Why Nations Fail: The Origins of Power, Prosperity, and Poverty

ability to grant monopolies was a key source of revenue for the state, and was used frequently as a way of granting exclusive rights to supporters of the king. Not surprisingly, this extractive institution blocking entry and inhibiting the functioning of the market was also highly damaging to economic activity and to the interests of many members of Parliament. In 1623 Parliament scored a notable victory by managing to pass the Statute of Monopolies, which prohibited James I from creating new domestic monopolies. He would still be able to grant monopolies on international trade, however, since the authority of Parliament did not extend to international affairs. Existing monopolies, international or otherwise, stood untouched.
    Parliament did not sit regularly and had to be called into session by the king. The convention that emerged after the Magna Carta was that the king was required to convene Parliament to get assent for new taxes. Charles I came to the throne in 1625, declined to call Parliament after 1629, and intensified James I’s efforts to build a more solidly absolutist regime. He induced forced loans, meaning that people had to “lend” him money, and he unilaterally changed the terms of loans and refused to repay his debts. He created and sold monopolies in the one dimension that the Statute of Monopolies had left to him: overseas trading ventures. He also undermined the independence of the judiciary and attempted to intervene to influence the outcome of legal cases. He levied many fines and charges, the most contentious of which was “ship money”—in 1634 taxing the coastal counties to pay for the support of the Royal Navy and, in 1635, extending the levy to the inland counties. Ship money was levied each year until 1640.
    Charles’s increasingly absolutist behavior and extractive policies created resentment and resistance throughout the country. In 1640 he faced conflict with Scotland and, without enough money to put a proper army into the field, was forced to call Parliament to ask for more taxes. The so-called Short Parliament sat for only three weeks. The parliamentarians who came to London refused to talk about taxes, but aired many grievances, until Charles dismissed them. The Scots realized that Charles did not have the support of the nation and invaded England, occupying the city of Newcastle. Charles opened negotiations, and the Scots demanded that Parliament be involved. This induced Charles to call what then became known as the Long Parliament, because it continued to sit until 1648, refusing to dissolve even when Charles demanded it do so.
    In 1642 the Civil War broke out between Charles and Parliament, even though there were many in Parliament who sided with the Crown. The pattern of conflicts reflected the struggle over economic and political institutions. Parliament wanted an end to absolutist political institutions; the king wanted them strengthened. These conflicts were rooted in economics. Many supported the Crown because they had been granted lucrative monopolies. For example, the localmonopolies controlled by the rich and powerful merchants of Shrewsbury and Oswestry were protected by the Crown from competition by London merchants. These merchants sided with Charles I. On the other side, the metallurgical industry had flourished around Birmingham because monopolies were weak there and newcomers to the industry did not have to serve a seven-year apprenticeship, as they did in other parts of the country. During the Civil War, they made swords and produced volunteers for the parliamentary side. Similarly, the lack of guild regulation in the county of Lancashire allowed for the development before 1640 of the “New Draperies,” a new style of lighter cloth. The area where the production of these cloths was concentrated was the only part of Lancashire to support Parliament.
    Under the leadership of Oliver Cromwell, the Parliamentarians—known as the Roundheads after the style in which their hair was cropped—defeated the royalists, known as Cavaliers. Charles was tried and executed in 1649. His defeat and the abolition of the monarchy did not, however, result in inclusive institutions. Instead, monarchy was replaced by the dictatorship of Oliver Cromwell. Following Cromwell’s death, the monarchy was restored in 1660 and clawed back many of the privileges that had been stripped from it in 1649. Charles’s son, Charles II, then set about the same program of creating absolutism