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Investments 1st Edition Haim Levy Digital Instant
Download
Author(s): Haim Levy, Thierry Post
ISBN(s): 9781405891240, 1405891246
Edition: 1
File Details: PDF, 32.90 MB
Year: 2006
Language: english
Levy_ppr 9/19/07 3:00 PM Page 1

The chapters are very well written, and present even relatively difficult material in

INVESTMENTS
a concise and very clear way.
Thore Johnson, Norwegian School of Economics and Business

To some people, security markets are like Key Features

casinos and investing is about predicting
➤ Up-to-date coverage of investment practice
security prices and speculating that those
and academic research
predictions will come true. Investments is
here to tell you otherwise. ➤ Many real-life case studies taken from
recent newspaper articles, in particular the
You could try to predict security prices by Financial Times
flipping a coin or reading a horoscope, but
➤ Extensive Review Questions and Answers,
if you really want to become a better investor
with additional questions and answers
then you need a thorough understanding of
available online
securities, securities markets and investment
strategies. That is exactly what this book
Investments is suitable for use by intermediate
provides.
to advanced undergraduate students taking
courses in investments as part of accounting,
This topical introduction to investment in
finance, economics and business studies
security markets discusses in detail the various
degrees. It is also suitable for postgraduate
ways in which you can minimise risk and
students on MBA courses and other
maximise yields. One of the basic insights that
programmes covering investments.
you will obtain from reading this book is that
good investments generally do not require
forecasting skills. Rather, in many cases, good Professor Haim Levy, MA, PhD, is Myles
investments require the matching of the Robinson Professor of Business
investments with the objectives and Administration at The Hebrew University of
constraints of the investor. Jerusalem in The Jerusalem School of
Business Administration.
Professor Thierry Post is a Professor of
Finance at Rotterdam School of Economics
of Erasmus University, the Netherlands.

Thierry Post
Haim Levy
The book is well presented and substantial,
the terms are clearly explained, there are
plenty of examples, and concepts are
introduced gradually and thoroughly.
James Clunie, The University of Edinburgh

Screenshot reprinted by permission from Microsoft Corporation

Cover © M.S. Kolmeijer – www.martinekolmeijer.exto.nl

Additional student support at Additional student support at

An imprint of www.booksites.net/levy www.booksites.net/levy
www.pearson-books.com
ITI_A01.qxd 8/3/06 5:38 PM Page i

INVESTMENTS

Would you like to get a better grade in your course? Visit the
Investments Companion Website at www.booksites.net/levy
to access a rich resource of valuable learning materials for
students, including:

n Multiple Choice Questions for every chapter, with instant feedback

n Interactive Spreadsheets, that accompany the Appendices in the book
n A searchable, online Glossary of key investments terminology
n Interactive Flashcards that allow you to check definitions against the
key terms during revision
n Full list of web links, directing you to key online sources of material on
investments.
n Learning Objectives from every chapter

..
ITI_A01.qxd 8/3/06 5:38 PM Page ii

We work with leading authors to develop the strongest

educational materials in finance, bringing cutting-edge
thinking and best learning practice to a global market.

Under a range of well-known imprints, including

Financial Times Prentice Hall, we craft high-quality print
and electronic publications which help readers to
understand and apply their content, whether studying or
at work.

To find out more about the complete range of our

publishing, please visit us on the World Wide Web at:
www.pearsoned.co.uk

Dedication:

Haim Levy: To my family

Thierry Post: In memory of my father, Rudi Post

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ITI_A01.qxd 8/3/06 5:38 PM Page iii

INVESTMENTS

Haim Levy
Hebrew University of Jerusalem

and

Thierry Post
Erasmus University Rotterdam

Assisted by
Deborah L. Murphy, University of Tennessee
Philippe Versijp, Erasmus University Rotterdam

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ITI_A01.qxd 8/3/06 5:38 PM Page iv

Pearson Education Limited

Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world

Visit us on the World Wide Web at:

www.pearsoned.co.uk

First published by South-Western College Publishing

This edition first published 2005

© Pearson Education Limited 2005

The rights of Haim Levy and Thierry Post to be identified as authors of

this work have been asserted by them in accordance with the Copyright,
Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in

a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without either the prior
written permission of the publisher or a licence permitting restricted copying
in the United Kingdom issued by the Copyright Licensing Agency Ltd,
90 Tottenham Court Road, London W1T 4LP.

All trademarks used herein are the property of their respective owners. The use of
any trademark in this text does not vest in the author or the publisher any trademark
ownership rights in such trademarks, nor does the use of such trademarks imply
any affiliation with or endorsement of this book by such owners.

ISBN-13: 978-0-273-65164-2
ISBN-10: 0-273-65164-1

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Levy, Haim.
Investments / Haim Levy and Thierry Post.
p. cm.
Includes bibliographical references and index.
ISBN 0-273-65164-1 (pbk.)
1. Investments. 2. Securities. 3. Capital market. 4. Portfolio management. I. Post,
Thierry. II. Title.

HG4521.L632 2005
332.6––dc22
2004043194

10 9 8 7 6 5 4 3 2
08 07 06 05 04

Typeset in 10/12pt Minion by 35

Printed and bound by Ashford Colour Press Ltd., Gosport. Hants.

The publisher’s policy is to use paper manufactured from sustainable forests.

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Brief contents

Preface xiv
Acknowledgements xviii
Guided tour to the book xxii
About the authors xxiv

1 Introduction 1

Part 1 THE INVESTMENT ENVIRONMENT 17

2 Bonds, stocks and other securities 19

3 Security markets 53
4 Institutional investors 94
5 Security regulation and investment ethics 121

Part 2 RETURN AND RISK 157

6 Rates of return 159

7 Fundamentals of portfolio analysis 203
8 Mean–variance analysis 234
9 Portfolio diversification 259

Part 3 CAPITAL MARKETS IN EQUILIBRIUM 287

10 The capital asset-pricing model 289

11 The arbitrage pricing theory 340
12 Efficient markets: theory and evidence 374

Part 4 SECURITY ANALYSIS 411

13 Interest rates and bond valuation 413

14 Bonds: analysis and management 455
15 Stocks: valuation and selection 491
16 Financial statement analysis 536
17 Macroeconomic analysis 566
18 Technical analysis 594
v

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BRIEF CONTENTS

Part 5 DERIVATIVE SECURITIES 621

19 Futures, options and other derivatives 623

20 Derivatives valuation 678

Part 6 PORTFOLIO MANAGEMENT 725

21 Risk management 727

22 Performance evaluation 761

Appendix A Introduction to regression analysis 801

Appendix B Excel spreadsheet applications 822
Appendix C Answers to review questions 845
Glossary 881
Name index 898
Subject index 902

Visit the Investments Companion Website at www.booksites.net/levy

to access a rich, free resource of valuable teaching and learning material,
including the following content:

For the lecturer

n A secure, password-protected site offering downloadable teaching support

n Customisable PowerPoint slides, including key figures and tables from the
main text
n Extensive Instructor’s Problem Set, including review and practice problems
with solutions

For the student

n Multiple Choice Questions for every chapter, with instant feedback

n Interactive Spreadsheets, that accompany the Appendices in the book
n A searchable, online Glossary of key investments terminology
n Interactive Flashcards that allow you to check definitions against the key terms
during revision
n Learning Objectives from every chapter

Also
This site has a syllabus manager, search functions and email results functions.

vi

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Contents in detail

Preface xiv
Acknowledgements xviii
Guided tour to the book xxii
About the authors xxiv

1 Introduction 1
Learning objectives 2
1.1 The difference between corporate finance and investments 4
1.2 The benefits of studying investments 5
1.3 The investment process 6
1.4 Recent developments in investments 9
1.5 Where do we go from here? A brief overview of the book 11
Summary 13
Key terms 14
Review questions 14
Selected references 15

Part 1 THE INVESTMENT ENVIRONMENT

2 Bonds, stocks and other securities 19
Learning objectives 20
2.1 The nature of securities 21
2.2 Fixed-income securities 22
2.3 Stocks 33
2.4 Investment companies 40
2.5 International investment 41
2.6 Derivative securities 42
2.7 Investment risks 44
Summary 49
Key terms 50
Review questions 51
Selected references 52

3 Security markets 53
Learning objectives 54
3.1 The primary security market 55
3.2 The secondary security market 66
vii

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CONTENTS IN DETAIL

Summary 89
Key terms 90
Review questions 91
Selected references 92

4 Institutional investors 94
Learning objectives 95
4.1 Institutionalisation 95
4.2 Insurance companies 97
4.3 Pension funds 102
4.4 Investment companies 108
Summary 117
Key terms 118
Review questions 118
Selected references 119

5 Security regulation and investment ethics 121

Learning objectives 122
5.1 The need for security regulation 123
5.2 Securities regulation 126
5.3 Ethics 140
Summary 148
Key terms 149
Review questions 150
Selected references 150
Appendix 5 IMR Code of Ethics and Standards of Professional Conduct 152

Part 2 RETURN AND RISK

6 Rates of return 159
Learning objectives 160
6.1 Calculating rates of return 162
6.2 Adjustments for tax, inflation and exchange rates 172
6.3 Indices 177
6.4 Sample return statistics 187
6.5 The historical record 194
Summary 196
Key terms 198
Review questions 198
Selected references 200
Appendix 6 Annual US rates of return, 1926–2002 201

7 Fundamentals of portfolio analysis 203

Learning objectives 204
7.1 The portfolio possibilities set 205

viii

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CONTENTS IN DETAIL

7.2 The probability distribution 208

7.3 The utility function 218
7.4 The expected utility criterion 219
7.5 Risk-aversion, diversification and risk premiums 224
7.6 Looking forward: from expected utility to mean–variance analysis 227
Summary 228
Key terms 229
Review questions 229
Selected references 230
Appendix 7 Cumulative standard normal distribution 232

8 Mean–variance analysis 234

Learning objectives 235
8.1 Fundamentals of mean–variance analysis 236
8.2 The mean and variance of a portfolio 242
8.3 Efficient and inefficient investment strategies 247
Summary 256
Key terms 257
Review questions 257
Selected references 258

9 Portfolio diversification 259

Learning objectives 260
9.1 Finding uncorrelated assets 261
9.2 International diversification 264
9.3 A little diversification goes a long way 269
9.4 Barriers to diversification 273
9.5 Estimation error 277
9.6 Human capital and property holdings 279
9.7 Actual diversification by households and mutual funds 280
Summary 282
Key terms 283
Review questions 283
Selected references 284

Part 3 CAPITAL MARKETS IN EQUILIBRIUM

10 The capital asset-pricing model 289

Learning objectives 290
10.1 The theory 292
10.2 Empirical tests of the capital asset-pricing model 314
10.3 Conclusion: dead or alive? 328
Summary 331
Key terms 333
Review questions 333

ix

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CONTENTS IN DETAIL

Selected references 334

Appendix 10 A formal proof of the capital asset-pricing model 337

11 The arbitrage pricing theory 340

Learning objectives 342
11.1 Factor risk models 343
11.2 The arbitrage pricing theory 351
11.3 The arbitrage pricing theory and the capital asset-pricing model 362
11.4 Empirical tests of the arbitrage pricing theory 364
Summary 367
Key terms 368
Review questions 369
Selected references 369
Appendix 11 A formal proof of the arbitrage pricing theory 372

12 Efficient markets: theory and evidence 374

Learning objectives 376
12.1 Efficient market defined 377
12.2 What constitutes the appropriate information set? 378
12.3 Investment strategy in an efficient market 383
12.4 Investment strategy in an inefficient market 387
12.5 Empirical evidence related to the efficient market theory 389
12.6 Market anomalies 396
12.7 Behavioural finance 401
Summary 404
Key terms 405
Review questions 406
Selected references 406

Part 4 SECURITY ANALYSIS

13 Interest rates and bond valuation 413

Learning objectives 414
13.1 Bond prices and yields 415
13.2 The yield curve 419
13.3 Spreads over Treasuries 429
13.4 The impact of embedded options 441
Summary 444
Key terms 445
Review questions 445
Selected references 446
Appendix 13A Simple equations for bond pricing 448
Appendix 13B Incorporating accrued interest and partial periods 449
Appendix 13C Methods of compounding interest rates 452

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CONTENTS IN DETAIL

14 Bonds: analysis and management 455

Learning objectives 456
14.1 Bond-pricing principles 456
14.2 Duration 466
14.3 Convexity 477
14.4 Passive bond-management strategies 480
14.5 Active bond-management strategies 484
Summary 485
Key terms 486
Review questions 486
Selected references 487
Appendix 14A Computational equation for duration 489
Appendix 14B Duration as the holding period that minimises interest-rate risk:
a formal proof 489

15 Stocks: valuation and selection 491

Learning objectives 492
15.1 The intrinsic value of stocks 493
15.2 The constant dividend growth model 498
15.3 Normal-growth and super-growth firms 502
15.4 Multiple-stage growth models 508
15.5 Implementing discounted cash flow models in practice 511
15.6 The free cash flow model 514
15.7 Valuation multiples 517
15.8 How analysts value stocks 526
Summary 531
Key terms 532
Review questions 532
Selected references 533
Appendix 15 The two-stage growth model: a single valuation equation 535

16 Financial statement analysis 536

Learning objectives 537
16.1 Financial statements 538
16.2 Financial ratio analysis 552
16.3 Quality of earnings 558
Summary 562
Key terms 562
Review questions 563
Selected references 564

17 Macroeconomic analysis 566

Learning objectives 567
17.1 Macroeconomic evaluation 568
17.2 The economy and the financial markets 579
17.3 International parity relationships 583
xi

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CONTENTS IN DETAIL

Summary 591
Key terms 592
Review questions 592
Selected references 593

18 Technical analysis 594

Learning objectives 595
18.1 The logic behind technical analysis 596
18.2 Tools for technical analysis 601
18.3 Empirical evidence regarding technical analysis 615
Summary 618
Key terms 618
Review questions 619
Selected references 619

Part 5 DERIVATIVE SECURITIES

19 Futures, options and other derivatives 623

Learning objectives 624
19.1 Reasons for using derivatives 625
19.2 Forward contracts 628
19.3 Swaps 631
19.4 Futures contracts 636
19.5 Options 650
19.6 Investment strategies using derivatives 665
19.7 Financial engineering 672
Summary 673
Key terms 675
Review questions 675
Selected references 676

20 Derivatives valuation 678

Learning objectives 679
20.1 Static and dynamic hedges 681
20.2 Valuation of futures 681
20.3 Option valuation: bounds 688
20.4 The binominal model 694
20.5 Black–Scholes option-valuation model 706
Summary 720
Key terms 721
Review questions 722
Selected references 723

xii

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CONTENTS IN DETAIL

Part 6 PORTFOLIO MANAGEMENT

21 Risk management 727
Learning objectives 728
21.1 Market risk 730
21.2 Credit risk 743
21.3 Operational risk 748
21.4 Instruments for risk control 753
Summary 757
Key terms 758
Review questions 759
Selected references 759

22 Performance evaluation 761

Learning objectives 763
22.1 Toolbox for performance evaluation 764
22.2 Risk-adjusted performance measures 768
22.3 Style analysis 780
22.4 Performance attribution 788
22.5 Empirical evidence for the performance of open-end mutual funds 791
22.6 A word of caution 795
Summary 796
Key terms 797
Review questions 798
Selected references 798

Appendix A Introduction to regression analysis 801

Appendix B Excel spreadsheet applications 822
Appendix C Review questions: answers 845
Glossary 881
Name index 898
Subject index 902

xiii

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Preface

This book offers a general introduction to investment in security markets. To some people,
security markets are like casinos and investing is about predicting security prices and speculating
that those predictions will come true. This book will be of little use to those people. Reading
this book won’t enable you to make predictions about security prices that are any better than
simply flipping a coin or reading a horoscope. That is not to say that this book won’t help
you to become a better investor. Indeed, one of the basic insights that you will obtain from
reading this book is that good investments generally do not require forecasting skills. Rather,
in many cases, good investments require the matching of the investments with the objectives
and constraints of the investor. Frequently, this can be achieved by means of spreading the
investments over many, preferably unrelated, securities (diversification), selecting securities
whose risks offset the risks of the investors’ liabilities (immunisation) and/or using derivative
securities to protect against downside risk (hedging). These strategies do not require any fore-
casting ability whatsoever. However, they do require a thorough understanding of securities,
securities markets and investment strategies. This is exactly what this book aims to achieve.

Intended audience
This book is geared to both undergraduate and graduate students. The subject matter can
be covered in a two-semester course, but the text can also be used for a one-semester course
by selecting the chapters considered most important. Generally, this course is taken after
principles of finance have been studied. However, all concepts needed for this book are
discussed here, in order to achieve a self-contained text. With regard to mathematics, no
more than high-school-level algebra is assumed.

Special features and ancillary material

This text and its special features were carefully developed by the authors and evaluated by a
dedicated panel of reviewers. The goal throughout has been to spark the interest of students
and enhance their motivation to learn about the field of investments. Some of the material
is placed on the accompanying Levy–Post investment website to allow for regular updates.
The URL of the website is: www.booksites.net/levy
The following special features are included in this book:

Up-to-date coverage of investment practice and academic research

Throughout the book, we have attempted to give an up-to-date coverage of current invest-
ment practice and academic research. For example, the table below gives a small sample of ten
key words that are found in this book but would not have appeared in a typical investment
xiv

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PREFACE

book ten years ago – most of them not even five years ago. Indeed, the financial markets have
changed beyond recognition during the past decade.

Key word Chapter

Behavioural finance 12
Electronic communication network (ECN) 3
Exchange-traded fund (ETF) 2
Hedge funds 4
Microsoft Excel spreadsheet application Appendix B
Socially responsible investment (SRI) 5
Style analysis 22
Three-factor model 11
Treasury inflation-protected security (TIPS) 13
Value-at-risk (VaR) 21

Pedagogical structure of the text

The book was designed to facilitate easy absorption of the material. Each chapter begins with
Learning objectives and ends with a Summary section. Key terms are presented in bold type
the first time they are introduced. These terms also appear in the end-of-chapter Key terms
section and in the end-of-book Glossary. Throughout the chapters, Practice boxes are used
to illustrate the key concepts. Every chapter also includes a Selected references section, which
guides the student to further literature on the subject covered in that chapter.

Real-life material: recent newspaper articles and case studies

Included are a wealth of articles and discussions from the Financial Times and other sources,
as well as the financial statements of corporations, in order to introduce students to real-life
scenarios that will give them the opportunity to apply investment theory and techniques. Each
chapter opens with Investments in the News, a newspaper article highlighting the main topic
discussed in the chapter. Additional material from the financial media is used thoughout each
chapter in the Connecting Theory to Practice sections.

Extensive sets of review and practice questions and answers (online)

We have spent much time and effort in developing a wealth of questions and answers for
purposes of review, practice and examination. This material is divided into three parts:
n Review and practice problems apply the concepts discussed in every chapter. We include
samples of both multiple-choice questions and essay questions. Many problems are taken
from the financial media and use real cases to show the relevance of the concepts studied.
This material is split into two parts: one part that is available to both students and academic
staff and another part that is available exclusively to academic staff. This allows academic
staff to use exclusive questions as classroom enrichment problems, homework assignments
and examination questions.
n Multiple-choice self-evaluation tests for every chapter. Students can take these tests and will
receive online a grade and feedback on the topics and sections that require further study.
n Special CFA examination questions are practice problems that prepare students for the
series of Chartered Financial Analyst (CFA) examinations administered by the Association
xv

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ITI_A01.qxd 8/3/06 5:38 PM Page xvi

PREFACE

for Investment Management and Research (AIMR). For more information regarding the
CFA Candidate Program, address enquiries to the Association for Investment Management
and Research, Department of Candidate Programs, 5 Boar’s Head Lane, PO Box 3668,
Charlottesville, VA 22903-0668, USA, or visit www.aimr.org/cfaprogram/
All material is posted on the accompanying Levy–Post investment website. This allows us to
regularly add new material and correct possible flaws in the existing material.

Appendices with regression and Excel tools for empirical research and
practical application
An introduction to the field of investments is not complete without an introduction to the
basic tools for empirical research and quantitative problem-solving. For this purpose, we have
developed two appendices that help students to independently conduct research and solve
decision-support problems. Appendix A, developed by Thierry Post, gives a step-by-step
introduction to regression analysis. Appendix B introduces the student to the use of Microsoft
Excel spreadsheets. The latter appendix was produced by Michael J. Seiler.

Ready Microsoft PowerPoint slides (online)

We have developed a collection of visually stimulating Microsoft PowerPoint slides for use
during classroom lectures. The slides are designed to allow the instructor to modify and adapt
each slide to meet individual classroom needs. The slides are posted on the accompanying
Levy–Post investment website.

Software and Internet links (online)

Microsoft Excel spreadsheet software is provided free to adopters of the text in order to
give students the opportunity to implement techniques presented in the text. Another feature
includes Internet references that lead academics and students to pertinent investment-related
websites. The software and Internet links will be updated regularly and are posted on the
accompanying Levy–Post investment website.

Acknowledgements
This project could never have been completed without the help of many colleagues and friends.
We would like to thank the following for providing valuable feedback and contributions:

Michael J. Alderson, St Louis University; Yakov Amihud, New York University; Hames J.
Angel, Georgetown University; Sung C. Bae, Bowling Green State University; Guido Baltussen,
Erasmus University Rotterdam; Kegian Bi, University of San Francisco; Avi Bick, Simon
Fraser University; Gilbert Bickum, Eastern Kentucky University; Richard H. Borgman, Uni-
versity of Maine; Denis O. Boudreaux, University of Southern Louisiana; Stephen Caples,
McNeese State University; John Clark, University of Alabama; John Clinebell, University of
xvi

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PREFACE

Northern Colorado; Charles J. Corrado, University of Missouri-Columbia; Arthur T. Cox, Uni-

versity of Northern Iowa; Richard F. DeMong, University of Virginia; Giorgio De Santis,
University of Southern California; Elroy Dimson, London School of Business; John W. Ellis,
Colorado State University; Thomas H. Eyssell, University of Missouri at St Louis; Daniel
Falkowski, Canisius College; James Feller, Middle Tennessee State University; J. Howard
Finch, University of Tennessee at Chattanooga; Adam K. Gehr, Jr, DePaul University; Deborah
W. Gregory, University of Otago; Frank M. Hatheway, Pennsylvania State University; David
Heskel, Bloomsburg College; Stan Jacobs, Central Washington University; Vahan Janjigian,
Boston College; Hazel J. Johnson, University of Louisville; Edward M. Kaitz, Marymount
University; Andrew Karolyi, Ohio State University; Mike Keenan, New York University; Yoram
Kroll, Hebrew University; Ladd Kochman, Kennesaw State College; Thomas Krueger, Uni-
versity of Wisconsin LaCrosse; Yoram Landskroner, Hebrew University; Graham K. Lemke,
Pennsylvania State University; Azriel Levy, Hebrew University; K. C. Lim, City Polytechnic,
Hong Kong; K. C. Ma, Investment Research Company; Steven V. Mann, University of South
Carolina; Ralph D. May, Southwestern Oklahoma State University; William M. Mayfield,
Northwestern Oklahoma State University; Micharel L. McBain, Marquette University; Robert
McConkie, Sam Houston State University; Robert McElreath, Clemson University; Bruce
McManis, Nicholls State University; Edward Miller, University of New Orleans; Lalatendu
Misra, University of Texas at San Antonio; Santhosh B. Mohan, Ohio Northern University;
Deborah L. Murphy, University of Tennessee; Eli Ofek, New York University; Joseph P. Ogden,
State University of New York at Buffalo; Rajeev N. Parikh, St Bonaventure University;
Rose Prasad, Michigan State University; Hugh M. Pratt, University of Manitoba; Jerry
Prock, University of Texas; Shafiqur Rahman, Portland State University; Venkateshward K.
Reddy, University of Colorado, Colorado Springs; William Reichenstein, Baylor University;
Stan Reyburn, Commercial Investment Counsellor, Professional Realty Associates; Meir
Schneller, Virginia Polytechnic Institute; Michael J. Seiler, Hawaii Pacific University; Latha
Shanker, Concordia University; Neil Sicherman, University of South Carolina; Raymond
W. So, Louisiana State University; Meir Statman, Santa Clara University; Stacey L. Suydam,
Montana State University, Billings; Antoinette Tessmer, University of Illinois; David E.
Upton, Virginia Commonwealth University; Martijn J. van den Assem, Erasmus University
Rotterdam; Jan van der Meulen, Erasmus University Rotterdam; Pim van Vliet, Erasmus
University Rotterdam; Gopala K. Vasudevan, Suffolk University; Joseph D.Vu, DePaul
University; William Wells, Merrimack University; Darin While, Union University; James A.
Yoder, University of South Alabama.
We would also like to thank Hyla Berkowitz and Maya Landau for their editorial help, as
well as Yael Ben-David, Daniel Berkowitz, Natali Eisof, Allon Cohen, Eitan Goldman, Doron
Lavee, Tijmen Beetz and Bart de Klerk for their assistance in preparing the manuscript.
Special thanks also go to Colette Holden for her excellent and thorough copy-editing, Lesley
Thomas for obtaining copyright permissions, Georgina Clark-Mazo for attentively con-
solidating all editorial changes on to a master copy for the typesetter, and Amanda Thomas
for overseeing production of the book.
Finally, we would like to thank the hardworking team at Pearson: Colin Reed, Senior Text
Designer; Kevin Ancient, Design Manager, who designed the cover; and Jo Barber, Marketing
Manager. In particular, we thank Justinia Seaman, Acquisitions Editor, and David Cox,
Development Editor, for coordinating and driving this entire project.

Haim Levy, Jerusalem, Israel

Thierry Post, Rotterdam, the Netherlands

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Acknowledgements

We are grateful to the following for permission to reproduce copyright material:

Exhibits 1.2, 1.3, 2.1, 2.2, 3.8, 5.1, 6.1, 6.2, 6.3, 6.4, 6.7, 6.8, 6.9, 6.10, 8.3, 8.7, 8.8, 8.9, 8.10,
8.11, 8.13, 8.14, 10.1a, 10.1b, 10.2, 10.3, 10.4, 10.6, 10.7, 11.1, 11.2, 11.4, 11.5, 11.6, 11.7, 12.1,
12.2, 12.3, 12.4, 12.7, 12.8, 13.2, 13.3, 13.4, 13.8, 13.9, 13.B1, 14.1, 14.2, 14.3, 14.4, 14.5, 14.7,
14.8, 14.9, 15.1, 15.2, 15.5, 15.6, 15.7, 17.5, 18.2, 18.3, 18.7, 18.8, 18.9, 18.10, 19.2, 19.5, 19.7,
20.1, 20.2, 20.3, 20.4, 20.5, 20.6, 20.7, 20.8, 20.9, 20.10, 20.13, 22.1, 22.2, 22.4, 22.7 and two
figures in Practice Box 18 from Introduction to Investments, 2nd edn, by Levy, © 1999, reprinted
with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com,
fax 800 730 2215; Exhibits 3.1, 3.2 and 3.5 from World Online Preliminary Prospectus, 1 March
2000, Utrecht, World Online International NV; Exhibit 3.4 reproduced with permission
from Van den Assem; Exhibit 3.7 from Financial Market Trends, Vol. 65, 1996, pp. 16–17,
© OECD Financial Market Trends, 1996; Exhibit 3.9 from www.archipelago.com, 5 January
2003, reproduced with permission of Archipelago Exchange® (ArcEx®); Exhibit 3.10 image of
the NYSE Trading Floor® a federally registered service mark of the New York Stock Exchange,
Inc., from www.nyse.com/pdfs/2001.factbook.06.pdf, photograph used with permission of
NYSE; Exhibits 4.1, 4.3 and 4.4 from Low of Funds, www.federalreserve.gov, public domain,
Washington, DC, Federal Reserve Board; Exhibit 4.2 from Insurance City Business Series 2001,
www.ifsl.org.uk, London, International Financial Services London (IFSL, 2001); Exhibit 5.3
from Progress on the Financial Services Action Plan, www.europa.eu.int/comm/internalmarket/
enfinances/actionplan/index.htm, 31 July 2003, Brussels, European Communities; Exhibit 6.5
from MSCI Net Indices for UK and South African Equity, www.msci.com, London, Morgan
Stanley Capital International, Inc.; Exhibit 6.6 from The Dow Jones Averages 1885–1995,
© Dow Jones & Company, Inc., 2003 (Pierce, P. S.); Exhibits 6.11 and 16.6, copyright 1992,
1987, respectively, CFA Institute, reproduced and republished from Financial Analysts Journal
with permission from the CFA, all rights reserved (Reilly, F. and Kao, G. W. 1992; Gibson, C.
1987); Exhibit 6.12 reprinted from Robertson, Malcolm J., Directory of World Futures and
Options Markets, 1st edn, © 1991; Exhibit 12.6 reprinted from Journal of Financial Economics,
Vol. 3, Rendleman, R. et al., ‘Empirical anomalies based on unexpected earnings and the
importance of risk adjustment’, pp. 285–6, copyright 1982, with permission from Elsevier;
Exhibit 12.9 from ‘The cross section of expected returns’, Journal of Finance, Vol. 47, pp. 427–
65, Oxford, Blackwell Publishing Ltd (Fama, E. F. and French, K. R., 1992); Exhibit 13.5
from Moody’s 17th Annual Survey of Global Corporate Defaults and Rating Performance and
Exhibit 13.7 based on data from Moody’s Corporate Baa Series, www.moodys.com, © Moody’s
Investors Service, Inc., and/or its affiliates, reprinted with permission, all rights reserved;
Exhibit 13.6 from Corporate Defaults in 2003 Recede from Recent Highs, copyright 2004 by
Standard & Poor’s, material reproduced with permission of Standard & Poor’s, a division of
The McGraw-Hill Companies, Inc. (Brady, B., 2004); Exhibit 13C.1 adapted from Livingston,
Miles, Money and Capital Markets: Financial Instruments and Their Uses, 1st edn, © 1990,
by permission of Pearson Education, Inc., Upper Saddle River, NJ; Exhibit 15.10 from ‘Break
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ACKNOWLEDGEMENTS

the barrier between you and your analyst’, Financial Executive, September, p. 19, Florham
Park, NJ, Financial Executives Institute (Chugh, L. C. and Meador, J. W., 1984); Exhibit 16.1
adapted from Financial Statement Analysis: Theory, Application and Interpretation, 4th edition,
Homewood, IL, Irwin (Bernstein, L. A., 1989); Exhibit 16.2 from Pfizer 1996 Annual Report:
Quarterly Consolidate Balance Sheet; Exhibit 16.3 from Consolidated Statement of Income
for Pfizer, Inc.; and Subsidiary Companies; Exhibit 16.4 from Statement of Cash Flows for
Pfizer, Inc.; Exhibit 16.5 from Pfizer 1996 Annual Report: Shareholder’s Equity; Exhibit 16.8
from Percentage Balance Sheet for Pfizer, Inc.; and Exhibit 16.9 from Percentage Income
Statement for Pfizer, Inc., http://www.pfizer.com/are/mn_investors.cfm, 1996, reproduced
with permission of Pfizer, Inc.; Exhibit 16.7 © 2004, CCH INCORPORATED. All rights
reserved. Reprinted with permission from Almanac of Business and Industrial Financial Ratios
(Troy, L.); Exhibit 17.1 ‘The procedure for reporting the GDP’, Exhibit 17.3 ‘Measuring
inflation and components of the GDP when they are reported’ and Exhibit 17.6 ‘The actions
of the Federal Reserve Bank and its influence on the economy’, from The Atlas of Economic
Indicators by W. Stansbury Carnes and Stephen D. Slifer, copyright © 1991 by HarperCollins
Publishers Inc., reprinted by permission of HarperCollins Publishers, Inc.; Exhibit 17.2 from
www.bea.gov/bea/dn/nipaweb/index.asp, public domain, US Bureau of Economic Analysis;
Exhibit 17.4 from Abel/Bernanke, Macroeconomics, Fig. 9.1 (p. 291), © 1995 by Addison-
Wesley Publishing Company, Inc., and Exhibit 17.10 from Solnik, International Investments,
Exhibit 1.1 (p. 9), © 1991, both reprinted by permission of Pearson Education, Inc., publishing
as Pearson Addison Wesley; Exhibit 18.1 from Technical Analysis Explained, New York, McGraw-
Hill, p. 14 (Pring, M. J., 1991); Exhibits 18.4, 18.5, 18.6 and 18.12 from The Technical Analysis
Course, Chicago, IL, Probus Publishing, pp. 102–3, 109–10, 120–1, 137 (Meyers, T., 1989),
reproduced with permission of The McGraw-Hill Companies; Exhibit 18.11 from Standard
& Poor’s (1997), Daily Stock Record, material reproduced with permission of Standard &
Poor’s. Copyright © 1997 Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc. Standard & Poor’s, including its subsidiary corporations (‘S&P’), is a division of The
McGraw-Hill Companies, Inc. Reproduction of this S&P Data in any form is prohibited with-
out S&P’s prior written permission. Because of the possibility of human or mechanical error
by S&P’s sources, S&P or others, S&P does not guarentee the accuracy, adequacy, complete-
ness or availability of any information or any errors or omissions or for the results obtained
from the use of such information. S&P GIVES NO EXPRESS OR IMPLIED WARRANTIES,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTIBILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for
any indirect, special or consequential damages in connection with any use of the S&P Data;
Exhibits 19.9 and 19.10 from Futures Magazine Source Book 2003 and 2004, Chicago, IL, Futures
Magazine, Inc. (Robertson, R., 1990); Exhibit 19.11 from www.amex.com, 24 February 2004,
copyright American Stock Exchange LLC 2004, reprinted with permission of American Stock
Exchange LLC; Exhibit 21.5 from The Report of the Board of Banking Supervision Inquiry
into the Circumstances of the Collapse of Bearings, Ordered by the House of Common, Crown
copyright material is reproduced with the permission for the Controller of HMSO and the
Queen’s Printer for Scotland (HMSO, 1995); Exhibit 22.6 from Asset allocation: management
style and performance measurement. The Journal of Portfolio Management, Vol. 18, pp. 7–19,
published by Institutional Investor, Inc., W. F. Sharpe (1992); Screenshots A.1, A.2, A.3, A.4,
A.5, A.6 from EViews Regression, reprinted by permission from Quantitative Micro Systems;
Screenshots B.1, B.2, B.3, B.4, B.5, B.6, B.7, B.8, B.9, B.10, B.11, B.12, B.13, B.14, B.15,
B.16, B.17, B.18, B.19, B.20, B.21, B.22, B.23 of Microsoft Excel® reprinted by permission
from Microsoft Corporation, © 2003 Microsoft Corporation, One Microsoft Way, Redmond,
Washington 98052-6399, USA, all rights reserved.
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ACKNOWLEDGEMENTS

Bulls back as indicators point to growth, © Financial Times, 17 September 2003; Riskier assets
do well thanks to US recovery, in 2003: the year in global markets, FT.com, © Financial Times,
31 December 2003; Exhibit 2.3 UK (Gilts) Treasury Bills, © Financial Times, 26 September
2003; Exhibit 2.4 Money market interest rates (%), © Financial Times, 10 October 2003;
Exhibit 2.5 UK Notes and bonds, © Financial Times, 24 November 2003; Exhibit 2.6 UK
index-linked bonds, © Financial Times, 24 November 2003; Exhibit 2.7 New corporate bond
issues, © Financial Times, 9 October 2003; Exhibit 2.8 London Stock Exchange benchmark
government bonds, © Financial Times, 7 October 2003; Exhibit 2.9 Extract from the Financial
Times Stock Market tables, © Financial Times, 28 October 2003; Exhibit 2.10 Some Stock
Market indices, © Financial Times, 11/12 October 2003; Big Board must end its costly drama,
FT.com, © Financial Times, 11 November 2003; Equity loans: how to sell what you do not
own, © Financial Times, 28 May 2001; Over-the-counter status presents an image problem, ©
Financial Times, 7 May 2001; Record inflow to mutual funds, © Financial Times, 28 February
2001; Share rises fail to ease pension deficits, © Financial Times, 17 January 2004; Mutual
funds join the world of shorting, FT.com, © Financial Times, 7 November 2002; Why risk
management is not rocket science, © Financial Times, 27 June 2000; Wall Street banks draw
up new code for analysts, FT.com, © Financial Times, 21 May 2001; Corporate America in
crisis: proposed reform, FT.com, © Financial Times, 2 July 2002; Out of sight, not out of
mind: over-the-counter derivatives, © Financial Times, 20 September 1999; Putnam assets fall
11 per cent in November, FT.com, © Financial Times, 6 December 2003; Positive about ‘best’
stocks, © Financial Times, 2 March 2002; Dubious practices are outlawed, © Financial Times,
12 May 2000; ‘Correlation’ a key to smart investment, © Financial Times, 31 May 2003; Fund
managers cautious over equities, © Financial Times, 19 February 2003; Equity investments
by pension funds projected to surge, © Financial Times, 5 March 2002; A puzzle at the heart
of equities, FT.com, © Financial Times, 19 March 2003; The enlightening struggle against
uncertainty, © Financial Times, 25 April 2000; Pension plans under scrutiny, © Financial Times,
7 December 2001; Investors seek escape from ties that bind, © Financial Times, 22 November
2002; Why enough is never enough: a new study shows that you may need more shares in
your portfolio than you think, © Financial Times, 24 June 2000; Investors get a lesson in home
economics, © Financial Times, 25 February 2002; A model weighting game in estimating
expected returns, © Financial Times, 21 May 2001; In search of money for nothing, ©
Financial Times, 11 June 2001; Dow inches forward into the black, © Financial Times,
24 September 2003; The curious case of Palm and 3Com, © Financial Times, 18 June 2001;
Markets behaving badly, FT.com, © Financial Times, 7 April 2001; Few countries enforcing
insider trading laws, © Financial Times, 12 April 2001; I’m a tracker punter and proud of
it, © Financial Times, 17 August 2002; Hewitt Bacon recommends ‘blindfolded monkey’
way, FT.com, © Financial Times, 16 June 2003; Funds get caught in a bond bubble bind, ©
Financial Times, 8 July 2003; Euro-zone yield curve on inversion course, © Financial Times,
19 May 2000; Bond and rating agencies: scores are often junk, say critics, © Financial Times,
8 March 2003; A fad for junk bonds, © Financial Times, 28 June 2003; Lex column: telephone
exchanges, © Financial Times, 9 January 2001; Balancing risk and return in volatile market
conditions, © Financial Times, 21 August 2001; Low rates prompt bond buybacks, FT.com,
© Financial Times, 20 June 2003; Markets/yields, FT.com, © Financial Times, 26 July 2002;
DaimlerChrysler board poised to make its first dividend cut, © Financial Times, 4 February
2002; Equities in wonderland, FT.com, © Financial Times, 2 July 2001; Conceptual, ©
Financial Times, 28 August 2000; True diligence, © Financial Times, 15 April 2002; Ahold
scandal stokes EU–US row over accounts regulation, © Financial Times, 26 February 2003;
Job losses mean no end in sight for US recession, © Financial Times, 5 April 2003; The art and
craft of reading the market, © Financial Times, 9 July 2001; FTSE rally gathers technical steam,
xx

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ACKNOWLEDGEMENTS

FT.com, © Financial Times, 18 March 2003; Technically, these methods don’t work, ©
Financial Times, 7 June 2003; The secret formula that saved Salomon North: Wall Street steps
in to rescue the fund that thought it was too smart to fail, © Financial Times, 25 September
1998; Exhibit 19.1 Spot and forward exchange rates against the dollar, © Financial Times,
2 December 2003; Euro markets: corporate sector embraces credit swaps, © Financial Times,
9 March 2000; Exhibit 19.8 Futures prices for December 2, 2003, © Financial Times,
3 December 2003; Eurex makes inroads into US, FT.com, © Financial Times, 28 May 2003;
Overview: essential controversial, popular and profitable, FT.com, © Financial Times,
5 November 2003; Banks wake up to risk management challenge, FT.com, © Financial Times,
7 May 2003; Long march into markets’ hell for a heavenly cause, © Financial Times,
22 February 2003; Weighing up the risks, © Financial Times, 2 December 1998; Sharpe’s the
word for risk and return, © Financial Times, 12 April 2003.
Diversification: Your excuses don’t add up, from The Financial Times Limited, 15 March 2003,
© Alpesh Patel, email: [email protected]; The great technology bubble has been
purged, from FT.com, The Financial Times Limited, 28 October 2002, © Jeremy Siegel; Getting
the measure of Wall Street, from The Financial Times Limited, 19 February 2000, © Edward
Chancellor; Undue pessimism is driving the Eurozone’s recession, from The Financial Times
Limited, 8 August 2003, © Paul de Grauwe; The costs of sterling, from FT.com, The Financial
Times Limited, 4 July 2002, © David Cobham.
In some instances we have been unable to trace the owners of the copyright material, and we
would appreciate any information that would enable us to do so.

xxi

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Another Random Scribd Document
with Unrelated Content
 § 1. Book-land and the Land-book.
Now these charters or land-books are, with
hardly any exceptions, ecclesiastical title-deeds. The lands of the
churches.
Most of them are deeds whereby lands were
conveyed to the churches; some are deeds
whereby lands were conveyed to men who conveyed them to the
churches. Partial, one-sided and in details untrustworthy though the
testimony that they bear may be, there is still one general question
that they ought to answer and we ought to ask. Domesday Book
shows us many of the churches as the lords of wide and continuous
tracts of land. Now about this important element in the feudal
structure the land-books ought to tell us something. They ought to
tell us how the churches acquired their territories; they ought to tell
us what class of men made gifts of land to the churches; they ought
to tell us whether those gifts were of big tracts or of small pieces.
For example, let us remember how Domesday Book shows us that
four minsters, Worcester, Evesham, Pershore and Westminster, were
lords of seven-twelfths of Worcestershire, that the church of
Worcester was lord of one quarter of that shire and lord of the triple
hundred of Oswaldslaw. How did that church become the owner of a
quarter of a county, to say nothing of lands in other shires? We
ought to be able to answer this question in general terms, for among
the charters that have come down to us there is no series which is
longer, there is hardly a long series which is of better repute, than
the line of the land-books which belonged to the church of
Worcester. They come to us for the more part in the form of a
cartulary compiled not long after the Conquest by the monk Heming
at the instance of Bishop Wulfstan[858].
Now the answer that they give to our question
How the churches
is this:—With but few exceptions, the donors of
these lands were kings or under-kings, kings or acquired their lands.
under-kings of the Mercians, kings of the
English, and the gifts were large gifts. Very often the charter
comprised a tract of land which in Domesday Book appears as a
whole vill or as several contiguous vills. Seldom indeed is the
subject-matter of the gift described as being a villa or a vicus:—the
king merely says that he gives so many manses or the land of so
many manentes at a certain place. Still, if we compare these
charters with Domesday Book, we shall become convinced that very
often the land given was of wide extent. For example, Domesday
Book tells us that the church of Worcester holds Sedgebarrow
(Seggesbarue) where it has four hides for geld, but eight plough
teams. How was this acquired? The monks answer that three
centuries ago, in 777, Aldred the under-king of the Hwiccas gave
them viculum qui nuncupatur aet Segcesbaruue iiii. mansiones, that
land having been giving to him by Offa king of the Mercians in order
that the soul of the subregulus might have something done for
it[859]. In the Conqueror’s reign the Archbishop of Canterbury held a
great estate in Middlesex of which Harrow was the centre, and which
contained no less than 100 hides. Already in 832 the archbishop or
his church had 104 hides at Harrow[860]. Here we will state our
belief, its grounds will appear in another essay, that the ‘manses’
that the kings throw about by fives and tens and twenties, are no
small holdings, but hides each of which contains, or is for fiscal
purposes deemed to contain, some 120 acres of arable land together
with stretches, often wide stretches, of wood, meadow and waste,
the extent of which varies from case to case. From the seventh
century onwards the kings are giving large territories to the
churches. One instance is beyond suspicion, for Bede attests it. In
686 or thereabouts Æthelwealh king of the South Saxons gave to
Bishop Wilfrid the land of eighty-seven families in the promontory of
Selsey, and among its inhabitants were two hundred and fifty male
and female slaves[861]. This gift comprised a spacious tract of
country; it comprised what then were, or what afterwards became,
the sites of many villages[862]. But to whichever of our oldest
churches we turn, the story that it proclaims in its title-deeds is
always the same:—We obtained our lands by means of royal grants;
we obtained them not in little pieces, here a few acres and there a
few, but in great pieces. Canterbury and Winchester echo the tale
that is told by Worcester. Another example may be given. It is one
that has been carefully examined of late. In 739 King Æthelheard of
Wessex gave to Forthhere bishop of Sherborne twenty cassati at the
place called ‘Cridie.’ Thereby he disposed of what now are ‘the
parishes of Crediton, Newton St. Cyres, Upton Pyne, Brampford
Speke, Hittesleigh, Drewsteignton, Colebrooke, Morchard Bishop,
Sandford, Kennerleigh and the modern parish of Sherwood, part of
Cheriton Bishop, and possibly the whole of Clannaborough.’ He
disposed of the whole and more than the whole of the modern
‘hundred’ of Crediton[863]. Then, to choose one last instance, it is
said that already in 679 Osric of the Hwiccas gave to an abbess
centum manentes qui adiacent civitati quae vocatur Hát Bathu[864].
It is not unlikely that this means that a king newly converted to
Christianity disposed by one deed of many square leagues of land,
namely, of the hundred of Bath[865]. The kingdom of the Hwiccas
was not boundless. If Osric executed a few more charters of this
kind he would soon have ‘booked’ it all.
Let us then examine with some care the
charters that come to us from the earliest The earliest books.
period, a period which shall begin with the year
600 and end with the year 750. From this time we have some forty
charters sufficiently genuine for our present purpose. With hardly an
exception the grantor is a king or an under-king, while the grantee is
a dead saint, a church, a bishop, an abbot, or a body of monks. If
the grantee is a layman, the gift is made to him in order that he may
found a minster. If this purpose is not expressed, it is to be
understood. Thus in 674 or thereabouts Wulfhere king of the
Mercians gives five manses to his kinsman Berhtferth as a perpetual
inheritance. Berhtferth is to have full power to give them to whom
he pleases, and we are not told that he proposes to devote them to
pious uses. Nevertheless, the king makes the gift ‘for the love of
Almighty God and of his faithful servant St. Peter[866].’ In other cases
the lay donee is to hold the land ‘by church right’ or ‘by minster
right[867].’ Indeed there seems to be no single deed of this period
which does not purport upon its face to be in some sort an
ecclesiastical act, an act done for the good of the church[868].
These charters are documents of ecclesiastical
origin; they are also documents of foreign Exotic character of
the book.
origin. The bishops and abbots have brought or
have imported models from abroad. The ‘books’
that they induce the kings to sign are full of technical phrases which
already have an ancient history. By way of illustration we will notice
one point at which there is an instructive resemblance and an
instructive contrast. On the Continent a grantor of lands ends his
conveyance with a ‘penal stipulation.’ If an heir of his controverts the
deed, he is to pay a certain sum, and none the less the conveyance
is to remain in full force. In England we can not thus stipulate for a
pecuniary penalty; the land-book is still so purely an ecclesiastical
affair that the punishment of its violator must be left to the church
and to God. So instead of stipulating that he shall pay money, we
stipulate that he shall be excommunicated and, if impenitent,
damned, but we do not forget to add that none the less the
conveyance shall remain as valid and effectual as ever. ‘If anyone,’
says Eadric of Kent, ‘shall attempt to go against this gift, let him be
separated from all Christianity and the body and blood of Jesus
Christ, manentem hanc donationis chartulam[869] in sua nihilominus
firmitate.’ Such words may look somewhat out of place in their new
surroundings; but they are part of a venerable formula[870].
But what is the model to which in the last
resort these documents go back? A conveyance The book purports
to confer ownership.
by a Roman landowner. He has in the land full
and absolute dominium and is going to transfer
this to another. Let us observe that the recorded motive which
prompts a king to set his cross, or rather Christ’s cross, to a land-
book is a purely personal motive. He wishes to save his soul, he
desires pardon for his crimes[871]. Of the welfare of his realm he
says nothing; but his soul must be saved. Sometimes he will give
land to an under-king or to an ealdorman, for they also have souls
and may desire salvation[872]. He is acting as a private landowner
might act. Then he uses terms and phrases which belong to the
realm of pure private law. He asserts in the most energetic of all the
words that the law of the lower empire could provide that he is a
landowner and that he is going to transfer landownership. The land
in question is tellus mea[873] or it is terra iuris mei[874]. Then it is
the very land itself that he gives, the land of so many manses, ‘with
all the appurtenances, fields, pastures, woods, marshes.’ It is no
mere right over the land that he gives, but the very soil itself. Next
let us observe the terms in which the act of conveyance is stated:—
perpetualiter trado et de meo iure in tuo transscribo terram ... ut
tam tu quam posteri tui teneatis, possideatis et quaecunque volueris
de eadem terra facere liberam habeatis potestatem[875]. The Latin
language of the time had no terms more potent or precise than
these. Or again: aliquantulam agri partem ... Waldhario episcopo in
dominio donare decrevimus[876]. Or again: aeternaliter et
perseverabiliter possideat abendi vel dandi cuicumque eligere
voluerit[877]. But it is needless to multiply examples.
No doubt then, if we bring to the interpretation
of these instruments the ideas of an earlier or Does the book really
confer ownership?
of a later time, the ideas of ancient Rome or of
modern Europe, we see the king as a
landowner conferring on the churches landownership pure and
simple. The fact on which our constitutional historians have laid
stress, namely, that sometimes (for we must not overstate the case)
the king says that the bishops and his great men are consenting to
his deed, important though it may be in other contexts, is of little
moment here. The king is put before us as the owner of the land
conveyed; it is, he says, terra mea, terra iuris mei. The rule, if rule it
be, that he must not give away his land without the consent of
bishops and nobles in no way denies his ownership. However, we are
at the moment more concerned with the fact, or seeming fact, that
what he gives to the churches is ownership and nothing less.
But if we loyally accept this seeming fact and
think it over, to what conclusions shall we not The book really
conveys a
be brought, when we remember how wide superiority.
were the lands which the churches acquired
from the kings, when we think once more how
by virtue of royal gifts the church of Worcester acquired a quarter of
a county? When these lands were given to the church were they
waste lands? It is plain that this was not the common case. Already
there were manses, there were arable fields, there were meadows,
there were tillers of the soil. One of two conclusions seems to follow.
Either the king really did own these large districts, and the tillers of
the soil were merely his slaves or coloni, who were conveyed along
with the soil, or else the clear and emphatic language of the charters
sadly needs explanation. Now if we hold by the letter of the
charters, if we say that the king really does confer landownership
upon the churches, there will be small room left for any landowners
in England save the kings, the churches and perhaps a few great
nobles. This is a theory which for many reasons we can not adopt;
no one can adopt it who is not prepared to believe that Britain was
conquered by a handful of chieftains without followers. The only
alternative course seems that of saying that many of the land-books
even of the earliest period, despite their language, convey not the
ownership of land, but (the term must be allowed us) a ‘superiority’
over land and over free men.
Let us for a moment remember that the
wording of a modern English conveyance might A modern analogy.
easily delude a layman or a foreigner. An
impecunious earl, we will say, sells his ancient family estate. We look
at the deed whereby this sale is perfected. The Earl of A. grants unto
B. C. and his heirs all the land delineated on a certain map and
described in a certain schedule. That in substance is all that the
deed tells us. We look at the map; we see a tract of many thousand
acres, which, besides a grand mansion, has farm-houses, cottages,
perhaps, entire villages upon it. The schedule tells us the names of
the fields and of the farm-houses. Like enough no word will hint that
any one lives in the houses and cottages, or that any one, save the
seller, has any right of any kind in any part of this wide territory. But
what is the truth? Perhaps a hundred different men, farmers and
cottagers, have rights of different kinds in various portions of the
tract. Some have leases, some have ‘agreements for leases,’ some
hold for terms of years, some hold from year to year, some hold at
will. The rights of these tenants stand, as it were, between the
purchaser and the land that he has bought. He has bought the
benefit, and the burden also, of a large mass of contracts. But of
these things his conveyance says nothing[878]. And so again, in the
brief charters of the thirteenth century a feoffor will say no more
than that he has given manerium meum de Westona, as though the
manor of Weston were some simple physical object like a black
horse, and yet under analysis this manerium turns out to be a
complex tangle of rights in which many men, free and villein, are
concerned.
But it will be said that all this is the result of
‘feudalism.’ It implies just that dismemberment Conveyance of
superiority in early
of the dominium which is one of feudalism’s times.
main characteristics. Undoubtedly in the twelfth
century the free tenant in fee simple who holds
land ‘in demesne’ can have, must have, a lord above him, who also
holds and is seised of that land and who will speak of the land as
his. But we are now in the age before feudalism, in the seventh and
eighth centuries. Are we to believe that the free owner of Kemble’s
‘ethel, hid, or alod’ might have above him, perhaps always had
above him, not merely a lord (for a personal relation of patronage
between lord and man is not to the point), but a landlord: one who
would speak of that ‘ethel, hid or alod’ as terra iuris mei: one who to
save his soul would give lsquo;that land to a church and tell the
bishop or abbot to do whatever he pleased with it? If we believe
this, shall we not be believing that so far as English history can be
carried there is no age before ‘feudalism’.
We will glance for a moment at two
transactions which took place near the end of Illustrations.
the seventh century. Bede tells how
Æthelwealh king of the South Saxons was persuaded to become a
Christian by Wulfhere king of the Mercians. The Mercian received the
South Saxon as his godson and by way of christening-gift gave him
two provinces, namely the Isle of Wight and the territory of the
Meanwari in Wessex, perhaps the hundreds of Meon in
Hampshire[879]. Then the same Bede tells us that the same
Æthelwealh gave to Bishop Wilfrid a land of eighty-seven families, to
wit, the promontory of Selsey: he gave it with its fields and its men,
among whom were two hundred and fifty male and female
slaves[880]. A modern reader will perhaps see here two very different
transactions. In the one case he sees ‘the cession of a province’ by
one king to another, and possibly he thinks how Queen Victoria
ceded Heligoland to her imperial grandson:—the act is an act of
public law, a transfer of sovereignty. In the other case he sees a
private act, the gift of an estate for pious uses. But Bede and his
translator saw little, if any, difference between the two gifts: in each
case Bede says ‘donavit’; the translator in the one case says ‘forgeaf,’
in the other ‘geaf and sealde.’ Now it will hardly be supposed that
the Isle of Wight had no inhabitants who were not the slaves or the
coloni of the king, and, that being so, we are not bound to suppose
that there were no free landowners in the promontory of Selsey. May
it not be that what Æthelwealh had to give and gave to Wilfrid was
what in our eyes would be far rather political power than private
property.
But over the free land of free landowners what
rights had the king which he could cede to What had the king
to give?
another king or to a prelate, saying withal that
the subject of his gift was land? He had, as we
think, rights of two kinds that were thus alienable; we may call them
fiscal rights and justiciary rights, though such terms must be
somewhat too precise when applied to the vague thought of the
seventh and eighth centuries. Of justiciary rights we shall speak
below. As to the rights that we call fiscal, we find that the king is
entitled to something that he calls tributum, vectigal, to something
that he calls pastus, victus, the king’s feorm; also there is military
service to be done, and the king, when making a gift, may have a
word to say about this.
Now it must at once be confessed that the
charters of this early period seldom suggest The king’s alienable
rights.
any such confusion between political power and
ownership as that which we postulate. Still
from time to time hints are given to us that should not be ignored.
Thus a Kentish king shortly after the middle of the eighth century
gave to the church of Rochester twenty ploughlands, not only ‘with
the fields, woods, meadows, pastures, marshes and waters thereto
pertaining,’ but also ‘with the tributum which was paid thence to the
king[881].’ Such a phrase would hardly be appropriate if the king
were giving land of which he was the absolute owner, land cultivated
for him by his slaves.
A little more light is thrown on the matter by
the first rude specimens of a clause that is to Military service as a
burden on land.
become common in after times, the clause of
immunity. Already in the seventh century
Wulfhere of Mercia, having made a gift of five manses, adds: ‘Let
this land remain free to all who have it, from all earthly hardships,
known or unknown, except fastness and bridge and the common
host[882].’ So in 732 a king of Kent says: ‘And no royal due shall be
found in it henceforth, saving such as is common to all church lands
in this Kent[883].’ Æthelbald of Mercia says: ‘By my royal power I
decree that it be free for ever from all tribute of secular payments,
labours and burdens, so that the said land may render service to
none but Almighty God and the church[884].’ Yet more instructive, if
we may rely upon it, is the foundation charter of Evesham Abbey.
Æthelweard has given twelve manses: he then says, ‘I decree that
for the future this land be free from all public tribute, purveyance,
royal works, military service (ab omni publico vectigali, a victu, ab
expeditione, ab opere regio) so that all things in that place which are
valuable and useful may serve the church of St. Mary, that is to say,
the brethren serving [God] there; save this, that if in the island
belonging to the said land there shall chance to be an unusual
supply of mast, the king may have pasture for fattening one herd of
pigs, but beyond this no pasture shall be set out for any prince or
potentate[885].’ Now in the first place, these charters speak as
though military service is due from land:—I (says the king) declare
this land to be free from the ‘fyrd,’ from the expeditio—or—I declare
that it is free from all earthly burdens, except military service and
the duty of repairing bridge and burh. We are not saying that there
is already military tenure, but we do say that already the ‘fyrd’ is
conceived as a burden on land, in so much that the phrase ‘This land
is—or is not—to be free of military service’ has a meaning. But after
all, land never fights: men fight. Of what men then is the king
speaking when he says that the land is, or is not, free from the
expeditio? Not of the donees themselves, for they are bishops and
monks and serve in no army but God’s. Not of the slaves who are on
the land, for they are not ‘fyrd-worthy.’ He is speaking of free men
who live on the land; he is declaring that when he has, if so modern
a term be suffered, ‘attorned’ them to the church, they will still have
to serve in warfare, or he is declaring that they will be free even
from this duty to the state in order that the land may be the more
absolutely at the service of God and His stewards.
Then military service, along with the duty of
repairing bridges and fastnesses, belongs to a The king’s feorm.
genus of dues, of which unfortunately we get
but a vague description. There are vectigalia publica, opera regia,
onera saecularia, there is tributum, there is victus. How much of the
information that we get about these matters from later days we may
carry back with us to the earliest period it is difficult to say.
Apparently the king, the under-king, even the ealdorman, has a
certain right of living at the expense of his subjects, of making a
progress through the villages and quartering himself, his courtiers,
his huntsmen, his dogs and horses upon the folk of the townships,
of exacting a ‘one night’s farm’ from this village, a ‘two nights’ farm’
from that. The men who have to bear these exactions may well be
free men and free landowners; still over them the king has certain
rights and rights that he can give away. According to our
interpretation of the charters, it is often enough such rights as these
that the king is giving when he says that he is giving terram iuris
mei. He declares, it will be observed, that the land is to be free from
vectigalia and opera to which it has heretofore been subject. But
does he mean by this to benefit the occupiers of the soil? No, he has
no care whatever to relieve them. Bent on saving his soul, his care is
that the land shall be wholly devoted to the service of God. As we
understand the matter, whatever vectigalia and opera the king has
hitherto exacted from these men the church will now exact. The king
has conveyed what he had to convey, a superiority over free
landowners.
It is permissible to doubt whether modern
historians have fully realized the extent of the Nature of the feorm.
rights which the king had over the land of free
landowners. In the middle of Ine’s laws, which follow each other in
no rational order, we suddenly come upon an isolated text, which
says this: ‘For 10 hides “to foster” 10 vessels of honey, 300 loaves,
12 ambers of Welsh ale, 30 of clear [ale], 2 old [i.e. full grown] oxen
or 10 wethers, 10 geese, 20 hens, 10 cheeses, an amber full of
butter, 5 salmon, 20 poundsweight of fodder and a hundred
eels[886].’ The context throws no light upon the sentence; but in
truth no sentence in Ine’s laws has a context. What is its meaning?
We can not but think that this foster is the king’s victus[887]. Once a
year from every ten hides he is entitled to this feorm. Perhaps it is a
‘one night’s feorm’; for it may be enough to support a king of the
seventh century and a modest retinue during twenty-four hours. Still
it will be no trifling burden upon the land, even if we suppose the
hide to have 120 arable acres or thereabouts. Suppose that the king
transfers his right over a single hide to some bishop or abbot, the
donee will be entitled to receive from that hide a rent which can not
be called insignificant. We dare not argue that this law is a general
law for the whole of Wessex. It may refer only to some newly settled
and allotted districts. There are other hints in these laws of Ine of
some large land-settlement, an allotment of land among great men
who have become bound to bring under cultivation a district
theretofore waste[888]. But it is difficult to dissociate the foster of
these laws from the victus of the charters, and, quite apart from this
disputable passage, we have plenty of proof that the king’s victus
was an incumbrance which pressed heavily upon the lands of free
landowners[889]. If in England the duty of feeding the king as he
journeys through the country developed into a regular tax or rent
this would not stand alone. That duty plays a considerable part in
the Scandinavian law-books, and in the Denmark of the thirteenth
century we may find arrangements which are very like that set forth
in Ine’s law. Every hundred (herad), taken as a whole, has to
contribute something towards the king’s support. Often it is a round
sum of money; but often it will consist of provisions necessary to
maintain the king’s household during a night or two or three nights
(servicium unius noctis, servicium duarum noctium). Then the
‘service of two nights’ is accurately defined. It consists of, among
other things, 26 salted pigs, 14 live pigs, 16 salted oxen, 16 salted
sheep, 360 fowls, 180 geese, 360 cheeses, corn, malt, fodder, butter,
herrings, stock-fish, pepper and salt. This revenue stands apart from
the revenue derived from the crown lands; it is regarded as a tax
rather than a rent; but it is to this extent rooted in the soil, that the
amount due from each hundred (herad) is fixed[890]. There is a
great deal to make us think that at a quite early time in England
such arrangements as this had been made. If we look at the
charters we find that the king is always giving away manses in fives
and tens, fifteens and twenties. This symmetry, this prevalence of a
decimal system, we take to be artificial; already the manse, or hide,
is a fiscal unit, a fraction of a district which has to supply the king
with food or with money in lieu of food[891]
Whatever be the origin of the king’s feorm—
Tribute and rent.
and if we find it in the voluntary gifts which yet
barbarous Germans make to their kings, we
may none the less have to admit that it has been touched by the
influence of the Roman tributum—it becomes either a rent or a tax.
We may call it the one, or we may call it the other, for so long as the
recipient of it is the king, the law of the seventh and eighth centuries
will hardly be able to tell which it is[892]. The king begins to give it
away: in the hands of his donees, in the hands of the churches, it
becomes a rent. This is not all, however, that the king has to give, or
that the king does give, when he says that he is giving land. That he
may be giving away the profits of justice, that he may be giving
jurisdiction itself, we shall argue hereafter. But probably he has even
in early days yet other things to give, and at any rate in course of
time he discovers that such is the case. He can give the right to take
toll, he can give market rights[893]. It is by no means impossible that
he has forest rights, some general claim to place uncultivated land
under his ban, if he would hunt therein, and some general claim to
the nobler kinds of fish[894]. Then again, in the eleventh century we
find men owing services to the king which he still receives rather as
king than as landlord, and the sporadic distribution of these services
seems to show that they are not of modern origin. Such are, for
example, the ‘inwards’ and the ‘averages’ which are done by the free
men of Cambridgeshire[895]. We are told in a general way that the
thegn owes fyrdfare, burh-bót and lang="ang"
xml:lang="ang">brycg-bót, but that from many lands—the lands
comprised within no privilege, no franchise—‘a greater land-right
arises at the king’s ban’; for there is the king’s deer-hedge to be
made, there are warships to be provided, there are sea-ward and
head-ward[896]. Every increase in the needs of the state, in the
power of the state, gives the king new rights in the land,
consolidates his seignory over the land. If a fleet be formed to resist
the Danes, the king has something to dispose of, a new immunity for
sale. If a geld be levied to buy off the Danes, the king can sell a
freedom from this tax, or he can tell the monks of St. Edmundsbury
that they may levy the tax from their men and keep it for their own
use[897]. This, we argue, is not a new abuse, a phenomenon which
first appears in the evil feudal time when men began to confuse
imperium with dominium, kingship with landlordship, office with
property, tax with rent. On the contrary, we must begin with
confusion. In some of the very earliest land-books that have come
down to us what the king really gives, when he says that he is giving
land, is far rather his kingly superiority over land and landowners
than anything that we dare call ownership[898]
Not that this is always the case. Very possible is
it that from the first the king had villages which Mixture of
ownership and
were peopled mainly by his theows and læts, superiority.
and intertribal warfare may have increased
their number. But the charters, for all their
apparent precision, will not enable us to distinguish between these
cases and others in which the villages are full of free landowners
and their slaves. The charters are not engendered by the English
facts; they are foreign, ecclesiastical, Roman. By such documents, to
our thinking, the king gives what he has to give. In one case it may
be a full ownership of a village or of some scattered steads; in
another it may be a superiority, which when analyzed will turn out to
be a right of exacting supplies of provender from the men of the
village; in a third, and perhaps a common case, the same village will
contain the mansi serviles of the king’s slaves and the mansi
ingenuiles of free landowners. He no more thinks of distinguishing
by the words of his charter his governmental power over free men
and their land from his ownership of his slaves and the land that
they are tilling, than his successor of the eleventh or twelfth century
will think of making similar distinctions when he bestows a ‘manor’
or an ‘honour.’
We have been suggesting and shall continue to
suggest that at a very early time, a time The king’s
superiority.
beyond which our land-books will not carry us,
the king is beginning to discover that the whole
land which he rules is in a certain and a profitable sense his land. He
can give it away; he can barter it in exchange for spiritual benefits,
and this he can do without wronging the free landholders who are in
possession of that land, for what he really gives is the dues (it is too
early to say the ‘service’) that they have owed to him and will
henceforth owe to his donee. Let us remember that his successors
will undoubtedly be able to do this. In a certain sense, Henry II., for
example, will have all England to give away. If we were to put an
extreme case, we might have to reckon with possible rebellions; but
every single hide of England Henry can give without wronging any
one. Suppose that C has been holding a tract as the king’s tenant in
chief by service worth £5 a year, Henry can make a grant of that
land to B, and by this grant C will not be wronged. Henceforth C will
hold of B, and B of the king. Suppose that, on the occasion of this
grant, services worth £2 a year are reserved, then the king has it in
his power to grant the land yet once more: to grant it, let us say, to
the Abbot of A, who is to hold in frankalmoin; C will not be wronged,
B will not be wronged. What the king has done with one hide he can
do with every hide in England; piece by piece he can give all
England away. We have been suggesting and shall continue to
suggest that at a very early time, even in the first days of English
Christianity, the king is beginning to discover that he has some such
power as that which his successors will exercise. This barbarous
chieftain learns that his political sway over the folk involves a
proprietary and alienable element of which he can make profit. It
involves a right to feorm and a right to wites. The beef and the
cheese and the Welsh ale that he might have levied from a district
he invests, if we may so speak, in what he is being taught to regard
as the safest and most profitable of all securities. He obtains not
only remission of his sins, but also the friendship and aid of bishops
and clergy. And so large stretches of land are ‘booked’ to the
churches. It is to be feared that if the England of the sixth century
had been visited by modern Englishmen, the Saxon chieftains would
have been awakened to a consciousness of their ‘booking’ powers by
offers of gin and rifles.
In its original form and when put to its original
Book-land and
purpose the land-book is no mere deed of gift;
church right.
it is a dedication. Under the sanction of a
solemn anathema, a tract of land is devoted to
the service of God. A very full power of disposing of it is given to the
bishop or the abbot, who is God’s servant. As yet the law has none
of those subtle ideas which in after ages will enable it to treat him as
‘a corporation sole’ or as ‘a trustee,’ nor can the folk-law meddle
much with the affairs of God. The bishop or abbot must be able to
leave the land to whom he pleases, to institute an heir. Thus ‘book-
land’ stands, as it were, outside the realm of the folk-law. In all
probability the folk-law of this early period knows no such thing as
testamentary power. Testamentary power can only be created by the
words of a book, by an anathema. But laymen are not slow to see
that they can make use of this new institution for purposes of their
own, which are not always very pious purposes. By a pretext that he
is going to construct a minster, a man will obtain a book garnished
with the crosses of bishops. One day calling himself an abbot and
the next day calling himself a king’s thegn, a layman among
ecclesiastics, an ecclesiastic among laymen, he will shirk all duties
that are owed to state and church. Already Bede complains of this in
a wise and famous letter. He advocates a resumption of these
inconsiderate and misplaced gifts, and reproves the prelates for
subscribing the books[899]. His letter may have done good; but
laymen still obtained books which authorized them to hold land ‘by
church right.’ Thus Offa of Mercia gave to an under-king lands at
Sedgebarrow ‘in such wise that he might have them during his life,
and in exercise of full power might leave them to be possessed by
church right[900].’ Thereupon the subregulus, as a modern English
lawyer might say, executed this power of appointment in favour of
the church of Worcester. The same Offa gave land to his thegn
Dudda so that by church right he might enjoy it during his life and
leave it on his death to whom he would[901]
We must wait for a later age before we shall
Book-land and
find the kings freely booking lands to their
testament.
thegns without any allusion to ecclesiastical
purposes. Indeed it may be said that the
Anglo-Saxon land-book never ceases to be an ecclesiastical
instrument. True that in the tenth century the kings are booking
lands to their thegns with great liberality; true also that there is no
longer any pretence that the land so booked will go to endow a
church; but let us observe these books and let us not ignore the
recitals that they contain. Why does the king make these grants? He
says that it is because he hopes for an eternal reward in the
everlasting mansions. This has perhaps become an empty phrase:
but it has a history. Also it is needed in order to make the deed a
logical whole. Let us observe the sequence of the clauses:
—‘Whereas the fashion of this world passeth away but the joys of
heaven are eternal; therefore I give land to my thegn so that he
may enjoy it during his life and leave it on his death to whomsoever
he pleases, and if any one shall come against this charter may he
perish for ever; I have confirmed this gift with the sign of Christ’s
holy cross[902].’ Some piety in the harangue (arenga) is necessary in
order to lead up to the anathema and the cross; it justifies the
intervention of the bishops, who also will make crosses and thereby
will be denouncing the church’s ban against any one who violates
the charter. And who, we may ask, is likely to violate the charter?
The donee’s kinsfolk may be tempted to do this if the donee makes
use of that testamentary power which has been granted to him (as,
for instance, by leaving the land to a church) more especially
because it may be very doubtful whether in impeaching such a
testament they will not have the folk-law on their side. Such in brief
outline is—so we think—the history of book-land. It is land (or rather
in many cases a superiority) held by royal privilege[903] under the
sanction of the anathema.
 § 2. Book-land and Folk-land.
With ‘book-land’ is contrasted ‘folk-land.’
Therefore of folk-land a few words must be What is folk-land?
said. What is folk-land? A few years ago the
answer that historians gave to this question was this: It is the land
of the folk, the land belonging to the folk. Dr Vinogradoff has argued
that this is not the right answer[904]. His argument has convinced
us; but, as it is still new, we will take leave to repeat it with some
few additions of our own.
The term ‘folk-land’ occurs but thrice in our
texts. It occurs in one law and in two charters. Folk-land in the
texts.
The one law comes from Edward the Elder[905]
and all that it tells us is that folk-land is the
great contrast to book-land. Folk-land and book-land seem to cover
the whole field of land tenure. Possibly this law tells us also that
while a dispute about folk-land will, a dispute about book-land will
not, come before the shiremoot:—but we hardly obtain even this
information[906]. Then we have the two charters. Of these the
earlier is a deed of Æthelbert of Kent dated in 858[907]. The king
with the consent of his great men and of the prelates gives to his
thegn Wulflaf five plough-lands at Washingwell (aliquam partem
terrae iuris mei) in exchange for land at Marsham. He declares that
the land at Washingwell is to be free from all burdens save the three
usually excepted, the land at Marsham having enjoyed a similar
immunity. The boundaries of Washingwell are then stated. On the
west it is bounded by the king’s folk-land (cyninges folcland) which
Wighelm and Wulflaf have. So much for the deed itself. On its back
there is an endorsement to the following effect: ‘This is the land-
book for Washingwell that Æthelbert the king granted to Wulflaf his
thegn in exchange for an equal amount of other land at Marsham;
the king granted and booked to Wulflaf five sullungs of land at
Washingwell for the five sullungs at Marsham and the king made
that land at Marsham his folk-land (“did it him to folk-land”) when
they had exchanged the lands, save the marshes and the salterns at
Faversham and the woods that belong to the salterns.’ Now this
deed teaches us that there was land which was known as ‘the king’s
folk-land,’ and that it was in the occupation of two men called
Wighelm and Wulflaf, the latter of whom may well have been the
Wulflaf who made an exchange with the king. The endorsement tells
us that when the king received the land at Marsham he made it his
folk-land, ‘he did it him to folk-land.’
The other charter is of greater value. It is the
will of the Ealdorman Alfred and comes from The will of Alfred
the Ealdorman.
some year late in the ninth century[908]. He
desires in the first place to state who are the
persons to whom he gives his inheritance and his book-land. He then
gives somewhat more than 100 hides, including 6 at Lingfield and 10
at Horsley, to his wife for her life, ‘with remainder,’ as we should say,
to their daughter. More than once he calls this daughter ‘our
common bairn,’ thus drawing attention to the fact that she is not
merely his daughter, but also his wife’s daughter. This is of
importance, for in a later clause we hear of a son. ‘I give to my son
Æthelwald three hides of book-land: two hides on Hwætedune
[Waddon], and one at Gatatune [Gatton] and therewith 100 swine,
and, if the king will grant him the folk-land with the book-land, then
let him have and enjoy it: but if this may not be, then let her [my
wife] grant to him whichever she will, either the land at Horsley or
the land at Lingfield.’ Such are the materials which must provide us
with our knowledge of folk-land.
We must examine Alfred’s will somewhat
carefully. The testator has a wife, a son, a Comment on
Alfred’s will.
daughter. He leaves the bulk of his book-land to
his wife for life with remainder to his daughter.
For his son he makes a small provision (only three hides) out of his
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