Notes
Outline
Institutions and economic growth.
Why did some countries create efficient institutions?
France.
Charles VII takes over a destroyed country after Hundred Years War, 1422.
Medieval sources of revenue depleted by war.
Creating nation state requires large and growing revenues.
France.
Charles effective in restoring order.
Estates General must approve levies.
Estates anxious to restore order.
Special right to levy turns into a permanent right.
Excluding nobles and clergy from taxation.
France.
Guilds become fiscal agents for the crown.
Taxation more effective.
Compare JP system in England.
Strengthens guilds.
Administrative bureaucracy.
Colbertism.
Jean-Baptiste Colbert.
Finance minister under Louis XIV (1661-83).
Colbertisme synonymous with mercantilism.
Economic reforms.
Efforts to reduce “particularism.”
But favored state monopoly and industrial control. Origin of laissez faire.
Frustrated by royal need for revenue.
Prohibitive tariffs lead to war with the Netherlands.
Spain in 1492.
Reconquest ends with capture of Granada, last Moorish stronghold.
Unification and consolidation of power.
Cortes grant taxing power.
Taxes increase 20 times between 1470 and 1540.
Expulsion of the Jews (and then Moriscos in 1609).
Loss of artisanal, commercial, and agricultural skills.
Columbus sets sail.
The Mestas.
Sheep guild.
Granted Royal privilege in 1273.
Transhumance rights in exchange for funds to finance reconquest.
Decree of 1501 reserves in perpetuity all land on which sheep have ever grazed.
Effect on enclosure.
Price controls on cereals.
Consulado of Burgos.
The Spanish empire.
The Spanish empire.
Bullion and Inflation.
Looted and mined gold and silver floods Spain and Europe.
Prices increase by more than a factor of three in Spain, and a factor of five in Brabant and England.
The Spanish empire.
The decline of Spain.
Revenues.
Americas less than 20 percent.
Netherlands largest source.
Costs.
Far exceed revenues.
Hapsburgs spend on military and wars to expand empire.
Effects.
Borrowing and bankruptcy.
Fiscal spiral.
Confiscation, monopoly, sale of titles.
The Netherlands.
Passes from Burgundy to the Hapsburgs (1477).
Both Burgundians and Hapsburgs encourage growth and trade.
Small taxes on many items in exchange for secure property rights.
Discourage monopolies, guilds.
The goose that lays the golden eggs?
The Netherlands.
Increased exactions lead to successful rebellion (1572-1581).
Antwerp sacked; commercial leadership moves to Amsterdam.
By 17th century, Dutch become commercial leaders of Europe.
Economic diversification.
The Dutch East India Company (1602).
“The First Modern Economy.”
England.
Government funded as an extended household.
Expenditures exceed revenues from Crown lands.
Sale of land to meet shortfall.
Elizabeth sells 25 per cent after 1588 war with Spain.
James I sells another 25 per cent.
Charles I (1625-1641) sells the rest.
Parliament controls taxes and customs.
Stuart England.
New customs impositions.
Sale of monopolies.
Expansion of peerage.
Packing the House of Lords.
James: a baronet for £1,095; price later falls to £220.
Loans secured under threat.
Purveyance.
Charles I seizes £130,000 of bullion stored in the Tower of London (1640).
Stuart England.
Parliament withholds revenues.
Demands respect for traditional property rights.
Common Law courts oppose monopolies.
Coke invokes Magna Carta.
Charles responds with Royal Prerogative.
Prerogative courts.
Special laws for individuals.
Star Chamber.
Fires Coke and other judges.
The English Civil War.
Coalition builds against the Crown.
Marginal incentive to support the king declines as costs of other people’s privileges mount.
Unlike continental monarchs, English king has no standing army.
The English Republic.
Star Chamber Abolished.
Restrictions against monopolies enforced.
Regular standing parliament.
Royal administrative mechanisms abolished.
Act of 1660 abolished feudal tenures, effectively making England a fee simple society.
The restoration.
Cromwell unable to find a stable form of government.
Son proves a poor successor.
Stuarts restored to power (1660).
Royal abuses begin again.
“Rechartering” the Whigs out of parliament.
James II turns on his own followers (1686-88).
The Glorious Revolution.
Parliament welcomes invasion by William of Orange and Mary, Protestant daughter of James II.
Parliamentary supremacy.
Fiscal revolution underpins political revolution.
A self-enforcing constitution.
A self-enforcing constitution.
Required parliament’s assent for major policy changes.
Allowed wealth-holders to veto what wasn’t in their interest.
Ways of reneging unilaterally eliminated.
Limited Crown sources of funds.
Audit expenditures.
Prerogative courts abolished.
Judicial tenure.
Self enforcing.
Credible threat of dethronement.
The fiscal revolution.
Parliament agrees to put government on sound financial footing in exchange for veto power.
Evidence: lenders now willing to supply funds.
After 1688, government has access to unprecedented funds.
Tenfold increase, 1688-1697.