To pass judgment as economists upon a whole historical period necessarily involves a comparison of it with what preceded and what followed; involves, that is to say, our understanding it as occupying a place in some larger movement of economic evolution. One naturally begins, therefore, by thinking of the various ways in which men have hitherto attempted to picture to themselves the development of the nations, and thereby to comprehend it in a complete theory. They have either fastened upon the parallel between the life of a people and the life of an individual; or they have conceived of a series of stages, in which (1) pastoral life, (2) agriculture, (3) industry, and (4) trade, or (a) barter, (b) the use of currency, and (c) trade resting upon credit, have followed one another in orderly succession. These are conceptions which do, indeed, each take hold of one portion of the contents of the process of economic evolution, and for the comparison with one another of many periods and communities they are appropriate enough; but with regard to the particular matter we have now in hand, the mercantile system, they give us little help, and may even lead us astray. And it is also clear that we could, with equal propriety, construct other formula, taken from the history of the population, of the settlement of the country, of the division of labour, of the formation of social classes, of the processes of production, or of the means of communication; and that each of these, so far as it went, and all of them, - together with those before mentioned, - would be of service for the creation of a complete theory of the development of mankind. But none of these sequences of thought seems to me anything like so important and significant as that which I shall venture to put in the foreground, as a means of setting the mercantile system in its true light. What I have in mind, is the connection between economic life and the essential, controlling organs of social and political life, - the dependence of the main economic institutions of any period upon the nature of the political body or bodies most important at the time.
In every phase of economic development, a guiding and controlling part belongs to some one or other political organ of the life of the race or nation. At one time it is the association of the kindred or tribe; at another the village or mark; now it is the district, and then the state or even a federation of states, which plays this part. It may or may not coincide substantially with the contemporary organisation of the state or of national, intellectual, or religious life; nevertheless it rules economic life as well as political, determines its structure and institutions, and furnishes, as it were, the centre of gravity of the whole mass of social-economic arrangements. Of course it is not the only factor that enters into the explanation of economic evolution; but it appears to me the fullest in meaning, and the one which exercises the most penetrating influence upon the various forms of economic organisation that have made their appearance in history. In association with the tribe, the mark, the village, the town (or city), the territory, the state, and the confederation, certain definite economic organisms have been successively evolved of ever wider scope: herein we have a continuous process of development, which, though it has never accounted for all the facts of economic life, has, at every period, determined and dominated it. Within the village, the town, the territory, and the state, the individual and the family have retained their independent and significant position; division of labour, improvement of the currency, technical advance, have each pursued their course; the formation of social classes has gone on in particular directions; and yet economic conditions have, throughout, received their peculiar stamp from the prevalence at each period of a village economy, a town economy, a territorial economy, or a national economy; from the splitting asunder of the people into a number of village- and town-economies loosely held together, or from the rise of territorial or national bodies which have taken up into themselves and brought under their control the earlier economic organs. Political organisms and economic organisms are by no means necessarily conterminous; and yet the great and brilliant achievements of history, both political and economic, are wont to be accomplished at times when economic organisation has rested on the same foundations as political power and order.
The idea that economic life has ever been a process mainly dependent on individual action, -- an idea based on the impression that it is concerned merely with methods of satisfying individual needs,- is mistaken with regard to all stages of human civilisation, and in some respects it is more mistaken the further we go back.
The most primitive tribe of hunters or shepherds maintains its existence only by means of an organisation based on kinship, wherein union for purposes of defence, joint journeyings to summer and winter pastures, communistic acquisition for the benefit of the whole tribe, communistic guidance by the tribal prince, play the most important parts. The first settlement and occupation of the soil is never a matter for individuals, but for tribes and clans. Then, while the life of religion, of language, of war, and of politics remains common for wider circles, the centre of gravity of economic life passes to the mark and the village. They become the bodies which for centuries rule the economic life of the mass of the people. The individual possesses, in the way of house and yard, garden and fields, only what the mark- or village community concedes to him and under the conditions it allows; he uses the pasture and the wood, the fisheries, and the hunting-ground on such terms as the commune (Gemeinde) permits; he ploughs and reaps as the village-community desires and ordains. It is hardly possible for him to come into closer intercourse with outsiders; for to remove any of the products, whatever they may be, derived directly or indirectly from the common land, is forbidden.(1*)To take wood from the common forest can only be allowed so long as no one exports wood or charcoal or tar; to turn out cattle at pleasure on the common pasture can only be recognised as a right when every one is feeding his own cattle for his own use and not for strangers. To alienate land to a non-member of the community is forbidden; and, indeed, as a rule, all sorts of formalities are put in the way even of the free yardling (Hufner) who wishes to leave the village. The village is an economic and commercial system complete in itself, and closed against the outside world. Its old constitution has to be broken up by the creation of great states and by other forces, before another and higher development of economic life can make its appearance.
As the village, so likewise does the town, - and even more conspicuously, - grow into an economic body (or organism), with a peculiar and vigorous life of its own, dominating every particular. To begin with, the choice of a locality, the laying-out of the plan, the construction of roadways, of bridges, and of walls; then the paving of the streets, the bringing of water, and the setting-up of lights; and, finally, the common arrangements which are necessary for the market, and which lead to common market-houses, public scales, etc. - these, together with the close juxtaposition of residences, and the higher forms of division of labour, of currency, and of credit, all create a mass of uniform, common institutions, and bring about an association of a far closer character than before. This necessarily makes itself felt both inside and outside the town. For centuries economic progress is bound up with the rise of the towns and the formation of civic institutions. Each town, and especially each of the larger towns, seeks to shut itself up to itself as an economic whole, and, at the same time, in its relation to the outside world, to extend the sphere of its influence, both economic and political, as far as possible. It is not without significance, that, during a considerable period of ancient and of mediaeval history, all complete political structures were city-states, in which political and economic life, local economic selfishness and political patriotism, political conflict and economic rivalry, all coincided. The economic policy of the German towns of the Middle Ages, and their economic institutions, have played so controlling a part in German life down to the seventeenth and eighteenth centuries, they project themselves, so to speak, in so many directions, into our own time, that we must pause a moment to speak of them more at length.
Not only separate jurisdiction (Immunitat), but also the right of holding a market, of collecting tolls, and of coining money, were, from early times, the privileges of the growing urban communities. This exceptional position was strengthened by the abolition of payments and services in kind, as well as by the legal advantages flowing from the principle that "town-air makes free"; and, finally, by the conquest of the right of self-government and legislation by the town council. Each separate town felt itself to be a privileged community, gaining right after right by struggles kept up for hundreds of years, and forcing its way, by negotiation and purchase, into one political and economic position after the other. The citizen-body looked upon itself as forming a whole, and a whole that was limited as narrowly as possible, and for ever bound together. It received into itself only the man who was able to contribute, who satisfied definite conditions, proved a certain amount of property, took an oath and furnished security that he would stay a certain number of years. It released from its association only the man who solemnly abjured his citizenship before the council, who swore that he would bear his share of responsibility for the town's debts, and contribute to the taxes of the town for a number of years, and who handed over to the town ten per cent of his property. The omnipotence of the council ruled the economic life of the town, when in its prime, with scarcely any limit; it was supported in all its action by the most hard-hearted town selfishness and the keenest town patriotism, - whether it were to crush a competing neighbour or a competing suburb, to lay heavier fetters on the country around, to encourage local trade or to stimulate local industries.
Market-rights, toll-rights, and mile-rights (Meilenrecht) are the weapons with which the town creates for itself both revenue and a municipal policy. The soul of that policy is the putting of fellow-citizens at an advantage, and of competitors from outside at a disadvantage. The whole complicated system of regulations as to markets and forestalling is nothing but a skilful contrivance so to regulate supply and demand between the townsman who buys and the countryman who sells, that the former may find himself in as favourable a position as possible, the latter in as unfavourable as possible, in the business of bargaining. The regulation of prices in the town is, to some extent, a mere weapon against the seller of corn, wood, game, and vegetables from the country; just as the prohibition of certain industries or of trade in the rural districts, and the restrictions placed upon peddling were intended to serve municipal interests. The acquisition by the town of crown-rights (Regalien) was utilised, in the first instance, to bring about a reconstruction of these regulations for the benefit of the town. Thus the market-toll was usually abolished so far as burgesses were concerned, and only retained for the countryman and the unprivileged "guest" (Gast). A complicated system of differential tolls was everywhere devised, by which some towns were favoured and others put at a disadvantage, in each case either in return for corresponding concessions or in accordance with the varying hopes or fears to which trade gave rise. The same purpose was served by the acquisition, wherever possible, of rights of toll on rivers and highroads in the neighbourhood. Day by day, as need arose, particular articles had heavier dues imposed upon them, or were forbidden for one or more market days, or excluded altogether, the importation of wine and beer, for instance, from towns in the vicinity was prohibited or restricted on countless occasions. The prohibition of the export of grain, wool, and woolfells was among the most usual means for regulating the local market in the local interest; and it constantly led to a complete stoppage of trade. Such a stoppage was the severest method of coercion that could be employed in the competitive struggle; and, though it frequently hurt those who resorted to it, it was also often employed, especially by the stronger party, with great success and profit to itself. The limitation of the exportation of the currency and of the precious metals frequently occurs in the case of the towns as early as the thirteenth century. In intermunicipal commerce we find the first germ of the theory of the balance of trade. It is to be seen in the efforts the towns were constantly making to bring about a direct exchange of wares, and to render this compulsory, - as in the Baltic trade, - by statutes and ordinances which aimed at preventing the regular flow of the precious metals to foreign countries.
All the resources of municipal diplomacy, of constitutional struggle between the Estates (Stande), and, in the last resort, of violence, were employed to gain control over trade-routes (Strassenzwang) and obtain staple rights: to bring it about that as many routes as possible should lead to the town, as few as possible pass by; that through traffic, by caravan or ship, should, if possible, be made to halt there, and goods en route exposed, and offered for sale to the burgesses. The whole well-rounded law as to strangers or "foreigners" (Gast- oder Fremdenrecht) was an instrument wherewith to destroy, or, at all events, to diminish the superiority of richer and more skilful competitors from outside. Except during a fair, the foreigner was excluded from all retail trade, allowed only to remain a certain time, and prohibited from lending money to or entering into partnership with a burgess. He was burdened with heavier dues,fees for setting up a stall, for having his goods weighed, and for the services of brokers and exchangers. The gild-organisation, which arose out of local market-privileges, and was formed with local objects, reached its aim,- which was to ensure to each master and each craft a livelihood suitable to their station in life, - chiefly by the readiness of the town council, whenever it appeared to them necessary, to limit for a season, or permanently, the entrance into the town of bread and flesh, beer and wine, and wares of all kind from far or near, as well as to forbid, for a year or more, the admission of new masters to a particular occupation. In short, the town market formed a complete system of currency, credit, trade, tolls, and finance, shut up in itself and managed as a united whole and on a settled plan; a system which found its centre of gravity exclusively in its local interests, which carried on the struggle for economic advantages with its collective forces, and which prospered in proportion as the reins were firmly held in the council by prudent and energetic merchants and patricians able to grasp the whole situation.
What, then, we have before our eyes in the Middle Ages are municipal and local economic centres whose whole economic life rests upon this, - that the various local interests have, for the time, worked their way into agreement, that uniform feelings and ideas have risen out of common local interests, and that the town authorities stand forward to represent these feelings with a complete array of protective measures; measures that differed, of course, from place to place and from period to period, according as the provision of the local market or the prosperity of a particular industry or trade seems to be most important at the time. The whole of this municipal economic policy, with all its local partiality, was justified so long as the progress of civilisation and of economic well-being depended primarily on the prosperity of the towns. This prosperity could rest upon no other "mass-psychological cause-complex" than corporate selfishness: and new economic structures could arise only in oases thus privileged, and not on the broad bases of whole states. So long as this selfish feeling of community within comparatively narrow circles also brought about an energetic movement forward, it justified itself, in spite of a coarseness and violence which we to-day not only disapprove but even scarcely understand:(2*) not until the system began to support an easy luxuriousness and sloth did it degenerate. it had then to be replaced by other mass-psychological elements and processes, and by other social forms and organisation.
Some limitations were, doubtless, always imposed on communal selfishness by the legal and moral ties created by the common life of the church, by the existence of the German empire, and, so far as the rural districts were concerned, by the power of the territorial principalities, which early began to make their appearance. But in the earlier period these limitations were so lax, so meaningless, that they were scarcely regarded, so long as neither empire, church, nor territory had given birth to any economic life of its own or any powerful economic organisation. With the transformation and enlargement of commerce, the growth of the spirit of union, and the consciousness of interests common to whole districts, with the augmented difficulties in the way of a proper organisation of economic life on the basis merely of town and village interests, and the increasing hopelessness of victory over the anarchy of endless petty conflicts, efforts and tendencies everywhere made their appearance towards some larger grouping of economic forces.
The town-leagues, reaching over the heads of the princes and of the inhabitants of the rural districts, but still maintaining the old, selfish policy towards the country immediately around, aimed at satisfying certain farther-reaching interests and needs of trade; but such an attempt could not permanently succeed. The greater cities sought to widen themselves into territorial. states by the acquisition of villages, estates, lordships, and country towns. In this the great italian communes succeeded completely, certain Swiss towns and German imperial cities at least in part; some also of the more vigorous Dutch provinces, though they were not so originally, came to be hardly distinguishable from enlarged town-territories. In Germany, however, it was, as a rule, the territorial princedom, founded on the primitive association of the tribe, and, resting on the corporate Estates of communes and knights, which created the new political unit, - a unit which had for its characteristic the association of town and country, the association of a large number of towns on one side, and, frequently, on the other side, of several hundred contiguous square miles of country subject to the same authority During the period from the fifteenth to the eighteenth century, these territories, in constant struggle with other institutions, grew not only into political but also into economic bodies. It was now the territorial organism that carried progress forward, and formed the vehicle of economic and political development. Territorial institutions now became the main matters of importance, just as municipal had been; like them, they found a centre round which to gravitate; and they sought to shut themselves off from the outer world, and to harmonise and consolidate their forces at home. And thus arose an enclosed territorial area of production and consumption, a territorial division of labour, a territorial system of measures and weights and currency, - an independent territorial economic body, which had its own centre of gravity, was conscious of it, and acted as a unit in accordance therewith.
No doubt this policy was pursued with varying vigour and success in the different territories. Where the impulse was given by a highly-developed and all-powerful industrial or commercial town, - as in the cases of Florence, Milan, and Venice,- there we very early find an economic policy pursued with great success; a policy which rose out of the older municipal interests, and which performed wonders. The House of Luxemburg, in Bohemia, and the House of Burgundy, in Flanders and on the lower Rhine, were, also, both of them able at an early period to guide their lands in the direction of a territorial policy on a large scale. But, in Germany, most of the princes were without the extensive dominions necessary for the purpose: in some places the towns, in other the knights, remained outside the new territorial commonweal. The most distinguished princes at the beginning of the sixteenth century, those of the Saxon house, were the lords of lands scattered in fragments all along the military thoroughfare of central Germany, from Hesse to Silesia; and, to make things worse, frequently partitioned these lands among the various branches of the family. And even what one of the Saxon princes happened to rule at any particular time was made up of a number of separate districts, geographically distinct. The situation of the other territories had much the same disadvantages.
Yet grave as were these difficulties, and obstinate as was the conservative opposition of the older economic institutions, especially those of the towns, we cannot help seeing, in all directions, that the necessities of real life were relentlessly driving society toward the territorial organisation. The old forms of loose combination characteristic of the Middle Ages, like the town-leagues and alliances to maintain the public peace, the town toll-system and staple, the town currency, the everlasting hostility of town and country, all the old mediaeval corporations, these became every day greater hinderances in the way of trade and economic progress. People had to get free from them and make their way to larger unities, to associations of districts, and to more far-sighted coalitions of interests, such as were to be found in the territorial assemblies (Landtage) and at the courts of the princes. The more completely the princely territories coincided with old boundaries and primitive tribal feelings; the stronger happened to be the system of parliamentary Estates binding, first, towns together and nobles together, and then the whole municipal estate to the whole estate of the nobles; the more intelligent and forceful were the princes who guided the movement, with frugal and competent officials to help them; the quicker proceeded the process of economic assimilation. To be sure it never ran its course without meeting with the bitterest opposition.
What trouble the Hohenzollern princes in Brandenburg had before they subjected to themselves, even externally and in military matters, the nobles and towns of the land! The severance of the Brandenburg towns from the Hanseatic League and the abolition of their independent right of alliance were barely accomplished during the years 1448 to 1488. The towns did not, however, surrender the right to pursue an independent commercial policy till long after this. The very important treaties with regard to the Frankfurt Staple (1490-1512) were certainly afterwards confirmed by the princes concerned. But the initiative still came from the towns; and this independence was retained as late as the Thirty Years' War, though in a lessened measure, and with increasing moderation and prudence in its exercise. Throughout the sixteenth century we find the princes of Brandenburg and their neighbours giving their attention more and more closely to matters of this kind. In the commercial controversies between Pomerania and Brandenburg (1562 and 1572), both the princely and the municipal authorities took part, although it was Frankfurt and Stettin that engaged in the trial before the Imperial Chamber (Reichskammergericht). The treaties of mutual defence with towns in other territories like Luneburg,(3*) - which were made as late as the time of Joachim I of Brandenburg, - seemed in the next period no longer suitable, since they aroused the distrust of the Luneburg princes. As the maintenance of the public peace passed into the hands of the princes, to them, and not to the towns, it fell to negotiate with one another for its strict preservation; for instance, in the treaty between Brandenburg and Pomerania of July 29, 1479,(4*) and that between Brandenburg and Magdeburg of July 24, 1479.(5*) The negotiations for commercial treaties, as well as the signature of the treaties themselves, between Brandenburg and Poland in 1514,(6*) 1524-27,(7*) 1534,(8*) and 1618,(9*) were the work of the princes and not of the towns. At the congresses to deal with the navigation of the Elbe and Oder in the sixteenth century, some of the ambassadors came from Frankfurt, but it was those sent by the elector who led the discussion. The treaty with "the common merchant" about transit through the Mark of Brandenburg was made by Joachim I, and not by the Brandenburg towns.(10*) In short, the representation of the country in the way of commercial policy passed over, slowly but surely, from the towns to the princely government. And if, in spite of this, the impression spread, about 1600, that all the trade of the country was coming to grief, the explanation is not to be found in this transference, but in the fact that the prince's policy was too feebly pursued, and that he was really at a disadvantage in dealing with Saxony, Silesia, Magdeburg, Hamburg, and Poland.
While thus the authority of the territorial prince (die Landeshoheit), - the jus territorii et superioritatis, - received a new meaning in relation to the representation of economic interests towards the world outside, it is a still more important fact that, within the country itself, the territorial government pushed on energetically, by means of resolutions of the Estates and ordinances of the prince, towards the creation of new law. It was not as if there had not already been, here and there, a territorial law. In the land of the Teutonic Order the Handfeste of Kulm had been in existence since 1233; in the principality of Breslau, the "law of the country" (Landrecht) since 1346. But local law was everywhere the stronger. Not till the fifteenth and sixteenth centuries did the judicial decrees of the courts of the princes of the land, the so-called "laws of the land" (Landrechte), the state ordinances, the territorial police regulations, and so on, begin their victorious career. An indisputable need shewed itself for a new law, dealing with civil and criminal matters, succession and procedure, and common to the whole country. Out of the exercise of the princely regalia sprang ordinances for the forests, for hunting, for fishing, for mining, for the use of streams, for navigation, and for the construction of dikes; ordinances which were applicable to the whole country, and supplied its economic life with uniform rules. The new life of the press, of the reformed faith, of the newly-instituted schools, and of the system of poor-relief, received, not a local, but a territorial organisation, by means of a legislation which soon began to penetrate pretty far into matters of detail. No less need for territorial legislation was seen in regard to trade and industry, weights and measures, currency and highways, markets and fairs.
But this construction of new territorial law was brought about, and the law itself enforced, in very different ways in the various lands. While the state of the Teutonic Order, as early as the fourteenth and fifteenth century, shewed some fair beginnings of such a legislation; while the larger states of Southwestern Germany, in consequence of their higher economic development and earlier civilisation, shewed, towards 1500 and during the course of the sixteenth century, much more extensive activity in this respect; Brandenburg, Pomerania, and other northern territories lagged behind. We must, of course, allow that in Brandenburg the new judicial tribunal (Kammergericht), created under the influence of the ideas of centralisation characteristic of Roman law, as well as the Joachimica, and, somewhat later, various influential legal writings, like the Consuetudines of Scheplitz tended towards legal uniformity; nevertheless Brandenburg did not arrive, during this period, at a recognised "law of the land," or at a generally accepted regulation of the relations between peasants and their manorial lords. The attempt, during the years 1490-1536, to bring the towns under rules of police and administration which should be uniform for the whole territory, was only partially and temporarily successful; and Stettin, Stralsund, and other towns in Pomerania, Konigsberg in Prussia, and the "old town" of Magdeburg in the archbishopric retained almost down to 1700 a position of independence like that of imperial cities. The admonition, found in the general ordinances of police which were directed to the towns of Brandenburg from 1515 onward, that the Berlin ell should be the regular measure of length all over the land, the Erfurt pound for the weight of wax and spices, and the weights of Berlin for meat, copper, tin, and heavy wares, remained for some time but a pious wish. Even two generations later, the most that the Elector Augustus of Saxony had succeeded in securing was the use of the Dresden bushel on his demesne estates.
While, for instance, in Wurtemberg the so-called "ordinances of the land" (Landesordnungen) in rapid succession, from 1495 onward, had, with ever widening scope, brought the economic activity of the country within their regulating lines, so that a whole series of the most important crafts were subjected to ordinances common to the whole duchy even before the Thirty Years' War (such as the butchers, the bakers, the fishmongers, the clothmakers, the copper-smiths, the pewterers, the workmen in the building trades, and, in 1601, even the whole body of merchants and dealers), and thus the whole land had already obtained an economic unity; we find in Brandenburg, during this period, only one or two quite isolated gild statutes issued by the princes that were not of a purely local nature, - such as that for the weavers of the New Mark, that for the linen weavers of the whole Mark, and that, about 1580, for the skinners and linen weavers of a number of towns together. The only evidence of any tendency towards territorial unity is to be found in the circumstances that, from 1480 onward, it was usual to seek the confirmation of the prince, as well as of the town council, for the statutes of every local gild (Innung); and that from about 1580 the prince's chancery began gradually to add to the confirmation a clause as to the power of revocation. This, however, was not the regular practice till after 1640; and it was not till 1690-1695 that the right was actually made use of. The practice of granting to the several artisan associations charters drawn up in identical terms dates from 1731.
Like the separate local gild privileges, the local town privileges still maintained themselves unimpaired; the most that could be gained by the electoral government was, that the burgesses of other Brandenburg towns should be treated a little better than men from Stettin or Breslau. It needed an ordinance of the prince in 1443(11*) to open the Frankfurt Leather Fair to the Berlin shoemakers; and the Elector added, apologetically, that this should not prejudice the claims of the shoemakers of other towns who had not yet frequented the Frankfurt fair. The surrender of inheritances by one town of the Mark to another, without the enormous withdrawal-charges hitherto made, was the gradual result of treaties between the towns themselves. As late as 1481 the men of Spandau introduced a high withdrawal tax, in order to prevent their rich men from trying to get burgess-rights in Berlin and transferring themselves thither.(12*)
Thus the question at issue was not, at the outset, whether the various town privileges should be blended in one body of rights enjoyed equally by every citizen of the territory, but simply whether the princely government should secure a moderate increase of its power as against each particular town. Efforts in this direction are to be seen in the approval by the prince of the town councillors, the enquiries into their administration, beginning about 1600, and the practice of granting special privileges and concessions. This last had gained a firm foothold from about 1500; and in some respects it prepared the way for, and helped to create, that right of issuing general ordinances which was recognized as belonging to the prince in the seventeenth and eighteenth centuries. The charters of privilege with regard to markets and mills, apothecaries, printers, copper-hammers, paper mills, and the like, the concessions made to persons establishing industries in connection with their estates, the personal permits issued to individual artisans and dealers of all sorts, allowing them to carry on their business without being members of a gild, - these were all mere inroads by the prince into the exclusive town economy; and yet, if they were only numerous enough, they necessarily made the territorial authority, rather than the town council, the chosen guide of the people in its economic life.
But the princely power not only obtained an increase of its influence in these individual cases; it had the same experience more widely, in its character of mediator and peacemaker. Abundant opportunity was presented for its intervention by the conflicts between town and country, which were especially bitter in the northeast of Germany. The old regulation of the town market, the mileright, the prohibition of industry in the country, the obligation imposed, if possible, by every town upon the people of the vicinity to carry thither all their produce and buy there all they needed, - all this gave frequent occasion for intervention. The proceedings of the territorial assemblies from the fifteenth to the seventeenth centuries in Brandenburg, Pomerania, and Prussia are largely occupied with matters of this sort. The rural districts, and the squires (die Ritterschaft) in their name, complain that the countryman is shamefully cheated when he comes to sell his corn, wool, and cattle in the neighbouring town, that price-lists are drawn up without the assistance of representatives of the squires, that they are overreached in weight and measure, that the craftsmen unite against them, that countrymen are prevented from selling to strangers and dealers at their own doors, that all the legislation as to markets and forestalling is devised to their hurt, as in the rules against Scotch and Nuremberg peddlers, that the towns receive runaway peasants, without license from their lords, that the gilds want to pursue concealed craftsmen in the country without paying any regard to the court of the lord of the manor (das Gericht des Gutsherrn), that by the prohibition of brewing in the country peasants and knights are compelled to buy beer in the towns and are there overcharged, that people have to make payments in barley when it would be more profitable to export it, and so on, and so on.
The towns take their stand on their "good old laws," upon their privileges, which, they declare, are being continually encroached upon by permits to country craftsmen, by country brew-houses, by foreign peddlers, loose rabble, horse dealers, and cattle dealers; the nobility themselves, they say, carry on trade, buy the peasants' produce and sell it to travelling dealers, and get the iron and other things they need from the Scots; moreover, the nobles claim the right of exporting their produce whenever they like, to the hurt of the towns. Not content with this, the towns complain of the government itself, - that it sells the wood of its forests dearer to the towns than to its vassals, that it authorises foreign dealers and peddlers, that it is not sufficiently severe and exclusive in its treatment of the Jews, and that it does not keep the nobles out of trade.
When matters like these were being all the time dealt with in the legislative assemblies in long-winded memorials and counter-memorials, it was natural that the municipal prohibitions of export or import, and the prohibitory regulations of the town should play an important part in the discussions. It was not a matter of indifference to the rural districts in Pomerania and Magdeburg if one fine day the council of Stettin prohibited the export of corn, and it was of the greatest moment to the townsmen whether the nobility could claim exemption. from such a prohibition. It was of importance for the whole country that, in East Prussia, at the beginning of the fifteenth century, each country-town could impose a prohibition of export on the neighbouring country-town without waiting for the sanction of the High Master (Hochmeister).
From all this confusion arising from local economic policy there was only one way out: the transference of authority in the most important of these matters from the towns to the territorial government, and the creation of a system of compromise which should pay regard to the opposed interests, bring about an adjustment on the basis of existing conditions, and yet, while necessarily and naturally striving after a certain self-sufficiency of the land in relation to the outside world, should also strive after a greater freedom of economic movement within it.
In the Prussian lands of the Teutonic Order it was recognised as a fundamental principle as early as 1433-34, that in future no Prussian town should obstruct another in the export of corn.(13*) In Brandenburg, likewise, the squirearchy (Ritterschaft) obtained for themselves the right of freely exporting their produce from the country as a general thing, and for the peasants, at least, a freedom of choice as to which town in the electorate, near or far, they should take their produce to.(14*) The much-disputed question whether foreign dealers should be permitted to go about buying and selling was differently settled from time to time in different assemblies - according as the towns or the squires happened to be the stronger; but at any rate they came to resolutions which, whether they threw open the country or closed it, bound the whole of it equally.(15*) The keen opposition of the agrarian interests to the old town policy, the advocacy by the agrarian party of free peddling, of a reform of "guest-right" (Gastrecht) and of the law as to markets and forestalling, led in Brandenburg, Pomerania, and Prussia, - partly in consequence of the strength of the squirearchy, partly in consequence of the increase of traffic and of general prosperity, - to a more considerable limitation of town privileges before the Thirty Years' War than was the case for some time after it: for the frightful economic retrogression which the war caused, seemed to call for the systematic employment of every possible means for encouraging the industrial life of the towns. But every success of the squirearchy in securing parliamentary resolutions or governmental ordinances meant a freer traffic in the country and greater liberality towards strangers. The fundamental principles which had governed legal relations between town and country remained, indeed, unchanged. Thus the belief in the hurtfulness of forestalling, - which did nothing, it was thought, but send up prices, - passed over almost intact from the town statutes into the law of the land. Nevertheless, it was an essential change that a regulation that in 1400 rested on a confused congeries of local regulations, customs, privileges, and alliances, became, about 1600, a law of the land (Landrecht) which encompassed, with tolerable uniformity, the whole territory.
Associated with the transformation described above was the loss of their staple privileges by all the small towns in the fifteenth and sixteenth centuries. They had employed them against competing towns in their neighbourhood regardless of the fact that they belonged to the same territory. As early as 1450 Frederick II complained that, in contempt of his authority, the men of Spandau demanded Niederlage from the burghers of Cologne and Berlin. The staple privileges of Spandau, as well as those of Oderberg, Landsberg, Eberswald, Tangermunde, and Brandenburg, and even those of Berlin were, by 1600, evaded or abolished. Oderberg, in 1634, formally surrendered the right of demanding Niederlage, in return for a grant by the elector of a court of lower jurisdiction.(16*) These were all signs of progress in the matter of internal freedom of trade. Only the right of Niederlage enjoyed by Frankfurt survived; and this was even enlarged: for, as its rivals were Stettin and Breslau and other trading towns outside the country, the electoral authorities thought it their duty to support it.(17*)
Although in this matter territorial policy treated the greater centres of trade differently from the smaller, and regarded their interests as, in a measure, the interests of the whole country, in other directions the government of the prince had to oppose even these larger towns - as in the matter of import and export, prohibitive regulations, and the like. The greater and more important the town might be, the less possible was it to allow it to have an independent policy in these respects.
Though the efforts of Joachim I to secure freer passage into the houses of one town of the beer made in another had little success; though the burghers of Berlin, even in the first half of the eighteenth century, desperately resisted any further allowance of the competition of Bernau; though the government were unable to obtain equal rights in fairs for all the traders and craftsmen of other Brandenburg towns; nevertheless, it was quite distinctly recognised, even in the sixteenth century, that the decision whether grain, wool, woolfells, and other wares could be imported or exported belonged to the electoral government. In the neighbouring territories, on the contrary, especially in Pomerania and the archbishopric of Magdeburg, we see the governments waging a long contest over the question whether the chief towns, Stettin and Magdeburg, or the government of the country, or both together, had the right to prohibit trade in corn. Such a prohibition was issued by the town of Brunswick in the sixteenth century quite independently, and, indeed, very frequently.
In Pomerania the struggle was ended in 1534-5 by arbitration: if the Stettin council wished to forbid export they must do so before Shrove Tuesday; the Duke retained the right both of suspending the prohibition altogether and of allowing exceptions.(18*) In the archbishopric of Magdeburg we find, in the time of the Elector Albert, that sometimes the town requested the government, and sometimes the government requested the town, to forbid export, and that there was an attempt to arrive at joint action by joint deliberation; yet, as early as 1538, the archiepiscopal governor (Statthalter) after a bad harvest imposed a duty of a quarter of a gulden per wispel on the export of corn to last until next Midsummer's Day, so as to keep a sufficient supply in the country and yet "not altogether prevent the peasant from making a livelihood." Under the succeeding Brandenburg "administrators" of the archbishopric, the right of the government to prohibit export in times of scarcity was as undoubted as in most of tHeir other territories.(19*)
In Brandenburg the following rules were established during the course of tHe sixteenth century. In winter, from Martinmas (Nov. 11) to the Feast of the Purification (Feb. 2) no exportation should take place; Scheplitz connects this with the cessation of navigation during the winter, the universal custom in earlier times. Moreover, the peasants were never to export; only the squires (knights), the prelates, and the towns. In time of dearth the Elector had the right of embargo; but exceptions were allowed, as, for instance, to the towns of Seehausen, Werben, and Osterberg in the Old Mark (1536), both on account of their position on the frontier as well as because they had paid a considerable sum for the privilege; the Margrave John granted to the Frankfurters, in 1549, a similar privilege with regard to his appanage, the New Mark. The through transport of corn not produced in the Mark was allowed at any time upon the production of certificates of origin; and the Frankfurters were permitted at any time to export barley in the form of malt, even if it came from the country itself.(20*)
While thus corn-exporting territories, like Pomerania, Magdeburg and Brandenburg, had constant recourse to prohibitions of export, though they were temporary only, these prohibitions rested on the idea of the territorial harmonising of production and consumption; and, when the needs were different, recourse was had without hesitation to an even more stringent and, in the last resort, permanent prohibition; as Pohlmann has described in the case of Florence,(21*) and Miaskowski for the Swiss cantons.(22*) The Netherlands prohibited the export not only of native horses, weapons, and war-material, but also of native corn, gold, silver, quicksilver, copper, and brass. In Brandenburg, also, hops were much more often compulsorily kept back than corn. Everywhere the prohibition of the export of leather and cattle played a great part. It was always the same conception that was involved: the resources of the land were thought of as a whole, which ought, first of all, to serve the needs of the country; they ought not to enrich a few individuals, but serve the home producer and the home consumer at a fair price. The regulations hitherto employed for this end by the towns were now transferred to the territories. As hitherto the town had laid an embargo, so now the territory: as the town had, at times, prohibited the import of foreign beer and wine and manufactured articles, so now the territory: as the town had hitherto maintained an elaborate system of differential tolls, so now the districts and territories set out upon a similar course. Berne threatened its Oberland (or subject territory) with an embargo on corn and salt, if it did not bring all its butter to Berne. As Nuremberg forced to its own market all the cattle that came within a circuit of ten miles;(23*) as Ulm did not allow a single head of cattle fed on the common pasture to leave its territory;(24*) so Florence secured for itself all the cattle sold from the subject districts without permitting their return, and exacted sureties from the owners of the great flocks driven to the Maremme that they would bring them back within the state boundaries a third larger. In the duchy of Milan, an official permission was necessary even for the transport of grain from place to place, so that the country might remain sure of its food.
This transition from municipal to territorial policy in Germany is most clearly shewn in the matter of the raw material for its most important industry, to wit wool. When the crisis began for the German cloth-manufacture, - as foreign competition became more and more serious, as the local industry, which was carried on everywhere, began to decay and its place to be taken by a more concentrated business confined to places peculiarly well suited for cloth-making (1450-1550), - the towns tried at first to render the export of wool difficult or to regulate it for the benefit of the home industry.(25*) The impracticability of such a local policy soon shewed itself. Thereupon the Empire itself made a fruitless attempt to prohibit the export of wool (1548-1559); but soon abandoned the matter to the larger territories. Wurtemberg, Bavaria, Hesse, Saxony, and Brandenburg then tried by repeated laws and ordinances to hinder export for the benefit of the home producer; and not only that, - even the importation of cloth was partially forbidden. The wool trade and soon afterwards the cloth industry of the whole country received a territorial organisation. We have no space here to give an account of the efforts of Brandenburg in this direction; they begin as early as 1415 and 1456, and end with the famous wool laws of 1572-1611, which, however, disclose to us only a part of the manifold struggles and endeavours with regard to the matter which marked the period.(26*)
Behind all the efforts I have described lay the conception that the territorial trade, the territorial industry, and the territorial market formed a united whole.(27*) All the regulations already mentioned, however, did but touch, one after the other, particular groups of people. The currency system, on the other hand, touched the whole body of the prince's subjects. The transition from a municipal to a territorial currency in Germany likewise belongs to the period from the fifteenth to the seventeenth century, and is one of the most important, and yet one of the most obscure, parts of the constitutional and economic history of the territories. The course of the development, as it appears to me, after the extensive, but by no means complete, study I have made of it, I may briefly sketch as follows:
With the imperial right of currency and a uniform imperial standard for its theoretic bases, there had, as a matter of fact, grown up in the course of the twelfth, thirteenth, and fourteenth centuries a system of altogether local currencies. These, however, were not put into a decent condition, either from the technical, the financial, or the economic points of view, until they passed pretty generally out of the hands of the princes, and under the authority or control of the towns. It was the towns and their markets that needed most urgently a well regulated and stable currency; they it was who got rid of the ceaseless depreciation that had hitherto been common; to them was due "the perpetual penny" (der ewige Pfennig), - in Brandenburg, among other places, for there, also, the currency (by the help of Bismarck's ancestors) passed over to the towns. It was the town money, that of Lubeck, Brunswick, Erfurt, Nuremberg, Halle, and other places, that was, for the time, the most satisfactory. The towns were rich enough to coin abundantly, and were intelligent enough to understand the evil results of a badly managed currency, and the harm that flows from fiscal trickery.
But this whole movement could last only as long as traffic was mainly local, and also scanty. "The penny is only taken where it is struck" (der Heller gilt nur, wo er geschlagen ist) was a legal proverb in the Middle Ages; all strange coins, even those from the nearest town, had to be taken to the exchanger or Hausgenosse, who sat at his table in front of the mint, and there exchanged them for new coins of the place. But this rule became hardly practicable in the fourteenth century and quite impracticable in the fifteenth. Every little currency-area was flooded with cheaper pennies by its neighbours, whenever they could manage it. The disadvantages of localisation began to surpass the advantages of a municipal currency; even the towns themselves entered upon a disgraceful competition as to which should debase the coinage most. Then followed numberless currency treaties between various towns and princes. Foreign coins of better quality, like the Italian and Hungarian gold gulden and the Bohemian groschen, forced their way in, and came to be treated as a kind of universal currency as contrasted with the changing and usually bad small coins of each particular place.
The German kings and emperors did indeed seek to create some sort of uniformity of currency - at any rate in the southwest: the gold gulden was regarded as an imperial coin; the imperial currency ordinance of 1521 was a plan pressed upon the Council of Regency (Reichsregiment) by the mint officials of western Germany. But in spite of later imperial ordinances, and the attempt to exercise control over the currency of the several Estates by means of the Circles (kreise), the empire was unable to bring about a real unity. Here, also, the victory belonged to the territories. The powerful and energetic territorial governments were able, step by step, to deprive the towns of their rights of coinage, to make the mint-masters once more the officials of the prince of the land, and to introduce a uniform system for at least a few hundred square miles. Upon the extent to which they succeeded depended in large measure the trade and prosperity of the several lands in the sixteenth century. Those princes who happened to possess rich silver mines, like the Saxon rulers, had the easiest task; and they naturally showed most antipathy towards the attempts to bring about a uniform currency for the empire or the several circles. The Hohenzollern princes seem to have resumed the right of coinage, and to have coined for themselves in the Mark of Brandenburg, at any rate from 1480 or 1490 onward; while in the lands of the Teutonic Order the towns had never completely and permanently secured the right. It is mentioned as an exception in the case of Berlin, that it struck some small coins on its own account from 1540 to 1542, and again, but for the last time, in 1621. In Pomerania, Bogeslaw disputed the privilege of Stralsund in 1504; and towards 1560 the town had lost the right. Stettin, in 1530, had to recognise that, even in the time of the father of the duke then ruling, the prince had refused, for weighty reasons, to allow the town to have its own currency.
The decisive thing was the exercise of the princely right of coinage by the territorial governments themselves. Mere ordinances,- such as those set forth as early as the reign of Frederick II of Brandenburg, that Rhenish gold gulden were to be taken at such and such a rate, but that, as a rule, people were to reckon in Bohemian groschen, - were useless. The essential matter was to replace municipal and foreign coins by those of the prince in sufficient quantity. Here, also, it appears to have been Joachim I who opened for Brandenburg the way to an energetic policy in the matter. He not only had gold gulden struck in Berlin, but also silver coins, both heavy and light, at seven different mints. Negotiations with Saxony for a uniform currency failed in their purpose. The standard in the Mark was lighter. The Brandenburg currency edict of 1556 did, indeed, create a new coinage with new subdivisions, which harmonised with the imperial currency. But the idea of a separate territorial currency system was still dominant and so remained. Only certain foreign coins were admitted, and these only at the value set upon them by the territorial authority. The other territorial and town coins were forbidden. It was from time to time strictly ordered that the coins that had been recently forbidden should be disused at a certain date, and exchanged at the mint. The prohibition of export plays a smaller part in Brandenburg than in Saxony; probably because, as the coins were lighter, there was less temptation to send them out of the land. But penalties were frequently (1590, 1598) threatened against Jews and Scots who bought up the old silver and exported it.
The earlier universal practice of the towns, with regard to the prohibition of foreign currency, or the exportation of their own, the right of preempting old gold and silver, and similar regulations, was now, naturally enough, copied by the territorial governments. Whether and how far they succeeded with all their penal mandates, depended, of course, on the movements of trade, and the relation of the nominal value of the several coins to the estimate placed upon them in neighbouring lands and in foreign trade. But undoubtedly it was the prevalent idea, with rulers and ruled alike, that it was the duty of the government to provide the land with a good and uniform coinage, and to close it against the outside world in this respect, even if not in the matter of trade.
This currency system for a whole principality was, then, the institution which, - together with the financial system for a whole principality to be next described, most distinctly drew the circle which bound the territory into one economic body.(28*)
As to the finances, here the participation of the Estates in their control tended towards centralisation, in even greater measure than the activity of the princes and their officials. Yet even this initiative of the court is not to be undervalued. Where thrifty princes, carrying on a paternal rule, duly regulated and extended the official body (as in Saxony the Elector Augustus, in Brandenburg the Margrave John), this activity was of no slight importance for the welfare of the land, and the consolidation of its economic forces. Many of the princes of the time were interested in technical improvements and inventions, had their own laboratories and alchemists, sought to establish mines, and erected mills, glassworks, and saltworks; here and there magnificent castles and fortresses were built with the aid of Italian architects and foreign artists and artisans. This put the household of the prince and the service of the prince, with its increasing number of officials, in the centre of the economic life of the territory more distinctly that it had ever been before, and left behind a distinct influence for generations. Thus the Margrave Hans, in his will, prides himself not unjustly upon the fact that during his reign both the country and the people had waxed great, and that they had never stood so high before in revenue and resources.
As to territorial taxes and their development, so little of the material for the history of taxation in the several states has been worked through, up to the present, that a clear and complete survey is still hardly possible.(29*) Nevertheless, this much is already clear that the construction of municipal systems of taxation, which belongs to the period from the thirteenth to the fifteenth century, was followed by a period wherein territorial systems were constructed; that the protracted struggles by which a system of direct and indirect territorial taxes was created belong chiefly to the period from the fifteenth to the seventeenth century; that these new systems in part abolished, in part profoundly modified, the old municipal systems; and, finally, that they created links and bonds of union between town and country, between circle and circle, and between the various districts of the same state, such as fundamentally affected economic life. To begin with, it could not fail to exert a very great influence, that the Estates met together in periodical assemblies, that they became accustomed, in granting the taxes, to look upon the country and its well-being as a whole, and to distribute, alter, or create taxes with that in their minds. The same must be said of the inspection of the whole land by commissioners of the Estates, for the purpose of preparing an assessment which should deal with property everywhere on common principles. And, finally, it is significant that in the great struggle for freedom of taxation, regard was paid to all other contributions by the privileged classes, in person or in purse, to the needs of the country. In no other field of political life was the principle so often invoked that the subjects were to regard themselves as membra unius Capitis, as in relation to taxation and to the other contributions demanded from subjects in natura.
In the towns the development would seem to have followed some such course as this: that the thirteenth century was mainly marked by the devising of the direct property tax; that thereupon in the beginning of the fourteenth century Umgelder and other indirect taxes came to the front; once more to be rivalled, during the course of the fourteenth century, by the increased prominence of the property tax. Much the same, I cannot help thinking, must have been the line of territorial development. To the fourteenth and fifteenth centuries belongs the struggle for the definite establishment of the Landbeden, the Landschosse, and other property taxes, based on yardlands (Hufen), number of cattle, houselots, and property valuation. These were constantly being tried in a rough-and-ready way in imitation of the older town taxes, without any great result. Fixed and regular contributions, paid annually but of very small amount, appear side by side with heavier subsidies granted every two or three years or so, for some particular time of stress or war.
To the century, next, from 1470 to 1570, belongs the attempt (for which there is evidence everywhere) to create a system of indirect taxes for the territory; and this necessarily led to a conflict with the indirect taxes of the towns and the trade policy based upon it. The prince's monopoly of salt, involving as it did a shutting-up of the country against the outside world, together with the beer tax, the excise on wine, and the various tolls occupied the foreground. Of the changes in the system of tolls, particularly in Brandenburg, I have given an account in another place, and I have tried to shew how the older system, which had become municipal and feudal, gave way entirely before the new territorial system during the period from 1470 to 1600.(30*) This latter did, indeed, become more and more purely fiscal in its character, especially in the gloomy years 1600-1640; yet it continued in some measure to be affected by economic considerations. Of equal importance for Brandenburg was the introduction of the beer tax, which from 1549 constituted the centre round which revolved the whole administration by the Estates of the territorial debt. The application in all places of the same rules in levying it, tended to bring about everywhere a uniform organisation of the business, - then among the most flourishing and important of town industries. As there was a large sale of Brandenburg beer in foreign parts, the heavy taxation imposed upon it rendered a gentle treatment necessary of the exporting towns on the frontier: as early as the years 1580-1620 there was some serious discussion as to the consequences of the beer tax here and in neighbouring states, and, indeed, of the effect of such territorial taxes in general upon commercial and industrial prosperity. The administration of the beer tax fund (Biergeldkasse) by the Estates grew into a credit system enclosing the whole land, and especially the funds of the several towns, within its network. Whoever happened to have any idle cash brought it to the district authorities, who used it to meet the never-ending deficit; thousands and thousands of gulden were every year withdrawn and paid in again. The debt office acted as a bank for the whole country, just as the town-chest had been for the town in earlier times. The men of means throughout the land were so closely associated with this central institution, that the insufficiency of its income prepared the way for a frightful bankruptcy.(31*)
With the financial and economic crisis of the Thirty Years' War began a new epoch in the history of territorial taxation, upon which we need not here enter. In Brandenburg and some other states, it is marked by a complete cessation of attempts to increase the beer tax, and by a sustained effort for some fifty or sixty years to develop the direct taxes, the subsidies, and the assessment on which they rested. During the period 1670 to 1700, however, as prosperity once more began to return, the tendency to develop the indirect taxes, especially the excise, again became predominant.
Here let us pause. Our purpose was to shew by a particular example, that of Brandenburg, that, during the course of the period from the fifteenth to the seventeenth century, the creation of the German territorial state was not merely a political but also an economic necessity. But the same results were brought about elsewhere. The several states of Holland, the French provinces, the Italian city-states, are all analogous phenomena. We have to do with a great historical process, by which local sentiment and tradition were strengthened, the social and economic forces of the whole territory consolidated, important legal and economic institutions created; by which, further, the forces and institutions thus united were led to a battle of competition with other territories, involving numerous shiftings of toll, confiscations of goods and ships, embargoes and staple-fights, prohibitions of importation and exportation and the like; while, within the country itself, old antagonisms softened and trade became more free.
To so powerful and self-contained a structure and so independent and individual a policy as the town had reached in an earlier age, and the modern state has reached since, the German territory scarcely anywhere attained. Naturally, territorial patriotism was by no means so strong as municipal before or national since; economic conditions, the methods of production and of transport and the division of labour in the fifteenth and sixteenth centuries did not necessitate so high a degree of unity in economic organisation as before in the town and afterwards in the national state. The imperial constitution of Germany, imperfect as it was, was still strong enough to hold the territories back in many ways from an independent economic policy. We have already remarked how greatly, in the case of most territories, their geographical position and boundaries hampered them in their advance towards a position like that reached by some Italian and Dutch districts. Everywhere in southwestern Germany, and to a great extent also in central Germany, the territories of the several Estates, the dominions of the counts, of the imperial cities, of the abbots, of the bishops, and of the knights were so small, that, if for no other cause, they were bound to remain in the stage of a natural economy, and a merely local policy. In the northeast of Germany there were, indeed, larger united areas; but in density of population, supply of capital, state of trade and transportation, mechanism of administration and general cultivation, they were, even in 1600, inferior to western and central Germany; so that in their economic institutions they remained far behind the greater states of the southwest; partly also, of course, in consequence of want of skill on the part of their rulers and other fortuitous circumstances. Not without reason did the Brandenburg ordinance concerning the privy council complain, in 1604, that, in spite of all its favourable conditions and all its navigable streams, the country was coming to be less frequented by foreign merchants, nay, even abandoned by them; not without reason did it attribute this state of things to the want of good "Polizei"; i.e. to an executive that was too weak, and that had too little internal and external unity. And things became even worse in the course of the great war, which not only annihilated population and capital, but, what was harder still, - buried in ruin the beginnings of a rational economic policy for the territory, both in Brandenburg and elsewhere; weakened for many long years the sense of the necessity of such a policy; and everywhere strengthened local privilege and individual self-will.
Yet this very time, - the second half of the sixteenth century and the seventeenth century, - was an epoch which gave every inducement for an economic transformation. The way was already clear, out of the narrow circle of the small territory into the larger union of forces possible only in the great state. An immeasurable horizon had been opened to the world's trade in India and America; the possession of spice colonies, and of the new gold and silver countries, promised measureless riches to those states that understood how to seize their share of the booty. But it was clear that for such purposes it was necessary to have powerful fleets, and either great trading companies or equivalent state organisations. At home, also, economic changes, of no less importance, took place. The new postal services created an altogether new system of communication. Bills of exchange, and the large exchange operations at certain fairs, together with the banks which were now making their appearance, produced an enormous and far-reaching machinery of credit. The rise of the press gave birth to a new kind of public opinion, and to a crowd of newspapers which cooperated with the postal service in transforming the means of communication. Moreover, there now took place in the several countries a geographical division of labour, which broke up the old many-sidedness of town industry; here the woollen manufacture was grouping itself in certain neighbourhoods and around certain towns, there the linen manufacture; here the tanning trade, there the hardware trade. The old handicraft (Handwerk) began to convert itself into a domestic industry (Hausindustrie); the old staple trade, carried on in person by the travelling merchants, began to assume its modern shape with agents, commission dealers, and speculation.
These forces all converging impelled society to some large economic reorganisation on a broader basis, and pointed to the creation of national states with a corresponding policy. Germany itself had made a brilliant start in many respects, - in the matter of traffic, of manufacturing processes and division of labour, and even in its foreign trade but neither its imperial or Hanseatic cities, nor, as a rule, its territorial states, were capable of making the most of it. Still less did the imperial power know how to set about the great task of the economic consolidation of the empire which was now so urgently called for: in the sixteenth century it was exclusively occupied in the maintenance of the religious peace; in the seventeenth century it was altogether subservient to the Austrian and Catholic policy of the Hapsburg dynasty. England's cloths were flooding the German market. Sweden and Denmark were organising themselves as maritime and commercial powers: Spain, Portugal, and Holland divided the colonial trade between themselves. Everywhere, save in Germany, economic bodies were stretching out and becoming political; everywhere new state systems of economy and finance were arising, able to meet the new needs of the time. Only in our Fatherland did the old economic institutions become so petrified as to lose all life; only in Germany were the foreign trade, the manufacturing skill, the supply of capital, the good economic usages, connections and traditions, which the country had possessed up to I62O, more and more completely lost.
And it was not simply the external loss in men and capital which brought about this retrogression of Germany, during a period of more than one century, in comparison with the Powers of the West; it was not even the transference of the world's trading routes from the Mediterranean to the ocean that was of most consequence; it was the lack of politico-economic organisation, the lack of consolidation in its forces. What, to each in its time, gave riches and superiority first to Milan, Venice, Florence, and Genoa; then, later, to Spain and Portugal; and now to Holland, France, and England, and, to some extent, to Denmark and Sweden, was a state policy in economic matters, as superior to the territorial as that had been to the municipal. Those states began to weave the great economic improvements of the time into their political institutions and policy, and to bring about an intimate relation between the one and the other. States arose, forming united, and therefore strong and wealthy, economic bodies, quite different from earlier conditions; in these, quite unlike earlier times, the state organisation assisted the national economy and this the state policy; and, quite unlike earlier times too, public finance served as the bond of union between political and economic life. It was not only a question of state armies, fleets, and civil services; it was a question rather of unifying systems of finance and economy which should encompass the forces of millions and whole countries, and give unity to their social life. There had always been great states; but they had been bound together neither by traffic nor by the organisation of labour nor by any other like forces. The question now was, - with a great society divided into social classes widely different one from another and complicated by the division of labour, - to bring about, as far as possible, on the basis of common national and religious feelings, a union for external defence and for internal justice and administration, for currency and credit, for trade interests and the whole economic life, which should be comparable with the achievements, in its time, of the municipal government in relation to the town and its environs. This was no mere fancy of the rulers; it was the innermost need of the higher civilisation itself that such enlarged and strengthened forms of social and economic community should come into existence. With the growing community in speech, art, and literature, with the growth of the spirit of nationality, with increasing communication and commerce, with money transactions and credit transactions becoming universal, the old mediaval forms of loose association no longer sufficed; and all the rigid local, corporate, class, and district organisations of an earlier time became intolerable hinderances to economic progress. Out of misery and conflict of every kind had arisen, in Spain as well as in France, in Holland as well as in England, the feeling of unity, the realisation of common interests; these it was, also, that prompted the stumbling search after new and wider forms of association. Herein economic and political interests went hand in hand. The stronger was the sense of nationality, the economic forces, the political power of any state, the more energetically did this movement get under way; for it meant a combining and organising of resources at home, even more than a measuring of them, when thus combined, with like creations across the frontier. The whole internal history of the seventeenth and eighteenth centuries, not only in Germany but everywhere else, is summed up in the opposition of the economic policy of the state to that of the town, the district, and the several Estates; the whole foreign history is summed up in the opposition to one another of the separate interests of the newly rising states, each of which sought to obtain and retain its place in the circle of European nations, and in that foreign trade which now included America and India. Questions of political power were at issue, which were, at the same time, questions of economic organisation. What was at stake was the creation of real political economies as unified organisms, the centre of which should be, not merely a state policy reaching out in all directions, but rather the living heartbeat of a united sentiment.
Only he who thus conceives of mercantilism will understand it; in its innermost kernel it is nothing but state making - not state making in a narrow sense, but state making and national-economy making at the same time; state making in the modern sense, which creates out of the political community an economic community, and so gives it a heightened meaning. The essence of the system lies not in some doctrine of money, or of the balance of trade; not in tariff barriers, protective duties, or navigation laws; but in something far greater: - namely, in the total transformation of society and its organisation, as well as of the state and its institutions, in the replacing of a local and territorial economic policy by that of the national state. With this accords the fact recently pointed out with regard to the literary history of the movement, that what is peculiar to all the mercantilist writers is not so much the regulations of trade which they propose for the increase of the precious metals as the stress they lay on the active circulation of money, especially within the state itself.(32*)
The struggle against the great nobility, the towns, the corporations, and provinces, the economic as well as political blending of these isolated groups into a larger whole, the struggle for uniform measures and coinage, for a well-ordered system of currency and credit, for uniform laws and uniform administration, for freer and more active traffic within the land, - this it was which created a new division of labour, a new prosperity, and which liberated a thousand forces towards progress. As the territorial policy had rested on the overthrow of independent local and town policies, on the limitation and modification of local institutions, upon the increasing strength of the general interests of the whole territory, so now there followed, for centuries, a struggle between state and district, between principality and province, a task which was doubly difficult in those cases where the state did not yet include the whole nation. This struggle was primarily an economic one; it had to do with the removal of all the old economic and financial institutions, and with the creation of new joint interests and of new and united institutions. It was a process which in Italy and Germany reached its full conclusion only in our own, day which in France was not quite finished in 1789; which even in Great Britain was not completed till late; and in the Republic of the United Netherlands halted midway in its course.
It is now to be noticed that it was the "enlightened," more or less despotic, monarchy of the seventeenth and eighteenth centuries by which this movement was initiated and pushed forward. Its whole activity centred in economic measures; its great administrative reforms were anti-municipal and anti-provincial, and aimed chiefly at the creation of larger economic organisms. With these princes mercantilist policy was not something subsidiary; all that they planned and performed necessarily took this direction.
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