The Medieval Roots of Inclusive Institutions : From the Norman Conquest of England to the Great Reform Act

We study the process that led to the inclusion of merchant towns in the English Parliament, using a novel comprehensive dataset for 549 medieval English towns (boroughs). Our analysis begins with the Norman Conquest in 1066 - an event of enormous political change that resulted in largely homogenous formal institutions across England. From this starting point, we document a two-step process: First, monitoring issues and asymmetric information led to inefficiencies in the king's tax collection, especially with the onset of the Commercial Revolution in the 12th century. This gave rise to mutually beneficial agreements (Farm Grants), whereby medieval merchant towns obtained the right of self-administered tax collection and law enforcement. Second, we show that Farm Grants were stepping stones towards representation in the English Parliament after its creation in 1295: to raise extra-ordinary taxes (e.g., for wars) from self-governed towns, the king had to negotiate with them - and the efficient institution to do so was Parliament. We show that royal boroughs with trade-favoring geography were much more likely to be represented in Parliament, and that this relationship worked through Farm Grants. We also show that medieval self-governance had important long-term consequences and interacted with nationwide institutional changes. Boroughs with medieval Farm Grants had persistently more inclusive local elections of public officials and MPs, they raised troops to back the parliamentarians during the Civil War in 1642, and they supported the Great Reform Act of 1832, which resulted in the extension of the franchise