The Third Pillar. Raghuram Rajan

came to an end. Their lands reverted to the Crown. Through such means, Henry VII doubled his revenues from Crown lands.4 Individual rebellious lords could also be picked off, convicted of treason, and executed, as was the duke of Buckingham by Henry’s son, Henry VIII. Their lands were seized by the Crown. Nevertheless, what really clipped the wings of the landed aristocracy was more indirect and perhaps unintended—the dissolution of monasteries and the great price inflation of the sixteenth century.

      THE DISSOLUTION OF THE MONASTERIES AND THE RISE OF THE GENTRY

      The Tudors were hungry for land, and looked for easy targets. After Henry VIII broke with the Pope over his marriage to Anne Boleyn, he turned his attention to the Church’s wealth in its various monasteries, which had grown substantially since the Gregorian reforms. Monastery property had two attractions. First, it had few armed men protecting it, unlike the land of the magnates. Many monasteries had also grown complacent and neglected their duties toward the needy. As a result, they enjoyed only modest public support. Second, and perhaps more important, monastery land was poorly managed. This attracted the attention of the capable, who felt they could do a better job using the latest methods of agricultural management.5 Henry VIII gave abbots and abbesses the choice between being accused of treason, convicted, and put to death cruelly (they needed to be convicted because only the property of traitors went legally to the Crown), or ceding property “voluntarily” to the Crown. Most made the obvious choice, and few among the public protested.

      The seized property was soon sold, as the king needed funds to fight wars. Those who bought the land were primarily local moderately wealthy land owners—the local gentry. These were typically minor nobility, who did not have the vast land holdings the high aristocracy had, but owned more land than well-to-do peasants. The landed aristocracy were only a few dozen, while the gentry numbered in the thousands. The gentry had made their money managing their own properties well. They could bring their expertise to the new properties, especially because they knew local conditions and were closer to the land than the landed magnates. Since land ownership was the route to social status in those times, successful wealthy town-dwellers such as merchants and lawyers also bought land so that they could rise to the status of country gentlemen.

      These men improved the management of the land they bought; they brought unused land into cultivation; they ended unproductive traditional techniques such as leaving one out of two fields fallow instead of one out of three; they appropriated customary-use common areas by enclosing them, and shifting them into more lucrative sheep rearing. Rather than continuing with the feudal practice of demanding unpaid labor from tenants, which was anyway grudgingly given, these “new” men instead hired labor directly for commercial wages. They raised rents on existing tenants in return for forgiving labor obligations. Not all were successful in making a go of land management, but the unsuccessful sold out to others who were more expert. At any rate, land management improved substantially, increasing agricultural output. Some economic historians argue that England’s prosperity in Elizabethan times was in substantial part due to higher national income growth resulting from the seized lands.6

      Importantly, the successful country gentlemen, both old and new, went on to acquire more land. Some of the richer gentry came to own as much as the poorer aristocrats. Furthermore, because many of the high lords were not particularly good managers—after all, they and their ancestors had established their prowess on the battlefield, not in estate management—the incomes of the richer gentry far exceeded that of the poorer aristocracy. For crops that had a national market, the more efficient cheaper production from the gentry lowered prices and thus aristocratic incomes. The old guard was at risk of being blown away by the gales of competition.

      The aristocracy, who no longer could distinguish themselves easily from lesser mortals based on land ownership or income, found new grounds for differentiation. What distinguished them from the nouveau-riche Calvinist gentry was their lavish entertainment and the liberal hospitality they showered on guests who passed their social threshold, their free-spending enjoyment of fashion, art, and architecture, and their sympathetic treatment of unproductive customary tenants paying low rents. These were exactly the wrong elements to distinguish themselves by as prices started rising.

      THE GREAT INFLATION

      The gold and silver flowing into Europe in the sixteenth century from its colonies in Africa and Asia first, then the Americas, raised prices of goods, as the growth in their production did not keep pace with the growth of coined precious metal. For the aristocracy, the tremendous increase in spending that was necessary to keep up their lifestyle and their army of retainers collided with the stagnant tenant rents that noblesse oblige demanded of them. Something had to give. For those who could not bring themselves to manage their lands commercially, it meant land sales and further decline—until some social-climbing wealthy merchant or member of the gentry could be persuaded to underwrite the aristocratic expenditure in return for a status-enhancing marriage alliance. For those who wanted to maintain their distance from the arrivistes, there was no alternative to moving to new techniques of agricultural production, raising rents on tenants who could cope, and terminating the tenancy of those who could not.

      The demands of the market—the competition from the gentry accentuated by the great inflation—thus killed the capacity of the aristocratic lord to look out for his tenant and see him through difficulty, the essence of the feudal obligation. At the same time, it also killed any loyalty the tenant might have had to his lord.7 Transactions were now on strictly commercial terms—the market, by competing away the rents on aristocratic estates, once again had eroded community ties. No longer would tenants flock to their lord’s banner in times of military need. For the monarch, this was a distinct relief, since his army was based far more on recruits drafted for a wage than on loyal feudal retainers.8

      The king also undermined the landed aristocracy in matters of local governance. As the gentry grew more prominent, the monarchy appointed them as justices of peace to judge small claims and local cases, as sheriffs, and as tax and military draft commissioners. These positions were unpaid, but offered their occupants prestige and local influence. And they became essential to administering local justice as well as collecting taxes and administering services for the poor. As one historian put it, “the gentry were essential to the power of the king, but he was not essential to theirs.”9

      THE POWER OF THE GENTRY

      All this meant that even though the aristocracy had been undermined, as had the Church before it, the monarchy did not have absolute power; a new power, the gentry, now stood in the way. The king was vastly more powerful than any single member of the gentry, but he could not treat them like Henry VIII treated the monasteries. Unlike the poorly managed monastery land, the gentry used their superior knowledge of farming and the locality to manage their land productively. There were no unrealized bonanzas that could be obtained through expropriation.10 It made far more sense for the king to tax the gentry regularly than to expropriate some of them and risk upsetting an entire class. Ironically, one of the most infamous violations of property rights in history, the expropriation of the monasteries, had strengthened property rights by moving land into the most productive hands. With the markets having done much of the work, courts and their judgments soon established property rights over land more firmly, eliminating the last vestiges of feudal constraints on property ownership and transfers, while protecting contractual ownership and tenancy rights.11

      The gentry also dominated the House of Commons in Parliament, an institution whose purpose we will describe shortly. It offered them a venue to coordinate their actions if they perceived any threat from the monarch such as moves toward expropriation or levying additional unapproved taxes. With their limited individual influence, they preferred an arm’s-length rule by law that would protect all of them. They were collectively wealthy—a peer ruefully noted in 1628 that the House of Commons could buy up the Lords thrice over—so together, they could influence the nature of those laws.12 And they were closer to their tenants than the great lords were, and thus could command more of the much-diminished sense of loyalty in their locality than either the great lord or the king. The gentry, not the landed magnates, thus became the primary source of possible opposition to the Stuart kings.

      As an aside, the belief that widely distributed property leads to better security of property and stronger constraints on the state has a long tradition.