ECONOMIC TRENDS AND CONDITIONS IN THE SIXTEENTH CENTURY
It is difficult to generalize about the European economy in the sixteenth
century. Conditions varied considerably from one area to another; and, although
there were forces that were everywhere at work, their intensity and their
impact differed as they affected different regions. Similarly, there were
temporal variations; conditions changed with the passage of time, and the
timetable varied from one area to another.
Keeping these
facts in mind, we may make some general statements. The sixteenth century was
on the whole a time of economic expansion for Europe. The depressed conditions
that had prevailed from the middle of the fourteenth century were giving way,
and the growth before 1350 was being resumed. One sign of this expansion, as
well as a cause of it, was a growth in population. By the sixteenth century,
the ravages of the Black Death and its recurrences were being made up, and the
overall population of Europe had reached its 1350 level and was increasing
beyond that point.
The general
statement that the sixteenth century was a period of economic expansion needs
to be qualified by the recognition that not all areas witnessed the same degree
of growth; in some, indeed, the overall picture is one of recession. The
economy of Europe was becoming truly European. What happened in one country
affected others, and wise businessmen kept abreast not only of economic
activities and problems in the various parts of Europe but also of the numerous
other factors that might affect their businesses. These factors included the
political, diplomatic, and military situations; dynastic arrangements,
including such matters as marriages among ruling families; and, as the split in
the church became deeper, religious matters.
Other important
influences were the voyages of discovery and exploration. Here again the impact
was different for different countries. One of the effects of the voyages
undertaken by the Portuguese, Spanish, English, French, and Dutch was to hasten
the process that had produced them the process, that is, whereby the nations of
the Atlantic seaboard took the place of the Italian city-states as the chief
factors in European trade and economic life in general. Until this time, Europe
had always centered on the Mediterranean; it was the Mediterranean that was the
great axis of trade and civilization, or else the great barrier across which
Christendom faced its enemies. Though it did not cease to be important, a
profound and apparently irrevocable shift in relationships was taking place,
and Europe was beginning to face the Atlantic seaboard. The Italian
city-states, by their failure to unite with one another were becoming the
battlegrounds and dependencies of the great western nations, particularly
Spain; and their economic greatness was passing. The change was gradual; Venice
remained a great state, and Genoese merchants and bankers played a significant
part in the Spanish economy. But the future lay elsewhere.
From the Spanish
Empire in the New World came an influx of precious metals, which had profound
economic effects. The flow became especially important in the second half of
the sixteenth century, and consisted of both gold and silver, with the latter
metal predominating. The Spanish went to great lengths to secure the entire
supply for themselves and prevent any of their precious cargoes from falling
into the hands of their rivals. Each year the plate fleet, bearing the bullion
from the mines of Peru and Mexico, was accompanied to Spain by a convoy of
warships, and during the sixteenth century no other nation ever succeeded in
intercepting this fleet. Francis Drake was able, however, to rob Spanish
treasure in Central America and in the Pacific.
In the middle of
the sixteenth century great deposits of silver were discovered in Mexico and
Peru; in the latter region were the great mines of Potosí, in the area of
modern Bolivia. A new method of extracting the silver from the ore was
developed, and the amount of silver reaching Spain became very great. It was
this bullion, which to a great extent, made possible the foreign and imperial
policies of the last years of Charles V and the reign of Philip II. Because of
these ambitious and costly policies, it proved impossible to keep the gold and
silver in Spain. Much of it was spent to support activities that were not
directly related to Spanish affairs, since both Charles and Philip had
extensive interests outside the country. It was also necessary to export the
precious metals to pay for manufactured goods, because of the neglect of
Spanish industry. Spain also was compelled to import agricultural products
throughout the century. Various causes combined to harm Spanish agriculture.
The mistreatment
of the Moriscos (See Chapter 18), who had been the chief agricultural workers
in the country, was a serious blow. Another harmful influence was the favor
shown to the mesta, the association of sheep-growers of Castile. Since the
mesta was a prolific source of tax revenues, the Spanish monarchs adopted the shortsighted
policy of favoring the sheep-growers at the expense of the farmers. Add to this
the fact that only about 45 percent of the soil of Spain is even modestly
fertile, while only 10 percent can be described as rich, and it becomes clear
why Spain was importing wheat from early in the sixteenth century.
The massive flow
of specie accompanied what has come to be called the Price Revolution a rise in
prices that took place all over Europe, even though it was higher in some
countries than in others. This inflationary trend was especially marked in
Spain and undoubtedly was connected with the influx of gold and silver. The
connection between the quantity of gold and silver in circulation and the rise
of prices was not immediately seen, but during the second half of the century
certain thinkers became aware of the connection. The earliest was a group of
men connected with the Spanish University of Salamanca; better known is the
versatile Frenchman Jean Bodin, whose work was much more widely known and who made
popular the idea that the price inflation was the direct result of the increase
in the money supply.
The same idea has
been put forward, in a much more elaborate and technical form, in the twentieth
century, but it has been challenged in recent years and can no longer be
accepted without serious modifications. The influx of gold and silver may now
be looked on as one factor in the Price Revolution, but far from the only one.
Of the others, perhaps the most important was the growth in population.
The example of
Spain shows that a simple increase in the amount of money was not necessarily
beneficial. However, in countries where agriculture and industry were in a more
flourishing state, and in which the demands of war and foreign policy were not
so all-consuming, the increase in the money supply acted as a stimulus to
economic activity. Even in such cases, however, its effects were unevenly
distributed among the various social classes. Wages rose more slowly than
prices, and wage earners did not share in the benefits of economic expansion as
did their employers, especially the great capitalists.
For centuries
capitalism had been emerging in many fields, and this process was continued,
and accelerated, in the sixteenth century. Here again, different sections of the
economy and different parts of Europe were affected in varying ways and at
varying rates of speed. For our purposes, capitalism may be defined as a system
in which enterprises are not controlled by those who supply the labor. The
greater guilds of Florence are examples of capitalism long before the sixteenth
century, and numerous other examples can be found in Italy, the Low Countries,
and throughout western Europe. Moreover, certain types of enterprise that
required substantial resources and that were conducted on a large scale, with
the concomitant risks, were inevitably capitalistic. This is true, for example,
of shipbuilding and international trade. The printing industry, which existed
in Europe from the fifteenth century, was essentially capitalistic, at least in
the case of the more stable and successful firms. Mining was necessarily a
capitalistic enterprise.
Even agriculture,
the most conservative branch of economic life, the one that responds most
reluctantly to change, was becoming capitalistic in the sixteenth century. The
enclosure movement in England exemplifies this trend. The term enclosure refers
to the enclosing of the open fields and common lands by means of fences or
hedges and converting them to grazing lands for sheep. This process was
stimulated by the great demand, both domestic and foreign, for English wool. It
was this process that brought forth the protest of Thomas More in the Utopia
about lands in which sheep eat men. There was some social dislocation caused by
enclosures; fewer men were required to take care of sheep than were needed for
raising crops, and, therefore, enclosures forced many peasants off the land and
made them vagabonds, sometimes criminals. Such persons were subjected to severe
punishments at the hands of the law in an age that lacked the modern
understanding of social change and its victims.
Wool had been the
chief article of export for England since the thirteenth century, but by 1500 a
shift had occurred. For a long time it had been raw wool that the English sent
abroad to be processed into woolen cloth in foreign countries. However, the
native English woolen manufacturing industry had been developed to the point
where it was now woolen cloth that constituted England's chief export. All
woolen cloth going to the Continent passed through Antwerp, which was,
therefore, the staple port for this product. It was handled by the Merchant
Adventurers, a group of wealthy merchants from various cities in the kingdom,
especially London. For the raw wool England still exported, the staple port was
Calais still in English possession in 1500 and it was handled by the
organization known as the Merchants of the Staple. For high grade wool,
England's chief competition was Spain, where the mesta, as we have seen,
dominated the rural economy. The prosperity of the Spanish sheep-growers was
based on the wool of the Merino sheep, which had first been imported into Spain
from North Africa about 1300. Wool was one of the chief articles of trade and
manufacture throughout western Europe. The Florentine economy, as previously
noted, was largely based on it; and the textile manufactures of the Low
Countries continued to be important. Sometimes the names of familiar articles
of use can remind us of the places that originally specialized in such
articles. For instance the city of Ghent (in French Gand) made and exported
gloves, and our word gauntlet preserves this connection.
The enclosers -
the men who made their land into pastures for sheep - were capitalists. They
employed labor, produced for an international market, and reaped the profits.
The English textile industry shows the advent of capitalism in a different
field. It manifested itself in the so-called putting-out system. Here the
leading figure the capitalist was the merchant who bought the raw material,
which he then distributed put out to the craftsmen who performed the various
operations required to transform it into finished cloth, and then sold it on
the market for a profit.
This system was
also known as the domestic system, because the various workers - carders,
fullers, spinners, weavers and so forth - worked in their homes. In other
places, as in Florence, textile manufacture was carried on by means of a sort
of factory system, with the workers gathered together in large workshops. The
difference here is related to differences in the respective position of the
guilds. In Florence the greater guilds such as the Arte della Lana, or wool
guild were great capitalistic organizations that dominated economic and
political life. In England, however, as in some other places, the guilds were
chiefly concerned with maintaining their exclusive local privileges and
preventing competition among their members, and consequently acting as a
restraint upon the expansion of trade and industry.
To circumvent
these restraints, the textile capitalists found their workers in rural areas,
outside the cities where guilds controlled the economy. This led in some areas
to a decline of the guilds and of the prosperity of the towns in which guilds
were especially strong. This was not true everywhere; in some places guilds
were growing stronger. In France, before the end of the sixteenth century, the
crown ordered all craftsmen to belong to guilds. In this way the government, by
controlling the guilds, could tighten its hold on the economy. One of the most
important, long-term economic and social trends, which had been going on for
centuries, was the decline of serfdom. For this there were numerous reasons. To
open up new lands, as in the "Drive to the East," inducements had to
be offered to peasant cultivators, and freedom was used as such an inducement.
The rise of towns, already noted, often had the effect of giving freedom to
serfs who escaped from the land and took refuge within the town walls. The
labor shortage that followed the Black Death in many areas enhanced the
bargaining position of the peasants who survived, and enabled many to secure
their freedom.
The development of
trade and the increased circulation of money worked in the same direction. As
more products from distant places became available, manorial lords began to
desire money with which to buy them, and to obtain it they were willing to
commute the obligations of their peasants from services and payments in kind to
money rents. The manorial lord thus evolved into a landlord, while the servile
peasant became a rent-paying tenant. The increased circulation of money here
helped the peasant by providing him with the ability to pay his rent. As for
the landlord, he could get his work done by hired labor, which might prove
economically more profitable than the old manorial services. As a result,
serfdom declined very widely in the West though not everywhere and this
development was most pronounced in the same areas in which economic development
had progressed the most. In eastern Europe, including Russia, where society was
overwhelmingly agrarian and dominated by noble landowners, a contrary trend was
taking place; and the social and legal position of peasants was being
depressed.
Accompanying the
changes in commerce, industry, and agriculture and to some extent making them
possible was the continued growth of banking and finance. The greatest
financial power of the sixteenth century was the house of Fugger in Augsburg.
The history of its rise is in itself a sort of synopsis of the development of
the European economy.
The founder of the
family fortunes was Hans Fugger, a weaver who in about 1367 came to Augsburg
from the countryside, where he had probably worked under the domestic system
for an Augsburg merchant engaged in international trade. In the city, he
expanded his activities, importing cotton and selling cloth made by himself and
by other weavers. Soon he began to trade in other wares, and the business was
continued by his descendants. They dealt in fruits, spices, and jewels as well
as textiles, and they became involved in dealings with the Hapsburgs and with
the papacy. The greatest of the Fuggers was Jacob Fugger II, called Jacob
Fugger the Rich (1459-1525). Though the business was already prospering when he
took it over, he greatly expanded it. From 1511 to 1527, under his direction,
the capital of the business rose tenfold (from 196,791 gulden to 2,021,202).
The greatest of Jacob's interests was mining. The family had become involved in
this field as early as 1481, when in return for a loan to a member of the
Hapsburg family, they received mining rights in the Tyrol. The mining
activities of the Fuggers increased in the time of Jacob, who profited in this
respect from the favor shown him by Emperor Maximilian I. He enjoyed important
rights in the silver and copper mines of the Tyrol, the chief source of these
metals before the opening up of the mines in the New World. The Fuggers also
acquired complete control of the copper production of Hungary. In addition to
the mines, they owned the plants that processed the ore, and employed hundreds
of workers. Jacob Fugger attempted, though unsuccessfully, to achieve a world
monopoly in copper and to use his monopoly to keep prices high. He was a
Catholic as a young man he had planned for a while to be a priest and did much
business with the papacy. He completely controlled the financial relationships
of the pope with Germany; this included a monopoly on sending to Rome the
proceeds from indulgences. In this way the activities of the Fuggers were at
least indirectly connected with the early career of Martin Luther. Because of
his importance to the papacy, Jacob was able to influence the appointment of
bishops.
With his far-flung
interests, it was necessary for him to be informed of events throughout Europe.
He had agents in all the main business centers who supplied him with a constant
flow of information, which has been compared to a press service.
Contemporaries, aware of his wealth and power, were frequently opposed to him.
There was a great deal of public sentiment that would have supported legal
restraints against the power of the great merchants, but Jacob Fugger was
protected by the favor of Charles V, to whom he was very valuable, even
indispensable.
It was his
relationship with Charles that involved Fugger in the most famous event of his
career. When Charles became a candidate for the throne of the Holy Roman Empire
upon the death of Maximilian I in 1519, he borrowed a great deal of money from
the Fugger bank in order to influence the electors in his favor. It was
generally believed that these loans were responsible for his success in being
chosen emperor. This is shown in an extraordinary letter of 1523 from Fugger to
the emperor, in an attempt to collect the money Charles owed him. In the letter
Fugger plainly states that without his help, Charles might not have been
elected. As security for the loan, and for later loans to the emperor, Fugger
received some of the revenues of the Spanish crown. Three great Spanish
religious orders were under the control of the king, and for over a century the
house of Fugger controlled the income from their property, which included large
agricultural holdings and mercury mines.
Under Jacob's
nephew Anton the firm reached its height, with a capital of about five million
gulden by 1546. However, the connection with the Hapsburgs proved fatal in the
end to the prosperity of the house. Later in the century and in the succeeding
one, the Hapsburgs were unable to meet their obligations, and most of the
firm's money was lost. Yet the career of the family, and especially of Jacob
Fugger, clearly indicates that the power of capital was making itself felt. In
some ways, Jacob was the most powerful man of his time.
The career of Jacob
Fugger also set in relief the importance of political factors, especially the
state, in the economic life in the sixteenth century. As the national state was
asserting its involvement in, and control of, numerous fields of human
endeavor, its activities more and more affected economic activities as the
governments sought, wisely or otherwise, to direct economic life for the
increase of national strength.
The emerging
nations suffered under handicaps in managing economic policy. One of these lay
in the fact that their financial needs had outgrown their ability to meet them;
that is, a system of raising money that had been devised to meet the needs of a
more or less decentralized feudal society was inadequate for the expanded
requirements of the larger and more concentrated units of political power that
were now becoming dominant. This problem was aggravated by the general
ignorance of economics and public finance.
These factors
combined to bring about such expedients as debasing the coinage, which proved to
be harmful to the economies of the countries concerned. During the Hundred
Years' War, the French crown had resorted on numerous occasions to this
practice. In sixteenth-century England, Henry VIII did the same thing, and it
was not until the reign of Elizabeth I in the second half of the century that
the coinage value was restored. Such a policy militated against a country's
prosperity; in the case of England it helps to explain why, in spite of
encouraging developments in trade, industry, and agriculture, the country
suffered from more or less depressed economic conditions for much of the
century.
Perhaps the most
obvious way in which political events affected the economy was through war. The
wars of the sixteenth century, as will be seen in subsequent chapters, were
frequent; international conflict and civil struggle fill the history of the
period and had a tremendously destructive effect. A few examples will
illustrate the point. The Sack of Rome in 1527 and the Sack of Antwerp
"the Spanish Fury" of 1576 were terrible blows to the cities
affected. Antwerp had been one of the greatest centers of trade and finance;
indeed, it had stood as the key city in the European economy. After the Sack of
1576 although there were additional factors it never regained its former
position.
Similarly, the
wars of Charles V and Philip II of Spain, although they were not fought on
Spanish territory, were financed largely by Spanish, and in particular by
Castilian, resources. They had the effect, again combined with other factors,
of directing the resources of Spain to unproductive uses, of stifling the
development of the economy, and of preventing prosperity. The decline of Spain
from its status as one of the great European powers, a decline from which it
has never recovered, was the result of this as much as of any one factor. Those
countries that enjoyed an abundance of resources and basic economic strength
recovered from the damage done by war. The revolt of the Netherlands was costly
to Spain and to that part of the Low Countries that remained under Spanish
control, but the new nation of the United Netherlands or Dutch republic went on
to become one of the most prosperous of the European states in the next
century. The French Wars of Religion were among the most terrible of the
century because they were primarily civil wars, and they caused great
devastation; but France was, nevertheless, to become the dominant power in
Europe in the seventeenth century.
In a general
sense, the growth of the nation-state, with increasingly unified control over a
territory larger than that of earlier political units, responded well to the
needs of the expanding economy and formed mutual alliances between monarchs and
merchants. Rulers and businessmen had a common interest in peace and security,
in breaking down local and regional restraints on the movement of goods, and in
subduing the nobility. It may be said that kings identified themselves socially
with the nobles, since they were of the same class; and that the wealth of the
great nobility depended largely on the favor of their rulers, who often endowed
them with rich estates to enable them to maintain their social prominence. At
the same time, when it came to political power, monarchs quite often took care
to keep their greatest nobles out of positions of power and to choose as their
closest advisers men of undistinguished origin whose position depended entirely
on royal favor.
For example, two
of the most important advisers of Henry VIII of England were Thomas Wolsey, son
of a butcher and innkeeper, and Thomas Cromwell, whose father was a brewer,
blacksmith, and fuller. Philip II of Spain followed the policy of using great
nobles for positions that took them out of the country, preferring to appoint
professional men and priests to positions of importance nearer home. Philip's
father, Charles V, had relied for many years on a man of humble origin,
Francisco de los Cobos, as the chief figure in the Spanish administration. In
France, where the old nobility noblesse dépe, or the nobility of the sword did
remain important, it was supplemented by the noblesse de robe or nobility of
the robe men of middle-class extraction who owed their noble status to judicial
office. In England, the gentry, a class of non-noble landowners, was becoming
dominant in the nation's affairs; one sign of their increasing importance is
found in the fact that members of this class formed the great majority of the
House of Commons.
What the members
of the non-noble business, professional, and landholding classes had to offer
their rulers was not only loyalty and service but also money. Methods of
acquiring money available to the monarchs of the time were primitive. Taxation
was in its infancy and was not yet regarded as the chief way to acquire funds
for the conduct of public business. In England the monarch was expected to
"live of his own" that is, to meet expenses with such resources as
the income of crown lands and the receipts from customs duties. In time of war
or other critical situations, Parliament might be induced to grant taxes, but
there was a limit to its willingness to part with money. In France, the taille,
a combined income and property tax, was levied throughout the country, but the
rate varied. In the more recently acquired provinces, where representative bodies
estates still existed, these estates served as a means of protecting the
inhabitants of their provinces against excessive royal demands, and the taille
had to be negotiated annually between the royal officials and the estates.
Where the estates no longer survived, the taille was levied directly on the
defenseless inhabitants, and the rate was higher.
Fiscal burdens
were often unequally distributed. In France, the First and Second Estates
clergy and nobility respectively were privileged classes, which means that they
were exempt from many of the payments required of the bulk of the population.
The French church sometimes granted the king a "free gift," which was
a good deal less than it would have paid if the wealth of the church had been
taxed at the rate levied on the unprivileged. In Castile, which supplied the
bulk of the revenues of the king of Spain, the nobles and clergy achieved the
goal of exemption from taxes in the reign of Charles V, and stopped attending
the Cortes the representative assembly so that only delegates from the towns
continued to be present at meetings. Deprived of the support of the other
classes, these townsmen were not strong enough to put up a successful
resistance to the steady growth of royal power.
Thus tax systems
were defective for various reasons. Another problem that arose in connection
with raising taxes was that much of the revenue tended to remain in the pockets
of officials engaged in the collection process. One of the reforms of Sully,
the finance minister of Henry IV of France at the end of the sixteenth century,
was to take measures that would suppress this sort of speculation and bring the
royal revenue to the royal treasury. There were consequently numerous reasons
why the tax structures of the European states failed to meet their expanding
needs and why various other expedients, generally unhealthy, were tried.
Reference has already been made to the debasement of coinage. Another was the
sale of titles of nobility. A good or bad example of the results of this practice
is found in the experience of France, where the sale of titles came in the
sixteenth century to be carried on extensively. For centuries thereafter,
individuals of the middle class who had succeeded financially sought to rise
socially by buying their way into the aristocracy. This was fiscally
disadvantageous in the long run, because elevation into the privileged ranks of
the nobility also meant a large degree of exemption from taxation. In this way,
many persons who were especially well qualified to contribute to the financial
support of the state were relieved of the necessity of carrying their fair
share of the burden.
Not only titles
but also offices were sold. Here again the case of France is especially
instructive. It was customary by the sixteenth century for judicial offices not
only to be sold, but also to be passed down from generation to generation in
the same family. In 1604 this practice received official status when a tax,
called the Paulene, was imposed at the time an office was transferred.
Thereafter an annual fee was paid that made the office virtually the property
of its holder. Interestingly enough, this did not create a body of mediocrities
holding positions for which they were not fitted because the jobs had become
family possessions. On the contrary, there came to exist distinguished legal
families, proud of their status, competent, and conscientious in carrying out
their professional and official duties. Nevertheless, the practice of selling
offices came in time to create a vast body of functionaries with overlapping
positions, who had bought their posts and intended to recoup their investments
at the expense of the citizenry. This oversized bureaucracy also came to hamper
the crown and complicate the problem of efficient government.
Some taxes in
France were farmed; that is, the right to collect them was sold to corporations
of tax-farmers at a fixed sum. The tax-farmers, having bought the privilege of
collecting the tax, were primarily interested in making a profit, and they were
pretty much given a free rein in doing so. In fact, the coercive force of the
state was at their disposal in dealing with recalcitrant taxpayers. These
tax-farmers were often guilty of extortionate practices in squeezing money from
the hapless French taxpayer, who, it must always be remembered, was a peasant
or a town dweller of either the working class or middle class, unprotected by
noble or clerical status.
We have had
occasion to note that governmental officials and functionaries quite generally
managed to acquire for themselves some of the funds that should have gone into
the public treasury. This sort of corruption, or graft, was so widespread that
it is almost unfair to refer to it in such unflattering terms. Public
officials, at least in some cases, were more or less expected to reward
themselves from pubic funds. Cardinal Wolsey, a man of modest origin as we have
seen, acquired wealth of vast proportions; the magnificence with which he
surrounded himself excited the envy of the great nobles of England, and he even
ventured, very imprudently, to rival the king himself in the lavishness of his
entertainments and banquets. In the following century, Cardinal Richelieu,
whose family was not a wealthy one, left so large an estate at his death in
1642 that his will was several pages long. Indeed, Thomas More and Niccol
Machiavelli, so different from one another in many respects, were alike in that
they could both truly assert that they had not profited financially by holding
public office; each seems to have realized that he was different from his
contemporaries in this way.
In the field of
commerce, governments were involved from a number of angles. Customs duties, on
both imports and exports, were used both to regulate trade and to add to
revenues. Organizations of merchants were encouraged by governments, and
officials of government often associated themselves with mercantile enterprises
by investing in them. The companies that were being formed to open up and carry
on trade in the newly discovered parts of the world received charters from
their governments that assured them of monopolies on the trade of specific
areas. In England a number of companies of this nature were formed during the
sixteenth century. The Cathay Company, chartered in 1576 for the Chinese trade,
failed. Others were more successful: the Muscovy Company (1555) for the trade
with Russia; the Eastland Company (1579) for the Scandinavian and Baltic trade;
the Turkey Company (1581), later known as the Levant Company; and, most famous
of all, the English East India Company, chartered in 1600, which was to have a
long and amazing career. The new Dutch republic formed its own East India
Company in 1602. Numerous other companies were chartered by these governments
and others for a long time to come and enjoyed varying degrees of success.
The companies were
formed on the joint-stock principle, which had been familiar in Italy for
centuries, but which was adopted in northern Europe in the sixteenth century.
By this arrangement, ownership was divided into shares of stock, which could be
purchased in small or large quantities. Each individual shareholder was an
owner of the company in proportion to the number of shares he held. The
shareholders chose the officers and directors of the company who carried on business
on behalf of the membership. This form of organization had numerous advantages
over earlier ones. It made it possible for a larger number of persons to
participate in mercantile enterprise, including many who could never have done
so on their own; it facilitated the accumulation of large quantities of
capital; and it lessened individual risk. In the older partnership form of
organization, each partner had unlimited liability for the losses and debts of
the firm. In seeking out and exploiting trade opportunities, joint-stock
companies did important work in exploring new lands and sometimes in the fields
of conquest, settlement, and government. Students of the history of the United
States and of India will be familiar with this fact.
By the sixteenth century,
it may be said that a European economy had emerged in which the various parts
of Europe were bound together by an intricate network of economic and financial
relationships. During the first half of the century and part of the second, the
city of Antwerp was the financial and commercial center for the European
economy, showing once again how the economic center of gravity had shifted from
the Mediterranean to the Atlantic. When the preeminence of Antwerp became a
casualty of the war for Dutch independence, its place was taken for a while by
Amsterdam and later by London.
The sixteenth
century saw not only the rise of new economic powers but also the decline of
old ones. In addition to the gradually decreasing importance of the Italian
city-states, the period also witnessed a falloff in the power and position of
the Hanseatic League, or Hansa towns. This was an organization of cities in
northern Europe, formed for the purpose of carrying on trade; it had been one
of the great powers in the fourteenth and fifteenth centuries. It secured
special trading privileges with numerous countries, fought wars to maintain its
privileges, and had settlements of merchants from London to Novgorod. The chief
city of the league was Lübeck, but many other great cities belonged to it. It
could flourish only in a period when central governments in some areas were
weak enough to permit the existence of virtually self-governing city-states.
With the rise and consolidation of the nations of Europe, its decline was
inevitable. By the sixteenth century its greatest days were over, though many
causes contributed to its decline and the decline did not come suddenly.
Something of the atmosphere of the Hanseatic towns as it came down to our own
century is preserved for us in the writings of a descendant of the prosperous
merchant class of a Hanseatic city, Thomas Mann.
