In the previous section we argued that primogeniture is a reasonable proxy for income distribution in a medieval society. The predominant historical view, that the Protestant Reformation was basically an "urban phenomenon,''57 offers another opportunity to test our theory. Inasmuch as city size and growth reflect exchange volume, and exchange volume reflects wider income distribution, a demonstrable link should exist between urban growth and the practice of primogeniture (a proxy for income distribution). In order to test this correlation we used the data base assembled by economic historians Paul Bairoch, Jean Bateau, and Pierre Chevre58 that was recently employed by Shleifer and Vishny to show that "absolutist" governments are associated with low economic growth (as measured by urban growth).59 Our premise is that, if other things are equal, competition and capitalist exchange are hampered by primogeniture. If this premise is valid and if the relationships between Protestant entry and primogeniture laws are correct, partible inheritance should also be correlated to economic growth and city size.
In order to test this relationship, we analyzed the data between 1500 and 1650 collected by Bairoch, Bateau, and Chevre. These two dates give us end-points for before and after the Protestant Reformation. The largest cities in 1500 were located in France and Italy; the smallest in Belgium and Germany. In 1500, primogeniture was practiced in twenty-eight of Europe's largest cities, and, of course, all were Catholic at that time. By 1650, seven cities in which primogeniture was practiced decreased in size, including five of the top ten largest cities in 1500, whereas only one city (Cologne) that did not practice primogeniture decreased in size. The cities that grew the most during the period were those in which primogeniture was not practiced and in which the Protestant Reformation made its greatest impact. In 1500 only three of the twenty-eight largest cities of Europe were in countries in which primogeniture was not practiced, but by 1650, ten such cities were among the largest. These ten were within the sphere of greatest influence of the Protestant Reformation—namely, the countries of Germany, Holland, Denmark, Belgium, and England. We do not suggest that these results are conclusive, but they are at least broadly consistent with the notion that inheritance laws may account, at least in part, for urban growth in the late Middle Ages.
If Protestant entry can be linked to primogeniture status, it presumably can also be related (along with other factors) to emergent markets in urban growth centers that were creating wealth through expansion of profit opportunities. One important result of this correlation is that it is consistent with the dominant historical view that the Protestant Reformation was an "urban phenomenon.''60 In short, rapidly growing towns, with dispersed and unstable wealth distributions, were ripe for Protestant entry. Those societies with more stable and concentrated income distributions were not, and they tended to remain Catholic.
Despite the axiomatic character of our argument that Protestant entry was facilitated by the instability of wealth distribution in countries where primogeniture either did not exist or was ineffective, we consider it significant that it accords with standard historical interpretations. In his essay confirming the substantial avoidance of primogeniture in England, legal historian George C. Broderick observed, "It is impossible not to connect the rapid growth and singular independence of the English gentry under the Tudors and Stuarts with the limitation of entails and freedom of alienation which characterised this remarkable period.''61 Long before the Reformation the yeoman class in England prospered and became a middle class of farmers and merchants. Historian Ralph V. Turner maintains that this process of maneuvering around restrictive property laws quickened as early as the thirteenth century, when non-aristocratic judges began changing feudal inheritance patterns in their own self-interest, thereby creating dispersion of property and an entrepreneurial spirit.62 And George A. Holmes verifies the English nobility used "family arrangements" to control property in the fourteenth century and to avoid strict primogeniture laws when it was in their interest to do so.63
Market forces that encouraged entrepreneurial economic activity in England (which only nominally practiced primogeniture) had similar effects on the European continent where primogeniture was not the law. As noted previously, towns of the German and Swiss principalities were engaged vigorously in income- and wealth-generating activities. Bohemia was a robust entrepreneurial economy, styled as "the Nevada of Europe at the end of the Middle Ages'' because of its mining industry, which attracted a large and transient population of foreigners.64 By contrast, primogeniture encouraged the concentration of wealth and the stability of its distribution. The experience of the Italian city-state, Lombardy, provides a case in point. At the end of the seventeenth century the number of noble persons in Lombardy was around sixty-five hundred. The source of their wealth was land. The Lombard nobility was less than 1 percent of the total population of the province, but it owned nearly half the total landed property.65 Wealth was preserved by the institutions of primogeniture and fidecommessi—a form of ecclesiastical mortmain, that is, a device used in wills to guarantee that property, especially land, could only be passed on to members of the same family or ecclesiastical community. Spain provides another example. The strength of the Spanish nobility lay in the sheer size of their estates. Historian Raymond Carr calculated that about a third of the cultivable land in medieval Spain was in the hands of four great houses.66 The institution that kept a large proportion of the national wealth in the hands of the higher nobility was the mayorazgo, a law of entail that kept landed estates from ever being legally transferred. Lawyers' interpretations of the Laws of Toro (1505) consistently favored the growth of entail and guarded its strict nature.
Other historical episodes tell a similar story. The experience of Poland showed how political and religious interests cooperated (often by force of necessity) to preserve and maintain wealth. After 1370, Poland was ruled mostly by foreign kings. The nobility emerged under the early kings and princes in two groups. The Magnates, who formed the Prince's Council, ultimately developed into the Upper House of the Polish Parliament. From this class came the high officials of church and state, who aided the princes in the administration of the country. Below the magnates on the social and political scale were the milites, who originally formed the prince's army and frequently received land in return for mili tary service. Together these two classes formed a large body of nobles. In the middle of the fifteenth century the king turned to the Polish nobility for money to fight the Teutonic Order, for which he gave, in return, a series of charters that gave the nobles considerable political influence in their local assemblies.67 In sum, while we do not argue that primogeniture laws explain economic growth, there is a good deal of evidence that their observance helped to concentrate wealth and their avoidance helped to disperse wealth in England and in Europe.
This chapter advances the view that the Protestant Reformation was an economic phenomenon with roots in intertemporal benefits and costs to Catholic Church members and disaffected groups. Although we stress the economic aspects involved, our argument nevertheless conforms to the conventional wisdom. For centuries, historians and other observers have argued that the selling of indulgences produced the Protestant revolt. But the traditional historical argument has revolved around the ethical consequences and attendant moral corruption that such venality introduced. By contrast, our approach emphasizes the economic consequences of early, medieval, doctrinal innovations. Furthermore, we have added a supply side to the argument, which recognizes that the Catholic Church's viability was inextricably linked to the kind of societal and economic institutions that were extant at the time of the revolt. The medieval church controlled and manipulated doctrine and rules in order to increase its revenues. By the late Middle Ages, church doctrine involving purgatory, indulgence, confession, penance, and all of their attendant beliefs, had become so complex as to be unbelievable, especially at the high prices the Catholic Church was charging for redemption. One result was that benefits to church members were reduced by a church-directed policy of price discrimination that put believers on the margin of defection. The advent of Protestantism as a belief system meant that consumers seeking redemption could take a more direct, less expensive path to salvation. Protestantism made redemption cheaper, and it increased benefits to believers by reducing transaction costs.
In the Middle Ages, the successful entry of Protestant sects required a flatter pricing structure. Therefore, rather than introduce a whole new belief system, Protestant religions adopted Christ and core Christian teachings (e.g., the Bible), but simplified many of the details, and eliminated the temporal connections of the Catholic Church's belief structure. These doctrinal and organizational differences soon created a flood of new forms of Protestant Christianity, as we shall see momentarily. Before we embark on an economic analysis of evolving forms of Protestantism, however, we turn to the critical topic of how the Catholic Church was forced by new competition to adjust its policies. The so-called Counter Reformation produced changes in church doctrine and practice, with mixed degrees of success and failure.
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