That's the way the money goes

may have helped Nelson win Trafalgar, but what did he do with the equivalent of #4m of the Navy's funds?

THE warm, sunny morning of Thursday, June 12, 1806, witnessed one of those odd pieces of mumbo-jumbo by which important political business in the United Kingdom is sometimes carried out.

The peers of the realm, all 135 of those able and willing to take part, assembled in the House of Lords wearing their heavy, ornate robes. Then, in strict order of precedence, they walked in procession to Westminster Hall, the great medieval structure where so much history has been played out, including the trial of Charles I.

This time too their lordships had a Scotsman in their sights, Henry Dundas, Viscount Melville, who at the age of 64 had controlled his country's politics for a quarter of a century. Presiding over the session was yet another Scot, the Lord Chancellor, Thomas Erskine. Rising from the Woolsack, he reminded the peers that they had been called on by the House of Commons to impeach Melville for various past offences and now, having heard the evidence, they were to give judgment.

The Lord Chancellor read out the first article of impeachment: ''That the said Henry Lord Viscount Melville, while he held and enjoyed the said office of Treasurer of His Majesty's Navy, did take and receive from and out of the money imprested to him as Treasurer of His Majesty's Navy, from His Majesty's Exchequer, the sum of #10,000, or some other large sum or sums of money, and did fraudulently and illegally convert and apply the same to his own use, or to some other corrupt and illegal purposes . . . ''

Several minutes passed while Erskine waded through the legal jargon. Then he turned to Lord Ellenborough, Lord Chief Justice of England, who by reason of his recent creation happened to be the most junior peer present. He and his family were old enemies of Dundas's, so there was no doubt how he would cast his vote.

Erskine demanded: ''What says your lordship to this article of the charge?''

''Guilty, upon my honour,'' Ellenborough's voice rang back. And so it went on through the other 134 peers.

The Lord Chancellor read the second article of impeachment: ''That the said Henry Lord Viscount Melville, dis-regarding the duties of the said office, and in breach and violation of the said act of Parliament for better regulating the same, did, after the passing of the said act, and whilst the said Henry Lord Viscount Melville continued to hold and enjoy the said office, connive at . . . ''

Once Erskine had got through that lot, he again asked each peer for a verdict. As there were 10 articles of impeachment, it turned out altogether a tedious business. It went on till four o'clock in the afternoon, the more tediously because the outcome had been obvious from the start. Only 15 other peers followed Ellenborough in voting against Melville, while 119 voted for him. Though his majority sank to 23 for the second article, there was no chance of a conviction on any of the others.

Erskine rose for the last time and turned to the accused: ''I am to acquaint you, Henry Lord Viscount Melville, that you are acquitted of the articles of impeachment exhibited against you by the Commons of the United Kingdom for high crimes and misdemeanours and of all matters therein contained.'' Then the 135 peers stood up and solemnly trooped back to their own chamber in the same order as they had entered

the hall.

The strange scene is worth remembering as something never to be repeated. In Britain this was the very last impeachment of a Minister of the Crown. In earlier times it had been a potent weapon against the executive, as it has remained in the United States, where the founding fathers purposely retained the device in the constitution. But over here it has fallen into disuse. Nowadays Ministers can be more easily removed by democratic elections than by a tortuous judicial process.

In Britain some things change but some things remain the same. One such thing is the sleaziness of the Scottish political system, which no reform, however fundamental, has ever been able to cure. Since 1707 it has existed primarily as a channel for money and other favours to pass from England to Scotland, quickened by no higher instinct. In other countries politics can accommodate a variety of ideas and ideals, but in Scotland it has for 300 years been about patronage and subsidy.

So the dependency culture is not an aberration of the late twentieth century, but arrived with the Union. Perhaps it is indeed the essence of the Union. That was the conclusion to which French philosophers came during the Enlightenment when they looked across and puzzled their heads over how such a corrupt nation could also be so clever. They soon shrugged their shoulders and pronounced that all small countries next to big countries sold themselves in

the end.

The great practitioners of Scottish politics in modern times have been Tom Johnston and Willie Ross. Yet despite having at their command far greater resources than Melville could have dreamed of, neither approached his supremacy in Scotland. Another difference is that he, after a fashion,

was caught.

His impeachment arose out of his conduct during the 1780s as Treasurer of the Navy (nowadays he would be Minister of State for Defence). In those days the administrative procedures of British government had yet to be

rationalised. The distinction between public and private remained fuzzy, with many politicians using their own money to serve their country - though not

usually in the expectation of coming out at the end with a loss. Nor was there any professional civil service: appointment and promotion depended on currying favour with some great man.

Since Melville spent his time ruling Scotland and India, his naval post was pretty much a sinecure. The few duties arising from it he entrusted to the Paymaster of the Navy, Alexander Trotter, one of many compatriots who owed their careers to him.

Trotter's station in life was by any standards a modest one. Yet he made out of it a fortune of #50,000 (#20m at today's values) and bought himself a fine house at Dreghorn, on the braes of the Pentlands above Edinburgh, which later became the city's lunatic asylum. In fact he did a good deal better than his boss, who was to die in 1811 with debts of #65,000.

Trotter achieved all this with public resources, yet by means which were then normal and for the most part legal. The money voted by Parliament for each head of expenditure lay at the Bank of England. Officials were in the practice of taking it out and depositing it in accounts of their own till the moment came for it to be actually spent. Meanwhile they were entitled to use it for any purpose they liked, including financial speculation. As long as the money eventually got where it was meant to go the Government did

not worry.

The system was a shambles, but in those days people thought of these things differently. Only for the Navy, with especially chaotic accounts that included debts outstanding for 100 years, had a regulatory Act of Parliament been passed.

Trotter anyway took no notice of it. When he moved down from Edinburgh he set up five accounts with the

London-Scots banking family of Coutts, to which he was related. With them he regularly placed the Navy's money and then played the markets. His accounts were hopelessly muddled, yet he must have known what he was doing. He made a lot of profit and the public lost not a penny.

Trotter also lent money. On one occasion he lent Melville a large sum without charging him any interest. And what did Melville do with the money? Melville, pleading official secrecy, would never say.

He might never have been asked had it not been for a review of expenditure undertaken by the tight-fisted Government of Henry Addington, to which Melville went into opposition in 1801. In 1804 he helped to overthrow it and came back as First Lord of the Admiralty. By a reversal of the cuts, he made possible Admiral Nelson's victory at Trafalgar. The review was completed and published all the same. It contained revelations so damning that Melville had to resign again, though protesting his innocence.

His enemies would not let go of him. A specially bitter foe was the plump, priggish, ruthless young Whig, Samuel Whitbread, immensely wealthy heir of the brewing family. It was he that pushed the impeachment through the Commons and presented it to the Lords in April 1806, opening his speech with a scoff: ''Scotland bowed before this idol.''

But the case was neither so clear-cut nor so convincingly argued as it might have been. Trotter, who testified for three days, had over months of preliminary interrogation entrenched himself in a strong position. He admitted he personally made money, but denied Melville knew anything about it. This defence the prosecution could not dent. Even another Whig, Henry Cockburn, observed: ''The charges against Lord Melville were groundless, and at last reduced to insignificancy.''

So the acquittal, when it came that summer's morning, was already a foregone conclusion. And 400 miles away, Scotland stood ready to celebrate. ''The Land of Cakes has really gone crazy,'' said Lord Minto.

Robert Dundas, Melville's nephew, was married to his daughter, Elizabeth, and from Edinburgh he wrote to her in the country: ''It would have done your heart good to have witnessed what I have done yesterday and today, the universal joy of all persons here on your father's acquittal. I really could hardly get along the street, being stopped by every person I met.''

Among the revelries was a public dinner for 500 organised by Sir Walter Scott, where everyone got very drunk and sang a song which he specially composed, one of his lesser poetic achievements: ''Come listen brave boys and I'll sing as I'm able, How innocence triumphed and pride got a fall.''

When Melville returned to the capital in July, Scott wrote: ''His journey too has been very flattering to his feelings - nothing but huzzaing and cheering in almost all the towns they had occasion to pass through.''

Yet Melville was guilty, if not quite as charged, for in the impenetrable mass of cryptic evidence his accusers simply did not know where to look. But he certainly was guilty of fiddling, and on his own admission.

He had spent the previous winter at Bath, taking the waters and anxiously following the inquiries through

correspondence with his son in London. At one point he wrote to him: ''I have been thinking how far the examinations might not lead to a discovery of any of those secret political purposes which I have declared my determination never to disclose. But I don't think they can unless something may appear in Mr Robert Dundas's books, accounts or letters connected with the Stirling district of burghs.

''Probably that may not be the case, and in general I should suppose nothing could appear, for in the expenditure to any extent on those political purposes, it was mostly done through Mr Mitchelson or Mr Walter Ross, both of whom are now dead, and although a third person employed pretty extensively on one occasion is still alive, it is impossible there can be any clue to lead them to a discovery of him, and any remittances to Scotland for those purposes are so blended with the expenditure of my private affairs, I don't believe any discovery can be made from the accounts of any of my three confidential men of business whom I have at different times employed.''

From these hints it seems that the money, originally voted for secret service, which Trotter took from the Bank of England and lent to Melville, was used by him for electioneering. All of it and more could certainly have been spent on the single constituency of Stirling Burghs, which by tradition sold itself to the highest bidder. In Melville's time it was the scene of repeated battles between his own henchmen and

various Erskines, another reason for that family's hatred of him.

MPs for the burghs had to be elected by their local councils, which were as sleazy then as now and as full of high jinks. Once, 10 councillors in Dunfermline, which belonged to the Stirling district, were carried off to Alloa House and kept in a state of ''constant intoxication'' till the poll was past, in case they voted the wrong way.

Six more were imprisoned for allegedly causing a riot during the council's annual outing to Kinghorn. For the sake of his vote, another councillor in Queensferry had to be saved from bankruptcy by the candidate, who then almost lost a second supporter, imprisoned on a trumped-up charge at the behest of his opponent. But the offender escaped from jail and managed to arrive in time to vote. So it went on. ''I pity the man who has anything to do with them,'' said one disappointed hopeful of the Stirling Burghs.

It could be laid to Melville's charge that he never got rid of such abuses. On the contrary, he joined in the battles with the relish of a born politician. Sometimes he talked about cleaning things up, but he never did anything.

He too tended to shrug his shoulders. ''It would be easier to reform Hell,''

he once said, when called on as MP

for Edinburgh to mount a purge in his own constituency.

Temperamentally he preferred to work the system rather than change it, being in that no better and no worse than most politicians, before and since. Most indeed are not very interested in constitutional reform and, if Melville had been asked, he probably would have said that the real point was the results that he got out of the system as it stood. He could justly have argued that those results were overwhelmingly to Scotland's good.

Till he came along, the Scottish system was in a mess. The office of Secretary of State had been abolished out of misguided English spite after the last Jacobite rebellion in 1746. No regular arrangement existed for dealing with Scotland's affairs, and the most routine business was neglected.

Melville, on becoming in 1775 Lord Advocate, the senior remaining officer of government, shook things up. He subjected public appointments to his own scrutiny, not only in the state but also in the Church and the universities. He was active in legislation. He found the public and private money to make his measures effective. He built an electoral machine which at its height controlled 43 of the 45 parliamentary seats. For the first time since the Union, Scottish interests counted in London.

Melville, with a phalanx of docile MPs behind him, turned himself into a mover and shaker at Westminster too. He was indispensable to the rising star of the era, William Pitt the younger, who without him could not have won the General Election of 1784 that inaugurated 17 years in office.

Melville thus rose steadily in the offices of the United Kingdom, becoming Home Secretary, President of the Board of Control for India, and Secretary of State for War. As he rose, hundreds of other Scotsmen rose with him. He always gave them at least their fair share of what was going in public offices, in the armed forces, in the Empire. The English complained it was much more than a fair share.

In fact, however, both nations gained, because it was to their mutual benefit to be partners. Certainly it was better than if Scotland had remained subordinate to England, as she had been during the first half-century after 1707. To see the difference that made, we have only to look at the fate of Ireland, even after she was brought into the Union in 1801 by the efforts of Melville and Pitt.

The pair resigned when they could not persuade George III to grant Catholic emancipation, as they had promised to the former parliament in Dublin. Union in itself solved nothing, but the wisdom of a nation's leaders did. The wisdom of Melville gave Scotland and England a new relationship, as partners.

One sign of maturing partnership came in the muted

reaction to Melville's impeachment. Anti-Scottish prejudice had been rife in England. A half-century before, the Earl of Bute became the first Scot to serve as Prime Minister of Great Britain. Within months he was hounded out just for being a Scot. A Minister, Henry Fox, explained it like this: ''Every man has sometime or other found a Scotchman in his way, and everybody has therefore damned the Scotch.'' When Melville entered Parliament he was laughed at for this thick accent. Before long he could laugh back, because he got for himself and brother Scots all they wanted out of the Union.

By 1806 the same was true of the English. Scots soldiers were fighting alongside English soldiers against the French. Scots sailors alongside English sailors were keeping their island home safe against invasion. So the English interest in the Union, for security, was fulfilled. In Scotland the industrial revolution was under way, stimulated by world war and foreign markets. Scotsmen outdid Englishmen in opening up the trade of the Orient and the Americas. So the Scottish interest in the Union, for prosperity, was fulfilled too.

Scots and English together were keeping their country free and making it rich. Partnership meant each depended on the other. After 100 years of Unionism, it was working.

n The next instalment of Michael Fry's Millennium Project will appear on Thursday, July 2.