From the smallest group, immediate family, up through larger and larger populations, clans, tribes etc, to the nation state, and, some hope, transnational and global agglomerations.
When trust is lost people instinctively pull back to the group or even the individuals they believe they can trust.
From Medievalists.net:
Money and trust. Amsterdam moneylenders and the rise of the modern state, 1478-1794
XIV International Economic History Congress (2006)
Synopsis: The aim of this paper is to establish how trust came about between the investing public and the central (aka provincial) rulers in the Netherlands, and how the settings of the state loans evolved over time. Throughout the late medieval and early modern period, particular loans and their investors are investigated. In correspondence with the models from the studies of urban public debt, the following characteristics are of interest:
1) were investors a small, typical ethnical or occupational elite, specialised in financial services in general (bankers, banking houses, goldsmiths, Lombards/Italian, Jews), or were they dispersed over several communities
2) did they belong to a close circle around the government centre (in our case usually The Hague) or were investors not directly tied to the bureaucracy of the emerging state
3) did loans come predominantly from societal institutions, such as orphanages or church boards or town governments, or were the investors operating individually
4) did the subscribers belong to the richest layers in society only (top-merchants, urban political elites) or were they broadly dispersed over society....MOREAnd from the paper's introduction:
Trust is one of the main constituents for a good-functioning society. Trust is also essential for efficient state-institutions. This has been established for our twenty-first century communities: trust reinforces social cohesion and furthers the workings of democratic mechanisms. Yet in the past trust was by no means a matter-of-course. Numerous societies were confronted with uncertainties and threats, not least caused by their own authorities or by competing elites. Trust was always highest in relatively small, preferably ethnic or religious homogeneous communities.
To establish trust that surpassed the level of those communities, such as for inhabitants and authorities of larger territories and countries, was difficult to realise and is a rare phenomenon in history. In the more commercialised societies, the study of money and monetary transactions isone of the available tools to gather information as to the degree of trust. An even better tool is the study of state loans that are subscribed by domestic creditors....MUCH MORE (25 page PDF)
Interest rates are to somedegree reflecting the level of trust. Also, the study of these loans allows us to establish the timing and extent of this trust (increasing over time? significant leaps? how widespread? which categories of the population?).
As the same loans contributed to the rise of a long-term public debt, they strengthened the emerging state. The creation of that public debt was never a conscious strategy from the start. The contracting of loans was usually a solution to a pressing problem experienced by the rulers: rising expenditures, mainly caused by war.
The emergence of a long-term public debt was thus an-unintended-consequence with another-unintended-consequence: it furthered state formation, whereas at the same time the promise of interest-payments upon the bonds constituted one of the major binding factors between the state and the investing public. The trust between rulers and ruled was high when interest rates were low and when the group of investors were drawn from a broad section of the population.
In the historiography on public debts the recent trend has been geared strongly to urban finances. All in all, two general models seemed to have existed in urban debt systems: a‘democratic’ model, in which a large section of the public was able to profit from the debt service payments upon public loans, and an ‘aristocratic’ model, in which only a small elite invested in state funds (and hence only a limited group was ‘rewarded’ by the interest instalments)....
