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

Introduction

Among the many distinctive features of European state formation two have received particular attentionthe 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 representationcertainly rulers in other regions met with councils or assembliesbut 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 seems little doubt that the most extensive early development of a system of public credit occurred in Europe. This parallel development of representation and credit suggests that a causal link might have existed between the two. Within Europe, states such as Venice or the Dutch Republic that are seen as models in the development of representative institutions can also be viewed as pioneers in the development of public credit, whereas polities such as France are considered as having trailed on both of these dimensions. Did the presence of an intensive form of representation facilitate access to credit for the former, allowing them to survive and their economies to prosper? If so, why did this intensive form of representation emerge in some places but not others? Finally, how did this joint development of credit and representation affect broader trends involving war, state formation, and economic growth? Despite the importance of these questions, no existing scholarly study examines these issues in a broad comparative context. This book is designed to fill that gap.

I will argue that the presence of an intensive form of representation characterized by an assembly that could monitor and modify expenditures was critical in facilitating access to credit by European states. But the existence of an assembly that would function in this manner was itself dependent on two underlying conditions. First, in an era of high communications and travel costs this intensive form of political representation could be maintained only in polities of limited geographic scale. assemblies of this sort were more likely to take actions consistent with the interests of state creditors in polities where the same merchants who invested in government debt were also predominant among the political elite. These two underlying conditions were most frequently, but not exclusively and not always, met in city-states where assemblies could be convened by devices as simple as the ringing of a town bell and where the same merchants who purchased public debt also served as magistrates on town councils. In the territorial states of Europe, in strong contrast, geographic scale often proved to be a fundamental obstacle, making it costly to sustain a representative assembly that would meet frequently enough to monitor public expenditures. Assemblies in European territorial states could be powerful, but their influence was of a more passive form involving the ability to veto requests by monarchs for taxation. The social composition of territorial state assemblies was also fundamentally different from that of the city-states. Merchantsthose who lent most frequently to governmentplayed a more limited role within them, a fact that had significant consequences for the behavior of these institutions.