II + 

The Economic Revolution + 

The religious revolution of the age came on a world heaving with the vastest economic crisis that Europe had experienced since the fall of Rome. Art and scientific curiosity and technical skill, learning and statesmanship, the scholarship which explored the past and the prophetic vision which pierced the future, had all poured their treasures into the sumptuous shrine of the new civilization. Behind the genii of beauty and wisdom who were its architects there moved a murky, but indispensable, figure. It was the demon whom Dante had met muttering gibberish in the fourth circle of the Inferno, and whom Sir Guyon was to encounter three centuries later, tanned with smoke and seared with fire, in a cave adjoining the mouth of hell. His uncouth labors quarried the stones which Michelangelo was to raise, and sank deep in the Roman clay the foundations of the walls to be adorned by Raphael. + 

For it was the mastery of man over his environment which heralded the dawn of the new age, and it was in the stress of expanding economic energies that this mastery was proved and won. Like sovereignty in a feudal society, the economic efforts of the Middle Ages, except in a few favored spots, had been fragmentary and decentralized. Now the scattered raiders were to be organized and disciplined; the dispersed and irregular skirmishes were to be merged in a grand struggle, on a front which stretched from the Baltic to the Ganges and from the Spice Islands to Peru. Every year brought the news of fresh triumphs. The general who marshaled the host and launched the attack was economic power. + 

Economic power, long at home in Italy, was leaking through a thousand creeks and inlets into western Europe, for a century before, with the climax of the great Discoveries, the flood came on breast-high. Whatever its truth as a judgment on the politics of the fifteenth century, the conventional verdict on its futility does scanty justice to its economic significance. It was in an age of political anarchy that the forces destined to dominate the future tried their wings. The era of Columbus and Da Gama was prepared by the patient labor of Italian cartographers and Portuguese seamen, as certainly as was that of Crompton and Watt by the obscure experiments of nameless predecessors. + 

The master who set the problem that the heroes of the age were to solve was material necessity. The Europe of the earlier Middle Ages, like the world of the twentieth century, had been a closed circle. But it had been closed, not by the growth of knowledge, but by the continuance of ignorance; and, while the latter, having drawn the whole globe into a single economic system, has no space left for fresh expansion, for the former, with the Mediterranean as its immemorial pivot, expansion had hardly begun. Tapping the wealth of the East by way of the narrow apertures in the Levant, it resembled, in the rigidity of the limits imposed on its commercial strategy, a giant fed through the chinks of a wall. + 

As was the general scheme, so were the details; inelastic in its external, Europe was hardly more flexible in its internal, relations. Its primary unit had been the village; and the village, a community of agrarian shareholders fortified by custom, had repressed with a fury of virtuous unanimity the disorderly appetites which menaced its traditional routine with the evil whose name is Change. Beyond the village lay the greater, more privileged, village called the borough, and the brethren of borough and gild had turned on the foreign devil from upland and valley a face of flint. Above both were the slowly waking nations. Nationalism was an economic force before nationality was a political fact, and it was a sound reason for harrying a competitor that he was a Florentine or a man of the Emperor. The privileged colony with its depot, the Steelyard of the Hanseatic League, the Fondaco Tedesco of the south Germans, the Factory of the English Merchant Adventurers, were but tiny breaches in a wall of economic exclusiveness. Trade, as in modern Turkey or China, was carried on under capitulations. + 

This narrow framework had been a home. In the fifteenth century it was felt to be a prison. Expanding energies pressed against the walls; restless appetites gnawed and fretted wherever a crack in the surface offered room for erosion. Long before the southward march of the Turks cut the last of the great routes from the East, the Venetian monopoly was felt to be intolerable. Long before the plunder of Mexico and the silver of Potosi flooded Europe with treasure, the mines of Germany and the Tyrol were yielding increasing, if still slender, streams of bullion, which stimulated rather than allayed its thirst. It was not the lords of great estates, but eager and prosperous peasants, who in England first nibbled at commons and undermined the manorial custom, behind which, as behind a dyke, their small savings had been accumulated. It was not great capitalists, but enterprising gildsmen, who began to make the control of the fraternity the basis of a system of plutocratic exploitation, or who fled, precocious individualists, from the fellowship of borough and craft, that they might grow to what stature they pleased in rural isolation. It was not even the Discoveries which first began the enormous tilt of economic power from south and east to north and west. The records of German and English trade suggest that the powers of northern Europe had for a century before the Discoveries been growing in wealth and civilization, and for a century after them English economic development was to be as closely wedded to its continental connections as though Díaz had never rounded the Cape, nor Columbus praised Heaven for leading him to the shores of Zayton and Guinsay. First attempted as a counterpoise to the Italian monopolist, then pressed home with ever greater eagerness to turn the flank of the Turk, as his stranglehold on the eastern commerce tightened, the Discoveries were neither a happy accident nor the fruit of the disinterested curiosity of science. They were the climax of almost a century of patient economic effort. They were as practical in their motive as the steam-engine. + 

The result was not the less sensational because it had been long prepared. Heralded by an economic revolution not less profound than that of three centuries later, the new world of the sixteenth century took its character from the outburst of economic energy in which it had been born. Like the nineteenth century, it saw a swift increase in wealth and an impressive expansion of trade, a concentration of financial power on a scale unknown before, the rise, amid fierce social convulsions, of new classes and the depression of old, the triumph of a new culture and system of ideas amid struggles not less bitter. + 

It was an age of economic, not less than of political, sensations, which were recorded in the letter-books of business men as well as in the state papers of Governments. The decline of Venice and of the south German cities which had distributed the products that Venice imported, and which henceforward must either be marooned far from the new trade routes or break out to the sea, as some of them did, by way of the Low Countries; the new economic imperialism of Portugal and Spain; the outburst of capitalist enterprise in mining and textiles; the rise of commercial companies, no longer local but international, and based, not merely on exclusive privileges, but on the power of massed capital to drive from the field all feebler competitors; a revolution in prices which shattered all customary relationships; the collapse of medieval rural society in a nightmare of peasants’ wars; the subjection of the collegiate industrial organization of the Middle Ages to a new money-power; the triumph of the State and its conquest, in great parts of Europe, of the Church⁠—all were crowded into less than two generations. A man who was born when the Council of Basel was sitting saw also, if he lived to a ripe old age, the dissolution of the English monasteries. At the first date Portuguese explorers had hardly passed Sierra Leone; at the second Portugal had been the master of an Indian Empire for almost a generation. In the intervening three-quarters of a century the whole framework of European civilization had been transformed. + 

Compared with the currents which raced in Italy, or Germany, or the Low Countries, English life was an economic backwater. But even its stagnant shallows were stirred by the eddy and rush of the continental whirlpool. When Henry VII came to the throne, the economic organization of the country differed but little from that of the age of Wyclif. When Henry VIII died, full of years and sin, some of the main characteristics which were to distinguish it till the advent of steam-power and machinery could already, though faintly, be descried. The door that remained to be unlocked was colonial expansion, and forty years later the first experiments in colonial expansion had begun. + 

The phenomenon which dazzled contemporaries was the swift start into apparent opulence, first of Portugal and then of Spain. The nemesis of parasitic wealth was not discerned, and it was left for the cynical rationalism of an ambassador of that commercial republic, in comparison with whose hoary wisdom the new plutocrats of the West were meddlesome children, to observe that the true mines of the Spanish Empire lay, not in America, but in the sodden clay of the waterlogged Netherlands. The justice of the criticism was revealed when Spain, a corpse bound on the back of the most liberal and progressive community of the age, completed her own ruin by sacking the treasury from which, far more than from Potosi, her wealth had been drawn. But the beginnings of that long agony, in which the powerhouse of European enterprise was to be struck with paralysis, lay still in the future, and later generations of Spaniards looked back with pardonable exaggeration on the closing years of Charles V as a golden age of economic prosperity. Europe as a whole, however lacerated by political and religious struggles, seemed to have solved the most pressing of the economic problems which had haunted her in the later Middle Ages. During a thousand years of unresting struggle with marsh and forest and moor she had colonized her own waste places. That tremendous achievement almost accomplished, she now turned to the task of colonizing the world. No longer on the defensive, she entered on a phase of economic expansion which was to grow for the next four hundred years, and which only in the twentieth century was to show signs of drawing towards its close. Once a year she was irrigated with the bullion of America, once a year she was enriched with a golden harvest from the East. The period of mere experiment over, and the new connections firmly established, she appeared to be in sight of an economic stability based on broader foundations than ever before. + 

Portugal and Spain held the keys of the treasure-house of East and West. But it was not Portugal, with her tiny population, and her empire that was little more than a line of forts and factories 10,000 miles long, nor Spain, for centuries an army on the march, and now staggering beneath the responsibilities of her vast and scattered empire, devout to fanaticism, and with an incapacity for economic affairs which seemed almost inspired, who reaped the material harvest of the empires into which they had stepped, the one by patient toil, the other by luck. Gathering spoils which they could not retain, and amassing wealth which slipped through their fingers, they were little more than the political agents of minds more astute and characters better versed in the arts of peace. Every period and society has some particular center, or institution, or social class, in which the characteristic qualities of its genius seem to be fixed and embodied. In the Europe of the early Renaissance the heart of the movement had been Italy. In the Europe of the Reformation it was the Low Countries. The economic capital of the new civilization was Antwerp. The institution which best symbolized its eager economic energies was the international money-market and produce-exchange. Its typical figure, the paymaster of princes, was the international financier. + 

Before it was poisoned by persecution, revolution and war, the spirit of the Netherlands found its purest incarnation in Erasmus, a prophet without sackcloth and a reformer untouched by heat or fury, to the universal internationalism of whose crystal spirit the boundaries of States were a pattern scrawled to amuse the childish malice of princes. Of that cosmopolitan country, destined to be the refuge of the international idea when outlawed by every other power in Europe, Antwerp, “a home common to all nations,” was the most cosmopolitan city. Made famous as a center of learning by Plantin’s press, the metropolis of painting in a country where painting was almost a national industry, it was at once the shrine to which masters like Cranach, Dürer and Holbein made their pilgrimage of devotion, and an asylum which offered to the refugees of less happy countries a haven as yet undisturbed by any systematic campaign to stamp out heresy. In the exuberance of its intellectual life, as in the glitter of its material prosperity, the thinker and the reformer found a spiritual home, where the energies of the new age seemed gathered for a bound into that land of happiness and dreams, for the scene of which More, who knew his Europe, chose as the least incredible setting the garden of his lodgings at Antwerp. + 

The economic preeminence of Antwerp owed much to the industrial region behind it, from which the woollen and worsteds of Valenciennes and Tournai, the tapestries of Brussels and Oudenarde, the iron of Namur, and the munitions of the Black Country round Liège, poured in an unceasing stream on to its quays. But Antwerp was a European, rather than a Flemish, metropolis. Long the competitor of Bruges for the reception of the two great currents of trade from the Mediterranean and the Baltic, which met in the Low Countries, by the last quarter of the fifteenth century she had crushed her rival. The Hanse League maintained a depot at Antwerp; Italian banking firms in increasing numbers opened businesses there; the English Merchant Adventurers made it the entrepôt through which English cloth, long its principal import, was distributed to northern Europe; the copper market moved from Venice to Antwerp in the nineties. Then came the great Discoveries, and Antwerp, the first city to tap the wealth, not of an inland sea, but of the ocean, stepped into a position of unchallenged preeminence almost unique in European history. The long sea-roads which ran east and west met and ended in its harbors. The Portuguese Government made it in 1503 the depot of the Eastern spice trade. From the accession of Charles V it was the commercial capital of the Spanish Empire, and, in spite of protests that the precious metals were leaving Spain, the market for American silver. Commerce, with its demand for cheap and easy credit, brought finance in its train. The commercial companies and banking-houses of south Germany turned from the dwindling trade across the Alps, to make Antwerp the base for financial operations of unexampled magnitude and complexity. + 

In such an economic forcing-house new philosophies of society, like new religious creeds, found a congenial soil. Professor Pirenne has contrasted the outlook of the medieval middle class, intent on the conservation of corporate and local privileges, with that of the new plutocracy of the sixteenth century, with its international ramifications, its independence of merely local interests, its triumphant vindication of the power of the capitalist to dispense with the artificial protection of gild and borough and carve his own career. “No one can deny,” wrote the foreign merchants at Antwerp to Philip II, in protest against an attempt to interfere with the liberty of exchange transactions, “that the cause of the prosperity of this city is the freedom granted to those who trade there.” Swept into wealth on the crest of a wave of swiftly expanding enterprise, which a century before would have seemed the wildest of fantasies, the liberal bourgeoisie of Antwerp pursued, in the teeth of all precedents, a policy of practical individualism, which would have been met in any other city by rebellion, making terms with the levelling encroachments of the Burgundian monarchy, which were fought by their more conservative neighbors, lowering tariffs and extinguishing private tolls, welcoming the technical improvements which elsewhere were resisted, taming the turbulent independence of the gilds, and throwing open to alien and citizen alike the new Exchange, with its significant dedication: Ad usum mercatorum cuiusque gentis ac linguae. + 

For, if Antwerp was the microcosm which reflected the soul of commercial Europe, the heart of Antwerp was its Bourse. The causes which made financial capitalism as characteristic of the age of the Renaissance, as industrial capitalism was to be of the nineteenth century, consisted partly in the mere expansion in the scale of commercial enterprise. A steady flow of capital was needed to finance the movement of the produce handled on the world-market, such as the eastern spice crop⁠—above all pepper, which the impecunious Portuguese Government sold in bulk, while it was still on the water, to German syndicates⁠—copper, alum, the precious metals, and the cloth shipped by the English Merchant Adventurers. The cheapening of bullion and the rise in prices swelled the profits seeking investment; the growth of an international banking system mobilized immense resources at the strategic points; and, since Antwerp was the capital of the European money-market, the bill on Antwerp was the commonest form of international currency. Linked together by the presence in each of the great financial houses of the Continent, with liquid funds pouring in from mines in Hungary and the Tyrol, trading ventures in the East, taxes wrung from Spanish peasants, speculations on the part of financiers, and savings invested by the general public, Antwerp, Lyons, Frankfurt and Venice, and, in the second rank, Rouen, Paris, Strasbourg, Seville and London, had developed by the middle of the century a considerable class of financial specialists, and a financial technique, identical, in all essentials, with that of the present day. They formed together the departments of an international clearing-house, where bills could be readily discounted, drafts on any important city could be obtained, and the paper of merchants of almost every nationality changed hands. + 

Nourished by the growth of peaceful commerce, the financial capitalism of the age fared not less sumptuously, if more dangerously, at the courts of princes. Mankind, it seems, hates nothing so much as its own prosperity. Menaced with an accession of riches which would lighten its toil, it makes haste to redouble its labors, and to pour away the perilous stuff, which might deprive of plausibility the complaint that it is poor. Applied to the arts of peace, the new resources commanded by Europe during the first half of the sixteenth century might have done something to exorcise the specters of pestilence and famine, and to raise the material fabric of civilization to undreamed-of heights. Its rulers, secular and ecclesiastical alike, thought otherwise. When pestilence and famine were ceasing to be necessities imposed by nature, they reestablished them by political art. + 

The sluice which they opened to drain away each new accession of superfluous wealth was war. “Of all birds,” wrote the sharpest pen of the age, “the eagle alone has seemed to wise men the type of royalty⁠—not beautiful, not musical, not fit for food, but carnivorous, greedy, hateful to all, the curse of all, and, with its great powers of doing harm, surpassing them in its desire of doing it.” The words of Erasmus, uttered in 1517, were only too prophetic. For approximately three-quarters both of the sixteenth and of the seventeenth centuries, Europe tore itself to pieces. In the course of the conflict the spiritual fires of Renaissance and Reformation alike were trampled out beneath the feet of bravos as malicious and mischievous as the vain, bloody-minded and futile generals who strut and posture, to the hateful laughter of Thersites, in the most despairing of Shakespeare’s tragedies. By the middle of the sixteenth century the English Government, after an orgy of debasement and confiscation, was in a state of financial collapse, and by the end of it Spain, the southern Netherlands including Antwerp, and a great part of France, including the financial capital of southern Europe, Lyons, were ruined. By the middle of the seventeenth century wide tracts of Germany were a desert, and by the end of it the French finances had relapsed into worse confusion than that from which they had been temporarily rescued by the genius of Colbert. The victors compared their position with that of the vanquished, and congratulated themselves on their spoils. It rarely occurred to them to ask what it would have been, had there been neither victors nor vanquished, but only peace. + 

It is possible that the bankruptcies of Governments have, on the whole, done less harm to mankind than their ability to raise loans, and the mobilization of economic power on a scale unknown before armed the fierce nationalism of the age with a weapon more deadly than gunpowder and cannon. The centralized States which were rising in the age of the Renaissance were everywhere faced with a desperate financial situation. It sprang from the combination of modern administrative and military methods with medieval systems of finance. They entrusted to bureaucracies work which, if done at all, had formerly been done as an incident of tenure, or by boroughs and gilds; officials had to be paid. They were constantly at war; and the new technique of war, involving the use of masses of professional infantry and artillery⁠—which Rabelais said was invented by the inspiration of the devil, as a counterpoise to the invention of printing inspired by God⁠—was making it, as after 1870, a highly capitalized industry. Government after Government, undeterred, with rare exceptions, by the disasters of its neighbors, trod a familiar round of expedients, each of which was more disastrous than the last. They hoarded treasure, only to see the accumulations of a thrifty Henry VII or Frederick III dissipated by a Henry VIII or a Maximilian. They debased the currency and ruined trade. They sold offices, or established monopolies, and crushed the taxpayer beneath a load of indirect taxation. They plundered the Church, and spent gorgeously as income property which should have been treated as capital. They parted with Crown estates, and left an insoluble problem to their successors. + 

These agreeable devices had, however, obvious limits. What remained, when they were exhausted, was the money-market, and to the rulers of the money-market sooner or later all States came. Their dependence on the financier was that of an Ismail or an Abdul, and its results were not less disastrous. Naturally, the City interest was one of the great Powers of Europe. Publicists might write that the new Messiah was the Prince, and reformers that the Prince was Pope. But behind Prince and Pope alike, financing impartially Henry VIII, Edward VI and Elizabeth, Francis, Charles and Philip, stood in the last resort a little German banker, with branches in every capital in Europe, who played in the world of finance the part of the condottieri in war, and represented in the economic sphere the morality typified in that of politics by Machiavelli’s Prince. Compared with these financial dynasties, Hapsburgs, Valois and Tudors were puppets dancing on wires held by a money-power to which political struggles were irrelevant except as an opportunity for gain. + 

The financier received his payment partly in cash, partly in concessions, which still further elaborated the network of financial connections that were making Europe an economic unity. The range of interests in which the German banking-houses were involved is astonishing. The Welsers had invested in the Portuguese voyage of 1505 to the East Indies, financed an expedition, half commercial, half military, to Venezuela in 1527, were engaged in the spice trade between Lisbon, Antwerp and south Germany, were partners in silver and copper mines in the Tyrol and Hungary, and had establishments, not only at Lisbon and Antwerp, but in the principal cities of Germany, Italy and Switzerland. The careers of the Hochstetters, Haugs, Meutings and Imhofs were much the same. The Fuggers, thanks to judicious loans to Maximilian, had acquired enormous concessions of mineral property, farmed a large part of the receipts drawn by the Spanish Crown from its estates, held silver and quicksilver mines in Spain, and controlled banking and commercial businesses in Italy, and, above all, at Antwerp. They advanced the money which made Albrecht of Brandenburg archbishop of Mainz; repaid themselves by sending their agent to accompany Tetzel on his campaign to raise money by indulgences and taking half the proceeds; provided the funds with which Charles V bought the imperial crown, after an election conducted with the publicity of an auction and the morals of a gambling hell; browbeat him, when the debt was not paid, in the tone of a pawnbroker rating a necessitous client; and found the money with which Charles raised troops to fight the Protestants in 1552. The head of the firm built a church and endowed an almshouse for the aged poor in his native town of Augsburg. He died in the odor of sanctity, a good Catholic and a Count of the Empire, having seen his firm pay 54 percent for the preceding sixteen years. + 