The success of the royal policy in England and France presents a marked contrast to the failure of the Spanish monarch, whose ultimate aim was nevertheless the same; each prince desired to raise the whole land over which he ruled into the highest pitch of prosperity. It was impossible for Charles V or Philip II to accumulate the treasure which was so necessary for the country, and with the aid of which each hoped in his turn to become the most powerful ruler in the world. The American silver could not be kept in Spain, and there was so little native capital for use in that widely extended empire, that it declined. England, on the other hand, was consciously developed by the great middle class, who were ready to invest comparatively small sums in promising undertakings, while the government gave active support to the foreign capitalists and workers whose experience was so valuable. The English minister, Cecil, nursed the realm as carefully as if he were the steward of a private estate, but he was hampered by the poverty of the Crown, and his great work lay in stimulating other people to take the initiative and trust to themselves for their own remuneration.
As we have just seen the revival of France was due to the capital in the hands of the King, whose measures were largely innovations and experiments carried out in spite of opposition. In England the development of the country was carried on by the people, in France for the people; but both countries attained a high degree of national prosperity. Huge empires, like those of Macedonia and Rome, had already been familiar in the ancient world, but nations constituted like France and England were something quite new. The intimate union of all parts of such large areas and the interdependence of each part on the other, as well as the conscious subordination of local interests to the larger idea of “the realm,”—these were conceptions not merely distinct from the civic policy of the Middle Ages but equally foreign to the idea of the great polities of ancient days. The nation is not only a new phenomenon, but it is the characteristic feature of what we are wont to call modern times; and hence the rise of Holland, as the heir of Portugal and a victor over Spain, the increased importance of England and the revival of France, mark an era in economic history. The transition from the medieval to the modern age has been accomplished; we are no longer concerned with the struggle of town with town, but of nation with nation, each trying to secure the greatest material advantages for its own land and its own people. The chief economic interest of the subsequent century lies in the study of the means taken by these three rivals to build up their own strength and to weaken their adversaries. Each had entered on a career of material prosperity, and each had adapted its system with more or less success to modern industrial and commercial conditions. It is worth while, however, to cast a retrospecting glance at some of the places which had been distanced in the race for wealth, and to enquire why so many of the cities which had attained to great prosperity in the fourteenth and fifteenth centuries failed to share in the extraordinary impulse which was given to progress by the discovery of the New World and its treasures. Some of them did not advance, and others distinctly declined.
The change of commercial routes was the most obvious reason for the decadence of some of the magnificent cities of the Middle Ages. Commerce takes the path of the least resistance, and none of the overland routes to the East or passes across the Alps could compare with the convenience of an unbroken voyage from the Moluccas to Amsterdam. The Italian and South-German towns which had been occupied with the Eastern trade, and the Baltic and Lithuanian cities which had been the great depots of the Hanse League, ceased to be the chief centres of commerce, and from the mere fact of their geographical position were left on a siding. In the case of Stettin and other towns which had been merely mercantile, and where there had been no success in developing industry as subsidiary to commerce, the decline of trade was a desperate blow. The towns which had developed an industrial life, Cologne and Strassburg, Augsburg and Nürnberg, Venice, Genoa, and Florence, did indeed suffer severely. They lost their facilities for access to the best markets or for the most convenient purchase of food and materials; but they were able to re-adapt themselves to their diminished opportunities, and to utilise their resources for the maintenance of a prosperous though less notable economic life.
Certain social conditions prevented some communities from adopting innovations which were necessary for maintaining the continuance of their prosperity. Where society had been very definitely organised and a social system was stereotyped, many insensible hindrances opposed themselves to modification of any kind. Success in the new order of things depended on adaptability. Capitalists were organising industry on other lines, and opening up wider commercial connexions. Those who were unable to adopt the modern methods of business were necessarily distanced in the race. The industrial centres where the craft-gilds had been most vigorous and had retained their power most successfully, were at a positive disadvantage in entering on competition with neighbours who had imposed no such restrictions. Modern nations have incorporated the towns which were formerly so powerful and which failed to maintain the leading position they once held; this has been in part at all events because their very success under the old system rendered them incapable of giving a cordial welcome to the new.
In conjunction with this social obstacle to progress may be specially noticed the antagonism which was felt in many quarters to the introduction or the retention of alien and seemingly incongruous elements of population. The strength of the capitalist system consists in its ability to utilise the most varied elements. Both Holland, and to a less extent England, in receiving immigrants from other countries, increased their industrial resources by that most precious of all national possessions,—great skill in industrial employments of every kind. Varieties of type and of intelligence have been of the greatest importance in introducing new methods of business and improved processes of production; France and Spain, on the contrary, suffered severely from the policy which insisted on assimilating the whole population to conformity in religious and political thought.
Such were the trading and social conditions which placed capital at a disadvantage, and which determined those who controlled it to seek opportunities for investment in other lands. But there was one occupation throughout Europe which offered little attraction to the enterprising capitalist, and which therefore continued to lie almost outside the sphere of his operations. The agricultural system on the Continent in general was highly stereotyped. In Germany and Hungary serfdom remained; in Spain, France, and Italy vestiges of natural economy survived. Such a reorganisation of the population as would have produced better results presented great difficulties; while the introduction of improved methods often involved an outlay of capital and a diminished rate of return. The small proprietary and cultivating peasantry were destitute of the means of introducing improvements, even if the value of the change had been apparent. Some public works for the benefit of agriculture were undertaken by the Crown both in Prance and Spain; but it was only in Holland where there was a plethora of capital, and in England where the trade of the farmer was encouraged, that private capitalists became interested in the improvement of the soil. There was, as a consequence, little alteration in the condition of the rural population, and the first changes which occurred with the gradual introduction of capitalism were often for the worse. It was left for the social and political revolutions of the last hundred years to sweep away the system which had been previously left untouched by economic progress.
These were the general conditions that determined the ultimate distribution of the treasure which was brought from the New World. Transferred in the sixteenth century, partly in response to military requirements, partly by successful depredation, and partly by mere smuggling, this treasure sooner or later found its way into the hands of agents of commerce, who desired to use it as capital and who employed it in the places and avocations where they had most reason to expect a large profit. The actual return depended partly on social, partly on physical conditions; but the results that followed were curious and unequal, for while some of the more backward countries moved rapidly forward, making huge strides in wealth and material prosperity, whole classes in every community and large districts of