The Medieval Roots of Inclusive Institutionspeople.bu.edu/chamley/Ec765-18/grantM.pdf ·...

The Medieval Roots of Inclusive InstitutionsFrom the Norman Conquest of England to the Great Reform Act

Charles Angelucci Simone Meraglia Nico Voigtländer

2018-04-18

Angelucci, Meraglia, Voigtländer Medieval Roots of Inclusive Institutions 18 April 2018 1 / 49

Table of Contents

1 Introduction

2 Trade =⇒ Farm Grants

3 Farm Grants =⇒ Parliamentary Enfranchisement

4 Farm Grants =⇒ Local Inclusive Elections

5 Inclusive Elections and Parliamentary Votes =⇒ National InclusiveInstitutions


Intro

The Medieval Roots of Inclusive Institutions

AJR(2005) found that the interaction of (Atlantic) trade with existing (“initial”)institutional constraints on the executive explained much of the First GreatDivergence.

Regardless of what we think of their work, we do generally expect thatconstraints on the executive (monarch) are relevant to economic development.

Question

But where do these “initial” institutions come from? That is, why do somecountries have constraints on the executive (embodied in inclusive institutions),and others do not?

Angelucci, Meraglia, and Voigtländer (AMV 2017) suggest that it’s trade,mediated by local self-governance.


Intro

The central argument

Trade creates demand for local self-governance, because of increasedefficiency of tax collection.

Local self-governance results in greater bargaining power with theexecutive and then representation in a parliament.

Self-governance also leads to inclusive local institutions.

National influence for boroughs with inclusive local institutions leads tomore inclusive national institutions.


Intro

Summary of Findings

With local self-governance (self-administered taxation), trade (proxied bygeography) leads to inclusive institutions.

In the absence of self-administered taxation, trade-favorable geographydoes not predict inclusive institutions.

If trade is exogenously degraded, local self-governance still predictsinclusive institutions.

The implication is that the land reform resulting from 1066 drove thedevelopment of democratic institutions even through the 19th century.

It’s a bold claim, but I think it’s well-supported.


Intro

My Favorite Control

Or, as AMV call it, a “placebo”.

Throughout, AMV make use of the mesne boroughs as a comparison forthe royal boroughs, showing that the existence of good geography for tradeonly predicts inclusive institutions well for royal boroughs.

Of course, the king didn’t randomly select boroughs to own.

So AMV also use a quantitatively weaker but qualitatively morecompelling control, boroughs that were trade-favored but which lost thatadvantage for various reasons.

Even boroughs where trade fell apart (mostly because their water gotmessed up) show the effects on inclusive institutions of having beentrade-favored centuries before.


Intro

Some history

In 1066 William of Normandy conquered England, resulting in awholesale replacement of the English elite (noble and ecclesiastical) andan almost total restructuring of land ownership.

In 1086 the Domesday Book was completed. It is a census/survey ofEngland in detail unsurpassed for over 700 years. As such it is the startingpoint for any medieval economic study of England. Its purpose was tofacilitate the collection of taxes.

Medieval England was divided into shires (counties), further subdividedinto hundreds and then manors. These then were composed of villages(rural settlements) and boroughs (urban settlements). Having a marketqualified a settlement to be a borough. Boroughs are the main unit ofanalysis here.


A page from the Book

Farm Grants

Commercial success creates demand for self-governance


Farm Grants

Administrative structure

About a quarter of all boroughs were owned by the king, approximately half bysecular mesne lords, and a quarter by ecclesiastical mesne lords.


Farm Grants

Tax farming

The farm of a borough was the fixed tax revenue due from the borough toits owner, determined based on the Domesday Book.

Of course, the king wanted to get in on the wealth generated by theCommercial Revolution. However, he has an information asymmetryproblem; he’s off fighting Crusades or whatever, and increasingly his taxesare on movable wealth rather than land. So he started auctioning off theright to collect the farm.

The winner of the auction was the “shire reeve” (sheriff) and he kept anyrevenue in excess of his bid, which creates obvious incentives forextortionary/predatory behavior.

Mesne lords usually didn’t have sheriffs; their territories were smaller andinformation asymmetries were less severe.


Farm Grants

Sheriffs are terrible

Thus royal boroughs have an extra layer of administration, one with lessvested interest in the welfare of the borough (sheriffs often only held theposition for a few years, while the mesne lords were permanent ownersand residents).

The sheriffs are stationary bandits, extracting as much as they can in ashort period of time. While there are a variety of attempts to curtail theirabuses, there’s still a fundamental principal-agent problem.

Solution: Farm Grants


Farm Grants

Farm Grants

The answer is self-administered tax collection, usually in the form of aCharter of Liberty, the most common type of which was the Farm Grant.

In a Farm Grant, the borough agrees to pay its lord (usually the king)higher annual taxes in exchange for the right to collect those taxesthemselves. The king benefits from higher revenue and less headachetrying to rein in the sheriffs. The borough benefits because they don’t havea sheriff (sheriffs are terrible).

AMV hypothesize that the benefit of a Farm Grant to a borough would begreater if the borough had a lot of trade; distortions and informationasymmetries are worse for trade than for land, and trade makes you richerso there’s absolutely more to gain.

Since sheriffs didn’t leave detailed records of their predation, we have nodata on how much the burgesses gained from Farm Grants, but they didneed to request them, so presumably the burgesses gained something.


Farm Grants

Trade leads to self-governance

So here’s AMV’s first claim: more trade leads to greater demand forself-governance, so places with lots of trade should be more likely toreceive Farm Grants. If this relationship holds for royal boroughs but notmesne boroughs, that’s evidence for their hypothesized mechanism.

We don’t have data on actual levels of trade, though, so we’ll make do withsome geographic variables likely to predict trade: being near rivers, theocean, and/or Roman roads.

AMV find that trade-favorable geography predicts Farm Grants (by 1348)for royal boroughs but not mesne boroughs.

While we don’t have trade levels, we do have wealth measurements fromthe Domesday Book for about half the boroughs. Trade-favoring geographypredicts wealth in 1086 for both royal and mesne boroughs. Wealth in1086 predicts Farm Grants for royal boroughs but not mesne boroughs.

Let’s briefly look at some tables with lots of numbers in fuzzy small print.


Trade-favorable geography predicts Farm Grants only for royal boroughs

Trade geography predicts wealth, commerce, and size for both mesne and royal boroughs.

Trade geography predicts wealth. Instrumented wealth predicts FGs only for royal boroughs.

Wealth predicts Farm Grants only for royal boroughs

Farm Grants

What possible problems do we have with this analysis?

My principal concern has to do with the endogeneity of a borough being royal.AMV do address this at length; they point out that the royal boroughs werelargely similar to mesne boroughs in wealth and large-scale geographicaldistribution. Their contention is that the boroughs selected to be royal werechosen for easy accessibility, because a distant lord (the king) cares more aboutthat than a local resident lord.

They have some sensible robustness checks and some fancy statisticaltechniques to try to address the problem, and I think they do a pretty good job.In particular, they examine sixteen boroughs that received Farm Grants butsubsequently lost their previous trade advantage, through harbor or riverdegradation (silting, watermills, dams, sinking into the ocean).


Geographic distribution of royal and mesne boroughs

Farm Grants

Wealth distribution of royal and mesne boroughs


Enfranchisement

Local self-governance influences national enfranchisement


Enfranchisement

The mother of parliaments

William I instituted a Curia Regis (“King’s Council”) for consultativepurposes, but it originally consisted only of the most powerful.

By the time of the Magna Carta (1215) knights and other lesser aristocratsand clergy were participating in the Great Councils.

In 1265, Simon de Montfort, de facto ruler of England, convened a GreatParliament. For the first time, elected representatives of the burgesseswere included.

In 1295 Edward I convened what became known as the Model Parliament.It followed the pattern established by Montfort’s Parliament, includingclergy, nobility, two knights from each shire, and two burgesses fromselected boroughs.

Those boroughs that were empowered to send representatives toParliament are the enfranchised boroughs.


Enfranchisement

What’s a parliament for?

The main purpose of Parliament was for taxation, specificallyextra-ordinary taxation.

When the king wanted to fight a war (which was pretty often) he neededmore money than was available through the ordinary taxes, so he wouldimpose extra-ordinary taxes.

This required extensive negotiations with the payers of the taxes.

At this point Parliament could be considered as an institution to reducethe transaction costs of this negotiation — rather than negotiate the taxeswith everyone who was paying, require the taxpayers to choose a smallernumber of people to represent them in negotiations.

Later they get uppity and start morphing into a legislature.


Enfranchisement

Local self-governance leads to enfranchisement

AMV claim that the boroughs with more self-governance had a strongerbargaining position and therefore were more likely to receive a seat at thetable in these negotiations.

In this argument, boroughs with Farm Grants, by self-administering taxes,had private information about wealth (especially movable wealth) andhence benefited from the information asymmetry.

The Farm Grant boroughs also had existing tax collection infrastructure,and had often purchased the right to keep the sheriff out altogether.

Finally, since extra-ordinary taxation was more concentrated on movablewealth and trade than the ordinary taxation was, commercial centers had aspecial interest in being involved in the negotiations.


Enfranchisement

Some numbers

By 1348, 129 boroughs have seats in Parliament.

62 out of 87 Farm Grant boroughs have seats; 67 out of 462 boroughswithout Farm Grants have seats in Parliament.

Why would the king ever enfranchise a non-Farm Grant borough?

A quirk of this system is that while mesne boroughs paid ordinary taxes totheir mesne lord, extra-ordinary taxes were paid to the king.

The king also employed strategic enfranchisement, attempting to packParliament with his supporters.


Another table with lots of numbers in small fuzzy print

A table I probably should have left out

Enfranchisement

Other rights purchased also associated with enfranchisement


Enfranchisement

How are we doing with all this?

Maybe I’m just credulous, but this all works for me. When we control for FarmGrants, trade-favorable geography no longer predicts a seat in Parliament, anda 2SLS using trade geography as an instrument for Farm Grants shows nostatistically significant effect of being a royal borough on enfranchisement. Theresults are robust to different Parliaments. Positive evidence for AMV’sproposed causal story is that Farm Grant boroughs that purchased additionalconstraints on executive authority were even more likely to get a seat inParliament.

This is a somewhat less interesting result than the first step, though; showingthat a borough that obtained some rights from the king was more likely to beable to obtain other rights from the king isn’t too earth-shattering.


Inclusive Elections

Self-governance leads to inclusive institutions


Inclusive Elections

Self-governance leads to self-governance

Starting in the 14th century, boroughs could buy Charters of Incorporation.

Among other effects, these created city councils and mayors for theborough.

AMV consider a borough to be strongly influenced by the king if the kingappoints the first council and mayor and subsequent officials areappointed by existing council members and/or mayors.

Of 157 boroughs with Charters of Incorporation between 1345 and 1641,66 were strongly influenced by the king.


It’s a table

Inclusive Elections

Farm Grants lead to inclusive MP elections

AMV use a variety of indicators for Parliamentary elections in the periodfrom 1820–1831.

This seems like a big jump in time to a fairly narrow period.

One consequence is that they only include boroughs with seats inParliament in 1820–1831 with available data.

They do some robustness checks using data from 1690–1715, 1754–1790,and 1790–1820.

I don’t have much to say about this. AMV are piggybacking on data fromAidt and Franck (2015) and don’t provide much detail. Some of thecontrols sound like they could introduce some highly correlated regressorsand run into multicollinearity problems.


Inclusive Elections



My Favorite Control

Roundheadedness and Reform-mindedness

Farm Grants predict Roundheadedness



The English Civil War

From 1629–1640, Charles I did not summon Parliament at all. He keptfighting wars, though, so he needed some other source of revenue.

Charles sold monopolies, customs farm licenses, and imposed variousother unpopular measures to raise money.

In 1640 Scotland rebelled (as it does on a regular basis). Charles had runout of fundraising schemes, so he summoned Parliament and waspromptly subjected to eleven years worth of pent-up complaints. Hedissolved Parliament almost immediately, attacked Scotland, and gotbadly beaten.

Scotland invaded northern England and Charles was forced to tryParliament again. He summoned Parliament in November 1640. ThisParliament would last thirteen years (and be aptly named the LongParliament).



Calling for volunteers

Next a rebellion broke out in Ireland (also a longstanding tradition).Obviously an army needed to be raised, but mutual trust of the King andParliament was near zero. Neither trusted the other with influence overthe new army, and each side started independent preparations to createarmies under their own control.

Parliament issued the Militia Ordinance without royal approval,appointing its own military commanders and ordering local militias tocontribute soldiers. In response Charles dusted off the hoary oldCommissions of Array, a medieval institution for raising troops from theshires.

While many areas tried to remain neutral, it became increasingly difficultto placate both parties, and most boroughs were forced to choose sides.

Parliamentary records mention 31 boroughs having raised troops insupport of Parliament. Almost all of them were Farm Grant boroughs.



Farm Grants predict Roundheadedness


Perhaps you would prefer some econometrics

My Favorite Control


Looks Good From Here

Having a navigable river and/or being near a Roman road in the 11th century isa strong predictor of a borough supporting Parliament during the Civil War,but only if the borough was originally royal. Crucially, once we control forFarm Grants, having been a royal borough is in itself useless for predictingsupport for the Roundheads.



Farm Grants predict Reform-mindedness

By the early 19th century, Parliament was showing its age. It was less andless representative of industrializing Britain.

Some booming areas with rapid population growth (e.g., Manchester) hadno representation in Parliament.

Other, sparsely populated, rural boroughs were heavily over-represented(the “rotten” boroughs). Gatton had no inhabitants at all, but still hadseats in Parliament.

Different boroughs had different laws about who could vote inParliamentary elections. In some the vote was restricted to a mere handfulof powerful men, or even to a single large landowner.

The Reform Bill of March 1831 aimed to change all that. It would havestandardized a uniform, broad franchise across the United Kingdom,eliminated rotten boroughs, and enfranchised the new, rapidly expandingindustrial boroughs.




Earl Grey (who supported the Reform) headed a minority government.The Reform Bill passed in the House of Commons but the bill failed in theHouse of Lords.

This led to the collapse of the government and new elections.

The new elections were essentially a referendum on the Reform Bill, andthe Whigs were returned to power with a commanding majority, andpassed the 1832 Reform Bill.

Parliament was radically reformed by the new law, with 56 boroughsdisenfranchised and 43 boroughs newly enfranchised. It more thandoubled the size of the electorate (from 3% to over 6% of the population),giving the right to vote to all property-owning males.




AMV find that Farm Grants predict MP votes on the Reform Bill 1832.

They do some sensible controls, in particular controlling for votes inMarch 1831, so that they find that having had a medieval Farm Grantseveral centuries before is a pretty good predictor of the electoral swingbetween the 1830 Parliament and the 1831 Parliament.

Unsurprisingly, it is a bit difficult to sort out the appropriate causal storyfor these results. AMV’s primary explanation is that Farm Grants led tocommercial wealth which led to support for an electoral reform thatwould strengthen the pro-trade coalition.

Another possibility is even simpler; as previously mentioned, Farm Grantspredicted broad franchises, and MPs elected by electorates more closelyresembling those that would result from the Reform Bill would be morelikely in favor of it.


My Favorite Control


Conclusions?

I don’t expect to get nearly this far, so I’ll just leave this as an open-endedquestion.


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