Factor Markets in England before the Black Death
By Bruce Campbell
Paper given at The Rise, Organization, and Institutional Framework of Factor Markets (2005)
Abstract: The origin of modern English factor markets can be dated to the two centuries of active commercialisation that preceded the Black Death of 1348-9. An active market in labour appears to have developed first and was well established by the end of the twelfth century. Evolution of an active market in land followed the legal reforms initiated by Henry II in the 1160s and 1170s, which severed the established feudal connection between land holding and personal obligation and created legally secure and defensible property rights in land. Thenceforth, first freehold land and then villein land were bought and sold with increasing frequency. This had a galvanising effect upon the growth of a capital market, since land now became a security against which credit could be obtained. Moreover, as, in an inflationary age, land became an appreciating asset, so men increasingly borrowed in order to acquire land.
Nevertheless, none of these nascent factor markets functioned unconstrained. Money wages were determined more by custom than by market forces. Serfdom prevented half the population from full and uninhibited participation in the labour market. Villein land was subject to the will of the lord, excluded from the jurisdiction and protection of the royal courts, and governed by manorial custom. The legal security of leasehold tenure long remained inferior to that of freehold tenure. Until 1283 Jewish moneylenders were in a stronger legal position to enforce debts than their Christian counterparts, and the latter had to contend with the Church’s strictures against the charging of interest enforced by canon law. Moreover, In England, as in much of the rest of northern Europe, interest rates were high. These constraints ensured that English medieval factor market operated with sub-optimal economic efficiency. They also left a legacy of legal, tenurial, and institutional complexities which it would take later generations centuries to reform.