The origins of buying a commission can be traced back to medieval times, and the system was only stopped in 1871. At one time, any person or group could raise a body of fighting men if they had sufficient capital, and then offer their services to fight in a campaign. The men who put up the money to raise the body were offered commissions in exchange, and it was this tradition of giving commissions in exchange for money that became known as the Purchase System. Higher ranks naturally cost more than junior ones.
An officer could therefore purchase his first commission, say as an Ensign in a line infantry regiment, for £450. Once he was an Ensign, he then could purchase a Lieutenant's Commission for £700, however, he could then sell his Ensign's commission to a newcomer for £450, and therefore he only paid out an extra £250 for his promotion to Lieutenant. By trading his commissions like this, an officer could rise up to Lieutenant Colonel.
By the 1820s, an officer did not really need to purchase a commission any more, but many did to ensure that they got into the regiment they wanted, and it was still a common method of entry into the Cavalry and Guards Regiments.
In 1821 an examination was introduced, both for initial commissions and to get promotion. The rates were also increased. In 1871, after much discussion, the purchase system was abolished
The price of a commission depended upon the rank that was required, and the regiment. The following is taken from "The Edinburgh Almanack or Universal Scots and Imperial Register for 1829":
Full Price of Commission
Difference in Price to
be paid on Promotion
|Royal Regiment of Horse Guards|
|Dragoon Guards and Dragoons|
|Major, with Rank of Colonel||8300||3500|
|Captain, with Rank of Lieutenant Colonel||4800||2750|
|Lieutenant, with Rank of Captain||2050||850|
|Ensign, with Rank of Lieutenant||1200|
|Regiments of the Line|
|Fusiliers and Rifle Corps, having 1st and 2d Lieutenants|