“…A number of papers study the use of tax farming to overcome the costs of tax collection in the preindustrial world (see Bonney, 1979;Goldsmith, 1987;Kiser and Schneider, 1994;Kiser and Linton, 2001;Maurer and Gomberg, 2004;White, 2004;Allen, 2005Allen, , 2012Johnson, 2006a,b;Coşgel and Miceli, 2009;Balla and Johnson, 2009), and there is an extensive literature on how monarchs in early modern Europe struggled to secure access to credit (see North and Weingast, 1989;Root, 1989;Epstein, 2000;Drelichman and Voth, 2011a;Stasavage, 2011). However, this is the first paper to build a model that shows how these two processes were interconnected.…”