States of Credit: Size, Power, and the Development of European Polities (review)

The growth of public debt in Latin Europe from 1250 to 1750 would have been impossible without double-entry bookkeeping—bifurcated journals that allowed merchants to unknot their welter of revenues and loans. Readers of Stasavage’s book may, at times, find themselves empathizing with medieval bean counters; theoretical and empirical debts accumulate, numbers bedevil, and a few liabilities must be marked down. Yet the returns on Stasavage’s central claim—that a polity’s survival depended not on the ferocity of its fighters but on the commitment of its creditors—make the readers’ investment more than worthwhile. Unraveling familiar ties between state size and military success, Stasavage successfully places sovereign credit, and the representative bodies ensuring its smooth circulation, at the nexus of warfare, institution formation, and economic growth in early modern Europe. Although Stasavage concedes that war still made the state, he also shows that the state made war in hock.

Borrowing from the literature about corporate finance, Stasavage casts sovereigns in the role of cash-strapped executives. Premodern mergers and acquisitions (warfare/conflict) required decision makers (single monarchs or town oligarchies) to petition the holders of liquid capital (urban merchants). But canny lenders refused to part with their coin without guarantees of repayment. Stasavage convincingly argues that representative assemblies, by controlling taxation as well as spending decisions, allayed lenders’ fears and kept specie flowing. Once established, however, spending and monitoring bodies suffered from ongoing costs; long-distance transportation to assemblies and the hiring of trustworthy provincial taxmen took their toll.

The central insight of Stasavage’s study is that territorial expansion (often envisioned as the engine of state growth) invited a set of exogenous costs to the very institutions necessary for funding warfare. Bigger states, it would seem, did not make better ones. Instead, Stasavage shows how the myriad of independent cities and city-states in premodern Europe, “where assemblies could be convened by devices as simple as the ringing of the town bell and where the same merchants who purchased public debt also served as magistrates on town councils” (2), persisted in spite of their larger territorial neighbors’ increased economies of scale.

Stasavage defends these findings through a mixed-methods approach. The first two-thirds of the book trace the credit rates and representative bodies of thirty-one European polities for five centuries. Stasavage uses this dataset to explore the early growth of city-state credit; to differentiate among representative bodies’ various tasks; to isolate from potential competing variables the link between debt and representation; and, finally, to propose a political rather than economic explanation of city-state emergence, centered on the collapse of post-Carolingian Lotharingia. Telescoping these quantitative conclusions into two chapters of case studies split between city-states (Cologne, Genoa, and Siena) and their territorial opponents (France, Castile, and Holland) adds much-needed qualitative depth.

Specialists should set aside the typical criticism of Stasavage’s sundry statistics or the choice of particular cases over others in favor of the overall picture. But two weaknesses in the book warrant some attention. The rigid division of territorial state from autonomous city makes coding cities with extensive landed (Florence) or overseas (Venice, Barcelona, and Genoa) acquisitions problematical. Did the institutions of territorial entities born from an urban past differ from those of their rural counter-parts? In addition, this book can leave readers with something like the feeling of a tragedy lacking a third, closing act; most of the city-states, for all their grandeur, eventually fell under the direct or indirect control of their larger neighbors. Stasavage’s claim of a shift from liquid to more secure wealth driving city-state failure should prove fruitful ground for future study. These minor reservations aside, Stasavage deserves credit. At a time when cultural studies are surging, this book injects materialist accounts of state formation with long-overdue intellectual capital.