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- To understand how a state acquires legal capacity, we need to study a state that lacked it. France, at the end of the sixteenth century did not possess a centralized legal or tax system. This reflected the way French monarchs had gradually added territories to their growing kingdom since the middle ages. Moreover, as more and more territories were added, the king was forced to concede old, and sometimes new, privileges to the regions so as to ensure their loyalty. In the words of one economic historian, the complexities of the resulting fiscal and legal system almost ‘defy description.’ […] Witchcraft was difficult to prosecute under conventional legal procedures and standards of proof. Maleficia may have sometimes actually occurred and, in rare cases, may even have left evidence. However, diabolism was, by its nature, beyond the pale of rational legal procedure. Since dealings with the devil existed only in the fantasies of accusers and (rarely) the accused, it was a thought crime. In order to get around the difficulty of prosecuting a suspected witch according to traditional standards of legal proof, local judges turned to the theories of the demonologists. […] The unobservable nature of the crime combined with the use of torture created a self-replicating logic to witchcraft trials. Accusation led to torture, which led to further accusations. This logic is illustrated by the following example which took place in 1599 in the area of Bazuel which lies in the North of France. A widow named Reine Perceval was accused of sorcery and brought to the local abbey for interrogation. Initially, she denied the accusa- tions, despite the attempts of her interrogator to coerce her confession by pointing to another recently accused woman who, by admitting to the crimes, was released. […] Later, under torture, the widow Perceval did confess to being a witch and named several ‘accomplices.’ […] It was costly in a purely financial sense to try an individual witch. Furthermore, fear of witchcraft could get out of control and result in lynchings and murders or in devastating mass trials in which large numbers of individuals who would not usually be suspected of witchcraft came under suspicion. […] We establish that witchcraft trials were more likely to take place where the central state had weak legal institutions. Combining data on the geographic distribution of witchcraft trials with unique panel data on tax receipts across 21 French regions, we find that the rise of the tax state can account for much of the decline in witch trials during this period. Further historical evidence supports our hypothesis that higher taxes led to better legal institutions. [Johnson and Koyama]