Bogart, Dan (2009) “Did the Glorious Revolution Contribute to the Transport Revolution? Evidence from Investment in Roads and Rivers”, University of California-Irvine, Department of Economics Working Papers, #080918, 56p.
By 1600, individual undertakers started proposing to relieve the royal administration and the parishes from the burden of taking care of the rivers and roads. Proposals for individual projects were made to the House of Commons or the House of Lords; “passed bills were sent to the other House and later to the Crown for final approval”.
From the late 1610s onward, the king began to play a greater role and even started to award his own patents for river or road improvements (p.6). Faced with this competition, the Parliament reacted vigorously by making it illegal for the Crown to issue such patents (the Statute of Monopolies, 1623; p.7). However, Charles I kept on granting authorizations. After the Civil War, the House of Commons imposed anew its monopoly over the matter (p.8). But once more at the Restoration, the king got directly involved. Only the Glorious Revolution ended the Crown’s interference (p.10).
These political changes had a significant impact for the undertakers who often lost several thousands pounds as their property rights failed to be recognized by the new government. Subsequently they also commonly lost large sums of money by trying to have their rights reinstated by a court (p.11). After Cromwell’s victory, for instance, a Willaim Sandys lost more than £40,000 (p.12).
Roads and river improvements often caused damages to their surrounding, creating demands for compensation payments. It was often the occasion for local groups to extract rents that could drive the undertaker out of business (p.13). However a jury system was put into place for the occasion, it was common for the king to decide over the matter: “this system bred uncertainty because the Crown could essentially make any ruling either for or against undertakers”. Moreover, the tolls designed to pay for the undertakers’ investments were fixed by the Privy Council, thus creating further uncertainty (p.14).
Uncertainty about the security of property rights discouraged investments until 1688:
“The patterns of completed investment in the 1600s are generally consistent with there being significant uncertainty. There were modest levels of completed investment in the 1630s, the 1660s and early 1670s, but there were no completed investments in the 1640s [Civil War], the late 1670s and 1680s [renewed opposition between king and parliament]. Overall road and river investment was very low for most of the seventeenth century” (p.17).
The cost of uncertainty
For instance after the Restoration only £90,000 of the £750,000 investment proposed were completed (p.18). Following the Glorious Revolution, an increase of the proposed investments comparable to the one observed after the Restoration is observable but:
- The completion rate was significantly higher.
- The proposed investments did not drop in the 1700s and 1710s as they did in the 1670s and 1680s.
This change allowed to complete from 1695 to 1709 as much investment as during the past century. Many projects of great economic significance were undertaken right after 1688 (p.19). The author also check for the impact on this process of non-institutional economic factors (interest rates, coastal trade, shocks). Even taking these elements into account the Glorious Revolution remains a statistically significant element in the chronology of investment leading to the Transport Revolution (p.21)
It is very likely that greater security of property rights explain the impact of 1688. Before the Glorious Revolution the likelihood that a river undertaker experienced at least one violation from the government was 33%, this rate fell below 6% after 1688 (mostly for failure to complete the proposed improvements; p.24).
The political stability after 1688 seems thus to have favoured investments. A multilayered decision process involving juries and the House of Commons (and granted a right of veto to the Lords) made it difficult to violate property rights (p.29).