Chapter 5 adds a new empirical dimension to the quantitative findings on the historical persistence of underdevelopment and underprovision of public goods. The military family clan was the key demographic unit and it defined its relationship with the imperial state. By collaborating with local clan heads in the military frontier, the Habsburg state achieved increased social control, blurring the line between the local rules of social organization and the formal rules of the state. Family clans were highly effective in recruiting and managing men for defending the border. However, as in many other contexts of imperialism, indirect rule through the clans together with communal property and weak state presence stifled personal initiative and investment in individual property. I provide evidence by analyzing social dynamics within a family clan that still existed in 1930s using historical anthropological accounts. I explain how belonging to military family clans molded clan members’ attitudes toward inner and outer groups in a way that prevented them from overcoming collective action problems.