Chapter II: The Commercial Revolution (2)

Popular notions that the waters of the tropics boiled, that demons and monsters awaited explorers to the westward, and that the earth was a great flat disk, did not pass current among well-informed geographers. Especially since the revival of Ptolemy's works in the fifteenth century, learned men asserted that the earth was spherical in shape, and they even calculated its circumference, erring only by two or three thousand miles. It was maintained repeatedly that the Indies formed the western boundary of the Atlantic Ocean, and that consequently they might be reached by sailing due west, as well as by traveling eastward; but at the same time it was believed that shorter routes might be found northeast of Europe, or southward around Africa.

[Sidenote: Navigation]

Along with this general knowledge of the situation of continents, the sailors of the fifteenth century had learned a good deal about navigation. The compass had been used first by Italian navigators in the thirteenth century, mounted on the compass card in the fourteenth. Latitude was determined with the aid of the astrolabe, a device for measuring the elevation of the pole star above the horizon. With maps and accurate sailing directions (_portolani_), seamen could lose sight of land and still feel confident of their whereabouts. Yet it undoubtedly took courage for the explorers of the fifteenth century to steer their frail sailing vessels either down the unexplored African coast or across the uncharted Atlantic Ocean.

[Sidenote: The Portuguese Explorers]

In the series of world-discoveries which brought about the Commercial Revolution and which are often taken as the beginning of "modern history," there is no name more illustrious than that of a Portuguese prince of the blood,--Prince Henry, the Navigator (1394-1460), who, with the support of two successive Portuguese kings, made the first systematic attempts to convert the theories of geographers into proved fact. A variety of motives were his: the stern zeal of the crusader against the infidel; the ardent proselyting spirit which already had sent Franciscan monks into the heart of Asia; the hope of reëstablishing intercourse with "Prester John's" fabled Christian empire of the East; the love of exploration; and a desire to gain for Portugal a share of the Eastern trade.

To his naval training-station at Sagres and the neighboring port of Lagos, Prince Henry attracted the most skillful Italian navigators and the most learned geographers of the day. The expeditions which he sent out year after year rediscovered and colonized the Madeira and Azores Islands, and crept further and further down the unknown coast of the Dark Continent. When in the year 1445, a quarter of a century after the initial efforts of Prince Henry, Denis Diaz reached Cape Verde, he thought that the turning point was at hand; but four more weary decades were to elapse before Bartholomew Diaz, in 1488, attained the southernmost point of the African coast. What he then called the Cape of Storms, King John II of Portugal in a more optimistic vein rechristened the Cape of Good Hope. Following in the wake of Diaz, Vasco da Gama rounded the Cape in 1497, and then, continuing on his own way, he sailed up the east coast to Malindi, where he found a pilot able to guide his course eastward through the Indian Ocean to India. At Calicut Vasco da Gama landed in May, 1498, and there he erected a marble pillar as a monument of his discovery of a new route to the Indies.

[Sidenote: Occupation of Old Trade-Routes by the Turks]

While the Portuguese were discovering this new and all-water route to the Indies, the more ancient Mediterranean and overland routes, which had been of inestimable value to the Italians, were in process of occupation by the Routes by Ottoman Turks. [Footnote: Professor A. H. Lybyer has recently and ably contended that, contrary to a view which has often prevailed, the occupation of the medieval trade-routes by the Ottoman Turks was not the cause of the Portuguese and Spanish explorations which ushered in the Commercial Revolution. He has pointed out that prior to 1500 the prices of spices were not generally raised throughout western Europe, and that apparently before that date the Turks had not seriously increased the difficulties of Oriental trade. In confirmation of this opinion, it should be remembered that the Portuguese had begun their epochal explorations long before 1500 and that Christopher Columbus had already returned from "the Indies."] These Turks, as we have seen, were a nomadic and warlike nation of the Mohammedan faith who "added to the Moslem contempt for the Christian, the warrior's contempt for the mere merchant." Realizing that advantageous trade relations with such a people were next to impossible, the Italian merchants viewed with consternation the advance of the Turkish armies, as Asia Minor, Thrace, Macedonia, Greece, and the islands of the Ægean were rapidly overrun. Constantinople, the heart of the Eastern Empire, repeatedly repelled the Moslems, but in 1453 Emperor Constantine XI was defeated by Sultan Mohammed II, and the crescent replaced the Greek cross above the Church of Saint Sophia. Eight years later Trebizond, the terminal of the trade-route from Tabriz, was taken. In vain Venice attempted to defend her possessions in the Black Sea and in the Ægean; by the year 1500 most of her empire in the Levant was lost. The Turks, now in complete control of the northern route, proceeded to impose crushing burdens on the trade of the defeated Venetians. Florentines and other Italians who fared less hardly continued to frequent the Black Sea, but the entire trade suffered from Turkish exactions and from disturbing wars between the Turks and another Asiatic people--the Mongols.

[Sidenote: Loss to the Italians]

For some time the central and southern routes, terminating respectively in Syria and Egypt, exhibited increased activity, and by rich profits in Alexandria the Venetians were able to retrieve their losses in the Black Sea. But it was only a matter of time before the Turks, conquering Damascus in 1516 and Cairo in 1517, extended their burdensome restrictions and taxes over those regions likewise. Eastern luxuries, transported by caravan and caravel over thousands of miles, had been expensive and rare enough before; now the added peril of travel and the exactions of the Turks bade fair to deprive the Italians of the greater part of their Oriental trade. It was at this very moment that the Portuguese opened up independent routes to the East, lowered the prices of Asiatic commodities, and grasped the scepter of maritime and commercial power which was gradually slipping from the hands of the Venetians. The misfortune of Venice was the real opportunity of Portugal.

[Sidenote: Columbus]

Meanwhile Spain had entered the field, and was meeting with cruel disappointment. A decade before Vasco da Gama's famous voyage, an Italian navigator, Christopher Columbus, had presented himself at the Spanish court with a scheme for sailing westward to the Indies. The Portuguese king, by whom Columbus formerly had been employed, already had refused to support the project, but after several vexatious rebuffs Columbus finally secured the aid of Ferdinand and Isabella, the Spanish monarchs who were at the time jubilant over their capture of Granada from the Mohammedans (January, 1492). In August, 1492, he sailed from Palos with 100 men in three small ships, the largest of which weighed only a hundred tons. After a tiresome voyage he landed (12 October, 1492) on "San Salvador," one of the Bahama Islands. In that bold voyage across the trackless Atlantic lay the greatness of Columbus. He was not attempting to prove a theory that the earth was spherical--that was accepted generally by the well informed. Nor was he in search of a new continent. The realization that he had discovered not Asia, but a new world, would have been his bitterest disappointment. He was seeking merely another route to the spices and treasures of the East; and he bore with him a royal letter of introduction to the great Khan of Cathay (China). In his quest he failed, even though he returned in 1493, in 1498, and finally in 1502 and explored successively the Caribbean Sea, the coast of Venezuela, and Central America in a vain search for the island "Cipangu" and the realms of the "Great Khan." He found only "lands of vanity and delusion as the miserable graves of Castilian gentlemen," and he died ignorant of the magnitude of his real achievement.

[Sidenote: America]

Had Columbus perished in mid ocean, it is doubtful whether America would have remained long undiscovered. In 1497 John Cabot, an Italian in the service of Henry VII of England, reached the Canadian coast probably near Cape Breton Island. In 1500 Cabral with a Portuguese expedition bound for India was so far driven out of his course by equatorial currents that he came upon Brazil, which he claimed for the king of Portugal. Yet America was named for neither Columbus, Cabot, nor Cabral, but for another Italian, the Florentine Amerigo Vespucci, who, returning from voyages to Brazil (1499-1500), published a letter concerning what he called "the new world." It was thought that he had discovered this new world, and so it was called after him,--America.

[Sidenote: First Circumnavigation of the Earth]

Very slowly the truth about America was borne in upon the people of Europe. They persisted in calling the newly discovered lands the "Indies," and even after Balboa had discovered (1513) that another ocean lay beyond the Isthmus of Panama, it was thought that a few days' sail would bring one to the outlying possessions of the Great Khan. Not until Magellan, leaving Spain in 1519, passed through the straits that still bear his name and crossed the Pacific was this vain hope relinquished. Magellan was killed by the natives of the Philippine Islands, but one of his ships reached Seville in 1522 with the tale of the marvelous voyage.

Even after the circumnavigation of the world explorers looked for channels leading through or around the Americas. Such were the attempts of Verrazano (1524), Cartier (1534), Frobisher (1576-1578), Davis (1585-1587), and Henry Hudson in 1609.

ESTABLISHMENT OF COLONIAL EMPIRES

[Sidenote: Portugal]

When Vasco da Gama returned to Lisbon in 1499 with a cargo worth sixty times the cost of his expedition, the Portuguese knew that the wealth of the Indies was theirs. Cabral in 1500, and Albuquerque in 1503, followed the route of Da Gama, and thereafter Portuguese fleets rounded the Cape year by year to gain control of Goa (India), Ormuz, Diu (India), Ceylon, Malacca, and the Spice Islands, and to bring back from these places and from Sumatra, Java, Celebes, and Nanking (China) rich cargoes of "spicery." After the Turkish conquest of Egypt in 1517 the bulk of commerce was carried on by way of the Cape of Good Hope, for it was cheaper to transport goods by sea than to pay taxes to the Turks in addition to caravan cartage. Lisbon rapidly gained prominence as a market for Eastern wares.

The Portuguese triumph was short-lived. Dominion over half the world-- for Portugal claimed all Africa, southern Asia, and Brazil as hers by right of discovery--had been acquired by the wise policy of the Portuguese royal house, but Portugal had neither products of her own to ship to Asia, nor the might to defend her exclusive right to the carrying trade with the Indies. The annexation of Portugal to Spain (1580) by Philip II precipitated disaster. The port of Lisbon was closed to the French, English, and Dutch, with whom Philip was at war, and much of the colonial empire of Portugal was conquered speedily by the Dutch.

[Sidenote: Spain]

On the first voyage of Columbus Spain based her claim to share the world with Portugal. In order that there might be perfect harmony between the rival explorers of the unknown seas, Pope Alexander VI issued on 4 May, 1493, the famous bull [Footnote: A bull was a solemn letter or edict issued by the pope.] attempting to divide the uncivilized parts of the world between Spain and Portugal by the "papal line of demarcation," drawn from pole to pole, 100 leagues west of the Azores. A year later the line was shifted to about 360 leagues west of the Cape Verde Islands. Portugal had the eastern half of modern Brazil, Africa, and all other heathen lands in that hemisphere; the rest comprised the share of Spain.

For a time the Spanish adventurers were disappointed tremendously to find neither spices nor silks and but little gold in the "Indies," and Columbus was derisively dubbed the "Admiral of the Mosquitos." In spite of failures the search for wealth was prosecuted with vigor. During the next half century Haiti, called Hispaniola ("Spanish Isle"), served as a starting point for the occupation of Puerto Rico, Cuba (1508), and other islands. An aged adventurer, Ponce de Leon, in search of a fountain of youth, explored the coast of Florida in 1513, and subsequent expeditions pushed on to the Mississippi, across the plain of Texas, and even to California.

Montezuma, ruler of the ancient Aztec [Footnote: The Aztec Indians of Mexico, like various other tribes in Central America and in Peru, had reached in many respects a high degree of civilization before the arrival of Europeans.] confederacy of Mexico, was overthrown in 1519 by the reckless Hernando Cortez with a small band of soldiers. Here at last the Spaniards found treasures of gold and silver, and more abundant yet were the stores of precious metal found by Pizarro in Peru (1531). Those were the days when a few score of brave men could capture kingdoms and carry away untold wealth.

In the next chapter we shall see how the Spanish monarchy, backed by the power of American riches, dazzled the eyes of Europe in the sixteenth century. Not content to see his standard waving over almost half of Europe, and all America (except Brazil), Philip II of Spain by conquering Portugal in 1580 added to his possessions the Portuguese empire in the Orient and in Brazil. The gold mines of America, the spices of Asia, and the busiest market of Europe--Antwerp--all paid tribute to his Catholic Majesty, Philip II of Spain.

By an unwise administration of this vast empire, Spain, in the course of time, killed the goose that laid the golden egg. The native Indians, enslaved and lashed to their work in Peruvian and Mexican silver mines, rapidly lost even their primitive civilization and died in alarming numbers. This in itself would not have weakened the monarchy greatly, but it appeared more serious when we remember that the high-handed and harassing regulations imposed by short-sighted or selfish officials had checked the growth of a healthy agricultural and industrial population in the colonies, and that the bulk of the silver was going to support the pride of grandees and to swell the fortunes of German speculators, rather than to fill the royal coffers. The taxes levied on trade with the colonies were so exorbitant that the commerce with America fell largely into the hands of English and Dutch smugglers. Under wise government the monopoly of the African trade-route might have proved extremely valuable, but Philip II, absorbed in other matters, allowed this, too, to slip from his fingers.

While the Spanish monarchy was thus reaping little benefit from its world-wide colonial possessions, it was neglecting to encourage prosperity at home. Trade and manufacture had expanded enormously in the sixteenth century in the hands of the Jews and Moors. Woolen manufactures supported nearly a third of the population. The silk manufacture had become important. It is recorded that salt-works of the region about Santa Maria often sent out fifty shiploads at a time.

These signs of growth soon gave way to signs of decay and depopulation. Chief among the causes of ruin were the taxes, increased enormously during the sixteenth century. Property taxes, said to have increased 30 per cent, ruined farmers, and the "alcabala," or tax on commodities bought and sold, was increased until merchants went out of business, and many an industrial establishment closed its doors rather than pay the taxes. Industry and commerce, already diseased, were almost completely killed by the expulsion of the Jews (1492) and of the Moors (1609), who had been respectively the bankers and the manufacturers of Spain. Spanish gold now went to the English and Dutch smugglers who supplied the peninsula with manufactures, and German bankers became the financiers of the realm.

The crowning misfortune was the revolt of the Netherlands, the richest provinces of the whole empire. Some of the wealthiest cities of Europe were situated in the Netherlands. Bruges had once been a great city, and in 1566 was still able to buy nearly $2,000,000 worth of wool to feed its looms; but as a commercial and financial center, the Flemish city of Antwerp had taken first place. In 1566 it was said that 300 ships and as many wagons arrived daily with rich cargoes to be bought and sold by the thousand commercial houses of Antwerp. Antwerp was the heart through which the money of Europe flowed. Through the bankers of Antwerp a French king might borrow money of a Turkish pasha. Yet Antwerp was only the greatest among the many cities of the Netherlands.

Charles V, king of Spain during the first half of the sixteenth century, had found in the Netherlands his richest source of income, and had wisely done all in his power to preserve their prosperity. As we shall see in Chapter III, the governors appointed by King Philip II in the second half of the sixteenth century lost the love of the people by the harsh measures against the Protestants, and ruined commerce and industry by imposing taxes of 5 and 10 per cent on every sale of land or goods. In 1566 the Netherlands rose in revolt, and after many bloody battles, the northern or Dutch provinces succeeded in breaking away from Spanish rule.

Spain had not only lost the little Dutch provinces; Flanders was ruined: its fields lay waste, its weavers had emigrated to England, its commerce to Amsterdam. Commercial supremacy never returned to Antwerp after the "Spanish Fury" of 1576. Moreover, during the war Dutch sailors had captured most of the former possessions of Portugal, and English sea-power, beginning in mere piratical attacks on Spanish treasure-fleets, had become firmly established. The finest part of North America was claimed by the English and French. Of her world empire, Spain retained only Central and South America (except Brazil), Mexico, California, Florida, most of the West Indies, and in the East the Philippine Islands and part of Borneo.

[Sidenote: Dutch Sea Power]

The Dutch, driven to sea by the limited resources of their narrow strip of coastland, had begun their maritime career as fishermen "exchanging tons of herring for tons of gold." In the sixteenth century they had built up a considerable carrying trade, bringing cloth, tar, timber, and grain to Spain and France, and distributing to the Baltic countries the wines and liquors and other products of southwestern Europe, in addition to wares from the Portuguese East Indies.

The Dutch traders had purchased their Eastern wares largely from Portuguese merchants in the port of Lisbon. Two circumstances--the union of Spain with Portugal in 1580 and the revolt of the Netherlands from Spain--combined to give the Dutch their great opportunity. In 1594 the port of Lisbon was closed to Dutch merchants. The following year the Dutch made their first voyage to India, and, long jealous of the Portuguese colonial possessions, they began systematically to make the trade with the Spice Islands their own. By 1602, 65 Dutch ships had been to India. In the thirteen years--1602 to 1615--they captured 545 Portuguese and Spanish ships, seized ports on the coasts of Africa and India, and established themselves in the Spice Islands. In addition to most of the old Portuguese empire,--ports in Africa and India, Malacca, Oceanica, and Brazil, [Footnote: Brazil was more or less under Dutch control from 1624 until 1654, when, through an uprising of Portuguese colonists, the country was fully recovered by Portugal. Holland recognized the Portuguese ownership of Brazil by treaty of 1662, and thenceforth the Dutch retained in South America only a portion of Guiana (Surinam).]--the Dutch had acquired a foothold in North America by the discoveries of Henry Hudson in 1609 and by settlement in 1621. Their colonists along the Hudson River called the new territory New Netherland and the town on Manhattan island New Amsterdam, but when Charles II of England seized the land in 1664, he renamed it New York.

Thus the Dutch had succeeded to the colonial empire of the Portuguese. With their increased power they were able entirely to usurp the Baltic trade from the hands of the Hanseatic (German) merchants, who had incurred heavy losses by the injury to their interests in Antwerp during the sixteenth century. Throughout the seventeenth century the Dutch almost monopolized the carrying-trade from Asia and between southwestern Europe and the Baltic. The prosperity of the Dutch was the envy of all Europe.

[Sidenote: Beginnings of English and French Explorations]

It took the whole sixteenth century for the English and French to get thoroughly into the colonial contest. During that period the activities of the English were confined to exploration and piracy, with the exception of the ill-starred attempts of Gilbert and Raleigh to colonize Newfoundland and North Carolina. The voyages of the Anglo- Italian John Cabot in 1497-1498 were later to be the basis of British claims to North America. The search for a northwest passage drove Frobisher (1576-1578), Davis (1585-1587), Hudson (1610-1611), and Baffin (1616) to explore the northern extremity of North America, to leave the record of their exploits in names of bays, islands, and straits, and to establish England's claim to northern Canada; while the search for a northeast passage enticed Willoughby and Chancellor (1553) around Lapland, and Jenkinson (1557-1558) to the icebound port of Archangel in northern Russia. Elizabethan England had neither silver mines nor spice islands, but the deficiency was never felt while British privateers sailed the seas. Hawkins, the great slaver, Drake, the second circumnavigator of the globe, Davis, and Cavendish were but four of the bold captains who towed home many a stately Spanish galleon laden with silver plate and with gold. As for spices, the English East India Company, chartered in 1600, was soon to build up an empire in the East in competition with the Portuguese, the Dutch, and the French, but that story belongs to a later chapter.

France was less active. The rivalry of Francis I [Footnote: See below, pp. 77 ff.] with Charles I of Spain had extended even to the New World. Verrazano (1524) sailed the coast from Carolina to Labrador, and Cartier (1534-1535) pushed up the Saint Lawrence to Montreal, looking for a northwest passage, and demonstrating that France had no respect for the Spanish claim to all America. After 1535, however, nothing of permanence was done until the end of the century, and the founding of French colonies in India and along the Saint Lawrence and Mississippi rivers belongs rather to the history of the seventeenth century.

[Sidenote: Motives for Colonization]

One of the most amazing spectacles in history is the expansion of Europe since the sixteenth century. Not resting content with discovering the rest of the world, the European nations with sublime confidence pressed on to divide the new continents among them, to conquer, Christianize, and civilize the natives, and to send out millions of new emigrants to establish beyond the seas a New England, a New France, a New Spain, and a New Netherland. The Spaniards in Spain to-day are far outnumbered by the Spanish-speaking people in Argentina, Chili, Peru, Venezuela, Colombia, Central America, and the Philippine Islands.

[Sidenote: Religion]

It was not merely greed for gold and thirst for glory which inspired the colonizing movement. To the merchant's eager search for precious metals and costly spices, and to the adventurer's fierce delight in braving unknown dangers where white man never had ventured, the Portuguese and Spanish explorers added the inspiration of an ennobling missionary ideal. In the conquest of the New World priests and chapels were as important as soldiers and fortresses; and its settlements were named in honor of Saint Francis (San Francisco), Saint Augustine (St. Augustine), the Holy Saviour (San Salvador), the Holy Cross (Santa Cruz), or the Holy Faith (Santa Fé). Fearless priests penetrated the interior of America, preaching and baptizing as they went. Unfortunately some of the Spanish adventurers who came to make fortunes in the mines of America, and a great number of the non-Spanish foreigners who owned mines in the Spanish colonies, set gain before religion, and imposed crushing burdens on the natives who toiled as slaves in their mines. Cruelty and forced labor decimated the natives, but in the course of time this abuse was remedied, thanks largely to the Spanish bishop, Bartolomé de las Casas, and instead of forming a miserable remnant of an almost extinct race, as they do in the United States, the Indians freely intermarried with the Spaniards, whom they always outnumbered. As a result, Latin America is peopled by nations which are predominantly Indian in blood, [Footnote: Except in the southern part of South America.] Spanish or Portuguese [Footnote: In Brazil.] in language, and Roman Catholic in religion.

The same religious zeal which had actuated Spanish missionary-explorers was manifested at a later date by the French Jesuit Fathers who penetrated North America in order to preach the Christian faith to the Indians. Quite different were the religious motives which in the seventeenth century inspired Protestant colonists in the New World. They came not as evangelists, but as religious outcasts fleeing from persecution, or as restless souls worsted at politics or unable to gain a living at home. This meant the dispossession and ultimate extinction rather than the conversion of the Indians.

[Sidenote: Decline of the Hanseatic League]

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

[Sidenote: Decay of Venice]

Less rapid, but no less striking, was the decay of Venice and the other Italian cities. The first cargoes brought by the Portuguese from India caused the price of pepper and spices to fall to a degree which spelled ruin for the Venetians. The Turks continued to harry Italian traders in the Levant, and the Turkish sea-power grew to menacing proportions, until in 1571 Venice had to appeal to Spain for help. To the terror of the Turk was added the torment of the Barbary pirates, who from the northern coast of Africa frequently descended upon Italian seaports. The commerce of Venice was ruined. The brilliance of Venice in art and literature lasted through another century (the seventeenth), supported on the ruins of Venetian opulence; but the splendor of Venice was extinguished finally in the turbulent sea of political intrigue into which the rest of Italy had already sunk.

EFFECTS OF THE COMMERCIAL REVOLUTION

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

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

[Sidenote: Nationalism in Commerce]

With the declining Italian and German commercial cities, the era of municipal commerce passed away forever. In the peoples of the Atlantic seaboard, who now became masters of the seas, national consciousness already was strongly developed, and centralized governments were perfected; these nations carried the national spirit into commerce. Portugal and Spain owed their colonial empires to the enterprise of their royal families; Holland gained a trade route as an incident of her struggle for national independence; England and France, which were to become the great commercial rivals of the eighteenth century, were the two strongest national monarchies.

[Sidenote: Mercantilism]

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

[Sidenote: Chartered Companies]

By far the most popular method of developing a lucrative colonial trade--especially towards the end of the sixteenth and throughout the seventeenth century--was by means of chartered commercial companies. England (in 1600), Holland (in 1602), France (in 1664), Sweden, Denmark, Scotland, and Prussia each chartered its own "East India Company." The English possessions on the Atlantic coast of America were shared by the London and Plymouth Companies (1606). English companies for trade with Russia, Turkey, Morocco, Guiana, Bermuda, the Canaries, and Hudson Bay were organized and reorganized with bewildering activity. In France the crop of commercial companies was no less abundant.

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

[Sidenote: Financial Methods.] [Sidenote: The "Regulated Company"]

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

[Sidenote: The Joint-stock Company]

After a decade or so, many of the regulated companies found that their members often pursued individual advantage to the detriment of the company's interests, and it was thought that, taken altogether, profits would be greater and the risk less, if all should contribute to a common treasury, intrusting to the most able members the direction of the business for the benefit of all. Then each would receive a dividend or part of the profits proportional to his share in the general treasury or "joint stock." The idea that while the company as a whole was permanent each individual could buy or sell "shares" in the joint stock, helped to make such "joint-stock" companies very popular after the opening of the seventeenth century. The English East India Company, organized as a regulated company in 1600, was reorganized piecemeal for half a century until it acquired the form of a joint-stock enterprise; most of the other chartered colonial companies followed the same plan. In these early stock-companies we find the germ of the most characteristic of present-day business institutions--the corporation. In the seventeenth century this form of business organization, then in its rudimentary stages, as yet had not been applied to industry, nor had sad experience yet revealed the lengths to which corrupt corporation directors might go.

[Sidenote: Banking]

The development of the joint-stock company was attended by increased activity in banking. In the early middle ages the lending of money for interest had been forbidden by the Catholic Church; in this as in other branches of business it was immoral to receive profit without giving work. The Jews, however, with no such scruples, had found money-lending very profitable, even though royal debtors occasionally refused to pay. As business developed in Italy, however, Christians lost their repugnance to interest-taking, and Italian (Lombard) and later French and German money-lenders and money-changers became famous. Since the coins minted by feudal lords and kings were hard to pass except in limited districts, and since the danger of counterfeit or light-weight coins was far greater than now, the "money-changers" who would buy and sell the coins of different countries did a thriving business at Antwerp in the early sixteenth century. Later, Amsterdam, London, Hamburg, and Frankfort took over the business of Antwerp and developed the institutions of finance to a higher degree. [Footnote: The gold of the New World and the larger scope of commercial enterprises had increased the scale of operations, as may be seen by comparing the fortunes of three great banking families: 1300--the Peruzzi's, $800,000; 1440--the Medici's, $7,500,000; 1546--the Fuggers', $40,000,000.] The money-lenders became bankers, paying interest on deposits and receiving higher interest on loans. Shares of the stock of commercial companies were bought and sold in exchanges, and as early as 1542 there were complaints about speculating on the rise and fall of stocks.

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

[Sidenote: New Commodities]

Not only was foreign trade changed from the south and east of Europe to the west, from the city-states to nations, from land-routes to ocean- routes; but the vessels which sailed the Atlantic were larger, stronger, and more numerous, and they sailed with amazing confidence and safety, as compared with the fragile caravels and galleys of a few centuries before. The cargoes they carried had changed too. The comparative cheapness of water-transportation had made it possible profitably to carry grain and meat, as well as costly luxuries of small bulk such as spices and silks. Manufactures were an important item. Moreover, new commodities came into commerce, such as tea and coffee. The Americas sent to Europe the potato, "Indian" corn, tobacco, cocoa, cane-sugar (hitherto scarce), molasses, rice, rum, fish, whale-oil and whalebone, dye-woods and timber and furs; Europe sent back manufactures, luxuries, and slaves.

[Sidenote: Slavery]

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

[Sidenote: Effects on Industry and Agriculture]

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

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

[Sidenote: General Significance of Commercial Revolution]

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

But the Commercial Revolution possesses a more general significance.

[Sidenote: Europeanization of the World]

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

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

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

[Sidenote: 3. The Rise of the Bourgeoisie]

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

ADDITIONAL READING

GENERAL. A. F. Pollard, _Factors in Modern History_ (1907), ch. ii, vi, x, three illuminating essays; E. P. Cheyney, _An Introduction to the Industrial and Social History of England_ (1901), ch. ii-vi, a good outline; F. W. Tickner, _A Social and Industrial History of England_ (1915), an interesting and valuable elementary manual, ch. i-vii, x-xii, xvi, xvii, xix-xxi, xxiv-xxvii; W. J. Ashley, _The Economic Organization of England_ (1914), ch. i-v; G. T. Warner, _Landmarks in English Industrial History_, 11th ed. (1912), ch. vii-xiii; H. D. Traill and J. S. Mann (editors), _Social England_ (1909), Vols. II, III; H. de B. Gibbins, _Industry in England_, 6th ed. (1910), compact general survey; William Cunningham, _The Growth of English Industry and Commerce in Modern Times_, 5th ed., 3 vols. (1910-1912), a standard work; H. D. Bax, _German Society at the Close of the Middle Ages_ (1894), brief but clear, especially ch. i, v, vii on towns and country-life in the Germanies. Very detailed works: Maxime Kovalevsky, _Die ökonomische Entwicklung Europas bis zum Beginn der kapitalistischen Wirtschaftsform_, trans. into German from Russian, 7 vols. (1901-1914), especially vols. III, IV, VI; Émile Levasseur, _Histoire des classes ouvrières et de l'industrie en France avant 1789_, Vol. II (1901), Book V; Georges d'Avenel, _Histoire économique de la propriété, des salaires, etc._, 1200- 1800, 6 vols. (1894-1912).

AGRICULTURE IN THE SIXTEENTH CENTURY. R. E. Prothero, _English Farming Past and Present_ (1912), ch. iv; E. C. K. Gonner, _Common Land and Inclosure_ (1912), valuable for England; R. H. Tawney, _The Agrarian Problem in the Sixteenth Century_ (1912); E. F. Gay, _Essays on English Agrarian History in the Sixteenth Century_ (1913); H. T. Stephenson, _The Elizabethan People_ (1910); W. Hasbach, _A History of the English Agricultural Labourer_, trans. by Ruth Kenyon (1908), an excellent work, particularly Part I on the development of the class of free laborers from that of the medieval serfs. Valuable for feudal survivals in France is the brief _Feudal Regime_ by Charles Seignobos, trans. by Dow. Useful for social conditions in Russia: James Mavor, _An Economic History of Russia_, 2 vols. (1914), Vol. I, Book I, ch. iii. See also Eva M. Tappan, _When Knights were Bold_ (1911) for a very entertaining chapter for young people, on agriculture in the sixteenth century; Augustus Jessopp, _The Coming of the Friars_ (1913), ch. ii, for a sympathetic treatment of "Village Life Six Hundred Years Ago"; and W. J. Ashley, _Surveys, Historical and Economic_, for a series of scholarly essays dealing with recent controversies in regard to medieval land-tenure.

TOWNS AND COMMERCE ABOUT 1500. Clive Day, _History of Commerce_ (1907), best brief account; W. C. Webster, _A General History of Commerce_ (1903), another excellent outline; E. P. Cheyney, _European Background of American History_ (1904) in "American Nation" Series, clear account of the medieval trade routes, pp. 3-40, of the early activities of chartered companies, pp. 123-167, and of the connection of the Protestant Revolution with colonialism, pp. 168-239; W. S. Lindsay, _History of Merchant Shipping and Ancient Commerce_, 4 vols. (1874- 1876), very detailed. The best account of sixteenth-century industry is in Vol. II of W. J. Ashley, _English Economic History and Theory_, with elaborate critical bibliographies. For town-life and the gilds: Mrs. J. R. Green, _Town Life in England in the Fifteenth Century_, 2 vols. (1894); Charles Gross, _The Gild Merchant_, 2 vols. (1890); Lujo Brentano, _On the History and Development of Gilds_ (1870); George Unwin, _The Gilds and Companies of London_ (1908), particularly the interesting chapter on "The Place of the Gild in the History of Western Europe." A brief view of English town-life in the later middle ages: E. Lipson, _An Introduction to the Economic History of England_, Vol. I (1915), ch. v-ix. On town-life in the Netherlands: Henri Pirenne, _Belgian Democracy: its Early History_, trans. by J. V. Saunders (1915). On town-life in the Germanies: Helen Zimmern, _The Hansa Towns_ (1889) in "Story of the Nations" Series; Karl von Hegel, _Städte und Gilden der germanischen Volker im Mittelalter_, 2 vols. (1891), the standard treatise in German. On French gilds: Martin St. Leon, _Histoire des corporations des métiers_ (1897). See also, for advanced study of trade-routes, Wilhelm Heyd, _Geschichte des Levantehandels im Mittelalter_, 2 vols. (1879), with a French trans. (1885-1886), and Aloys Schulte, _Geschichte des mittelalterlichen Handels und Verkehrs zwischen Westdeutschland und Italien_, 2 vols. (1900).

GENERAL TREATMENTS OF EXPLORATION AND COLONIZATION. _Cambridge Modern History_, Vol. I (1902), ch. i, ii; A. G. Keller, _Colonization: a Study of the Founding of New Societies_ (1908), a textbook, omitting reference to English and French colonization; H. C. Morris, _History of Colonization_, 2 vols. (1908), a useful general text; M. B. Synge, _A Book of Discovery: the History of the World's Exploration, from the Earliest Times to the Finding of the South Pole_ (1912); _Histoire générale_, Vol. IV, ch. xxii, xxiii, and Vol. V, ch. xxii; S. Ruge, _Geschichte des Zeitalters der Entdeckungen_ (1881), in the ambitious Oncken Series; Paul Leroy-Beaulieu, _La colonisation chez les peuples modernes_, 6th ed., 2 vols. (1908), the best general work in French; Charles de Lannoy and Hermann van der Linden, _Histoire de l'expansion coloniale des peuples européens_, an important undertaking of two Belgian professors, of which two volumes have appeared--Vol. I, _Portugal et Espagne_ (1907), and Vol. II, _Néerlande et Danemark, 17e et 18e siècle_ (1911); Alfred Zimmermann, _Die europaischen Kolonien_, the main German treatise, in 5 vols. (1896-1903), dealing with Spain and Portugal (Vol. I), Great Britain (Vols. II, III), France (Vol. IV), and Holland (Vol. V). Much illustrative source-material is available in the publications of the Hakluyt Society, Old Series, 100 vols. (1847-1898), and New Series, 35 vols. (1899-1914), selections having been separately published by E. J. Payne (1893-1900) and by C. R. Beazley (1907). An account of the medieval travels of Marco Polo is published conveniently in the "Everyman" Series, and the best edition of the medieval travel-tales which have passed under the name of Sir John Maundeville is that of The Macmillan Company (1900). For exploration prior to Columbus and Da Gama, see C. R. Beazley, _The Dawn of Modern Geography_, 3 vols. (1897-1906).

WITH SPECIAL REFERENCE TO AMERICA: J. S. Bassett, _A Short History of the United States_ (1914), ch. i, ii, a good outline; Edward Channing, _A History of the United States_, Vol. I (1905), an excellent and more detailed narrative; Livingston Farrand, _Basis of American History_ (1904), Vol. II of the "American Nation" Series, especially valuable on the American aborigines; E. J. Payne, _History of the New World called America_, 2 vols. (1892-1899); John Fiske, _Colonization of the New World_, Vol. XXI of _History of All Nations_, ch. i-vi; R. G. Watson, _Spanish and Portuguese South America_, 2 vols. (1884); Bernard Moses, _The Establishment of Spanish Rule in America_ (1898), and, by the same author, _The Spanish Dependencies in South America_, 2 vols. (1914). With special reference to Asiatic India: Mountstuart Elphinstone, _History of India: the Hindu and Mohametan Periods_, 9th ed. (1905), an old but still valuable work on the background of Indian history; Sir W. W. Hunter, _A Brief History of the Indian Peoples_, rev. ed. (1903), and, by the same author, _A History of British India_ to the opening of the eighteenth century, 2 vols. (1899-1900), especially Vol. I; Pringle Kennedy, _A History of the Great Moghuls_, 2 vols. (1905-1911). With special reference to African exploration and colonization in the sixteenth century: Sir Harry Johnston, _History of the Colonization of Africa by Alien Races_ (1899), a very useful and authoritative manual; Robert Brown, _The Story of Africa_, 4 vols. (1894-1895), a detailed study; G. M. Theal, _South Africa_ (1894), a clear summary in the "Story of the Nations" Series; J. S. Keltic, _The Partition of Africa_ (1895). See also Sir Harry Johnston, _The Negro in the New World_ (1910), important for the slave-trade and interesting, though in tone somewhat anti-English and pro-Spanish; J. K. Ingram, _A History of Slavery and Serfdom_ (1895), a brief sketch; and W. E. Burghardt Du Bois, _The Negro_ (1915), a handy volume in the "Home University Library."

EXPLORATION AND COLONIZATION COUNTRY BY COUNTRY. Portugal: C. R. Beazley, _Prince Henry the Navigator_ in "Heroes of the Nation," Series (1897); J. P. Oliveira Martins, _The Golden Age of Prince Henry the Navigator_, trans. with notes and additions by J. J. Abraham and W. E. Reynolds (1914); K. G. Jayne, _Vasco da Gama and his Successors_, 1460- 1580 (1910); H. M. Stephens, _Portugal_ (1891), a brief sketch in the "Story of the Nations" Series; F. C. Danvers, _The Portuguese In India_, 2 vols. (1894), a thorough and scholarly work; H. M. Stephens, _Albuquerque and the Portuguese Settlements in India_ (1892), in "Rulers of India" Series; Angel Marvaud, _Le Portugal et ses colonies_ (1912); G. M. Theal, _History and Ethnography of Africa South of the Zambesi_, Vol. I, _The Portuguese in South Africa from 1505 to 1700_ (1907), a standard work by the Keeper of the Archives of Cape Colony. Spain: John Fiske, _Discovery of America_, 2 vols. (1892), most delightful narrative; Wilhelm Roscher, _The Spanish Colonial System_, a brief but highly suggestive extract from an old German work trans. by E. G. Bourne (1904); E. G. Bourne, _Spain in America_, 1450-1580 (1904), Vol. III of "American Nation" Series, excellent in content and form; W. R. Shepherd, _Latin America_ (1914) in "Home University Library." pp. 9-68, clear and suggestive; Sir Arthur Helps, _The Spanish Conquest in America_, new ed., 4 vols. (1900-1904). A scholarly study of Columbus's career is J. B. Thacher, _Christopher Columbus_, 3 vols. (1903-1904), incorporating many of the sources; Washington Irving, _Life and Voyages of Christopher Columbus_, originally published in 1828-1831, but still very readable and generally sound; Filson Young, _Christopher Columbus and the New World of his Discovery_, 2 vols. (1906), a popular account, splendidly illustrated; Henry Harrisse, _Christophe Colomb, son origine, sa vie, ses voyages_, 2 vols. (1884), a standard work by an authority on the age of exploration; Henri Vignaud, _Histoire critique de la grande entreprise de Christophe Colomb_, 2 vols. (1911), destructive of many commonly accepted ideas regarding Columbus; F. H. H. Guillemard, _The Life of Ferdinand Magellan_ (1890); F. A. MacNutt, _Fernando Cortes and the Conquest of Mexico_, 1485-1547 (1909), in the "Heroes of the Nations" Series, and, by the same author, both _Letters of Cortes_, 2 vols. (1908), and _Bartholomew de las Casas_ (1909); Sir Clements Markham, _The Incas of Peru_ (1910). On the transference of colonial power from Spain to the Dutch and English, see _Cambridge Modern History_, Vol. IV (1906), ch. xxv, by H. E. Egerton. England: H. E. Egerton, _A Short History of British Colonial Policy_, 2d ed. (1909), a bald summary, provided, however, with good bibliographies; W. H. Woodward, _A Short History of the Expansion of the British Empire, 1500-1911_, 3d ed. (1912), a useful epitome; C. R. Beazley, _John and Sebastian Cabot: the Discovery of North America_ (1898); J. A. Williamson, _Maritime Enterprise, 1485-1558_ (1913); E. J. Payne (editor), _Voyages of the Elizabethan Seamen to America_, 2 vols. (1893-1900); L. G. Tyler, _England in America, 1580-1652_ (1904), Vol. IV of "American Nation" Series; George Edmundson, _Anglo-Dutch Rivalry, 1600-1653_ (1911). France: R. G. Thwaites, _France in America, 1497-1763_ (1905), Vol. VII of "American Nation" Series.