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States of Credit

States of Credit: Size, Power, and the Development of European Polities

David Stasavage
Copyright Date: 2011
Pages: 224
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  • Book Info
    States of Credit
    Book Description:

    States of Creditprovides the first comprehensive look at the joint development of representative assemblies and public borrowing in Europe during the medieval and early modern eras. In this pioneering book, David Stasavage argues that unique advances in political representation allowed certain European states to gain early and advantageous access to credit, but the emergence of an active form of political representation itself depended on two underlying factors: compact geography and a strong mercantile presence.

    Stasavage shows that active representative assemblies were more likely to be sustained in geographically small polities. These assemblies, dominated by mercantile groups that lent to governments, were in turn more likely to preserve access to credit. Given these conditions, smaller European city-states, such as Genoa and Cologne, had an advantage over larger territorial states, including France and Castile, because mercantile elites structured political institutions in order to effectively monitor public credit. While creditor oversight of public funds became an asset for city-states in need of finance, Stasavage suggests that the long-run implications were more ambiguous. City-states with the best access to credit often had the most closed and oligarchic systems of representation, hindering their ability to accept new economic innovations. This eventually transformed certain city-states from economic dynamos into rentier republics.

    Exploring the links between representation and debt in medieval and early modern Europe,States of Creditcontributes to broad debates about state formation and Europe's economic rise.

    eISBN: 978-1-4008-3887-5
    Subjects: Economics, Political Science, History

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Illustrations
    (pp. ix-x)
  4. Acknowledgments
    (pp. xi-xiv)
  5. CHAPTER ONE Introduction
    (pp. 1-24)

    Among the many distinctive features of European state formation two have received particular attention—the invention of the concept of political representation and the development of a system of public credit. It is a matter of some debate whether Europe was unique in having a system of political representation—certainly rulers in other regions met with councils or assemblies—but it is probably not an exaggeration to say that this phenomenon initially advanced to its greatest extent in Europe. Likewise, while rulers in other regions developed mechanisms for deferring payment for goods or for receiving advances on tax collections, there...

  6. CHAPTER TWO The Evolution and Importance of Public Credit
    (pp. 25-46)

    This chapter reviews reasons why access to credit was important for European states, and it provides extensive new evidence on the evolution of public credit across five centuries, from 1250 to 1750. In this analysis there is a clear difference between city-states and territorial states, with city-states enjoying an apparent financial advantage that allowed them to begin borrowing earlier and to obtain access to lower-cost finance. This raises the possibility that the financial advantage of city-states depended on features of their representative institutions—the subject that I will take up in subsequent chapters.

    The ability to borrow was critical in...

  7. CHAPTER THREE Representative Assemblies in Europe, 1250—1750
    (pp. 47-69)

    So far I have suggested that city-states enjoyed an advantage over territorial states when it came to public credit, and it seems difficult to explain this advantage by referring exclusively to economic factors like levels of private interest rates or sources of revenue. I have not yet considered in detail the alternative possibility that access to credit depended on the structure of representative institutions. To address this question adequately we first need to establish a broad picture of the representative phenomenon in Europe during these centuries. Numerous historical sources provide evidence of a sharp distinction between the financial roles played...

  8. CHAPTER FOUR Assessing the City-State Advantage
    (pp. 70-93)

    The previous two chapters have painted a broad picture of the emergence of representative assemblies and the development of public credit in Europe. I have emphasized the strong contrast between city-states and territorial states and suggested that strictly economic factors may not suffice to account for this difference. City-states created a long-term debt earlier than their territorial neighbors, and on average they borrowed at significantly lower rates of interest. City-states also had more active representative assemblies that played a more direct role in managing and monitoring spending, taxation, and debt. The goal of this chapter is to bring the evidence...

  9. CHAPTER FIVE Origins of City-States
    (pp. 94-109)

    City-states had better access to credit than territorial states, and there are reasons to believe that this can be attributed to their small size and to the strong representation of merchants within their political assemblies. But why did city-states emerge in some European regions in the first place, whereas elsewhere the territorial state became the dominant mode of state organization? In this study I have so far been silent on this important issue. It has long been observed that within Europe, autonomous cities tended to emerge in a relatively narrow belt stretching from the Low Countries to northern Italy, and...

  10. CHAPTER SIX Three City-State Experiences
    (pp. 110-131)

    Up to this point, my empirical analysis has taken the form of a broad comparison involving a large number of states and a very long time span. I have identified an apparent financial advantage of city-states. I have argued that this financial advantage stemmed from the fact that public creditors were well represented in the governance of city-states, but creditor representation was itself dependent on underlying factors involving small geographic size and the presence of an elite that held liquid forms of wealth. The econometric tests in chapter 4 provide significant support for this argument, but even after considering these...

  11. CHAPTER SEVEN Three Territorial State Experiences
    (pp. 132-155)

    As with the previous chapter on city-states, the objective of this chapter is to ask whether detailed historical evidence supports the conclusions that I have drawn about territorial states. I have argued that territorial states found it more difficult to gain access to credit because of the weakness of their representative assemblies. The contribution of this chapter will be to confront the following question: if having a representative assembly with strong control over finance had major advantages, then why could territorial states not emulate the institutions present in their city-state neighbors? To answer this question I will consider the experiences...

  12. CHAPTER EIGHT Implications for State Formation and Development
    (pp. 156-166)

    I have attempted in this book to provide a broad picture that allows for a better understanding of two phenomena that observers since at least the eighteenth century have seen as somehow being linked—the development of a representative form of government and the establishment of a system of public credit. An enhanced appreciation of the intertwined history of representation and public credit in Europe can in turn inform us about broader scholarly debates on related subjects. In making these arguments I have been heavily influenced by the work of several key scholars. Like Charles Tilly, I emphasize that there...

  13. Bibliography
    (pp. 167-186)
  14. Index
    (pp. 187-192)