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The Saxons divided the country they had occupied into convenient areas, the Shire and the Hundred, for administering justice and collecting taxes. The precise dates of the formation of these administrative areas is not known, but it was probably fairly soon after the occupation of the land. The Shire, still frequently today retaining its ancient boundaries, came under the control of the Shire-reeve or Sheriff, the most important legal officer in every county, who was responsible for the collection of taxes and the paying of the proceeds at the Exchequer, as well as, since the twelfth century, being in charge of prisons and the trial of prisoners. The boundaries of these areas were established long before written records were made, and natural features were used like the ridge of the Blackdown Hills in south-west Somerset, or a river like the Avon in the north of the county. In the past the county has sometimes been called Somerset and sometimes Somersetshire. There have been many arguments about which is historically correct, but both forms can be traced at least as far back as Domesday. In 1889 the newly established County Council adopted the form 'County of Somerset', and this is the present usage. It has been suggested that the name Somerset originally meant 'the land of the Summer pastures' and referred to the fine grazing lands of the marshy levels. Here, perhaps, it is best to consider Somerset as being the district which looked towards Somerton, its chief town, for government.

The division of the county into hundreds also took place in the early years of its foundation. The term 'hundred' is generally thought to have been derived from an area of 100 hides, the 'hide' being the amount of land which would support a peasant family, an extended group of several generations, including grandparents as well as married sons and their children. There is a wide variation in the estimated acreage of the hide, from 40 to 140 acres. Its name in the form of 'hide', 'hiwisc' or huish has survived in several Somerset place names.

The hundred provided a convenient unit for calling out the 'fyrd', the local defence force, as well as for the collection of taxes. Meetings of the hundred court, which was concerned with the maintenance of law in the area, were at first held in the open air at regular intervals of four weeks so that everyone would know about them and there would be no need to issue a summons to appear. The shire and the hundred courts dealt with serious crimes and also ensured that everyone was registered as a freeman or tenant of the lordship within which he lived. Within each hundred the maintenance of law and order was placed in the care of small groups known as 'tithings', possibly originally involving ten people, though the derivation is not certain. Frequently the hundred fell into private hands and its court was held with those of the landed estates which, with their lords and tenants, both free and servile, were known as manors. Each tithing was responsible for all that went on in its own small area. It reported or arrested any of its members who committed crimes. If the suspect ran away, the tithing had to raise the 'hue and cry' by shouting and blowing horns. Members of the tithing had to attend the lord of the manor's court to present the offenders and see that they were punished, or were themselves fined for failing to do so. Twice a year, representatives of each tithing attended the hundred court to give a report of the behaviour of their members, and to admit as new members all males who had reached the age of 12 years. The hundred and its courts gradually declined in importance as its jurisdiction came into the hands of lords of the manor and royal justice was extended through the assize courts.

Map of the Hundreds as they existed early in the eighteenth century

In the twelfth century, King Henry II had introduced a new system of paid professional judges who travelled around the country to try serious cases in courts held in the most important towns of each county. This developed into regular sittings of assize courts, eventually held only in Taunton and Wells, and lasted until 1971, when a new crown court system was introduced. In the medieval period the Shire or County Court became established at llchester, where a county gaol was built, and it replaced Somerton as the county town. As the new courts of justice were developed, the powers of the old County Court declined.