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State Cash Resources and State Building in Europe 13th-18th century

 | 
Katia Béguin
, 
Anne L. Murphy

Taxation and the Rise of the State: Introductory Remarks

Katia Béguin et Jean-Philippe Genet

Note de l’éditeur

The first part of this introduction is by Jean-Philippe Genet, the second part is by Katia Béguin.

Texte intégral

  • 1 For a ‘global’ view of this history, see B. Yun-Casalilla, ‘Introduction: the rise of the fiscal st (...)
  • 2 ‘L’État moderne: un modèle opératoire?’, in J.-P. Genet, L’État moderne: genèse, Paris, CNRS éditio (...)
  • 3 R. Bonney and W. M. Ormrod, ‘Introduction’, in W. M. Ormrod and R. Bonney (ed.), Crises, revolution (...)

1Clichés die hard in history as elsewhere, and the origins of the tax system in Europe1 are still associated with the modern period of the history of the state, with a clear division into two phases: the medieval ‘feudal state’ and the period of the modern ‘fiscal state’ in the sense in which historians generally use that term. It is partly in order to break down that barrier that I have adhered to the expression ‘modern state’ in the various collective projects that I have coordinated or directed in recent years,2 whereas some of the participants in these projects actually questioned whether we could talk about a ‘state’ in the medieval period. More usefully, Richard Bonney and Mark Ormrod suggested creating a typology of states according to their ‘fiscal constitution’.3 From reading the list of criteria that they drew up, it was clearly during the fourteenth century that western monarchies began to cross this frontier between the feudal state and the fiscal state, a frontier that the Italian cities had crossed in the previous century, even if, in that case, we have more justification for challenging the term ‘state’ owing to the small size of their territory. But there is another point that they rightly highlight: namely, that the fiscal development of the European states was not linear. For example, we see that England in the fourteenth century was at the forefront of the development of the European fiscal state, but that under Henry VII and at the start of Henry VIII’s reign it was more like a ‘feudal state’, and that France only succeeded in creating a more or less stable fiscal system after 150 years of abortive attempts.

  • 4 Documented in Richard Bonney (ed.), Economic systems and state finance, Paris, Presses universitair (...)
  • 5 The works of Charles Tilly, The formation of national states in western Europe, Princeton, Princeto (...)

2The crucial factor in the emergence of tax systems is war. In terms of balancing expenditure and revenue, a feudal state can meet a sovereign’s needs, even if they are substantial, so long as they are fairly regular, as clearly illustrated by thirteenth-century France. But when a major war erupts, the available reserves (if any) are quickly exhausted once troops need to be deployed rapidly on the battlefield. Even if the troops are not always paid, they always get supplies and equipment. Taxation is then essential. That accounts for its central position in the change in medieval political structures that led to the rise of the modern state.4 I shall use a metaphor: tax is the fuel that drives the state’s engine of expansion, namely war. A preliminary comment is in order here: when taxation reappears in the twelfth century in the first communes and then, in the next century, in the feudal states, be it directly or indirectly, it is immediately linked closely to borrowing, and therefore to debt and credit. That is precisely because of its link to war: raising taxes takes time, whereas military needs are generally immediate. The funding of wars is therefore based less on the actual tax than on the supposed taxability of a commune or state: if the actual amounts levied are out of line, there will be resounding bankruptcies. In addition, war also ruins states; if a war ends in disaster it may even lead to a state’s extinction.5 That makes the fuel even more indispensable: it is inexhaustible, except that renewal of the supply is closely dependent on the consensus that makes it legitimate. It is not a natural resource, but a political resource which, if exploited unduly, makes societies quick to rebel. That amounts to saying that the rise of the modern state is not dependent only on taxation. Tax plays a crucial role in the process, but the rise of the state also depends on the degree of consensus obtained from political society.

  • 6 See Elisabeth Magnou-Nortier (ed.), Aux sources de la gestion publique, Lille, Presses universitair (...)
  • 7 See C. Wickham, ‘Lineages of western European taxation 1100–1200’, in M. Sánchez Martinez (ed.), Co (...)

3The form of taxation that re-emerged from the twelfth century onwards varied greatly from place to place. But there was definitely a gradual break with the old system of taxation, even if the speed and timing of that break are still very much the subject of debate. Some people consider that the feudal dues, at least in the form still levied in the great Carolingian monasteries during the ninth and tenth centuries, were nothing other than the vestiges of the Roman tax system which the monks continued to apply thanks to their mastery of the written culture.6 While that is not impossible, it is nevertheless the case that by the eleventh century the public origin (i.e. fiscal in the true sense) of these levies had been forgotten and they had become feudal. Moreover, like the Roman taxes, these feudal dues based on both men and land were regular and largely foreseeable; they were linked to the exercise of the dominium, which can be understood as public authority exercised collectively by the domini class which seized control at the time of the collapse of the Carolingian Empire, and imposed the dues on their dependants. Whether feudal dues originated from public taxation or not, whether they are considered to be public, private or privatized, matters little. The new authorities that developed in the twelfth century only had access to resources of feudal origin (e.g. tolls, tonlieux [stallholder taxes], and market taxes), and some vestiges of more recent albeit rather unproductive public taxes, such as the money that the English king still derived from the Danegeld introduced by the Anglo-Saxon kings in the tenth century to buy off the Viking fleets when they threatened to ravage the country. The ‘droit de gîte’ [duty to provide board and lodging for the king and his entourage], the profits from coinage, and the conversion of the military obligations of freemen into a contribution only raised modest amounts compared to military needs. A public tax system had yet to be recreated, even though conditions were favourable in twelfth-century Europe, in particular with regard to the strong growth of the available resources and the improvement in written record-keeping techniques.7

  • 8 Gerald L. Harriss, King, parliament and public finance in medieval England to 1369, Oxford, Clarend (...)
  • 9 Vincent Moss (‘Normandy and England in 1180: the pipe rolls evidence’, in David Bates and Anne Curr (...)

4In any case, leaving aside the levies imposed on the people, the assistance that vassals were obliged to give to the feudal lord was strictly limited by custom, even if the principle was certainly acknowledged. In case of urgent need, the commune or the prince could only rely on arbitrary measures. Regarded as an abuse, the levies depended on the balance of power and were therefore by their nature unstable. The sovereign’s vis et voluntas always wins when he is powerful, but when put to the test it turns against him. The Plantagenet king, Henry II, had bitter experience of it in the wars that tore his family apart.8 The efforts of Richard the Lionheart and John Lackland to increase the revenues from the Duchy of Normandy in order to fortify and defend the duchy in a manner comparable to that of Philippe Auguste in Île de France were probably a major factor in the abandonment by the Norman vassals of the suzerainty of the English king.9 Neither Philippe Auguste nor John Lackland managed to convert their arbitrary impositions into a tax, though the tax system of the Crusades did provide them with a model. True, when he lost the major part of his continental fiefs in 1204, John Lackland did impose a levy on his English subjects’ movable assets, based on that demanded for the ransom of Richard the Lionheart (justified both from the point of view of the Crusade – the crusader’s return – and that of the feudal system – the feudal lord’s ransom). The Thirteenth of 1207 raised £57,421, ten times more than the most profitable of all other taxes available to the king! However, that overwhelming success was not repeated. His subjects stubbornly refused to pay the subsequent taxes. And Frederick Barbarossa, practically at the same time, did no better when he tried to increase his power. As we shall see, his action was one of the indirect causes of the revival of the tax system in the western world, but it was to his cost.

  • 10 See C. R. Brühl, Fodrum, gistum, servitius regis, Cologne, Kölner historische Abhandlungen 14, 1968 (...)
  • 11 To follow these developments, see Philip J. Jones, The Italian city state. From commune to signoria(...)
  • 12 Jean-Claude Maire-Vigueur, Cavaliers et citoyens. Guerre, conflits et société dans l’Italie communa (...)

5In fact, public taxation reappeared more or less simultaneously on two occasions, and first in Italy. Traditionally, the developing communes had to pay the holder of the regnum Italie, in fact the Holy Roman Emperor, a tax due when the emperor was resident in Italy (which rarely happened): this was the fodrum. Frederick I Barbarossa made an abrupt change to the scale of this levy, raising it to 30,000 silver marks, a huge sum in the mid-twelfth century, and tried to collect it annually: Germany was poor and would supply the men; Italy was rich and would supply the money.10 There followed endless wars, exacerbated by the fight between popes and emperors. Not only was there fighting among the cities themselves, according to their respective alliances (Guelphs supporting the pope, Ghibellines the emperor), but there were also opposing factions within each city.11 When they finally seized their autonomy from the emperor, some of the cities took the fodrum and made it the nucleus of their own direct tax system, while at the same time developing the indirect taxation required for their military needs. Reimbursement for horses lost in the war by members of the militia, the elite mounted warriors, soon became the biggest item in city budgets.12 The money was there; thriving trade and a vigorous economy made it possible to collect both direct and indirect taxes. This society of bankers and merchants also had the financial techniques: all or nearly all the technologies of taxation and credit originated in Italy, including public debt consolidation and the creation of government stocks, as well as theoretical debate on questions such as whether the interest charged on these stocks counted as usury. They had all the technologies, but state-building had not occurred, or only on a small scale. The Italians continued to play a leading role in the development of the European states, their tax systems and their finances.

  • 13 Frederick H. Russell, The just war in the Middle Ages, Cambridge, Cambridge University Press, 1975.

6We have already mentioned the other event that gave rise to taxation, namely the Crusades. In developing the theology of the Crusades the popes also developed the canon law concept of war: the Crusade is essentially a just war, and it is therefore legitimate to raise funds for the purpose of waging such a war.13 Financed initially by donations, following the loss of Jerusalem the Crusades were funded by taxation, often levied by the kings leading the expeditions. After a number of attempts, in 1188–1189 the king of France and the king of England, with some difficulty, raised the famous Saladin tithe, and from 1199 the papacy created its own tax based on tithes. Theologians and lawyers then seized on the subject, defining alongside the just war the doctrine of necessitas which, while it must of course be invoked wisely, makes the levy legitimate since everyone has to contribute towards the defence of everyone’s property, an obligation extended to the clerics from the end of the thirteenth century. Here, the new definitions of the canon lawyers joined the old feudal principle of aid already mentioned, which is also the main basis for one of the other aspects of state power, the military service obligation of vassals and, by extension, of male subjects (the English fyrd or the French barons and vassals). The introduction of the new culture of taxation and its institutional and financial mechanisms therefore took place gradually during the thirteenth century, especially in England but also in France and in Castile. This legal work was able to differentiate between public and private wars. The capacity to conduct a public war and therefore to have access to taxation became one of the distinguishing characteristics of the state as opposed to other forms of power.

  • 14 Lydwine Scordia, ‘Le roi doit vivre du sien’. La théorie de l’impôt en France XIIIeXVe siècle, Par (...)

7The creation of efficient tax systems in fact faced some formidable obstacles. The English and Castilian monarchies were the first to try to overcome them. We saw this with the ill-fated attempts by John Lackland based on the precedent of Richard the Lionheart’s ransom. The Reconquista almost made Castile into a crusader state. In 1091, it was thus possible, via the pedidos, to ask for contributions to pay for the infantry. But the sovereigns very soon discovered their limits, with the English kings failing to convince their subjects that re-conquering their continental lands was any concern of theirs – not to mention the fiasco of the Sicilian affair which triggered the ‘Barons’ War’ – while the involvement of Alphonse X in the race for the imperial title ruined his credit, both actually and figuratively. In France, the domanial state par excellence, the levies imposed for the Crusade and then for the ransom of Louis IX were not enough to make people forget the exceptional wealth of the French royal domain, emphasized incidentally by the saying that ‘the king must live on his own resources’.14 Even if war was always the trigger, as we have said, there were in fact many structural changes in the context of the various processes, some long and some not so long, which led to the permanent establishment of the tax system and caused subjects to accept this new type of levy as an addition to those that already existed.

8I shall mention three of those processes which took place in parallel and were involved in the short, medium and long term, enabling the structure to become firmly established. In the short term, for a period of about twelve years from 1282 to 1294, Europe was in turmoil. On 31 March 1282, the population of Palermo massacred the Angevin garrison installed by Charles of Anjou who, under the papal aegis, had conquered the old Norman kingdoms of Naples and Sicily which the Emperor Frederick II of Hohenstaufen had made his seat of power. The population sent for the Aragonese fleet, the king of Aragon, son-in-law of Frederick II, being the proclaimed heir of the Hohenstaufen cause. Immediately, the two alliances, the Guelphs (loyal to the pope) and the Ghibellines (very theoretically loyal to the king of Aragon but essentially anti-Guelph) confronted one another. The battle between the two kingdoms of Naples (Angevin) and Sicily (Aragonese) only died down in the mid-fifteenth century, but the system of alliances led to a succession of conflicts throughout the Mediterranean which only came to an end when absorbed and remodelled in the Italian wars between a pro-French and a pro-Spanish alliance.

9The other trigger was much less dramatic: at first it was only recurrent scuffles that degenerated into a battle between Breton sailors and Norman sailors off Pointe Saint-Mathieu. This came after innumerable incidents relating to pleas by the English king’s Gascon subjects to the Paris parliament. One thing led to another, unleashing a war between France and England which, although it was fought in peripheral regions (Gascony, Scotland, Flanders, Brittany), continued until it became known as the Hundred Years War, when the king of England, tired of being defeated, decided to invoke the dynastic argument and claimed the French crown. The two series of conflicts soon merged. The Capetian powers (France and Angevin Naples) formed alliances with Scotland, Navarre, Castile and the Guelph powers, while England tended to side with the Ghibelline powers, Aragon and Portugal. These alliances were subject to reappraisal, the Empire itself switching from the Ghibelline side with the House of Wittelsbach to the Guelph side with the House of Luxembourg.

  • 15 On developments concerning war during the period, see Philippe Contamine, La guerre au Moyen Âge, P (...)

10One of the consequences of the more or less continuous wars was the need for the belligerents to go beyond the customary compulsory service and pay professional troops, whose equipment was becoming increasingly sophisticated, including the introduction of artillery, which further increased the cost of war (10% of the French monarchy’s military expenditure in the second half of the fifteenth century), not to mention the additional costs entailed in remodelling fortifications.15 Of course, that expenditure corresponded to income for the recipients of the pay: generally, that was the aristocracy – even if the social realities corresponding to this ‘portmanteau word’ vary greatly from one part of Europe to another. Taxation thus ensured a transfer of wealth from the population of taxpayers to a specific social group. That should be borne in mind when I speak of the long term.

  • 16 M. Lauwers and L. Ripart, ‘Représentation et gestion de l’espace dans l’Occident médiéval’, in J.-P (...)
  • 17 Vincent Boulet, ‘Henri VI et le gouvernement de son royaume de France 1422–1436’, doctoral thesis, (...)
  • 18 J.-P. Genet, ‘Disunion: true hallmark of the history of Europe?’, Europaeum Review, VIII (1), 2007, (...)

11In the medium term, another structural change concerned the territorialization of power, which was closely linked to the spread of Roman law in medieval Europe from the end of the eleventh century. One of its consequences is crucial for us: it is the concept of ‘territory’ which is also linked to the concepts of necessitas and bellum justum mentioned earlier. The process of territorialization began with the strict definition of sacred areas by the Gregorian reform which reintroduced in the west the Roman idea of territory, taken up by the emperor and the sovereigns who used it to their advantage as ‘emperors in their realm’.16 But when a sovereign, such as the king of England, found that, as the duke of Aquitaine, he came under the authority of another sovereign, the king of France, owing to the rash provisions of the Treaty of Paris of 1259, justice and law became tools of political domination. The superposition of powers over the same territory, which was a common and viable practice under feudalism, was totally at odds with the exercise of state sovereignty: the king-duke could not govern effectively in Aquitaine under the higher authority of the king of France. In 1435, when the French king Charles VII and the duke of Burgundy came to an agreement at Arras, the solution imagined at the time was to reserve for the duke of Burgundy his own quota of councillors in the Paris parliament:17 the attempt was not repeated. The territorialization of power necessarily led to territorial competition, because maximizing one’s territory meant maximizing one’s resources: and the system of alliances kindled conflicts, especially as states did not act only on their own behalf but also on behalf of their allies. And conflicts required resources … War therefore became a permanent feature of Europe, to the point where we can say that it was war that made Europe:18 Europe was nothing other than an area of territorial competition between interlinked powers which were condemned to wage war in order to survive and avoid being eliminated.

  • 19 The most convincing account of the Marxist analysis of the great depression in the Middle Ages is p (...)

12In the long term, there was a third process at work: the reversal of the economic cycle. After at least three centuries of sustained, rapid growth which revitalized towns and trade, and led to the monetization of the economy, the territorial expansion of the Latin Christian world and the rebalancing of power with the Muslim world, everything came to a halt with the outbreak of the Black Death in 1348–1349. In successive waves, this plague reduced the population of Europe by almost half, the low point coming around 1450.19 People in those days clearly denounced taxes as one of the evils which, like plague, war and famine, make life so difficult. But things are more complicated in that the redistribution effected by taxation was precisely one of the factors in the fundamental transformation of European society and the European economy. In fact, taxation changed the nature of the social connection between sovereigns and elites, with the feudal warmongering aristocracy and with the urban oligarchies. While the aristocracy viewed any progress by the state as an attack on its freedoms, it was among the first to benefit from the financial transfers, via the gifts, wages and salaries that taxation makes possible. Tax thus appeared as a surcharge, making it possible to extract a surplus where the feudal levy was static or even declining. The towns benefited from the income derived from government loans and annuities. Redistribution became a crucial political issue. When that situation led to confrontation and civil war, it forced sovereigns and political societies to engage in a dialogue (even if there was a conflict of views), and gave states the means to exercise more or less effective control over the dominant classes, even if – as in France – it meant having to grant them exemption from paying direct taxes.

  • 20 Richard W. Kaeuper, Bankers to the Crown: the Riccardi of Lucca and Edward I, Princeton, Princeton (...)
  • 21 Terence H. Lloyd, The English wool trade in the Middle Ages, Cambridge, Cambridge University Press, (...)
  • 22 W. M. Ormrod, in R. Bonney (ed.), Economic systems and public finances, op. cit.

13As we have said, when war came, the need for funding was urgent. Feudal resources were not enough, especially as taxation was the principal factor that made borrowing possible. Two contrasting examples can be used to analyse the process. England constructed an effective fiscal system in two stages. First, it took advantage of its geographical position and the dependence of the great Flemish cloth trade on English wool. In 1275 Edward I introduced an export tax on raw wool, which was increased at the start of the war with France in 1294. He was thus able to borrow from the Riccardi of Lucca or the Frescobaldi of Florence. The customs duty accounted for half of the repayments made to the Riccardi, who were all the readier to lend since they received the duty.20 But while the system easily absorbed the cost of conquering Wales, that was not so in the case of the war with France: Edward I’s bankers all went bankrupt. That disastrous experience was repeated at the start of the Hundred Years War with Edward III and his Florentine bankers, the Bardi and the Peruzzi. Edward III turned to the English, Hanseatic or Flemish merchants, finding other solutions based on money advanced on the sale of wool; that led to the creation of the Merchant Staplers (established in Calais in 1363) whose company was repeatedly a source of credit.21 The use of taxation was a key explanatory factor in the English military capability. According to the database developed under the direction of Richard Bonney for the programme Origins of the modern state, between 1337 and 1342 the king of England – a little country – had access to the equivalent of 66.5 tonnes of fine silver per annum, obtained from extraordinary resources and borrowing, whereas the king of France – a huge country with four times the population – had only 42.5 tonnes, derived mainly from ordinary resources, i.e. the domain.22

  • 23 W. M. Ormrod, Edward III, New Haven, Yale University Press, 2011, pp. 293–298.
  • 24 J.-P. Genet, ‘La Normandie vue par les historiens et les politiques anglais au XVe siècle’, in P. B (...)
  • 25 G. L. Harriss, Cardinal Beaufort. A study of Lancastrian ascendancy and decline, Oxford, Clarendon (...)
  • 26 C. Barron, ‘London and the Crown 1451–1461’, in J. R. L. Highfield and Robin Jeffs (ed.), The Crown (...)
  • 27 W. M. Ormrod, ‘Urban communities and royal finance in England during the later Middle Ages’, in M.  (...)

14It is true that the English system at that time certainly did not operate smoothly: but after the violent crisis of 1340–1341, which forced Edward III to return to England leaving his crown and treasure in Ghent as a pledge, the king understood that he needed to negotiate subsidies with parliament, and thus obtained the finance that enabled him to conduct the victorious Crécy campaign and to take Calais.23 The agreement between parliament and the royal government was still working under Henry V. Suffice it to say that an impressive number of members of parliament took part in the Agincourt campaign and the conquest of Normandy.24 But the English tax system was still tied to specific needs – generally, of course, war. And the political price had to be paid: defeat and the inability to restore order in the country led to the collapse of the system, and after the death of Cardinal Beaufort, whose immense fortune partly funded the end of the English experiment in France,25 the London merchants’ refusal to continue lending to the Lancastrian monarchy led to the latter’s downfall.26 England certainly knew how to construct a fiscal system: while Edward IV and Henry VII made little use of it, renouncing an aggressive foreign policy, Henry VIII reactivated it. Conversely, and despite its links with the London merchants, the English monarchy did not succeed in building a true financial system on the basis of its fiscal system.27

  • 28 The essential work is still that by John B. Henneman, Royal taxation in fourteenth century France. (...)
  • 29 J.-F. Lassalmonie, La boîte à l’enchanteur. La politique financière de Louis XI, Paris, Comité pour (...)
  • 30 B. Chevalier, Les bonnes villes de France du XIVe au XVIsiècle, Paris, Aubier-Montaigne, 1982.

15France took the opposite route. The brutal policy of Philip IV (Philip the Fair), who confiscated the assets of his potential lenders, Jews or Lombards, and then expelled them, did not improve the credit of the king of France and he did not manage to secure any real fiscal cooperation from the meetings of Estates-General that he had initiated in his war against Boniface VIII. The more serious attempts by Philip V and Philip VI28 were unsuccessful, and it is not surprising that the king of France resorted to debasing the coinage on a massive scale, even if that did cause slightly more disruption to an economy already ailing because of the war. But in the end, tired of the violence and pillaging of the English and the Grand Companies, the French agreed that Charles V could develop the first fiscal system: however, he abandoned it on his deathbed and the wave of anti-fiscal revolts that broke out at the time showed that his decision had less to do with remorse and was prompted more by political realism. It took another series of failed experiments on the part of the French monarchy before taxation was accepted, this time with so little reluctance that from 1444 the king of France set the amount of the levy without consulting the estates; Louis XI was able to raise the taxes to an exceptionally high level.29 But the paradox of this fiscal power was that it depended on exemption for the nobility and the urban oligarchy. And despite a close agreement with the ‘good towns’,30 the French monarchy also failed to construct a financial system to perpetuate its fiscal system.

  • 31 D. C. North and R. P. Thomas, The rise of the western world: a new economic history, Cambridge, Cam (...)
  • 32 See A. P. Usher, The early history of deposit banking in Mediterranean Europe, I, Cambridge (Mass.) (...)
  • 33 J.-Y. Grenier, L’économie d’Ancien Régime. Un monde de l’échange et de l’incertitude, Paris, Albin (...)

16In the Middle Ages, it was in fact only the Iberian monarchies that managed to perpetuate taxation with a financial credit structure comparable to that of the great Italian cities: moreover, it did not always reinforce the power of their sovereigns, particularly in the case of the kings of Aragon who forfeited part of their autonomy to the Barcelonan bourgeoisie and the Generalitat. But all the same, economists of the institutionalist school such as Douglass North31 have shown that in the late Middle Ages states did create the conditions for future economic development by fostering a decline in transaction costs. Taxation – with the credit practices associated with it from the fourteenth century – was one of these decisive factors that made the operation of the economy more secure by helping to define national territory, offering sovereigns the resources which enabled them not to jeopardize the currency by destructive over-exploitation, and consolidating the credit systems, even though the development of public banks was still primarily a Mediterranean phenomenon.32 States thus made it possible to set up trading structures in which the mechanism of the advance could operate: according to Jean-Yves Grenier, that was the primary characteristic of what is known as ‘the Ancien Régime economy’.33

  • 34 F. Comín Comín and B. Yun Casalilla, ‘Spain: from composite monarchy to nation-state, 1492–1914. An (...)

17In fact, it was not just the tax itself and the associated financial techniques that made taxation a crucial factor in the development of the modern state: it was the penetration of political issues in society and the resulting reinforcement of the state’s authority that rendered the impact of taxation decisive. Once again, this must not be confined rigidly to the development of institutions: the English parliament was undoubtedly exceptional, but the French system (for example) – despite its defects in that respect – constantly obliged the monarchy to anticipate the reaction of its taxpayers. It was primarily at the political level that taxation proved essential in the Europe of the late Middle Ages. As we have said, public taxation has one major defect which is in fact its principal virtue: it entails a political risk, since it implies consent. In other words, the sovereign is forced into a continuous dialogue with political society if he wants the taxes to keep coming in, and that determines his borrowing capacity. In a recent work, B. Yun Casalilla contrasted the case of Portugal with that of Castile, which had fairly similar representative institutions in the fifteenth century.34 But since the Portuguese monarch had retained total control over the creation of the Empire and the profits derived from it, there was no longer any contact between the sovereign – who no longer needed taxes – and political society; that was never the case in Castile, though the process of colonization was even more dramatic there. It is this link between the ruling power and political society that is the decisive feature of state taxation.

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18In modern times there has been a decisive acceleration of the dynamics initiated or tried out on a small scale in the Middle Ages. The interactions between the assertion of state power, the rise of state fiscal capacity, and the expansion of state borrowing potential were amplified up to the end of the eighteenth century, when tax and debt became structural elements of the finances of all western European countries. The organization of these two complementary methods of mobilizing public resources gained unprecedented importance, because the ability of sovereigns to influence the amount of their future resources, by increasing taxes and issuing currency, enabled them to borrow in anticipation of their future tax revenues and to allocate the funds to current military needs. One of the most remarkable features of the last three centuries of the modern age as opposed to preceding centuries lies in the spread of the public debt in western Europe, a unique phenomenon that seems to have no equivalent anywhere else in the world before the nineteenth century. Long-term debt is particularly emblematic of the interdependence between the structure of the state, taxation and borrowing, since it presupposes the continuity of the state’s commitments (from one sovereign to the next) and sufficiently high and stable tax revenues to guarantee the payment of the interest.

19Recurrent and ever more expensive war has remained the main factor driving these developments. Financing wars has been the main motive for rulers increasing their tax revenues and issuing more substantial debt than in the past. Military conflicts have also been a key factor in shaping the collective acceptance – admittedly often relative and precarious – of recourse to solutions which implied overcoming or circumventing many obstacles. In making this retrospective assessment of the transformations achieved, we should not lose sight of the fact that they did not occur by themselves. The dominant philosophy of moderate, occasional taxation, the aversion to long-term debt which was essentially contrary to that philosophy since it was based on a high level of permanent taxation, and finally the fear of unsustainable debt, were concerns common to most states.

Imposing Taxation

  • 35 James B. Collins, Classes, estates and order in early modern Brittany, Cambridge, Cambridge Univers (...)

20The means to increase taxable wealth and the number of taxpayers were in fact subject to a range of geopolitical, political, cultural, social and economic constraints that restricted the scope available to rulers. Foreign expansion leading to the fiscal incorporation of conquered territories and populations or the development of trade and colonial markets obviously depended on the outcome of wars. What is more, the sudden introduction of new levies entailed a risk of uprisings among the people of border areas or colonies, if there was another military conflict that enabled them to enlist the support of other countries. The granting or negotiation of specific tax regimes for newly subject peoples were therefore common pragmatic solutions, though they only secured marginal additional revenue for the states. For instance, the expansion of French territory between the late Middle Ages and the sixteenth century resulted in the stabilization of a belt of peripheral provincial states which enjoyed a degree of fiscal autonomy and moderate taxation compared to the situation of the older provinces, prerogatives which were only slowly and incompletely eroded from the seventeenth century.35

  • 36 Patrick K. O’Brien, ‘Afterwords: reflections on fiscal foundations and contexts for the formation o (...)

21The route to internal fiscal growth, through the increase or standardization of taxes throughout the governed territory, was almost as arduous as imposing taxes on populations which acquired a new sovereign following an annexation. Indeed, direct taxes long retained the status of extraordinary contributions, justifiable by exceptional circumstances. In principle, they required the consent of a political society much more narrowly defined than the group of taxpayers, whatever the representative institutions that handled the dialogue between rulers and subjects or involved the latter in political decision-making. In practice, most sovereigns have tended to free themselves of this constraint of consent to taxation, and to restrict the consultation processes in modern times. Nevertheless, a sudden increase in the tax burden was still a potential source of social and political troubles. Revolts were accompanied by bad debts, and increased the cost of raising taxes, especially when they triggered a coercive response.36 Furthermore, definition of the tax base, management of the information on private wealth capable of being mobilized, the choice of taxation methods, and the establishment of an authority responsible for assigning and collecting taxes, caused problems which not all sovereigns were equally equipped to face and which they could not all solve in the same way. Tax evasion was a constant problem for modern states, lacking effective means of control. Evasion took many forms: smuggling, concealment of information on taxable wealth, obstacles to the reproduction of tax documents listing properties, destruction of those documents, and concealment or under-reporting of taxable income.

  • 37 For example, in Castile during the War of the Spanish Succession (1701–1713), then the Anglo-Spanis (...)
  • 38 David D. Bien, ‘Les offices, les corps et le crédit d’État: l’utilisation des privilèges sous l’Anc (...)

22The overall increase in the fiscal potential of modern states has therefore been a story riddled with resistance, protest and various forms of evasion by taxpayers. The rise in taxation has usually been erratic, with sudden jumps in time of war followed by downturns which reduced the taxation while still maintaining it at a level generally higher than it had been before the conflict. Finally, while it is beyond dispute that the transition from occasional levies to a permanent tax system generating larger, stable revenues has generally taken place, the route to universal taxation without immunities, privileges or exemptions was only adopted in a few states at the end of the modern age. It is true that wars almost always justified a temporary waiver of the tax exemption enjoyed by privileged social groups, yet it was difficult in practice to force those groups to pay these new taxes in proportion to their wealth, and even harder to perpetuate these exceptional levies in peacetime.37 What is more, the enclaves of legal privilege were probably not so much an obstacle, an archaic relic, but more an inherent by-product of the dynamics of the ‘fiscal state’, according to the perfect demonstration of that in the case of France.38

  • 39 For a detailed analysis of the French case and this fiscal/financial system which shares some chara (...)

23The increase in tax revenues and their relative stability was achieved over the years by converting extraordinary subsidies into ordinary levies, but primarily – to an increasing extent – by indirect taxation on trade in and consumption of everyday goods (meat, wine, beer, oil, etc.). The importance of indirect taxes in modern fiscal systems is symptomatic of the changes in progress more or less everywhere. This type of tax, which was predominant in towns at the end of the Middle Ages, has expanded dramatically in all modern states, beyond the wide variety of fiscal systems. There are various possible reasons for this change in the tax structure and the way in which direct taxes, even if they have increased, have been gradually relegated to second place, though they are by no means secondary: the greater acceptability of indirect taxes for political and social elites hostile to the taxation of property and wealth, the greater ease of collection which reduced the costs, and revenues which were more stable than in the case of extraordinary taxation linked to conflicts, and offered more scope for collection in advance. The regularity of indirect taxes was accentuated by a collection method which developed in most states: ‘tax farming’, i.e. assigning a large proportion of the collection of these taxes to individuals or financial syndicates, traders and bankers who paid fixed amounts in advance and were reimbursed out of the income generated by their companies. Such a system, under diverse legal arrangements, enabled sovereigns to anticipate future tax revenues while being relieved of the costs and uncertainties of tax collection, which were taken on by tax farmers thanks to the surpluses produced by their efforts, which were deemed to be highly profitable.39 This dominant use of tax collection concessions (alongside direct collection which varied in importance from one country and one period to another) coincided with a period of ‘lateral’ growth of the states, some of whose functions were not based on the creation of a specific authority but were delegated to specialist companies or elites. This transfer not only gave rulers the assurance of receiving regular revenues each year, but also reinforced their capacity to enter into contracts with the same business people – or through them – to obtain loans guaranteed by tax revenues over which they had control thanks to tax farming. Finally, the increased importance of indirect taxes had a vital impact, since they became the main factor underpinning the states’ ability to take on debt.

Debt, from Cities to States

24We now come to a key factor in the financial changes of the modern age. The borrowing capacity of states increased considerably with the expansion of the proceeds from taxation allocated to repaying and/or servicing the debt, and via the use of long-term debt instruments which eventually became ‘standard’. From the Middle Ages, the alienation of feudal revenues in return for the immediate advance of funds, and short-term loans contracted with professional lenders, bankers, financiers, merchants or ordinary subjects, resolved some of the problems created by the time lag between the urgency of war and the flow of tax revenues. But the decisive innovation, at the start of the modern age, was the adoption by Catholic territorial states (and by the papacy itself) of a new means of raising finance which became the basis of their long-term debts and a universal means of converting their debts of every kind. The need to finance increasingly costly wars was the driving force behind the importance of perpetual loans in the fiscal systems of the European state. However, the adoption of the redeemable annuity did not take place everywhere at the same rate: some states (including England up to the end of the seventeenth century) continued for longer than others to prefer short-term loans remunerated at a higher interest rate, entailing the risk of partial repudiation or enforced renegotiation of the debt.

  • 40 Tontines, named after their Neapolitan inventor Lorenzo Tonti, are a system of life annuities divid (...)

25In modern times, recourse to long-term loans became widespread among European sovereigns because, from the end of the fifteenth century, they had access to a common financial instrument, even if they did not all use it at first, and even if the loan vehicles diversified subsequently, to include lotteries and tontines, for instance: this was the ‘repayable’ or ‘heritable’ loan under its various names of juros, luoghi, renten, perpetual loans, consols.40 The characteristics of this instrument are due to the ban on usury in force at the time, comprising the widespread acceptance of loans at interest, implying the joint stipulation of an interest rate and a term for the loan. The ban on usury could thus be circumvented by a fiction, in specifying only one or other of these terms (the repayment date or the rate of interest). In effect, an annuity consisted in the acquisition of annual income in return for immediate payment of capital remunerated at a rate of interest fixed by the contract creating the instrument (the denier, or the inverse of the nominal interest rate: denier 12 = 8.33%, denier 18 = 5.5%, denier 20 = 5% etc.) and did not have any maturity date, i.e. a set repayment term. Two sorts of annuity existed from the Middle Ages, with this common characteristic. The life annuity was widespread in the towns of northern Europe, and expired on the death of the person or persons named, without repayment of the capital, hence its description as a ‘non-repayable’ annuity. The other type, the repayable annuity, still known as a perpetual annuity, which formed the cornerstone of the short-term loan consolidations of the cities of northern Italy, was declared lawful by the papacy in the mid-fifteenth century, subject to mandatory conditions. First, its remuneration must not exceed the statutory interest rate set by the rulers. Also, the debtors – whether individuals or states – had the inalienable right to terminate the loan when they wished by repaying the capital, which the annuitants could neither demand nor refuse.

26This loss of control of funds advanced by those acquiring annuities (inability to demand payment of the capital) had two essential implications. First, the borrowers (private and sovereign) were only required to pay the interest and were totally at liberty to effect or delay indefinitely the repayment of the borrowed capital in order to be released from the annual burden of interest payable. The perpetual annuity therefore gave them a new way of anticipating future income and compensating for the irregularity and relative inflexibility of tax revenues. It offered a flexibility compatible with the alternation between war and peace, as the large-scale mobilization of capital in time of war could give way to repayments in peaceful times. Also, the fact that the annuitants could not demand repayment of their capital had a fundamental counterpart: their right to sell to a third party, which was for them the only way of recovering their money, as they could not demand it back. In practice, that safeguard evidently depended on the conditions governing the transferability of securities, the effective dynamism of the resale markets, but also the unequal credibility of the issuers.

  • 41 I refer to two collections of articles on this question: Mark Boone, Karel Davids and Paul Janssens (...)
  • 42 Oscar Gelderblom and Joost Jonker, ‘A conditional miracle. The market forces that shaped Holland’s (...)

27Modern monarchies followed the example of the cities in the closing centuries of the Middle Ages, in sometimes using forced loans, as in the city-states of northern Italy, and sometimes voluntarily selling public debt securities, like the towns of northern Europe.41 Sovereigns of large territorial states used this range of solutions according to circumstances. The transition from the forced sale of securities to the voluntary raising of capital, presumed to be more modern, was in no way irreversible, but was accompanied by later reversion to a coercive and hybrid method of forced loans.42 Above all, their demand for funds was based on credibility, the administrative system and the expertise that towns and cities had acquired over decades or even centuries of loan practice. Towns and established bodies more or less everywhere acted as intermediaries and guarantors for sovereign loans, in return for the transfer to a greater or lesser extent of the management of the annuities and the collection of the tax revenues specifically allocated to payment of the interest. The dubious credibility of the monarchs was thus backed by the more proven credibility of the towns. The development of this system had an impact on the fiscal and financial life of cities and states. It enabled sovereigns to use loans in order to mobilize a large part of the wealth accumulated in the towns at the beginning of the modern age. A growing proportion of the proceeds from indirect taxes paid by the entire urban population, including visitors and foreigners, could be devoted to paying the debt, whereas the finances of the towns were transformed under pressure of the demands from the state. Finally, in those cities which continued to supply the majority of the investors and lenders in modern states, dependence on the interest injected fuelled the concentration of wealth while stimulating urban economies, but at the same time made them over-exposed to the consequences of default.

  • 43 In contrast to what is the norm nowadays (rising interest rate curves), interest rates did not incr (...)
  • 44 These costs, which incorporate the various expenses relating to the transactions, but also the time (...)

28Sovereign borrowers found that this method of borrowing offered substantial, but conditional, advantages. They gained unprecedented financial freedom and access to lower interest rates than they would have had to pay to their short-term lenders to compensate for a very real risk of default.43 However, in order to be realized, these potential advantages required continuity of commitments, and the allocation of sufficient, and almost continuous, fiscal resources, capable of ensuring that continuity, and the states had to ensure that the securities could actually be traded. These basic components of the annuitants’ securities depended largely on the issuing powers, their very uneven credibility and the dynamism of the resale markets. In fact, from one state to another, promises to pay the annual interest punctually and in full were not always respected with the same stringency, and many sovereigns defaulted to some extent, reducing the capital repayable. In addition, the tradability of the annuities was facilitated or restricted in varying degrees, being subject to or free of transaction costs which reduced their liquidity, i.e. the possibility for owners to recoup their capital without a loss, which was of course inconceivable in the event of the borrower’s default.44 Intermittent taxes on resale transactions in some places had an effect which is difficult to gauge in hampering the operation of the secondary market. Above all, however favourable the trading conditions, they were not always enough to ensure the liquidity of the securities (which assumes resale at par or at a price close to their original face value).

  • 45 Ann M. Carlos and Larry Neal, ‘Amsterdam and London as financial centres in the 18th century’, Fina (...)

29While ensuring liquidity was of decisive importance, that was certainly not due to the need for all debt security holders to dispose of the instruments quickly: far from it. The wealthiest often passed them down from generation to generation, and hospitals and charitable institutions (mortmain) everywhere supported their activities of assisting the poor by means of an almost irreversible accumulation of securities obtained from purchases, donations and foundations. But it is equally true that the annuities also lent themselves to similar social uses which transcended the diversity of the issuing countries: diversification of investments, maintenance of minors, widows, and unmarried daughters, payment of dowries, and maintenance of hospitals and religious communities. These unvarying uses were also transitory, particularly in the case of unmarried daughters or widows, inheriting more liquid wealth than men; their active involvement in the public debt markets as buyers and sellers has been repeatedly analysed.45 Above all, the lenders’ securities and the capital value of their assets, whether it be a question of estimating that value when they are shared out, passed on to heirs or given away, or using them as collateral for their own debts, obviously depended on their market price.

  • 46 Sidney Homer and Richard Sylla, A history of interest rates, Hoboken, Wiley (4th ed.) 2005; Stephan (...)
  • 47 Wantje Fritschy, ‘A “financial revolution” revisited. Public finance in Holland during the Dutch re (...)
  • 48 Patrick K. O’Brien, ‘Mercantilist institutions for the pursuit of power with profit: the management (...)

30The generic criteria of credibility, such as the volume and cost of loans (the most credible governments mobilizing large volumes of capital at low interest rates) offer valuable information on the variations in the price of money in time of war or peace, and on the ability of states to mobilize the resources of domestic or foreign savers. However, little is known about the market prices of securities – on the primary market (when they are issued) and on the secondary market (when they are resold between individuals) – and the effective interest rates (including issue premiums of all kinds, and not just the nominal interest rates), apart from isolated studies and occasional series available on any one of these subjects.46 Market prices fluctuated as a result of many factors, the essential ones including the punctuality of the interest payments, the volume of new loans and the associated interest rate, and the match between the supply of securities for resale and demand from individuals and institutions wishing to buy. Past experience of potential investors, and their expectations (whether justified or not) concerning the outcome of wars financed by the issues, also influenced their willingness to lend, a hypothesis which is difficult to support in the absence of detailed analyses of borrowing costs, resale prices of securities and the economic situation. Thus, the striking decline in interest rates on long-term loans issued by the northern provinces of the Netherlands to finance their war of independence against Spanish domination, down from a nominal rate of 12% in the 1580s to 5% from the 1640s, partly reflects the initial expectation, which became increasingly probable, of victory against the Habsburgs, enshrined in the Treaties of Westphalia of 1648.47 The extreme sensitivity to military events, wars in the short term, was also reflected by the changing behaviour of the lenders: an initial wait-and-see attitude at the start of the conflict and a rush to lend at the finish, when the peace negotiations implied resolution, so that the price of money would soon fall.48 Moreover, the distribution of wealth in society, and the propensity of savers to put their savings into state loans or allocate them to other investments, are variable but significant explanatory factors, which themselves depend on the scope for alternative uses of the money and, of course, confidence in actual repayment. This shows the degree to which the context is essential for comparing the credibility of sovereign borrowers.

A Mosaic of Experiences, and Some Common Questions

31Extending the scope of our research to a multitude of cases in medieval and modern Europe in fact means letting go of a financial history composed of exceptions and models confronting imperfections or shortcomings. It reveals the diversity of solutions used and the absence of any move towards a single formula as the condition sine qua non of fiscal, financial and administrative performance. It means looking at the approaches followed by states and the choices made by rulers in the context of the complex assortment of constraints and options that defined their scope for action, in the immediate future, and depending to a greater or lesser extent on choices made in the past. It was sometimes impossible to change the taxation strategy, but debt servicing could also become a serious problem, and a limit on new borrowing, if it was not influential creditors or a failure to have full control of political decision-making that hampered the implementation of a debt reduction policy. Nevertheless, there is no doubt that access to these taxes and credit resources varied over time and from one state to another. It is on the basis of this disparate fiscal, financial and political potential that we need to understand the conditions that were most conducive to the actual raising of funds, and how sovereign borrowers in the past built up or eroded their credibility. The three topics addressed in this conference explore in turn hypotheses which are not necessarily contradictory, even if they may have been used in academic controversies to refute their respective explanatory importance.

  • 49 On the role of intermediaries, and particularly notaries, see Philip. T. Hoffman, Gilles Postel-Vin (...)

32The first chapters will consider the impetus given by fiscal innovations or the redefinition of the tax base, the choices made by states between the various methods of financing, taxation or borrowing (and manipulation of the currency), and the insoluble link between taxation and the borrowing potential of sovereigns. Next, we shall examine the nature of political regimes, as the – in any case very controversial – hypothetical origin of the greater credibility of some states, endowed with representative assemblies assumed to be capable of restraining the temptation for the rulers to default, or at least creating conditions favourable to the acceptance of taxation and the control of political decisions by the creditors. Finally, the chapters on the primary and secondary markets in securities will examine debt issuance conditions, borrowing costs and the ability of the resale markets to fulfil the investors’ liquidity expectations. And where favourable conditions were combined, a new understanding emerges of the symbiotic relationship between public and private credit and the towns and cities where the most liquid wealth was concentrated. The chapters also show that the major financial centres emerged where the vitality of the representative institutions was superior and where the information obtained by the various financial intermediaries reduced uncertainty over the quality of the securities and facilitated transactions on the secondary market.49

33I shall conclude these preliminary remarks by thanking the research centres of the University of Paris 1 Panthéon-Sorbonne involved in this academic conference, the IDHES (Paris Laboratory Institutions and Historical Dynamics of Economy and Society), the LAMOP (Paris Laboratory of Western Medieval Research), the EA 127 (Paris University research team), the SAMM (Statistics, Analysis and Multidisciplinary Modelling team), and the REFI centre of excellence on financial regulation which also provided support. Finally, the IGPDE (French Institute of Public Management and Economic Development), represented by Mr Philippe Mazuel, helped to organize this event and was a major supporter.

34My final acknowledgement is due to the person who played a decisive role in this initiative, Mr Jean-Claude Colliard, then President of the University of Paris 1 Panthéon-Sorbonne.

Notes

1 For a ‘global’ view of this history, see B. Yun-Casalilla, ‘Introduction: the rise of the fiscal state in Eurasia from a global, comparative and transnational perspective’, in F. Comín Comín, P. O’Brien and B. Yun-Casalilla (ed.), The rise of fiscal states: a global history 1500–1914, Cambridge, Cambridge University Press, 2012, pp. 1–35.

2 ‘L’État moderne: un modèle opératoire?’, in J.-P. Genet, L’État moderne: genèse, Paris, CNRS éditions, 1990, pp. 261–281; J.-P. Genet, ‘La genèse de l’État moderne: les enjeux d’un programme de recherche’, Actes de la recherche en science sociales, 118, June 1997, pp. 3–18.

3 R. Bonney and W. M. Ormrod, ‘Introduction’, in W. M. Ormrod and R. Bonney (ed.), Crises, revolutions and self-sustained growth. Essays in European fiscal history, 1130–1830, Stamford, Shaun Tyas, 1999, pp. 1–21.

4 Documented in Richard Bonney (ed.), Economic systems and state finance, Paris, Presses universitaires de France, ‘The origins of the modern state in Europe’ series, Oxford, Oxford University Press, 1995, for comparative study, and in Richard Bonney (ed.), The rise of the fiscal state in Europe 1200–1815, Oxford, Oxford University Press, 1999, for national experiences.

5 The works of Charles Tilly, The formation of national states in western Europe, Princeton, Princeton University Press, 1975, and Coercion, capital and European states 990–1990, Cambridge (Mass.), B. Blackwell, 1990, present a picture of this development in which both wars and the finance that makes them possible redefine the borders of European states, ultimately bringing about a drastic reduction in their number.

6 See Elisabeth Magnou-Nortier (ed.), Aux sources de la gestion publique, Lille, Presses universitaires de Lille, 3 vols., 1993, 1995 and 1997; idem, Aux origines de la fiscalité moderne: le système fiscal et sa gestion dans le royaume des Francs à l’épreuve des sources VeXIe siècle, Geneva, Droz, 2012.

7 See C. Wickham, ‘Lineages of western European taxation 1100–1200’, in M. Sánchez Martinez (ed.), Corona, municipis i fiscalitat a la Baixa Edat Mitjana, Lleida, Institut d’estudis ilerdencs, 1997, pp. 25–42.

8 Gerald L. Harriss, King, parliament and public finance in medieval England to 1369, Oxford, Clarendon Press, 1975, pp. 18–25.

9 Vincent Moss (‘Normandy and England in 1180: the pipe rolls evidence’, in David Bates and Anne Curry (ed.), England and Normandy in the Middle Ages, London and Rio Grande, Hambledon Press, 1994, pp. 185–195) shows that in the absence of kingly rights in Normandy it was necessary to fall back on the towns and increase pressure on all other revenues: for example, judicial fines raised much more revenue in Normandy than in England (42.6% compared to 16.1%); for France, see John W. Baldwin, Philippe-Auguste et son gouvernement: les fondations du pouvoir royal en France au Moyen Âge, Paris, Fayard, 1991.

10 See C. R. Brühl, Fodrum, gistum, servitius regis, Cologne, Kölner historische Abhandlungen 14, 1968; F. Menant, Les campagnes lombardes du Moyen Âge: l’économie et la société rurales dans la région de Bergame, de Crémone et de Brescia du Xe au XIIIe siècle, Rome, Bibliothèque de l’École française de Rome, 281, 1993.

11 To follow these developments, see Philip J. Jones, The Italian city state. From commune to signoria, Oxford, Clarendon Press, 1997.

12 Jean-Claude Maire-Vigueur, Cavaliers et citoyens. Guerre, conflits et société dans l’Italie communale XIIeXIIIe siècle, Paris, Éd. de l’École des hautes études en sciences sociales, 2004.

13 Frederick H. Russell, The just war in the Middle Ages, Cambridge, Cambridge University Press, 1975.

14 Lydwine Scordia, ‘Le roi doit vivre du sien’. La théorie de l’impôt en France XIIIeXVe siècle, Paris, Institut d’études augustiniennes, 2005.

15 On developments concerning war during the period, see Philippe Contamine, La guerre au Moyen Âge, Paris, Nouvelle Clio, 1980, new ed. 2010.

16 M. Lauwers and L. Ripart, ‘Représentation et gestion de l’espace dans l’Occident médiéval’, in J.-P. Genet (ed.), Rome et l’État moderne européen, Rome, Collection de l’École française de Rome, 2007, pp. 115–171.

17 Vincent Boulet, ‘Henri VI et le gouvernement de son royaume de France 1422–1436’, doctoral thesis, Paris 1, 2010.

18 J.-P. Genet, ‘Disunion: true hallmark of the history of Europe?’, Europaeum Review, VIII (1), 2007, pp. 10–14.

19 The most convincing account of the Marxist analysis of the great depression in the Middle Ages is presented by Guy Bois, Crise du féodalisme: économie rurale et démographie en Normandie orientale du début du XIVsiècle au milieu du XVIsiècle, Paris, 2nd ed. 1981 (1st ed., 1976); for the political and social implications, idem, La grande dépression médiévale, XIVe et XVsiècles. Le précédent d’une crise systémique, Paris, Presses universitaires de France, 2000; for some new proposals, M. Bourin, S. Carocci, F. Menant and L. To Figueras, ‘Les campagnes de la Méditerranée occidentale autour de 1300: tensions destructrices, tensions novatrices’, Annales HSS, 3, 2011, pp. 663–704; for a presentation of the ecological argument, also supported by Robert Fossier, William C. Jordan, The Great Famine. Northern Europe in the early 14th century, Princeton, Princeton University Press, 1996, and B. Campbell, ‘Nature as historical protagonist: environment and society in pre-industrial England’, Economic History Review, 63, 2010, pp. 281–314.

20 Richard W. Kaeuper, Bankers to the Crown: the Riccardi of Lucca and Edward I, Princeton, Princeton University Press, 1973; Michael Prestwich, War, politics and finances under Edward I, Aldershot, Gregg Revivals, 1972. But on this point see the new analysis by Adrian R. Bell, Chris Brooks and Tony K. Moore in this volume.

21 Terence H. Lloyd, The English wool trade in the Middle Ages, Cambridge, Cambridge University Press, 1977.

22 W. M. Ormrod, in R. Bonney (ed.), Economic systems and public finances, op. cit.

23 W. M. Ormrod, Edward III, New Haven, Yale University Press, 2011, pp. 293–298.

24 J.-P. Genet, ‘La Normandie vue par les historiens et les politiques anglais au XVe siècle’, in P. Bouet and V. Gazeau (ed.), La Normandie et l’Angleterre au Moyen Âge, Caen, Publications du CRAHM, 2003, pp. 277–306, based on J. S. Roskell, Carole Rawcliffe and Linda Clark, The House of Commons 1386–1421, Stroud, Alan Sutton, 1992, 4 vols. 

25 G. L. Harriss, Cardinal Beaufort. A study of Lancastrian ascendancy and decline, Oxford, Clarendon Press, 1988.

26 C. Barron, ‘London and the Crown 1451–1461’, in J. R. L. Highfield and Robin Jeffs (ed.), The Crown and the local communities in England and France in the 15th century, Gloucester, A. Sutton, 1981, pp. 88–109.

27 W. M. Ormrod, ‘Urban communities and royal finance in England during the later Middle Ages’, in M. Sánchez Martinez (ed.), Corona…, op. cit., pp. 45–60, on p. 55.

28 The essential work is still that by John B. Henneman, Royal taxation in fourteenth century France. The development of war financing, Princeton, Princeton University Press, 1971. See more recently R. Cazelles, Étienne Marcel: champion de l’unité française, Paris, Tallandier, 1984; idem, Étienne Marcel, la révolte de Paris, Paris, Tallandier, 2006; and for Philippe V the thesis by Yong-Jin Hong, ‘Le roi et la société politique: la monarchie française et le système de communication, 1315–1360’, thesis, Paris 1, 2010.

29 J.-F. Lassalmonie, La boîte à l’enchanteur. La politique financière de Louis XI, Paris, Comité pour l’histoire économique et financière de la France, 2002.

30 B. Chevalier, Les bonnes villes de France du XIVe au XVIsiècle, Paris, Aubier-Montaigne, 1982.

31 D. C. North and R. P. Thomas, The rise of the western world: a new economic history, Cambridge, Cambridge University Press, 1973, and particularly D. C. North, ‘Institutions, transaction costs and the rise of merchant empires’, in J. D. Tracy (ed.), The political economy of merchant empires, Cambridge, Cambridge University Press, 1995, pp. 7–34.

32 See A. P. Usher, The early history of deposit banking in Mediterranean Europe, I, Cambridge (Mass.), Harvard University Press, 1943.

33 J.-Y. Grenier, L’économie d’Ancien Régime. Un monde de l’échange et de l’incertitude, Paris, Albin Michel, 1996.

34 F. Comín Comín and B. Yun Casalilla, ‘Spain: from composite monarchy to nation-state, 1492–1914. An exceptional case?’, in F. Comín Comín, P. O’Brien and B. Yun-Casalilla (ed.), The rise of fiscal states…, op. cit., pp. 233–266.

35 James B. Collins, Classes, estates and order in early modern Brittany, Cambridge, Cambridge University Press, 1994; William Beik, Absolutism and society in 17th century France. State power and provincial aristocracy in Languedoc, Cambridge, Cambridge University Press, 1985; Marie-Laure Legay, Les États provinciaux dans la construction de l’État moderne aux XVIIe et XVIIIsiècles, Geneva, Droz, 2001; Julian Swann, Provincial power and absolute monarchy. The Estates General of Burgundy 1661–1790, Cambridge, Cambridge University Press, 2003.

36 Patrick K. O’Brien, ‘Afterwords: reflections on fiscal foundations and contexts for the formation of economically effective Eurasian states from the rise of Venice to the Opium War’, in F. Comín Comín, P. O’Brien and B. Yun-Casalilla (ed.), The rise of fiscal states…, op. cit., pp. 442–453.

37 For example, in Castile during the War of the Spanish Succession (1701–1713), then the Anglo-Spanish colonial conflict of 1739–1742; in France where the first universal taxes were devised, capitation at the time of the War of the League of Augsburg (1688–1697) and the dixième tax on income during the War of the Spanish Succession. However, with the creation of the first, second and then third vingtième taxes on income in France in the eighteenth century and their disputed, partial retention in peacetime, Michael Kwass sees the advent of a new category of privileged taxpayers (Privilege and the politics of taxation in eighteenth century France: liberté, égalité, fiscalité, Cambridge, Cambridge University Press, 2000). I also refer to the article by Peter Ericsson, ‘Privileges undermined. The meaning of extraordinary taxation in Sweden in the 17th and 18th centuries’, in Simonetta Cavaciocchi (ed.), La fiscalità nell’economia europea. secc. XIIIXVIII, Florence, Florence University Press, 2008, vol. 2, p. 757–769; F. Comín Comín, P. O’Brien and B. Yun-Casalilla (ed.), The rise of fiscal states…, op. cit.

38 David D. Bien, ‘Les offices, les corps et le crédit d’État: l’utilisation des privilèges sous l’Ancien Régime’, Annales ESC, March–April 1988, 2, pp. 379–404.

39 For a detailed analysis of the French case and this fiscal/financial system which shares some characteristics with those in other modern states, see Daniel Dessert, Argent, pouvoir et société dans la France du Grand Siècle, Paris, Fayard, 1984.

40 Tontines, named after their Neapolitan inventor Lorenzo Tonti, are a system of life annuities divided into age groups which provide for the share belonging to deceased annuitants to revert to survivors in the same age group. England and France made use of them particularly in the eighteenth century. See David Weir, ‘Tontines, public finance and revolution in France and England, 1688–1789’, Journal of Economic History, 49 (1), 1989, pp. 95–124; François R. Velde and David R. Weir, ‘The financial market and government debt policy in France 1746–1793’, Journal of Economic History, 52 (1), March 1992, pp. 1–39; Jean Berthon and Georges Gallais-Hamonno, Les emprunts tontiniers de l’Ancien Régime, un exemple d’ingénierie financière au XVIIIIe siècle, Paris, Publications de la Sorbonne, 2008.

41 I refer to two collections of articles on this question: Mark Boone, Karel Davids and Paul Janssens (ed.), Urban public debts. Urban government and the market for annuities in western Europe (14th–18th centuries), Turnhout, Brepols, 2003; José Ignacio Andrés Ucendo and Michel Limberger (ed.), Taxation and debt in the early modern city, London, Pickering & Chatto, 2012.

42 Oscar Gelderblom and Joost Jonker, ‘A conditional miracle. The market forces that shaped Holland’s public debt management 1514–1713’, working paper, 2010, Utrecht University.

43 In contrast to what is the norm nowadays (rising interest rate curves), interest rates did not increase the longer the term of the loans. The highest remuneration was paid on short-term loans. The repayable annuity, the outcome of the consolidation of short-term debt or of states directly raising money, was more advantageous from that point of view in the latter case. King Philip II of Spain, an unrivalled serial defaulter, was the subject of a recent detailed study by Mauricio Drelichman and Hans-Joachim Voth, Lending to the borrower from hell: debt, taxes and default in the age of Philip II, Princeton, Princeton University Press, 2014. I refer also to my own work, Financer la guerre. La dette publique et les rentiers de l’absolutisme, Seyssel, Champ Vallon, 2012, on defaults by the French monarchy in the seventeenth century.

44 These costs, which incorporate the various expenses relating to the transactions, but also the time needed for their conclusion, are insignificant when the securities are issued, but higher for the resale market.

45 Ann M. Carlos and Larry Neal, ‘Amsterdam and London as financial centres in the 18th century’, Financial History Review, 18 (1), April 2011, pp. 21–47; idem, ‘Women investors in the Bank of England in the time of the South Sea Bubble 1720–1725’, Financial History Review, 11 (2), October 2004, pp. 197–224; Anne Laurence, Josephine Maltby and Janette Rutterford (ed.), Women and their money. Essays on women and finance, New York, Routledge, 2009.

46 Sidney Homer and Richard Sylla, A history of interest rates, Hoboken, Wiley (4th ed.) 2005; Stephan R. Epstein, Freedom and growth. The rise of states and markets in Europe 1300–1750, London, Routledge, 2000.

47 Wantje Fritschy, ‘A “financial revolution” revisited. Public finance in Holland during the Dutch revolt 1568–1648’, Economic History Review, 56 (1), 2003, pp. 57–89. The nominal interest rate on long-term loans was no lower at the time of the first English loans, when it hovered around 14% in 1695 and did not drop below 6.5% during the War of the Spanish Succession.

48 Patrick K. O’Brien, ‘Mercantilist institutions for the pursuit of power with profit: the management of Britain’s national debt 1756–1815’, in Fausto Piola Caselli (ed.), Government debts and financial markets in Europe, London, Pickering & Chatto, 2008, pp. 179–208; Béguin, Financer la guerre, op. cit., chap. 7.

49 On the role of intermediaries, and particularly notaries, see Philip. T. Hoffman, Gilles Postel-Vinay and Jean-Laurent Rosenthal, Priceless markets. The political economy of credit in Paris 1660–1870, Chicago, University of Chicago Press, 2000. On the power of the representative institutions in the cities as the primary explanation for their better access to credit, I refer to David Stasavage, States of credit: size, power and the development of European polities, Princeton, Princeton University Press, 2011.

Auteurs

Director of studies at the École des Hautes Études en Sciences Sociales in Paris (Modern History), her research relates to the transformations initiated by the growth of the public debt in modern France. Her ongoing work relates to the markets in public debt and their internationalization during the eighteenth century, the circulation of securities and the decisions of authorities with regard to long-term management of the debt. She has recently published: ‘Le droit fiscal d’Ancien Régime. Les dynamiques de la fiscalité, du privilège and de la dette’, Grief. Revue sur les mondes du droit, Dalloz-EHESS, 1, 2014, pp. 173–183; (with P.-C. Pradier) ‘Bâtir l’éternité avec des rentes perpétuelles? L’efficace des fidéicommis pour les titres de dette publique’, Mélanges de l’École française de Rome. Italie et Méditerranée modernes et contemporaines, 124 (2), 2012, pp. 421–432; Financer la guerre au XVIIe siècle. La dette publique et les rentiers de l’absolutisme, Seyssel, Champ Vallon, 2012; ‘Estimer la valeur de marché des rentes d’État sous l’Ancien Régime. Une contribution aux méthodes de l’histoire sociale’, Histoire & Mesure, XXVI (2), 2011, pp. 3–30.

Jean-Philippe Genet is Emeritus Professor of the University of Paris 1 Panthéon-Sorbonne. His notable publications include: ‘Les motifs de la demande et de l’acceptation de l’impôt en Angleterre’, in C. Levelleux-Texeira, A. Rousselet-Pimon, P. Bonin and F. Garnier (eds.), Le gouvernement des communautés politiques à la fin du Moyen Âge. Entre puissance et négociation: villes, finances, États. Actes du colloque en l’honneur d’Albert Rigaudière, Paris, Éditions, Panthéon-Assas, 2010, pp. 201–221; ‘Légitimation religieuse et pouvoir dans l’Europe médiévale latine’, in J.-P. Genet (ed.), Rome et l’État moderne européen, Rome, École française de Rome, 2007, pp. 381–418; La genèse de l’État moderne. Culture et société politique en Angleterre, Paris, PUF, 2003.

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