[SOLVED] ​Write a literature review based on two readings – Writing

Write a literature review based on two readings: 1. Bogart and Richardson: parliament and property rights (https://www.journals.uchicago.edu/doi/full/10.1086…) 2. Dimitruk: political conflict (https://academic.oup.com/ereh/article/22/3/261/482…) The number of words should be more than 1500. Structure: 1. statement of thesis; 2. literature review( first study second study) 3. Comparative analysis( similarities differences)your overall view should be clear 4. conclusionHere is the grading rubric:Thesis:a thesis statement about what is ‘true’ based on the two assigned papers.Discussion of Research papers:There is analysis of both assigned papersThe discussion of the papers is meaningful to the advancement of the thesisThere is critical analysis of the papersWriting style:There are no grammatical errors, incomplete sentences, or misspellingsThe paper flows from one topic to the next and is logicalProperty Rights and Parliament in
Industrializing Britain
Dan Bogart University of California, Irvine
Gary Richardson University of California, Irvine
Abstract
During Britain’s industrialization, Parliament operated a forum where rights to
land and resources could be reorganized. This venue enabled landholders and
communities to exploit economic opportunities that could not be accommodated by the inflexible rights regime inherited from the past. In this essay,
historical evidence, archival data, and statistical analysis demonstrate that Parliament increased the number of acts reorganizing property rights in response
to increases in the demand for such acts. Tests with placebo groups confirm
the robustness of this result. This evidence indicates that Parliament responded
elastically to changes in the public’s demand for reorganizing property rights.
Parliament’s efforts to adapt property rights to modern economic conditions
may have accelerated Britain’s economic ascent.
Laws and institutions must go hand in hand with the progress of
the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and
manners and opinions change, with the change of circumstances,
institutions must advance also to keep pace with the times. We
might as well require a man to wear still the coat which fitted him
when a boy as civilized society to remain ever under the regimen
We thank Jean-Laurent Rosenthal, Claudia Goldin, Gary Libecap, Lee Alston, Stergios Skaperdas,
Linda Cohen, John Wallis, Tim Leunig, Richard Sylla, Mauricio Drelichman, and Joel Mokyr for
helpful comments on earlier drafts. We also thank seminar participants at the University of British
Columbia, New York University, the University of Michigan, Northwestern University, and the
Washington Area Economic History Seminar and conference participants at meetings of the Economic
History Society, the All–University of California Group in Economic History, the World Congress
of Economic History, the International Economic History Association, and the Development of the
American Economy Spring Institute at the National Bureau of Economic Research. We thank Francesca Labordo and Patricia Suzuki for research assistance, the Parliamentary Archives for assistance
and advice, and the University of California for financial support.
[Journal of Law and Economics, vol. 54 (May 2011)]
䉷 2011 by The University of Chicago. All rights reserved. 0022-2186/2011/5402-0009$10.00
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of their barbarous ancestors. [Thomas Jefferson, letter to Samuel
Kercheval, July 12, 1816]1
1. Introduction
Ronald Coase’s seminal articles “The Problem of Social Cost” (1960) and “The
Lighthouse in Economics” (1974) examine property rights in nineteenth-century
Britain. The British system, Coase contends, was flexible and efficient, a contention illustrated with examples from the common law of industrial torts and
Parliament’s policies toward lighthouses. A large literature follows Coase’s lead
and describes the common law’s role in regulating property rights, particularly
rights to real estates, but little scholarship discusses Parliament’s influence over
rights to land and resources.
Recent research addresses that lacuna in the literature (Bogart and Richardson
2009, 2010). Parliament played a pivotal role in the evolution of equitable estates,
a property right superimposed above real estates and dictating who received
revenues arising from land and resources. This essay extends that insight to the
spectrum of legal arrangements regulating the cultivation of land, the utilization
of resources, and investment in infrastructure.
Addressing these issues requires understanding property rights in preindustrial
Britain. Britain’s preindustrial property rights regime posed problems for people
trying to reallocate resources toward more productive uses, particularly opportunities arising from technologies unanticipated in the distant past. Holders of
equitable estates could neither mortgage, nor lease, nor sell much of the land under
their control. Holders under many types of tenures could transfer property only
to particular persons or members of a local community. Residents in commonfield villages often had to keep land in traditional uses. Residents could neither
utilize resources in new ways, nor improve infrastructure, nor repackage rights
without reaching agreements with all other parties possessing interests in a parcel,
and such agreements could not in most cases be enforced by law but could in
many instances be challenged through courts.
Britain’s preindustrial property rights system also inhibited localities from
providing public goods, particularly those extending beyond the bounds of traditional communities or those necessitated by the expansion of commerce and
cities. Communities lacked mechanisms for raising revenues and powers of eminent domain. Communities struggled to overcome free riding, which inhibited
the provision of public goods, and holdouts, who withheld resources needed for
public projects unless paid exorbitant sums. Market transactions might have
alleviated these inefficiencies, but in most cases, the necessary transfers could
not be consummated and the requisite contracts could not be enforced because
of the restrictive nature of the rights regime, which valued tradition and stability
above innovation and flexibility.
1
This quote is inscribed on the southeastern interior wall of the Jefferson Memorial in Washington,
D.C.
Property Rights and Parliament
243
These problems persisted until Parliament embraced novel ideas concerning
property and established procedures for processing petitions from groups hoping
to reorganize rights to land and resources. These procedures enabled Parliament
to review requests from individuals, families, and communities and, after considering the interests of all concerned and the general public, rewrite rules regarding the use of land and resources. Parliament enshrined these accords in
three types of acts: estate, statutory authority, and enclosure. Estate acts altered
the rights of individuals and families, eliminated restrictions on the uses to which
property could be put, authorized the sale, mortgage, and leasing of land, and
facilitated the enforcement of contracts. Acts establishing statutory authorities
created new organizations that built, operated, and maintained infrastructure
and public services. Statutory authorities received new rights, such as the authority to collect tolls, levy taxes, issue debt, and purchase land. These rights
superseded traditional rights, such as burgesses’ right to travel throughout the
realm free from tax and toll, which was enshrined in town charters and the
Magna Carta. Enclosure acts disbanded collectively managed common-field villages and assigned to individuals rights to particular pieces of property. Enclosure
acts also shifted commonly held agricultural land to new uses, such as the
construction of housing and workshops near growing towns and cities. Acts of
all three types embodied the public’s desire to reorganize rights and to reallocate
resources toward new uses.
A key question concerning Parliament’s role in the property system is whether
Parliament supplied legislation that reorganized property rights elastically, in the
sense that when the public’s demand for legislation expanded, the quantity of
legislation rose in response while the cost remained reasonable and stable. Or
did Parliament supply legislation inelastically, which would indicate that the
political system dictated the pace of reform, perhaps because of desires to extract
economic rents, protect social classes, or restrain change?
This essay demonstrates that Parliament supplied property rights elastically,
beginning with evidence describing Parliament’s procedures for reorganizing
rights. The evidence indicates that Parliament’s process was rapid, affordable,
and consensual. The demonstration continues with a series of statistical tests
that compare the annual number of acts that reorganized property rights with
variables that influenced the public’s desire to reorganize rights and Parliament’s
willingness to supply the requisite legislation. The public’s demand depended
on the costs and benefits of reorganizing rights. The benefits of reorganization
depended on returns to constructing infrastructure, which varied with the cost
of investment and the health of the economy. A good proxy for the former is
the ex post real interest rate, and a good proxy for the latter is the volume of
international trade.
Our statistical tests regress changes in the annual number of acts reorganizing
property rights on changes in the volume of trade, the real interest rate, and an
array of additional variables that influenced the public’s desire to reorganize
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rights and Parliament’s ability to pass the requisite legislation. Coefficients recovered from these regressions reflect short-term changes in legislative output
caused by fluctuations in factors influencing the demand for reorganization and
the supply of legislation. These regressions also account for econometric issues—
such as nonstationarity and heterogeneity—that complicate the process of drawing inferences from time-series data. Additional robustness checks, including
placebo groups and instrumental variables, allow clear conclusions to be drawn
from the correlations in the data. The placebo groups consist of acts that were
processed using the same procedures as acts reorganizing property rights but
that did not alter rights to land and resources. The instrumental variables consist
of climatic conditions conducive to crop cultivation—as recorded in the width
of tree rings—for Great Britain and its principal trading partners. These instrumental variables clearly demonstrate the direction of causation.
The rest of this essay elucidates our endeavor. Section 2 provides details about
Parliament’s process for reorganizing rights to land and resources. Section 3
describes the quantitative evidence that we analyze. Section 4 describes our
statistical methods. Section 5 presents empirical results. Section 6 discusses the
implications of our analysis. Parliament supplied legislation for reorganizing
property rights elastically. When demand for reorganization rose, the quantity
of legislation rose as well. When demand contracted, the quantity contracted.
Parliament’s actions enabled Britain to reorganize property rights gradually and
peacefully during the century following the Glorious Revolution.
Understanding Parliament’s role in the property rights system addresses the
larger issue of why Britain was first to industrialize. Some scholars have emphasized Parliament’s role in restraining the Crown and its implications for the
security of property rights (North and Weingast 1989). Others have emphasized
the impact of Enlightenment ideas in eroding rent-seeking policies (Mokyr and
Nye 2007). Our analysis is unique because it shows how Parliament changed
property rights in an enlightened manner. Similar large-scale changes did not
occur on the European continent until the nineteenth and twentieth centuries,
following shocks to society such as the French and Russian revolutions.
2. Acts That Reorganized Rights to Land and Resources
This section describes estate, statutory authority, and enclosure acts and Parliament’s procedures for passing them. These three types of acts had a common
theme: they relaxed constraints on the use of land and resources. They did this
in varying ways. Some of these acts created new rights. Others altered or annulled
old rights. Some created new organizations, such as turnpike trusts. Others
disbanded existing organizations, including ancient entities such as village councils and manorial courts.
Property Rights and Parliament
245
2.1. Estate Acts
Estate acts enabled holders of property to take some action prohibited by the
rules under which they had inherited their land. Estate acts were necessary
because the inheritance system limited estate holders’ power over their property,
particularly the ability to sell or lease land. These restrictions adhered to the
wishes of the deceased (who bequeathed the property to their descendents) to
protect the interests of dependents and heirs and to preserve a family’s estate
for future generations (English and Saville 1983, pp. 19–21). This system of
inheritance, known as strict settlement, solidified during the seventeenth century
and prevailed until the nineteenth century. “Settlement” was a generic name for
a property transaction and for the documents created in its consummation. While
estimates vary, at the peak at least one-quarter and as much as three-fourths of
land in England was held through strict settlements (English and Saville 1983,
pp. 11–12, 30).
Three features of settlements generated a need for parliamentary involvement.
First, without an act of Parliament, holders of settled estates could change the
terms of the settlement only when their heirs came of age (reached the age of
21). Then the holder and the heir (typically father and son) could join forces
and amend the settlement via the process of common recovery. Limited life spans
meant that settlements could be changed only infrequently. A family might wait
decades (or generations) for an heir to come of age and for the holder and heir
to reach an agreement about restructuring the estate.
Second, settlements restricted the uses to which land could be put. Holders
of a settled estate (who were just life tenants) could grant neither leases lasting
beyond their lives nor leases from which they benefited at the expense of their
heirs (such as leases in which tenants paid lump sums up front in return for
concessions). Holders could seldom sell, swap, or mortgage property under their
control. Holders could not alter property, even if they considered the alterations
to be an improvement, without risking legal suits. The removal of trees, hedges,
and buildings, the mining of minerals, quarries, and peat bogs, and the conversion of arable lands into pasture (or vice versa) could be considered waste,
since these actions converted permanent resources into current income. All those
who benefited from such actions could be liable for damages if dependents or
heirs claimed to be harmed. Courts allowed sales, exchanges, mortgages, improvements, and long-term leases only if the settlement contained specific clauses
authorizing such actions. Settlements written in the seventeenth and early eighteenth centuries seldom provided such powers, although as the eighteenth century progressed and as the law concerning settlements became increasingly sophisticated, settlements tended to provide broader powers.
Third, conducting transactions and enforcing contracts on settled land could
be costly, uncertain, and insecure. Settlements were long, complex documents,
often unpunctuated and repetitious. Interpreting settlements required experience,
skill, detailed knowledge of the document, and a large library of property laws,
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precedents, and legal texts estimated at 674 volumes in 1826 (English and Saville
1983, p. 18). Settlements were not part of the public record. Copies of the deeds
were usually held by the settlers, trustees, and lawyers. Settlements had to be
consulted before mortgages could be taken out, leases drawn up, or sales completed, because if the settlement did not specifically authorize a transaction, the
transaction could be voided. Ambiguities in settlements often deterred individuals from acting for fear that the transactions would be disputed (Bogart and
Richardson 2009).
Estate acts solved these problems. They facilitated the enforcement of contracts
by clarifying permissible transactions and the rights of pertinent parties. They
authorized actions previously prohibited by settlements, such as the mortgaging
of property, cutting of old-growth timber, and mining of ores and minerals.
They also authorized the sale and leasing of land, which was one of the most
significant economic effects of estate acts, since large tracts of English land were
exposed to market forces.
2.2. Statutory Authority Acts
Statutory authority acts fostered the construction, improvement, and maintenance of infrastructure and social services. They focused on particular topics.
Transportation acts promoted roads, bridges, river navigation, ports, canals, and
railways. Urban improvement acts provided for street paving, gas lighting, garbage collection, sewage extraction, water provision, and police protection. Government building acts fostered the construction of prisons, courthouses, and
county administrative offices. Poor-relief acts provided assistance for the poor
and encouraged the construction of workhouses. Court-of-small-request acts
established legal forums for adjudicating credit contracts valued at less than 40
shillings. Lighthouse acts authorized the construction of new lighthouses.2
Statutory authority acts were necessary because existing governmental entities—parishes, counties, boroughs, and sewer commissions—lacked appropriate
fiscal devices and clear powers of eminent domain. River navigation provides
an illustration. In the early seventeenth century, most tidal rivers were under
the authority of commissions of sewers. Commissions could compel landowners
to cleanse waterways and could tax land along riverbanks to pay for upkeep but
could not tax individuals who traveled on the river or drank its waters and could
not purchase land along a waterway or divert its course. These limitations kept
sewer commissions from improving and extending navigable waterways.
To encourage the improvement and expansion of infrastructure, Parliament
passed statutory authority acts that established nonprofit organizations whose
trustees served without remuneration or for-profit corporations whose directors
purchased shares and profited from their investments. To these new organiza2
The history of statutory authorities has been documented by several scholars. For a sample of
works, see Webb and Webb (1963), Willan (1964), Albert (1972), Handley (1990), Innes (1998), and
Bogart (2005).
Property Rights and Parliament
247
tions, statutory authority acts granted an array of rights. One was the right to
levy user fees and/or raise revenue through other means. A turnpike act, for
example, authorized a trust operating a turnpike to levy tolls on road users and
claim labor (or the equivalent in taxes) from inhabitants along the road. The
tolls marked a significant departure from the existing system, in which parishes
paid for road improvements with local labor and property taxes and individuals
possessed the right of free passage. Trustees also received the right to issue debt
and equity. The bonds were secured by the tolls. If interest payments fell into
arrears, bondholders could seize toll revenues.
Acts gave statutory authorities the right to purchase land along a route’s rightof-way and established legal procedures for doing so. Organizations initially
negotiated with landowners. If the parties could not agree on a price for a plot
of land, the organization could appeal to a commission that could compel the
landowner to sell at a price that a jury and commission determined to be fair
and reasonable. These procedures provided the legal origin for modern laws
concerning eminent domain.
2.3. Enclosure Acts
Enclosure acts reorganized rights to property, usually in open-field agricultural
villages. At the beginning of the eighteenth century, approximately one-quarter
of the arable land in England lay in such villages, where residents shared rights
to communal assets such as water, pasture, and woods. Villagers also shared
rights in large open fields that served as pasture during fallow periods and as
cropland during the growing season. The cropland was divided among the residents, who possessed the right to grow grain on particular plots scattered
throughout the fields and intermingled with those of their neighbors. Villagers
managed collective assets, such as the open arable fields, through village institutions, including customary laws and manorial courts.
The problems of open fields have long been studied by scholars.3 Collective
decision making and communal rights impeded investments in improvements,
the adoption of new techniques, and the conversion of land to new uses. Scattered
plots wasted time and resources. Common pastures encouraged overgrazing and
hindered breeding.
Parliamentary enclosure acts replaced collective ownership of common resources with individual ownership of particular plots of land and replaced collective management through village institutions with individual management of
personal estates. An enclosure act appointed a commission to devise the plan
of enclosure and implement the terms of the act. The commission employed
surveyors to draw a map of the village with its open fields and strips, tofts and
crofts, waste and pasture, and other physical features. The surveyors recorded
the holders of rights to all of these assets. At a series of public meetings, holders
3
For a sample of works, see Tate (1967, 1978), Turner (1984), Wordie (1983), Allen (1992), Clark
(2001a), and Richardson (2005).
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of land (and all other rights in the village) advanced claims as to what they
should receive under the new arrangements. The commissioners decided on the
validity of these claims. After they made their decisions, the surveyors created
a map of the new village, displaying the new features, such as fields, roads, fences,
and irrigation channels, and the owners of each.
2.4. The Process of Passing Acts
The passage of estate, statutory authority, and enclosure acts required time,
resources, and expertise. Individuals and communities had to organize and submit proposals. Legislators had to review proposals and counterproposals from
opposing interests. Clerks had to inscribe acts on parchment and ensure that
they contained language enforceable in courts.
Procedures for passing estate, statutory authority, and enclosure acts were
standardized in the early 1700s and operated with minor adjustments through
the late nineteenth century (Clifford 1968; Williams 1948). An estate act began
with a petition from an individual or family desiring to change the rules regarding
its estate. A statutory authority act also began with a petition, usually from a
community stating a problem, such as insufficient road capacity, or an entrepreneur proposing a project, such as a canal or railway. An enclosure act began
with a series of public meetings during which residents of a village debated the
issue and drafted a petition signed by a sufficient share (typically four-fifths) of
those possessing rights to the property under consideration.
Petitions could be submitted to either house of Parliament. A Parliamentary
committee investigated the merits of a petition. In the Commons, committees
consisted of members of Parliament (MPs) who had knowledge of the individuals
or localities involved. In the Lords, committees consisted of lords of Parliament
(peers) with knowledge of the issue at hand, although it was standard practice
to let any peer participate if he desired to do so. If the committee deemed a
petition appropriate, the petition became a bill that was read at least three times
to the entire chamber and publicly disseminated, ensuring that all interested
individuals learned of the legislation. During the readings and subsequent committee meetings, members could suggest amendments and pertinent parties could
submit counterproposals. After the initial house approved the bill, it was sent
to the other house, where it once again underwent public review. After it passed
both houses, Parliament submitted the bill for royal assent. Then the bill became
law.
Repeated public notice ensured that individuals with vested interests knew
about relevant legislation. Interested individuals often appeared before Parliament to support or oppose bills. Estate bills could be opposed by any beneficiary,
creditor, or claimant of the estate. Opposition might come from immediate family
members, distant relatives, trustees, bankers, or legal representatives. Enclosure
bills could be opposed by anyone with rights to the lands under consideration
or with interests in the village about to be reorganized. Opposition might come
Property Rights and Parliament
249
from tenants, smallholders, or other parties who thought that they deserved
more compensation for the rights that the legislation would extinguish. Statutory
authority bills could be opposed by a broader range of persons, such as neighboring landowners, nearby towns, and rival operators. Opponents could air their
grievances if called as witnesses by the committee. Opponents could also submit
counterpetitions that amended the original legislation or offered alternative proposals. Some bills aroused so much opposition that they failed to become acts.
Others became law, but only after amendments appeased opposition.
The cost of proposing and opposing legislation appears to have been moderate
and stable. Petitioners paid fees to the clerks of Parliament and officers of the
Houses of Commons and Lords. Standing orders dictated the schedule of fees
(Clifford 1968, pp. 716–51). The fees increased for longer bills with multiple
provisions or when multiple parties were involved. On several occasions, Parliament debated the efficacy of the fee schedule. Leaders of the Commons advocated the fee-for-service approach on the grounds that fees encouraged clerks
and officers to work diligently. In 1821, a select committee argued that fees
should be retained because they “stimulate[d] the exertions of [officers] during
periods of accumulated business” (Clifford 1968, p. 741). Members of Parliament
and peers received no direct compensation for introducing and advocating bills,
but politicians may have been rewarded indirectly with electoral support, payments in kind, patronage, or side payments. Petitioners also paid lawyers or
parliamentary agents to prepare the paperwork and guide their bills through
Parliament. Agents presented arguments, gathered evidence, and prepared witnesses for committee proceedings. Agents’ fees amounted to 50–80 percent of
the cost of obtaining an act (Commons 1833, pp. 424–29).
The preponderance of material pertaining to petitions indicates that the process was accessible, affordable, and predictable. Whether the political process
operated as advertised is, of course, a testable hypothesis. The subsequent sections
of this essay describe the historical data and statistical methods needed to conduct
such a test.
3. Data
The Parliamentary Archive maintains a computerized catalog, Portcullis, which
indicates the clerical title, calendar year, regal year, and parliamentary session
for all acts passed since the sixteenth century.4 Clerks inscribed clerical titles on
the exterior of a roll of parchment containing the full text of an act when
Parliament reviewed the original legislation. The clerical title summarized the
act, usually in a concise paragraph containing enough information for the clerks
4
See Parliament’s Web site (Portcullis Catalogue Archive, http://www.portcullis.parliament.uk).
The clerical titles in Portcullis were first published in two nineteenth-century compilations of Parliamentary legislation, Statutes of the Realm (Great Britain 1800) and Statutes at Large (Great Britain
1807), which were computerized during the 1990s.
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Figure 1. Number of acts reorganizing property rights, 1700–1830
to identify the act and its principal provisions amid thousands of similar pieces
of parchment, without opening the rolls to read the full text.
Earlier papers explain processes for converting the clerical title of every act
of Parliament into a vector of variables (Bogart and Richardson 2006, 2010).5
Figure 1 plots the annual number of acts dealing with estates, statutory authorities, and enclosures from 1700 to 1830. Estate acts were the most common
type of legislation altering property rights in the early 1700s. Statutory authority
acts increased in number throughout the century. Enclosure acts became common from 1760 to 1820. The number of all of these acts varied greatly from
year to year.
Table 1 describes the series on estate acts, including the total number of estate
acts passed each year and time series indicating the annual number of estate
acts that authorized the sale or lease of property. Our analysis emphasizes estate
acts authorizing sales and leases because these acts placed land long bound by
the fetters of the past onto the market.
Table 1 also describes the data that serve as a comparison (or placebo) group
for estate acts. Marriage acts permitted individuals to marry and/or divorce in
5
Our quantitative compilation of acts builds on a large literature that counts and categorizes acts
of Parliament. See Langford (1991), Hoppit (1996), and Innes (1998) for recent contributions.
Property Rights and Parliament
251
Table 1
Estate and Other Private Acts: Summary Statistics
Series in Levels
Type of Act
Estate acts:
All
Authorized sales
Authorized leases
Authorized sales or leases
Nonestate private acts:
Marriage
Naturalization
Office
Sum
Series in Differences
Average
SD
Min
Max
Average
SD
Min
Max
21.7
11.2
3.7
14.8
8.4
5.0
3.1
6.8
0
0
0
0
45
29
24
39
⫺.2
⫺.1
.0
⫺.1
9.6
5.7
3.1
7.2
⫺21
⫺15
⫺12
⫺17
30
15
16
17
1.6
7.7
.4
12.1
2.0
6.2
.7
7.9
0
0
0
0
10
36
4
47
.1
.0
.0
.1
2.2
6.9
1.0
9.3
⫺9
⫺25
⫺4
⫺34
7
20
3
26
Note. Estate acts changed rights to land and resources, while nonstate private acts did not. Personal rights
were affected by some estate acts and by all nonestate private acts. For the series in differences, the
observation in year t ⫺ 1 is subtracted from the observation in year t.
contravention of secular and religious statutes. Naturalization acts provided
foreign-born denizens with the rights of native-born citizens. Office acts appointed individuals to positions in the royal household, courts of law, and executive agencies and other positions that provided government-funded livings.
Important similarities existed between these marriage, naturalization, and office
acts (collectively called nonestate private acts) and the estate acts. When processing all of these acts, Parliament followed common procedures. Similarities
also existed in the clientele that requested these acts. A key feature, however,
distinguishes estate and nonestate private acts. The value of estate acts varied
with economic conditions that influenced the costs and benefits of reorganizing
rights to land. The value of marriage, naturalization, and office acts did not.
Table 2 presents the numbers of statutory authority acts passed each year. The
acts pertaining to transportation principally involve roads, canals, harbors, rivers,
bridges, and railways. The acts pertaining to urban improvements principally
involve the provision of water, sewers, market infrastructure, public buildings,
gas lighting, garbage collection, church maintenance, courts of small request,
poor relief, prison construction, and police protection. An augmented DickeyFuller test was used to indicate whether the series are stationary. While several
series are nonstationary in levels, all of the series are stationary in differences.
The placebo group for statutory authority acts is government finance acts,
which dealt with national government expenditure and taxation. Most pertained
to excise, customs, and land taxes, the purchasing of ships, provisioning of
military forces, and construction of military fortifications. Like statutory authorities, these acts financed the provision of public goods, and their passage
through Parliament required balancing local and broader interests. Unlike statutory authority acts, however, demand for these acts depended largely on the
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Table 2
Statutory Authority and Finance Acts: Summary Statistics
Series in Levels
Series in Differences
Average SD Min Max Stationary Average SD Min Max Stationary
Statutory authority acts:
All
Transportation only
Urban only
Government finance acts
50.8
37.2
9.8
24.5
41.4
29.1
10.8
23.0
0
0
0
0
187
126
53
94
No
No
Yes
Yes
1.0
.7
.2
.2
19.4
14.3
6.9
16.5
⫺53
⫺37
⫺22
⫺87
68
56
26
54
Yes
Yes
Yes
Yes
Note. All statutory authority acts changed rights to land and resources and authorized the provision
of infrastructure or services. No government finance acts changed the rights to land or resources, but
some authorized the provision of infrastructure or services. For the series in differences, the observation
in year t ⫺ 1 is subtracted from the observation in year t. The placebo group is government finance
acts. An augmented Dickey-Fuller test is used to determine whether the series possesses a unit root.
dictates of foreign affairs and little on the costs and benefits of reorganizing
rights to land and resources.
Table 3 describes enclosure acts. The placebo group is amendments to enclosure acts. Amendments provide an illuminating comparison because their passage
followed procedures identical to those for initial enclosure acts, but demand for
amendments arose primarily after random instances when errors crept into original legislation during the long process of drafting and passing bills.
The accuracy of the data depicted in Tables 1–3 depends upon our ability to
accurately determine the year in which acts passed. We can do that with confidence for years after 1762. For the early part of our sample period, a minor
complication arises. A convention dated all acts passed by a session of Parliament
as if they passed on the opening day of the session. This convention lingered
from an earlier period when Parliament met infrequently at royal request and
handled a limited volume of business in a short time period. After 1689, Parliament met annually. Sessions began in the fall, usually in the month of October,
November, or December, lasted throughout the winter, and adjourned in the
spring. These conventions complicate the dating of acts for the Parliaments of
1714–15, 1751–52, and 1760–61. In these years, the monarch died and/or Parliament opened late. In 1714, for example, Queen Anne died. George I assumed
the throne. His ascension delayed the opening of Parliament until January of
1715. This Parliament adjourned in the spring and another opened on schedule
during the next fall. So, in the year 1715, the conventional dating method assigned
the acts passed in two parliamentary sessions—the winters of 1714–15 and 1715–
16—to one calendar year, 1715. We correct for this confusion by assigning
dummy variables to the years in which Parliament did not meet and the years
in which Parliament met twice. In the example above, a dummy is included for
1714, 1715, and 1716.6
6
We also correct for this by assigning acts to the years in which they appear to have been passed
and by running all of our regressions only for the years 1763–1830, for which we can precisely date
all acts. Our conclusions remain robust regardless of the way in which we date acts from these
idiosyncratic years.
All
Some
None
All
Corrected
Error
32.1
.2
Average
SD
35.1
.7
0
0
Min
136
5
Max
Series in Levels
No
Yes
Stationary
.2
0
Average
13.8
1.1
SD
Max
37
5
Min
⫺49
⫺5
Series in Differences
Yes
Yes
Stationary
Note. “Corrected error” indicates whether the acts amended or corrected earlier acts changing rights to land and resources. For the series in differences, the observation
in year t ⫺ 1 is subtracted from the observation in year t. An augmented Dickey-Fuller test is used to determine whether the series possesses a unit root.
Enclosure acts
Enclosure amendments
Changed Rights
to Land and
Resources
Table 3
Enclosure Acts and Amendments: Summary Statistics
254
The Journal of LAW & ECONOMICS
Table 4 lists the right-hand-side variables in our regression analysis. The key
explanatory variables are the real interest rate and the volume of foreign trade.
The real interest rate determined the cost of investment and rate of intertemporal
exchange, which were principal factors determining the returns from reorganizing
property rights. Our real interest rate is the nominal interest rate, measured as
the yield on long-term government bonds (known as consols) from Neal (1990),
minus inflation, measured as a 3-year moving average of the percentage change
in Clark’s (2001b) consumer price index.7 The volume of foreign trade was linked
to aggregate economic activity, which was a principal determinant of revenues
earned from improving infrastructure and reallocating resources toward more
productive uses. The volume of trade also measures the health of the industrial
and mercantile sectors relative to agriculture. Our measure of the volume of
foreign trade, like that of most scholars, is the sum of the official values of
imports and exports (Mitchell 1988). The official values reflect changes in the
quantity of imports and exports weighted by a particular set of prices fixed at
the outset of the eighteenth century.
The indexes of climatic conditions are derived from timber growth rates. Tree
rings reveal year-to-year fluctuations in conditions conducive to cultivation,
which had large effects on trade patterns and interest rates in an economy
dominated by agriculture.8 Tree-ring indexes exist for Britain and several of its
largest trading partners. A series from Belgium reveals climatic conditions in the
Low Countries, the agricultural lands adjoining the North Sea and the English
Channel, and the Rhine River basin. A series from the southern French Alps
reflects climatic conditions in the Mediterranean basin, particularly the productive and densely populated regions along the Rhone River and in northern
Italy. A series from Pomerania reflects climatic conditions in the grain-exporting
regions in eastern Europe and near the Baltic Sea. Series from New York and
Virginia reflect climatic conditions in England’s American colonies, particularly
the northern regions exporting foodstuffs, like fish and grain, and the southern
colonies exporting cash crops, such as cotton and tobacco.
Graphing the data described in Tables 1–4 reveals correlations between the
explanatory and dependent variables. A key correlation appears between changes
in interest rates and changes in legislation reorganizing property rights. Figures
2–7 illustrate this correlation. Figures 2, 4, and 6 show that the number of acts
increased when the interest rate fell, for estate acts, statutory authority acts, and
enclosure acts, respectively. Figures 3, 5, and 7 show that this correlation did
not exist for the placebo groups for each type of act. These patterns reveal a
clear correlation between changes in the demand to reorganize property rights
and changes in the number of reorganizations approved by Parliament. The next
7
From 1700 to 1729, the dividend yield on Million Bank stock is used for the yield on long-term
government bonds. See Neal (1990) and Global Financial Data (2010) for more discussion of UK
interest rates in the early eighteenth century.
8
See Mathias (1983) for a discussion of the role of climate in the British economy.
4.9
4,665
.6
.3
.5
.3
.5
.1
.3
258.0
177.1
282.0
16.7
187.4
196.2
⫺.1
738
0
0
0
0
0
0
0
11.6
2.5
⫺4.0
.1
1.45
1.4
12.9
18,300
1
1
1
1
2.0
1
1
1,190
496
867
61
493
550
⫺1,040
⫺468
⫺871
⫺63
⫺495
⫺479
Max
⫺15.1
⫺24,200
⫺1
⫺1
⫺1
⫺1
⫺2.1
⫺1
⫺1
Min
Hoffsummer (1986)
Baillie (1986)
Tessier (1995)
Wazny (1995)
Cook (1995)
Cook (1994)
Neal (1990); Clark (2001b)
Mitchell (1988)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Rodger (2004); Holmes (1993); Holmes and Szechi (1993); Evans (2001)
Sources
Note. The real interest rate is the yield on 2.5% consols minus inflation. The volume of foreign trade is calculated as the sum of exports plus imports at official prices.
The values for tree rings are based on an index in which 0 indicates no growth and 1,000 is average. All of the differenced series are stationary.
Real interest rate
Volume of foreign trade
Election year
Monarch died
Prime minister changed
Epidemic mortality
Real land tax rate (shillings/acre)
Tax code change
War years
Tree rings:
Belgium
England
French Alps
Pomerania
New York
Virginia
SD
Average
Series in Differences
Table 4
Explanatory Variables: Summary Statistics
256
The Journal of LAW & ECONOMICS
section describes statistical methods that yield clear interpretations of these
correlations.
4. Methods
This section builds upon research that explores the public’s demand and the
political system’s supply of property rights (Anderson and Hill 1975; Libecap
1989; Alston, Libecap, and Mueller 1999; Alston and Mueller 2004). Formalizing
this intuition yields equations that can be estimated with clear interpretations
and salutary statistical properties. This section explains what the estimating equation reveals about the patterns in the evidence.
The estimating equation is
冘
I
DA t p
ip1
冘
J
ai Dx i, t⫺1 ⫹
bj Dz j, t⫺1 ⫹ ␧t ,
jp1
where DAt is the change in the number of acts passed by Parliament from year
t ⫺ 1 to t, Dx i,t⫺1 is the change from year t ⫺ 2 to t ⫺ 1 in the ith variable that
affects returns from reorganizing property rights and thus shifts the demand for
legislation, ai is the coefficient on the ith demand-shift variable, Dz j,t⫺1 is the
change from t ⫺ 2 to t ⫺ 1 in the jth variable that alters Parliament’s productivity
and thus shifts the supply of legislation, bj is the coefficient for the jth supplyshift variable, and ␧t is an error term. Explanatory variables are lagged to capture
the time necessary to respond to changing circumstances, prepare petitions,
debate bills, and pass acts.
This specification is derived from a standard supply and demand model applied
to a market for reorganizing rights.9 In such a model, the effect of a shift in
demand depends on the elasticity of supply. If supply is inelastic, then shifts in
demand have little (or no) impact on the equilibrium quantity but a large impact
on the equilibrium price. As the elasticity of supply increases, shifts in demand
have a larger impact on quantity and a smaller impact on price. The elasticity
of supply is a key issue; it indicates Parliament’s response to constituents’ requests. If supply was elastic, then when constituents desired to reorganize property rights, Parliament allowed them to do so (as the documentary evidence
indicates). If supply was inelastic, then Parliament based its decisions about
reorganizing rights on concerns other than economic efficiency—concerns such
as extracting economic rents, protecting social classes, or restraining modernization. In our model, determining the elasticity of supply involves the traditional
hypothesis test for statistical significance of ai, the coefficients on the demandshift variables Dx i,t⫺1. If the null hypothesis that these coefficients equal zero can
be rejected, then the supply curve cannot be perfectly inelastic. As the demand9
See Bogart and Richardson (2008) for details on the model and the derivation of the estimating
equation.
Figure 2. Relationship between real interest rate and estate acts
Figure 3. Relationship between real interest rate and placebo group for estate acts
Figure 4. Relationship between real interest rate and statutory authority acts
Figure 5. Relationship between real interest rate and placebo group for statutory authority
acts.
258
Figure 6. Relationship between real interest rate and enclosure acts
Figure 7. Relationship between real interest rate and placebo group for enclosure acts
259
260
The Journal of LAW & ECONOMICS
shift coefficients ai increase relative to the supply-shift coefficients bj, the elasticity
of supply increases.
Analyzing changes (also known as first differences) in the data is sensible
because this is the specification that arises from a supply and demand model.
Analyzing differences is also necessary because much of the data that we analyze
trends over time. Statistical phenomena frequently generate spurious correlations
between trending time series. Analyzing differences ensures that the correlations
we detect arose for real rather than statistical reasons.10
Our method also accounts for unobserved explanatory variables and the direction of causation. We control for unobserved explanatory variables using
placebo groups. It is possible that our regressions do not control for an unobserved factor correlated with both an independent variable (such as the real
interest rate) and the number of acts reorganizing rights to land and resources
(our dependent variable). The exclusion of this unobserved variable might make
it appear as if the real interest rate influenced the demand for acts, when in
actuality the excluded variable was the source of the correlation. Placebo groups
indicate whether correlations existed between our independent variables and acts
that did not reorganize rights to land and resources. If such correlations existed,
then our regressions may reveal spurious, rather than real, relationships.
Our estimation method determines the direction of causation using instrumental variables. Our instruments are tree-ring measurements from Great Britain
and its major trading partners. Tree-ring measurements reveal variations in climate conducive to cultivation that are obviously exogenous and highly correlated
with the volume of commerce. When this instrument is used to identify the
effects of trade on statutory authority acts in a standard two-stage least squares
specification, the main results change little, which indicates that the regressions
identify a causal link between short-run changes in economic conditions and
property rights legislation.
5. Results
This section presents results from the methods described in the preceding
section. Table 5 examines the year-to-year change in the annual number of estate
acts authorizing the sale or lease of land on year-to-year changes in the key
explanatory variables. The regressions span the 124 years for which we have data
suitable for statistical analysis. The initial year, 1705, lies close to the point at
which Parliament formalized procedures for processing acts regarding property
rights. The final year, 1830, lies close to the nationwide reform of parliamentary
elections and procedures enshrined in the Great Reform Act of 1832.
The table explores the temporal relationship between the explanatory and
dependent variables. Columns 1, 2, and 4 indicate that estate holders and Par10
Our approach improves on earlier papers in the literature that link the level of real interest rates
with the number of enclosure or statutory authority acts in given year (see Albert 1972; Crafts 1977).
(3)
(4)
⫺.51*
.002
⫺.32
.23
.04
(.08)
Yes
19
106
⫺.03
(.04)
⫺.15
(.20)
Yes
53
9, 106
.11
(.17)
Marriage Naturalization
(5)
(6)
⫺.11
(.13)
⫺.34*
⫺.39*
⫺.40*
(.10)
(.11)
(.12)
⫺.03
⫺.22
(.12)
(.14)
⫺.09
⫺.07
⫺.10
(.17)
(.16)
(.16)
No
No
Yes
Yes
313
360
528
2,945
2, 113
2, 113
9, 106
11, 104
9,
⫺.22*
(.11)
(2)
All
(8)
All
(9)
⫺.20
.37
⫺.05
.90
⫺.28
(.32)
.02
⫺.01
.08
(.02)
(.22)
(.27)
.01
(.14)
⫺.01
.09
⫺.06
(.01)
(.28)
(.28)
Yes
Yes
Yes
13,378
149
162
9, 106
9, 106
11, 104
Office
(7)
D Nonestate Private Acts
Note. N p 124. Standard errors are calculated using the Newey-West procedure with three lags. Control variables include year of election, death of a monarch,
change in prime minister, epidemic mortality, real land tax rate, change in tax code, and war years.
* Significant at the 5% level.
Control variables
F-test statistic
Degrees of freedom
D Real interest rate t ⫺ 1 ⫹ D real
interest rate t ⫺ 2
p-Value
D Trade t ⫺ 1 ⫹ D trade t ⫺ 2
p-Value
D Trade t ⫺ 2
D Trade t ⫺ 1
D Real interest rate t ⫺ 2
D Real interest rate t ⫺ 1
(1)
D Estate Acts Authorizing Sales and Leases
Table 5
Estate Acts, 1705–1830: Regression Results
262
The Journal of LAW & ECONOMICS
liament reacted to the changes in the real rate of interest over a period of 2
years, with the second lag being larger. Adding control variables in columns 3
and 4 improves the fit of the regression but does not alter the results.
An array of checks demonstrates the robustness of these regressions to a wide
range of alternative specifications. Neither the signs nor the significance levels
of the coefficients change when the endpoints of the analysis change by up to
2 decades. The signs and significance levels are also invariant to the inclusion
of additional explanatory variables such as year-to-year changes in the level of
population, industrial production, and parliamentary majorities. Granger causality tests indicate that changes in economic conditions precede changes in
legislative outcomes, while changes in legislative outcomes do not precede
changes in economic variables. In technical terms, changes in the real interest
rate Granger cause changes in estate acts.11
Replacing the dependent variables with placebos, nonstate private acts,
strengthens our results. The placebos resembled estate acts in many dimensions
but did not alter property rights. In all of the placebo tests, the dependent variable
is uncorrelated with the real interest rate. This result has two important implications. First, the real interest rate influenced the passage of estate acts through
demand-side channels, since if interest rates influenced the way in which Parliament supplied acts, then changes in interest rates should be correlated with
changes in all types of acts, including nonestate private acts. Second, excluded
explanatory variables do not drive the results for the estate acts. If they did, then
the same patterns should appear for the placebos.
Table 6 replicates these results for the years 1763–1830, which span the generations during which the Industrial Revolution began, spread, and accelerated.
The years also span the period for which all acts are accurately dated and other
statistical series pose the fewest problems. Columns 1–3 and 6–10 demonstrate
that the relationship between real interest rates and the number of acts reorganizing rights to land holds for this key period and for the cleanest data. Column
4 shows that these results hold when the dependent variable is limited to only
acts that authorized sales of strictly settled land. Column 5 shows that these
results hold when the dependent variable is limited to acts that authorized the
lease of strictly settled lands.
Table 7 presents results for statutory authorities. Columns 1–4 regress the
change in the number of statutory authority acts on changes in the real interest
rate and the volume of trade, with various sets of controls and lags. Column 5
restricts the analysis to statutory authorities dealing with transportation. Column
11
The Granger causality tests are based on a vector autoregression (VAR) model with equations
for the number of acts, the real interest rate, and the volume of trade. The equations include three
lags of each endogenous variable. All test statistics, such as the likelihood ratio statistic, indicate that
the lag length should be 3. The p-value for the chi-square statistic on changes in the real interest
rate is less than .01, which indicates strong statistical significance. The VAR model also reveals that
changes in sale and lease acts do not Granger cause changes in trade or real interest rates (the pvalues are .86 and .14, respectively). Variation in acts is correlated with lags but not leads of our
explanatory variables.
Leases
(5)
⫺.64*
.003
⫺.35
.15
⫺.36*
.01
⫺.29
.16
⫺.28⫹
.06
⫺.06
.48
⫺.20
(.22)
Yes
2
9, 57
⫺.01
(.38)
Marriage Naturalization
(6)
(7)
⫺.21⫹
⫺.02
⫺.19⫹
(.12)
(.09)
(.11)
⫺.39*
⫺.43*
⫺.34*
⫺.09
⫺.06
(.17)
(.16)
(.14)
(.08)
(.08)
⫺.05
⫺.29*
⫺.14
⫺.15*
(.12)
(.14)
(.11)
(.06)
⫺.02
⫺.06
⫺.15
.09*
.03
(.13)
(.12)
(.11)
(.04)
(.08)
No
Yes
Yes
Yes
Yes
Yes
3
7
8
3
5
3
2, 64
9, 57
11, 55
11, 55
11, 55
9, 57
⫺.32*
(.13)
Sales
(4)
All
(9)
All
(10)
⫺.41
.23
⫺.06
.88
⫺.46
(.50)
.01
⫺.12
.05
(.03)
(.48)
(.58)
.07
(.15)
.00
⫺.18
⫺.13
(.01)
(.31)
(.31)
Yes
Yes
Yes
1
1
2
9, 57
9, 57
11, 55
Office
(8)
D Nonestate Private Acts
Note. N p 66. Standard errors are calculated using the Newey-West procedure with three lags. Control variables include year of election, death of a monarch, change
in prime minister, epidemic mortality, real land tax rate, change in tax code, and war years.
⫹
Significant at the 10% level.
* Significant at the 5% level.
Control variables
F-test statistic
Degrees of freedom
D Real interest rate t ⫺ 1 ⫹D real
interest rate t ⫺ 2
p-Value
D Trade t ⫺ 1 ⫹ D trade t ⫺ 2
p-Value
D Trade t ⫺ 2
D Trade t ⫺ 1
D Real interest rate t ⫺ 2
D Real interest rate t ⫺ 1
Sales and Sales and Sales and
Leases
Leases
Leases
(1)
(2)
(3)
D Estate Acts
Table 6
Estate Acts, 1765–1830: Regression Results
⫺1.03*
(.31)
All
(3)
All
(4)
Yes
124
255
106
.58*
(.24)
⫺.56*
(.20)
Transport
(5)
⫺1.00*
⫺1.20*
(.34)
(.45)
⫺.14
(.35)
1.03*
1.03*
1.01*
1.12*
(.36)
(.31)
(.35)
(.34)
⫺.02
(.32)
No
Yes
Yes
Yes
124
124
124
66
117
169
1,237
8
2, 113
9, 106
11, 104
9, 57
9,
⫺1.14*
.001
.99⫹
.10
⫺1.00*
(.33)
All
(2)
Yes
124
482
9, 106
.37*
(.11)
⫺.27⫹
(.14)
Urban
(6)
Yes
120
169
9, 102
1.08*
(.39)
⫺.87*
(.26)
All
(7)
Yes
120
26
9, 102
.64
(.53)
⫺.03
(.33)
D Finance
Acts
(8)
Note. Standard errors are calculated using the Newey-West procedure with two lags. Control variables include years of election, death of a monarch, change in prime
minister, epidemic mortality, real land tax rate, change in tax code, and war years.
⫹
Significant at the 10% level.
* Significant at the 5% level.
Control variables
N
F-test statistic
Degrees of freedom
D Real interest rate t ⫺ 1 ⫹ D real interest rate t ⫺ 2
p-Value
D Trade t ⫺ 1 ⫹ D trade t ⫺ 2
p-Value
D Trade t ⫺ 2
D Trade t ⫺ 1
D Real interest rate t ⫺ 2
D Real interest rate t ⫺ 1
All
(1)
D Statutory Authority Acts
Table 7
Statutory Authority Acts Regression Results
Property Rights and Parliament
265
Table 8
Enclosure Acts Regression Results
D Enclosure Acts
(1)
D Real interest rate t ⫺ 1
D Real interest rate t ⫺ 2
D Trade t ⫺ 1
D Trade t ⫺ 2
Control variables
F-test statistic
Degrees of freedom
D Real interest rate t ⫺ 1 ⫹ D real
interest rate t ⫺ 2
p-Value
D Trade t ⫺ 1 ⫹ D trade t ⫺ 2
p-Value
(2)
⫺1.02*
(.28)
⫺1.04*
(.27)
.45
(.32)
.43
(.34)
No
11
2, 64
Yes
7
9, 57
(3)
⫺.81*
(.29)
⫺1.26*
(.50)
.26
(.32)
.04
(.35)
Yes
8
11, 55
D Amendments
(4)
.01
(.03)
⫺.04
(.04)
Yes
1
9, 57
⫺2.07*
.00
.30
(.61)
Note. N p 66. Standard errors are calculated using the Newey-West procedure with two lags. Control
variables include years of election, death of a monarch, change in prime minister, epidemic mortality, real
land tax rate, change in tax code, and war years.
* Significant at the 5% level.
6 restricts the analysis to statutory authorities related to the improvement of
urban infrastructure and provision of urban services. The results reveal strong
correlations between economic conditions that influenced the value of statutory
authorities and the number of statutory authority acts passed by Parliament.
Column 8 examines the placebo group: changes in the number of government
finance acts. The placebo is uncorrelated with changes in real interest rates and
the volume of trade. Granger causality tests indicate that causation ran from
changes in economic conditions to changes in legislative outcomes.12
Table 8 examines enclosure acts. As with estate acts, the reaction to changes
in the real interest rate appears to have occurred over a period of 2 years. The
placebo group, acts amending enclosure acts, appears uncorrelated with the real
interest rate, which suggests that the variation in the number of enclosure acts
was not driven by unobserved factors that altered the costs of creating acts.
So far, our results illuminate correlations between changes in the quantity of
legislation, changes in the volume of trade, and changes in the real interest rate.
The direction of causation appears to be from economic conditions to legislative
outcomes, but the results cannot rule out all potential counterhypotheses. We
12
The Granger causality test comes from a three-variable VAR model. The test indicates that
changes in trade and real interest rates Granger caused changes in statutory authority acts (p-values
of .09 and .01, respectively). In contrast, changes in statutory authority acts did not Granger cause
changes in trade or real interest rates (p-values of .86 and .52, respectively).
266
The Journal of LAW & ECONOMICS
address this issue using tree-ring measurements for Britain and its major trading
partners as instruments for exogenous changes in economic conditions.
Our analysis focuses on statutory authority acts, where clear results arise,
probably because trade consisted largely of agricultural products and statutory
authorities primarily financed improvements in transportation. In Table 9, column 2 reports results from a two-stage least squares (2SLS) regression of the
change in statutory authority acts in year t on the change in trade in t ⫺ 1. The
second stage includes all the control variables in t ⫺ 2 but excludes tree-ring
measurements. The first stage includes the change in tree-ring measurements
for Britain in the years t ⫺ 2, t ⫺ 3, and t ⫺ 4 and all the control variables in
t ⫺ 2. The estimated effect of a change in trade on the change in statutory
authority acts is positive and statistically significant at the 10 percent level. The
coefficient is larger than the estimate in the comparable ordinary least squares
(OLS) model. The hypothesis that the coefficient on trade in the 2SLS model is
equal to the coefficient in the OLS model cannot be rejected. This indicates that
our OLS model is an accurate assessment of the effect of trade on statutory
authority acts.
Table 9 shows that tree-ring measurements are valid instruments. The lagged
values for UK tree-ring measurements are jointly significant in the first stage at
the 10 percent level. Ideally, the F-statistic would be larger, avoiding a weakinstruments problem, but the estimate seems sensible, given that many factors
influenced the volume of trade and that climatic conditions influenced the economy with variable and extended lags. The overidentification test confirms our
intuition that tree-ring measurements were exogenous.
Column 3 reports results from an expanded set of tree-ring measurements
including Britain’s major trading partners. The results indicate that exogenous
changes in trade had a positive and significant effect on the number of statutory
authorities. The hypothesis of equality between the OLS and 2SLS coefficients
cannot be rejected. Concerns arise with the first stage of this regression. While
adding instruments improves the fit of the first stage (the R-squared statistic in
the first stage increases from .14 to .31), the F-statistic decreases, and the instruments no longer appear jointly significant. This appearance, however, occurs
because we do not account for differences in the length of time for which climatic
shocks in various countries affected English trade. Controlling for these lags
alleviates the problem but imposes additional assumptions.
Results for regressions that use the change in the real interest rates as the
endogenous variable resemble those for the volume of trade. The second-stage
regressions indicate that our OLS regressions had little bias. Changes in real
interest rates caused changes in statutory authorities. The first-stage regression
indicates that tree rings are a valid instrument—tree rings pass both the goodnessof-fit and overidentification tests.
The results from a 2SLS model that includes both the changes in real interest
rates and in trade as endogenous variables resemble those of the previous regressions. A positive correlation exists between the volume of trade and the
1.00*
(.35)
1.76⫹
(.96)
2.45
.07
.96
.62
United Kingdom
2SLS
(2)
1.42*
(.67)
1.38
.16
19.01
.33
New York, Virginia,
France, Spanish
Netherlands, Silesia,
United Kingdom
2SLS
(3)
⫺1.12*
(.38)
OLS
(4)
1.79
.04
21.40
.21
New York, Virginia,
France, Spanish
Netherlands, Silesia,
United Kingdom
⫺1.54*
(.68)
2SLS
(5)
⫺1.28⫹
(.75)
1.20⫹
(.66)
1.47
.05
17.23
.37
New York, Virginia,
France, Spanish
Netherlands, Virginia,
United Kingdom
2SLS
(6)
Note. N p 124. Control variables are included in all models. Robust standard errors are reported. The Spanish Netherlands are modern-day Belgium; Silesia is modernday Poland. Three lags are included for tree-ring data.
⫹
Significant at the 10% level.
* Significant at the 5% level.
F-test statistic (first stage)
p-Value
Overidentification statistic
p-Value
Regions with tree-ring data
D Trade t ⫺ 1
D Real interest rate t ⫺ 1
OLS
(1)
Table 9
Statutory Authority Acts: Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) Results
268
The Journal of LAW & ECONOMICS
quantity of legislation. A negative correlation exists between the real interest rate
and the quantity of legislation. Causation runs from changes in economic conditions to changes in the quantity of legislation.
A series of historical examples strengthens our arguments concerning causality.
The first is Lancashire’s turnpike-building boom. During the 1760s and 1770s,
technological innovations dramatically lowered the cost of spinning yarn and
dramatically increased the production of cotton cloth. The city of Manchester
was the center of this industrial revolution. In 1780, few improved roads linked
Manchester to the textile towns emerging in its vicinity. During the next decade,
localities and entrepreneurs sought to improve the road network. They could
not do so without reorganizing property rights. So a steady stream of turnpike
bills appeared before Parliament. Most of the bills came in the years following
surges in textile production. In 1792, for instance, the revolution in France and
a blockade of French ports reduced competition for English manufactures. English imports of raw cotton rose, and exports of finished cloth surged. In the
following year, 1793, Parliament received a surge in turnpike proposals from the
Lancashire textile region exceeding the number of all acts proposed in the previous 10 years combined. Within a few months, Parliament passed all of the
acts.
A second example comes from London’s expansion during the eighteenth and
nineteenth centuries, when London became the richest and one of the largest
cities in the world. This expansion required agricultural land on the city’s periphery to be converted for residential and industrial uses. Existing property
rights, however, prevented some of this land from being redeveloped. Prohibitions on selling land and signing long-term leases deterred development. Developers feared that they would not be able to reap the returns from investments
and that successful building projects would be held up after the fact. To solve
these property rights problems, holders of equitable estates sought parliamentary
assistance. Landholders did this more often when interest rates fell and profits
from development rose.
This connection is particularly clear during the 1750s and 1760s, when the
Seven Years’ War and harvest failures pushed interest rates to prohibitive levels.
Spikes in interest rates coincided with declines in the number of estate acts. In
1761, for example, because of the exorbitant yield on government bonds, private
lending virtually ceased (Belcher, Cottrell, and Sheppard 1979, p. 186). During
the next 3 years, landholders on London’s periphery sought few acts for reorganizing rights. In 1765, however, the yield on government bonds dropped to
around 3.25 percent. A building boom ensued. During the next 3 years, landholders sought large numbers of acts reorganizing rights to estates on London’s
periphery.
The texts of these acts prove particularly illuminating. Consider the case of
George Forster Tuffnell. In 1766, Tuffnell held property in Islington and Holborn,
just outside the city. From Parliament, Tuffnell obtained an act that declared,
“From the great increase of buildings which have lately been in the Parish of
Property Rights and Parliament
269
Islington . . . [Tuffnell] had a fair prospect and opportunity by granting building
leases to make a considerable improvement and to increase the yearly income.
. . . But Tuffnell is, by the terms of the will, disabled from making and granting
leases of any part of the said premises to any persons so as to encourage them
to make such improvements, without the aid and authority of Parliament” (6
Geo. 3, c. 45 [private]). So Parliament altered the terms of Tuffnell’s estate,
allowing him to sign 99-year building leases, which provided a contractual condition conducive to development.
How responsive was Parliament to changes in the demand for acts reorganizing
rights? A few calculations reveal the answer to this inquiry. The sums of the
coefficients for the real interest rate in Tables 5, 7, and 8 are ⫺.51, ⫺1.14, and
⫺2.07. Multiplying those coefficients by the standard error of the yearly difference in real interest rates (4.9) indicates that a 1-standard-deviation decline
coincided with an increase of 2.5 in the yearly difference in estate acts, an increase
of 5.6 in statutory authority acts, and an increase of 10.1 in enclosure acts. Thus,
a 1-standard-deviation change in the yearly difference in interest rates explains
approximately 35 percent (2.5/7.2) of a 1-standard-deviation change in the yearly
difference in estate acts, 29 percent (5.6/19.4) of a 1-standard-deviation change
for statutory authority acts, and 73 percent (10.1/13.8) of a 1-standard-deviation
change for enclosure acts. Similarly, a 1-standard-deviation change in the yearly
difference in trade explains 24 percent of a 1-standard-deviation change for
statutory authority acts. Short-run fluctuations in trade explain around 19 percent of the variation in transportation acts and 25 percent of the variation in
urban acts.
6. Discussion
At the opening of the eighteenth century, Parliament established a forum for
reorganizing rights to land and resources. This venue enabled individuals, families, and communities to exploit opportunities that could not be accommodated
by the inflexible rights regime inherited from England’s past. The process was
rapid, affordable, and consensual. The forum operated elastically. When returns
from reorganizing rights rose, the public requested and Parliament passed larger
numbers of acts. Reorganizing rights in this way was a principal occupation of
Parliament during the century preceding industrialization. From 1700 to 1830,
estate, statutory authority, and enclosure acts made up more than half of all
legislation passed by Parliament.
These acts probably contributed to Britain’s economic ascent. The acts loosened constraints on investment inherent in Britain’s medieval landholding system, which could not accommodate modern economic opportunities. Parliament’s impact appears to have increased during the eighteenth and nineteenth
centuries, as the constraints inherent in the property rights system became increasingly binding. Relaxing these constraints was probably a necessary condition
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The Journal of LAW & ECONOMICS
for English economic development. Entrepreneurs, landowners, and localities
would have forgone investment opportunities without alterations in their property rights.
In other European nations, inflexible property rights regimes prevented entrepreneurs from exploiting emerging opportunities. In France, for example, the
sclerotic landholding system impeded the construction of infrastructure such as
canals, even when returns from their operation would have substantially exceeded
construction costs (Rosenthal 1992). The principal problem involved establishing
rights-of-way. Local groups who opposed projects (or hoped for a larger share
of the profits) could perpetually delay construction by repeatedly suing in slow
and inefficient courts. Only after its revolution did France simplify procedures
for establishing rights-of-way. Through statutory authority acts Britain established procedures for establishing rights-of-way more than a century before
France and other countries on the Continent.
Why did Parliament establish such institutions when it did? The proximate
answer is the Glorious Revolution of 1688, after which Britain became a constitutional monarchy and the political system changed in fundamental ways.
Parliamentary supremacy triggered transcendent political and intellectual developments. The Bill of Rights in 1689 (and subsequent legislation) encouraged
the expansion of legislative activity. Parliament began meeting on a predictable,
annual schedule and setting its own agenda, and it established a permanent
bureaucracy and procedures for processing petitions. Streamlined procedures
reduced the cost of submitting bills and increased the predictability of passage.
A cadre of professional solicitors and clerks emerged to help petitions through
the parliamentary process. By the 1720s, capacity expanded to the point where
the legislative process could effectively accommodate almost any demand for
legislation reorganizing property rights.
The political system that solidified at that time internalized a balance of political power among landowning, mercantile, courtly, and aristocratic interests.
That balance enabled individuals interested in economic development to pass
acts restructuring property rights and promoting economic progress. Political
stability ensured that those acts would not be overturned by the ascension of
new regimes, via either violent revolution or parliamentary election. Parliament’s
decisions became the law of the land.
The emergence of Britain’s system for reorganizing property rights also coincided with the intellectual revolution of the Enlightenment. The essence of the
Enlightenment was the notion that natural laws could be identified and harnessed
for the betterment of society (Mokyr 2002, 2009; Mokyr and Nye 2007). Enlightened English thinkers such as John Locke wrote repeatedly about the appropriate role for government (Locke [1690] 1988, chap. 5, secs. 34–35). Locke’s
concepts of property rights, civil government, and consent of the governed
informed the individuals who reformed Britain’s political system in the late
seventeenth and early eighteenth centuries. These reforms allowed all citizens
(not just the king and his appointees) to utilize forms of petition previously
Property Rights and Parliament
271
employed for the reorganization of royal estates, appointments to royal offices,
and the assignment of rights to aristocratic estates and chartered towns. The
principal modification of the old form was the addition of clauses indicating
that the acts would enhance the wealth of the realm and enable individuals and
communities to prosper. These clauses provide textual evidence that Enlightenment ideals influenced estate, enclosure, and statutory authority acts.
We close by reemphasizing how our findings expand Coase’s (1974) insights
into Parliament and property rights in industrializing Britain. Coase argued that
in a world with transaction costs, some distributions of property rights promote
efficiency. Other distributions trap people in poverty. Parliament and commonlaw courts understood this principle and strove to assign rights in a way that
maximized the wealth of the realm. The evidence presented in this essay shows
that Parliament operated in this way beginning in the early 1700s, a century and
a half before the era studied by Coase.
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European Review of Economic History, , – © The Author(s) . Published by Oxford University Press on behalf of the European Historical
Economics Society. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
doi:./ereh/hex Advance Access Publication Date: March , 
“I Intend Therefore to Prorogue”: the effects
of political conflict and the Glorious
Revolution in parliament, –
This paper provides evidence that the Glorious Revolution removed political barriers to
changing property rights in seventeenth century England. I study parliament’s passage of
estate bills, a legislation that broke restrictions on land use and made up most of parliament’s legislative output from  to . Using a new dataset on estate bills, I first
document that the sudden closure (prorogation) of parliament by the monarch caused
bills to fail. Probit and OLS estimates show estate bills were  percentage points more
likely to fail in these sessions. Second, I show conflict delaying revenue bills and conflict
with the monarch’s interests made sudden prorogations more likely before the Glorious
Revolution. Political and constitutional changes with the Glorious Revolution were thus
important for England’s economic development. They improved parliament’s provision
of legislation that made property rights more flexible to changing economic opportunities
throughout the preindustrial era.
. Introduction
How to set up and change property rights is a fundamental problem for societies. For
example, for land to be traded today, there are titling agencies and registries to securely transfer ownership. States and governments play a key role in this system, but can be impeded by
political barriers and influenced by political factors. This paper studies how political barriers
to changing property rights were removed in seventeenth century English parliament. The
lessons from this particular period in English history loom large in the economic history, political economy, and development literatures as well as for policy makers today.
Specifically, I study how politics and conflict influenced parliament’s passage of legislation that reorganized property rights in land markets, so-called estate bills. Land was not
easily transferred or improved because there were complex, opaque restrictions from
England’s inheritance system and norms. Parliament provided estate bills as a legislative
service to its land and property-holding constituents so they could reallocate their rights
and use resources in new ways. An Act passed in , for example, was titled “An Act to
enable Sir Edward Hungerford Knight of the Bath, to make Leases for Years of Hungerford
House in the Strand.” Hungerford cited that the “Houses Buildings and Shoppes are too old
and ruinous” and that with the rights to lease land “encouragment might be given to those who

See, for example, Coase (), de Soto (), Lamoreaux (), Libecap and Lueck (), and Besley and
Ghatak ().

See Lamoreaux (), pp. –.
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KARA DIMITRUK*
*PhD Candidate, Department of Economics, University of California, Irvine. kdimitru@uci.edu.

European Review of Economic History
should undertake the rebuilding.” After improving the buildings, Hungerford was granted the
right in  to hold a market on the property, which was in the heart of London, three days a
week. He eventually sold the property and the market rights. Estate bills were also quantitatively
important. They were the single largest category of parliament’s legislative output (successful
bills) from  to , making up the majority of personal Acts during this period.
Estate bills were numerous but they were not always successful in being approved by parliament and the monarch. Figure  shows changes in the success rate of estate bills from
 to . A “successful bill” was approved by the House of Commons, the House of
Lords, and received the royal assent from the monarch to become an Act of Parliament.
The era begins after the restoration of the monarchy in , includes the regime change
with the Glorious Revolution of  and ends with the death of William III in . Gaps
show years when parliament did not meet. The success rate was low on average, about 
percent, before . After , however, the rate shows a marked increase to an average
of about  percent. This paper studies why the success rate of estate bills was low before
the Glorious Revolution and improved thereafter.
I use a new dataset on estate bills to document that the sudden prorogation (closure) of a
session of parliament by the monarchs caused estate bills to fail until . The dataset contains detailed information on each bill’s “legislative life-cycle” collected from the Journals



 Cha. II, c. .
Henning, B.D., The History of Parliament: the House of Commons, .
Personal legislation comprised about % of all bills from  to . For comparison, there were nine other
“types” of legislation that made up the other half of parliament’s legislative output. Examples of other types of
bills include legislation regarding religion, armed services, and trade (Hoppit , table ).
Downloaded from https://academic.oup.com/ereh/article/22/3/261/4824864 by guest on 12 February 2021
Figure . Success rate of Estate Bills: –.
Notes: Author’s calculations from estate bill dataset. Figure shows improvements in the
success rate of estate bills (reorganization of property rights) by years bills were introduced. A “successful bill” was approved by House of Commons, House of Lords, and
monarch (became an Act of Parliament). Parliament did not meet in , , –
, and –.
The effects of political conflict and the Glorious Revolution in parliament




Work analyzing the legislative effectiveness of Members of Congress in the United States (–) uses similar data and, to my knowledge, coined the term legislative life-cycle. See www.thelawmakers.org.
See Epstein () and Dincecco () for historical perspective and Besley and Persson () for state capacity and economic development today.
See van Zanden et al. () for an overview of the historical development and rationale for parliaments across
Europe from the twelfth to the eighteenth century and how “active” or frequently meeting parliaments are associated with the “Little Divergence” in regional development in Europe.
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of the two Houses. I code sessions that were suddenly prorogued from the monarchs’
speeches in parliament and from the historiographies. I first provide descriptive evidence
that the sudden closure of sessions by the monarch caused estate bills to fail. I also show
that sudden prorogations were more common before . I then use probit and OLS
models to estimate the effect of sudden prorogation on estate bill success.
The estimates show that bills were about  percentage points more likely to fail in these
sessions. The sudden closure of parliamentary meetings had several economic effects. The
main effect was that bills entering in sessions suddenly prorogued were “scarred”: they had
a significantly lower long-term success rate. Bills that were eventually successful were
delayed by about  months and there is some evidence to suggest new bills were displaced
in sessions meeting after one that was suddenly prorogued.
My approach addresses several identification issues. I include a rich set of bill-level and
time-varying controls to account for possible correlation between sessions that were suddenly prorogued and other factors that could lead to bill failure. I provide evidence on the
timing of bill introduction and passage in parliament to show that sudden prorogations
were unexpected. Bills do not appear to be introduced earlier on average nor did parliament
legislate on bills more quickly in sessions that were suddenly prorogued.
In the last section, I examine why sudden prorogations occurred more often before the
Glorious Revolution. I document that the monarch suddenly ended sessions of parliament
to interfere with parliamentary proceedings unrelated to estate bills. The proceedings centered on the crown–parliament relationship: () conflict that stopped the passage of revenue
bills, () conflict in parliament with a monarch’s policies, and () the monarch’s independence from parliament. The three political variables are positively correlated with sudden
prorogations under the late Stuarts before the Glorious Revolution, but not under William
and Mary and William III who reigned after . The evidence shows that political and
constitutional changes with the Glorious Revolution made sudden prorogations less likely
largely by decreasing the likelihood that both conflict delaying revenue bills and conflict
with policies occurred. Further econometric analysis of estate bill success shows that conflict delaying revenue significantly hindered parliament’s passage of estate bills under the
late Stuarts.
There are several contributions of this paper. First, it contributes to our understanding of
parliaments and state capacity. Functioning legislatures and states with robust capacity are
key elements of growth and development. They can secure property rights from expropriation by the executive and provide public goods and services. I provide new evidence on
how a parliament’s provision of an economic service legislation and functioning improved
during this era. This adds an important historical example to understanding how conflict
can hinder state capacity and how removing political barriers can improve its capacity. This
paper also improves upon recent historical work studying functioning parliaments. I study a
parliament’s legislative output, which provides insight to how a parliament that meets can
help explain urban economic growth.

European Review of Economic History
. Background
. Property Rights to Land and Estate Bills
Land and permanent fixtures, such as buildings and mines, were bound by a set of inheritance institutions and norms, known as strict settlements. A strict settlement was a

The seminal work is North and Weingast (). For more recent overviews, see Cox (), Hodgson (),
and Murrell ().

Scholars highlight that both institutional (constitutional) changes and the particular people ruling in government
had to change. The seminal work is North and Weingast (). See Acemoglu, Johnson, and Robinson (),
Cox (), and Murrell () for perspectives on constitutional changes and evidence that the Glorious
Revolution was important. See Stasavage (), Pincus (), and Pincus and Robinson () for the role of
vested interests, in particular the role of Whigs and Tories. There is also a debate on how the Glorious
Revolution provides insight to the processes underlying institutional change more generally: by design or by evolution. The evidence is mixed, see Cox () and Murrell (). Pincus () and Pincus and Robinson
() connect the changes in government to larger shifts across society.

See North and Weingast (), Coffman, Leonard, and Neal (), Dincecco (), Hodgson () for
credibility, sovereign debt, and financial and administrative development of the English state. See Bogart ()
for credibility and improving incentives for transportation investments.

On parliament and principles of policy making, see Hoppit (), Mokyr and Nye (), and
Bogart and Richardson ().

See Clark (), Hoppit (), Bogart and Richardson (, , ), and Hodgson () on security
and perspectives on property rights in England. While work has emphasized the importance of the common law
system for England’s economic development, it has largely ignored England’s equity and inheritance system.
For an example of work highlighting the importance of the common law system, see Glaeser and Shleifer
().

Parliament would also provide enclosure acts and statutory authority acts. See Bogart and Richardson ().

See Mokyr and Nye () and Bogart and Richardson () for discussions of the Enlightenment in this
change.

This section draws on English and Saville () and Bogart and Richardson ().
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Second, the analysis presents new evidence to how the Glorious Revolution was important for
English development. The literature is extensive and follows several threads. Work argues
changes with  asserted parliament’s supremacy by constraining the executive, which served
as the foundations of England’s political and economic ascent until the Industrial Revolution.
The changes could have impacts for public finance because it improved credibility of the government. It could also influence policy-making in general because it shifted power to parliament.
This paper is the first to provide causal evidence on how political and constitutional changes with
the Glorious Revolution were important for parliament’s legislative position by making sudden
closures by the monarch less likely. It is also the first to provide evidence consistent with Cox
(), who argues that parliament’s new designs of revenue bills and fiscal policies improved
the government’s fiscal credibility and were important for the development of the English state.
This paper shows these changes were also important for allowing parliament to pass legislation.
Last, this paper contributes to our understanding of property rights change. For England,
property rights in land were relatively secure after the restoration of the monarchy, but they
could not be changed easily and could not be adjudicated in the common law system.
Parliament would operate as a forum where individuals, families, and communities could
reorganize their property rights en masse to use land and resources in new ways throughout
the preindustrial era. The removal of political barriers during this era provides insight to
one reason parliament became an adaptable institution providing legislation to changing
economic conditions until the nineteenth century.
The effects of political conflict and the Glorious Revolution in parliament

. Crown and Parliament in the Seventeenth Century
Crown–parliament politics influenced how parliament passed estate bills from  to
. The Triennial Act of  broadened the monarch’s royal prerogatives that

English and Saville (), pg. . See Bogart and Richardson (), pp. – for changing rights in different
venues.

As a constituent service, they are most similar to regulatory exceptions for geographic constituencies (Baron
). The bills had concentrated benefits for families, land markets, and Members of Parliament (MPs) representing those constituencies. The bills had diffuse costs, perhaps time costs of working on the legislation relative
to more general legislative alternatives, to MPs. Historians and legal scholars have also noted similar patterns:
estate acts were “unlikely to cause broad problems [..] as Maitland put it [..] “A vast majority of statutes he
would class rather as privilegia than as leges”” (Hoppit ).

Bogart and Richardson (), pp. –.

Bogart and Richardson (). There is a debate on this framework, however. See McCahill ()
for an overview and recent evidence.

Bogart and Richardson (), pp. –. On changes in parliamentary procedure, see William ().
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contract that () ensured that a family’s estate would descend across generations and ()
provided for extended family members. To carry out these goals, land and resources
belonged to a family trust. The trust ensured the estate followed a succession across generations and provided for extended family. To ensure the transmission of land across generations, a property holder assigned control of the estate to an heir, usually an eldest son, and
dictated that on the death of the heir, the estate would descend to an unborn heir (creating
a tenant in tail). The trust made the current holder a beneficiary and a life tenant with
restricted powers over land use. The life tenant in turn held the land in trust for a set of
beneficiaries who had rights to income from the land (estates). The beneficiaries could
include his wife, children, unborn descendants, future heirs, and charities.
There were a variety of ways the strict settlement increased costs of land use and trade.
First, life tenants or landholders could not easily convey or transfer ownership of settled
land to third parties. A buyer of settled land may not be secure in his or her title because
settlements were not public records and any remote family member with an estate could
dispute the purchase far into the future. Second, life tenants could also not easily use or
improve their resources, like mines, timbers, or buildings because their powers could be
complex or unknown. Third, if an …
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