The stirring story of the colonial struggles which occupied the seventeenth and eighteenth centuries will be taken up in another chapter; at this point, therefore, we turn from the expanding nations on the Atlantic seaboard to note the mournful plight of the older commercial powers--the German and Italian city-states. As for the former, the Hanseatic League, despoiled of its Baltic commerce by enterprising Dutch and English merchants, its cities restless and rebellious, gradually broke up. In 1601 an Englishman metaphorically observed: "Most of their [the league's] teeth have fallen out, the rest sit but loosely in their head,"--and in fact all were soon lost except Lubeck, Bremen, and Hamburg.

[Sidenote: Decay of Venice]

Less rapid, but no less striking, was the decay of Venice and the other Italian cities. The first cargoes brought by the Portuguese from India caused the price of pepper and spices to fall to a degree which spelled ruin for the Venetians. The Turks continued to harry Italian traders in the Levant, and the Turkish sea-power grew to menacing proportions, until in 1571 Venice had to appeal to Spain for help. To the terror of the Turk was added the torment of the Barbary pirates, who from the northern coast of Africa frequently descended upon Italian seaports.

The commerce of Venice was ruined. The brilliance of Venice in art and literature lasted through another century (the seventeenth), supported on the ruins of Venetian opulence; but the splendor of Venice was extinguished finally in the turbulent sea of political intrigue into which the rest of Italy had already sunk.

EFFECTS OF THE COMMERCIAL REVOLUTION

In a way, all of the colonizing movements, which we have been at pains to trace, might be regarded as the first and greatest result of the Commercial Revolution--that is, if by the Commercial Revolution one understands simply the discovery of new trade-routes; but, as it is difficult to separate explorations from colonization, we have used the term "Commercial Revolution" to include both. By the Commercial Revolution we mean that expansive movement by which European commerce escaped from the narrow confines of the Mediterranean and encompa.s.sed the whole world. We shall proceed now to consider that movement in its secondary aspects or effects.

One of the first in importance of these effects was the advent of a new politico-economic doctrine?mercantilism--the result of the transference of commercial supremacy from Italian and German city-states to national states.

[Sidenote: Nationalism in Commerce]

With the declining Italian and German commercial cities, the era of munic.i.p.al commerce pa.s.sed away forever. In the peoples of the Atlantic seaboard, who now became masters of the seas, national consciousness already was strongly developed, and centralized governments were perfected; these nations carried the national spirit into commerce.

Portugal and Spain owed their colonial empires to the enterprise of their royal families; Holland gained a trade route as an incident of her struggle for national independence; England and France, which were to become the great commercial rivals of the eighteenth century, were the two strongest national monarchies.

[Sidenote: Mercantilism]

The new nations founded their power not on the fearlessness of their chevaliers, but on the extent of their financial resources. Wealth was needed to arm and to pay the soldiers, wealth to build warships, wealth to bribe diplomats. And since this wealth must come from the people by taxes, it was essential to have a people prosperous enough to pay taxes. The wealth of the nation must be the primary consideration of the legislators. In endeavoring to cultivate and preserve the wealth of their subjects, European monarchs proceeded upon the a.s.sumption that if a nation exported costly manufactures to its own colonies and imported cheap raw materials from them, the money paid into the home country for manufactures would more than counterbalance the money paid out for raw materials, and this "favorable balance of trade" would bring gold to the nation. This economic theory and the system based upon it are called mercantilism. In order to establish such a balance of trade, the government might either forbid or heavily tax the importation of manufactures from abroad, might prohibit the export of raw materials, might subsidize the export of manufactures, and might attempt by minute regulations to foster industry at home as well as to discourage compet.i.tion in the colonies. Thus, intending to retain the profits of commerce for Englishmen, Cromwell and later rulers required that certain goods must be carried on English ships.

[Sidenote: Chartered Companies]

By far the most popular method of developing a lucrative colonial trade--especially towards the end of the sixteenth and throughout the seventeenth century--was by means of chartered commercial companies.

England (in 1600), Holland (in 1602), France (in 1664), Sweden, Denmark, Scotland, and Prussia each chartered its own "East India Company." The English possessions on the Atlantic coast of America were shared by the London and Plymouth Companies (1606). English companies for trade with Russia, Turkey, Morocco, Guiana, Bermuda, the Canaries, and Hudson Bay were organized and reorganized with bewildering activity. In France the crop of commercial companies was no less abundant.

To each of these companies was a.s.signed the exclusive right to trade with and to govern the inhabitants of a particular colony, with the privilege and duty of defending the same. Sometimes the companies were required to pay money into the royal treasury, or on the other hand, if the enterprise were a difficult one, a company might be supported by royal subsidies. The Dutch West India Company (1621) was authorized to build forts, maintain troops, and make war on land and sea; the government endowed the company with one million florins, sixteen ships, four yachts, and exemption from all tolls and license dues on its vessels. The English East India Company, first organized in 1600, conducted the conquest and government of India for more than two centuries, before its administrative power was taken away in 1858.

[Sidenote: Financial Methods.]

[Sidenote: The "Regulated Company"]

The great commercial companies were a new departure in business method.

In the middle ages business had been carried on mostly by individuals or by partnerships, the partners being, as a rule, members of the same family. After the expansion of commerce, trading with another country necessitated building forts and equipping fleets for protection against savages, pirates, or other nations. Since this could not be accomplished with the limited resources of a few individuals, it was necessary to form large companies in which many investors shared expense and risk. Some had been created for European trade, but the important growth of such companies was for distant trade. Their first form was the "regulated company." Each member would contribute to the general fund for such expenses as building forts; and certain rules would be made for the governance of all. Subject to these rules, each merchant traded as he pleased, and there was no pooling of profits. The regulated company, the first form of the commercial company, was encouraged by the king. He could charter such a company, grant it a monopoly over a certain district, and trust it to develop the trade as no individual could, and there was no evasion of taxes as by independent merchants.

[Sidenote: The Joint-stock Company]

After a decade or so, many of the regulated companies found that their members often pursued individual advantage to the detriment of the company's interests, and it was thought that, taken altogether, profits would be greater and the risk less, if all should contribute to a common treasury, intrusting to the most able members the direction of the business for the benefit of all. Then each would receive a dividend or part of the profits proportional to his share in the general treasury or "joint stock." The idea that while the company as a whole was permanent each individual could buy or sell "shares" in the joint stock, helped to make such "joint-stock" companies very popular after the opening of the seventeenth century. The English East India Company, organized as a regulated company in 1600, was reorganized piecemeal for half a century until it acquired the form of a joint-stock enterprise; most of the other chartered colonial companies followed the same plan.

In these early stock-companies we find the germ of the most characteristic of present-day business inst.i.tutions--the corporation.

In the seventeenth century this form of business organization, then in its rudimentary stages, as yet had not been applied to industry, nor had sad experience yet revealed the lengths to which corrupt corporation directors might go.

[Sidenote: Banking]

The development of the joint-stock company was attended by increased activity in banking. In the early middle ages the lending of money for interest had been forbidden by the Catholic Church; in this as in other branches of business it was immoral to receive profit without giving work. The Jews, however, with no such scruples, had found money-lending very profitable, even though royal debtors occasionally refused to pay.

As business developed in Italy, however, Christians lost their repugnance to interest-taking, and Italian (Lombard) and later French and German money-lenders and money-changers became famous. Since the coins minted by feudal lords and kings were hard to pa.s.s except in limited districts, and since the danger of counterfeit or light-weight coins was far greater than now, the "money-changers" who would buy and sell the coins of different countries did a thriving business at Antwerp in the early sixteenth century. Later, Amsterdam, London, Hamburg, and Frankfort took over the business of Antwerp and developed the inst.i.tutions of finance to a higher degree. [Footnote: The gold of the New World and the larger scope of commercial enterprises had increased the scale of operations, as may be seen by comparing the fortunes of three great banking families: 1300--the Peruzzi's, $800,000; 1440--the Medici's, $7,500,000; 1546--the Fuggers', $40,000,000.] The money-lenders became bankers, paying interest on deposits and receiving higher interest on loans. Shares of the stock of commercial companies were bought and sold in exchanges, and as early as 1542 there were complaints about speculating on the rise and fall of stocks.

Within a comparatively short time the medieval merchants' gilds had given way to great stock-companies, and Jewish money-lenders to millionaire bankers and banking houses with many of our instruments of exchange such as the bill of exchange. Such was the revolution in business that attended, and that was partly caused, partly helped, by the changes in foreign trade, which we call the Commercial Revolution.

[Sidenote: New Commodities]

Not only was foreign trade changed from the south and east of Europe to the west, from the city-states to nations, from land-routes to ocean- routes; but the vessels which sailed the Atlantic were larger, stronger, and more numerous, and they sailed with amazing confidence and safety, as compared with the fragile caravels and galleys of a few centuries before. The cargoes they carried had changed too. The comparative cheapness of water-transportation had made it possible profitably to carry grain and meat, as well as costly luxuries of small bulk such as spices and silks. Manufactures were an important item.

Moreover, new commodities came into commerce, such as tea and coffee.

The Americas sent to Europe the potato, "Indian" corn, tobacco, cocoa, cane-sugar (hitherto scarce), mola.s.ses, rice, rum, fish, whale-oil and whalebone, dye-woods and timber and furs; Europe sent back manufactures, luxuries, and slaves.

[Sidenote: Slavery]

Slaves had been articles of commerce since time immemorial; at the end of the fifteenth century there were said to have been 3000 in Venice; and the Portuguese had enslaved some Africans before 1500. But the need for cheap labor in the mines and on the sugar and tobacco plantations of the New World gave the slave-trade a new and tremendous impetus. The Spaniards began early to enslave the natives of America, although the practice was opposed by the n.o.ble endeavors of the Dominican friar and bishop, Bartolome de las Casas. But the native population was not sufficient,--or, as in the English colonies, the Indians were exterminated rather than enslaved,--and in the sixteenth century it was deemed necessary to import negroes from Africa. The trade in African negroes was fathered by the English captain Hawkins, and fostered alike by English and Dutch. It proved highly lucrative, and it was long before the trade yielded to the better judgment of civilized nations, and still longer before the inst.i.tution of slavery could be eradicated.

[Sidenote: Effects on Industry and Agriculture]

The expansion of trade was the strongest possible stimulus to agriculture and industry. New industries--such as the silk and cotton manufacture--grew up outside of the antiquated gild system. The old industries, especially the English woolen industry, grew to new importance and often came under the control of the newer and more powerful merchants who conducted a wholesale business in a single commodity, such as cloth. Capitalists had their agents buy wool, dole it out to spinners and weavers who were paid so much for a given amount of work, and then sell the finished product. This was called the "domestic system," because the work was done at home, or "capitalistic," because raw material and finished product were owned not by the man who worked them, but by a "capitalist" or rich merchant.

How these changing conditions were dealt with by mercantilist statesmen, we shall see in later chapters.

The effect on agriculture had been less direct but no less real. The land had to be tilled with greater care to produce grain sufficient to support populous cities and to ship to foreign ports. Countries were now more inclined to specialize--France in wine, England in wool--and so certain branches of production grew more important. The introduction of new crops produced no more remarkable results than in Ireland where the potato, transplanted from America, became a staple in the Irish diet: "Irish potatoes" in common parlance attest the completeness of domestication.

[Sidenote: General Significance of Commercial Revolution]

In the preceding pages we have attempted to study particular effects of the Commercial Revolution (in the broad sense including the expansion of commerce as well as the change of trade-routes), such as the decline of Venice and of the Hanse, the formation of colonial empires, the rise of commercial companies, the expansion of banking, the introduction of new articles of commerce, and the development of agriculture and industry. In each particular the change was noticeable and important.

But the Commercial Revolution possesses a more general significance.

[Sidenote: Europeanization of the World]

(1) It was the Commercial Revolution that started Europe on her career of world conquest. The petty, quarrelsome feudal states of the smallest of five continents have become the Powers of to-day, dividing up Africa, Asia, and America, founding empires greater and more lasting than that of Alexander. The colonists of Europe imparted their language to South America and made of North America a second Europe with a common cultural heritage. The explorers, missionaries, and merchants of Europe have penetrated all lands, bringing in their train European manners, dress, and inst.i.tutions. They are still at work Europeanizing the world.

[Sidenote: 2. Increase of Wealth, Knowledge, and Comfort]

(2) The expansion of commerce meant the increase of wealth, knowledge, and comfort. All the continents heaped their treasures in the lap of Europe. Knowledge of the New World, with its many peoples, products, and peculiarities, tended to dispel the silly notions of medieval ignorance; and the goods of every land were brought for the comfort of the European--American timber for his house, Persian rugs for his floors, Indian ebony for his table, Irish linen to cover it, Peruvian silver for his fork, Chinese tea, sweetened with sugar from Cuba.

[Sidenote: 3. The Rise of the Bourgeoisie]

(3) This new comfort, knowledge, and wealth went not merely to n.o.bles and prelates; it was noticeable most of all in a new cla.s.s, the "bourgeoisie." In the towns of Europe lived bankers, merchants, and shop-keepers,--intelligent, able, and wealthy enough to live like kings or princes. These bourgeois or townspeople (_bourg_ = town) were to grow in intelligence, in wealth, and in political influence; they were destined to precipitate revolutions in industry and politics, thereby establishing their individual rule over factories, and their collective rule over legislatures.

ADDITIONAL READING

GENERAL. A. F. Pollard, _Factors in Modern History_ (1907), ch.

ii, vi, x, three illuminating essays; E. P. Cheyney, _An Introduction to the Industrial and Social History of England_ (1901), ch. ii-vi, a good outline; F. W. Tickner, _A Social and Industrial History of England_ (1915), an interesting and valuable elementary manual, ch.

i-vii, x-xii, xvi, xvii, xix-xxi, xxiv-xxvii; W. J. Ashley, _The Economic Organization of England_ (1914), ch. i-v; G. T. Warner, _Landmarks in English Industrial History_, 11th ed. (1912), ch.

vii-xiii; H. D. Traill and J. S. Mann (editors), _Social England_ (1909), Vols. II, III; H. de B. Gibbins, _Industry in England_, 6th ed. (1910), compact general survey; William Cunningham, _The Growth of English Industry and Commerce in Modern Times_, 5th ed., 3 vols. (1910-1912), a standard work; H. D. Bax, _German Society at the Close of the Middle Ages_ (1894), brief but clear, especially ch. i, v, vii on towns and country-life in the Germanies. Very detailed works: Maxime Kovalevsky, _Die okonomische Entwicklung Europas bis zum Beginn der kapitalistischen Wirtschaftsform_, trans. into German from Russian, 7 vols. (1901-1914), especially vols. III, IV, VI; emile Leva.s.seur, _Histoire des cla.s.ses ouvrieres et de l'industrie en France avant 1789_, Vol. II (1901), Book V; Georges d'Avenel, _Histoire economique de la propriete, des salaires, etc._, 1200- 1800, 6 vols. (1894-1912).

AGRICULTURE IN THE SIXTEENTH CENTURY. R. E. Prothero, _English Farming Past and Present_ (1912), ch. iv; E. C. K. Gonner, _Common Land and Inclosure_ (1912), valuable for England; R. H. Tawney, _The Agrarian Problem in the Sixteenth Century_ (1912); E. F. Gay, _Essays on English Agrarian History in the Sixteenth Century_ (1913); H. T. Stephenson, _The Elizabethan People_ (1910); W.

Hasbach, _A History of the English Agricultural Labourer_, trans.

by Ruth Kenyon (1908), an excellent work, particularly Part I on the development of the cla.s.s of free laborers from that of the medieval serfs. Valuable for feudal survivals in France is the brief _Feudal Regime_ by Charles Seign.o.bos, trans. by Dow. Useful for social conditions in Russia: James Mavor, _An Economic History of Russia_, 2 vols. (1914), Vol. I, Book I, ch. iii. See also Eva M.

Tappan, _When Knights were Bold_ (1911) for a very entertaining chapter for young people, on agriculture in the sixteenth century; Augustus Jessopp, _The Coming of the Friars_ (1913), ch. ii, for a sympathetic treatment of "Village Life Six Hundred Years Ago"; and W.

J. Ashley, _Surveys, Historical and Economic_, for a series of scholarly essays dealing with recent controversies in regard to medieval land-tenure.