Part 2

In the towns of the second category we find a quite different condition. Here capitalism not only exists but develops toward perfection. Instruments of credit, such as the lettre de foire, make their appearance; a traffic in money takes its place alongside the traffic in merchandise and, despite the prohibition of loans at interest, makes constantly more rapid progress. The coutumes of the fairs, especially those of the fairs of the Champagne, in which the merchants of the regions most advanced in an economic sense, Italy and the Low Countries, meet each other, give rise to a veritable commercial law. The circulation of money expands and becomes regulated; the coinage of gold, abandoned since the Merovingian period, is resumed in the middle of the thirteenth century. The security of travellers increases on the great highways. The old Roman bridges are rebuilt and here and there canals are built and dykes constructed. Finally, in the towns, the commercial buildings of the previous period, outgrown, are replaced by structures more vast and more luxurious, of which the halles of Ypres, with their façade one hundred and thirty-three metres long, is doubtless the most imposing specimen.

In the presence of these facts it is impossible to deny the existence of a considerable traffic. Moreover documents abound which attest the existence in the great cities of men of affairs who hold the most extended relations with the outside world, who export and import sacks of wool, bales of cloth, tuns of wine, by the hundred, who have under their orders a whole corps of factors or "sergents" (servientes, valets, etc.), whose letters of credit are negotiated in the fairs of Champagne, and who make loans amounting to several thousands of livres to princes, monasteries, and cities in need of money. To cite here merely a few figures, let us recall that in 1273 the company of the Scotti of Piacenza exports wool from England to the value of 21,400 pounds sterling, or 1,600,000 francs (metallic value); in 1254 certain burgesses of Arras furnish 20,000 livres to the Count of Guines, prisoner of the Count of Flanders, to enable him to pay his ransom. In 1339 three merchants of Mechlin advance 54,000 florins (700,000 francs) to King Edward III.

Extensive however as capitalistic commerce has been since the first half of the thirteenth century, it no longer enjoys the freedom of development which it had before. As we advance toward the end of the Middle Ages, indeed, we see it subjected to limitations constantly more numerous and more confining. Henceforth, in fact, it has to reckon with municipal legislation. Every town now shelters itself behind the ramparts of protectionism. If the most powerful cities can no longer exclude the stranger, upon whom they live, they impose upon him a minute regulation, the purpose of which is to defend against him the position of their own citizens. They force him to have recourse in his purchases to the mediation of his "hosts" and his "courtiers"; they forbid him to bring in manufactured articles which may compete with those which the city produces; they exploit him by levying taxes of all sorts: duties upon weighing, upon measuring, upon egress, etc.

In those cities especially in which has occurred the popular revolution transferring power from the hands of the patriciate into those of the craft-gilds, distrust of capital is carried as far as it can go without entirely destroying urban industry. The craftsmen who produce for exportation--for example, the weavers and the fullers of the towns of Flanders--try to escape from their subjection, to the merchants who employ them. Not only do the municipal statutes fix wages and regulate the conditions of work, but they also limit the independence of the merchant, even in purely commercial matters. It will be sufficient to mention here, as one of their most characteristic provisions, the forbidding of the cloth merchant to be at the same time a wool merchant, a prohibition inspired by the desire to prevent operations that will unfavorably affect prices and the workman's wages.

But it is not solely the municipal authority which attacks the speculations born of the capitalistic spirit. The Church steps forward, and under the name of usury forbids indiscriminately the lending of money at interest, sales on credit, monopolies, and in general all profits exceeding the justum pretium. No doubt these prohibitions themselves attest the existence of the abuses which they endeavor to oppose, and their frequency proves that they did not always succeed. It is none the less true that they were very burdensome and that the pursuit of business on a large scale found itself much embarrassed by them.

The increasing specialization of commerce embarrassed it much more. At the beginning the merchants had devoted themselves to the most various operations at once. Wandering from market to market, they bought and sold without feeling in need of centring their activity on this or that kind of products or commodities, but from about 1250 this is no longer the case. The progress of economic evolution has resulted in localizing certain industries and in restraining certain branches of commerce to the groups of merchants best suited to their promotion. Thus, for example, in the course of the thirteenth century the trade in fine cloth became a monopoly of the towns of Flanders, and banking a monopoly of certain merchant companies of Lombardy, Provence, or Tuscany. Thenceforward commercial life ceases to overflow at random, so to speak. It has a less arbitrary, a more deliberate, and consequently a more embarrassed quality.

These limitations resting upon commerce have resulted in turning away from it the patricians, who moreover have become, as has been said above, a class of landed proprietors. The place which they left vacant is filled by new men, among whom, as among their predecessors, intelligence is the essential instrument of fortune. The intellectual faculties which the first developed in wandering commerce are used by these later men to overcome the obstacles raised in their pathway by municipal regulations of commerce and ecclesiastical regulations in respect to money affairs. Many of them find a rich source of profit by devoting themselves to brokerage. Others in the industrial cities exploit shamelessly and in defiance of the statutes the artisans whom they employ. At Douai, for example, Jehan Boinebroke (1280-1310) succeeds in reducing to serfdom a number of workers (and characteristically, they are chiefly women) by advancing wool or money which they are unable to repay, and which therefore place them at his mercy. The richest or the boldest profit by the constantly increasing need of money on the part of territorial princes and kings, to become their bankers. It will be remembered that it was Lombard capitalists who furnished Edward III. with money to prepare his campaigns against France, and, quite recently, the history of Guillaume Servat of Cahors (1280-1320) has shown us a man who, setting out with nothing, like Godric in the eleventh century, accumulates in a few years a considerable fortune, supplies the King of England with a dowry for one of his daughters, lends money to the King of Norway, farms the wool duties at London, and, unscrupulous as he is shrewd, does not hesitate to engage in shady speculations upon the coinage. And how many other financiers do we not know whose career is wholly similar: Thomas Fin at the court of the counts of Flanders, the Berniers at that of the counts of Hainaut, the Tote Guis, the Vane Guis, at that of the kings of France, not to name the numberless Italians entrusted by the popes with the various operations of pontifical finance, those mercatores Romanam curiam sequentes among whom are found the ancestors of the great Medici of the fifteenth century.

In the course of the fifteenth century this second class of capitalists, courtiers, merchants, and financiers, successors to the capitalists of the hanses and the gilds, is in its turn drawn along toward the downward grade. The progress of navigation, the discoveries made by the Portuguese, then by the Spaniards, the formation of great monarchical states struggling for supremacy, begin to destroy the economic situation in the midst of which that class had grown to greatness, and to which it had adapted itself. The direction of the currents of commerce is altered. In the north, the English and Dutch marine gradually take the place of the hanses. In the Mediterranean, commerce centres itself at Venice and at Genoa. On the shores of the Atlantic, Lisbon becomes the great market for spices, and Antwerp, supplanting Bruges, becomes the rendezvous of European commerce. The sixteenth century sees this movement grow more rapid. It is favored at once by moral, political, and economic causes; the intellectual progress of the Renaissance, the expansion of individualism, great wars exciting speculation, the disturbance of monetary circulation caused by the influx of precious metals from the New World. As the science of the Middle Ages disappears and the humanist takes the place of the scholastic, so a new economy rises in the place of the old urban economy. The state subjects the towns to its superior power. It restrains their political autonomy at the same time that is sets commerce and industry free from the guardianship which the towns have hitherto imposed upon them. The protectionism and the exclusiveness of the bourgeoisies are brought to an end. If the craft-guilds continue to exist, yet they no longer control the organization of labor. New industries appear, which, to escape the meddling surveillance of the municipal authorities, establish themselves in the country. Side by side with the old privileged towns, which merely vegetate, younger manufacturing centres, full of strength and exuberance, arise; in England, Sheffield, and Birmingham, in Flanders, Hondschoote and Armentières.

The spirit in which is now manifested in the world of business, is that same spirit of freedom which animates the intellectual world. In a society in process of formation, the individual, enfranchised, gives the rein to his boldness. He despises tradition, gives himself up with unrestrained delight to his virtuosity. There are to be no more limits on speculation, no more fetters on commerce, no more meddling of authority in relations between employers and employed. The most skillful wins. Competition, up to this time held in check, runs riot. In a few years enormous fortunes are built up, others are swallowed up in resounding bankruptcies. The Antwerp exchange is a pandemonium where bankers, deep-sea sailors, stock-jobbers, dealers in futures, millionaire merchants, jostle each other--and sharpers and adventurers to whom all means of money-getting, even assassination, are acceptable.

This confused recasting of the economic world transfers the rôle played by the capitalists of the late Middle Ages in a class of new men. Few are the descendants of the business men of the fourteenth century among those of the fifteenth and sixteenth. Thrown out of their course by the current of events, they have not been willing to risk fortunes already acquired. Most of them are seen turning toward administrative careers, entering the service of the state as members of the councils of justice or finance and aspiring to the noblesse de robe, which, with the aid of fortunate marriages, will land their sons in the circle of the true nobility. As for the new rich of the period, they almost all appear to us like parvenus. Jacques Coeur is a parvenu in France. The Fugger and many other German financiers--the Herwarts, the Seilers, the Manlichs, the Haugs--are parvenus of whose families we know little before the fifteenth century, and so are the Frescobaldi and the Gualterotti of Florence, or that Gaspar Ducci of Pistoia who is perhaps the most representative of the fortune-hunters of the period. Later, when Amsterdam has inherited the commercial hegemony of Antwerp, the importance of the parvenus characterizes it not less clearly. We may merely mention here, among the first makers of its greatness, Willem Usselinx, Balthazar de Moucheron, Isaac Lemaire. And if from the world of commerce we turn toward that of industry the aspect is the same. Christophe Plantin, the famous printer, is the son of a simple peasant of Touraine.

The exuberance of capitalism which reached its height in the second half of the sixteenth century was not maintained. Even as the regulative spirit characteristic of the urban economy followed upon the freedom of the twelfth century, so mercantilism imposed itself upon commerce and industry in the seventeenth and eighteenth centuries. By protective duties and bounties on exportation, by subsidies of all sorts to manufactures and national navigation, by the acquiring of transmarine colonies, by the creation of privileged commercial companies, by the inspection of manufacturing processes, by the perfecting of means of transportation and the suppression of interior custom-houses, every state strives to increase its means of production, to close its market to its competitors, and to make the balance of trade incline in its favor. Doubtless the idea that "liberty is the soul of commerce" does not wholly disappear, but the endeavor is to regulate that liberty henceforward in conformity to the interest of the public weal. It is put under the control of intendants, of consuls, of chambers of commerce. We are entering into the period of national economy.

This was destined to last, as is familiar, until the moment when, in England at the end of the eighteenth century, on the Continent in the first years of the nineteenth, the invention of machinery and the application of steam to manufacturing completely disorganized the conditions of economic activity. The phenomena of the sixteenth century are reproduced, but with tenfold intensity. Merchants accustomed to the routine of mercantilism and to state protection are pushed aside. We do not see them pushing forward into the career which opens itself before them, unless as lenders of money. In their turn, and as we have seen it at each great crisis of economic history, they retire from business and transform themselves into an aristocracy. Of the powerful houses which are established on all hands and which give the impetus to the modern industries of metallurgy, of the spinning and weaving of wool, linen, and cotton, hardly one is connected with the establishments existing before the end of the eighteenth century. Once again, it is new men, enterprising spirits, and sturdy characters which profit by the circumstances. At most, the old capitalists, transformed into landed proprietors, play still an active rôle in the exploitation of the mines, because of the necessary dependence of that industry upon the possessors of the soil, but it can be safely affirmed that those who have presided over the gigantic progress of international economy, of the exuberant activity which now affects the whole world, were, as at the time of the Renaissance, parvenus, self-made men. As at the time of the Renaissance, again, their belief is in individualism and liberalism alone. Breaking with the traditions of the old régime, they take for their motto "laissez faire, laissez passer". They carry the consequences of the principle to an extreme. Unrestrained competition sets them to struggling with each other and soon arouses resistance in the form of socialism, among the proletariate that they are exploiting. And at the same time that that resistance arises to confront capital, the latter, itself suffering from the abuses of that freedom which had enabled it to rise, compels itself to discipline its affairs. Cartels, trusts, syndicates of producers, are organized, while states, perceiving that it is impossible to leave employers and employees longer to contend in anarchy, elaborate a social legislation; and international regulations, transcending the frontiers of the various countries, begin to be applied to working men.

I am aware how incomplete is this rapid sketch of the evolution of capitalism through a thousand years of history. As I said at the beginning, I present it merely as an hypothesis resting on the very imperfect knowledge which we yet possess of the different movements of economic development. Yet, in so far as it is exact, it justifies the observation I made at the beginning of this study. It shows that the growth of capitalism is not a movement proceeding along a straight line, but has been marked, rather, by a series of separate impulses not forming continuations one of another, but interrupted by crises.

To this first remark may be added two others, which are in a way corollaries.

The first relates to the truly surprising regularity with which the phases of economic freedom and of economic regulation have succeeded each other. The free expansion of wandering commerce comes to its end in the urban economy, the individualistic ardor of the Renaissance leads to mercantilism, and finally, to the age of liberalism succeeds our own epoch of social legislation.

The second remark, with which I shall close, lies in the moral and political rather than the economic field. It may be stated in this form, that every class of capitalists is at the beginning animated by a clearly progressive and innovating spirit but becomes conservative as its activities become regulated. To convince one's self of this truth it is sufficient to recall that the merchants of the eleventh and twelfth centuries are the ancestors of the bourgeoisie and the creators of the first urban institutions; that the business men of the Renaissance struggled as energetically as the humanists against the social traditions of the Middle Ages; and finally, that those of the nineteenth century have been among the most ardent upholders of liberalism. This would suffice to prove to us, if we did not know it otherwise, that all these have at the beginning been nothing else than parvenus brought into action by the transformations of society, embarrassed neither by custom nor by routine, having nothing to lose and therefore the bolder in their race toward profit. But soon the primitive energy relaxes. The descendants of the new rich wish to preserve the situation which they have acquired, provided public authority will guarantee it to them, even at the price of a troublesome surveillance; they do not hesitate to place their influence at its service, and wait for the moment when, pushed aside by new men, they shall demand of the state that it recognize officially the rank to which they have raised their families, shall on their entrance into the nobility become a legal class and no longer a social group, and shall consider it beneath them to carry on that commerce which in the beginning made their fortunes.

FOOTNOTES:

This article represents the substance of an address delivered at the International Congress of Historical Studies held in London, April, 1913.

First edition in 1893.

Der Moderne Capitalismus (1902).

R. Heynen, Zur Entstehung des Capitalismus in Venedig (1905).

H. Sieveking, "Die Capitalistische Entwickelung in den Italienischen Städten des Mittelalters", Vierteljahrschrift für Social-und Wirtschaftsgeschichte (1909).

Davidsohn, Forschungen zur Geschichte von Florenz, III. 36; A. Doren, Die Florentiner Wollentuchindustrie, p. 481.

A. Schaube, "Die Wollausfuhr Englands von 1272", Vierteljahrschrift für Social- und Wirtschaftsgeschichte (1908), pp. 39 ff. Cf. F. Keutgen, "Hansische Handelsgesellschaften", ibid. (1906), pp. 288 ff.

Cf. H. Pirenne, Les Anciennes Democraties des Pays-Bas, pp. 11 ff.

I. Goll, "Samo und die Karantinischen Slaven", Mitteilungen des Instituts für Oesterreichische Geschichtsforschung, vol. XI.

A. Dopsch, Die Wirtschaftsentwickelung der Karolingerzeit, II. 274. I cannot, however, accept the thesis of Mr. Dopsch on the importance of commerce in the Carolingian period. The extremely interesting texts which he has assembled seem to me to establish the existence of a sporadic commerce only.

Of course all the new towns did not grow up around an episcopal residence. Many of them, especially in the North and particularly in the Low Countries, had as their primitive nucleus a fortress (Ghent, Bruges, Ypres, Lille, Douai, etc.). But my purpose here is merely to recall the broad outlines of the subject.