in New Testament times may be inferred from certain passages in the Gospels. Luke vi. 22, John ix. 22, xii. 42 indicate that exclusion from the synagogue was a recognized penalty, and that it was probably inflicted on those who confessed Jesus as the Christ. John xvi. 2 ("Whosoever killeth you," &c.) may point to the power of inflicting the major penalty. The Talmud itself says that the judgment of capital cases was taken away from Israel forty years before the destruction of the Temple. "Forty" is probably a round number without historical value, but the circumstance recorded by this tradition and confirmed by the evangelist's account of the trial of Jesus is historical, and is to be regarded as one of several restrictions imposed on the Jewish courts in the time of the Roman procurators.

3. _Primitive Christian Practice._--The use of excommunication as a form of Christian discipline is based on the precept of Christ and on apostolic practice. The general principles which govern the exclusion of members from a religious community may be gathered from the New Testament writings. Matt. xviii. 15-17 prescribes a threefold admonition, first privately, then in the presence of witnesses (cf. Titus iii. 10), then before the church. This is a graded procedure as in the Jewish synagogue and makes exclusion a last resort. Nothing is said as to the nature and effects of excommunication. The tone of the passage when compared with the disciplinary methods of the synagogue indicates that its purpose was to introduce elements of reason and moral suasion in place of sterner methods. Its object is rather the protection of the church than the punishment of the sinner. The offender is only treated as a heathen and publican when the purity and safety of the church demand it. In the _locus classicus_ on this subject (1 Cor. v. 5) Paul refers to a formal meeting of the Corinthian church at which the incestuous person is "delivered unto Satan for the destruction of the flesh that the spirit may be saved in the day of the Lord Jesus." These are mysterious words implying (1) a formal ecclesiastical censure, (2) a physical penalty, (3) the hope of a spiritual result. The form of penalty which would meet these conditions is not explained. There is a reference in 2 Cor. ii. 6-11 to a case of discipline which may or may not be the same. If it be the same it indicates that the excommunication had not been final; the offender had been received back. If it be not the same it shows the Corinthian church exercising discipline independently of apostolic advice. Up to this point there is no established formal practice. 1 Tim. i. 20 ("Hymenaeus and Alexander whom I delivered unto Satan that they might be taught not to blaspheme") seems to refer to an excommunication, but it does not appear whether the apostle had acted as representing a church, nor is there anything to explain the exact consequences or limits of the deliverance to Satan. 1 Cor. xvi. 22, Gal. i. 8, 9, Rom. ix. 3 refer to the practice of regarding a person as anathema. Taking these passages as a whole they seem to point to an exclusion from church fellowship rather than to a final cutting off from the hope of salvation. In the pastoral letters there is already a formal and recognized method of procedure in cases of church discipline. 1 Tim. v. 19, 20 requires two or three witnesses in the case of an accusation against an elder, and a public reproof. Tit.