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Repudiations and Confiscations by the Medieval State

Published online by Cambridge University Press:  03 March 2009

John M. Veitch
John M. Veitch
Affiliation:
Assistant Professor at the University of Southern California
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Abstract

Loan repudiations and property confiscations were common between medieval kings and individuals. Traditional accounts of these confiscations focus on factors affecting the kings, ignoring the motivations of the victims. This deficiency may be remedied by considering the problems faced on both sides of any agreement between a king and a group of citizens. A model is presented which explains the timing and the form of repudiations and confiscations without resorting to an assumption of irrationality by either party. It is general enough to address a persistent problem in the property rights view of government: How can an individual protect himself from abuses by his protector?

Type
Articles
Information
The Journal of Economic History , Volume 46 , Issue 1 , March 1986 , pp. 31 - 36
Copyright
Copyright © The Economic History Association 1986

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References

1 The Order of the Knights Templar and their dissolution is chronicled in: Barber, M., The Trial of the Templars (Cambridge, 1978);Google ScholarCampbell, G. A., The Knights Templar: Their Rise and Fall (London, 1937);Google ScholarDelisle, M., Memoire sur les Operations Financières des Templiers (Paris, 1888).Google Scholar

2 The episode of the Italian merchant societies and their loans to the kings of England has been well documented: see Bond, E. A., “Extracts from the Liberate Rolls, relative to Loans supplied by Italian merchants to the Kings of England in the 13th and 14th Centuries,”Google Scholarcommunicated by Young, C. G., Archaeologia, 27 (1839), pp. 207–306;Google ScholarFryde, E. and Fryde, M., “Public Credit with Special Reference to North-Western Europe,” Postan, M. M., Rich, E. E., and Miller, E., eds., Cambridge Economic History of Europe (Cambridge, 1963), vol. 3, pp. 430–553;Google ScholarRhodes, W. E.. “The Italian Bankers in England and their loans to Edward I and Edward II,” in Tout, T. F. and Tait, J., eds., Historical Essays by members of Owens College, Manchester (London, 1902), pp. 137–68;Google ScholarRussell, E., “The Societies of the Bardi and Peruzzi and their dealings with Edward III,” in Unwin, G., ed., Finance and Trade under Edward III, (Manchester, 1908), pp. 93–135.Google Scholar

3 A self-enforcing agreement between two parties has three features: first, the terms of the agreement are carried out by both parties only as long as the benefits to each of continuing outweigh the benefits of ending the agreement: second, each party must determine if the other has violated any of the agreement's terms in a period: and finally, if such a violation occurs the injured party's only remedy is to end the relationship. The relationship of threats to self-enforcing agreements in dynamic settings is explored in Telser, L., “A Theory of Self-Enforcing Agreements,” Journal of Business, 22 (1980), pp. 27–44.CrossRefGoogle Scholar

4 See Veitch, J., “Repudiations, Defaults and Confiscations by the Medieval State” (mimeo Northwestern University, July 1984) for details of the benefits each of these groups enjoyed.Google Scholar

5 The argument is contained in Hicks, J. R., A Theory of Economic History (Oxford, 1969), chap. 4, “Finances of the Sovereign.”Google Scholar

6 Bond, E. A., “Extracts,” p. 225 provides a rough estimate of not more than £6,000 for Jewish wealth in England at this time based on a talliage levied on one-third of this wealth in 1274. In comparison the purchases of wool by the Italian merchants in late-thirteenth-century England exceeded £23,000 in a typical year.Google Scholar

7 See Veitch, “Repudiations,” for an interpretation of the downfall of the Knights Templar using self-enforcing agreements.Google Scholar

8 See ibid. for a formal model of the hierarchy of self-enforcing agreements involved in the relationship of the Italian societies and the English kings. The conditions under which it is rational to participate in the loans to the king are derived in this framework.