Chapter IV Industrial Evolution
At all times within the historic period trade and industry have reacted profoundly on social life; and as we near the modern period in our own history the connection becomes more and more decisively determinant. In the oldest culture-history at all known to us, as we have seen, the commercial factor affects everything else; and at no time in European annals do we fail to note some special scene or area in which trade furnishes to politicians special problems. Thus the culture-history of Italy, as we have also seen, is in past epochs inseparably bound up with her commercial history. But as regards the north of Europe, it is in the modern period that we begin specially to recognise trade as playing a leading part in politics, national and international. The Mediterranean tradition is first seen powerfully at work in the history of the Hansa towns: then comes the great development of Flanders, then that of Holland, then that of England, which gained so much from the influx of Flemish and Dutch Protestant refugees in the reign of Philip II, but which was checked in its commercial growth, under Elizabeth and James alike, by their policy of granting monopolies to favourites.
Sir Josiah Child puts “the latter end of Elizabeth’s reign” as the time when England began to be “anything in trade” (New Discourse of Trade, 4th ed. p. 73). Cp. Prof. Busch on English trade under Henry VII, England unter den Tudors, i, 71-85, with Schanz, Englische Handelspolitik, i, 328, where it is stated that in the latter part of the sixteenth century there were 3,000 merchants engaged in the sea trade. This seems extremely doubtful when we note that the whole foreign trade of London was stated in Parliament in 1604 to be in the hands of some 200 citizens (Journals of the House of Commons, May 21, 1604), and the total customs of London amounted to £110,000 a year, as against £17,000 from all the rest of the kingdom. As Hume notes (ch. 45, note), a remonstrance from the Trinity House in 1602 declared that since 1588 the shipping and number of seamen in England had decayed about a third. (Cit. from Anglesey’s Happy Future State of England, p. 128.) This again, however, seems doubtful.
Broadly put, the fact appears to be that after a considerable development of woollen manufacture in the towns during the Wars of the Roses (above, p. 393), when sheep-rearing must have been precarious and wool would be imported, there was a general return to pasturage under the Tudor peace, the towns falling away, with their manufactures. Attempts were made under Henry VIII and Edward VI to develop the English mining industries by means of German workmen and overseers, but apparently with no great success (Ehrenberg, Hamburg und England im Zeit. der Kön. Elisabeth, 1896, pp. 4-6). It was after the persecution of Protestants in the Netherlands under Charles V had driven many tradesmen to England for refuge that manufacturing industry notably revived; and in 1564-65 we find the year’s exports of England reckoned at £68,190 for wool and £896,079 for cloths and other woollen wares; the whole of the rest of the export trade amounting only to £133,665 (Brit. Mus. Lansdowne MS. 10, fol. 121-22, cited by Ehrenberg, p. 8; cp. Cunningham, Industry and Commerce, ii, 82-83; Gibbins, Industrial Hist. of England, 3rd. ed. pp. 132-33.) After the fall of Antwerp, again, much of the commerce of that city fell to the share of England, some of her commercial and artisan population following it (Froude, Hist. of England, ed. 1872, xii, 1-2).
In the same period the commercial life of north Germany, which had hitherto been far more widely developed than that of England (Ehrenberg, pp. 1-11), was thrown back on the one hand by the opening of the new ocean route to the East Indies, which upset the trans-European trade from the Mediterranean, and on the other by the new strifes between the princes and the cities (id. pp. 34-49); and here again English trade came to the front.
The “Merchant Adventurers,” ready enough to accept monopolies for their own incorporations, were free-traders as against other monopolists;1207 and not till all such abuses were abolished could England compete with Holland. And though they were never legally annulled even under the Commonwealth, “as men paid no regard to the prerogative whence the charters of those companies were derived, the monopoly was gradually invaded, and commerce increased by the increase of liberty.”1208 France at times promised to rival both Holland and England; but she at length definitely fell behind England in the race, as Flanders fell behind Holland, by reason of political misdirection. In the middle and latter part of the seventeenth century, all the northern States had their eyes fastened on the shining example of Holland;1209 and commerce, which as an occasion of warfare had since the rise of Christianity been superseded by religion, begins to give the cue for animosities of peoples, rulers, and classes. The last great religious war—if we except the strifes of Russia and Turkey, which are quasi-religious—was the Thirty Years’ War. Its very atrocity doubtless went far to discredit the religious motive,1210 and it ranks as the worst war of the modern world. Commerce, however, for centuries supplied new motives for war to men whose ideas of economics were still at the theological stage.1211 The eternal principle of strife, of human attraction and repulsion, plays through the phenomena of commerce as through those of creed. The profoundly insane lust for gold and silver, which had so largely determined the history of the Roman Empire, definitely shaped that of Spain; and Spain’s example fired the northern nations with whom she came in contact.
Prof. Thorold Rogers is responsible for the strange proposition (Economic Interpretation of History, p. 186; Industrial and Commercial History of England, p. 321) that the chief source of the silver supply of Europe, before the discovery of the New World, was England. He offers nothing but his own conviction in proof of his statement, to which he adds the explanation that the silver in question was extracted from sulphuret of lead. It seems well to point out that there is not a shadow of foundation for the main assertion. That the argentiferous lead mines were worked seems clear; but that they could produce the main European supply without the fact being historically noted is incredible. On the other hand, silver mines were found in Germany in the tenth century and later, and there is reason to attribute to their output a gradual rise of prices before the fifteenth century (Anderson’s History of Commerce, i, 67). In any case, there is no reason to doubt the statement of the historians of the precious metals, that what silver was produced in Europe in the Middle Ages was mostly mined in Spain and Germany. See Del Mar, History of the Precious Metals, 1880, pp. 38-43 and refs.; also Ehrenberg, Hamburg und England im Zeitalter der Königin Elisabeth, 1896, pp. 4, 9; Menzel, Geschichte der Deutschen, Cap. 276, end; and Kohlrausch, History of Germany, Eng. tr. 1844, p. 261.
The direct search for gold as plunder developed into the pursuit of it as price; and wealthier States than Spain were raised by the more roundabout method which Spain disdained.
This was soon recognised by Spanish economists, who probably followed the French physiocrats, as represented in the excellent chapters of Montesquieu on money (cited above, p. 363). See the passage from Bernard of Ulloa (1753) cited by Blanqui, Hist. de l’écon. polit., 2e édit. ii, 28. Cp. Samber, Memoirs of the Dutch Trade, Eng. tr. 1719, pref. Apart from the habits set up by imperialism, the Spaniards were in part anti-industrial because industry was so closely associated with the Moriscoes (Major Hume, Spain, p. 195); and the innumerable Church holidays counted for much. Yet in the first half of the sixteenth century Spain had a great development of town industrial life (Armstrong, Introd. to same vol. pp. 83-84). This is partly attributable to the new colonial trade; but probably more to the connection with Flanders. Cp. Grattan, The Netherlands, pp. 66, 88. About 1670, however, manufacture for export had entirely ceased; the trade of Madrid, such as it was, was mainly in the hands of Frenchmen; the Church and the bureaucracy alone flourished; and although discharged soldiers swarmed in the cities, what harvests there were had to be reaped by the hands of French labourers who came each season for the purpose. Hume, as cited, p. 285. This usage subsisted nearly a century later (Tucker, Essay on Trade, ed. 1756, p. 25)
Holland in the seventeenth century presented to the European world, as we have seen, the new and striking spectacle of a dense population thriving on a soil which could not possibly be made to feed them. “Trade” became the watchword of French statesmanship; and Colbert pressed it against a froward nobility;1212 while in England a generation later it had acquired the deeper rooting that goes with the voluntary activity and self-seeking of a numerous class; and already the gentry freely devoted their younger sons to the pursuits which those of France contemned.1213
The turn seems to have been taken in the most natural way, after Parliament was able to force on James I a stoppage of the practice of granting monopolies. At his accession, the King had sought popularity by calling in and scrutinising the many monopolies granted by Elizabeth, which constituted the main grievance of the time.1214 Soon, however, he conformed to the old usage, which had in some measure the support of Bacon;1215 and in 1621 it was declared that he had multiplied monopolies twentyfold.1216 The most careful historian of the period reports that though they were continually being abused,1217 they were granted on no corrupt motives, but in sheer mistaken zeal for the spread of commerce.1218 It would be more plausible to say that when interests either of purse or of patronage lay in a certain direction, those concerned were very easily satisfied that the interests of commerce pointed the same way. At length, after much dispute, the Lords passed, in 1624,1219 a Monopoly Bill previously passed by the Commons in 1621;1220 and though some of the chief monopolies were left standing, either as involving patents for inventions or as being vested in corporations,1221 mere private trade monopolies were for the future prevented.
It was a triumph of the trading class over the upper, nothing more. As for the corporations, they were as avid of monopolies as the courtiers had ever been; and independent traders hampered by monopolist corporations were only too ready to become monopolist corporations themselves.1222 Under Charles I, for instance, there was set up a chartered company with a monopoly of soap-making, of which every manufacturer could become a member—a kind of chartered “trust,” born out of due time—the price paid to the crown for the privilege being £10,000 and a royalty of £8 on every ton of soap made. For this payment the monopolists received full powers of coercion and the punitive aid of the Star Chamber. After a few years, in consideration of a higher payment, the King revoked the first patent and established a new corporation. Similar monopolies were granted to starch-makers and other producers; the Long Parliament pursuing the same policy, “till monopolies became as common as they had been under James or Elizabeth.”1223
Part of the result was that about 1635 “there were more merchants to be found upon the exchange worth each one thousand pounds and upwards than there were in the former days, before the year 1600, to be found worth one hundred pounds each.”1224 The upper classes, as capitalists and even as traders, were not now likely to remain aloof. But all the while there was no betterment of the lot of the poor. “That our poor in England,” writes Child after the Restoration, “have always been in a most sad and wretched condition... is confessed and lamented by all men.”1225 Child’s theory of the effect of usury laws in the matter is pure fallacy; but his estimate of men’s fortunes is probably more accurate than the statement of the Venetian ambassador in the reign of Mary, that “there were many merchants in London with £50,000 or £60,000 each.”1226 Howell, in 1619,1227 expresses a belief that “our four-and-twenty aldermen may buy a hundred of the richest men in Amsterdam.” Yet, though it was also confessed that among the Dutch, and even in Hamburg and Paris, the poor were intelligently provided for,1228 no such necessity was practically recognised in England,1229 either by Puritan or by Cavalier, though before the Rebellion the administration of Charles had not been apathetic;1230 and a century later there were the same conditions of popular misery and vice, with a new plague of drunkenness added.1231 By that time, too, the corporation monopolies were strangling trade just as the private monopolies had formerly done;1232 while France, which in the latter part of the seventeenth century gave such a stimulus to English and Dutch industry by the suicidal Revocation of the Edict of Nantes, had recovered both population and trade,1233 and was on a commercial footing which, well developed, might have given her the victory over England in the race for empire.
Everywhere in the seventeenth century, however, the new development meant new strife. Protestant England and Holland, Catholic France and Protestant Holland, flew at each other’s throats in quarrels of trade and tariffs; and for the monopoly of the trade in cloves, Dutch and Spanish and English battled as furiously as for constraint and freedom of conscience. The primitively selfish and mistaken notion men had formed of commercial economy was on a level with the religious impulse as it had subsisted from the beginning of Christendom; and even as each Christian sect had felt it necessary to throttle the rest, each nation felt that its prosperity depended on the others’ impoverishment. To spite the Dutch, the Cromwellian party in 1651 passed the Navigation Act, prohibiting all imports of foreign goods save in English ships or those of the nations producing them. In practice it was a total failure, the effect being to injure the English rather than the Dutch trade; but the Dutch themselves, who were fanatical for their own Asiatic monopoly trade, believed it would injure them, and went to war accordingly.
The eulogy of the Navigation Act as “wise” by Adam Smith (put, by the way, with a “perhaps”) is one of his worst mistakes. Roger Coke in 1672 testified (Treatise on Trade, p. 68, cited by M’Culloch) that within two years of the passing of the Act England lost the greater part of the Baltic and Greenland trades; and Sir Josiah Child’s New Discourse of Trade shows in detail that the English by about 1670 or 1690 had lost to the Dutch even much of the trade they formerly had. (See Preface to second and later editions, and compare M’Culloch, note xi to his edition of the Wealth of Nations, and McCullagh, Industrial History, ii, 340.) The one direction in which the Act seems to have been successful was in stimulating shipbuilding and seafaring in the American colonies. (See Prof. Ashley in the Quarterly Journal of Economics, Boston, November, 1899, pp. 4-6.) Joshua Gee, in his Trade and Navigation of Great Britain Considered (1730, 6th ed. p. 113), expressly ascribes a “prodigious increase of our shipping” to “the timber trade between Portugal, etc., and our plantations,” one result being that English ships have “become the common carriers in the Mediterranean, as well as between the Mediterranean, Holland, Hambro’, and the Baltic.” He says nothing of the Navigation Act, but lays stress on the cheap building of ships in New England, and notes (p. 114) that the Dutch habitually hire English ships “to transport their goods from Spain, etc., to Amsterdam, and other places.”
Even among expert merchants there was no true economic science, only a certain empirical knowledge, reduced to rule of thumb. Hence the traders were for ever tending to strangle trade, and the ablest administrators fell into the snare. Everywhere they tended to be possessed by the gross fallacy that they could somehow sell without buying,1234 and so heap up gold and silver; and to secure at least a balance in bullion was considered an absolute necessity. This was the most serious error of the policy of Colbert, who secured a balance of social gain to France by stimulating and protecting shipping and new industries,1235 but failed to learn the lesson that foreign commerce in the end must consist in an exchange of goods. Thus, though he resisted the ruinous methods of Louis XIV,1236 he lent himself to the theory which, next to the hope of making the Netherlands a province of France and so an arm of French naval strength, stimulated the policy of war. By repeatedly raising his tariffs he forced the Dutch to raise theirs; whereupon France went to war. Had he known that the Dutch could not sell to France without buying thence, and vice versa, he would have rested content with establishing his new industries.
M. Dussieux (as cited, p. 127) frames a deplorable demonstration that Holland was impoverishing France and destroying all industry there by selling more articles than she bought. As if any country could go on buying in perpetuity without selling in payment. M. Dussieux goes on to admit that France before Colbert had some great industries, and a great agricultural export trade, as must needs have been. His argument shows the survival of the mercantilist delusion that trade can drain a productive country of its bullion. It is evident that Colbert helped trade more by checking fiscal abuses and promoting canals and roads than by protecting new industries. On the whole he seems to have gravely injured agriculture (id. pp. 89, note, and 133); and Adam Smith’s criticism (Wealth of Nations, bk. iii, ch. ii; bk. iv, ch. ix) remains valid. He was “imposed upon by the sophistry of merchants and manufacturers, who are always demanding a monopoly against their countrymen,” and by prohibiting export of grain he depressed agriculture, the natural and facile industry of France, and so promoted the rural misery which at length inspired the Revolution. It was essentially by way of reaction against his error that the Physiocrats fell into theirs—the denial that any industry was productive except agriculture. Even if he had not prohibited export of grain, his import duties, in so far as they excluded foreign products, would have checked the grain exports which had formerly paid for these. Thus, as M. Dussieux admits, Colbert failed to secure prosperity for the peasantry while he was helping industry. (Cp. Brandt, Beiträge, as cited.) Colbert in the nineteenth century had the benefit of the doctrine that monarchism prepared for democracy in France, and there is some truth in the protest of Morin that on this and other grounds he became the object of “un culte ridicule qui brave les notions les plus élémentaires de l’économie publique” (Origines de la démocratie, Introd.—written in 1854—p. 48). Morin goes so far as to charge on Colbert equally with Louvois the misfortunes of France under Louis XIV (id. pp. 88, 120).
Of course the rival nations were equally self-seeking. Prohibitive tariffs were necessarily lowest with the most specifically commercial State, the Dutch; and the free trade doctrine began early to be heard in England.
E.g., from Dudley North. Macaulay, ed. cited, i, 253. See the quotations in M’Culloch, as above cited. Pepys, in his Diary, under date 1664, February 29, tells how Sir Philip Warwick expounded to him the “paradox” that it does not impoverish the nation to export less than it imports. For earlier instances of right thinking on the subject see the author’s Trade and Tariffs, p. 65 sq. The repeal in 1663 of statutes against exporting bullion was carried in the interests of the East India Company, and apparently on a false theory; see it in Child, New Discourse, p. 173. Cp. Shaftesbury, Characteristics, Treatise II, pt. i, § 2, end, as to the advantage of a “free port.” This had been partially insisted on, as we have seen, by the Merchant Adventurers in the days of Elizabeth and James; and Raleigh strongly pressed it in his Observations touching Trade and Commerce with the Hollander and other Nations, presented to James. Works, ed. 1829, viii, 356-57. Raleigh, however, was a bullionist.
But whether rulers leant in the direction of free trade or strove to heap up import duties as did France, they went to war for monopolies and for imposts. Holland had as determinedly sought the ruin of Antwerp as England did that of Holland. And as the race-principle embroiled nations on the score of trade, so the class-principle set up new feuds of class in all the nations concerned. The new trading class fought for its own hand as the trade gilds of the Middle Ages had done; and the fact of its connections with the gentry did not prevent animosity between gentry and traders or investors in the mass. Thus were the old issues complicated, for good or for ill.
Prof. Cunningham (English Industry and Commerce, ed. 1892, ii, 16-17) offers an unexpected defence of the “Mercantile System,” under which bullion was striven for as “the direct means of securing power.” “The wisdom of the whole scheme,” he writes, “is apparently justified by the striking development of national power which took place during the period when it lasted. England first outstripped Holland and then raised an empire in the East on the ruins of French dependencies.” After this argument Dr. Cunningham falters, observing: “But even if the logic of facts seems to tell in its favour, there is a danger of fallacy: success was attained, but how far was it due to the working of coal, and the age of mechanical invention, and how far to the policy pursued?” There is really no need to suppose such an antinomy between “the logic of facts” and any other logic. The only legitimate logic of facts is that which takes in all the facts. Now, seeing that France was as much devoted as England to the Mercantile System, and that in the terms of the case she failed, it cannot have been the Mercantile System that secured success to England. The logic of facts excludes the hypothesis. As for the “outstripping” of Holland, a country with perhaps a fourth of England’s population in the eighteenth century, we have seen that the Mercantile System, as operating in the Navigation Act, totally failed to attain its purpose, and that Dutch decadence was largely due to monopolies—i.e., to acceptance of the Mercantile System. The working of coal, on the other hand, was a real wealth-making force, certainly conducive to naval and other empire. But more allowance is to be made for the fact that France had heavy continental quarrels on hand while she was fighting England in Asia and America.
If at this stage we seek to discover the manner of life of the working class in England, we shall find it hard to reach a confident conception. Many phrases in Shakespeare remind us that as towns grew there grew with them a nondescript semi-industrial class, untrained for any regular industry and unable to subsist without industry of some sort. In the latter part of the seventeenth century we seem to see a process of elimination at work by which the organisms capable of enduring toil are selected from a mass to which such toil was too irksome. In 1668 Sir Josiah Child writes that the English poor in a cheap year “will not work above two days in a week; their humour being such that they will... just work so much and no more as may maintain them in that mean condition to which they have been accustomed.” That, accordingly, a high price for bread was a good thing, as forcing the poor to industry, became the standing doctrine of such publicists as Petty.1237 In the next generation, Mandeville puts as indisputable the statement that “the poor” will not work any more than they need to maintain bare existence. When, late in the eighteenth century, we find Adam Smith, with French testimony to support him, denying that the pinch of poverty makes for industry, we are left in doubt as to whether the improvement came by a positive dying out of the lazy types through the new plague of alcoholism, or through the gradual exemplary force of a higher standard of comfort as seen among the more industrious. Probably both influences were at work. But it was at best in a grimy under-world of degeneracy and hunger, squalor and riot, that there were laid the roots of the new mechanical industries which were to make England the chief mill and counter of Europe.1238 And when we find one of the acutest observers of the next generation arguing that a large body of the needy poor is the right and necessary basis of industry and public wealth,1239 we realise that the new life was to be as hard for the toilers as that of any earlier age.