Why you should care
Because freeing the economy from the yoke of the church and crown made Britain wealthy — a lesson in enterprise for central planners.
“What’s that smell?” I asked my dad as we approached Rievaulx Abbey on a visit to Yorkshire, England. “It’s wild garlic,” he said — which I’d later learn was a surprising crop to find so far north, though the story behind the monastery would prove even more surprising.
The monastery was established in 1132 by Cistercian monks from France’s Clairvaux Abbey and remained in operation until the 1500s. But it plays a part in a uniquely English story — one that begins, as many do, with church and crown but ends with the Industrial Revolution.
“He was a rank tyrant, operating like his somewhat later contemporary Ivan the Terrible.”
The forced closure of Rievaulx, and many places like it, spurred the growth of enterprise in England, eventually bringing the country enormous wealth, according to new research from the Massachusetts-based National Bureau of Economic Research (NBER). And who gets credit for crushing England’s monasteries and planting the earliest seeds of modern-day capitalism? Henry VIII — the man recently voted the worst monarch ever by the British Historical Writers Association. “He was not the genially amusing figure of fun that Americans sometimes suppose,” says professor Deirdre McCloskey from the University of Illinois, Chicago. “He was a rank tyrant, operating like his somewhat later contemporary Ivan the Terrible,” she says, noting how he unleashed a form of economic terror on the church.
In the years before Henry got busy evicting monks in 1536, it was estimated that the church and its 825 monasteries owned nearly a third of the land in England and Wales, according to the NBER paper “Monks, Gents and Industrialists: The Long-Run Impact of the Dissolution of the English Monasteries.” The crown owned a further 5 percent, and in an agrarian society — as all societies were then — land is the means of production.
“Most European countries were theocracies; the church and state were one,” says Robert E. Wright, professor of political economy at Augustana University in Sioux Falls, South Dakota. “Between the crowns of the Hapsburg Empire, Spain and France, there was quite a bit of control of the economy, but less so in Holland and eventually in the U.K.” Significantly, Henry didn’t keep the monks’ land for the crown but instead decided to sell it off, bit by bit. “The monasteries and abbeys were to be plundered to establish a war chest for the conflict with Catholic Europe that now seemed inevitable,” writes historian Simon Schama in A History of Britain.
A little more than a century later, by 1688, the church and crown owned just 5 to 10 percent of the land, thanks to how Henry severed the theocratic link and subjected the economy to market forces. He sold “a lot of the [lands] to the highest bidder,” Wright says, and he created a “new class of commercial farmers, the gentry,” who spurred innovation and productivity.
To assess the longer-term economic effect of Henry’s massive land grab, the NBER researchers analyzed how much money the monasteries were making at the time of the dissolution, with income coming from a variety of sources — including rents, farming, mining and donations. They then compared those figures with what was going on economically in the early 19th century — and found that the higher the monastic income, “the more industrialization there was in 1838 in terms of the presence and number of textile mills and the number of mill employees.” The report also shows that higher monastic income in 1535 was associated “with a smaller proportion of the labor force employed in agriculture” by 1831 and a “larger share of the labor force employed in manufacturing and retail.” Simply put, the lands previously owned by the monasteries were run more efficiently by the gentry, who used their profits to invest in new technologies, like textile mills, giving rise to more innovation and industry.
This boost in innovation didn’t happen overnight, but we know that when land is owned, rather than leased, owners have significantly more financial incentive to make improvements, since they get to keep the value of the improvements. In this instance, initial improvements could have been as simple as adding fences or water mills, explains Wright — relatively modest investments that would instantly add value to the land and make it more financially productive. And while Henry’s purpose in selling the land to the highest bidder was to swell the crown’s coffers, the move also motivated the new owners to use their acreages in ways that justified paying top dollar. Moreover, the NBER researchers pointed to the expanding middle and lower gentry during that period, explaining that these were educated people with access to the latest commercial practices. They also noted that certain of the monastic orders were models of inefficiency, providing their former tenant farmers with the incentive to buy the land and work it more productively.
Henry VIII’s decision to dissolve hundreds of monasteries was a revolutionary act by a monarch spouting the need for monastic reform. The truth, of course, was that the king was hungry to fund military campaigns — and didn’t mind taking a knock at papal authority in the process. But what this despot with outsize appetites could not have foreseen is that by selling off the monks’ land, he opened it to market forces, a move that did wonders for the British economy and provided an early spark for the Industrial Revolution.