Giving 18th-century workers more land to use as collateral led to a massive spike in family bankruptcies.
April 26, 2026
Original Paper
Land Reforms in Developing Financial Markets: Lessons from England's Land Enclosures 1750-1830
SSRN · 6633338
The Takeaway
The privatization of common land in England increased the availability of credit but made the economy more fragile. Most economists believe that expanding the amount of property people can pledge for loans is an unqualified win for stability. This historical analysis shows that it actually triggered more financial failures during economic downturns. Workers who took on debt against their land were the first to collapse when the market shifted. This proves that increasing the reach of the credit market can create systemic risks that outweigh the benefits.
From the abstract
Land titling is expected to expand credit by making land pledgeable, but isolating this collateral channel empirically is difficult. We utilize English enclosures from 1750-1830 as a laboratory: privatization of "common waste" created newly mortgageable land, in contrast with "open-field" enclosures which largely reorganized already titled arable land. A stylized model with endogenous default predicts that an influx of newly pledgeable waste land lowers equilibrium collateral requirements, gener