When do rulers delegate powers to jurisdictions? The independence of medieval European cities
By Alexander Fink
Paper given at the Annual Meeting of the Public Choice Society (2011)
Abstract: During the Middle Ages European cities were to various degrees autonomous. This paper analyzes the interaction between cities and their overlords. I argue that in return for lump sum tax payments territorial rulers delegated the supervision of cities to groups – mostly merchants – that were better equipped to foster trade within the city limits. Merchants had superior knowledge to implement attractive rule structures and devised institutions that reduced the potential for public predation. I further argue that rulers of smaller territories with relatively mobile subjects tended to delegate more powers. I provide evidence in support of my suggestions from central Europe during the high and late Middle Ages.
Introduction: During the commercial revolution of the Middle Ages the volume of long-distance trade increased again. At the center of the development were Europe’s reviving cities that served as trade hubs. During the high and late Middle Ages many cities in western Europe attained some degree of autonomy from their territorial ruler and were able to conduct independent policies implemented by a city authority. According to conventional wisdom, the autonomy of medieval cities from their territorial ecclesiastical or secular rulers was the result of conflict between the cities’ representatives and the cities’ overlords. For instance, Jenks remarks on 13th century northern Germany that “the towns had to be continually on their guard against the attempts of their lords to reduce their autonomy and their economic freedom of movement, to transform them into mere providers of tax income and unquestioning subjects.” Similarly, Ennen states that “like every medieval body, the town council sought to establish an independent jurisdiction for itself. How far it achieved this depended on the success of its struggle against the town overlord.” In these accounts the interaction between cities and their territorial rulers is perceived as one of conflict.
I provide an alternative hypothesis. I argue that tax-revenue-maximizing rulers could benefit from the voluntary delegation of powers to city authorities. Rulers stood to benefit from city independence, because the members of the ruling classes of the cities were potentially better equipped to build an institutional environment conducive to productive activity. The members of the city authorities – in most instances city councils occupied by merchants – potentially had the requisite knowledge to implement rules of conflict settlement that were attractive for traders. And members of city authorities faced institutions that reduced the potential for public predation. Increases in the city’s available tax base potentially increased the tax revenues the territorial ruler could extract from the city as a whole. At the same time city independence was costly for territorial rulers. The more independent a city was the more likely it was to become entirely autonomous from its overlord; in which case the city would stop paying tribute to him. I argue that territorial rulers traded off the cost of city independence from the threat of complete autonomy against the benefits of city independence from increases in tax revenues possible due to more effective city governance.