Optimal Rent Extraction in Pre-Industrial England and France – Default Risk and Monitoring Costs



work in small-scale heterogeneous units on the countryside [Brewer 1988
and O’Brien and Hunt 1999].14

Another reason for the difference in monitoring costs may be that the
transportation infrastructure was less developed in France, in combina-
tion with the fact that the geography of the country was not favorable
for tax collection [Szostak 1991, Oligvie 2000 and Kiser and Kane 2001].
Szostak [1991], for example, argues that roads and bridges as well as
waterways were much better developed in England from the seventeenth
century and onwards compared to France. “The first turnpikes were
introduced in the seventeenth century, while in the first half of the eigh-
teenth a network of turnpike roads was established linking virtually all
towns in England [Szostak 1991, p. 60]. The situation was different in
France. According to Szostak [1991, p. 61] “...it is clear that around
1700 the roads /in France/ were in a deplorable state”.15 As for wa-
terways, in contrast to France, England “paid considerable attention to
improvement of waterways in the seventeenth and eighteenth centuries”
[Szostak 1991, p. 56].16

14 There is a vast literature dealing with why England became more urban than
France. One distinct difference between England and France was the English Acts
of Enclosement, whereby land that had earlier been common became the property
of private landowners. As a consequence, a large number of people had to leave
the countryside to work in the emerging industrial sectors in urban areas [see e.g.
Clarkson 1971, Dillard 1967 and Rider 1995].

15 Ogilvie [2000, p. 125] also states “Elsewhere on the continent /compared to
England/ neither markets nor states made much of a start on improving land trans-
portation until the late eighteenth century”.

16 The question as to why England developed a better infrastructure goes beyond
the scope of this paper. However, England did not possess a technological advantage
over France. One reason may instead be that the French bureaucracy was too rigid to
be able to develop the infrastructure [Szostak 1991]. Moreover, entrenched political
elites may not have favored economic development due to their fear of losing rents



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