A
  HISTORY OF COMMERCE

  BY

  CLIVE DAY, Ph.D.

  KNOX PROFESSOR OF POLITICAL ECONOMY
  IN YALE UNIVERSITY


  _REVISED AND ENLARGED_


  LONGMANS, GREEN, AND CO.
  55 FIFTH AVENUE, NEW YORK
  39 PATERNOSTER ROW, LONDON
  TORONTO, BOMBAY, CALCUTTA AND MADRAS
  1925




  _Copyright, 1907, by_
  LONGMANS, GREEN, AND CO.

  _Copyright, 1914, by_
  LONGMANS, GREEN, AND CO.

  _Copyright, 1922, by_
  LONGMANS, GREEN, AND CO.


  First Edition, May, 1907
  Reprinted, April, 1908; June, 1909; August, 1910
  August, 1912
  New Edition, June, 1914
  Reprinted, February, 1916; April, 1917
  August, 1919
  September, 1920
  August, 1921
  New Edition thoroughly revised, September, 1922
  Reprinted, February, 1923; January, 1924,
  May, 1925


  MADE IN THE UNITED STATES




  To
  E. L. D.




PREFACE


The year 1914 marks one of the great turning points in history. I have
accordingly revised the part of this book covering the recent period to
close the narrative at that date, and have added another part, covering
the history of commerce in the war and in the two or three years of
peace immediately following. The commerce of the great nations of the
world has departed since 1914 far from its accustomed paths and forms.
In my attempt to make intelligible the commercial changes of the time
I have had to take account of matters in public finance, currency and
foreign exchange which are usually treated apart from the history of
international trade. I have thought it better, by touching on these
outside subjects, to show the reasons for the course which commerce has
followed, rather than to omit the reasons because they are hard for the
student of the history of commerce to understand.

  CLIVE DAY




CONTENTS


  PART I

  ANCIENT COMMERCE

  CHAPTER                                                     PAGE

        I. GENERAL CONDITIONS                                    1

       II. ORIENTAL PERIOD                                       9

      III. GREEK PERIOD                                         17

       IV. ROMAN PERIOD                                         26


  PART II

  MEDIEVAL COMMERCE

        V. CONDITIONS ABOUT THE YEAR 1000                       31

       VI. TOWN TRADE                                           41

      VII. LAND TRADE                                           54

     VIII. FAIRS                                                63

       IX. SEA TRADE                                            70

        X. THE LEVANT TRADE                                     79

       XI. COMMERCE OF SOUTHERN EUROPE                          90

      XII. COMMERCE OF NORTHERN EUROPE                         102

     XIII. DEVELOPMENT OF THE MEDIEVAL ORGANIZATION OF
             COMMERCE                                          113

      XIV. COMMERCE AND POLITICS IN THE LATER MIDDLE AGES      123


  PART III

  MODERN COMMERCE

       XV. EXPLORATION AND DISCOVERY                           128

      XVI. DEVELOPMENT OF THE ECONOMIC ORGANIZATION            139

     XVII. CREDIT AND CRISES                                   150

    XVIII. THE MODERN STATE AND THE MERCANTILE SYSTEM          161

      XIX. SPAIN AND PORTUGAL                                  174

       XX. THE NETHERLANDS                                     190

      XXI. ENGLAND: SURVEY OF COMMERCIAL DEVELOPMENT           199

     XXII. ENGLAND: EXPORTS                                    209

    XXIII. ENGLAND: IMPORTS; SHIPPING; POLICY                  219

     XXIV. FRANCE: SURVEY OF COMMERCIAL DEVELOPMENT            229

      XXV. FRANCE: POLICY                                      242

     XXVI. THE GERMAN STATES                                   250

    XXVII. ITALY AND MINOR STATES                              263


  PART IV

  RECENT COMMERCE

   XXVIII. COMMERCE AND COAL                                   270

     XXIX. MACHINERY AND MANUFACTURES                          280

      XXX. ROADS AND RAILROADS                                 290

     XXXI. MEANS OF NAVIGATION AND COMMUNICATION               302

    XXXII. THE WARES OF COMMERCE                               317

   XXXIII. THE MODERN ORGANIZATION                             329

    XXXIV. COMMERCIAL POLICY                                   345

     XXXV. ENGLAND: COMMERCIAL DEVELOPMENT, 1800-1850          357

    XXXVI. ENGLAND: REFORM OF COMMERCIAL POLICY                368

   XXXVII. ENGLAND: COMMERCIAL DEVELOPMENT, 1850-1914          376

  XXXVIII. ENGLAND: PRE-WAR PROBLEMS                           386

    XXXIX. GERMAN STATES                                       400

       XL. GERMANY UNDER THE EMPIRE                            408

      XLI. FRANCE                                              422

     XLII. MINOR STATES OF CENTRAL AND NORTHERN EUROPE         431

    XLIII. STATES OF SOUTHERN EUROPE                           442

     XLIV. EASTERN EUROPE                                      454


  PART V

  UNITED STATES

      XLV. ORGANIZATION OF PRODUCTION, 1789                    469

     XLVI. INTERNAL TRADE AND FOREIGN COMMERCE, 1789           485

    XLVII. COMMERCE AND POLICY, 1789-1815                      498

   XLVIII. NATIONAL EXPANSION, 1815-1860                       511

     XLIX. EXPORTS, 1815-1860                                  530

        L. IMPORTS, POLICY, DIRECTION OF COMMERCE, 1815-1860   540

       LI. NATIONAL DEVELOPMENT, 1860-1914                     552

      LII. EXPORTS, 1860-1914                                  566

     LIII. IMPORTS, POLICY, DIRECTION OF COMMERCE, 1860-1914   578


  PART VI

  WORLD WAR

      LIV. COMMERCE AND THE WORLD WAR, 1914-1918               593

       LV. UNITED KINGDOM, 1914-1920                           607

      LVI. FRANCE AND THE PROBLEM OF REPARATIONS               622

     LVII. CENTRAL AND EASTERN EUROPE, 1914-1920               634

    LVIII. UNITED STATES, 1914-1920                            648


  INDEX                                                        671




LIST OF MAPS


  NO.                                                         PAGE

   1. The Ancient World (colored)                   _Facing_     9

   2. Roman Roads in Southern Britain                           28

   3. Tolls on the River Loire                                  58

  4. The Fairs of Champagne                                     66

   5. Trade Routes between Asia and Europe                      85

   6. The Venetian Empire                                       91

   7. Trade Routes between Germany and Italy                    94

   8. The Hanseatic Commercial Empire about 1400               106

   9. Commercial Geography of Europe about 1250                108

  10. Trade Relations of a German Merchant about 1400          114

  11. A Medieval Map of the World                _Facing_      129
      The Laurentian Portolano of 1351. _Reproduced
        by permission from Beazley’s “Prince Henry, the
        Navigator,” (Putnams)._

  12. Discoveries of the Portuguese                            131

  13. Map of the Known World in the Time of Columbus           132

  14. European Powers in America (colored)         Facing_     166

  15. The Spanish Monarchy                                     175

  16. European Powers in the East about 1700                   193

  17. Spheres of Trade of English Companies in the Early
        Seventeenth Century                                    203

  18. The French Colonial Empire                               237

  19. Germany in the Eighteenth Century                        251

  20. Italy, 1515                                              263

  21. Waterways of North Central Europe                        294

  22. Growth of the European Railroads                         298

  23. The British Empire, 1902 (colored)          _Facing_     362

  24. Development of the German Zollverein                     403

  25. The Trans-Siberian Railroad                              463

  26. North America in 1782                                    470

  27. United States, Acquisition of Territory, 1783-1853       513

  28. River Transportation in 1860                             517

  29. Canals of the United States                 _Facing_     520

  30. Railroads, 1830-1850                                     524

  31. Railroads, 1850-1860                                     525

  32. Products of the United States                            568

  33. Course of Steamship Lines in 1880                        587




A HISTORY OF COMMERCE




PART I.—ANCIENT COMMERCE




CHAPTER I

GENERAL CONDITIONS


=1. The purposes of commerce.=—The reader will follow more
intelligently the history of commerce if he will stop a moment at the
start to consider the purposes of commerce and the difficulties which
must be overcome if it is to be successfully carried on.

As to the purposes we may be brief. The largest part of the time and
energy of the ordinary man is consumed in getting the material things
which furnish him with the means of subsistence and of culture. We
are accustomed to think of the farmer and the manufacturer as charged
especially with supplying our material wants, but a little reflection
will show that the work of these classes, without the aid of another
class, would be of little use to us. The food and clothing and tools
and other desirable articles which they produce are valuable only when
they are put into the hands of a man who wants them and can use them.
Articles which we all should pronounce desirable, the ripe fruit of the
farmer and the finished product of the manufacturer, have still only
the possibility of good in them; and this possibility is realized only
when they are put in the place where they are wanted at the time when
they are wanted. It is the business of the merchant to attend to the
proper distribution of wares, in place and time. He does not change the
form of things, like the farmer or the manufacturer, but he is as truly
a producer as they are.

Ice may be manufactured in summer by the ammonia process, or it may be
saved from the preceding winter, or it may be brought in summer from
Greenland. To the consumer it makes no difference which one of these
methods is employed; he wants his ice in summer, and the trader who
satisfies his wants by saving or transporting the ice is as useful a
member of society as the manufacturer who makes the ice.

=2. Obstacles to the development of commerce. (1) Personal.=—Great as
are the advantages of commerce, ages of progress were required to give
it the position which it holds in the modern world. It has had to make
its way against innumerable obstacles; and to some of these obstacles
the reader is asked now to give his attention.

There is, first of all, the difficulty which we may term personal. A
man now accepts trade as a matter of course. He devotes himself to
some special line of production, the growing of wheat or the making of
shoes, feeling sure that he can exchange his surplus for whatever else
he wants, and making his exchanges without hesitation. An uncivilized
man, however, is accustomed to satisfy his wants in only two ways, by
his own labor in production or by robbing another man. He is suspicious
of any offer to exchange wares, and is unwilling to apply himself to
any special line of production that would make him dependent on trade.
The ignorance and suspicions of men were in early times the greatest
hindrances to the rise of commerce, as they are still in backward
portions of the world; it has required generations of experience to
teach men wants for things which they did not themselves produce, and
to teach them to satisfy these wants by exchange. Commerce took on
definite proportions and became of considerable importance only when
a special class of traders and merchants arose, who made it their
business to study wants, to inspire new ones, and to provide the means
of satisfying them.

=3. (2) Physical obstacles.=—Another difficulty in the pursuit of
commerce, which we may term physical, appears in the exchange of
articles which are produced at some distance from each other, so that
they need to be transported by land or sea. A farmer who sets out for
the city with a load of grain will have to count carefully the cost of
getting it to market. Assume that he feeds himself and his horses from
his wagon-load; evidently, if the road is long, or so bad that progress
is slow and many horses are necessary, he may find all the wheat
consumed on the journey before he has secured a purchaser. In this
aspect the facilities for transportation, whether by land or water, by
pack-animal, cart, canal boat or steamer, are of great importance. It
has been estimated that a human burden bearer would require more than
a day and a half to move a ton of goods a mile; a strong pack-horse
can carry three hundredweight a considerable number of miles in a day;
while on first-rate level roads a horse can drag a ton even further.
Another factor in this question is the character of the ware. A farmer
who could not afford to bring wheat to market might still find it
profitable to bring butter, which has much greater value in the same
bulk, so that the profits on a wagon-load might pay the expenses of
the journey. Gold can be exported from the interior of Alaska under
difficulties which would make the transportation of any other product
impossible.

=4. (3) Risk of loss at the hand of public enemies or robbers.=—The
carrier of merchandise has to face not only physical difficulties, but
also dangers from another source. From time to time we read in the
modern newspaper of high rates charged for war insurance, when ship
or cargo may be captured and confiscated by an enemy on the sea. The
merchant must count his insurance charges before he can figure out his
profits. This illustration will make clear the character of one of the
obstacles to commerce, which we may term military, by some stretching
of the current meaning of the word. It gives, however, no idea of the
extent of this danger in earlier times, when not only were wars far
more common, but when even in times of peace the state was so weak that
the merchant, in every mile of his progress, was exposed to attack by
highwaymen on land and by pirates at sea. Either the merchant must bear
his own risks, or pay somebody to protect him against them. In either
case the result would be the same, the necessity of charging higher
prices for the wares, and so making sales less attractive and less
common.

=5. (4) Political restrictions.=—Still another element can be
distinguished in history, which seems often to be an obstacle to the
development of commerce. This element may be termed the political. A
man is not only a producer and consumer; he is also, whether he is
conscious of it or not, a member of the state, and subject to some
kind of political organization which restrains and directs him in his
economic life. His efforts to further his own interests are restricted
by laws meant to protect the interests of the people as a whole against
the selfishness of individuals. A merchant in the United States who
proposes to import some ware from another country will find that he
must pay not only the natural transportation and insurance charges, but
possibly also a customs duty in addition, that would make the exchange
unprofitable. If he proposed to import a foreign ship for use in the
American coasting trade he would find that he is absolutely prohibited
from doing this, no matter how much he might be willing to pay as duty.

These restraints are imposed nowadays, not because the government
assumes that individuals cannot take care of themselves and is afraid
that they may lose money by making purchases abroad, but because it
thinks that they may hurt the interests of producers in the home
market, whom it proposes to protect. We shall find that governments
in earlier times restrained the flow of commerce to protect not only
producers but also consumers and even the merchants themselves; and
that regulations were imposed, of such variety and such strictness,
that they made a very important element in the commercial life of
peoples. The church as well as the state interfered with the course of
exchange in the Middle Ages, and thought it necessary to safeguard
public morals by many restrictions which have since disappeared.


QUESTIONS AND TOPICS

 1. Consider some articles of your clothing; try to ascertain from what
 different sources the materials were gathered by the merchant for the
 manufacturer, and how the finished product reached you. Do the like
 for a common implement, a lead-pencil or pocket knife, or an article
 of furniture. What countries were drawn upon to supply the food and
 setting of your breakfast table? [Compare The cost of a dinner,
 Outlook, March 13, 1897, quoted in Clow’s Introduction to the Study of
 Commerce, Silver, Burdett & Co., 193-194.]

 2. What articles would you have to do without if your supply were
 limited to the things produced within a radius of 10 miles of your
 home? Within a radius of 100? Within a radius of 1,000?

 3. Ice was given as an example of a ware which varies greatly at
 different times. Are all wares subject to such variation? [If you
 find what seems to be an exception, verify it by the wholesale prices
 quoted in newspapers.]

 4. What is the use of grain elevators and wheat speculators?

 5. Can you detect any difference between city people and country
 people in making a bargain?

 6. What has been the attitude of the North American Indians to trade?
 With what wares have traders had to tempt them?

 7. Arrange the following articles in the degree of their
 transportability, _i.e._, according to the distance which they may
 be carried with profit: raw cotton, coal, potatoes, silver, building
 stone, gold, wheat, cotton cloth, diamonds, hay, coffee, salt, silk
 ribbons, copper. [The price per pound of many of these wares is given
 in the newspaper.]

 8. Give an instance of articles wasting, unused for lack of good
 wagon-roads; for lack of railroads.

 9. In what regions has piracy persisted to recent times? [Read some
 description of Borneo or of the Philippine Islands, or a description
 of Chinese junk trading and Chinese river life.]

 10. What effect did the Civil War have on American commerce? [See
 reference in chap. 51.]

 11. In what regions of the world is land trade still unsafe?

 12. To what restrictions, if any, does an American merchant have to
 submit who desires to trade in one of the following wares: cigars,
 gunpowder, whisky, lottery tickets, imported iron, cigarettes,
 improper literature?

 13. Government restrictions now are due usually to one of three
 objects: (1) collection of revenue, (2) protection of other producers,
 (3) protection of the consumer and the public. Classify the wares
 above according to the object of the legislation.

 14. Read Bourne, Romance of trade, 96-137, on the close relations of
 politics and commerce.


BIBLIOGRAPHY

 The reader will find at the end of most of the following chapters
 titles of books suggested for further reading and study; titles of
 books that are warmly recommended are marked by an asterisk, titles
 that are particularly noteworthy are marked by two asterisks. In all
 cases the references are restricted to books available in English. The
 prices given are in most cases those at which the book was sold before
 the war, and are retained as giving some indication of the relative
 expense involved in the purchase of the books; prices have changed so
 much during and after the war that an attempt to list current prices
 appears impracticable.

 BIBLIOGRAPHY.—The best available bibliography of English books on
 the history of commerce is Sonnenschein’s Bibliography of social
 and political economy, London, 1897, reprinted from The Best Books
 and The Reader’s Guide. Useful bibliographical information will
 be found also in Palgrave’s Dictionary, and in the Subject Index
 of the British Museum Library, which has been published at brief
 intervals since 1902, and which lists all the new books added to the
 Library. The American Economic Review, established in 1911, is a
 quarterly publication which has devoted particular attention to the
 bibliography of economic subjects, and which should be consulted for
 the announcement of new books, the summary of articles in periodicals,
 and the appreciation of important works in book reviews. The American
 Library Association Catalogue, which has appeared in various editions,
 gives full bibliographical information about popular books which are
 on sale in the American market.

 In default of a general bibliography the student must refer to books
 describing conditions in England. The most complete and scholarly
 bibliography is that given by Cunningham, in appendixes to his Growth,
 etc. References which to most students will be more useful are given
 in Traill’s Social England. Both these sources cover the whole period,
 into the nineteenth century. For the medieval period the general
 student has a bibliography approaching near to perfection by Charles
 Gross, Sources and literature of English history, London and N. Y.,
 1900, and the student of the history of commerce will find many
 references in the Select bibliography of English mediaeval economic
 history, edited by Hubert Hall, London, 1914. A revision of C. K.
 Adams, Manual of historical literature, which has been undertaken
 by the American Historical Association will be of great value when
 completed.

 MANUALS.—Cheesman A. Herrick, **History of Commerce and industry,
 N. Y., 1917, resembles in plan the present book. Bibliographies are
 appended to the different chapters. Two English manuals on the history
 of commerce, H. de B. Gibbins, *History of commerce in Europe, London,
 Macmillan, 1891, and J. R. V. Marchant, Commercial history, London,
 Pitman [about 1901], suffer from the attempt to compress an immense
 number of facts into a small compass. William C. Webster, *General
 history of commerce, Boston, Ginn, 1903, $1.40, marks a decided
 advance in the selection and presentation of material, but is lacking
 in scholarship; the present writer discusses this book in detail
 in Yale Review, Feb., 1904, vol. 12, p. 436 ff. It has scattered
 bibliographies, unclassified. George W. Sanford, *Outlines of the
 history of commerce, Chicago, Powers & Lyons, 1902, occupies a place
 by itself, and should be of decided value in supplementing any manual.
 It gives topical outlines of the different chapters in the history of
 commerce, suggestions and references for reading, and skeleton maps
 for the student to fill in. It seeks to give no information directly.

 GENERAL WORKS.—Of the general works on the history of commerce most
 are old and out of print. Of these only one need be noted here,
 Lindsay’s *History, of which the first volume covers ancient and
 medieval times. This will be of value to any school library, if it can
 be procured. John Yeats, Growth and vicissitudes of commerce, Boston,
 Boyle, covers the whole subject, from ancient to recent times, in a
 volume of about 400 pages; it was compiled about 1870, from other
 compilations, and is not to be trusted entirely, but is about the only
 book of its kind now in the market. Bourne’s *Romance of trade and
 Oxley’s *Romance of commerce answer well to the description Bourne
 gives of his book, “an interesting gossip-book about commerce”; both
 books contain readable discussions of various topics in the history
 of commerce, and references will be given to them hereafter. Morris,
 History of colonization, 2 vols., N. Y. Macmillan, 1900, would be
 a valuable book to the teacher if it were well done, as it covers
 the history of colonization and commerce from earliest times to the
 present. It is, however, so badly constructed and so unreliable that
 it cannot be recommended. See the reviews in The Nation, Yale Review,
 American Historical Review. A far better book on the subject is A. G.
 Keller, **Colonization, N. Y. 1908.

 The book which I recommend most strongly to teachers who are
 restricted in their choice is Cunningham’s **Growth; it will enable
 the teacher to dispense with many other books, and no other book
 could be substituted for it. Ashley’s *Economic history, always
 desirable, is less necessary for the purposes in view here. Ashley’s
 **Economic Organization of England, London, 1914, is an admirable
 survey of English economic history and is well suited to serve as
 collateral reading, but has little on the history of commerce proper.
 If Cunningham’s large work is provided, the teacher and student can
 afford to neglect the smaller manuals on English economic history by
 Cunningham and MacArthur, Warner, Price, Cheyney (revised edition,
 1920), Usher, and others. Frederic A. Ogg *Economic development
 of modern Europe, N. Y., 1917, deserves separate mention since it
 embraces not only England, but also the more important countries on
 the Continent; it covers the earlier periods briefly, but treats the
 nineteenth century fully, and has extensive bibliographies.

 Many of the general histories of Europe and England can be used to
 advantage by the teacher or student of the history of commerce. The
 only work, however, which can receive special mention here is Traill’s
 *Social England; chapters contributed by various writers cover the
 history of commerce from earliest times to 1885.

 MAPS.—The student must look to the general historical atlas for help
 in studying the history of commerce. He will find that the more
 elaborate atlases are hardly worth the extra expense for his purposes.

 William R. Shepherd, **Historical Atlas, N. Y., Holt, revised ed.
 1921, includes considerable economic material, is provided with a full
 index of places, and will serve all ordinary needs.

 The outline maps of the McKinley Publishing Company (Philadelphia),
 and the Rand McNally Co., will be found valuable for the use both of
 teacher and class.

 In many cases a modern atlas is more desirable than a historical
 atlas. Longmans’ **School atlas, N. Y., 1901, is an admirable work,
 which should be in the hands of every student, and the Century **Atlas
 is indispensable for reference purposes.

[Illustration: THE ANCIENT WORLD]




CHAPTER II

ORIENTAL PERIOD


=6. Prehistoric commerce. Ancient Egypt.=—The origins of commerce are
lost in obscurity. Before people are sufficiently civilized to leave
written records of their doings they engage in trade; we can observe
this among savage tribes at the present day, and we know that it held
true of the past, from finding among the traces of primitive man
ornaments and weapons far from the places where they were made. Such
evidences, interesting as they are, belong to the prehistoric period,
and this sketch of early commerce must begin with the peoples who had
acquired the art of writing and have left us records from which we can
gain some idea of their history.

First among these peoples, in point of time, were the Egyptians. Three
thousand years before Christ, at the time when the great pyramids were
built, this people had already attained a developed civilization,
which, in the opinion of modern scholars, can be traced back even
thousands of years more. The Egyptians, however, were not a commercial
people. Their main resource was agriculture, and though they developed
some of the industrial arts to great efficiency they used the products
for direct consumption rather than for trade. Their country, a strip
of the Nile valley over five hundred miles long, and but a few miles
wide, was so much alike in its different parts that it offered little
inducement to internal exchange over great distances; while its
isolation by deserts was a bar to the growth of foreign commerce. The
sea, in this early period, was a hindrance, rather than a help, to
communication.

=7. Rise of Egyptian commerce; characteristic wares.=—Egypt never
became a commercial country so long as it remained under its native
rulers. With the period known as the New Empire, however, beginning
about 1600 B.C., commerce at least became more important than it had
been before. Regular communication was established with Asia, and
caravans brought to the country the products of Phœnicia, Syria, and
the Red Sea district. Before the eyes of Joseph and his brethren
“behold, a company of Ishmaelites came from Gilead with their camels
bearing spicery and balm and myrrh, going to carry it down to Egypt”;
to this caravan Joseph was sold as a slave. The wares named here were
characteristic imports of Egypt; among others were precious woods,
ivory, gold, wine, and oil. Among the exports of the country were
grain, linen, and manufactured wares like weapons, rings, and chains.
Even to a late period trade was carried on by barter, the use of coins
being rare, and many of the imports came as tribute, for which the
Egyptians needed to make no return.

=8. Development of Egyptian commerce in a later period.=—Only in the
last period of Egyptian independence, a few centuries before the
country was conquered by Alexander, did commerce bind it closely to
other portions of the ancient world. The government, which formerly had
discouraged trade, now permitted and encouraged it; Greek merchants
came in considerable numbers to Egypt; and an active commerce sprang
up. It is said that Necho, the king who ruled about 600 B.C., sent
out Phœnician sailors to attempt the circumnavigation of Africa; and
the same king took up the work of cutting a canal across the isthmus
of Suez which was completed shortly afterward. The canal was allowed
to fill up with sand, but was reopened later, and its course may be
distinctly traced, it is said, along the route of the modern canal.

=9. Rise of commerce in the Mesopotamian Valley.=—The district
northwest of the Persian Gulf, centering in the river valleys of
the Tigris and Euphrates, offered opportunities for the rise of
civilization which led to the establishment of settled governments
while Egypt was still living secluded from the rest of the world. This
district was rich in agricultural products, but lacked the metals,
some of the building materials, and other of the raw materials of
industry. Though it was bordered in part by deserts, communication with
other districts was far easier than in the case of Egypt; and commerce
with other countries early acquired an importance here which Egyptian
commerce attained only in the last period of the country’s history.
Ancient Babylon, which rose to importance some time after 3000 B.C.,
under a Semitic people (with a language akin to that of the Jews), was
a market-place for wares brought not only from the South (Arabia) and
West (Syria), but also from the East (Iran, the later Persia). Clay
tablets, used like modern paper for the preservation of records, have
been discovered and deciphered in modern times, and show an active
trade in the precious metals, grain, wool, building materials, etc.

=10. Development of commerce under the Assyrian and Persian
empires.=—Military expeditions extended the commercial relations of the
people of this district; and the conquests of an Assyrian, who founded
a great empire about 745 B.C., were guided in part by commercial
considerations. Babylon, Armenia, Syria, and parts of Iran and
Palestine, were brought under one rule; peoples on the frontiers were
held in check, and order was fairly well maintained within; so that
merchants could traverse the different parts of the empire, and meet
at its capital, Nineveh, to exchange their wares. The Assyrian empire
was made by the sword, and it fell by the sword after a brief duration;
but its place was taken by succeeding states, and commerce continued to
grow. The Persian empire, which enjoyed its full power for about two
hundred years, until its destruction by Alexander in 330 B.C., included
an area more than half that of modern Europe; it stretched from the
Mediterranean on the West to the Indus on the East, from the Indian
Ocean and the Persian Gulf to the Black and Caspian seas. Within these
boundaries lay some of the richest regions of the ancient world, the
products of which could now be exchanged without passing from under the
protection of the Great King.

=11. Relative insignificance of the commerce of the ancient empires.
The Jews. The Phœnicians.=—In the Oriental states which we have
hitherto considered, commerce never grew to a position of decisive
importance in the national life, however great it may seem when we
compare it with its meager beginnings. It served mainly the needs of
luxury, and left untouched the economic position of the mass of the
people. If we seek in the ancient Orient a people whose very existence
depended on trade we must look further. We do not find the Jews to have
been such a people, though we are accustomed nowadays to think of them
as devoted largely to the pursuit of trade. The descriptions of the
Bible show that they lived mainly a pastoral and agricultural life;
and down to the time of the Roman Empire they counted for little in
the world of commerce. A truly commercial people we do find, however,
in near neighbors of the Jews, the Phœnicians, who inhabited a strip
of land on the coast of Syria and Palestine, scarcely ten miles wide
in most places and little over a hundred miles long. They could gain a
scanty food supply from the level ground, and had timber in abundance
on the mountains that separated them from the interior, but had to look
to trade with other peoples for the means of growth which their home
denied them.

=12. Commerce of the Phœnicians. Beginnings of sea-trade.=—From raw
materials which were in many cases procured from other countries they
manufactured products which found a market throughout the ancient
world. Their cloths and glass were celebrated; they exported large
amounts of metal ware; and they had a monopoly of the purple dye
extracted from a species of shell-fish, which was highly prized
throughout this period. These wares were but a few of those in which
they regularly traded; the reader who would have a more detailed
account of the wares of Phœnician commerce, especially the imports,
is advised to study the description in the Bible. They maintained an
active exchange with peoples to the South, East, and North of them by
caravan routes, while they were the first people of antiquity to secure
such mastery over the sea that it could be made the medium of regular
and extensive transportation. The beginning of these sea voyages is
lost in the obscurity of the past. We know that they were highly
developed by 1500 B.C., when Sidon was the leading Phœnician city, and
that they did not cease to extend when the primacy of the Phœnician
cities passed to Tyre. The Phœnicians taught the art of navigation
to the ancient world. Their ships were long the accepted models of
construction, and the Greeks learned from them to direct their course
at night by the North, or, as the Greeks called it, the Phœnician star.

=13. Development of sea-trade; wares of Phœnician commerce.=—Beginning,
presumably, with fishing and short coasting trips, and reluctant always
to venture out in the stormy season, they had reached the islands of
Cyprus and Rhodes, and had established regular commerce with Greece
in the heroic age of Greek history, say before 1000 B.C. From this
point their progress was rapid, and soon they had traversed the whole
Mediterranean, and passed outside it into the Atlantic. The means
of cheap transportation which they controlled gave them an immense
economic advantage. We may accept as a product of the imagination the
story that on their arrival in Spain they found silver so plentiful
that they not only filled their ships but made their utensils, even
their anchors, from it; still the story shadows forth a truth. They
found wares in some districts cheap and begging a market because of
their abundance, which were rare and highly prized elsewhere; and
they could make great profits by exchanging wares so as to put each
where it was most wanted. From the island which we now call England
they procured tin, which is a very rare metal in Europe, and which was
especially desired as a component of the important alloy bronze. They
got copper in Cyprus and Spain, also silver and iron in Spain, and gold
and ivory in Africa. They carried westward the wares of the Orient
(cf. our words cinnamon, cassia, hyssop, cumin, manna, all from Hebrew
forms), and manufactures, which not only gratified the momentary needs
of Europeans but served also as models for imitation.

=14. Establishment of colonies by the Phœnicians. Carthage.=—The
Phœnicians are noteworthy not only as the greatest merchants and the
first navigators of the ancient world; they were the leaders also in
the founding of colonies. At points important for commercial or naval
reasons they established stations which enabled them to trade in
security with the natives and to control the sea. Gades, for instance
(the modern Cadiz), near the straits of Gibraltar, was a rallying-point
from which the Carthaginians extended their voyages to the tin islands
in the North, and far down the Atlantic coast of Africa on the South.
Similar stations were established on many of the Mediterranean islands
(Malta, Sicily, Sardinia, Balearics); and one founded on the north
coast of Africa, Carthage (near the site of modern Tunis), grew to
especial importance. The power of the Phœnicians declined, a few
centuries after 1000 B.C., partly by reason of internal dissensions
and the attacks of land-powers like Assyria, partly by reason of the
commercial rivalry of the Greeks, who had risen to an independent
position and cut the lines of communication between East and West.
In this period Carthage fell heir to the Phœnician establishments in
the western Mediterranean, and maintained its power and policy on
substantially similar lines until it received its great defeats at the
hands of Rome.


QUESTIONS AND TOPICS

 1. What evidences of prehistoric commerce are given by Indian
 arrow-heads, wampum, Indian ornaments, or the relics of the
 mound-builders?

 2. What modern countries have the strip-form of Egypt? [See a map of
 South America.]

 3. Are there any modern countries like Egypt in the uniformity of
 their conditions and products, diminishing the stimulus to internal
 trade? [Study, for example, conditions in Alaska, Nevada, or
 Australia.]

 4. Are any of the exports of ancient Egypt still characteristic wares
 of the country? [See the Statesman’s Year-Book, index under words
 Egypt, commerce.]

 5. What can you infer as to the security of trade from the fact that
 it was carried on by caravans, bands of merchants?

 6. What physical barriers obstructed Egyptian commerce? [See map 33 of
 Longmans’ School atlas, noting the deserts and the cataracts of the
 Nile.]

 7. Write an essay on the economic conditions of Egypt, from references
 to that country in the Bible.

 8. What countries of the modern world fill the space occupied by the
 ancient empires of the East? What commerce do they carry on? [See
 Statesman’s Year-Book.]

 9. Can you suggest any reasons why the commerce of these regions seems
 now much less important than in ancient times?

 10. Write an essay on the economic conditions of later Babylon, from
 descriptions in the Bible. [See Babylon, in the subject-index of the
 Oxford Bible.]

 11. Write an essay on the economic life of the Jews from the
 descriptions of the Bible.

 12. Write a similar essay on the Phœnicians. [See Sidon and Tyre in
 the subject-index.]

 13. Show the similarity of conditions in Phœnicia and in Norway,
 forcing the inhabitants of both countries to the sea. [Study the
 physical characteristics of Norway in a geography, and note the
 history of the Vikings, and the importance of commerce and navigation
 in modern Norway.]

 14. Write a report, from information to be got from the Encyclopædia
 Britannica, on one of the following subjects:—

 (_a_) The commerce and manufactures of the Phœnicians. [See the index
 in the last volume of the ninth edition, under Phœnicians.]

 (_b_) The manufacture and trade in glass in the ancient world. [See
 vol. 10, p. 647.]

 (_c_) The Phœnician purple. [See the references under the word Purple,
 vol. 20, p. 116, and the index.]

 (_d_) Early navigation. [See the index.]

 15. Wares of Phœnician commerce. [Bible, Ezekiel, chap. 27.]


BIBLIOGRAPHY

 ANCIENT COMMERCE.—The best available survey of the economic
 development of the ancient world is Cunningham’s **Western
 civilization in its economic aspects, vol. 1, Ancient times,
 Cambridge (N. Y.) Macmillan, 1898; this may be used for parallel
 reading throughout. On Egypt, Adolf Erman, Life in ancient Egypt,
 London, 1894, is interesting and reliable. Readers of English are
 fortunate also in having a translation of Holm’s *History of Greece,
 N. Y., Macmillan, 1894, 4 vols.; it may be made to serve as a history
 of commerce in the Mediterranean down to the second century. The
 popular books on Alexander’s conquests and their results, by Wheeler
 and Mahaffy, give, unfortunately, little attention to economic
 affairs. P. V. N. Myers, *History of Greece, Boston, Ginn, 1895, is a
 convenient manual for general reading. Alfred E. Zimmern, **The Greek
 Commonwealth, revised ed., Oxford, 1915, is an interesting account of
 the economic and political factors in Athens of the fifth century.

 On economic development in the Roman world the student has now
 available a good manual by Tenney Frank, **An economic history of
 Rome, Baltimore, 1920. A detailed account of conditions in the
 provinces is provided by Mommsen’s *Provinces of the Roman Empire, N.
 Y., Scribner, 1887, 2 vols., $6. The current Roman histories give a
 distorted idea of Roman commerce by viewing it from the capital.

 MAPS.—In default of an atlas of the history of commerce students
 must seek the maps scattered through special works, or rely upon an
 ordinary historical atlas. Justus Perthes’ *Atlas antiquus (about
 $.75) can be recommended for use in ancient history; it is admirably
 executed, and is provided with an index.




CHAPTER III

GREEK PERIOD


=15. Greece, physical character and products.=—The mention of the
Greeks at the close of the last chapter introduces us to a people who
were, for a time, the leading merchants of the Mediterranean. The
peninsular part of Greece has an area less than that of the State of
Maine, little more than half that of the State of New York. It is,
however, most richly diversified geographically, and no country in the
world of an equal area, it is said, presents so many islands, bays,
peninsulas, and harbors. The coast line of this little country is
longer than that of Spain. No point is more than a few miles from the
coast, and there are few points on the coast from which an observer
does not see an island. In the Greek sea, moreover, every island is
in plain sight either of the mainland or of another island, and in
the good season the winds are very regular. Favoring conditions such
as these are of vast importance in the early days of navigation, when
sailors faced real perils due to their inexperience, and perils of the
imagination which were even greater. At home the Greeks inhabited a
country which was not rich enough to support them without exertion,
but was, on the other hand, not so poor as to force them to use all
their ingenuity in finding the means of subsistence. They could easily
produce a surplus of oil and wine, but found a deficiency of other
products, especially grain and, in the early period, manufactured wares.

=16. Rise of Greek commerce. Colonies.=—Though it would be hard to
conceive a better nursery for the growth of commerce than existed under
the conditions here described, the Greeks, when we first get knowledge
of them, about 1000 B.C., were not yet ready to take advantage of
their opportunities. There was some commerce, it is true, but it lay
entirely in the hands of the Phœnicians, who brought utensils and
cloth and took away timber and metals. Little by little the Greeks
rose to commercial prominence, and gained the place formerly held by
the Phœnicians. A striking feature of this revolution was the Greek
colonial movement, which covered some five hundred years, and ended
about 600 B.C. Greek emigrants settled throughout the Ægean Sea and
established themselves as a fringe on the coast of Asia Minor and
about the Black Sea; in the West they chose by preference the shores
of southern Italy and Sicily, but founded colonies as far as Malaga
in modern Spain, and created a great commercial center on the site of
modern Marseilles. The colonies kept up an active intercourse with the
mother country, and Greek sailors and merchants ousted the Phœnicians
from their commanding position. The Greeks at home began to produce
wares for export, seeking customers not only among the colonists but
in other markets also; they emancipated themselves from their former
dependence on Oriental manufactures, and developed the clay, bronze,
and woolen industries to a point not dreamed of before.

=17. Rapid development in the fifth century, B.C.=—In this, which may
be termed the preparatory period of Greek commerce, the leadership
rested with the Greek colonies in Asia; Miletos was the first of the
Greek cities in commercial importance. The advance of the Persian kings
about 500 broke the power of the Greek colonies in the East; at the
same time the western colonies, especially Syracuse, grew rapidly in
importance, and forced Carthage to recognize their supremacy in the
northern Mediterranean. The mother country itself was, however, that
part of the Greek world which showed the most striking gains. The
successful resistance to the Persians was followed by a remarkable
development not only in politics but in industry and commerce as well,
and Greece now took for two centuries the position which England
occupies in the modern world. The little island of Ægina (near
Athens), rocky and sterile, supporting to-day but 6,000 inhabitants,
became for a time the most important market of the Greek world; it
amassed fabulous riches by a commerce penetrating all seas, aided by
an artificial harbor and a strong war navy. Another great commercial
city, destined to a longer career, was Corinth; this city was the
natural medium of trade with the western colonies, not only because
it offered an opportunity to reach them without rounding the dreaded
promontory of the southern tip of Greece, but also because some of the
leading colonies of the West were Corinthian or closely allied to the
Corinthians.

=18. Rise of Athens to leadership. Exports.=—The city of Athens, which
had developed rapidly in the century preceding the Persian wars, rose
to the first place among the Greek cities in the century in which they
occurred (500-400 B.C.). The Athenians broke the power of Ægina in
armed conflict, and appropriated its commerce; the Athenian sea-port,
the Piræus, became the leading commercial port of the Greek world, and
remained so until the Macedonian period (about 300). Readers must be
referred to one of the narrative histories of Greece for an account
of the way in which Athens built up its empire in the Ægean Sea, and
for the story of the varied fortunes of its political power. Even in
times of defeat, when its war-navy was scattered and its leagues and
alliances broken up, it was still able to control a large part of
the trade of the Ægean and Black seas, and maintained an important
commerce with the South and West. The favorable situation of the city,
and the ability and energy of its navigators and business men, enabled
it to conduct a large carrying trade for other peoples, and many of
the exports were foreign wares which were merely transshipped in the
Piræus. Of native wares it exported silver and coin, from the mines
near the city, some natural products (oil, figs, honey, wool, marble)
of comparatively slight importance, and especially manufactured wares,
of which pottery was the chief.

=19. Athenian imports and policy.=—The chief import was wheat, on which
Athens was then as dependent as England is now; the city had grown
so great by trade that the surrounding country was unable to support
it. The great granary of Athens was the level country north of the
Black Sea, and the Athenians made extraordinary efforts to control
the narrow entrance to the Black Sea, that they might assure their
food supply. They were not entirely dependent on this source, however,
and imported wheat also from Sicily, Egypt, Syria, and the mainland
to the North. Among the other imports were ship-building materials,
salt fish, slaves, raw materials for the Athenian manufacturers, and
articles of luxury. The breadth of the Athenian trade is pictured in
the statement of a contemporary: “What delicacies there are in Sicily,
or Lower Italy, or Cyprus, or Egypt, or Lydia, or on the Pontus, or in
Peloponnesus, or anywhere else, they all are brought to Athens by her
control of the sea.”

The commercial policy of the Athenians was framed with an eye
especially to the interests of the consumer. What duties were levied
were low, and had no leaning to “protection” in the modern sense.
The export of articles especially desired (wheat, ship-building
materials) was restricted in the hope of keeping up the home supply,
and commercial advantages were granted or withheld with the idea of
exercising political pressure on other states; but nothing like modern
protectionism can be found in the commercial policy of this period.

=20. Contrast of the ancient and modern world; effect of Macedonian and
Roman conquests.=—In the course of our narrative we are now approaching
a point when a great change came over the ancient world. The isolation
of the earlier states of antiquity is their most striking feature.
Each one lives only unto itself. It rises in civilization and then
declines, without sharing its gains and losses with other states. It
may conquer and hold them for a time, it is true, but it rules them as
foreign territory, with alien interests; and the great empires crumble
as readily as they are made. This characteristic of ancient history
is one of its main difficulties to the student, for it deprives him of
any bond of connection between the peoples, and forces him to pass from
one to another of them, until he feels lost in the complexity of the
narrative.

The modern world, with its common fund of culture and its community of
interests uniting different peoples, could arise from these conditions
only after long centuries of struggle. The unity of the Christian faith
was needed to confirm the union of peoples in a common civilization.
The process of union begins, however, at the point which we have
reached; the great conquests of Alexander of Macedon, and those of
Rome, did much to break down the barriers between peoples, and to
prepare them for the acceptance of a common civilization and a common
religion. It is to be hoped that the student knows already something of
the narrative of those conquests. We shall have to confine ourselves to
the results as they appear in the history of commerce. Here the reader
can merely be reminded that Alexander united the eastern world into an
empire extending from Greece to India, a little before 300 B.C., and
that the Romans began about 200 B.C. to extend their authority outside
the Italian peninsula, and before the birth of Christ had subjected to
it practically all the peoples whose history we have been studying.

=21. Effect of Alexander’s conquests on commerce; decline of
Greece.=—In appearance the empire of Alexander outlived its founder but
a few years, and then dissolved. Alexander, however, was a civilizer
as well as a conqueror; he endowed the East with a common fund of
Greek culture; and however distinct or hostile the states might seem
thereafter the peoples were united as they had never been before.
Commerce took on a new aspect. Greece, which before had been at the
center of the great commercial movements, was now left on the western
edge. Greek merchants could for a time use their former commanding
position to share in the great commercial development, but in the long
run their struggle was hopeless. The most energetic Greeks left their
home to settle in eastern countries which were richer, more populous,
and closer to the great currents of trade. Corinth was the only city
which managed to maintain and extend its trade. Athens declined rapidly
in commercial importance; and grass grew and cows were pastured in the
streets of other towns which had once been important markets.

=22. Rise of great cities.=—Some indication of the development of
commerce, and of the rearrangement of its important centers, can be got
from a study of the great cities of the ancient world. Before the time
of Alexander there were only three cities of the Mediterranean with a
population of over 100,000, Syracuse, Athens, Carthage; none of these
had a population far above that figure. About 200 B.C., scarcely more
than a century afterward, there were four cities with a population
over 200,000, Alexandria, Seleukia, Antioch, Carthage; one city with a
population far above 100,000, Syracuse; and of cities with a population
about 100,000 there were Corinth, Rome, Rhodes, Ephesos, and possibly
others. The names of some of these cities are already familiar to us.
Carthage was enjoying its last century of commercial greatness, before
Rome robbed it of its influence in the northern Mediterranean. Syracuse
was the chief Greek colony of the West, destined also to fall under the
Roman power just before 200. Other names, however, are entirely new
to history, or first became of great importance at this time, and the
best idea of the commerce of the period can be got by considering the
reasons for their greatness.

=23. Alexandria, Seleukia, Antioch.=—Alexandria, as its name suggests,
was founded by the Macedonian conqueror. It was situated on a tongue of
land between a lagoon and the sea, near the most western of the mouths
of the Nile. It had a double harbor, formed by the island Pharos, which
has given the name for lighthouse in some of the modern languages
(French, _phare_, Italian, _fáro_), as the most celebrated lighthouse
of antiquity was erected there. Alexandria furnished the only good
harbor for large vessels on the coast of Egypt; it had access to the
Nile, tapping one of the great granaries of antiquity, and connected
with the Red Sea through the canal that ran from the Nile to the Bitter
Lakes. It was at the point where the sea-route from the far East
reached the Mediterranean, and it became by right the greatest market
and the largest city that the world had known.

Next to it in size and importance came two other cities, Seleukia and
Antioch, which were founded even later than Alexandria. Seleukia, on
the Tigris, took the place of the earlier Babylon and the later Bagdad;
it was situated in a rich plain at the points where the routes from
the Persian Gulf and the Persian highlands met on their way westward.
Antioch was at the focus of the routes by which the trade with inner
Asia was carried on. Situated at a point where the Euphrates approaches
to within a few days’ march of the coast, and where the valley of the
Orontes offers the best means of reaching the sea from the interior, it
had the full benefit of the revival of eastern commerce which followed
the conquests of Alexander and the enlightened rule of his successors.

=24. Rhodes.=—Only one other city, Rhodes, deserves especial attention,
and this not because of its size alone but also because it was so
specifically a commercial city. The little island could offer but
scanty products to commerce, but it enjoyed an exceptionally favorable
position, where navigators from Egypt and Syria, avoiding the dangers
of the open sea, would put in for shelter and to trade. Rhodes
followed a far-sighted foreign policy, guided by the idea of securing
the greatest freedom of trade; it policed the seas and repressed
piracy with vigor; and established a code of mercantile law which was
celebrated as a model and which invited dealings in its market. The
Rhodians were skilful navigators, and developed the principles of
commercial association to a point of high efficiency. It is little
cause for wonder, therefore, that commerce flowed hither from all parts
of the eastern Mediterranean and even from the Black Sea; that foreign
merchants sent their sons there to learn the conduct of commerce;
and that great riches were accumulated, of which one evidence was
furnished by the many colossi, gigantic statues, about the city.


QUESTIONS AND TOPICS

 1. Prove the statement in the text, regarding the Greek islands. Take
 a good map, measure off on the scale 25 miles, the distance at which
 hills of about 125 feet are visible (the Greek islands are mountainous
 and the air very clear), and show by what stepping-stones timid
 sailors could advance.

 2. Study in detail the influence of the physical characteristics of
 Greece on the people and their history. [See Myers, chap. 1; Holm,
 vol. 1, chap. 2.]

 3. Write a report on the evidences of early civilization and trade.
 [Holm, vol. 1, chap. 8.]

 4. Write a report on the early commerce carried on by Phœnicians.
 [Holm, vol. 1, chap. 9.]

 5. Make a careful study of the Greek colonial movement, noting, (_a_)
 the motives to colonization, (_b_) the extent of Greek colonies, (_c_)
 the relations with the mother-country, (_d_) the mode of life in the
 colonies, (_e_) the influence on the commercial development of the
 different parts of Greece. [Myers, chap. 5; Holm, vol. 1, chaps. 12,
 13, 14, 21, 25.]

 6. Write a report on the history of the Greek colonies of the West,
 especially Syracuse and its contest with Carthage. [Holm, vol. 1,
 chap. 25; vol. 2, chap. 6, 29; Freeman, Story of Sicily, N. Y.,
 Putnam, 1892, $1.50.] ·

 7. Study the growth of the sea-power and empire of Athens, indicating
 on a map the allied or subject cities. [Myers, chaps. 15, 16; Holm,
 vol. 2, esp. chap. 17.]

 8. Contrast Athenian exports of this period with the exports of modern
 Greece. [Statesman’s Year-Book.]

 9. What is the leading port of modern Greece? [Same.]

 10. Write an essay comparing the Athenian and the British empires,
 noting, (_a_) advantages of geographical position, (_b_) products of
 the home country, exports and imports, (_c_) naval power and naval
 stations, (_d_) policy to members of the empire, (_e_) commercial
 policy of the home country. [See Myers or Holm, and the chapters
 in this book on England; compare E. A. Freeman, Greater Greece and
 Greater Britain, London, 1886.]

 11. Compare the imports of ancient and of modern Greece. [Statesman’s
 Year-Book.]

 12. Make a chart, naming on a horizontal line the leading states of
 antiquity, from Egypt to Rome, placing dates (3000, 1500, 1000, etc.)
 in a column at the left, and indicating changes in the history of each
 state in the appropriate place in its column.

 13. Draw a map showing the extent of Alexander’s conquests, and
 comparing the empire with earlier Oriental empires. [See the maps in
 Myers, and if no good historical atlas is available consult the maps
 in the Oxford Bible, teacher’s edition.]

 14. Study the influence of the Macedonian conquests on civilization
 and commerce. [Myers, chaps. 25, 26, 27; Holm, vol. 3, esp. chap. 27.]

 15. Write a report on the economic decline of Greece after the
 Macedonian conquest. [Holm, vol. 4.]

 16. Is England exposed to such a change in the currents of trade as
 furthered the decline of Greece?

 17. Why do great cities rarely grow up without the aid of commerce?
 [The answer to this question is suggested in a later chapter, but the
 student should be able to work it out himself.]

 18. Are there any exceptions? What is the commerce of Washington, D.
 C.? Is there any one of the cities named in this section which may
 have owed its size to something beside commerce?

 19. Has there been any later period in which great cities have risen
 suddenly, as in this period after Alexander?

 20. Write a commercial history of Carthage from the information to
 be got in a Roman history, or in the Encyclopædia Britannica. Write
 a commercial history of Syracuse in the Roman period, from the same
 sources.

 21. Write a report on the commerce and civilization of one of the
 cities, using Holm, vol. 4, and the encyclopedia.

 22. Endeavor to trace the later history of one of these cities, and to
 discover its population now, using the encyclopedia and a geographical
 gazetteer.


BIBLIOGRAPHY

 See chapter ii.




CHAPTER IV

ROMAN PERIOD


=25. The Roman state; Rome not a commercial city.=—In entering on the
period of Roman domination we need spend no time over the earlier
history of the city which came to rule the world. The Romans were not
a commercial people. Even in the last two centuries B.C., when Rome
extended her sway over the eastern countries which have already been
noticed, and subjected a large part of the West as well, Rome did not
become a commercial center. The city grew to unparalleled size, it is
true, and required immense imports of food to support the population.
These imports came, however, as taxes and tribute to the conquerors.
Rome supplied no exports of considerable amount, and built up no great
carrying and forwarding trade such as would have made the city the
center for the exchanges of other people. The service which the Romans
gave to the world of their time, and for which they received such rich
reward, was not economic but political in character; they were the
greatest organizers and administrators of antiquity, and by their skill
in the arts of war and government succeeded in living on the labor of
subject peoples. They were not mere parasites. They earned all that
they received by one great contribution, “pax Romana,” Roman peace,
which continued almost unbroken for centuries, and which furnished an
opportunity for commercial development before unknown.

=26. Development of commerce in the Roman East.=—The study of commerce
in the Roman period resolves itself, as suggested above, into a study
of commerce in the different regions of which the great Roman state
was composed. In the East commerce developed on the lines which have
already been described; Alexandria and Antioch continued to be great
markets for Oriental wares, coming now even from India and China; and
Carthage remained an important outlet for the African trade. Asia
Minor, northern Africa, and southeastern Europe reached the very
pinnacle of their historical development in the Roman period; these
countries have never since attained to anything like the prosperity
they then enjoyed. We shall not have the time hereafter to notice
the commerce of these regions in detail; the reader may take it for
granted that merchants struggled strenuously to keep the place they had
reached, and that decline came slowly, when it did come later.

Our attention must be directed hereafter mainly to the West. It was
there that the most important states of modern Europe arose, and there
that commerce grew up in its modern form. Our chief interest must be to
know what progress the peoples of the West made under Roman rule, and
how far commerce had developed among them.

=27. Backward condition of the people of the West.=—The peoples of
the West were far behind those of the East in civilization. They
have sometimes been compared to the American Indians, and though the
comparison is inexact in detail and may easily mislead, it gives still
a rough indication of their backwardness. They lived more from the
products of their flocks and herds than from agriculture, when the
Romans came in contact with them; they had practically no towns, and no
considerable trade.

The five hundred years (roughly) of Roman rule made some striking
changes in the Roman provinces of the West (modern Spain, France,
England; not Germany or countries farther east). It kept the people in
order, and gave them an opportunity to acquire the elements of a higher
civilization. The fact that modern Spanish and French are based on
Latin remains always a striking testimony to the Roman influence on the
provincials.

=28. Limited influence of Rome on the commercial development of the
West.=—It is easy, however, to overestimate the results of this
influence, especially so far as regards economic progress. Rome gave
her subject peoples of the West a chance at commercial development,
but none had sought it and few were ready to profit by it. The Roman
government constructed a system of military roads, models of their
kind, which enabled troops and messengers to reach speedily the
different provinces. Romans settled in the provinces as officials
or private gentlemen, and Roman culture was acquired by the wealthy
provincials; cities and large landed estates formed centers of industry
and exchanged manufactured products for the raw materials of the
surrounding districts.

[Illustration: ROMAN ROADS IN SOUTHERN BRITAIN

 The course of some of the roads is uncertain, and the number would
 be increased or diminished according to the authority followed. The
 map gives, however, a fair picture of the Roman road system; it was,
 evidently, not so extensive as our modern railroad system.
]

The roads, however, seem to have served mainly Roman purposes, and
the cities and culture depended mainly on Roman influence for their
support. The mass of the people remained passive, and advanced slowly.
Most of them lived by agriculture in the country districts, producing
the things necessary for their own subsistence and a small surplus
for the Roman tax-gatherer; they received for their surplus no wares
which would have formed the basis of commerce. However much Rome did
to efface the differences of race, language, and national tradition,
such differences remained to hinder commerce; and peoples were still
separated by great distances and by serious physical barriers. The
commercial development of the West, though it may seem great in
comparison with conditions in the following period of disorder, was
very limited even at the height of Roman power.

=29. Decline of Roman power and of commerce in the West.=—The time came
soon when the provincials could no longer look to Rome for protection
and stimulus. In the third century, A.D., the Roman government began to
go to pieces. It lacked the force to repress internal revolts in the
provinces, and to repel the inroads of barbarians on the frontiers. The
process of decline had already proceeded far before the “Fall of Rome”
(476), when even the shadow of authority passed from the Roman Emperor
of the West. The remnants of Roman rule centered henceforth about the
eastern capital, Constantinople. In the West barbarian chieftains
established government of a kind on the fragments of the Roman state,
but endeavored in vain to follow the models which the Romans had set
them. The motives to commerce grew weaker as Roman culture disappeared,
and the obstacles to commerce increased rapidly with the decline
in public order. Brigandage and piracy became more profitable than
honest industry; roads and bridges deteriorated; the course of rivers
was obstructed. Even a great ruler like Charlemagne, who had himself
crowned Emperor in 800, could do little to stay the process of decline,
and weaker successors could do still less. The last remnants of the
Roman organization seemed to have passed away, and the European world
passed into the “Dark Ages.”


QUESTIONS AND TOPICS

 1. Endeavor to verify the statements in the text by studying the
 descriptions of Roman commerce in the current Roman histories. Ask the
 following questions of them. What wares, beside manuscript books and a
 few other items of no great importance, did the people of Rome produce
 for export? What wares beside food for the people and luxuries for the
 rich did they import?

 2. Show how the taxes and tribute from conquered provinces can be
 regarded as war-insurance.

 3. Write a report on the civilization and commerce of one of the
 provinces of the Roman Empire. [See Mommsen, Provinces, esp. vol. 1,
 chap. 7, Greek Europe; chap. 8, Asia Minor; vol. 2, chap. 12, Egypt;
 chap. 13, the African Provinces.]

 4. Write a similar report on one of the provinces of the West. [Vol.
 1, chap. 2, Spain; chap. 3, Gaul; chap. 4, Germany; chap. 5, Britain.]

 5. Study the civilization of Roman Britain, distinguishing carefully
 the life of the upper (Roman) classes, and the life of the common
 people. What effect would this contrast of classes have on the extent
 and character of commerce in the Roman period? [Consult manuals of
 English history.]

 6. Study the economic and political factors in the fall of Rome.
 [Cunningham, West. civ., vol. 1, p. 170 ff.; Adams, Civ., chap. 4.]

 7. Compare the fall of Rome with the growth of political corruption in
 some modern cities, as affecting the prosperity of commerce.


BIBLIOGRAPHY

 See chapter ii.




PART II.—MEDIEVAL COMMERCE




CHAPTER V

CONDITIONS ABOUT THE YEAR 1000


=30. Political conditions affecting commerce; the modern system of
government.=—The reader who studies the history of commerce in the
medieval period faces a system of government entirely different from
that of modern times, which he must understand before he can appreciate
the peculiar conditions of commerce then. We can illustrate the
modern method of government by taking a country, say France, for an
example. We wish to understand the relations of the capital, Paris,
to other parts of the country, say the district around Bordeaux, in
the southwest corner. An observer of this country will find that
Paris and Bordeaux are united by different means of communication and
transportation, telegraphs and posts, railroads, highways and canals,
which are constantly employed in the service of government. On the path
from the province to the capital go the reports of the officials who
are in charge of the government of Bordeaux; and, if they fail in their
duties, petitions and complaints from private citizens, asking relief,
will take the same path. By this path, also, the taxes collected at
Bordeaux will stream to the treasury at Paris, to be employed in
maintaining the government. Part of these taxes will be expended at
Paris, to support the officials who live in the capital, the central
army, etc. Part, however, must be used to fulfil the local needs of
Bordeaux; and on the road from the capital to the province we shall
find money and wares, going as salaries to officials, appropriations
for public works and the like. On this road, furthermore, we shall
find a stream of messages, sent by the central government to its local
subordinates, directing them in their work; these messages will answer
the reports of officials and the petitions and complaints of subjects.

=31. Impossibility of applying modern methods of government in the
period after the fall of Rome.=—The system of government, thus roughly
outlined, was the system used in the period when Rome was still strong.
But when the power of Rome declined it became constantly more difficult
to maintain a system of the kind; every obstacle to the free passage
of men and wares weakened the hold of the government on its provinces.
The roads grew worse, and while they were still passable the danger
of traversing them increased, so that the expense of maintaining this
government became prohibitive. The reports from officials and the
petitions from subjects were delayed or lost; only a small part of the
local taxes reached the treasury at the center. The central government,
on its side, found that it had no longer the means to pay the bills for
salaries and public works in the provinces, and found that its commands
were not received there, or were not obeyed, because the government
could no longer send officials and troops to force obedience.

=32. The feudal system; rise and character.=—The time came, finally,
when the government had to recognize publicly the change in conditions,
and to adopt a system of quite a different kind, known as the feudal
system. In substance it told the man who before had been a salaried
official that it could no longer pay salaries, and that he must support
himself henceforth from the revenues of land which would formerly have
gone to it as taxes. It maintained still a nominal superiority, and
exacted from the feudal lords who now assumed the responsibility of
government certain payments for general public service, occasionally
a sum of money and more frequently personal service of a military or
judicial kind. Practically, however, the state had split into little
pieces; the central government had lost the right even to nominate the
successor of an official, and each was succeeded in the duties and
profits of government by his son, as though he had been a petty king.
It is impossible to state accurately the number of little governments
of this kind that existed in the different countries of Europe; in
France, in the tenth century, it is supposed to have exceeded 10,000.
The character of government varied greatly, of course, according to
local conditions, not only in different countries but in different
parts of the same country, but it was everywhere extremely low when
measured by modern standards. This will be apparent as we survey the
conditions under which commerce was carried on in the period known as
the Dark Ages.

=33. Difficulties and dangers of transportation.=—Attempt was made to
maintain the roads, which of course are essential to trade by sea as
well as by land, by making the proprietors through whose land they
ran responsible for their repair. Many of the proprietors managed to
escape contribution, and what work was done was largely wasted, through
ignorance and lack of proper superintendence. We shall see that even in
later periods the roads were bad; in this early time they were so bad
that they seem to have been mere tracks, of service to passengers on
foot or on horseback, but of little use for wagon traffic.

The merchant suffered even more, however, from bad men than from bad
roads. Government was so weak that robbery was common; people were so
ignorant of everything outside the narrow sphere of local interests
that they suspected every stranger, and too often with reason. There is
a whole series of English laws, beginning about 700 and continuing for
centuries, of which this is an early example; “If a man come from afar,
or a stranger, go out of the highway, and he then neither shout nor
blow a horn; he is to be accounted a thief, either to be slain or to be
redeemed.”

=34. Restrictions imposed to insure security. The market.=—The dangers
of travel required a merchant to go in company with others, and the
danger that a merchant would himself turn robber made it necessary
for him to subject himself constantly to public supervision, and to
get residents who would act as sureties for his good behavior. In
England, even in the eleventh century, the central government thought
it necessary to pass a law “that every man above twelve years of age
make oath that he will neither be a thief nor cognizant of theft.” Such
a general statute would surely be of little use.

Many other statutes of a more specific nature were passed, which may
have helped to repress robbery, but which must have hampered trade
at the same time. The idea in general was to force a man to make his
purchases in public, so that if he appeared at home with new wares he
could get witnesses to prove that he came honestly by them. Cattle
formed a large part of the personal property in early times, and as
these could readily be stolen, many laws were passed restricting
the trade in cattle. Other things were included in the restriction,
however, as the need of protecting commerce became more apparent. In
England, in the tenth century, a man was not allowed to buy or sell any
goods above the value of twenty pence, unless he did it within a town
where a public official and witnesses could legitimate the bargain. In
this practice is found the origin of the market, a medieval institution
of which more will be said later. A market was a place appointed by
the government, where bargains could properly be made; and only small
exchanges of household produce could be made outside it, in the open
country. Beginning in the need that was felt to prevent thieving it
developed as a public institution, which the people found it profitable
to extend as a means of collecting tolls and of regulating internal
trade.

=35. Society organized to exist with the minimum of commerce; the
medieval village.=—The striking and important feature in the life of
European peoples at this period was not the large amount of commerce
carried on, but the small amount. The people were organized on a system
which enabled them to support life with the least commerce possible.
Instead of being concentrated in towns, they were isolated in little
groups, often called manors, one of which would be composed often of
less than 100 people, who got their living from the square mile or
so of land surrounding them. It is not necessary here to discuss the
social and political life of these little groups, though it is proper
to remark that often some of the inhabitants were slaves, and many more
were only half-free, like the Russian serfs of the nineteenth century.

=36. Self-sufficiency of the villages; low stage of the arts of
production.=—The economic life of these village groups is the side
in which we are interested, and the chief point in that was the
_self-sufficiency_ of each group. A village tried to produce everything
that it wanted, to be free from the uncertainty and expense of
trade. We find, then, that almost all the people in a village were
agriculturists, and these raised the necessary food supply by methods
which were always crude, and were often very cumbersome and wasteful.
The stock was of such a poor breed that a grown ox seems to have been
little larger than a calf of the present day, and the fleece of a sheep
weighed often less than two ounces. Many of the stock had to be killed
before winter, as there was no proper fodder to keep them, and those
that survived were often so weak in the spring that they had to be
dragged to pasture on a sledge. Insufficient stock meant insufficient
manure, and though the fields were allowed to lie fallow every third
year they were exhausted by constant crops of cereals, and gave a yield
of only about six bushels of wheat an acre, of which two had to be
retained for seed.

Not only the food but nearly everything else had to be raised where
it was to be consumed. Houses were constructed of materials from the
forest, clothes were made out of flax and wool from the village fields,
furniture and implements were made at home. Nearly every village had a
mill, usually run by water, to grind its meal or flour; some villages
had a smith or carpenter; few special artisans beside those suggested
were to be found in the ordinary manor.

=37. Evils resulting from the lack of commerce.=—Before we proceed to
describe the growth of European commerce from such origins it will be
well to stop and consider the results of a system which was based on
the lack of commerce. With regard to the main product, food staples,
the result was an alternation of _waste_ and _want_. A good year
brought a surplus for which there was no market outside the village,
and which could not be worked up inside for lack of manufacturing
skill and implements. A bad harvest, on the other hand, meant serious
suffering, because there was no opportunity to buy food supplies
outside the manor and bring them to it. Nearly every year was marked
by a famine in one part or another of a country, and famine was often
followed by pestilence. Diseases now almost unknown in the civilized
world, like leprosy and ergotism or St. Anthony’s fire, were not
infrequent. The food at best was coarse and monotonous; the houses were
mere hovels of boughs and mud; the clothes were a few garments of rude
stuff. Nothing better could be procured so long as everything had to be
produced on the spot and made ready for use by the people themselves.
Finally, these people were coarse and ignorant, with little regard
for personal cleanliness or for moral laws, and with practically no
interests outside the narrow bounds of the little village in which they
lived.

=38. Exceptional instances of higher organization of industry.=—These
conditions existed all over western Europe, and may be taken as typical
of the period about the year 1000. Though they determined the commerce,
or better the lack of commerce, at this time, they were not absolutely
universal. Great feudal princes and great monasteries owned each a
considerable number of villages or manors, and tried to introduce a
more advanced economic system among them. A great lord would have
his shoemaker and tailor, his saddler, swordsmith, etc.; and would
have a considerable number of women gathered in a sort of factory
making clothes. It is noteworthy, however, that the difficulties of
transportation were so great that for a long time to come it was not
practicable to concentrate the food supplies of a large group of manors
in one place, and the owner would have to go to the food instead of
having it brought to him. So we read of the kings and princes being
always on the road, traveling with court and retinue from one manor to
another, eating up the surplus that had accumulated and then moving on.

=39. Common wares of commerce in the period of the manor.=—Absolute
self-sufficiency was impossible; it was the ideal at which the managers
of the manor aimed, but there were few manors which could supply all
the necessaries of life. The list, however, of articles which had to
be procured by commerce with the outside world was small. Salt was
one item, of special importance as it was so difficult to keep live
stock through the winter, and the animals had to be killed and salted
down. Iron was necessary for various implements, though it was so
expensive that it was spared in every possible way. Other articles had
to be bought as occasion arose, stones for the mill or tar to keep
the murrain from sheep. These wares were essential to existence; by
channels so obscure that they cannot now be traced they reached the
places where they were wanted, and were purchased with part of the
manor’s scanty surplus. Cattle and horses formed also, as is natural,
common objects of exchange.

=40. The slave trade in Europe.=—One ware which had long been an object
of commerce was of especial importance in the period just after the
fall of Rome, and, indeed, for some time later; this was slaves. The
slave trade extended over all Europe, and had great markets on the
Mediterranean, the North, and the Baltic seas. Merchants drove troops
of slaves in chains from one country to another, or exported them in
lots of 100 or more. In the slave markets of the Baltic as many as 700
are said to have been put up for sale at once. A number of English laws
regulated the slave trade of the time. It seems to have been largely
confined to convicts, but a law of Alfred provided that a father
should not sell his daughter to servitude among strange people. Later
the English laws forbade the trade entirely, but we read of Bristol
merchants in the eleventh century who not only bought slaves all over
England for export to Ireland, but bred them as well; and the trade
persisted in various sections even later.

=41. Distant commerce confined to rare luxuries.=—Under conditions
such as these the term “foreign commerce” in its modern sense is
meaningless. The areas which now form the countries of Europe did
not specialize in the production of different wares, so that we can
trace a regular exchange of products between them. Most of the common
wares of commerce circulated inside a restricted area. Only the rich
could afford to pay for the transportation of wares over any distance,
and they would spend their money only for valuable luxuries. The
dignitaries of the church, by reason of their higher culture and
connection with a universal organization, created a demand for a few
foreign wares, and the governing classes wanted some things which could
not be produced at home. Wines and spices were brought up from southern
Europe, along the river routes and over the passes of the Alps, and
furs were brought down from the North.

Distant sea voyages were still uncommon. An English law of about 900
provided that “if a merchant thrived so that he fared thrice over the
wide sea by his own vessel” he might be promoted to a higher social
class; and later laws refer to merchant ships again. The Scandinavians
have left records of adventurous voyages to the North and West, and a
vast number of silver coins found in Russia and the Baltic countries
shows that a land trade with southwestern Asia persisted in the period
of which we treat. It is only toward the close of this period, however,
that we begin to get details about distant commerce, and can see that
it is firmly established. The Institutes of London, issued in the
eleventh century, and regulating the commerce of the town, mention
ships coming from Flanders, from Rouen and other places in France, and
from Germany. Foreign merchants bought wool and pigs, and sold wine,
furs, spices, gloves, and fish.

=42. Character of the merchant in the early Middle Ages.=—We know
even less of the person of the merchant, in this period (about 1000
A.D.), than of the wares that he carried. It is certain, at any rate,
that the merchant was not the specialist that he afterwards became,
but was a jack-of-all-trades. He might be wholesaler and retailer,
transporter and pedler, and often an artisan too. Nothing like the
country store of the present day existed, and trade outside the few
centers where markets had been established was carried on by pedlers,
who carried their wares on the back or on a pack animal. Every merchant
was sure to be something of a soldier, as he was thrown largely on his
own resources for self-defence; and he often assumed the garb of a
missionary or pilgrim to get the help of the church in carrying on his
trade. The pilgrim was exempt from many burdens laid on the ordinary
traveler or merchant, and though this exemption had later to be
abolished, because it was so frequently abused, it seems to have been
of great use in helping commerce through its early stages.


QUESTIONS AND TOPICS

 1. Modern France has, approximately, an area of 200,000 square miles.
 Calculate the average size of the feudal state about the year 1000,
 and compare it with the county in which you live.

 2. Can you suggest anything in cow-boy life on the plains of the West
 reminding you of feudal conditions, when the State was weak?

 3. What district, known to you, has the least commerce with the
 outside world?

 4. How does the yield of wheat, as given in the text, compare with the
 yield in different parts of the U. S.? [See Abstract of the United
 States Census.]

 5. Show why the lack of commerce requires small groups of people to
 produce everything for themselves, and why this self-sufficiency
 involves a low standard of living.

 6. How does commerce remedy the waste and want which are
 characteristic of self-sufficiency? Why cannot people plan to produce
 just enough food?

 7. Report on the wares and workmen collected on the estates of a
 great king. [Falkner, Statistical documents of the Middle Ages,
 Philadelphia, 1896, 10 cents, pp. 2-5.]

 8. Name some wares, important in the stock of even the smallest
 country store, which did not appear in commerce in the period of the
 manor. Show the necessity of each one of the wares mentioned in the
 text.

 9. Why could a profitable commerce in slaves be carried on when other
 wares did not pay the merchant?

 10. What are the luxuries which a trader now can afford to pack into
 the uncivilized districts of Africa and America?


BIBLIOGRAPHY

References on the rise and character of feudalism may be found in many
manuals of European history; among others Emerton, Introduction, 236;
Mediæval Europe, 477; Robinson, Middle Ages, 119. Brief accounts,
mainly for the student of political history, may be found in the
above, in Adams, European Hist., 185-191; and in the same author’s
*Civilization, chap. 9. The best account of the feudal system in
English is Seignobos, **Feudal regime, N. Y., Holt, 1903.

Most of the books describing conditions in this period treat them
either from the political or the agrarian standpoint; the writer knows
nothing, suitable for student’s reading, discussing the origins of
commerce at this time. See, therefore, Cunningham, Growth, vol. 1, book
1, or the smaller manuals on English economic history.




CHAPTER VI

TOWN TRADE


=43. Significance of towns in the economic organization; decline of
the Roman towns.=—In the latter part of the Middle Ages, beginning
after the year 1000, a striking change took place in the life of
Europe; the people advanced so rapidly in their economic and political
organization that we can make this a new era in their history. It will
be necessary to notice the important changes in detail, but we can
summarize them now, from the economic standpoint, by saying that people
advanced from the stage of the village or manor to that of the town. A
town, as the word will be used here, means a group of at least several
hundred, perhaps several thousand people, settled closely together, and
maintaining themselves in large part by manufactures and trade. Such
towns had existed, as noted above, in the Roman Empire of the West.
In Roman Gaul (modern France) there were over one hundred of them.
They depended for their existence, however, on the stimulus of Roman
culture, and on the security which good government could afford to
their trade. A manufacturing class evidently could not eat the wares
it made, and needed the chance to exchange them for food products from
the country districts if it was to maintain itself. In the period
before, during, and after the German invasions the chance for exchange
grew steadily less, as we have seen. Some of the towns were entirely
destroyed in the period of disorder which followed the fall of the
Roman government. London, for instance, which had been a flourishing
town under Roman rule, must have become a mere heap of rubbish, for
when it was rebuilt in later times no attempt was made to follow the
lines of the old streets, and new streets were laid out over the
ruins of former houses. When a town was not actually destroyed it
ceased to live; the inhabitants had to take to agriculture to support
themselves, and the town shrank to a mere village, which could not be
distinguished from the manors about it. Of more than 500 modern French
cities scarcely 80 can be traced back to the Roman period, and all of
these lost their identity as towns and became simple villages in the
intervening time.

=44. Rise of towns after 1000; conditions determining their
location.=—We read of towns in Europe before the year 1000 but they
scarcely deserve the name; they were rather the germs from which towns
were later to spring. Considerable numbers of people would collect
in the place where some great feudal lord spent most of his time, or
where a monastery had been founded; garrisons would be established
at places suitable for military operations. We must regard such
groups, however, as supported by taxation rather than by the trade of
individuals, from which most urban groups arise. Trade of this kind
became, however, so considerable after the year 1000 that real towns
grew up in constantly increasing numbers. Their position was determined
by two important conditions of existence, political protection and the
chance for profitable trade. People found the former by nestling under
the walls of some castle or monastery; the many French towns which
bear the name of some saint show how much the protection of the church
was prized. The latter object was generally attained by founding the
town at some break in a line of transportation, where goods had to be
transshipped and where merchants would naturally congregate to rest and
exchange their wares (cf. Ox-ford, Cam-bridge, etc.). We find the most
considerable towns, therefore, along the seacoast and rivers, and at
breaks or intersections of the land routes.

=45. Development of manufacturing in the towns.=—The rise of the towns
brought with it, as has been suggested, a new era in manufactures. In
the ordinary village it did not pay men to specialize in the production
of wares, as the market was so small. A shoemaker, for instance,
could not make a living by selling 50 or 100 pairs of shoes a year.
If we think, however, of a village growing into a town surrounded by
a considerable country population, we see that the market has widened
into an area of size sufficient to support a number of specialists.
Manufacturing became a _profession_ to which men devoted most of their
time. A man could learn his trade much more thoroughly, and could
afford to make the tools which would enable him to exercise it most
efficiently. The result was an increase in production which enabled the
people on a given area to live far more comfortably than they had done
before.

=46. Effect of the towns in improving the conditions in the
country.=—This movement was bound to change the conditions of life in
the country districts. The people there were freed from the necessity
of devoting part of their time to work which they never did well;
they could apply most of their energy to agriculture, and could use
the surplus crop which they thus obtained, for a profitable exchange
with the artisans of the town. The growth of towns affected them in
another way. In the purely manorial period a serf could not better his
condition by running away; he had nowhere to go except to other manors
like the one he had left, where his condition might actually be worse
than before. In the towns, however, practically all the population were
free; the artisans were numerous and intelligent enough to provide
for their own protection, and did not need to subject themselves to
a lord. The towns were islands of freedom in a sea of serfdom or of
half-freedom. The custom established itself that a serf who could
escape from his lord, and who lived a year and a day within the walls
of a town, became a free man, and could not be reduced to his former
position. Landlords found that they must bid against the attractions of
the town if they were to keep the laborers in the country, and agreed
to lighten their burdens if they would stay. Many influences worked
together, and the results were modified by many factors, especially
of a political kind, in various countries, but the upward movement of
the country population was general throughout western Europe. Free men
produced more than serfs, and this was another influence increasing the
surplus of the country districts, and furthering trade thereby.

=47. The “foreign” trade of this period was that between towns, even in
the same country.=—The student who has begun the history of commerce
with the notion, as common as it is erroneous, that the foreign trade
of a country is more important than its internal trade, and who is
impatient to arrive at the description of this foreign trade, will be
disappointed to learn that even in the latter part of the Middle Ages
it scarcely existed in the modern sense. We mean now by foreign trade
that between states—between the United States and Germany, for example.
In the manorial period, as has been suggested, foreign trade was rather
that which existed between manors. In the period under discussion it
was that which existed between towns. The towns existing inside the
boundaries of a modern European country did not, it is true, differ
as much among themselves, in their products, as they differed, taking
them altogether, from the towns of another country. But the expense
of transportation restricted most trade still to a comparatively
small radius, and the town, rather than the country, was the natural
trading unit. The radius of profitable trade, for most articles, was
so small that an English town would have its most important commercial
relations with the other English towns rather than with the towns of
foreign countries. The town, moreover, was the unit for regulating
trade. Each town would have its own customs tariff, and to a merchant
of London it made little difference whether he traded with Southampton
or with Paris; national regulation was less important than municipal.
Climatic and historical influences, it is true, made a clearly marked
distinction between the great sections of Europe, the North and the
South, the East and the West, and we shall have to take up some of
these sections in detail; but we shall use our time most effectively
by spending it not on the features of trade in the different modern
countries considered separately, but on the characteristics of trade
common to all the advanced countries.

=48. Small size of the medieval towns.=—A point deserving special
emphasis in the description of the medieval town is this, that though
the town comprised practically all the mercantile and manufacturing
population of a country, and though it marked a tremendous advance over
the village, yet the town was a very small affair when measured by
modern standards. In England in the thirteenth and fourteenth centuries
the average size of the first class of towns was probably below 5,000
inhabitants; few had more than 10,000 and many had less than 1,000.
On the Continent, in the last centuries of the Middle Ages, even
celebrated cities like Nuremberg and Strassburg had not over 20,000
inhabitants. Frankfort on the Main had scarcely 10,000, and other
cities which played a great part in economic and political history had
even less.

=49. Rural characteristics of the towns.=—Another misconception must be
guarded against. Though the town was a distinctly industrial group in
comparison with the village, yet each town had grown from a village,
and retained many features of its agricultural infancy even to a
late period. Most of the townspeople owned some land which they used
for garden plots, and every town had considerable amounts of arable
and pasture land outside the walls which was used for the benefit of
the townspeople if not actually worked by them. In Coblentz, in the
thirteenth century, work on the city walls was stopped during harvest
by lack of labor, and in London at the same period people were allowed
to keep pigs “within their houses,” and the attempt to keep vagrant
swine off the streets was a distinct failure.

=50. General description of a town.=—There were generally a few streets
that were broad and straight, as they were the old highways on which
the town had grown up. The attempt was made to keep these clear of
encroaching houses and shops by sending a horseman through them once
a year with a spear held horizontally, and by forcing the removal of
obstructions. Most of the streets, however, had grown up from village
by-paths and were narrow and crooked. They were rarely paved, and as
they served as the repository for all kinds of offal and garbage we
can understand why the townspeople wore wooden overshoes when they
went out, and even the saints in the pictures were painted with them
on. The houses were of wood in the early period, and there were no
chimneys, so that fires were frequent and disastrous until they forced
people to a better mode of building. Travelers in Europe now remark
upon the picturesque beauty of the old houses, and upon the merits of
their construction, but it should be noted that most of these relics
date from the very end of the Middle Ages and that they were the select
few of their time, and give no indication of the character of the
average house. Most of the people lived in narrow quarters, dark and
drafty, unsuited for good work places and unwholesome as habitations.
Wares were exposed for sale either in the open market-places which are
so common in European towns, or in little shops like pedlers’ booths
at the front of the house. The municipal government spent little or
nothing for public works or police protection; it tried to make the
inhabitants share in performing all absolutely necessary duties, but
succeeded so ill that all the towns were sinks of disease, and breach
of the peace was a constant occurrence.

=51. Improvement in conditions in the later Middle Ages.=—In the early
period of the towns, say before 1300, conditions were distinctly worse
than they were in the last two centuries of the Middle Ages, when
commerce had attained such development that it brought great wealth to
some and comparative comfort to many among the city people. The town
of Colchester, in England, ranked as one of importance in 1295, but a
tax roll of that date shows a striking poverty in the stock in trade
assessed for taxation, in the small value of household furniture,
in the insignificant amount of most of the assessments, and in the
preponderance of rural wealth like live-stock and agricultural produce
over other kinds of personal property. In the fourteenth century,
however, the population of the town doubled, and in the fourteenth and
fifteenth centuries the towns of England in general freed themselves
from the worst features of medieval squalor, accumulated wealth, and
expended large sums in building and improvements.

=52. Town organization. The merchant gilds.=—Much more might be said
about the general characteristics of the medieval town, but the student
of the history of commerce must devote most of his time to its economic
life. He must prepare himself to accept and understand conditions quite
different from those of modern times, and must try to realize how much
the world has gained by the advance of the commercial organization
from these early stages. In every town the merchants and manufacturers
were organized in _gilds_ and subject to strict regulation. The
Anglo-Saxon word gild means “a contribution to a common fund,” and
came to be applied to the society itself. Societies had existed in the
first part of the Middle Ages with social and religious objects, and
about the eleventh century, with the springing up of trade, commercial
gilds became more and more common. It is supposed that the dangers
and difficulties of trade were then so great that merchants united
in bands for a journey, as caravans are now formed in the unsettled
countries of the East. A collection of early gild rules shows that
the members were subject to regulations like the following: Every one
was obliged to carry armor, a bow and twelve arrows on penalty of a
fine; they must stand by and help each other when they set out for a
journey; in case one member had not sold his wares the others must wait
one day for him; if one was imprisoned or lost his wares on the road
the others must ransom him. The organization was probably temporary at
first, and the company of merchants dissolved at the end of the trip;
but as such caravans became more regular at any place there grew the
tendency to permanence of organization. These merchant gilds were at
first also private associations, formed voluntarily by the merchants to
protect themselves; but they received public recognition and became a
part of the town government as the town saw the advantage it could get
from them in pushing its trade and protecting it against the efforts
of rivals. They included not only professional merchants, but all who
bought and sold, including many artisans. Of the nine members who
belonged to the Shrewsbury merchant gild in its earliest period two
were fishermen and one was a butcher.

=53. Position of the merchant gilds; their privilege of
monopoly.=—These merchant gilds did not exist in all parts of Europe,
and differed much from each other in the various regions where they did
exist. In England, which we shall choose to illustrate their operation,
they became regular parts of the town government. They were granted
one most important privilege, the exclusive right of trading within
the town. “Foreigners,” which meant at this period the people from any
other town, whether English or not, were allowed to bring their wares
to the town and to sell them wholesale, but they were forbidden to
purchase wares which the townspeople wanted for themselves, and they
were not allowed to keep shops and to sell retail. The gilds were not
like modern “trusts,” for, in the first place, their membership was
very broad, and, in the second, they were associations of men, not of
capital, and there was no division of profits among the members. There
was a strong feeling of solidarity among the members, however, and
competition between them was discouraged. In some places there was a
law that if a gildsman made a bargain for any ware another gildsman had
the right to share in it if he gave security that he could pay for the
portion he desired.

=54. Development of manufactures in the towns; the common
handicrafts.=—The growth of towns led, as has been said, to a
specialization in manufactures which was impossible before. All the
industries that had been carried on in villages were continued in towns
by professional craftsmen, and new ones were added as the demand for
them grew. There were from a dozen to a score of handicrafts which
supported for centuries the staple manufacturing groups of the towns:
butchers, bakers, brewers, blacksmiths, goldsmiths, coppersmiths,
masons, carpenters, cabinet-makers, wheelwrights, skinners or furriers,
tanners, shoemakers, saddlers and harness-makers, weavers, dyers,
fullers, and tailors. Most of these terms will be familiar to the
reader. Coppersmiths took the place of the modern tinsmiths before the
introduction of tinned iron. Fullers improved the texture of cloth
after it had been woven, by beating and washing it with fuller’s earth,
a clay which absorbs the grease from the wool; the cloth loses in
length and breadth but gains in body and thickness.

=55. The craft gilds.=—The craftsmen, like the traders, were organized
in gilds, which followed shortly after the rise of merchant gilds.
The general reason for their existence was the desire on the part of
members of a particular craft to be free to regulate their professional
affairs as they pleased, and the willingness on the part of the public
authorities to grant them this privilege when it seemed to promise
better work and better products for the consumer. To insure efficient
regulation the grant of monopoly was necessary, and accordingly no one
was allowed to practise a craft who did not belong to the appropriate
gild. We shall see that the monopoly was greatly abused in later times
and was a serious hindrance to the development of manufacturing. At
the start, however, the craft gilds were liberal; they desired a
large number of members to increase their political importance, and
admitted them freely; inside the gild the class distinctions were at
first unimportant. “The regulations drawn up by the crafts aimed at
the prevention of fraud, and the observance of certain standards of
size and quality in the wares produced. Articles made in violation of
these rules were called ‘false,’ just as clipped or counterfeit coin
was ‘false money.’ For such ‘false work’ the makers were punished
by fines (one half going to the craft, the other half to the town
funds), and, upon the third or fourth offence, by expulsion from the
trade. Penalties were provided, as far as possible, for every sort of
deceitful device; such as putting better wares at the top of a bale
than below, moistening groceries so as to make them heavier, selling
second-hand furs for new, soldering together broken swords, selling
sheep leather for doe leather, and many other like tricks.”

=56. Town policy; imports, exports, protection.=—Every town felt a
community of interests among its inhabitants and a competition with the
inhabitants of other towns, which expressed themselves in a town policy
very like the national commercial policy of the modern state. We can
consider this municipal policy under several different heads.

(1) Every town had what may be called a “revenue tariff,” consisting
of duties levied on articles brought within the walls, with additional
dues for the use of the market. As an example we can cite a brief
extract from one of the London tariffs, giving the customs on victuals.
“Every load of poultry that comes upon horse, shall pay three
farthings, the franchise excepted.... If a man or woman brings any
manner of poultry upon horse, and lets it touch the ground, such person
shall pay for stallage three farthings. And if a man carries it upon
his back and places it upon the ground, he shall pay one half-penny,
of whatever franchise he may be.” It is interesting to note that this
custom still survives in some European cities (_octroi_).

(2) Prohibitions to export goods, now rare in national policy (though
suggested recently to keep English coal at home), were common in the
town policy, when the supply of necessaries was small. “No butcher, or
wife of a butcher, shall sell tallow or lard to a strange person for
carrying to the parts beyond sea; by reason of the great dearness and
scarcity that has been thereof in the City of late.” “No person shall
carry corn or malt out of the City, under penalty of forfeiture.”

(3) The modern idea of protection was applied by the towns in a number
of different ways. Bread from one part of London could not be sold in
another part, which formed a separate jurisdiction. The protection at
this period was attained more commonly, however, by aiming it against
persons rather than wares; the merchant always accompanied his wares
at this period, so it was easy to discriminate against “foreigners,”
by making them pay special dues from which members “of the franchise,”
_i.e._, townspeople, were excepted, and by restricting their chances
for profit. Reference has been made above to the monopoly of retail
trade reserved to townspeople and designed to protect the “home market.”

=57. The market and its regulations.=—(4) The market was an institution
used in this period to regulate trade for the benefit of the
townspeople; the name is applied now especially to meat shops simply
because regulations were imposed on butchers after other dealers were
freed from them. The townspeople were afraid that traders bringing
provisions for sale could impose on their needs and force higher
prices by making separate individual bargains. Therefore they required
the country people to bring their provisions to a certain place
(market-place) at a certain time, that they might have the benefit of
competition among sellers; and tried to force the traders to sell out
their stock before the close of the market. That all the townspeople
might have an equal chance they were forbidden to buy goods on their
way to market (“forestalling”); to buy larger amounts than they needed
(“engrossing”); and to buy goods for retailing before the ordinary
consumers had supplied their needs (“regrating”). After the close of
the market the town shop-keepers looked after the needs of retail trade.

Ignorance and distrust were still so powerful in the town period that
merchants were subject to constant supervision; they had to employ
officials to weigh and measure for them, and could not employ brokers
to hunt up customers unless the agents were also officials acting under
oath.

=58. Attempts to regulate prices. The assize of bread.=—The town
government went even so far as to set the prices at which wares must
be sold. We are familiar, nowadays, with instances of the regulation
of prices by public authority, as in the case of hack fares. Such
instances, however, are now exceptional, while in the Middle Ages
innumerable attempts at public regulation, covering practically all
wares, were made at different times and places. Most of them were soon
given up, because they defeated their own object; when the price was
set too low the ware was no longer offered, and people suffered more by
going without than by paying the higher price. Thus it was found unwise
to set a price for a necessary like wheat; and high wheat prices were
allowed to work their own cure by the inducement they offered to an
increase in supply. It was as hopeless to set a fixed price for bread,
but the government determined that at least the baker should not make
improper profits from the necessities of his customers. It established,
therefore, the “assize of bread,” a sliding-scale which fixed the
weight or the price of a loaf according to the market price of wheat,
and so restricted the power of the baker to raise his charges unduly.
The same system was applied to ale, and assizes of this kind have
lasted down to the nineteenth century in some countries.


QUESTIONS AND TOPICS

 1. Show what would happen to our modern cities if there were an
 interruption of commerce, either physical (perhaps the giving out of
 coal) or political (wars, strikes attended with violence, etc.).

 2. Study the effect on a modern city of such a brief interruption as a
 great blizzard.

 3. Find the reasons for the rise and growth of the following: London,
 York, Paris, St. Omer, Lille, St. Denis, Lyons, Bruges, St. Cloud.
 [Use a geography and the encyclopedia.]

 4. Starting from the statements in the text, that in a manor of 100
 inhabitants the only specialists were perhaps miller and smith, try
 to think of specialists who would appear as the group grew in size to
 1,000; to 10,000; to 100,000; to 1,000,000. For example, when would
 the following appear: watch-maker, artificial limb-maker, shoe-maker,
 saddler? [The business directory of a city may supply helpful
 suggestions.]

 5. How has the growth of cities in the U. S. affected the agriculture
 of the surrounding districts and the welfare of the farmers?

 6. Compare the size of medieval towns with that of towns and villages
 familiar to you, and try to realize the conditions if all the larger
 cities were swept off the map. [See Abstract of the Census of U. S.
 giving the population of all places having 2,500 or more inhabitants,
 arranged by States.]

 7. (_a_) Make a list of the ten or fifteen largest towns in modern
 England. [Statesman’s Year-Book, index, England, cities and towns.]
 (_b_) Compare this with a list of towns in early times and discover
 what large towns are of recent origin. [Cheyney, English towns, pp.
 35-39. Beware of the large figures of population, p. 38; they are
 misleading.]

 8. Write a report on the economic and social life of a medieval town.
 [See M. D. Harris, Life, or the original local customs in Cheyney,
 English towns, pp. 2-6.]

 9. Write a similar report on the merchant gilds. [Harris, Life, chap.
 7; Cheyney, English towns, pp. 12-20.]

 10. Reviewing the list of trades in the text, try to realize how the
 people managed in the manorial period, when professional specialists
 in these trades were lacking.

 11. Study the list of craft gilds in York, 1415; find from dictionary
 and encyclopædia the meaning of each trade mentioned; arrange them in
 classes, as for example: food, clothing, building utensils, personal
 service, etc. [Cheyney, English towns, pp. 29-32.]

 12. Write a report on the town artisans and the craft gilds. [Harris,
 Life, chap. 13; Cheyney, English towns, pp. 21-29.]

 13. Compare medieval and modern ideas on the regulation of trade.
 [Farrer, The State in its relation to trade, N. Y., Macmillan, 1902,
 $1.]


BIBLIOGRAPHY

 Gross, Sources, §§ 24_a_, 72.

 GENERAL.—For the significance of towns in the development of the
 industrial organization the student may be referred to two important
 books, differing in details: Schmoller, Merc. system; Bücher, Indust.
 evolution. Chapters on the rise of towns and town life will be
 found in Adams, *Civ.; Emerton, Med. Eur.; Robinson, Middle Ages;
 Munro, Hist.; etc. Greater emphasis is, of course, laid on the
 economic (including commercial) aspects of town life in **Ashley and
 *Cunningham. Jessopp, *Coming, gives a vivid picture of urban and
 rural life of the period. Mary D. Harris, **Life in an old English
 town (Coventry), London, 1898 (N. Y., Macmillan, $1.75), should
 be very useful to student and teacher. Green, **English Towns, is
 valuable and interesting for the English towns of the fifteenth
 century.

 SOURCES.—Cheyney, **English towns and gilds, Penn. Translations,
 Phila., 1895, $.20, gives an excellent selection, which can be used to
 advantage with advanced students.




CHAPTER VII

LAND TRADE


=59. Roads neglected, or left to benevolent associations.=—The
maintenance of the roads was still left to local authorities. We find
in the court records of manors that the people reported stretches of
road which were in bad condition, and ordered that they should be
repaired under penalty of fine; but a road had to be very bad before
it attracted attention, and received little care at best. The clergy
were the leaders in maintaining the roads, for their estates were
scattered and they felt the need of transportation as none other but
merchants did. Pious persons also devoted themselves to this object, as
a meritorious work like visiting the sick or caring for the poor; they
formed associations to keep roads in repair, and left bequests to allow
the work to be carried on after their death. The Alpine hospices, which
are so familiar to visitors in Switzerland now, were established by
religious orders to help travelers and merchants on their way.

=60. Difficulties of transportation by road.=—A feudal lawyer
distinguished in theory five kinds of roads: the path, the wagon road
of eight feet, the road of sixteen feet, the highway of thirty-two
feet, and the Roman roads of sixty-four feet. There was nothing in
reality to correspond to this distinction. The Roman roads were still
in use, but they were too much worn and too few in number to raise
the general level of transportation. When an English king wanted to
transport provisions to Scotland about 1300, he required four horses,
or, in the northern counties, eight oxen to a wagon. Transportation
by wagon was so difficult that pack animals were still in general use
and travelers nearly always went on horseback, both men and women
riding astride, and twenty miles being considered a fair day’s journey.
The town of Bristol was granted a county court in 1373 to save the
townspeople the journey to Gloucester, “distant thirty miles of road,
deep, especially in winter time, and dangerous to passengers.” At
the very end of this period (1499) a glover traveling to market at
Aylesbury was drowned with his horse in a pit which a miller had dug to
get clay from the road. A court acquitted the miller on the ground that
he had no malicious intent, and really did not know of any other place
where he could get the kind of clay he wanted.

=61. Lack of bridges.=—Bridges were still rare. Those which the Romans
had built fell into ruins; they were rebuilt in wood, or replaced
by bridges of boats, by simple ferries, or by mere fords. Complaint
was made to the English Parliament in 1376 that nobody was bound to
maintain the bridge over the Trent near Nottingham; the bridge was
“ruinous,” and “oftentimes have several persons been drowned, as well
horsemen, as carts, man and harness”: Parliament refused authority
to keep the bridge in repair. A large number of towns had grown up
on rivers, as is shown, for instance, by the number of English town
names ending in -ford, -bridge, -ferry; and the difficulty and danger
of crossing the streams were serious obstacles to trade. Pious and
public-spirited people took up the work which the government was
still unable to undertake, and devoted their time and money to the
construction and repair of bridges; the church assisted by the grant
of indulgences (remitting church punishments for sins) to those who
contributed. Even now the religious character of some of the European
bridges is attested by the chapels built on or near them.

=62. Advantages of river transportation.=—The difficulties of
land transport led to the use of river navigation wherever it was
practicable. It is said that the flow of many European rivers was more
full in the Middle Ages than it is now, and though the course was apt
to be obstructed by mill dams and fish-weirs, and little was done
to preserve the channel, merchants could transport by rivers bulky
articles which would not have paid for their carriage on land. A single
boat, it is estimated, carried as much as 500 pack animals would take,
and it often paid to go far out of the shortest way to a market to
follow navigable water. It was cheaper, for instance, to bring salt
from Lüneburg to Brandenburg by way of Lübeck and Stettin, though the
direct land route was of course far shorter.

=63. Danger of violence on the road.=—The physical difficulties of
travel were accompanied by danger of violence of which people nowadays
have little conception. The church attempted to secure the safety of
merchants, and cooperated with the political authorities in maintaining
the “Peace of God,” and in repressing disorder. The feudal system had
developed into a more efficient system of government in its later
period, and something like the modern state rose from it before the
close of the Middle Ages. But in spite of all efforts highway robbery
and violence were regular and normal occurrences, even in the more
advanced countries. In many parts of Europe merchants still traveled
in temporary bands or “caravans,” for better protection, and students
going to college in England were encouraged to carry arms on the
journey.

=64. Complicity of feudal lords in robbery.=—The King of France tried
in vain, in the thirteenth century, to make feudal lords responsible
for crimes committed in their territories. The lords were often
accomplices in the crimes; the King himself was not always above
suspicion; and even dignitaries of the church or heroes of the crusades
turned highway robbers on occasion. An indication of the conditions
is given by a complaint of the English House of Commons in 1348.
“Whereas it is notoriously known throughout all the shires of England
that robbers, thieves, and other malefactors on foot and on horseback,
go and ride on the highway through all the land in divers places,
committing larcenies and robberies; may it please our lord the king
to charge the nobility of the land that none such be maintained by
them, privately nor openly; but that they help to arrest and take
such bad fellows.” A century before, two merchants from the continent
had been robbed in Hampshire; the culprits were arrested, but could
not be convicted for a long time; finally more than sixty persons
were executed for complicity in this and similar crimes, the number
including many men of position, numerous royal officials and some even
of the king’s household. Shakespeare’s story of Prince Hal’s exploits
on the road may not be true, but it is not at all improbable.

=65. Tolls imposed by feudal authorities.=—It would be a great
mistake to suppose that the merchant’s expense comprised only the
sums necessary to transport his goods over bad roads and to protect
himself against robbers. In addition every merchant had to pay the
feudal tolls: tolls for the repair of a road which was not kept up,
and tolls for protection which he had to furnish himself. Feudal lords
were everywhere, and every feudal lord tried to make money out of the
movement of men and goods. As early as the time of Charlemagne (809)
we find the central government attempting to keep the ways of commerce
open. Charlemagne forbade the compelling of travelers to use bridges
when there were short-cuts, or the building of bridges in dry places to
extort passage money from travelers, or the stretching of ropes across
streams to force ships to pay for the right of passage with money or
wares. The attempt was vain. The power of the central government fell
into the hands of local lords, and was exercised by them without regard
to any but selfish and local interests.

=66. Variety and number of tolls.=—The variety of feudal tolls is
almost inconceivable. Attempts by scholars to classify them as we
should modern fees and taxes are useless, because no principle underlay
the system. A French scholar has made a list of seventeen different
kinds of tolls, but this is rough and incomplete. We can say in general
that tolls were levied everywhere and on everything. Even a jongleur,
the equivalent to the modern organ-grinder, could not pass the gates
of Paris without making his monkey show off to pay his own way. A man
had to pay toll not only when he went _over_ a bridge; he had to pay a
toll when he went _under_ it, and could not escape the toll by going
_around_ it.

[Illustration:

 Places at which tolls were levied are marked by a line across the
 river, or, when many were levied at one place, by lines drawn near the
 river. The tolls as shown were established at different times down
 to the seventeenth century, and affected different wares; so that a
 merchant did not have to pay all of them at any time. The map of the
 Hudson is inserted as a help in estimating distances.
]

In the thirteenth century there were on one side of the Rhone four
toll-stations on a stretch of little over thirty miles. In the
fourteenth century there were 74 tolls on the Loire, from Roanne to
Nantes; 12 on the Allier; 10 on the Sarth; 60 on the Rhone and Saone;
70 on the Garonne or on the land-routes between la Reole and Narbonne;
9 on the Seine between the Grand Pont of Paris and the Roche-Guyon.
There were 13 toll-stations on the Rhine between Mainz and Cologne. In
a few hours’ walk around Nuremberg one passed 10 stations.

The traveler abroad, whose route follows the line of medieval trade,
is struck with the number of feudal castles which he passes. He admires
the picturesque ruins, perhaps, without realizing that each castle was
once a toll station and without reflecting that the Hudson shows a
higher stage of civilization than the Rhine.

=67. Abuses of the tolls.=—The burden of the tolls was aggravated by
the fact, already suggested, that the merchant got nothing in return
except the right to look out for himself. The merchants were forced to
associate to do what the river lords neglected: keep up the tow-paths,
drag the river-bed, build warehouses and wharves. The merchant might
pay a lord for a safe-conduct which was supposed to assure him
protection in a certain territory, and then be robbed by the lord
himself.

According to the feudal theory exemption from tolls must be granted
in certain cases. Supplies for the army and navy, for the king and
higher officials, for churches, hospitals, and monasteries, should pay
no toll. Scholars at the universities enjoyed in theory an immunity
which they could not secure in fact. The merchant, however, was always
regarded as fair prey, and wares of commerce which were supposed to
be exempt, as in France, for instance, wares on their way to Lyons
fair, enjoyed only partial immunity. A sixteenth-century French writer
instances as an example of the oppression of tolls the case of a
merchant who shipped to the East some cloth that was wet on the voyage
and had to be sent back to Paris to be redyed; all along the road in
France the tolls had to be paid over again. The collectors levied toll
even on grain that was being taken to mill, on cattle that were to be
used as plow animals, on agricultural implements and manure.

=68. Development of the toll system.=—With the growth of commerce the
toll-stations of course increased in value; and the practice grew up of
leasing them to contractors, who paid a high sum for the privilege and
had to devise, an old author tells us, “ten thousand new and unusual
tyrannies, frauds and exactions” to make any profit for themselves.
Many kept taverns, and managed to detain the merchant for days on
various pretexts, such as absence of the proper official. Some made
the merchant pay to be relieved of the necessity of having his wares
unpacked and weighed and measured in detail. Many kept the tariff
secret, and extorted what they could on every occasion. Some lived far
from the highway, and some put their offices by design on impracticable
roads, and fined the merchants heavily who went by another route.

On some routes, as along the middle Rhine, Bingen to Coblenz, it was
almost impossible for commerce to be carried on except along the
river, and very heavy tolls could be levied here without danger of
the merchants escaping; but under other conditions the collectors
established wings, as they were called, secondary offices on the
side-roads to prevent evasion of the toll. Some collectors established
regular pools, to use the modern term applied to railroad combination;
twenty-five or thirty of them, representing perhaps five or six
separate toll-areas, associated and agreed upon their rates; then they
pooled and divided their profits.

=69. Constraint of trade by tolls.=—The establishment of toll-stations
put an artificial constraint on trade, which kept it in the paths most
convenient for the collectors, not most suitable to the merchants.
Lords would not allow new and better roads to be built, for fear that
profits on the old roads would be impaired. The compulsion to follow
certain routes (German _Strassenzwang_) became a serious evil as
commerce developed and sought new openings; and the loss to the public
was far greater than any gain by the toll receiver.

Peculiarly noxious customs clustered around the rights which feudal
lords claimed for themselves in the period when the central government
was powerless. The right to a wrecked ship, which had once been the
prerogative of the king, could be distorted so that the whole cargo
of a Regensburg ship was confiscated in 1396 because a single little
cask had fallen off into the Danube. It was an accepted rule in Germany
that if a wagon broke down so that the axle touched the ground it
became a part of the land and belonged to the lord of the territory;
break-downs must have been frequent, in view of the wretched condition
of the roads, and it has been suggested that lords sought to cause them
by traps and pitfalls.

=70. Burden of the tolls on trade.=—The most evident effect of the
tolls was the additional cost of transportation which must be paid,
of course, by the consumer. The price of a ware might rise, within a
comparatively short distance, so much that it could not be sold at all.
It has been estimated that in the fourteenth century the Rhine tolls
merely on the stretch between Bingen and Coblenz amounted to two thirds
of the value of the wares. Even in the fifteenth century, and after
some reform had been effected in the French tolls, the price of goods
was doubled by carriage from Nantes to Orleans on the Loire or from
Honfleur to Paris on the Seine.

Besides the loss of money there was the loss of time; a merchant might
arrive at his destination too late to find a market for his wares,
or might find that they had deteriorated on the road. The monks of
Beauvais took three pennyworths from each horse load that passed by,
and on fast days they spent so much time in selecting their fish that
the rest of the load spoiled before it reached Paris.


QUESTIONS AND TOPICS

 1. Make a study of the roads in your own State, noting (_a_) the
 extent of good and of bad roads, (_b_) the effect on transportation,
 (_c_) the system under which the roads are maintained, (_d_)
 organized attempts at improvement. Study the system of New Jersey and
 its effects. [Documents aiding in this study may be obtained from
 the Department of Agriculture, Washington, and probably from the
 government of your own State—apply to State Librarian for information.]

 2. To what extent is river navigation practised in your State? Was it
 not more important before the introduction of railways?

 3. Estimate the distance between the points named in the text, sect.
 62, by land and by water.

 4. Have we had in the U. S. in recent times any similar dangers of
 violence in transportation? [Read the history of gold-mining in
 California, in H. H. Bancroft or other available books.]

 5. Robber knights in medieval Germany. [Baring-Gould, Story, chap.
 22.]

 6. Read the first part of Shakespeare, Henry IV, about the exploits of
 Prince Hal and Falstaff on the highway.

 7. What would be the effect on trade in your State if tolls were
 levied on the border of every county, or even inside the counties?

 8. Using a good map find from the scale of miles the length of one of
 the stretches mentioned in sect. 66 (for example, Mainz to Cologne),
 and insert the toll stations; then transfer this, changing the scale
 if necessary, to some road or railroad entering the place where you
 live.

 9. Modern railroad officials are sometimes called “robber barons.”
 Assuming the truth of charges made against them, discuss the
 appropriateness of the term, indicating points of likeness and of
 difference with respect to medieval nobles.

 10. Compare medieval and modern compulsion in the choice of routes.
 What is alleged to be the attitude of transcontinental railroads to
 the construction of the Panama Canal?

 11. Using the method suggested in sect. 66 apply the statements in
 sect. 70 to conditions at home, and show how much medieval tolls would
 add to the present low charges of transportation.


BIBLIOGRAPHY

 By far the best reference that can be given is Jusserand, **English
 wayfaring life. If a library containing older books is available
 much of interest will be found in Smiles, *Lives of the engineers,
 London, 1862, vol. 1. A good study will be found also in the Economic
 Review, vol. 7, July, 1897: Alice Law, English towns and roads in the
 thirteenth century.




CHAPTER VIII

FAIRS


=71. Fairs; the reason for their existence.=—The foregoing description
of medieval commerce will have shown that trade was far less
extensive than it is now, and will suggest the reason for one of the
characteristic trading institutions of the time—the fairs.

Every person with wares to sell seeks a purchaser who desires those
particular wares and who will give him in exchange something that he
himself desires. Nowadays, for instance, a farmer brings his country
products to the city, seeks out a produce merchant who will give him
money for it, makes his purchases at the dry goods store with the
money, and returns contented; he has exchanged his surplus for what
he lacks. If there is no special store where he can sell his produce
he must seek out buyers by going around to the separate houses, and
if there is no general store where he can make his purchases he must
again hunt up the individuals who make or sell what he desires. Where
exchange is still relatively rare it may be a very troublesome process
to find the buyers and sellers of particular wares, and the following
device has almost always been adopted to meet the difficulty; people
who desire to trade agree to meet at a certain time and place, so
that there will be every chance that buyer and seller will find each
other and secure that coincidence of supply and demand which exchange
implies. The current of trade is dammed for a time as it were; then
allowed to flow in much greater volume for a little while, then dammed
again.

=72. Comparison of fairs with markets and modern exchanges.=—Even now
the old custom of “market days” persists in some places, and once
it was universal; townspeople and country people agreed on a certain
day, and met in the market-place then to exchange their wares. A fair
is the same kind of institution as a market, and grew up for similar
reasons, but it represented a further step of development, for it
attracted buyers and sellers from a far greater area, and served the
needs of wholesale as well as retail trade. The fair is, of course,
much less advanced than the modern exchanges (stock and produce), from
the fact that it was intermittent instead of being continuous, as well
as for other reasons; but in the Middle Ages it was the means by which
commerce grew strong, and the prosperity of commerce could be measured
by the prosperity of fairs.

The fairs always attracted people for social as well as business
purposes; life in the Middle Ages would be regarded as insufferably
dull at the present time, and both townspeople and country people
enjoyed the excitement which the fair brought with it. There were
“side-shows” in plenty, then; wild animals, trained dogs, and
monstrosities, poets and musicians, actors and clowns, dancing and
gambling halls; and there was a good opportunity to turn a penny
dishonestly as well as honestly. The court roll of the English fairs of
St. Ives tells us of a defendant who was caught selling a ring of brass
for 5-1/2d., saying “that the ring was of the purest gold, and that he
and a one-eyed man found it on the last Sunday in the Church of St.
Ives, near the Cross.”

=73. Privileges of merchants trading at a fair.=—The fair ordinarily
grew up under the protection of some feudal lord, secular or
ecclesiastical, who endeavored in every way to further its growth
that he might increase his revenue from the taxes he imposed on it.
The lord of a fair endeavored to attract merchants by guaranteeing
them protection on their way, and there were many cases in which the
lord took up the cause of merchants of his fair who had been robbed
or maltreated by others, and forced restitution. Furthermore, he
endeavored to secure exemption from tolls for wares on the way to his
fair, and sometimes merchants on their way to a fair were freed from
the attachment of the person for debt. Inside the fair a freedom of
trade was allowed which was unusual at the time, and various special
privileges were granted the merchants. The most important of these
was a special court in which cases of breach of contract and the like
could be tried. It was called the Court of Pie Powder (Pie, French
_pied_, foot; _curia pedis pulverizati_, court of dusty foot) from the
dusty feet of the merchants, or, as some said, because justice was
done as speedily as dust would fall from the foot. At any rate this
court did give a rough and ready means of settling commercial disputes
by referring them to a committee of traders, which was highly prized
because commercial law was still in its infancy, and no justice could
be looked for in a manorial or a feudal court.

=74. Great fairs in Europe. The fairs of Champagne.=—It would be
possible to give a long list of fairs, for every country of Europe had
them in varying number at different times. The oldest was probably that
of St. Denis at Paris, which may have been founded (as its patrons
alleged) in the seventh century, and which was certainly in active
operation long before the time of Charlemagne. In a later period
another Paris fair, that of St. Germain, became more important, and
later still the fairs in the French province of Champagne became the
most flourishing in Europe. The prosperity of these fairs was due in
part to their geographical position, which made them a natural trade
center and distributing point when commerce on land was more important
than that on sea, but still more, apparently, to the good government
and wise policy of the Counts of Champagne. The Counts gave sufficient
protection both at home and abroad, maintained regular and reasonable
dues, and did everything to stimulate the confidence of the merchant
class. They got an enviable reputation by their strictness in forcing
the proper execution of contracts made at the fairs, and took such
precautions to assure the payment of debts contracted there that some
merchants (or bankers) went to the fairs simply to loan money.

[Illustration:

 Most of the traffic of the Champagne fairs went North and South, by
 way of Flanders and of Italy. Merchants from Normandy ascended the
 river Oise to its junction with the land route. The route of German
 merchants is unknown, but most of them probably went by way of Bruges.
]

=75. Trade at the Champagne fairs; other continental fairs.=—In the
thirteenth century, the period of their greatest prosperity, six
fairs were held at different places in Champagne, of which Troyes and
Provins, southeast of Paris, were the most important. Each lasted
over six weeks, and, following in rotation, they supplied an almost
continuous market. Here one might find all the wares which formed the
objects of commerce in Europe; textiles of silk, wool, and linen; minor
manufactures and jewelry; drugs and spices; raw materials like salt
and metals; leather, skins, and furs; foods and drinks, live stock and
slaves. The bulk of the trading was done by merchants from various
parts of France and Flanders (modern Belgium) and by Italians who came
up over the Alpine passes; there were also Germans and Spanish, and, in
less number, English, Dutch, and Swiss. Wares came from more distant
countries, Scandinavia and the eastern Mediterranean, but changed hands
on the way.

The fairs declined as heavier dues were imposed, and especially when
Champagne was brought directly under the French king, about 1300; wars
diverted the merchants from Champagne to Flanders, and the growth of
sea-trade favored this same movement. The Champagne fairs dwindled to
insignificance, and their place was taken by the fairs of Bruges and
Cologne, of Frankfurt on the Main, Geneva, and Lyons.

=76. English fairs.=—England was near the circumference of trade in
this period, instead of being at the center as it now is, and its
commerce was not so highly developed as that of some of the Continental
countries. The English fairs, therefore, were of less importance,
and in most cases did not attract merchants from distant countries.
The largest English fair was Stourbridge Fair held about a mile from
Cambridge, in an excellent position for trade with the low countries
across the Channel, and for the distribution of goods through the
thickly populated districts of England. Another great English fair
was that of Winchester, held each year for sixteen days, beginning
on August 31st. “The hill-top was quickly covered with streets of
wooden shops; in one the merchants from Flanders, in another those
of Caen or some other Norman town, in another the merchants from
Bristol. Here were placed the goldsmiths in a row, and there the
drapers; while around the whole was a wooden palisade with guarded
entrance,—precautions which did not always prevent enterprising
adventurers from escaping payment of toll by digging a way in for
themselves under the wall.... All trade was compulsorily suspended at
Winchester, and within a ‘seven-league circuit,’ guards being stationed
at outlying posts, on bridges and other places of passage, to see that
the monopoly was not infringed. At Southhampton, outside the circuit,
nothing was to be sold during the fair-time but victuals, and even
the very craftsmen of Winchester were bound to transfer themselves to
the hill and there carry on their occupation during the fair. There
was a graduated scale of tolls and duties; all merchants of London,
Winchester, or Wallingford who entered during the first week were free
from entrance tolls; after that date newcomers paid tolls, except the
members of the merchant gild of Winchester.”


QUESTIONS AND TOPICS

 1. Following the reasons given in sect. 71 to explain the rise of
 fairs, show why they have declined in recent times. What effect will
 the extension of railroads and the development of trade between Asia
 and Europe have upon the fairs of Nijni Novgorod?

 2. Set down all the points of likeness and of difference, so far as
 they occur to you, of: market, fair, produce or stock exchange.

 3. Study the history of fairs in your own State. Did the “county fair”
 once have more economic importance than it has now?

 4. Does a modern stock-exchange seek to attract customers by offering
 guarantees of special security, as in the case of fairs? [Study the
 rules of the exchange, and the pains taken to secure honesty and
 solvency of members.]

 5. Study, on a good map, the advantages of location (transportation
 by land and water, nearness to advanced commercial people) of the
 Champagne towns; of their successors in commercial importance.

 6. Indicate on a sketch map of England the position of medieval fairs.
 [See the index of Cunningham or Ashley]

 7. Write a report on English fairs in the Middle Ages [same reference.]

 8. Write a report on one of the following topics:

 (_a_) The great fairs of Europe. [Horne, Harper’s Magazine, vol. 46,
 p. 376.]

 (_b_) The fair of Nijni Novgorod. [T. Child, Harper’s Magazine, vol.
 79, p. 670.]

 (_c_) Kentucky fairs. [James Lane Allen, Harper’s Magazine, vol. 79,
 p. 553.]


BIBLIOGRAPHY

 Gross, Sources, has no separate section on fairs, but includes a
 number of books on them, to be found by consulting the index. A
 bibliography will be found also in the article **Fairs, by John
 Macdonald, in the Encyc. Brit.; this article can be heartily
 recommended to teacher and student. For modern fairs see Poole’ s
 Index of Periodical Lit. Bourne, Romance of trade, devotes chap. 3 to
 fairs.




CHAPTER IX

SEA TRADE


=77. Rise of sea commerce. The Scandinavians.=—We might suppose, in
view of the difficulties and dangers of travel on land, that the trade
of Europe would have been forced to the sea during the feudal period.
In the last two centuries of the Middle Ages there was, in fact, a
growth of maritime commerce which prepared the way for the great
discoveries and the oceanic period of modern commerce. Before this
period, however, the means of navigation were still so slight that
regular and extended commerce on the sea was the exception rather than
the rule.

In Northern Europe the Scandinavians were the leaders in the
development of navigation. We get an idea of the ships that they used
from one which was discovered a few years ago in a burial mound in
southern Norway, where it had been preserved since the ninth century,
it is supposed. It is an open boat, clinker built, and fashioned to go
in either direction; it is about 75 feet long, and has places for 15
oars on each side, but no arrangement for a sail. Similar boats, with
the addition of a rudder and hutch at each end, are still used in the
Lofoten Islands. They are well suited to carry passengers along the
coast, but have small cargo capacity, and, of course, are unfit for
long sea voyages. The Scandinavian Vikings, indeed, used them mainly
for raiding and piracy, and in them harried for centuries the coasts of
western Europe, with a recklessness which accorded with their warlike
character. A chronicle speaks of Danes who were tossed about for nearly
a month before they made their landing in England. Along with these war
vessels the Scandinavians must have had some cargo-ships, the details
of which are unknown to us; a modern writer conceives them to have been
clumsy and slow, “tub-shaped, round-bowed, and flat-bottomed.” Sailing
ships were certainly used from a very early period.

=78. Development of shipping in Northern Europe.=—The Bayeux tapestry,
which pictures the events of the conquest of England by the Normans in
1066, shows what was substantially the Viking type of vessel to have
been used in that expedition; the boats were undecked, and several
foundered at anchor before starting. A modern writer thinks that few
were over 30 tons in size, and that none carried over 40 or 50 men.
About two centuries later the seals of Sandwich and Dover show a ship
still undecked, but provided with a rudder working over the side,
fighting platforms at bow and stern, and a mast with a crow’s-nest at
the top. It is doubtful how far we can trust representations such as
these on the tapestry and seal, which were often executed by persons
unfamiliar with the object and were sure to be conventional. We can, if
we choose, follow the statements in the chronicles, which would make
the ships much larger, holding a hundred men or even several hundred;
the chronicles are notorious, however, for the constant exaggeration
in matters of statistics, and the truth lies probably somewhere in
between our two sources of information. Down to the fifteenth century
the single mast with the square sail was the usual rig. Some vessels,
however, carried two masts, one near the center and one toward the bow,
and could spread six sails. For shorter trips and for the coasting
trade smaller boats were used, sometimes propelled only by oars.

=79. Development of shipping in the Mediterranean.=—Navigation
developed more rapidly in the Mediterranean, especially after the
beginning of the Crusades, than in northern Europe. It is hard to
believe the statements according to which the Mediterranean ships
carried 1,000 or even 1,500 pilgrims, after all allowance is made
for the crowding which would be permitted at this time, but the
Mediterranean ships undoubtedly surpassed others in size and
equipment. Venice presented to France in 1268 some ships which measured
110 by 40 feet, which were 11-1/2 feet deep in the hold and had a
height between decks of 6-1/2 feet. These ships carried a complement
of over 100 men, and must have measured 400 or 500 tons, while English
ships of the period rarely exceeded 50 or 100. Mediterranean shipping
regulations of about this date show advanced ideas concerning the
construction, the equipment, and the loading of ships; all ships were
inspected and none could sail which did not comply with the regulations.

The ship-builders of the Mediterranean ports retained the type of the
classical galley, depending mainly upon oars for its propulsion. The
hull was much longer than in the northern type of sailing ships and did
not rise far above the water; both characteristics depended on the need
of placing the oarsmen where they could work to advantage. The three
square sails were a comparatively late improvement on the earlier rig,
which consisted ordinarily of one sail; a fair wind was utilized for
helping the boat on its course, but the chief reliance was placed on
the oars.

=80. Backwardness of the art of navigation.=—The control of a ship is
as important as its construction, if it is to serve commerce, and the
growth of maritime commerce in the last centuries of the Middle Ages
was due as much to improvements in the art of navigation as to superior
ship building. During the early Middle Ages, as in ancient times,
ship captains took their lives in their hands when they ventured out
of sight of a familiar coast. The only means they had for determining
their position at sea was “dead-reckoning,” _i.e._, estimating the
distance that they had traveled from a known point, and the course that
they had steered; and to know their course they had to rely upon the
stars, which of course were obscured in stormy weather, when their help
was most wanted. It was customary, on voyages in the open sea, to sail
due north or south to the parallel of the destination, then to turn
at right angles and sail due east or west; errors in the course of 8
or even 10 degrees were not uncommon. The means of fixing the course
in any weather, the mariner’s compass, which was discovered by the
Chinese, and is supposed to have been known to the Arabs at this time,
was still unknown in Europe.

=81. Introduction of the compass, and of navigators’ directories.=—The
first documentary evidence of acquaintance with the compass in the
West dates from a little before 1200; and within fifty years we find
it mentioned in nearly a dozen different places, both in the North and
South of Europe. It has been suggested that Mediterranean sailors may
have been the first to learn of the compass, from the Arabs, but that
they could not use it in its early form of a magnetized needle floated
on water by a rush or cork, because of the choppy seas; later the
needle was balanced, as at present, on a point. In 1300 the compass was
in general use. It is possible to exaggerate its importance as a cause
of the great maritime explorations; for without it the Northmen had
made their distant expeditions to the North and West, and with it the
Portuguese crept along the west coast of Africa only slowly and timidly
for a considerable period. As a means to regular navigation, however,
it was indispensable; and the great extension of commercial voyages in
the last two centuries of the Middle Ages is inconceivable without it.
Medieval types of “sailing directions” now came into use; these were
manuals telling the sailor about the coast, the tides, the bottom, and
other features of the route he was to traverse. One of them, written
probably before 1400, covered the whole West of Europe from Spain to
the mouth of the Finnish gulf, enabling the mariner who was provided
with a compass (used for determining the time of tides) to navigate the
coast with a fair degree of safety.

=82. Limits of early trading voyages.=—Maritime voyages were made
to suit the conditions of the time. In the first part of the period
under discussion (say before 1300), they were attempted only for short
distances and in the part of the year when severe storms were rare.
“To sail after Martinmas (November 11) is to tempt God,” writes an old
chronicler; and in the early days of the Hanseatic League there was a
regulation by which ships were not to sail after November 11, and were
to be in port if possible before that time. Some time afterwards an
amendment was adopted which allowed ships laden with beer, herrings,
or dried cod to sail as late as December 6, because the cargo was
perishable or was needed for the Lenten market. The extent of the
voyage was at first short. The sailors of Bordeaux would go as far as
the coast of Brittany and Normandy; the Normans would go as far as
England and Flanders; and so the chain of voyages was kept up.

=83. Medieval seaports; contrast with modern.=—Vessels were so small
that they needed no great depth of water in their harbors, and could
ascend rivers for a considerable distance. So the English town of
Bawtry, lying on the little river Idle, which flows into the Trent,
which flows into the Humber, which flows into the North Sea, was called
in an official document “the port of Bawtry”; and the town of York,
situated on the river Ouse, another branch of the Humber, claimed the
right to share in wrecks at sea, as though it were on the seaboard.
Ports of this kind were actually preferred to those on the coast which
form the great harbors of modern times, for they gave access to the
interior markets without the expense of land transportation, and they
offered better security not only against tempests but also against
pirates. Towns like Rouen on the Seine, Nantes on the Loire, Bordeaux
on the Garonne, Narbonne and Aigues Mortes (“Dead waters”), on lagoons
of the Mediterranean coast, were the great French ports of the early
period.

=84. Decline of medieval seaports in later times.=—Occasionally a
medieval port would keep its importance later; from the list above
we can select Bordeaux, and there are a number of other examples in
Europe—London, Antwerp, and Hamburg, for instance. Often, however, the
port was superseded by another on the same river but nearer the sea;
the trade of Rouen went to Havre; the trade of the Humber river system
has gone to Hull; the commerce of Bremen has gone to Bremerhafen. The
town of Bruges, in Flanders (modern Belgium), once the most important
port in Europe, is situated at a distance of seven miles from the sea,
and this might be seven hundred as far as its present oceanic commerce
is concerned. Its trade has been taken by seaports giving easy access
to large vessels; in the same way the trade of Narbonne and Aigues
Mortes has passed to Marseilles.

=85. Development of maritime commerce; persistence of medieval
ideas.=—After about 1300 the distances covered by sea voyages grew
much greater. Galleys were sailed and rowed from Venice all the way to
Bruges, and met there vessels from the far North and East of Europe;
English sailors traded regularly with southern France, Spain, and the
Scandinavian countries. The expense of transportation by sea, however,
was still great. The price of spices was in Bruges two or three fold
what it was in Venice; and English wool transported to Florence sold
there for two to twelve times as much as it brought at home. It is hard
for us, in modern times, to realize such facts, but the student should
note them carefully, for they go far toward explaining the slight
development of commerce even in the latter part of the Middle Ages.

The high cost of transportation is itself a fact demanding explanation.
Inefficient ship-building and navigation would account for it in large
part, but other factors are still to be considered. These distant
voyages were carried on in the face not only of real dangers serious
enough, but also of far greater dangers imagined by ignorant and
credulous men. An English chronicler says that in 1406, when English
ships were going to Bordeaux, they entered an unfrequented sea, and
four vessels from Lynn were engulfed in a whirlpool which swallowed up
the flood and vomited it forth again three times a day. The Arabian
Nights have been called sober and realistic in comparison with the
ideas held by the medieval mariner of the wonders and dangers of the
unknown parts of the world.

=86. Piracy.=—At sea, as on land, the merchant faced dangers of
violence which were probably as serious an obstacle to the growth of
commerce as the physical difficulties of navigation. Ships went always
armed, and sailed when possible in fleets for better protection.
Sometimes one that had ventured out alone could beat off its enemies,
as in the case of a trading ship from Stralsund which was attacked in
1391 but won a complete victory, and brought back (it is said) 100
pirates, packed in casks with only the heads sticking out, for a bloody
punishment. Pirates came from every source. An ordinary merchantman
would turn pirate if it met a weaker vessel from some town which was
so far distant or so weak that reprisals need not be feared. A mariner
of Winchelsea in England, who had seized and plundered a vessel owned
by Dorsetshire merchants, became mayor of Winchelsea a few years
later, and in the fifteenth century a Canterbury abbot was convicted
of plundering a wine ship and was forced to make restitution. Even
ships sent out by the public authorities for protection against pirates
attacked and plundered ships not only of other nationalities but of
their own too. Six ships which had been organized in 1316 to protect
Berwick from freebooters harried the English coast to the south, and
the fleet of the Cinque Ports (five towns on the English Channel), used
its spare time in preying on English commerce and attacking English
towns.

=87. Organized piracy; privateering.=—Piracy became a regular
profession, in which partners organized for greater efficiency. The
“Victual Brothers” formed an organization, modeled after that of the
Knights Templars, for carrying on piracy; their motto was “God’s
friend and all the world’s enemy.” They had a stronghold at Gotland,
in the Baltic Sea, and were long a terror to traders and fishermen;
their power was broken in 1394 only by a fleet of thirty-five ships
sent against them. A fleet of Venetian galleys on their way north were
attacked off Lisbon in 1485 by a piratical expedition of six ships,
which killed and wounded over four hundred men and took enormous booty;
it is said that the discoverer Christopher Columbus was one of the
corsairs. War at sea was carried on even more barbarously than war on
land. Crews and passengers of captured merchant vessels, whether taken
after resistance or not, were frequently tossed overboard, sometimes
with their hands tied behind their backs, or were hung to the yards, or
murdered on the deck in cold blood.

An appearance of legitimacy was given to the attack on merchant vessels
in time of war; “letters of marque” were not considered necessary to
justify attacks by private vessels against merchant vessels of the
enemy, and as war was the rule rather than the exception in Europe
privateering was nearly constant. During the Hundred Years’ War between
England and France, in spite of booms and chains, watches and beacons,
almost every town on the south coast of England was sacked and burnt
by French privateers. Even at London the streets which opened on the
river were defended by chains, to hinder a landing within the city, and
the people thought of building high stone towers on both sides of the
river, with a chain stretched between them, to defend the shipping from
night attacks.


QUESTIONS AND TOPICS

 1. Ships and exploits of the Vikings. [Beazley, Prince Henry, chap. 2;
 C. F. Keary, The Vikings in western Christendom, N. Y., 1891, chaps.
 5, 6, 9.]

 2. In connection with the small vessels of the early Middle Ages
 the reader is reminded of the exploits of various “captains” of the
 present day who cross the ocean alone, and he might profitably hunt
 up a description of one of the boats employed and compare it with the
 description in the text. A ton is 100 cubic feet of internal volume.

 3. If the reader lives at a trading port he should ascertain the
 tonnage and rig of the vessels ordinarily employed, and thus prepare
 himself to understand the conditions of medieval navigation.

 4. Compare the medieval galley with the ancient galley described in
 classical histories. [Beware of pictures given in the text-books; many
 are pure products of the imagination.]

 5. Write a report on the history of the compass. [Encyclopædia
 Britannica; consult Poole’s Index for articles in recent periodicals.]

 6. Measure distances in sect. 82, and apply them to the sea- or
 lake-coast of the U. S.

 7. Indicate on an outline map of Europe the position of the ports
 named, in sect. 82, using the conventional signs of death (†) and
 birth (*) to show those that declined and those that gained in
 importance.

 8. Write a report on the credulity of early sailors. [Voyages of
 Sinbad the Sailor in the Arabian Nights, a popular romance of the
 Indian trade in the ninth century; Voyages of Sir John de Mandeville,
 N. Y., Macmillan, 1900, $1.50; Selections in Cassell’s Library, paper,
 $.10.]

 9. What is the difference between a government war-vessel, a
 privateer, and a pirate? [Dictionary and encyclopedia, or some manual
 of international law.]


BIBLIOGRAPHY

 Articles and bibliographies by *Clowes in Traill’s Social
 England; John Fiske, *Discovery of America; Alice Law, Notes on
 English medieval shipping, in the Economic Review, 1898, vol. 8;
 Cornewall-Jones, The British merchant service; Lindsay, History, vol.
 2.




CHAPTER X

THE LEVANT TRADE


=88. Wares of the Levant trade. Slaves.=—The “colonial products” of
the modern world (tea, coffee, spices, etc.) have familiarized us with
a class of wares which cannot be produced at home and are imported
from distant countries. In the commerce of medieval Europe there were
wares like these which could not be produced near the place where
they were to be consumed, because of the severe climate, or the lack
of technical skill, and yet which were eagerly desired by the upper
classes. These wares were obtained from Asia, and formed the basis
for an Oriental trade which was one of the most important branches
of medieval commerce. There was one ware of Oriental trade in which
there was a reciprocal exchange; this was slaves. Slaves were exported
from Europe to the great market at Cairo in Egypt, and were imported
from western Asia and Africa. At the very end of the fifteenth century
there were said to be 3,000 slaves in the single city of Venice. Most
of the wares, however, flowed in only one direction; and to give an
idea of the character and importance of the trade we shall preface our
narrative of its development by a description of the chief products
imported into Europe.

=89. Spices.=—Among the raw materials a very important place was taken
by spices, the product of tropical plants and trees which thrive only
in a few parts of the world even now. The food of the common people
in the Middle Ages would seem intolerably coarse and monotonous to
a modern laborer, on whose table appear regularly products from all
parts of the world; and even the diet of the rich needed a great deal
of condiment if it was to be palatable. A staple import, then, was
pepper, the berry of a vine growing in India and in the islands of
Asia, which was used in Europe by all who could afford the luxury of a
seasoning. For common use the price was prohibitive. Cloves, from the
Molucca Islands, were even more expensive, costing two and three times
as much as pepper; they were used for seasoning food and drink, and
also as medicine. Cinnamon, nutmegs, and mace served similar purpose,
and ginger took a place among medieval luxuries of this kind second
only to pepper.

=90. Drugs; perfumes; sugar.=—Beside the spices which were employed in
medicine by medieval apothecaries many wares were imported which served
solely or mainly for drugs. Among them were rhubarb, aloes, balsam,
borax, gum tragacanth, gum benzoin, cubebs, cardamoms, camphor, etc.

Sugar belongs in this list of wares, on the border-line between
medicines and table delicacies. It was far too costly to be an article
of common consumption, and the gift of a small piece of loaf sugar
implied far more devotion than would be evidenced now by a present of
the finest confectionery. It found its main employment in medicine,
therefore, and though it was used in increasing quantities for
sweetening food and drink and for preserving, native honey was the
medium commonly used.

=91. Precious stones; preponderance in general of luxuries over
articles of general utility.=—Another category of wares, which found a
ready market among the upper classes of medieval Europe was precious
stones. The part of Europe which now produces a considerable quantity
of these, the region of the Ural Mountains, was still unexplored; the
source of supply in the New World was of course unknown; and Europe
looked entirely to Asia and Egypt for its supply. Diamonds, emeralds,
rubies, sapphires, lapis lazuli, etc., were collected in various parts
of the East, passed through innumerable hands, and finally found a
resting-place among the jewels of some great lord or lady of the West.
Pearls came from the Indian Ocean, and ivory from Africa, through the
hands of Asiatic traders. Europe was able to make a return in kind
from the Mediterranean coral fisheries; the greater part of European
coral was exported to meet the demand in the East, being carried to
Egypt by Spanish or Italian ships, and distributed from there to India
and China.

The reader who has followed thus far this category of eastern products
must be struck by the preponderance in it of costly luxuries over
articles of general consumption. The expenses of transportation over
great distances and through dangerous districts were, in fact, so great
that most of the Eastern wares had necessarily to comprise great value
in a small bulk, and sought their market only among the upper classes
of Europe, who could afford to pay well to gratify their desires.

=92. Dyestuffs; alum.=—Among the raw material brought from the East
there was only one important class of wares which served manufacturing
industries, the dyestuffs. Indigo (Greek, _Indikon_, Indian) came from
the East as its name implies, the chief staple for it being Bagdad.
It gives a fast and deep blue and had been imported in Europe even
in ancient times; with the revival of commerce after the Crusades it
became again an article of commerce, and was used constantly thereafter
as a dyestuff, in spite of the attempt to substitute for it the
native woad, an herb of the mustard family. Some of the red dyes were
produced in Europe, notably madder, mentioned in one of Charlemagne’s
laws, and the scarlet or carmine obtained from the kermes insect in
Southern France and Spain. Both of these dyes were imported to some
extent, however, and another red dye which was an important import was
Brazil-wood. The name suggests an American origin, but was given it in
fact because its redness made it seem like glowing coals (cf. English
brazier), and the South American country received its name later from
the tree found growing in it. Brazil-wood was brought to Europe in
blocks and was then ground up for use in dyeing and painting. A common
yellow dye of the Middle Ages, saffron, was also imported when the
best quality was desired, and yellow arsenic (orpiment) was used as a
pigment. Lac (shellac) was used for a dye as well as for varnish. More
important than any of the separate dyes was alum, which came to be
regarded as indispensable for fixing the color when wool or silk had
been dyed in the piece. This was procured mainly in Asia Minor, and was
one of the most highly prized products of the eastern trade.

=93. Other raw materials of industry.=—In comparison with the dyes most
other raw materials of industry were unimportant as objects of trade.
Cotton (Arabic _kotn_) was imported both in its finished form and as a
raw material. The cotton manufacture in Europe had, of course, nothing
like its present importance, but it was already well established in
Germany, where a staple cloth was made out of a mixture of cotton and
flax, and it required more of the raw cotton than the plantations of
southern Europe could supply. Small amounts of flax were imported from
Egypt, because of the superior quality of the product.

Silk was, however, the only textile material which was a very important
ware in its raw form. The culture of the silkworm, which had been
carried on for centuries in China, but so far as possible had been
kept a secret from other peoples, spread gradually to the West and
was introduced into Europe by the Emperor Justinian in the sixth
century. The Arabians introduced mulberry plantations and the raising
of silkworms into Sicily and Spain, and the culture thrived so far as
to leave a surplus for export after supplying the home manufactures.
Christian peoples, however, did not succeed so well in the culture;
France could as yet furnish no appreciable quantity of raw silk, and
the output in Italy was unsatisfactory both in respect to quality and
quantity. The growing silk manufacture in Europe had therefore to meet
its deficiency by trade with the East, getting part of its supply of
raw material from China and Persia, but the bulk from the countries
about the Caspian Sea.

=94. Textile imports; exports from Europe.=—Among manufactures
imported from the East textiles held the most important place. Europe
was strong enough in the manufacture of linen and woolen goods to
export them in considerable quantities to Asia, but it lacked in the
manufacture of cotton and silk not only raw material but the technical
skill to compete with the artisans of the East; and imported large
quantities of finished cloth. Dignitaries of the church and the
merchant princes of the late Middle Ages demanded for clothing and for
furniture fabrics of finer quality and of greater quantity than the
looms established by the Mohammedans in Spain and Sicily could supply,
and sought them chiefly in the countries bordering the eastern end of
the Mediterranean. From this district came a great variety of silks,
woven often as brocades with gold or silver threads, and the early
types of velvet and satin. Silk goods formed the chief but not the
sole constituent of the textile imports; with them came fine cottons
from India, cloth made from the hair of camels and other animals, and
linen from Egypt and Syria, which surpassed all of western make. Europe
depended also on the East for fine china and glass.

Before the end of the Middle Ages the Italian silk manufacture had
grown strong enough to turn the tide, and to export to the East.
Through the greater part of this period, however, the only European
textiles exported to Asia were the woolens and common linens which
were produced in England, Flanders, and other of the more advanced
countries. Besides these manufactures the main exports consisted of raw
materials: wool, hides, metals (gold, silver, and tin), and food stuffs.

=95. Revival of Oriental trade about 1000, under the leadership
of Italians.=—As commerce with the East had lasted throughout the
period of Roman rule, and had cultivated tastes among rich Romans
and provincials which could only be satisfied by its continuance, we
find evidence even in the Dark Ages that it was still carried on. A
document dated 716 shows that the rich monastery of Corby in northern
France received pepper, cloves, and other spices from southern France;
and Marseilles maintained its commercial relations with the East.
The trade in this period, however, was carried on almost entirely by
Syrians and Jews; the peoples of western Europe had not yet learned to
profit by active participation in it, and it had sunk to comparative
insignificance. The revival came about the year 1000 with the general
awakening of economic life in Europe which had for its most striking
feature the growth of towns. As the possibilities for trade became
greater, and the demand for luxuries kept pace with them, the eastern
trade felt a powerful stimulus, and grew rapidly in importance. It was
now carried on mainly by the people who were destined to control it
until the great discoveries left them outside the path of progress,—the
Italians. A group of towns in the far south of the Italian peninsula,
Bari, Trani, Brindisi, and Taranto, took advantage of their nearness
to the Levant (the eastern end of the Mediterranean) to establish
commercial relations which returned large profits and developed into a
considerable trade. Another group of towns near the Bay of Naples, of
which Amalfi was the chief, shared in the profits of this trade, and
still another town, standing alone near the head of the Adriatic Sea,
Venice, began already to assume the commanding position in the Oriental
trade which she was destined to make good against all rivals.

=96. Routes between Asia and Europe.=—The main routes serving as the
paths of trade between Asia and Europe during the Middle Ages were
three in number. The central route, the oldest and for much of this
period the most important, began at the head of the Persian Gulf;
after the foundation of Bagdad near the site of ancient Babylon (about
750 A.D.) it found there its first important stopping-place. Thence
a caravan route led around and through the desert to Damascus, where
it branched off to the coast of ancient Phœnicia in one direction, to
Egypt in the other. Aside from partial interruptions this route was
used steadily until near the close of the Middle Ages, when it was
partially blocked and commerce was forced to the south.

[Illustration: TRADE ROUTES BETWEEN ASIA AND EUROPE

 The map shows only the chief lines of trade, omitting side routes for
 the sake of clearness. See the text, sect. 96, for description of the
 uses to which the routes were put.
]

The southern route, reaching Europe through Egypt, was mainly maritime.
It had to contend with two great difficulties: the great stretch
of open water presented by the Indian Ocean, and the difficulty of
navigation in the Red Sea, on the west coast of which strong north
winds blow through much of the year. The first of these difficulties
became less serious in the Christian era, as navigators learned to
time their voyages to suit the monsoons, the winds blowing at regular
seasons in the Indian Ocean. Vessels could leave an Egyptian port
in July and reach India by the southwest monsoon in little over two
months. The second difficulty was obviated by starting for the East
not from the Gulf of Suez but from a point part way down the coast
(Berenice), reached by a trip on the Nile and by caravan. This route
became of greatest importance at the close of the Middle Ages.

The third route, entirely overland, led from India across the mountains
to the River Oxus, where it was joined by a caravan route from China.
Branching near Bokhara, one part led to the Caspian Sea and up the
Volga, another left the Caspian to the north and reached Europe at
the Black Sea (Trebizond, Constantinople). This route traversed high
mountain passes and long desert stretches, and was suitable only
for the carriage of valuable articles of small bulk. For about two
centuries after 1250 it was kept open by the Mongols or Tartars, who
lived on good terms with the Christians; then it was blocked by the
Turks.

=97. Character of the crusades; number of crusaders.=—To assign to
economic motives the chief part in the crusades would be a distortion
of the great movement which marked the life of Europe in the two
centuries following 1100. Not hope of gain but vague ideals of this
life and the life to come drove hundreds of thousands of men to
the perilous journey to the Holy Land from which so few returned.
Indirectly commerce had its share in this movement; it had drawn the
peoples closer together, stimulated curiosity and broadened interests.
Men sought an outlet for their surplus energy, and a relief from the
monotony of medieval life; ascetic ideals imposed upon them holy tasks
which they could fulfil to the benefit of their souls. The effect can
be traced in an increase in the pilgrimages of individuals to holy
places. The people of Europe needed only organization and a leader to
unite their scattered forces; they found their organization in the
church, their leader in the Pope and his delegates, their goal in the
delivery of the Holy Sepulcher from the hands of the infidels who were
abusing Christian pilgrims.

Any estimate of the numbers who engaged in the crusades must be pure
guesswork. The statistics of medieval chronicles, always notoriously
inaccurate, seem to reach the acme of unreliability in the figures
of the crusaders engaged in the different expeditions. The main body
of the first crusade, which started in 1095, was compared in number
with the sands of the seashore or the stars in heaven; even moderate
contemporaries made it 600,000 or at least 300,000 strong; perhaps
it was really 100,000. There were six or eight separate expeditions
lasting down to 1270, and we may say that a million men, roughly
speaking, and probably many less rather than more, took part.

=98. Commercial aspect of the crusades.=—Even the transportation of
this number of men, with their baggage and equipment, must have been
a great stimulus to the growth of Mediterranean shipping. The first
crusade went almost entirely by land, but the sufferings and losses
were so great that crusaders were driven to the sea route, and this
became gradually the regular way of reaching the Holy Land. Italian
merchants accompanied the expedition from the beginning, not as real
crusaders but as contractors for transportation and supplies, turning
both the needs and the successes of the crusaders to their commercial
profit. A fleet from Genoa and Pisa accompanied the first crusade
along the coast of Syria, selling provisions. The Venetians waited
until Jerusalem had been taken; then fitted out a fleet which fought
the Pisans, quarreled with the Greeks, and in return for very slight
services rendered to the crusaders demanded that in every city captured
they should have a market, church, and freedom from taxes. “Whilst the
warriors of Christendom were fighting for glory, for kingdoms, or for
the tomb of Christ, the merchants of Venice fought for counting-houses,
stores, or commercial privileges.” “The other crusaders obeyed the new
impulse, the Venetians utilized it.”

The fourth crusade, starting soon after 1200, was fairly captured by
the Venetians and turned into a commercial expedition for their profit.
When the time for starting came, the feudal knights, improvident
as ever, could not pay the sum agreed on for their transportation,
and Venice used her power over them as debtors to force them to aid
her, first to capture Zara on the Adriatic, a Christian city but a
commercial rival, then to take Constantinople itself, the key to the
trade of the Black Sea. The crusade accomplished nothing against the
infidels; it was merely a means by which Venice built up her commercial
and colonial empire at the expense of other Christians.

=99. Effect of the crusades on knowledge of the East and of eastern
wares.=—Aside from the help which the crusades gave the Italians in
building up their fleets and in establishing trading posts or colonies
in the East, they were of no less importance in extending the market
for eastern wares in Europe. The crusaders lost their provincialism,
and acquired new fashions (shaving the beard and bathing); they became
acquainted with fine stuffs and dyes and were no longer satisfied with
the coarse products of home. The European vocabulary was not large
enough to give names to the new acquisitions, and we can trace back
to this period many words which were borrowed from Arabic, the common
language of the Mohammedans: alcove, sofa, mattress, talisman, elixir;
many of commercial significance, bazar, tariff, corvette, barracks. Not
only the words but the things themselves became native in many cases;
the crusades spread in Europe the cultivation of the lemon, apricot,
watermelon, rice, and sugar cane. European literature described the
marvels of the Orient, the silks of Syria, the tapestries of Persia,
the precious stones and perfumes of Arabia; the names of eastern
countries became familiar and knowledge of geography widened rapidly.


QUESTIONS AND TOPICS

 1. Selecting any one among the more important wares, sects. 88-94,
 write a report on its production, uses, value, and history as
 an article of commerce. [Encyclopedia; commercial geographies;
 encyclopedias of commerce and of manufactures, as those by McCulloch,
 Waterston, Homans, Ure.]

 2. Taking British India as a characteristic source for the Eastern
 wares, contrast the exports then and now. [Statesman’s Year-Book,
 index, India, exports.]

 3. What seaports of those named in sect. 95 are still of importance?
 [Statesman’s Year-Book, index, Italy, shipping.]

 4. What evidences have the other ports left of their former greatness?
 [Encyc.; *Baedeker’s guide-books.]

 5. Which one of the three routes, sect. 96, is now the most important?

 6. What railways have been constructed or proposed along the line of
 ancient routes? [See a good atlas, and note the proposed railway from
 Asia Minor through the Mesopotamian valley to the Persian gulf. What
 effect may this railway have on the importance of Constantinople?]

 7. Read a description of one of the ancient centers of trade in modern
 times. [Consult books by modern travelers in south-western Asia.]

 8. Where now can be found pilgrimages like those of the Christians
 to Jerusalem? What is their commercial influence? [See Mecca in the
 encyclopedia; and in Poole’s Index.]

 9. How does the average number of crusaders going per year to
 Palestine compare with the number of Americans going abroad?

 10. Prepare, from descriptions in the current history manuals or
 from a historical atlas (Droysen’s, for example), a map showing the
 route of each crusade; number each route that the development of the
 sea-route may be more apparent.

 11. Show the development of Venice in the period of the crusades, by
 comparing her commerce and power at the two dates limiting the period.
 [References in next chapter.]


BIBLIOGRAPHY

 Aside from the current manuals of the history of commerce very little
 has appeared in English on the routes and wares of the Levant trade.
 Lincoln Hutchinson, *Oriental trade and the rise of the Lombard
 Communes, Quarterly Journal of Economics, 1901-2, 16: 413-432 (esp.
 415-421), can be recommended; and Cheyney, **Eur. background, has two
 excellent chapters on the subject (Levant wares in chap. 1; routes in
 chap. 2).

 The reader will have to rely largely on accounts of the crusades,
 in which there are incidental references to commerce: Adams, *Civ.;
 Robinson (* bibliography); Emerton, Med. Eur. (bibliog.); etc.




CHAPTER XI

COMMERCE OF SOUTHERN EUROPE


=100. Position of Venice; early history.=—The course of the eastern
trade can best be followed in connection with the fortunes of the city
of Venice which still shows, in the splendid palaces lining its canals,
the evidence of its former greatness.

The beginnings of the city are traced back to the period of barbarian
invasions when fugitives from the mainland sought shelter on the
islands a short distance from shore. The inhabitants, thus protected
from the unending wars of the feudal period, were at the same time
forced to seek their living on the sea, first as fishermen but more
and more as merchants. The Italian conquests of the Emperor Justinian
(about 500 A.D.), brought them into relations with Constantinople which
were maintained by trade and frequent embassies. Even before the year
1000 the Venetians had won a secure position in Constantinople by an
imperial charter which granted them, among other privileges, freedom
from the vexatious tolls and delays imposed by subordinate customs
officers. Still more important was a charter of 1082, which granted
lands and buildings in Constantinople for a special Venetian quarter,
which freed the Venetians from all taxes and at the same time required
their trade rivals, the Amalfitani, to pay taxes to them for the right
to trade.

=101. Expansion of Venetian empire during the crusades.=—Before the
crusades, therefore, Venice had a commanding position in the eastern
trade. It confirmed this position by a series of bitter struggles
with its rivals, especially the cities of Genoa and Pisa which were
rising to great prominence. These cities imperiled for a time Venetian
control of the Black Sea trade at Constantinople; but the outcome
of the fourth crusade (1204), was a victory for Venice which left her
supremacy for the time unquestioned.

[Illustration: THE VENETIAN EMPIRE]

In the share taken by them in the partition of the Eastern Empire the
Venetians showed that common sense which is always found at the bottom
of all their actions. They left to the crusaders the inland provinces
and took for themselves the coast-towns and islands which promised the
best commercial returns and were easiest to defend. In Constantinople
itself they took a large part of the city, in which their podestat
ruled almost as an independent sovereign. At places commanding the
all-important sea route to the East, in the Peloponnesus or Morea, in
Crete and in Eubœa, naval stations were established under the control
of officers sent out by the home government. The strict rules by which
these officers were governed gives an insight into the discipline
which existed in the Venetian foreign service. In every place in which
the Venetians founded a principality their capital was surrounded by
Italian colonies; there where one found formerly only nests of pirates,
the terror of Venetian commerce, one found now friendly ports, refuges
fortified and secure, where Venetian captains and merchants, certain of
a good reception, could ask asylum and protection.

=102. Extent of Venetian commerce.=—Thanks to the colonial empire which
they established the Venetians controlled the trade of the eastern
Mediterranean more efficiently than Great Britain has controlled the
world commerce of the nineteenth century; the field of operations was
narrower, and “trade followed the flag” in those early times as it has
never done since. Foreigners might trade if they would pay sufficiently
for the privilege; without this recognition of their inferiority they
were public enemies to be given short shrift.

Venice established her colonies or trading factories not only along
the shore of the eastern Mediterranean and the Black Sea; Venetian
merchants penetrated deep into Russia, and into Central Asia through
the Crimea. So bold were their enterprises that the home government,
fearful for its interests, passed a law to limit their extent.
“Dalmatia, Albania, Romania, Greece, Trebizond, Syria, Armenia, Egypt,
Cyprus, Candia, Apulia, Sicily and other countries, kingdoms and
islands were the fruitful gardens, the proud castles of our people,
where they found again profit, pleasure, security.” The old chronicler
names but one side of the equation of trade; the products from all
these countries and from the far East behind them were brought to
Venice to be exchanged for the products of the West. Martino da Canale
says of an earlier period what must at any rate have been true of his
own (thirteenth century): “The Venetians went about the sea here and
there, and across the sea and in all places, and bought merchandise and
brought it to Venice from every side. Then there came to Venice Germans
and Bavarians, French and Lombards, Tuscans and Hungarians, and every
people that lives by merchandise, and they took it to their countries.”

103. =Development of the institutions of commerce in Venice.=—Reference
has been made in an earlier chapter to the Venetian regulations on the
building, rigging, and manning of ships, which anticipated by many
centuries similar legislation in the countries of northern Europe.
The extent of her commercial relations led Venice to a development of
book-keeping and banking which made her in these important branches the
instructor of Europe, to whom the sons of wealthy merchants in other
countries were sent to school. The reader will appreciate how great is
the debt of other countries to Italy when he reflects on the number
of Italian words having to do with commerce and banking which have
become current in general commercial use; among them are conto, conto
corrente, porto, risico, disconto, brutto, netto, deposito, folio,
bilanza, etc.

104. =Venetian commercial policy.=—The Venetian commercial policy
may be described briefly as the maintenance of as strict a monopoly
as possible in the trade east of Italy, and the regulation of trade
between Venice and the North or West which would give the Venetians
the greatest advantage when they sold their Oriental wares to other
Europeans. This policy, as well as the material character of the
commerce, can be studied in connection with the two great branches of
Venetian trade in Europe, the overland commerce with Germany, and the
sea commerce with northwestern Europe.

[Illustration: TRADE ROUTES BETWEEN GERMANY AND ITALY

 The different routes varied in importance at different periods, and
 some routes were used besides those indicated on the map. The Brenner
 Pass was always of great importance to Venetian trade; the St. Gothard
 Pass was not opened until the thirteenth century.
]

105. =Overland trade with Germany.=—As the Venetians were essentially
a sea-faring people, and as it was easier to reach the large cities of
central and southern Germany by land than by sea, they took the passive
part in their German trade, staying at home and allowing the Germans
to come to them for wares. The trip overland from central Germany took
roughly two weeks or a little less; trade letters of the fifteenth
century were a month or more on the way between Venice and Bruges.
Different routes were chosen according to the starting-point of the
journey. The chief route was that leading over the Brenner, one of the
lowest of the great Alpine passes, lying between Augsburg in Germany
and Verona in Italy; but very often the merchant struck off to the East
before reaching Verona into the valley of the Drave or the Brenta.
Coming from the East, from Vienna, for instance, the Semmering pass was
commonly chosen.

=106. Strict control over German merchants in Venice.=—On reaching
Venice the merchant was put at once under strict supervision. He
could not choose his own lodgings, but must stay at the “Fondaco dei
Tedeschi” (German factory, using that word in its earlier sense of a
trading post). This was a building (in its later form a handsome palace
now used as a government office) which belonged to the city, and which
served at once as a hotel, a warehouse, and an office for controlling
the trade. When a merchant arrived he was disarmed and given a room; a
careful list was made of all his wares, which served as a basis for the
government dues; and an inspector was assigned to him. This inspector
acted as an interpreter and as a broker, helping the merchant make
his bargains, but it would be a great mistake to suppose that he was
appointed mainly to serve the merchant’s convenience; his main business
was to “shadow” the merchant constantly, to see that he broke none of
the numerous regulations designed to assure to the government its dues
and to the Venetian people their profits. Germans could bring to Venice
only the wares of their own country and of northeastern Europe, because
the Venetians wanted to carry on themselves the trade with Flanders;
Germans could trade with no other foreigners in Venice, and could not
trade even among themselves, in order that the Venetians might have the
sole market; they must sell out their whole stock in Venice, without
the option of withdrawing part of it and carrying it further. One is
tempted to ask why the Germans came to Venice at all, to submit to such
severe restrictions. The answer is easy; they had no other place to go
to, for the wares they wanted. Thanks to her position and to her skill
in trade and war Venice had a monopoly of Oriental wares which enabled
her for some time to make what regulations she pleased without fear of
losing her customers.

=107. Importance of the trade between Venice and Germany.=—The German
trade in Venice amounted, according to an estimate of the fifteenth
century, to a million ducats a year, and the ducat of this period was
worth considerably more than the modern dollar. It supplied Germany
with the coveted eastern wares which we have already enumerated, and,
moreover, with some of the products of Venetian manufactures, which
were then highly developed and which were stimulated by protective
tariffs. These manufactures included glass, which is even now a
specialty of the city, fine textiles, weapons, paper, etc. The Venetian
trade, on the other hand, furnished to Germany a market for her metals
(gold, silver, iron, copper, lead, tin), furs, twine, rosaries, and
manufactures of leather and horn, and the coarser textiles.

=108. Commerce by sea with northwestern Europe.=—With the countries
west of Germany Venice carried on an “active” commerce; that is,
instead of waiting for foreigners to come to her she brought the wares
to them, as she could well do by the sea route. The crusade of 1204,
to which we have already referred as a turning-point in Venetian
development, was composed in large part of knights from northwestern
Europe, and the relations established then with Flanders, Champagne,
and neighboring districts, were continued by trade. The first reference
to Venice discovered in English documents is dated 1201, but before
the close of the thirteenth century a brisk commerce with England had
grown up; at one time in the reign of Edward I over 2,000 sacks of wool
were found in the possession of Italian trading companies. The trade
followed at first the land route across France, but soon took to the
sea, and though the land traffic was never wholly abandoned it became
less important and was discouraged by special dues.

=109. Regulation of this commerce; the Flanders galleys.=—Soon after
1300 the government took charge of this trade and regulated it on
principles which were followed for the two hundred years during which
it remained important. Separate voyages were, as a rule, prevented, and
Venetian merchants who wished to participate in the trade must join
in the fleet of “Flanders galleys” which sailed at intervals (usually
once a year), as the opportunity for trade seemed favorable. On these
occasions the Venetian senate voted a certain number of galleys for
the voyage, and auctioned off the right to freight them. Each galley
was propelled by 180 oarsmen, and carried for its protection a force
of archers commanded by four young patricians who were sent out that
in this way they might see the world and learn to serve their native
city. The cargo was carried on the account of private merchants, but
the supreme control of the fleet was vested in a captain appointed
by the Venetian government, and bound to follow its instructions.
The voyage to Flanders and back occupied the greater part of a year,
as the galleys touched and traded at many ports along the way. The
route generally taken included the following stopping-places: Capo
d’Istria (Pola), Corfu, Otranto, Syracuse, Messina, Naples, Majorca,
the principal ports of Spain and Morocco, and Lisbon. In the English
Channel the fleet divided, some galleys going to Southampton or London,
others to Sluys (the port of Bruges, connected with it by a short
canal), Middelburg, and Antwerp. The chief objective was the city of
Bruges, the great market where the trade of northern Europe, in the
hands of the Hanseatic merchants, and the trade of southern Europe in
the hands of the Venetians, came together.

=110. Development of other cities in Italy; freedom and vigor of their
policy.=—Space forbids the consideration in detail of the history and
policy of other Italian cities, of which some rose to the first rank
in commerce, though none attained to the greatness of Venice. The
lack of a central government in the peninsula enabled each city to
frame its policy solely with an eye to its own interests. The Italian
cities were able to free themselves from the laws and customs that
had been necessary in an earlier time, but which lay like fetters on
developing trade and industry. The city of Florence, for instance,
showed a liberality in its policy regarding land tenure, industry,
domestic and foreign commerce, which was strikingly modern. The result
was an extraordinarily rapid development in commerce, manufacture and
finance, but also, unfortunately, a jealous rivalry between the cities,
which expressed itself not only in commercial competition but also in
destructive wars.

=111. Genoa.=—Genoa, situated in a position corresponding to that of
Venice on the other side of the Italian peninsula, grew great like
her in the course of the crusades. In conflict with Pisa, which had
become a threatening commercial rival, Genoa was a complete victor
by the naval victory of Maloria in 1284. Against Venice the city was
not so fortunate. Genoa recovered in part from the blow dealt her by
Venice in the fourth crusade, when the Greek empire was re-established
at Constantinople (1261), and won some important naval victories in
the constant succession of wars culminating in the battle of Chioggia
in 1380. The Genoese managed always to secure a share of the Oriental
trade; they helped to establish the system of joint stock companies;
and contributed to the development of banking and public finance. They
lacked, however, the advantages of the Venetian situation, both as
regarded their opportunity for trade and their capacity for defence.
They were drawn into the net of continental politics, and as at home
they had never shown the ability of the Venetians to pacify or to crush
rival factions, their force was wasted in useless political conflicts.

=112. Inland cities; Florence.=—Besides the two great seaports of
Venice and Genoa other cities of northern Italy grew rich by industry
and commerce at this period, notably Milan. The chief commercial
city in the interior, however, was Florence in central Italy.
Though Florence had no seaport of its own until after 1400, when it
overpowered Pisa and Leghorn, it carried on an extensive commerce in
its chief product, wool and silk textiles. Great trading houses bought
up the raw material through agents settled in markets like Bruges, or
traveling for years at a time, and sold the finished product through a
similar network of agencies. The amount of manufacturing and commerce
in the city stimulated the development of banking institutions, and
Florentine bankers gained not only a regal position at home, but also a
commanding voice in international politics.

=113. Other Mediterranean cities; Marseilles, Barcelona.=—On the
Mediterranean coast of France the only great port at this period was
Marseilles, which had developed rapidly in the course of the crusades.
It exported to Italy and the East French textiles (woolen and linen),
wood, metals, wine, oil, soap, etc.

In Spain the Arabs had developed the arts of civilization to a point
which was far above that of the contemporary Christian states. Toward
the close of the Middle Ages, however, the contest between them and
the Christian kings for the supremacy of the peninsula absorbed the
best energies of both parties, and caused an actual decline in material
civilization. One city, however, Barcelona, carried on a very extensive
commerce, and was one of the most important ports of the Mediterranean.
Its inhabitants enjoyed unusual freedom under the kings of Aragon
and were reputed to be among the best sailors of their time; they
had trading stations along the coast of the Mediterranean as far as
Egypt and Syria, and as merchants or pirates frequented the Grecian
archipelago.


QUESTIONS AND TOPICS

 1. Study: (_a_) the position of Venice in the Mediterranean; (_b_)
 the peculiarities of the site of the city; and write a report on the
 influence of these factors on the history of Venice in its different
 periods. [Encyclopedia.]

 2. Compare the policy pursued by Venice toward Amalfi in
 Constantinople to the early policy of the Standard Oil Company. [See
 the account of railroad rebates in accounts of the Standard Oil
 Company by Lloyd or Tarbell.]

 3. Compare the Venetian and the Athenian sea-empires in respect to
 (_a_) extent, (_b_) duration, (_c_) policy. [See chapter 2, and for
 further information on Venetian history see Brown.]

 4. Make a map showing Venetian trade relations in the fifteenth
 century. [Falkner, Statistical Documents, V.]

 5. Summarize the account of commercial transactions at that period.
 [Same.]

 6. Write a report on the contributions of the Italians to
 book-keeping. [Cf. Beckmann, Hist. of inventions, Bohn’s Library, vol.
 1, pp. 1-5.]

 7. Write a similar report on their contributions to banking. [Encyc.,
 Palgrave’s Dict., or some history of banking.]

 8. Write out the English equivalents of the Italian words in sect. 103.

 9. What resemblance can you find between Venetian policy toward
 Germans, and Boer policy toward English in the South African Republic?
 [See one of the many accounts of conditions preceding the war in South
 Africa.]

 10. From the description in sect. 109 draw on an outline map the route
 of the Flanders galleys.

 11. Write a report on the political conditions in Italy in the last
 centuries of the Middle Ages. [Current manuals of European history;
 Burckhardt, Civilisation of the Renaissance, London, 1878.]

 12. Write a report on the rivalry of Venice and Genoa. [Brown, Venice.]

 13. Write a report on the chief periods in the history of Genoa.
 [Encyclopedia.]

 14. Study the history of the Medici family as showing the character
 of commercial and political life in Florence. [Encyclopedia; various
 biographies.]

 15. Write a brief report on the commercial history of Marseilles or of
 Barcelona. [Encyclopedia.]


BIBLIOGRAPHY

 A bibliography of the history of Venice is given by Brown, pp.
 xix-xxiii. A good brief survey of Venetian history, with a description
 of the modern city and a map, will be found in the Encyc. Brit. The
 history in the Story of the Nations series cannot be recommended.
 The best book for our purposes is Horatio F. Brown, *Venice, N. Y.,
 Putnam, 1893. The history of other Italian cities is treated, with
 some attention to commerce, in Bella Duffy, The Tuscan republics with
 Genoa, N. Y., Putnam, 1893.




CHAPTER XII

COMMERCE OF NORTHERN EUROPE


=114. Development of commerce in South and North.=—Medieval commerce
reached its highest development on opposite sides of the continent of
Europe, in the Levant trade of the South and in the trade carried on
by the Hanseatic cities of the North. Commerce was, of course, not
confined to these localities. We have seen already how German merchants
and the Flanders galleys united the North and South of Europe; and
every one of the present European countries took a greater or less
share in the exchange of wares. We have already described, however,
the general character of commerce in the medieval period, and must
refer the reader to that description for some idea of the commerce of
countries which are not treated in detail in this sketch.

=115. Conditions and wares of the Baltic trade.=—The wares of the
northern trade present a contrast to those which furnished the material
of eastern commerce. In the first place the countries of central Europe
found in Scandinavia and the Northeast, which formed the trading
ground, peoples who were their industrial inferiors; these peoples
were glad to receive manufactures instead of supplying them. Secondly,
the cost of carriage was much less in the North than in the South,
not only because transportation was almost entirely by sea and over a
shorter route, but also because the tolls on trade were much less than
in the Asiatic countries. It was possible, therefore, to trade in bulky
articles of comparatively small value.

The luxuries which formed so large a part of the eastern exports were
scarcely represented in the northern trade. Amber can be put in this
class, though the trade in it was of no great importance; this was a
fossilized resin which was found on the coast of the Baltic, and which
was used for ornaments. Wax was a far more considerable item of export,
which may, perhaps, be regarded as a luxury, since it found its chief
employment in the form of candles used in church services.

=116. Exports from the Baltic, mainly raw materials.=—Most of the
exports from northeastern Europe were raw materials serving the simpler
needs of man. Among the foodstuffs fish took the first place. Until
the fifteenth century the herring, which does not now range outside
the waters of the North Sea and the open ocean, came each year in late
summer to the Swedish and German coasts of the Baltic; and the trade
in dried and salted fish, especially herring, was one of the chief
branches of northern commerce. The whole population of western Europe
was at this time Roman Catholic, and the consumption of fish was of
course stimulated by the rules of the church. Other foodstuffs exported
were honey, butter, and salt meat.

The Northeast had no textiles to offer to the rest of Europe, but in
its furs it had a substitute for them which was most highly prized.
The furs included not only the finer varieties, the use of which was
restricted to the upper classes, but also common grades that were
desired as much for their warmth as for their appearance. Houses were
so poorly heated that comfort was impossible without thick clothing. We
can understand, therefore, the complaint of a German bishop who said
that “we strive as hard to come into the possession of a marten skin as
if it were everlasting salvation.”

Other raw materials exported were skins and tallow from animal
industry, and forestry products which were destined to be the mainstay
of the Baltic trade in later times, various forms of timber and the
group of products known later as “naval stores,” including pitch, tar,
and turpentine.

=117. Exports from the West to the Baltic countries.=—In return
for its imports western Europe sent to Russia and Scandinavia its
manufactures and the raw products which could not be obtained in the
Northeast. The list includes wheat, wine, salt, and metals, and, among
the manufactures, especially cloth and beer. The merchants of the West
conducted the trade not only between their home districts and the less
developed countries, but also between these countries; they carried
herrings, for instance, from Scandinavia to Russia.

=118. Contrast of the history of the commercial cities in Italy and
in Germany.=—The cities of Germany, which took advantage of the
opportunities for trade in the North, were like those of Italy in their
freedom from royal authority. There seems, therefore, a chance that
they might fight among themselves for the trade, and that one of them
might get a commanding position as did Venice in the South. No one of
them, however, had the peculiar advantages of the geographical position
and the freedom from attacks by land which Venice enjoyed. They were
too evenly matched to settle quickly the question of supremacy, and
they ran such dangers from the attacks of feudal lords that they could
not afford to quarrel among themselves. Instead of competing they
united, in the Hansa or Hanseatic League, which was the most remarkable
commercial association of the medieval period.

=119. Rise of the Hanseatic League.=—The word “hanse” meant in early
German a society, a band of men, and was applied to a number of
commercial associations besides the particular league to which we
apply it here. This league grew up gradually in the thirteenth and
fourteenth centuries. The merchants of various German cities found it
necessary to unite for the protection of their interests abroad, and
the beginnings of the association are found in the island of Gotland,
in the Baltic and in the city of London, where Germans carried on
a considerable trade. After a while the cities at home took up the
association which their merchants had started in foreign countries,
and in the fourteenth century a great league grew up, centering in the
cities at the southwestern corner of the Baltic, of which Lübeck was
the chief. Sailors were still afraid to navigate the waters around
Denmark, because of the dangerous currents and shoals, so Baltic wares
were carried across the isthmus, and cities like Lübeck grew great on
this trade and on that which came down the Elbe valley.

=120. Extent and organization of the League.=—“When the ambassadors of
the Hanseatic League in England in 1376 were asked for a list of the
members who made up their vast association, they answered scornfully
that surely even they themselves could not be supposed to remember the
countless names of towns, big and little in all kingdoms, in whose name
they spoke.” The league was in fact very extensive, for it included
not only the chief German seaports, but also towns in the interior
and some towns outside of Germany altogether. The number varied from
time to time; in the period of greatest power it was nearly 100,
stretching from Dinant in modern Belgium to Krakau and Reval in the
East, and including towns as far inland as Göttingen in Germany. The
towns never formed a very close union, but sent their representatives
every year or so to a meeting-place where they could discuss matters of
common interest, decide upon the policy to be followed, and raise what
resources they could for carrying the policy through.

=121. Control of the commerce of northern Europe by the League.=—The
aim in general was the protection of commerce from the attacks of
pirates and feudal lords and the negotiation of commercial treaties
which would extend the privileges of members and preserve their
monopoly of trade. The League was so successful that it obtained in the
closing centuries of the Middle Ages a predominance in the commerce of
northern Europe comparable to that of the Dutch and of the English in
later times. In the West it had to share its trade with other peoples.
In this direction Bruges was the terminus of many of the voyages; at
that port the Hanseatics met the Venetians, coming in the Flanders
galleys, and secured also many wares from western Europe. This was by
no means, however, the limit of their western voyages. They had an
important trading station in England, with a great group of buildings,
the “Steelyard” near London bridge, and invested their capital in
English tin mines; one of their favorite voyages was to Bourgneuf,
south of the Loire, on the western coast of France; and they sent their
ships in some periods as far as Spain and Portugal.

[Illustration:

  THE
  HANSEATIC COMMERCIAL
  EMPIRE
  ABOUT 1400
]

The North and East of Europe were, however, the field of their greatest
success. In Scandinavia (including Iceland) and Russia, they gained
a complete monopoly of commerce; the peoples of those countries were
so backward that they permitted the Germans to do the most important
part of their trading for them, and the governments were weak and were
easily forced to grant the privileges desired.

=122. Methods of trading; factories.=—The methods which the Hanseatics
employed in their trade are worthy of special attention, because
they were characteristic of the time, being very similar to those of
the Venetians in the East, and because they have been employed under
similar conditions in later periods. They established “factories” in
the sense of trading posts (_not_ manufactories), where most of the
trade was carried on. A factory was, in the first place, a fortress
where the merchants could be safe from attacks by the natives; at
Novgorod, for instance, the group of buildings was enclosed and was
carefully guarded by men and by great watch-dogs both day and night.
The factory was, moreover, a place where the trade could be regulated,
and where the merchants could be kept under supervision. To let a man
trade as he pleased would have subjected not only himself but all his
compatriots to danger, for the natives made little distinction between
foreigners and would readily have punished one merchant for the fault
of another. The factories were centers of social life, with their rough
initiations and their games, and they were useful in training young men
in commerce; but they were kept under such strict discipline and minute
regulation that they seem like garrisons in the enemy’s country.

[Illustration:

 The map follows a contemporary description of the wares which were
 brought for sale to Bruges and Flanders, omitting some of the less
 important and those difficult to identify. Of the countries left blank
 on the map, Italy excelled in manufactures (textiles and glass), and
 France had a notable export trade in wine.
]

=123. Flanders and Bruges.=—Between the regions under the commercial
control of the Hanseatics on one side and the Venetians on the other
lay a sort of neutral zone where both parties met, centering in the
region about modern Belgium. This district was favored not only
by the junction in it of the northern and southern trade; it had
other advantages of position in that it lay near the mouths of great
rivers, the Scheldt, Meuse, and Rhine, and was also at the crossing of
important land routes. It had enjoyed an early development of industry
in its towns, and had been liberally treated by its feudal rulers.

At different periods the great commerce which flowed to and through
this district chose different points for its concentration. In the
fourteenth century the favored spot was Bruges (the Flemish word
meaning bridges), the greatest market in northern Europe, vying even
with Venice. Here could be found Scandinavians, Germans, English,
French, Portuguese, Spaniards, and Italians, exchanging the wares from
different sources; a contemporary writer names 30 different countries,
both Christian and Mohammedan, which fed the market of Bruges with
their commodities. The natives were content to let foreigners carry on
the business of transportation; they stayed at home and grew rich from
the wares, money and credit instruments which commerce brought to their
doors.

=124. Decline of Bruges in the fifteenth century; rise of
Antwerp.=—Partly because of this passive part which they assumed,
partly because of the practice of medieval countries in diverting
their trade from one place to another, the people of Bruges had but
a precarious hold on their commerce, and lost it in the fifteenth
century. The silting up of its harbors, making these unfit to hold
the larger ships now coming into use, explains in part the decline of
Bruges, but political forces were at work also to divert commerce to
another center. In the fifteenth century the place of Bruges as the
great market of northern Europe was taken by Antwerp, which had fought
its way up against all rivals, and which held the leadership now for
one hundred years.

=125. Conditions of commerce in England.=—England lay on the outside
of the great currents of medieval commerce. It had an advantage which
it had enjoyed since pre-Roman times, the practical monopoly of tin
production in Europe; and added to this in the latter part of the
Middle Ages a still more important monopoly, that of wool production.
Sheep were raised, of course, in other parts of Europe, and the merinos
of Spain yielded a finer grade of wool than could be produced in
England. For some reason, however, the sheep industry did not prosper
elsewhere as it did in England. Possibly the constant wars and raids
which disturbed the feudal states of the continent may have prevented
the production of a commodity which could be so easily destroyed
or carried off as booty. At any rate, the more settled political
conditions in England, where internal war became soon a rare exception,
favored the development of all the national resources. Aided by the
prevalence of peace at home, and by the disappearance of feudal tolls
on trade, the English advanced rapidly in the fourteenth and fifteenth
centuries and instead of exporting the raw wool began to make it into
cloth and to export the finished product. Trade was furthered also
by the continental conquests of English kings, which brought England
and the South of France into close relationship, and built up a large
import trade in French wines.

=126. English trade passive until the close of the Middle Ages.=—Most
of the trade in English wares, however, was in the hands of foreigners
until the very close of the Middle Ages. The English kings showed more
interest in the development of their resources by the encouragement
of alien merchants than they showed in the extension of commerce
carried on by natives. Hanseatics and Venetians fetched and carried the
wares of distant countries for the English; and the “Merchants of the
Staple,” a society composed largely of aliens, enjoyed a legal monopoly
of the export of the most important raw materials which England
supplied to European commerce—wool and sheepskins, leather, tin, and
lead.

English merchants became restive in the inferior position assigned to
them both at home and abroad, and before the end of the Middle Ages
began to fight for equal rights or for privileges, but they did not
secure final and complete victory until the beginning of the modern
period, in the sixteenth century.


QUESTIONS AND TOPICS

 1. Pursue on sects. 114-117 studies similar to those suggested above
 (sects. 88-94) for the Levant wares. For the character of the Baltic
 trade at present consult the Statesman’s Year-Book, index, Norway or
 Sweden. The history of the trade in amber may be made an interesting
 study, as the article has been an object of commerce since prehistoric
 times.

 2. Origin of the Hanseatic League. [Zimmern, pp. 11-29.]

 3. What place does Lübeck hold in the commerce of modern Germany?
 [Statesman’s Year-Book, Germany, last table in section on commerce.]

 4. What effect may the Elbe-Trave Canal, opened June 16, 1900,
 have upon the future of the city? [See U. S. Consular reports and
 newspapers about that date.]

 5. Contrast the organization of the Hanseatic League and of the
 Venetian empire.

 6. Report in detail on the organization of the League, and its
 weaknesses. [Zimmern, 202-220.]

 7. Write an essay on the life in a Hanseatic factory. [Zimmern,
 137-147, Bergen; 179-201, London.]

 8. Compare the Hanseatic factory with an Indian trading post.
 [Descriptions of such posts can be found in histories of the Hudson’s
 Bay Company.]

 9. Write a report on the rise and fall of Bruges or of Antwerp as a
 commercial center. [Encyclopedia.]

 10. Write a report on one of the following topics in English medieval
 commerce:

 (_a_) Exports.

 (_b_) Imports.

 (_c_) Shipping.

 (_d_) Attitude of the king.

 (_e_) Institution of the Staple.

 [Sufficient material on all these points may be found in Cunningham,
 Growth, and if the student is able to use a book like that he will get
 far more benefit than in abstracting the summaries (often inaccurate
 or misleading) in the smaller manuals.]


BIBLIOGRAPHY

 For general bibliography consult Gross, Sources, and Palgrave’s
 Dictionary.

 General accounts will be found in Encyc. Brit., article Hanseatic
 League, and in Zimmern, **Hansa Towns, a book which can be strongly
 recommended. It includes a map and illustrations, but has no
 bibliography.

 For descriptions of English commerce in this period see Cunningham, **
 Growth, or the articles in Traill’s Social England. Briefer accounts
 are, of course, to be sought in manuals already mentioned.




CHAPTER XIII

DEVELOPMENT OF THE MEDIEVAL ORGANIZATION OF COMMERCE


=127. Types of medieval traders; pedler, shopkeeper.=—Enough has
already been said to guard the reader against the idea that great
wholesale merchants of the modern type were common in the Middle Ages.
The regular type of trader was the artisan who manufactured the goods
he sold, or the pedler who collected a stock of goods in a town and
carried them about in a pack for sale. The pedler’s stock was not
unlike that which he would carry around the country nowadays,—sewing
materials, toilet articles, etc. An illumination in a manuscript of
the fourteenth century, representing monkeys opening a pedler’s box,
shows vests, caps, gloves, musical instruments, purses, girdles, hats,
cutlasses, pewter pots, and other articles. An English statute of the
fourteenth century, describing a similar stock in trade, mentions
rabbit skins as one of the articles which the pedlers took in exchange
for their wares, and an English author of the period accuses them of
catching cats for their skins. The petty shopkeeper stood a step above
the pedler. He had a regular shop in a town, where he displayed his
wares, and often went on trips to the markets of other towns, where
he set up a booth and carried on such trade as the town regulations
allowed.

=128. Merchants.=—Still another step above the shopkeeper was the real
merchant, who had his warehouse, from which he supplied the retail
traders, and who bought up considerable quantities of goods at the
great fairs at home and abroad. It is doubtful whether we can find in
this class in northern Europe any men who devoted themselves entirely
to wholesale trade; and merchants had not yet specialized so that each
would devote himself exclusively to the trade in a particular ware. We
can illustrate the point by a German merchant, whose account books have
been preserved so that it is possible to follow his business operations
exactly. Vicko von Geldersen was a draper of Hamburg, where he rose
to wealth and a high position. He imported cloth wholesale, and sold
it both wholesale and retail. But he made use of his connection with
Bruges, which was the great cloth market, to send there for sale iron,
honey, meat, butter, etc., and to import such wares as oil, spices,
figs, and almonds, which he sold to smaller dealers in many cities of
Germany.

[Illustration:

TRADE RELATIONS OF

A GERMAN MERCHANT

About 1400

 See section 128 for a description of the trade of this merchant. The
 map shows only his German business, and indicates roughly, by the size
 of the circle, the importance of each town in his commercial dealings.
 Note how trade tended to the water routes.
]

Members of the class to which Vicko belonged were the leaders
of commerce in the North of Europe during the Middle Ages; they
accumulated wealth which seemed great at the time, and formed an
aristocratic class in social and political life. Their sons were
brought up to follow the family business, and often trained to it by
extensive study and residence in foreign countries.

=129. Development of commercial association in the Middle Ages.=—In the
Middle Ages we find the beginnings of that process of association which
can be traced step by step to the formation of the great “trusts” of
the present day, and which forms one of the most important features in
the development of commerce. To point out the various advantages which
arise from the association of laborers and of capitalists would lead us
into political economy; and to describe in detail the development of
the various forms of association would require an excursion into legal
history equally out of place. We must content ourselves with indicating
some of the main features which are easily intelligible.

The need of association was felt especially in the Middle Ages because
it was necessary that a merchant or his representative should accompany
his wares on the road. It was often difficult for a merchant to look
after a commercial venture in person; he could not trust it to a
hireling; and the slight development of the carrying and commission
profession made it impossible for him to leave it to a class of persons
who nowadays make it their business to attend to such matters. The
merchant, therefore, would associate with him some one who could
represent his interests; and a modern author asserts that in comparison
with the amount of business many more commercial companies were formed
then than at present. The merchant would choose by preference a member
of his family, and family partnerships were the prevailing form of
association at first. With the growth of commerce, however, greater
freedom of association was demanded, and the group ceased to be limited
by considerations of relationship.

=130. Advantages of association.=—By joining together, two or more men
could follow different lines; one would stay at home while another
could accompany the wares, and perhaps still another could attend
to sales in a distant city. The advantages of this are apparent,
and of not less importance are the benefits arising from the better
utilization of capital. A person who had accumulated wealth, but who
on account of advanced age, physical disability, or other circumstance
could not himself employ it in commerce, would join with him a man who
contributed to the enterprise the necessary business activity.

Capitalists gained also in another way, for they were enabled by
association to share the risks of an enterprise. A man who put all
his money into one ship or cargo ran the risk of being ruined; and
foregoing paragraphs have shown that the dangers in the path of
commerce were by no means slight. By distributing his capital in a
number of enterprises, however, as could easily be done if he entered
into association with others, he could hope to make up for any probable
loss by the profits of his successful ventures, and can be regarded as
insuring himself. We find, in fact, that the shipping business was for
the most part carried on in this way.

=131. Forms of association; partnership.=—Commercial association took
ordinarily the form of a “commenda” (Latin _commendare_, entrust).
The “commendator” contributed capital in the form of money, wares or a
ship, while the other party, called the “tractator” contributed only
his personal services to the enterprise; of the profits one fourth went
to the tractator and the remainder to the commendator. The tractator
who saved his earnings could in time also contribute capital, and was
given a greater share of the profits and more freedom in conducting the
business.

The commenda, corresponding to a “silent partnership,” was older
and of more importance in commercial undertakings than the ordinary
partnership of the present day; but the latter form of association grew
up also at this time, and was used in commerce as well as in industry.
The joint-stock corporation belongs in its important applications to a
later period.

=132. Spread of the practice of association from Italy.=—The different
forms of partnership developed especially in Italy in the last few
centuries of the Middle Ages, when the growth of commerce was most
rapid, and they became extraordinarily extensive and important. They
secured the union of capital and executive ability which enabled far
greater enterprises to be carried on than would have been possible
without them. The Italian commercial house of the Peruzzi, for
instance, had fourteen branches and one hundred and fifty factors or
agents. Even the assistants in the business, who did not themselves
contribute capital to it, were interested in its success by a system
of profit sharing. From Italy the practice of association spread to
the North of Europe, and it became practically universal in commercial
undertakings. Each of the larger firms had its characteristic
trade-mark, distinguishing its bales of goods.

=133. Position of the Jews in medieval commerce.=—The Jews held a
peculiar position in medieval Europe. They were distrusted and disliked
by the Christians, because of their difference in religion, and because
of their business ability, which made competition with them a difficult
matter. Though they were scattered throughout Europe they kept touch
with each other, and so enjoyed exceptional advantages in the pursuit
of commerce and the extension of business relations. In the early
part of the Middle Ages they were indispensable; Christians were not
educated up to their level in business, and had to leave to them the
major part of the slight commerce of the times. As Christian peoples
developed, however, they demanded for themselves the place which the
Jews had won; and by a long series of restrictions and persecutions
they forced the Jews into some particular branches of business where
the Christians could not follow them. The church taught for a time that
it was wrong to lend money at interest, and discouraged Christians
from seeking gain by this means. The Jews, therefore, seized the
opportunity which was denied to Christians, and became money-lenders.
Their position was always precarious, for the law gave them no
protection, and they were subject constantly to robbery by feudal
princes and by the people, who believed everything evil of them. From
England they were banished altogether, for several centuries. They
showed astonishing skill and fortitude, but in the last centuries of
the Middle Ages they lost their position even as leaders in credit
operations. The church then permitted money-lending if the terms were
not extortionate; and Christians from southern Europe, “Caursines”
(named from Cahors, in the south of France) and “Lombards,” succeeded
the Jews as the money-lenders of Europe.

=134. Character of currency in the Middle Ages.=—One of the serious
obstacles to the development of commerce was the character of the
currency in the various countries of Europe. Assuming that the reader
appreciates the importance of money as facilitating the operations
of exchange, and knows the qualities of good money, we may confine
ourselves to pointing out some of the characteristic faults of medieval
currency.

(1) Merchants could not rely upon the government to maintain the
standard of value. In many countries the kings debased the coinage
again and again, to secure the means of carrying on war or paying
public expenses of other kinds. Every debasement, as it left the coins
with less pure metal, lowered their purchasing power and raised prices;
many innocent people suffered and everybody grew reluctant to make
bargains and contracts.

(2) In many countries, especially those on the Continent, the
privileges of the great feudal lords included the right to keep a mint
and to issue coins. The central government restricted this right, as it
grew stronger, but in general the currency of medieval Europe was made
up of a vast variety of coins of standards even less reliable than that
of the king’s coinage. There was danger that a coin, even if it was of
good weight, could not be passed at its full value outside the locality
where it was minted.

(3) Even in countries like England, where feudal coinage was put down
and where debasement by the government was exceptional, counterfeits
were not rare, and the clipping of coin was very common.

These characteristics of medieval currency made the money-changer
a necessary figure in the commercial world; he was to be found
everywhere, even in the small towns, buying and selling the various
coins in circulation.

=135. Difficulty in making payments in distant places.=—While the
money-changer facilitated payments in any given place, he was not of
much assistance to a merchant desirous of making a payment in a distant
town or country. The merchant, it is true, could buy from him foreign
money with which to make the payment; but the transportation of the
actual coin was not only dangerous and expensive, but also subject to
legal restriction, and was to be avoided if possible. The merchant
would probably prefer to send instead of money some ware, which he
could sell to advantage at the destination, and then with the proceeds
make his payment. For example, when Michael Behaim of the Nuremberg
Company wanted to send 1,000 gulden from Breslau to Nuremberg, he found
it expedient to buy an amount of wax which he could sell in Nuremberg
for the required sum, and he shipped that instead of money.

=136. Introduction of the bill of exchange.=—It might not, however,
always be convenient for a man to meet his obligations in this way;
he might not have the commercial knowledge, or perhaps he might have
no good opportunity to ship a ware. Behaim, in the case cited, had in
fact resorted to the wax shipment only from necessity, after he found
it impossible to make his payment by the means of remittance now become
general, the _bill of exchange_.

Suppose that B. in Breslau owed the 1,000 gulden, to A. in Nuremberg,
for spice; and suppose that D. in Breslau was the creditor of another
Nuremberg merchant C, to the extent of 1,000 gulden, perhaps for furs.
It would be absurd for B to ship the money or to go out of his way
to ship wax to A, and for C to ship the same value to D, when the
payments could be made to cancel each other. Why should not B pay to
D in Breslau the 1,000 guldens due him, and tell C to pay the same
amount to A in Nuremberg? This could be accomplished by means of bills
of exchange; D could write out an order to C directing him to pay the
money, and sell it to B, who would thus have the means of paying his
debt in Nuremberg to A.

Such an operation implies, however, not only regular commerce of
considerable volume but also mutual confidence among the participants.
How could B know whether D actually had a correspondent in a distant
place who would meet his obligations promptly? It was not, in fact,
until the thirteenth century that bills of exchange were used to any
considerable extent; then they were developed in Italy, and spread from
there.

=137. Development of banking in Italy.=—In Italy, also, the
money-changers developed other forms of banking. As they were dealers
in money, business men in want of capital for their operations
naturally sought it of them. The money-changers might lend it from
their own stock or act as brokers and secure the money from some man
who had a surplus. The short step from this to the common form of
modern banking was made when merchants deposited their surplus cash
with the money-changer, and he had thus a considerable stock, which he
could lend so long as he kept sufficient reserve to meet the demands
of depositors. It soon became unnecessary for money to pass at all in
large transactions; a man could get a loan from a bank simply by having
a deposit ascribed to him on the books, and could assign this loan to
others as he chose to pay it out. The characteristic danger of banking,
the attempt to make a great deal of credit out of a little capital,
appears early in Italy, with its results of failures and crises. The
advantages of the banking system, however, the economizing of time and
money and the facilitating of business operations, were so clear that
banking kept its place, and spread toward the close of the Middle Ages
from Italy to other countries.


QUESTIONS AND TOPICS

 There is, in the history of commerce, no topic more difficult and none
 more important than the development of the organization. The student
 who has learned the facts has made only a beginning; he must grasp the
 significance of the facts if he is to gain anything from his study.
 The teacher is advised, therefore, to enlarge on the advantages of
 association and cooperation, as they are treated, from one point of
 view, in Adam Smith’s celebrated discussion of the division of labor,
 and in many manuals of economics.

 So much depends on the degree of advancement of the pupil, and on
 his particular environment in country, town or city, that it is
 difficult to suggest specific questions or topics. In general, the
 teacher should suggest the meaning of earlier development by constant
 reference to the present organization. Why have pedlers disappeared in
 so many districts, where do they still remain, and why? What is the
 proportion of retail and wholesale merchants in your city; how far has
 the specialization of wholesale trade progressed? Answers may perhaps
 be found in a business directory. The student who is competent to work
 out the history of business organization in his own town will not fail
 to get new light on the history of earlier development; and a report
 on the history of some particular branch of trade at home should be
 an excellent exercise to be worked out. Another exercise would be
 the history of the different forms of association (partnerships,
 joint-stock companies), and a study of the reasons lying behind the
 rise and fall of a particular form. The choice of questions and topics
 here must be left to the ingenuity and discretion of the teacher.

 The history of the currency in England [see Cunningham] is an easier
 topic.

 On the rise of credit instruments (bills of exchange, banking), the
 student will probably be best prepared if he is given reading, either
 in review or in anticipation, in some general manual which will enable
 him to appreciate the importance of credit institutions now, and will
 hence interest him in their origin. [Cf. Usher, The origin of the bill
 of exchange, Journal of Pol. Econ., Chicago, June, 1914, 22: 566-576.]

 An exercise which should be profitable and rather easy is a report by
 the student on the life of some English merchant. [See Fox Bourne, or
 consult the Dictionary of National Biography on names like Richard
 Whittington, William Canynges, William de la Pole, etc. Further
 biographical material is provided by Alice Law, Some notable “King’s
 Merchants,” Economic Review, 1902, 12: 309 ff.; 1903, 13: 411 ff.]

 If Bourne’s Romance of trade is available the student may prepare an
 abstract of chap. 1 (the Jews) or chap. 4 (money and credit).


BIBLIOGRAPHY

 The student will find bibliographies of some of the topics treated
 in this chapter by consulting the appropriate articles in Palgrave’s
 Dictionary. Most of the best literature is foreign. The best
 references in English are to **Ashley and *Cunningham.

 The important and difficult subject of the development of capitalistic
 organization is treated by John A. Hobson, *Evolution of modern
 capitalism, new ed., 1916, chap. 1, W. Sombart, **The quintessence
 of capitalism: a study of the history and psychology of the modern
 business man, London, 1915, and by Pirenne, *The stages in the social
 history of capitalism, American Hist. Rev., Apr. 1914, 19: 494-515.
 One aspect of the subject is covered by Arthur H. Woolf, Short history
 of accountants and accountancy, London, 1912.




CHAPTER XIV

COMMERCE AND POLITICS IN THE LATER MIDDLE AGES


=138. Development of the modern political system in the later Middle
Ages.=—Toward the close of the Middle Ages the feudal system of
government gave place gradually to a system more like that which the
Romans had established and with which we are familiar now. As trade and
intercommunication increased, and towns grew up holding a population
of considerable wealth, the kings found it possible to make into a
reality the position of nominal headship which tradition and the church
conferred upon them. They found in the mercantile and manufacturing
classes people who could afford to pay taxes, and who were willing to
pay large sums to be relieved from the oppressions of the feudal lords.
It became possible once more to transport supplies and to send troops
to distant localities, and the kings devised means by which they could
keep in touch with their officials, and hold them to loyal service. The
result was a great increase in the power of the central government, at
the expense of the feudal lords.

=139. Variety of development in different countries.=—The development,
as sketched above, was very different in the different countries. It
came early in England, and local lords lost practically all of their
independence. In France it was a very gradual process, extending over
the last four centuries of the Middle Ages. Even in the sixteenth
century and later, the kings, though they seemed to enjoy great power,
did not abolish all the remnants of feudalism, which continued down
to the French Revolution in 1789, to the great harm of industrial
development. In Spain the union of the crowns of Castile and Aragon
just before 1500 completed the process, by establishing nearly
absolute royal authority over the greater part of the peninsula. In
Germany and Italy the result was different. The same man, who called
himself the Emperor of the Romans, claimed the royal power in both
countries, but in attempting too much he lost everything. He wasted the
royal resources in vain attempt to establish his authority, and became
a mere figure-head. The control of government passed in those countries
to local authorities; but it is important to note that these included
not only feudal lords, but also cities which had become strong enough
to throw off feudal authority and to establish for themselves almost
complete independence.

=140. Effect on commerce of a strong and of a weak central
government.=—In a country in which the cities established complete
independence they seemed for a time to have gained by throwing off
the royal power. Each city could control its affairs and shape its
policy to suit local interests; and the great cities of Italy and
Germany before the close of the Middle Ages were the most advanced
and prosperous parts of Europe. Though they controlled only small
areas of land they had great resources from their commerce, and even
in war could hold their own with the feudal lords fighting in the
old-fashioned way.

They were strong enough to fight a feudal lord; they were not, however,
strong enough to fight a modern king. While they were building up
their power at the expense of rival cities and at the expense of the
country districts, the kings of lands to the west of them were quietly
engaged in uniting all the cities and the country districts, too, under
one rule. The cities in France and England seemed for a time to lose,
because they were forced by the kings to make concessions to each other
and to the country districts. When, however, they had become used
to consider themselves as only parts of a bigger whole, the nation,
they found that their sovereign was far better fitted to represent
their interests and further their progress than any one of them was
individually. The struggle of the independent cities of Italy and
Germany against the national states of England, Spain, and France was
not decided until after the discovery of America and the sea-route to
Asia, when the national organization proved decisively its superiority
to the municipal.

=141. Rise of a national commercial policy.=—The rise in power of the
central government in countries like England and France is proved by
the appearance, toward the close of the Middle Ages, of a national
commercial policy. The reader will remember that even in these
countries the towns were at first so independent that each adopted a
commercial policy of its own; as though, nowadays, for instance, Boston
and New York and Philadelphia should each have its own independent
tariff and set of commercial regulations. A merchant of Dover was
a foreigner in Southampton, and if he wanted to collect a debt due
him from a Southampton merchant he would appeal, not to the central
government and the law of the land, but to the Dover government; and
the Dover government would put pressure on the Southampton government,
perhaps by arresting any merchant from Southampton and holding his
goods, until the debt was paid. About 1300 the English king was at last
strong enough to make general regulations in matters like this of the
collection of debts, and about the same time he established a national
tariff at the ports, as a regular system, and forced the various towns
to give up the right to levy what dues they pleased. A similar change
took place in France at nearly the same time; the idea grew strong that
the general interest of all Frenchmen was superior to the particular
interests of any town or individual, and the people of France began to
look to the king instead of to the local authorities for protection and
control.

=142. Medieval ideas on commerce.=—When commerce was undeveloped and
only an incidental feature in the economic life of peoples, those high
in authority in church and state held ideas of it which have faded away
as commerce has proved its power and shown its benefits. Many kinds
of commerce, including some forms of money-lending now considered
legitimate, were prohibited because they seemed to give a man something
for nothing. In ordinary trade one man was thought to make his profit
at the expense of another, and government was always vigilant to
protect the weaker party. A government, moreover, looked on foreign
commerce rather as a privilege of its citizens than as their right,
and used it freely as a political weapon instead of considering it an
economic necessity. The ports of the kingdom were the “king’s gates,”
which he could open or close at his pleasure, to further his royal
policy.

=143. Characteristic features of commercial policy.=—Among the
characteristic features of national economic policy in the later
centuries of the Middle Ages we find the following:

(1) Export and import could be carried on only by favor of royal
license, which was granted to and withdrawn from groups of natives and
foreigners as suited the king’s ideas.

(2) The export of necessaries was frequently prohibited (as had
previously been the custom with the towns), to increase the supplies of
the kingdom and keep an enemy from getting the good of them.

(3) The export of money, as a specially valuable asset of the kingdom,
was prohibited and its importation was favored.

(4) The growth of native industries was stimulated by a variety of
regulations. The English cloth manufacture was protected, for instance,
in the following ways: the export of raw material (wool, teasles,
etc.) was forbidden from time to time, that the home manufacturer
might supply himself more cheaply; the import of foreign cloth was
restricted; and the wearing of fur was limited to certain classes,
that the home market for woolen manufacture might be larger. Among the
protected industries was shipping. “Navigation acts,” requiring the use
of native ships, were common, though they ordinarily remained in force
but a short time and had not yet hardened into a system.

(5) The foreign trade of a country was not only restricted, as at
present, to certain points on the frontier where duties could be
collected, but was often concentrated in one or more special places,
the “staples.” The government could then oversee the trade more easily,
could collect its dues, insure good quality, and protect merchants
more readily, and it could also make better use of trade as a weapon
of policy, directing the stream of goods where it pleased, and so
rewarding or punishing other states.


QUESTIONS AND TOPICS

 1. Review the sections on feudalism, and see how the modern system
 of government grew up from feudalism as the forces which had created
 feudalism were reversed. [Cf. Seebohm, Prot. Rev., pp. 15-21.]

 2. Write a report on the rise or decline in power of the central
 government in one of the following countries, in the period 1100-1500:
 France, England, Germany, Italy, Spain. [Consult the current history
 manuals, or the encyclopedia.]

 3. In connection with sect. 140 read the sections in a later part of
 the book, describing the advantages which have come to Germany and
 Italy in recent times by their union under strong central governments.

 4. Write a report on medieval doctrines on one of the following
 subjects:

 (_a_) Loans at interest.

 (_b_) Profits in trade.

 [Cunningham, Growth, or Ashley, vol. 1, chap. 3; vol. 2, chap. 6.]

 5. Write a report on “protection” in the medieval state. [See
 Cunningham or Ashley on commercial policy, or read J. S. Nicholson,
 The English corn laws.]

 6. What has been the history of the meaning of the word _staple_?
 [Dictionaries, especially Murray’s New English Dict.; Cunningham.]


BIBLIOGRAPHY

 The subject of this short chapter takes the reader within the bounds
 of political history, and he is referred to the many history manuals
 for further reading and references. The growth of the French monarchy
 has been well treated by Adams, Civilization, chap. xiii, or Growth of
 the French nation.




PART III.—MODERN COMMERCE




CHAPTER XV

EXPLORATION AND DISCOVERY


=144. The revolution about 1500; topics to be considered.=—The period
centering about the year 1500 was marked by changes so rapid and
so extensive that they deserve the name of revolution. The changes
affected not only the intellectual life of Europe (the Renaissance) and
its religious life (the Protestant Revolt or Reformation); they caused
a revolution also in the world of politics and in the world of industry
and commerce. It will be necessary to survey some of these changes
before we return to the narrative of the history of commerce. Three
main topics will occupy the attention: first, the extension of the
commercial area by exploration and discovery; second, the development
of the commercial organization by new forms of cooperation; third, the
rise of modern states in Europe, and their influence on the growth of
commerce.

=145. Growth of geographical knowledge. Asia.=—About the year 1000,
to most people in Europe “the world” meant scarcely more than the
village in which they lived, so limited were their interests and their
knowledge. Pilgrims to the holy places in Palestine brought back with
them knowledge of this edge of Asia, but what the Greeks and Romans
knew of that continent and of Africa had been forgotten, and even the
better educated people thought of the outer parts of the world as
mysterious regions, wrapped in darkness or peopled with prodigies,
when they thought of them at all. The growth of the Levant trade and
the crusades caused an increase in interest and in information. After
the year 1200, when a great Mongol or Tartar Empire was established
in inner Asia by Genghis Khan, Europeans began to penetrate Asia
seeking aid from the Mongols against their enemies the Turks.
Ambassadors, missionaries, merchants, and explorers made the journey
so frequently that a regular guide-book was written by an Italian soon
after 1300; and about the same time the Venetian Marco Polo returned
from a long stay in China and described his travels. He had gone by
land, through Persia, Turkestan, and Mongolia, and, returning by sea,
he could tell also about Japan, the great Malay islands, Burmah, India,
etc. Before the invention of printing knowledge spread slowly, but the
maps of the fifteenth and sixteenth centuries show that the results of
these explorations were not lost, and Europe had become conscious that
Asia was bounded by a sea on the east.

[Illustration: A MEDIEVAL MAP OF THE WORLD

(The Laurentian Portolano. 1351)]

=146. Need of a sea route to Asia; means of navigation.=—The
explorations by land in Asia were of great importance in spreading
knowledge of the countries from which the wares of the Levant trade
came, but they were of little assistance to traders who sought to
develop commerce on the old routes. With the decline of the Mongol
power and the spread of the Turks, passage across Asia became
constantly more difficult. The available routes finally narrowed to
one, that through Egypt, and trade on this route was burdened with
very heavy tolls. The European people were urged by powerful economic
motives to seek out the sea route to India which was now believed to
exist.

The means of navigation were still those of the later Middle Ages. The
ships in which some of the most adventurous voyages were taken were of
fifty tons or even less. The rig had been improved slightly, so that
the ships could be handled more readily than when they bore the old
square sails; and instruments for ascertaining the position at sea
were also improved. Still, when we add to the actual peril of distant
voyages the imagined dangers which the minds of men ascribed to unknown
seas, we must admit that the early explorers met a test of courage to
which men nowadays are rarely put.

=147. The lead in maritime exploration taken by Prince Henry of
Portugal.=—Italians were, in general, the guides who led Europeans
through the seas of darkness to the East. Conditions at home, however,
forced them to seek service abroad in realizing their plans, and
Portugal was the first of the European countries to effect great
oceanic discoveries. The country was small and undeveloped, but it
enjoyed in the fifteenth century the guidance of a singularly able
line of kings. It had in the person of Prince Henry, “the Navigator,”
an enthusiast who devoted practically his whole life and fortune to
the cause of discovery. When but twenty-four years old he retired from
the world to a promontory at the southern extremity of the country,
and there he worked for over forty years, until his death in 1460.
Prince Henry combined the commercial motive with missionary zeal and a
medieval hostility to the Mohammedans, but the character of his work
was entirely modern and business-like. He gave what was most needed for
success, organization; he attracted sailors and pilots from all Europe;
stimulated development in the science and art of navigation; equipped
and inspired expeditions.

=148. Exploration of the West Coast of Africa; difficulties, real
and imagined.=—The great achievement of Portuguese navigation was
the discovery of the sea route to India around Africa. The coast of
the northwest corner of Africa was well known to sailors of several
European countries, and the belief was current in many minds that
circumnavigation was possible. Some Genoese sailors had actually
attempted to reach India in this way in the thirteenth century, but
they had disappeared without leaving a trace. There was all the
difference in the world between the theory and the practice of European
navigators; the limit of their voyages had practically always been Cape
Bojador, far north on the west coast. A strong inshore current and
short but furious storms made coasting dangerous. The coast of dreary
sand dunes afforded no good anchorage; mist or dust dimmed the air and
frightened sailors with the thought that they were actually entering
the sea of darkness; Cape Bojador was a forbidding obstacle in that
it projected far out beyond the coast line, and was supposed to be
extended by perilous reefs. Furthermore, most people submitted to the
opinion of ancient philosophers, that the tropics were uninhabitable by
reason of the intense heat of a blazing sun, which approached nearer
the earth in those regions.

[Illustration: DISCOVERIES

OF THE

PORTUGUESE

See Sections 148-149.]

=149. Discovery of the Cape of Good Hope (1487) and of the sea route to
India (1498).=—Under the stimulus of Prince Henry the Portuguese passed
Cape Bojador in 1434, and were rewarded on a more extended voyage
about ten years afterward by the discovery of Cape Verde. The name,
“Green Cape,” is significant; the explorers had passed the southern
edge of the desert and found a watered country with waving palms. In
this enterprise, as in most others, the first steps proved to be the
hardest. Though progress was steady it was slow, and at the death of
Prince Henry in 1460 the Portuguese had not passed beyond Sierra
Leone. They had, however, accumulated valuable experience and gained
confidence; the long period of preparation fitted them to advance more
rapidly as time went on. In 1471 they passed the equator, without the
scorching that some had feared; and in 1487, under Diaz, they turned
the southern extremity of the Continent, named by the sailor the Cape
of Storms, but renamed Cape of Good Hope by the King, as an augury for
the future. The illness and death of the King prevented the Portuguese
from utilizing their discovery immediately; but in July, 1497, Vasco
da Gama was despatched with a fleet bound for India, which anchored
at Calicut (southwest coast; _not_ Calcutta), in May, 1498. Oceanic
commerce with India had begun, and the tolls and charges which had
hampered trade by the land routes were things of the past.

[Illustration: Map of the known world in the time of Columbus.]

=150. Belief that Asia could be reached by sailing westward.=—While
the Portuguese were pushing on down the west coast of Africa in their
search for a route to India, the minds of some men were occupied with
the thought that the same object could be attained more easily by
sailing directly west from Europe. The earth was known to be round and
was thought to be smaller than it actually is. Asia was known to be
bounded by a sea on the East. Why not reach India by sailing around the
globe? Perhaps, they thought, the east coast of Asia was but a little
way from the west coast of Europe or Africa. Skippers who ventured
to the Azores, the Canaries, and other islands not far from Europe,
brought back stories of foreign objects washed up on the beaches, or of
land dimly descried on their voyages.

The belief that land existed beyond the horizon was commonly held,
and Columbus does not deserve the credit of originating the idea.
Nor can his discovery of the New World in 1492 be regarded as one
of those acts without which the history of the world would be very
different. The Portuguese were certain to touch America sooner or later
in circumnavigating Africa, for they planned to steer due south from
Guinea to the latitude of the Cape, to avoid the calms and currents
of the coast, and an equatorial current carried their ships westward.
Under these conditions the Portuguese Cabral, on his way to India
around the Cape, actually did land on the coast of what is now Brazil,
in 1500.

=151. Discovery of America (1492); partition of the world outside
Europe between Spain and Portugal.=—Columbus, however, certainly
deserves the fame which has been given him, for the courage he
showed in turning theory into action; and the consequences of the
discovery, however we apportion the credit for it, make it one of the
turning-points in the world’s history. Europe was disappointed, it is
true, in the hope that a shorter route to India had been found. Balboa
proved by the discovery of the “South Sea,” or Pacific Ocean (1513),
that the new land was a continent by itself, and the great distance
between America and Asia became known by the voyage of Magellan around
the earth (1519-1522), “doubtless the greatest feat of navigation that
has ever been performed.” Time was needed to prove that America offered
more than Asia to build up European commerce, and the full measure of
its possibilities was not realized until the nineteenth century. At the
time Portugal seemed to have gained more than Spain. The non-Christian
world was divided between these two powers, by a papal decree, which
gave to Portugal Africa and Asia (except the Philippines) and to Spain
the Americas (except Brazil). So long as other European states obeyed
papal authority and feared the might of Spain and Portugal, they were
bound to respect this division; and the first period of discoveries was
followed by a series of voyages, carried on especially by English and
Dutch, seeking a passage northeast or northwest through Arctic seas,
that would enable them to evade the monopoly granted by the Pope.

=152. Effect of the discoveries on the field of commerce; growth of a
world commerce.=—Contrasting medieval and modern commerce we find that
the discoveries produced great changes both in the area and in the
articles of trade. Maritime commerce in the Middle Ages was restricted
in general to the seas of Europe (Baltic, North, Mediterranean, Black)
and to the edge of the Atlantic; exchange was hindered not only by
physical obstacles but also by the claims of various states to the
exclusive control of inland waters (Hansa in the Baltic, Venice in the
Adriatic). When once sailors had learned to leave the coast and steer
boldly into the open ocean, secure in the consciousness that they
were approaching not a “sea of darkness” but a land much like that
which they had left behind them, the ocean became a means of uniting
continents rather than of separating them. The principle that the sea
is free to all was not accepted, it is true, for some time; states
tried to extend to the open sea the same narrow principle of exclusion
that had been practised with respect to interior waters. These claims
led to bitter national conflicts in the sixteenth and seventeenth
centuries, but they fell gradually into oblivion as the hopelessness
of making them effective became apparent; and the European commerce of
a former period expanded into a world commerce.

=153. Effect of the discoveries on the wares of commerce.=—Europe
had become acquainted with Asiatic wares in the course of the Levant
trade, so that the market for them was well established when the
first Portuguese ships returned from India. Transportation by the
sea route, however, with its diminished costs and with the greatly
increased cargoes, caused such a decline in the price of eastern
goods that the market for them expanded immensely. What had before
been costly luxuries for the rich became now a part of their regular
necessaries, and became for other classes luxuries or comforts which
they could afford to purchase. It is in this period that tea, coffee,
and sugar became common articles of consumption in some of the European
countries. The part played by those three articles in the commerce
of an advanced country can be seen from the fact that before the end
of the eighteenth century they formed _over one fourth_ of the total
imports of England. Other wares, such as Indian textiles, which had
been known to Europe before, but which were too bulky to pay for the
import of cheaper grades, could now be placed on the market in large
quantities, when protective duties did not exclude them.

=154. Importance of the precious metals in the American trade; effect
on prices in Europe.=—The American continent offered at first only
one class of wares of prime importance, namely, the precious metals.
The Spanish secured great quantities of gold in the early years of
their conquests, but about 1550 the output of gold was exceeded by
that of silver, which reached enormous proportions, as a result of
the discovery of new mines in Mexico and Peru, and by the use of the
amalgamation process. Before 1550 the production of the precious
metals in Europe and Africa exceeded the supply from the New World,
but then the balance changed; and during the seventeenth century
the American supply was more than five-fold that gained in the Old
World. The result was an increase in the stock of money in Europe so
great that a revolution in prices ensued; silver became so plentiful
that a given weight of it would purchase only one half or one third,
sometimes even one fourth or one fifth, of what it would have bought
before the discovery of the American mines. The serious results of
this price revolution on different classes in Europe must be left to
the imagination of the reader, as they lie outside the scope of this
manual. No other American product competed in importance with silver,
in the early period, but as the North American continent and the West
Indies were settled with whites and negroes some important staples were
brought from those parts to Europe. The islands proved to be especially
well suited to the production of sugar, while the mainland contributed
in tobacco, a ware before unknown in Europe, but one which could soon
rely on a large and increasing demand. Food staples like maize and
potatoes continued unimportant, not only as wares of commerce but also
as articles of European production, until comparatively recent times.

=155. Improvement in the means and methods of navigation.=—With the
extension of navigation new qualities were needed in ships; speed
to cover the great distances, carrying capacity for the storage of
bulky cargoes, and stability sufficient to ensure safety in tropical
hurricanes or eastern typhoons. The medieval galley, rowed with oars,
was, of course, unsuited to long voyages, and sails came into universal
use. The favorite types of vessel all showed, however, the influence
of medieval models. The caravel, of small tonnage and easily managed,
was simply a galley fitted with masts and sails. The galleon was
larger, having two or three decks; in it the attempt was made to unite
the lines and speed of a galley with the stability and dimensions
of a cargo carrier. Finally, the carrack, with four or five decks,
combined great carrying capacity with the defensive strength of a
floating fortress. Piracy continued to be a plague, especially in the
Mediterranean and in waters outside Europe, and the large merchantman
with a considerable number of guns enjoyed a great advantage over
smaller vessels. We read of ships of a thousand tons and over. The
size of the Hanseatic ships trading to London increased so much in the
sixteenth century that they could no longer pass London Bridge, or lie
at the wharf of the Steelyard; and the increase in the size of ships
caused changes in the importance of ports, by which Seville gave place
to Cadiz, Rouen to Havre, Dordrecht to Rotterdam.

Improvements were effected also in the art of navigation, especially in
the means of determining the position east and west. The simple means
of the later Middle Ages could give some idea of a vessel’s latitude,
but very little of its longitude. The introduction of the log in the
seventeenth century enabled a sailor to measure distance traversed more
accurately, and the invention of the chronometer in the eighteenth
century gave at last a reliable and practical means of determining
longitude at sea. Progress in scientific astronomy was made of service
to sailors by tables which were the forerunners of the modern “nautical
almanac”; and charts and sailing directions became, as the result of
generations of experience, more trustworthy and more useful.


QUESTIONS AND TOPICS

 1. Character and life of Prince Henry of Portugal. [E. G. Bourne,
 Prince Henry the Navigator, Yale Review, Aug., 1894, 3: 187-202,
 reprinted in Essays in historical criticism, N. Y., 1901; or one of
 the readings in the bibliography.]

 2. Measure on the map the distances traversed in the voyages in search
 of the sea-route to India; indicate these distances on a straight
 line, with the dates, that the rapid increase in the extent of the
 voyages may be apparent.

 3. Early life and first voyage of Columbus. [Bourne, Spain, chaps. 1
 to 3.]

 4. Early Christian pilgrimages to the East. [Beazley, chap. 1.]

 5. European explorers in Asia. [Cheyney, chap. 3; Verne, vol. 1, part
 1; Beazley, chap. 3.]

 6. Write a report on one of the countries of the East visited by Marco
 Polo. [See the translation of his travels.]

 7. Development of geographical science before 1500. [Beazley,
 Introduction, chap. 5.]

 8. Make tracings of typical maps, of antiquity, of the Middle Ages,
 and of the period of the great discoveries; and compare them with a
 modern map of the world. [See maps in Beazley and Cheyney.]

 9. Maritime exploration before the fifteenth century. [Beazley, chap.
 4.]

 10. What were the means and methods of navigation in the fifteenth
 century? [See Cheyney, p. 53 ff., and Fiske, Discovery.]

 11. Voyages in search of a passage to India through the Arctic Ocean.
 [Oxley, Romance, chap. 6; Verne, vol. 1, part 2, chap. 3; or Payne.]

 12. Write a report on the history of tea, coffee, or sugar as a ware
 of commerce. [Use the references suggested for wares of the Levant or
 Baltic trade.]

 13. Write a similar report on gold, silver, or tobacco.

 14. Effect of the fall in value of silver in England. [Cunningham,
 Growth, vol. 2, sect. 182.]

 15. Development of the art of navigation in modern times. [Encyc.
 Brit., Navigation.]


BIBLIOGRAPHY

 Classified bibliographies of the period of the discoveries will be
 found in Cheyney, and in Cambridge modern hist., vol. 1.

 General accounts will be found also in those two sources. Cheyney’s
 ** European Background includes some half dozen chapters on important
 topics in the history of commerce; these chapters offer, in some
 cases, the only available reading in English, and the book can be
 warmly recommended. Another book, which is inexpensive, readable,
 and very valuable, is Beazley’s **Prince Henry; this is full on the
 beginnings of exploration, and has an especially good collection of
 early maps. The first part of Fiske’s **Discovery of America presents
 an admirably written survey of conditions leading to the explorations.
 The first volume of the Exploration of the World by Jules Verne, N.
 Y., Scribner, 1879, 3 vols., covers the medieval period as well as
 that of the great discoveries; it has the merits and failings which
 the author’s name suggests.

 For Prince Henry and the Portuguese discoveries see **Beazley,
 Stephens, Portugal, chap. 7, Cheyney, chap. 4, or, for a brief and
 readable account, Oxley, Romance, chap. 7.

 For the period following the discoveries, E. J. Payne, Voyages of the
 Elizabethan seamen, London, 1880, can be recommended; it contains
 original accounts of the exploits of the great English seamen of the
 time of Elizabeth (Hawkins, Frobisher, Drake, etc.). Howard Pyle,
 *The Buccaneers, N. Y., Macmillan, and David Hannay, The sea trader,
 London, 1912, continue the narrative to a later period.




CHAPTER XVI

DEVELOPMENT OF THE ECONOMIC ORGANIZATION


=156. Agriculture.=—The next important subject to be discussed in
considering the great changes in commerce in the modern period is
the development of the economic organization. The influence of the
discovery of new lands, new routes, and new wares is so obvious that
the discoveries are often represented as the chief cause of the growth
of commerce in the modern period. They were unquestionably very
important factors in this growth, but European commerce was developing
without them, and would have felt their influence much less if it
had not been changing in its internal structure. Men were applying
new methods of cooperation, which enabled them to make more of their
resources at home and to utilize with greatest effect the opportunities
for gain abroad. Even at the end of the period the commerce of England
with Europe was larger than with all the other continents together.

We shall review briefly in the following sections the main changes
in the different branches of production. The topic of agriculture
must be dismissed with but a few words. There was a general movement
toward freedom of the agricultural classes of western Europe at the
beginning of the period. Wars and other political interruptions checked
the movement in France, and brought about an actual decline of the
cultivators in Germany; England was the only important country in
which the country classes became perfectly free. In Europe as a whole,
however, the conditions of production in agriculture were decidedly
better than they had been in the Middle Ages, and the increased product
supported a larger population and furnished a basis for a more extended
trade.

=157. Development of manufacturing organization in England; persistence
of gild restrictions elsewhere.=—In manufactures, also, there was a
movement toward freedom in the more favored countries. We shall see,
in the history of England, how greatly English manufactures, and the
commerce depending on them, advanced under the leadership of merchants
and capitalists who broke through the old gild restrictions. The
striking feature, however, in the manufactures of most countries of
this period is the maintenance of the gild system, which became a
most serious check on industrial advance. It will be remembered that
the gilds grew originally out of the union of artisans in any trade,
who banded together to protect their interests, and who were granted
certain privileges, especially that of monopoly, that they might
regulate the trade more efficiently and so protect the interests of
consumers also. At the present time the interests of consumers are
sufficiently protected by the competition of producers, who do not need
government regulations to tell them that they must sell good wares at
low prices if they desire to succeed; and just as soon as exchange
becomes sufficiently active to stimulate competition the public gains
by having restrictions abolished. In most of the European countries,
however, the gild privileges and restrictions were retained until the
nineteenth century, with results set forth in the following paragraph.

=158. Evils of the gilds.=—(1) The privilege of monopoly was abused
by limiting entrance to the gild in various ways, so that production
was restricted and prices were raised to the detriment of merchant and
consumer. Laborers suffered, also, by the lessened demand for their
services. (2) Gilds came into frequent conflict over the question as
to which had the right to exercise a particular branch of trade or
manufacture; these quarrels were similar to those arising between trade
unions at the present time. Manufacturers suffered from the separation
of allied trades; and time and money, which ought to have gone into
the business, were wasted in long lawsuits. (3) The full members of
the gilds, the masters, tried to keep the laborers (apprentices and
journeymen) in an inferior position, and granted promotion by favor
rather than by merit; laborers lost the incentive to good work and were
tempted to idleness and disorder. (4) The masters tried to preserve
equality among themselves. Any master who was sufficiently enterprising
to attempt to extend his business by introducing improvements or by
employing more men was pulled back to the general level. (5) Technical
improvements were prevented also by the regulations which were adopted
originally to secure good quality of the product, but which hardened
into a routine prescribing the details of every process of manufacture.
(6) After all the restrictions, consumers did not get good quality even
when they paid high prices. They could not punish the producers of poor
goods by withdrawing their custom; and scamped work, adulteration, and
fraud were common.

=159. Development of the commercial organization. Rise of
wholesalers.=—Reviewing the substance of the last few paragraphs we
find that the advance in agriculture was local and incomplete, while
in manufactures it failed, in great measure, to displace a wornout
system inherited from a preceding period. Only in commerce itself were
the changes rapid and general in western Europe. Methods of business
which before had been practised in only a few Italian cities, were now
adopted in the country north of the Alps, and developed rapidly in the
leading commercial districts.

A class of professional wholesale merchants now sprang up. Before
this time, of course, merchants had on occasion dealt in considerable
quantities of wares, but even the leading medieval merchants seem to
have been glad to keep up their business by selling in small quantities
to consumers. Only in the last century of the Middle Ages do we find in
Germany merchants who confined themselves entirely to wholesale trade.
As yet they had not become specialists in any one particular ware. An
idea both of the variety and of the extent of their transactions can
be gained from the business of John von Bodeck, who was a merchant in
Frankfort about 1600. He bought silk and drugs in Venice, spices in
Amsterdam, and sent them for sale to Hamburg; he bought iron and wax in
Hamburg and sent them to Spain; he bought indigo and wool in Spain and
sent them to Amsterdam and Antwerp; he bought rye in Amsterdam and sent
it to Genoa.

=160. Development of the commission trade; services of factors.=—Bodeck
must have traded in these wares often without knowing much about them
himself, and generally without seeing them. Such a business would have
been impossible in the Middle Ages when a merchant accompanied his
wares or shared his responsibilities with a few associates. It was made
possible now by the development of the commission trade. Commission
merchants, or factors, made it their profession “to buy and sell for
other business men for a certain profit which is given them for their
trouble by the principals.” Sometimes they were in business on their
own account also; sometimes they were specialists in various lines. A
writer of the seventeenth century distinguished five classes: those
who lived in a manufacturing or commercial center and bought goods
for others; those who sold goods for others; the correspondents of
business men and bankers who made collections and remittances of money
for them; forwarders, who received and forwarded goods at places of
transshipment; and, finally, the agents for carriers, who distributed
and collected the load of a freight wagon in a city. The duties of a
mercantile factor, in general, were to advise his principal frequently
concerning the market for wares, the course of exchange, etc., to
acknowledge letters punctually, and to follow orders exactly. The
commission varied from 5 per cent of the value of the goods in the West
Indies to 2 per cent or even less in some of the European countries.

=161. Improvement in means of communication; posts.=—Commission
business of the kind described in the preceding paragraphs implied
much greater frequency of communication among merchants, and it is
noteworthy that the system of public posts was founded in Europe
about the beginning of this period, and developed rapidly during it.
Relays of horses with postilions and with the necessary officials
were established by the governments of various countries, to insure
regular communication; the system was meant at first only for official
business, but was soon extended to serve the needs of private
individuals. Some idea of the advance can be got from a statement
made at the opening of the railroad from Strassburg to Basel, giving
the time required to go from the one to the other of these places in
earlier times. The distance, about seventy-five miles, or less than
the distance between New York and Philadelphia, was covered in the
sixteenth century by a coach in eight days, in 1600 by a diligence in
six days, in 1700 by the same vehicle in four days, and in 1800 by
“express” (Eilwagen) in two days and a half. In the eighteenth century
a man in England could send a letter fifteen miles for a penny, thirty
miles for twopence, and so on up, the sum increasing with the distance;
postage from London to France was tenpence, to New York a shilling.

Merchants needed no longer to rely upon the friendly offices of the
traveler who happened to be going in the desired direction, and
were free from the expense of special couriers. Knowledge of market
conditions in distant places spread more broadly and more rapidly than
it had ever done before. Shrewd speculators could still sometimes make
great profits by getting possession early of some special bit of news,
but the essentials of commercial information were available for all.
The modern newspaper grew up, by several stages, from written reports
that were passed around as circulars in this period, telling of the
state of the market, prices, conditions of transportation, etc.

=162. Need of closer association among merchants; risks of
commerce.=—The most striking change in the organization of commerce,
regarding especially that with distant countries and other continents,
was the growth of association among merchants. We have noted the
development in the Middle Ages of the partnership and other forms of
association; we have now to study the rise of great companies which
form a connecting link with the corporations and trusts of the present
day.

Among the reasons for the rise of great commercial companies the
following are to be noted. (1) Distant commerce was exposed constantly
to armed attack. The protection of a country’s navy extended but a
small distance from home. Ships in European waters were threatened by
pirates in times of peace, by privateers in times in war; in waters
outside Europe they faced trade rivals from other European countries,
and hostile natives who were not bound by the civilized rules of peace
and war. Distant commerce was essentially military in character,
and required for successful prosecution greater military force than
a small group of men could afford. (2) Partly because of dangers
suggested above, partly because of the natural perils of the sea under
the conditions of navigation at the time, partly because of the very
novelty of the trade, distant commerce was very hazardous. If five men
sent out a ship they might make a great fortune, but they might lose
everything. If they associated themselves with ninety-five others and
together sent out twenty ships they were pretty sure to lose some of
these, but they were pretty sure to make from the other ships enough to
return large profits.

=163. Association required by government; reasons.=—It was natural,
under the circumstances, that associations of men should spring up for
carrying on commerce in distant parts. We must note further, however,
that these associations were required by European governments, that
a certain field was assigned to each company in which it was given a
monopoly, and that in this field trade by individuals and by other
associations was prohibited. The reasons for this course were, in
brief, as follows:

(1) The peoples of distant countries did not distinguish between
individual merchants. As all Chinamen look alike to us, so all
Englishmen or even all Europeans were alike to them. An unscrupulous
trader, who cheated, robbed, or killed a native, escaped the
consequences of his crime and left them to be borne by his countrymen
who sought later to carry on the trade. The home government could not
punish such offences, and it could not afford to let them continue.
It required, therefore, that a man proposing to trade to a distant
country should have an interest in the permanent welfare of the trade,
by making him contribute money to the association, and subscribe to its
rules.

(2) The government could diminish the risks of distant commerce by
assuring merchants who spent money in building up a trade that they
should not be deprived of the fruits of their labors by newcomers who
had made no sacrifices. It seemed as proper to encourage in this way
the investment of capital in commerce as to encourage investment in
manufactures by granting patents.

(3) Finally, governments were led naturally to apply the prevalent
ideas of guild regulation to distant commerce, and found some practical
advantages in doing this; it was easier to tax and to regulate an
association of men than a number of individuals.

=164. Association in the form of the regulated company.=—Many of the
objects enumerated above could be obtained by union in what was called
a “regulated company.” The regulated company had a monopoly of a
certain field of trade, and established regulations which were binding
on the members trading in that field. Every one, however, who secured
admission by paying the entrance fee and promising obedience to the
rules, traded thenceforth with his own capital, and kept his profits
for himself; there was no pooling of capital or profits. The character
of such a company may be suggested to readers by the organization of
the modern stock exchange. No one who is not a member can trade on the
exchange, and every member is bound to follow certain rules in his
dealings, but every member keeps his capital and profits distinct from
those of the others.

The larger part of the early English commercial companies were
regulated companies of this kind. To a certain extent they attained the
objects of association which have been enumerated above; some of the
worst evils of individual trade were impossible so long as the company
adopted wise regulations and could force members to live up to them.

=165. Objections to the form of the regulated company.=—Still, the
regulated company was at best a loose association. Individual traders
had no greater interest in it than the amount of their entrance fees,
and regarded their momentary individual interests as more important
than the permanent interests of the group. This weakened the control of
the company over the associates, and rendered difficult the prevention
of abuses. A strong and active policy was hardly possible, moreover,
when associates kept the bulk of their capital in their own hands, and
could withdraw in periods of adversity, so that the resources available
to push the interests of the association diminished when most needed.

The problem set before Europe in this condition of affairs was as
important as it was difficult. The future of European commerce, even of
European civilization, depended on some solution which would make from
the individual impulse to gain, the instinctive selfishness of every
man, a collective force which would enable a number of men to work
for gain together. The partnership had united the interests of a very
few men, simplifying the problem by starting with members of the same
family, who were naturally bound together. The relation of merchant
and factor was another move in the right direction, as it united in
loyal support of each other two men separated by considerable distance,
and with no other common interest than that of their business. The
principle of association must, however, be extended far beyond the
bounds of factorship, or partnership, or of the regulated company, if
Europe was to rise to the opportunity presented by trade with distant
countries.

=166. The joint stock company, and its advantages.=—The problem,
reviewed briefly, was to get: (_a_) a permanent stock of capital,
(_b_) so large that it must be contributed by a very considerable
number of people, (_c_) under the management of a few people who would
employ it efficiently, and for the advantage of all the contributors.
The solution was the joint stock company. Early examples of this form
of association are to be found in Italy, but it developed north of
the Alps only after the founding of the Dutch and English East India
Companies about 1600.

Let us see how the stock company meets the demands for an improved
form of association which were imperative at this time. (1) It insures
permanence of operation. Individual stockholders or managers may die,
but the company does not die with them; their places are filled, and
the company continues with its original capital. (2) The contributor
does not, like a partner, need to be a business man; does not, like
a silent partner, need to have especial trust in the person of the
managers. The contributor may be a foreigner, a child, or a woman,
and the sources from which capital may be drawn are thus immensely
extended. (3) Capitalists of every class are willing to contribute to
the undertaking because of the peculiar safeguards which this form of
association offers to them. In the first place, though the investment
is permanent, from the standpoint of the company, and so enables the
management to carry out far-sighted plans, yet it endures, from the
standpoint of the individual subscriber, only so long as he pleases.
The system of transferable shares enables a stockholder to sell out
his interest at any time, and so change his investment. In the second
place, the stockholders have a voice in the management of the company
proportionate to their interest in it. They choose the persons to whom
they will entrust the active direction of affairs, require periodical
reports on the course of business from the managing directors, and have
the power to change the directors if the conduct of affairs is not
satisfactory.

=167. Good and bad sides of joint stock companies.=—The reader would
err if he assumed that all the advantages suggested above were secured
immediately on the founding of the first stock companies. Experiments
of various kinds were tried at the start, and only gradually did the
companies take the form which they have assumed in modern law. The
English East India Company, for instance, which was founded in 1600
as a regulated company, was made over into a joint stock company by
degrees, and could not be regarded as permanently established on this
basis for over fifty years. Generations of bitter experience were
required to teach people the possible dangers as well as the possible
benefits of this form of association.

Incompetence and corruption were prevalent in the management of
affairs. The worst abuses of our modern corporations give one but a
faint idea of the enormities that were perpetrated in the early period
of joint stock history. In spite of all, the joint stock companies
accomplished the purpose for which they were created; they attracted
capital at home, stimulated the prosecution of a definite policy
abroad, and extended commercial interests as individuals or other forms
of association would have been unable to do. The American reader may
remember that Virginia was founded and Massachusetts was developed
by joint stock companies. Other forms of association, especially
partnership, were more suitable for many purposes, and increased
constantly in number; but alongside them several hundred stock
companies grew up in Europe of which perhaps a hundred were founded to
develop great commercial and colonial undertakings.


QUESTIONS AND TOPICS

 1. Write a report on the break-up of the manor and the rise of modern
 farming in England. [Cheyney, Indust. hist., chap. 5, or one of the
 other manuals of English economic history.]

 2. Write an essay comparing the restrictions of the guilds with those
 of modern trade-unions.

 3. What are the functions of wholesale merchants and hence what was
 the importance of their rise at this time?

 4. Who were some of the notable merchants of the period? [Bourne,
 Romance, chap. 12, or English merchants.]

 5. What examples can you find nowadays of the different classes of
 commission merchants mentioned in the text? What commission do they
 charge?

 6. Write a report on the rise of the modern postal system. [See Encyc.
 Brit., articles Post-office, Postage stamps.]

 7. Write a similar report on the history of the newspaper. [Encyc. or
 Bucher, **Indust. Ev., chap. 6.]

 8. Endeavor to understand the reasons for mercantile association,
 and for the requirement of this association by the government, by
 reviewing the changes in conditions since this period, and seeing why
 association is not necessary or compulsory now.

 9. Study Cunningham, Growth, vol. 2, sect. 188, on regulated and
 joint-stock companies, and pick out examples of each type in the
 following sections.

 10. Write a report on the various forms which the (English) East India
 Company assumed during the first century of its existence, and the
 reasons for the changes. [Cunningham, or Hunter, **Hist. of British
 India.]

 11. Write a report on abuses and corruption in this company. [Hunter.]


BIBLIOGRAPHY

 A bibliography accompanies the chapter by Cunningham on **Economic
 change, Cambridge mod. hist., vol. 1, which furnishes the best brief
 account in English of topics considered in this chapter.

 Histories of various countries at the period of the Reformation
 present descriptions of their agricultural, industrial, and commercial
 organization; but I know of no general and comprehensive treatment in
 English of topics treated here.

 The only topic on which there is abundant material available is that
 of commercial organization. See Cheyney, **Eur. background, chap. 7
 (chartered commercial companies), chap. 8 (typical American colonizing
 companies); Hewins, **English trade, chap. 3 (trading companies);
 Hunter, Hist. Brit. India (East India Co.). R. B. Westerfield,
 *Middlemen in English business, Trans. Conn. Acad., May, 1915, 19;
 111-445, is a scholarly study of the development of the organization
 of marketing, and W. R. Scott, *The constitution and finance of
 joint-stock companies, Cambridge Univ. Press, 3 vol., 1910-1912, is an
 authoritative work on the history of that subject.




CHAPTER XVII

CREDIT AND CRISES


=168. Growth of credit business and of banking.=—The rise of the
joint stock companies was a great step in the development of the
power of capital and of credit. Individual savings, which before
might have been hoarded and made useless to society, were drawn from
their hiding-places to form the capital and loans by which the great
companies extended the scope of commerce in this period. Another
step in advance, which deserves notice here, was the extension of
banking north of the Alps. The medieval doctrine that it was wrong
to take interest on loans lost its force when it appeared that loans
were wanted by merchants who would put them to a good use; and
society concluded that it was wise to encourage the lending of money
by permitting the lender to take interest for it. There is a great
difference, however, between the lending by an ordinary individual, who
has more than he knows what to do with, and the business of lending
as practised by a banker. The difference is this, that an ordinary
individual lends his own money, while a banker lends that of somebody
else. When credit operations have become sufficiently extensive the
banker appears as a man who makes dealing in credit his profession.
He steps in between the people who have capital but lack the ability
or inclination to employ it profitably, and the people who have the
ability and inclination to conduct business enterprises but lack
the desirable amount of capital. The banker is a specialist in this
profession, and by his special knowledge can do more than any one else
could to collect the surplus capital and place it where it can be used
to the best advantage.

=169. Description of the rise of discount and deposit banking in
England.=—The history of banking is too large a topic to be considered
here in detail. The early banks were marked by a number of individual
peculiarities, and occupied often a public position as agents of
the government; these points need not detain us. The development of
ordinary commercial banking can be illustrated by the business of
the London goldsmiths in the seventeenth century. The goldsmiths
were required by the character of their stock to keep strong-boxes
(“safes”), which served the purpose of a modern safe-deposit vault;
and they united dealings in gold and silver coin with their original
business. They were naturally the persons to whom a man would apply
who wanted the means of keeping cash and other valuables more securely
than was possible on his person or at his office or home; and thus
they received in time considerable deposits from merchants and others.
Probably they made some charge at first for the accommodation, but
soon they were encouraging deposits by paying some interest, and by
undertaking to perform services such as collection and remittance for
their customers. They could afford to do this by reason of the fact
that they did not let the cash lie idle in their vaults, but lent it to
the government and to business men; they had become banks of discount
and deposit. A tract published in 1676, entitled “The Mystery of the
New fashioned Goldsmiths or Bankers,” gives this account of their
operations. “Having thus got Money into their hands, they presumed upon
some to come as fast as others was paid away, and upon that confidence
of a running Cash (as they call it) they begun to accommodate men with
moneys for Weeks and Moneths, upon extraordinary gratuities, and supply
all necessitous Merchants that overtraded their Stock, with present
Money for their Bills of Exchange, discounting sometimes double,
perhaps treble interest for the time, as they found the Merchant more
or less pinched.”

=170. Rise of “money-power” as shown in the history of the Fugger
family.=—The reader will perhaps comprehend more clearly the great
development of business in the modern period if we follow here the
history of one of the families of South Germany which rose to the first
rank among the money powers. The Fugger family was descended from a
simple country weaver, who settled in Augsburg and died there in 1409.
His sons rose to high place in the crafts of weavers and merchants,
and accumulated wealth, like many others, by trade in spices, silks,
and woolen cloth. Under a grandson, Jacob (1459-1526), who had been
trained in Venice, the family business underwent a striking change.
We should call Jacob a financier rather than a merchant. He and his
brothers continued, it is true, to deal in merchandise, but they made
their great profits by dealing in money and capital. If a prince or
king wanted a loan they made it to him, charging a good round sum in
commission and interest, gaining often a security for their advance,
such as a mine or the right to collect some taxes, from which they
could make good profit. If a king like Charles V, whose dominions were
widely scattered, wanted to disburse some of his revenues in a distant
province, they undertook to sell him the necessary exchange and avoided
the transportation of the coin itself. Their business extended from
Hungary and Poland in the East to Spain in the West, from Antwerp in
the North to Naples in the South.

=171. Description of the Fugger business.=—The records of the Fugger
firm have been preserved, and we can learn the extent and character
of its business by the statement of its resources as they appeared in
1527. The figures are in florins, of which each had a purchasing power
equal roughly to eight dollars to-day.

  Mines (Tyrol, Hungary)                          270,000
  Other real estate (city and country)            150,000
  Merchandise (copper, silver, brass, textiles)   380,000
  Cash (in home office and 14 factories)           50,000
  Loans                                         1,650,000
  Private accounts of associates                  430,000
  Various current affairs                          70,000
                                                ---------
                                                3,000,000

The reader will note the large sums appearing under mines and
merchandise, showing that the Fuggers still maintained their dealings
in wares, after they made finance their special business. The chief
item, however, is that of loans, which included sums borrowed by the
Pope, the Emperor, and kings of Europe. The Fuggers and other great
financiers had immense influence on the politics of their time, for
they could command money and credit while sovereigns were still trying
in vain to build up an adequate revenue system. They made fabulous
profits, over 50 per cent a year, in prosperous periods, and the
Fuggers managed to make an average profit of over 30 per cent a year
for over thirty years. In the case of most firms, however, there were
lean years as well as fat ones, and the general average would be very
much less. More striking than the rate of profit is the increase
in the size of the capital. Taking two Italian banking firms, the
Peruzzi about 1300, and the Medici about 1440, and comparing them with
the Fuggers in 1546, we find that the capital was about as follows,
expressed in modern purchasing power: Peruzzi, $800,000, Medici
$7,500,000, Fuggers $40,000,000.

=172. Weakness of the Fugger and other banking firms.=—The great
financial firms of the sixteenth century seem to have been premature.
They lacked the permanence of the later joint stock companies, for
they still retained the medieval form of a company based chiefly on
family relationship, and required constant reorganization. Their
success in the hazardous operations of the time depended entirely
on the sagacity of the heads of the family, and as genius cannot be
transmitted indefinitely they went to pieces ordinarily in the third
generation from their establishment. The head of the Fugger firm about
1550 tried to wind up the business and withdraw the capital, but
found it impossible to do this, and became involved in more and more
enterprises. The balance of the firm in 1563 showed decided weakness;
members of the family began to quarrel among themselves; and the firm
finally lost in unfortunate loans practically all its accumulations.
The bankruptcy of one of these firms involved wide-spread disaster,
for as time went on they carried on their business less and less on the
money contributed by members, and more and more on their credit. All
classes in the community—nobles, burghers, peasants whose savings did
not exceed ten florins, even servants—deposited their money at interest
with the financiers, and were involved in their fall.

=173. Description of business in Antwerp in the sixteenth
century.=—After considering the new forms of business from the
standpoint of individual firms it will be profitable to study them
in the city that was the business center of the time, where all the
great firms were represented by agents. This city, in the first part
of the sixteenth century, was Antwerp, which rose as the medieval
port of Bruges declined. There have been, of course, greater cities
and greater markets since that time, but never before or since, it is
said, has the world seen such concentration of the trade of different
peoples in a single place. The town owed its development almost
entirely to the foreigners who flocked there to trade, and though it
saw less of Italians and Hanseatics than Bruges had done, it was the
one great gathering place for the Portuguese, Spanish, English, and
German merchants who were now the leaders. It is said that over five
hundred vessels sailed in or out of the port in one day, and that the
English merchants alone employed over 20,000 persons in the city. The
poet Daniel Rogiers said of the Antwerp exchange, “One heard there a
confused murmur of all languages, one saw there a motley mixture of all
possible costumes; in short the Antwerp bourse seemed to be a little
world in which all parts of the great were united.” In contrast with
Bruges, trade in Antwerp was almost entirely unrestricted, and this was
perhaps the chief reason why the merchants of the time selected it as
the place in which to develop the new forms of business.

=174. Rise of the Antwerp exchange; its significance.=—Antwerp
presented in the sixteenth century the first case of a great bourse or
exchange, that is, a place in which men meet daily and effect their
exchanges without displaying and transferring the wares themselves, by
the use of paper securities representing the wares. Such an institution
cannot exist until the volume of trade is large enough to cause a
steady and continuous flow of wares, in contrast to the spurts that
marked the period of the fairs. It requires, moreover, that the objects
dealt in be of such a kind that they can be represented at the exchange
by some document or sample, so that the buyer can learn the quality of
the ware without actually inspecting it. This is possible when a ware
can be _graded_, put into a certain class the characteristics of which
are so closely defined and so well known that the buyer needs only to
decide whether he cares to take a certain quantity at a certain price.

=175. Development of business on the exchanges; produce and money.=—The
use of the word “ware” in the foregoing description may suggest the
produce exchange as the earliest and most important form of the
exchange. Produce of various kinds, especially pepper, did form an
object of exchange trade in Antwerp; and there was a considerable
development of the produce exchange later in Amsterdam. At the
“candle-auctions” on the Royal Exchange of London in the seventeenth
century, goods were offered with an inch of lighted candle on the desk,
and were knocked down before the candle went out; a single parcel
of silk, indigo, or spice sold in this way was sometimes worth half
a million dollars. The produce exchange, however, did not reach its
full development until the nineteenth century, and we shall leave its
significance in the commercial organization for later consideration.

The “ware” which formed the main object of trade on the Antwerp
exchange was loanable capital, represented by various paper
instruments. Princes who desired to borrow money, and who formerly
would have applied to individual financiers like the Fuggers, turned
to the exchange of Antwerp or of Lyons, where loanable capital from
all over Europe was collected. Through the medium of the exchange a
French king could and did borrow money of a Turkish pasha; and it was
said that payments amounting to a million crowns were made in a single
morning without the use of a penny of cash.

=176. Advantages offered to industry and commerce by the
exchanges.=—Antwerp and Lyons had served especially political needs
in their loans; they were embarrassed by the insolvency of royal
debtors, and soon declined. Their place was taken by Amsterdam, London,
Hamburg, Frankfort, and other cities, and with the rise of these new
money centers a change of importance is to be noted. The new exchanges
attracted capital for investment in private or semi-private economic
undertakings, serving the needs of the new companies which were being
established. Ordinary people with comparatively small savings would not
have known (as they would not know now) where to invest their money if
they had not had the stock exchange to turn to for an indication of
enterprises seeking capital, and of the current price of the stock. The
stock exchange was the natural and necessary accompaniment of the stock
company.

Shares of trading and industrial companies and of public debts became
the objects of a regular commerce, which was not confined by national
boundaries, but which drew capital from all sources. When shares of the
Dutch East India Company were put on the market in 1602 they were taken
up to a considerable extent by capitalists of Antwerp who no longer had
use for their money at home; much of the money needed to rebuild London
after the fire of 1666, and a large part of the capital of the Bank of
England, came from the Dutch; shares of the English companies trading
with Asia and Africa circulated freely on the Amsterdam exchange; a
loan to the German Emperor was floated in London.

=177. Growth of speculation; early abuses.=—Modern forms of speculative
business grew up with the exchanges. A pamphlet published as early
as 1542 described the “monstrous thing” that Antwerp merchants had
devised; they _bet_ with each other on the course of foreign exchange,
one saying it would be 2 per cent, one 3 per cent, etc., and afterwards
they settled by paying the differences. This is substantially the same
operation as that which is carried on regularly to-day. When the trade
in shares of stock was established traders would speculate on a rise or
a fall, or a combination of both. Shrewd speculators organized a system
of news gathering and forwarding which gave them the first knowledge
of important events affecting the price of securities, and enabled
them to anticipate the turn of the market. London speculators got word
through a private channel of the signing of the treaty of Rijswijk in
1697, a day before the English ambassador arrived with the official
announcement; their eagerness to buy bank stock aroused suspicion, and
the reason for their purchase appeared when the news was published and
the price of the stock rose from 84 to 97.

Underhanded methods of trade were common. Speculators would set afloat
rumors to depress the price of securities, and then buy in. One day
during the reign of Anne in England a well-dressed man rode furiously
through the street proclaiming the death of the Queen. The news spread
and the funds fell; the Jew interest on the exchange bought eagerly,
and were suspected later of being responsible for the hoax, though it
was not proved against them. The Englishman, Child, who made a fortune
in speculation, and who was called in a pamphlet of 1719 “the original
of stock-jobbing,” would have one set of brokers spread rumors of
disaster, and sell a little of his stock publicly, while another set
bought for him “with privacy and caution”; in a few weeks he would
reverse the process and come out ten or twenty per cent ahead.

=178. Dangers of the new system of business; promotion of unprofitable
enterprises.=—The appeal of joint stock companies to the public through
the medium of the stock exchange proved to be so effective in gathering
capital that a great many worthless undertakings were floated. When
times were good, that is, when enterprises had proved successful,
when people had saved money for investment and looked with confidence
to the future, almost anything in the shape of a company could get
subscribers to its stock. The reader should note that there were two
sides, one good and one bad, to the new methods by which commerce was
being developed. The facility of getting capital from a great number of
subscribers made possible more and larger undertakings than had been
known before, and was an unmixed benefit when the new undertakings
were devised to fill a real need of society. There was, however, a
separation before unknown between the subscriber and the undertaking;
the contributor of capital might be entirely ignorant of the economic
basis of the enterprise, and might sink his money for a return which
came late or not at all. There was thus a chance for the diversion of
the capital of society to worthless purposes; the business organization
had become more powerful, but at the same time more delicate and
subject to derangement. We find in this period the beginning of
commercial crises marked by the misdirection of invested capital,
disappointment of investors, and distrust and lethargy, until spirits
rose with the recovery of lost ground, and good times began again.

=179. Description of the “Bubble Period” in England.=—Commercial crises
occurred in all of the advanced countries during this period. We shall
not, however, attempt an enumeration of them here, but shall use the
available space for a description of the most important crisis, that
which affected both England and France about 1720.

The crisis in England was closely connected with the course of the
South Sea Company, which had been established in 1711 as a trading
corporation. The company had secured the right to export slaves to the
Spanish colonies, had developed a promising whale-fishery, and was
thought to be a large and flourishing concern. It was then transformed
into a financial company, with the bold plan of assuming the whole
national debt, for which it made extravagant offers. “The large sum
offered by the company, which made success impossible, stimulated the
imaginations of the people, who fancied that a privilege so dearly
purchased must be of inestimable value, and the complication of
credulity and dishonesty, of ignorance and avarice, threw England into
what it is scarcely an exaggeration to term a positive frenzy.”

All classes rushed to buy the stock, which at one time was quoted at
1,000. Then the weakness of the scheme became apparent; the stock fell
as rapidly as it had risen, and investors or speculators were ruined in
large numbers. This was only one of the bubbles which were inflated and
which burst about this time. Other companies were promoted for making
salt water fresh, for extracting silver from lead, for trading in human
hair, and for a wheel of perpetual motion. Insurance was now coming
into prominence, and this offered a favorite field for promoters.
Subscriptions were received for companies that proposed to insure
against losses of servants, against burglars and against highwaymen;
one scheme was “Plummer and Petty’s Insurance from Death by drinking
Geneva” (gin). We get a vivid idea of the spirit of the period from the
fact that one promoter, who announced a company “for an undertaking
which shall in due time be revealed,” secured 2,000 guineas in a single
morning, with which he immediately made off.

=180. The crisis of the Company of the Indies in France.=—Just before
the time of the English crisis one curiously similar in character
occurred in France. A Scotchman, John Law, who was an able banker and
financier, promoted a Company of the West, expanded later into the
Company of the Indies, which united with its commercial projects an
attempt to finance the government. Extravagant ideas were formed of the
possibilities of Law’s “system,” and the roads to Paris were blocked
by people hurrying there to speculate in shares. Two of the ablest
scholars in France deplored the madness at one interview, and at the
next found themselves bidding against each other. Coachmen, cooks,
and waiters became millionaires by lucky speculation; tradespeople
in the street where the exchange was established made fortunes by
letting out their stalls and chairs. The price of stock rose until it
frightened even the promoter of the system, who interfered in the
hope of checking speculation, but who found soon that he was unable to
check either the rise or the fall of the stock. The crash which quickly
followed was especially serious, as the whole currency consisted now
of discredited notes issued by the company. Ruin was widespread,
and credit received a blow which made the promotion of legitimate
enterprises difficult for a long time thereafter.


QUESTIONS AND TOPICS

 1. Prepare yourself to see the significance of the facts of this
 chapter by reviewing the functions and benefits of credit institutions
 like banks. [See Bullock, Introd., chap. 9, or other current manuals
 of economics.]

 2. Write a report on the way in which churchmen and scholars came
 to justify the taking of interest on loans. [Cunningham, Growth, or
 Ashley, **Ec. hist., vol. 2, sect. 65 and others following, esp. 72.]

 3. Fill in the outline of the text, sect. 169, by details to be found
 in Cunningham, Growth, vol. 2, sect. 180.

 4. Write a report on the business career of Sir Thomas Gresham, one of
 the great English financiers of the sixteenth century. [Encyc., Dict.
 of nat. biography, and references in those sources.]

 5. Write a report on Antwerp in the sixteenth century. [See Motley,
 Rise of Dutch Republic, N. Y., 1858, vol. 1, 81 ff., chap. 13.]

 6. Benefits and dangers of speculation. [Hadley, Economics, chap. 4.]

 7. Manias and panics, modern and recent. [Bourne, Romance, chap. 11.]

 8. Write a report on one of the following topics:

 (_a_) The tulip mania. [Oxley, Romance of commerce, chap. 3.]

 (_b_) The “Bubble” period in England, [Cunningham, Growth, vol. 2,
 sect. 218; Oxley, chap. 2; cf. Lecky, Hist. of England, and cf.
 Macaulay’s history of bubbles about the time of the founding of the
 Bank of England.]

 (_c_) John Law and the Mississippi Bubble. [Oxley, chap. 1.]

 (_d_) The Fugger family. [Paul Van Dyke, A captain of industry of the
 sixteenth century, Harper’s Magazine, June, 1910, 120: 276-284.]


BIBLIOGRAPHY

 As the subjects of this chapter have been treated generally by
 specialists, and considered in their relation to modern economics
 rather than earlier history, the reading is scattered, and, for our
 purposes, unsatisfactory.

 The chapter by Cunningham in the first volume of the Cambridge modern
 history covers in part the ground of this chapter. The important
 commercial crises are described in the histories of England, France,
 etc.




CHAPTER XVIII

THE MODERN STATE AND THE MERCANTILE SYSTEM


=181. Growth of modern states under the influence of commerce.=—If the
modern reader is impressed, in studying the history of Europe before
1500, with the influence on commerce of the lack of strong government,
he will be equally impressed, in the period from 1500 to 1800, with
the strength of government and with the important part it played in
commercial development. We have here to sketch in brief the changes
in political conditions, leaving to later chapters a consideration
of the details as they appear in the history of different countries.
Commerce itself was the great force that broke the power of feudalism.
Commerce crept through the barriers that kept localities apart; it
established a circulation of wares through a large area of country; and
it concentrated wealth in the cities which it built up. These were the
very changes needed to allow the world to escape from feudal anarchy,
and to construct a system of government similar to that which the
Romans had employed. Kings had now subjects able and willing to pay
taxes, and, by means of commerce, they could transport their taxes,
turn the proceeds into any shape they chose, and apply them wherever it
was necessary.

=182. Decline of feudal power with the rise of mercenary armies.=—A
large part of the new revenues was spent by governments in
strengthening their military position. Feudal lords were good fighters
in the old-fashioned way, and would not give up their local power
without a struggle. They had to yield finally, however, before the
standing armies which kings called into existence towards the close
of the Middle Ages. Feudal lords loved to fight, but they were only
amateurs, after all, and did not make fighting a business. The
mercenaries, on the other hand, whom kings collected as soon as they
could afford the expense, were professionals, who submitted to a
certain amount of discipline because they could make a living by doing
so. Enterprising men collected a number of recruits, taught them to
use their arms, and drilled them until they counted for far more than
an equal number of untrained men; the leaders studied tactics and
strategy, and knew how to make the most of their superiority. The
leaders were perfectly willing to let their troops to any one who could
pay the price, but as feudal lords were always in want of ready money
the advantages of the new armies went almost entirely to the kings. The
introduction of gunpowder in warfare increased the superiority of the
mercenary armies, by adding to the value of training, and here again
the kings, with ready money to invest in the latest improvements, had
an advantage.

=183. Growth in power of the central government as shown in the
development of taxation.=—By the year 1500 the process had gone so far
that many of the states of Europe had assumed a shape substantially
like that which they have to-day; and feudalism as a great political
force was dead. Government could now proceed to develop on the basis
of an extended territory. Some measure of the gain of the central
government in power can be had by noting the increase of its resources
from taxation. English taxes yielded about half a million pounds in
the sixteenth century, seven and a half million in the next century,
and about forty million towards 1800. In little over a hundred years
the yield of taxes in Prussia increased twenty-eight fold. The revenue
system was still crude and wasteful. Every European state followed
at one time or another the practice of raising money by selling the
right to hold an office. Every European state lost money, not only
by the inefficiency of the revenue system, but also by corruption of
officials; often half or more of money that the people paid in taxes
never reached the treasury. In spite, however, of these inevitable
faults, national resources were concentrated as they had never been
before, and the central government gained a power before unknown.

=184. Persistence of medieval conditions in the modern period.=—From
the modern standpoint no better field could be found for the use of
this power than in the reform of internal conditions. Centuries after
feudalism had lost its controlling position the local differences and
the spirit of separatism which marked the feudal period remained to
plague the merchant and the statesman. Commerce was hindered by local
variations in laws and in weights and measures; by the persistence of
barriers to the development of trade and manufacture which had grown up
in the medieval system of tolls and gilds; by the maintenance of the
class distinctions marking feudal society, and putting on a different
basis the merchant, the agriculturist, and the noble. A country like
England, which early threw off the most oppressive of its medieval
institutions, gained a great start over countries where they were
allowed to continue. Statesmen in these other countries recognized the
need of reform, and made attempts to realize it from time to time; they
made slow progress, not only because the task of reforming old customs
was at best tedious and expensive, but also because their attention
was distracted from the task for much of the time by the pressure of
foreign affairs.

=185. Attempts at reform, leading in many cases to
over-regulation.=—All the European governments in this period did pay
attention to the development of internal resources. One of the chief
features of the mercantilist theory, that animated government policy
during the seventeenth and eighteenth centuries, was the emphasis laid
on the circulation of money and wares inside the country. The new
national governments helped to further internal commerce by repressing
disorder, and by reforming, to some extent at least, the system of laws
and courts to which business men could appeal for the settlement of
disputes. Most of the governments paid considerable attention also to
the development of the postal system.

Governments could serve their people well in ways like these, but
unfortunately they expended their energy on other objects that were
useless or harmful. “The state moulds men into whatever shape it
pleases,” was an idea of the time, which led to an enormous amount of
government regulation. In few states of the Continent was a man free
to seek his profit where he would; he was entangled in a network of
government regulations that fixed the rules of his trade, the prices of
his wares, even the articles which he might or might not consume. An
excellent example is furnished by the grain trade, which governments
regulated so strictly that in many cases laws caused the very famines
which they were designed to prevent.

=186. Attention distracted from internal reforms by foreign
interests.=—A consciousness that government regulation had gone too
far for the interests of commerce grew strong before the end of the
eighteenth century, when a school of thinkers, the physiocrats,
protested earnestly against it. Their formulas, “don’t govern too
much,” “let things alone” (_laisser faire_), were to be realized in
the nineteenth century. At the time, however, they had little effect;
the faith in the power of government was still strong in the minds of
rulers, and their attention was distracted by other interests. When
rulers had crushed the resistance of their subjects, and established
their absolute authority, they had a surplus of power which they
were inclined to apply abroad. The period from the sixteenth to the
eighteenth centuries is filled with strife between the European states,
each attempting to get possession of some of the territory and power of
a rival. The states of Europe were still young, with all the vigor and
all the inexperience of youth, and not until they had tried conclusions
with each other were they willing to settle down as they have done in
the nineteenth century. It was said above that internal reform was the
best object of government expenditure “from the modern standpoint.”
Kings and peoples were not modern, and to a king of the time one of the
best objects appeared to be a war with another king by which he might
get more people under his power.

=187. Wars occasioned by religious and dynastic interests.=—In
tracing later the commercial histories of the different countries it
will be necessary to refer occasionally to these wars, but it will
conduce to clearness if we stop a moment here to examine their causes
and character. Some of the wars were religious, growing out of the
Protestant revolution. The states of the South remained Catholic,
and those of the North became Protestant with comparatively little
opposition, but in the center, in France and Germany especially, where
neither side had at first a clear supremacy, the Protestant movement
led to disastrous civil wars.

Another series of wars may be called dynastic, as they grew out
of the ambitions of rulers to extend their power in Europe at the
expense of other ruling families. In the sixteenth century the chief
contestants were Spain and France. Spain dropped from the first rank,
and France and Austria continued the struggle for supremacy through
the seventeenth and eighteenth centuries. The dynastic wars seem to
the student of the history of commerce as unfortunate as those that
came from religious differences. They diverted men and resources from
production to destruction; they checked at the same time commercial
development and the reform of government.

=188. Wars occasioned by commercial interests; military aspect
of commerce in this period.=—Still another class of wars can be
distinguished in which the religious or dynastic motive might enter to
some extent, but in which the commercial motive was predominant. The
reader should be cautioned against an extravagant idea of the power of
government to extend commerce. At the present time this power seems
very slight indeed. It was, however, far greater in the period under
consideration. References in preceding sections to the prevalence of
piracy and to the warlike attitude of merchants of different nations
toward each other have suggested the military character of commerce,
inviting the armed protection of the state. “One fact stands out
clearly,” says a recent authority on the history of India, “No European
nation has won the supremacy of the East which did not make it a
national concern.” The prize in distant commerce went not to the best
producers and merchants, but to the group of the best fighters; not
size and resources, but ability to organize and willingness to risk
resources in conflict, determined the question of success. The little
state of Holland made her fortune by an eighty years’ war, in which she
broke the power of the Portuguese and Spanish in the East. The English
were still unready to embark their national resources in distant
ventures, but they won their position in continental India in the
eighteenth century by military support which the French kings refused
their subjects.

=189. Wars arising from the conflict of colonial interests in the
New World.=—Between 1600 and 1815 was a constant succession of wars,
arising from the fact that five European powers had colonies in the
New World which they were seeking to maintain or to extend. Holland
and Portugal lacked the territorial basis to maintain their struggle
when larger states armed for the conflict; France and Spain found their
best energies absorbed by dynastic interests in Europe which tied their
hands abroad; England emerged victorious from the conflict and found
herself repaid, by a position of commercial supremacy, for the expense
to which she had been put. Out of the one hundred and twenty-six years
between 1688 and 1815 she had spent more than half, sixty-four, in wars
ranging from seven to twelve years in length.

=190. Political importance of commerce in this period, connected with
the desire of governments for ready money.=—Commercial expansion in
this period depended, as said above, on the political power of the home
country. Did not, on the other hand, the political power of the state
depend on commerce? A statesman of the time would have answered this
question in the affirmative, and with an emphasis which would seem
strange now. We think nowadays that the resources of a state depend
upon the prosperity of the people, no matter whether this prosperity
comes from agriculture or from manufactures, from internal trade or
from foreign trade. Statesmen, however, of the period under discussion,
set a peculiarly high value on foreign commerce, and regarded it as a
more important branch of industry than any other.

[Illustration:

  EUROPEAN
  POWERS
  IN
  AMERICA

  (About 1700)
]

The chief reason for this view lay in the fact that most of the
European states produced little or none of the precious metals, and
could get them only by trade with a neighbor or with a distant country.
Now money is “the sinews of war,” and when states were constantly at
war with each other, a good supply of money seemed to the statesman a
matter of the first necessity. We regard money nowadays only as a means
of procuring other forms of capital by exchange, and do not worry about
the money supply so long as capital in other forms is abundant. It may
have been the fact, however, that in the early period of the modern
state the fiscal and military systems operated more smoothly when the
stock of money in the country was abundant.

=191. The mercantile system, aiming to increase the stock of ready
money in the country.=—Whether rulers were justified or not in the
anxiety that they showed about the money supply, they made it a
cardinal point in their policy to regulate commerce so as to increase,
if possible, the stock of the precious metals in the country. They
argued that the country would make money if it sold more merchandise to
foreigners than it bought of them, for then the foreigners would have
to make up the balance in coin or bullion. This was called “a favorable
balance of trade,” as tending to bring money into the country. On the
other hand, if the country became indebted for foreign merchandise to
an amount greater than could be offset by the exports, the country
would owe a cash balance abroad, and this was an “unfavorable” balance
of trade. At the beginning of the period the government tried to effect
its object simply by prohibiting the export of bullion (gold and
silver); this was the “bullionist” policy.

Prohibitions were found to be ineffective, however, and were a serious
hindrance to some branches of commerce, that with the East especially,
in which the foreigners demanded considerable supplies of the precious
metals. The export of bullion, therefore, was generally permitted, and
the government contented itself with a regulation of the commerce in
merchandise which, it hoped, would bring more bullion into the country
than was carried out.

=192. Features of the mercantile system; restriction of imports.=—If
the student will remember that the main object of the mercantile
system, as it was expressed in the commercial policy of the seventeenth
and eighteenth centuries, was to increase the credits in a country’s
foreign trade, and diminish the debits, so as to get a balance in cash,
the main features of the policy will be easily intelligible.

In the first place, imports were discouraged. A Spanish mercantilist
thought that his country suffered “an infinite wrong” from the
importation of fish from abroad, which, by his reckoning, cost the
country three million piasters a year; he suggested either that home
fisheries should be built up so that the money need not leave the
country, or that permission be obtained from the Pope to eat meat
on Saturdays, which would diminish the necessity for importation. A
typical example of the ideas underlying the policy is furnished by an
appeal of the English salt-makers in the seventeenth century, urging
that the use of foreign salt in the curing of fish be prohibited on the
ground that it was the “wisdom of a kingdom or nation to prevent the
importation of any manufacture from abroad which might be a detriment
to their own at home, for if the coin of the nation be carried out
to pay for foreign manufactures and our own people left unemployed,
then in case a war happen with our potent neighbours, the people are
incapacitated to pay taxes for the support of the same.”

Mercantilism and modern protectionism easily ran together, as is
apparent in the quotation, but the spirit animating restrictions was
in this period mainly mercantilist, based, that is, on consideration
of the flow of precious metals. The methods of tariff regulation,
moreover, differed from those of modern protectionism; statesmen did
not, in most cases, attempt to scale the duties so as just to balance
the advantages of the foreign producer, but resorted to downright
prohibition of the wares which they desired to exclude from the home
market.

=193. Encouragement of exports, manufactures, and shipping.=—In the
second place, exports were encouraged, for they represented the
credit items in a country’s trade, and might bring home a balance
in cash. Even imports could be tolerated if they led to a more than
corresponding increase in exports. The trade with East India was looked
on with suspicion for some time because, as said above, it required
the export of considerable bullion; but finally it established itself
in public esteem, on the ground that a large part of the eastern wares
was transshipped in England and exported to other European countries,
so that the bullion was recovered from them. Altogether the best kind
of imports, however, was held to be the raw materials of manufacture;
if these could be worked up in England and exported, the country
cleared not only the sum originally due for the imported material,
but also the extra charge for the manufacture. Home industries were
given various privileges by the government, because they either spared
the importation or increased the exportation of the wares which they
produced.

Shipping and the fisheries were regarded with special favor, not only
because they helped to produce a favorable balance of trade, but also
because they were feeders for the national navy, and thus augmented the
strength of the country in war.

=194. Failure of the mercantile system to affect the distribution
of the precious metals.=—Such were, in brief, the characteristics
of commercial policy in the time of the mercantile system. The word
“system” may give a false impression, for though the main ideas of
mercantilism were generally accepted during the seventeenth and
eighteenth centuries, they were greatly modified in their practical
application, and were seldom carried to their logical conclusions. For
example, though statesmen professed a desire to stimulate exports, yet
export duties were generally retained in this period for the revenue
that they returned, and they hurt in some cases, without question, the
sale of wares abroad.

After this review of the characteristics of commercial policy the
reader will naturally inquire what were its effects. On one point an
answer can be given with considerable assurance; the policy had no
important effect on the distribution of the precious metals. Gold
and silver were brought from America, the chief source of supply, to
Spain, and flowed from Spain to the countries where they were needed in
business; it seemed as though all the people of the world were in an
unconscious conspiracy to defeat the plans of statesmen for checking
or directing the flow. It is noteworthy that Spain, the country which
had the best chance apparently to accumulate treasure and which pursued
a policy of exaggerated mercantilism, was always complaining of the
dearth of gold and silver, while Oriental states, which had never heard
of mercantilism, accumulated large stores of bullion. The attempts
of European countries to rob other countries of their treasure by
legislation present, from one point of view, an absurd spectacle, for
they were all applying the same principles in much the same way, action
and reaction were equal, and no amount of political straining affected
the distribution due to economic demand.

=195. Important effects of the mercantile system in other ways.=—The
commercial policy of the mercantilist period had effects in other
directions, if it did miss the mark at which it aimed. It was
important, considered merely as a policy of restriction, in checking
the exchange of commodities between states. Just as manors and the
districts centering around a city had aimed at self-sufficiency in an
earlier period, so the states of this period were led by their dislike
of imports to attempt the production of everything possible within
their borders; and an international organization, in which each state
would specialize in the products for which it was best fitted, and
would depend on commerce with others for supplying deficiencies, was
hindered from developing. The mercantile system furnished a natural
basis for the system of national protection, which grew up from it, and
which has not entirely outgrown even yet its mercantilist origins. One
of the most obvious effects of mercantilist commercial policy can be
traced in its influence on the foreign relations of states. It was not,
as is often said, the chief cause of the many wars which vexed Europe
at this period; their cause lay deeper than any theory of favorable
or unfavorable balances of trade. The balance of trade theory did,
however, affect the political grouping of countries to a considerable
extent, and inclined statesmen to look for friends or foes in the
countries with which the balance was favorable or unfavorable. England,
for example, made herself the ally of Portugal through a large part of
the modern period, because Portugal bought her manufactures, and sold
in return wines and other commodities which could not be produced at
home; and England kept alive the traditional hostility toward France
because the trade with that country showed regularly an unfavorable
balance.

=196. Colonial policy.=—Based on considerations like the preceding,
the colonial policy of this period was marked by restrictions entirely
opposed to modern ideas of commercial freedom. A government which
permitted or encouraged the establishment of colonies in distant lands,
considered it a duty to itself to see that other governments or the
colonists themselves did not rob it of the rewards of success. The
colonial policy of the period has sometimes been pictured as purely
one-sided, selfishly sacrificing the colonists to the interests of the
people at home. This view leaves out of account not only the generous
help given by European governments to their dependencies, but also a
great mass of legislation aiming to benefit the colonists by assuring
them a market in the home country, and imposing sometimes serious
restrictions on the inhabitants there. A government did no more than
hold resolutely to the idea that emigrants, wherever they might be,
were still citizens of their native state and bound to help maintain
its power. The government tried ordinarily to frame its regulations so
that mother country and dependency would devote themselves to different
lines of production, and so supplement rather than compete with each
other. It considered it only natural and proper that the colony should
trade mainly or entirely with the mother country. As said above,
this was a period of bitter conflict among the European states, and
a country’s commerce was thought to be one of the mainstays of its
military and naval power; it seemed, therefore, to be the plain duty of
colonists to contribute by their commerce to the resources on which the
independent existence of the whole nation was thought to depend.


QUESTIONS AND TOPICS

 The student will do best, probably, to study carefully one of
 the references to manuals in the bibliography as a means to an
 understanding of the topics of this chapter.

 1. An exercise requiring considerable time, and supposing some
 acquaintance with narrative history, but promising valuable results,
 is the following. Select one of the European states: England, France,
 Spain, the Netherlands. Make a chronological summary of its wars
 during the period 1500-1789, classifying the wars under one of the
 heads suggested, and aiming to get the total years spent in each kind
 of war and at peace. Estimate the gains and losses by war, and so
 reach a position to judge of the merits of the policy pursued.

 2. Sections 181-2 cover, to some extent, the ground of chap. 15.
 Review that chapter, and, if possible, review the history of some
 state like France, to appreciate the significance of the political
 development. [Adams, French nation.]

 3. Make a written summary of the hindrances to commerce in France at
 the end of this period. [Taine, The ancient regime, N. Y., Holt, 1876,
 $2.50; Edward J. Lowell, The eve of the French Revolution, Boston,
 Houghton, 1900, $2.]

 4. Thomas Mun, an Englishman who lived in the seventeenth century,
 wrote that the regular means “to encrease our wealth and treasure
 is by _Forraign Trade_, wherein wee must ever observe this rule; to
 sell more to strangers yearly than wee consume of theirs in value.”
 State the arguments by which Mun would support this proposition, and
 determine your own opinion on the question.

 5. Make a brief written statement of the difference between
 mercantilism and protectionism.

 6. Define the attitude which the mercantilist would assume toward each
 of the following trade phenomena: import of raw silk, export of silver
 plate, export of silk goods, import of knives, import of gold bullion,
 import of salt fish.

 7. Study, in a book on economics, the influences determining the
 distribution of the precious metals, and show how mercantilism was
 bound to fail in its object of increasing the money in circulation in
 a given country. [For a brief and clear discussion see F. A. Walker,
 Pol. econ., advanced, N. Y., Holt, sects. 176-178.]

 8. Discover, in the writings and speeches of American protectionists,
 evidence of mercantilist views. [See, for example, Roberts, Government
 revenue, Boston, 1884, or R. W. Thompson, History of protective tariff
 laws, Chicago, 1888.]

 9. Criticism of the old colonial policy. [Adam Smith, Wealth of
 nations, Book 4, chap. 7, part 2, reprinted in Rand, Ec. hist., chap.
 1.]


BIBLIOGRAPHY

 A bibliography, unfortunately ill suited to the purposes of untrained
 students, is appended to chap. 22 of Cambridge mod. hist., vol.
 3. See also the histories of economics by Cossa and Ingram, under
 mercantilism.

 Of general discussions the student must choose between the chapter
 noted above, J. N. Figgis, Political thought in the sixteenth century,
 which is abstruse and theoretical, or Cheyney, Eur. background, chap.
 6, Political institutions of Central Europe, 1400-1650, which is
 concrete and descriptive; neither is satisfactory for our purposes.
 Probably the most intelligible discussion will be found to be Seeley’s
 **Expansion of England, especially lecture 4, the old colonial system;
 and lecture 6, commerce and war. Schmoller, **The mercantile system,
 deserves its place as an economic classic, but will be found difficult
 by beginners. A brief account of mercantilism, by Ingram, will be
 found in the Encyc. Brit., 9th ed., 19: 354-358.

 Among the smaller manuals can be recommended: Cunningham and McArthur,
 chap. 4; Warner, chap. 9. Thomas Mun, England’s treasure by forraign
 trade, N. Y., Macmillan, 1895, $.75, presents mercantilist views in
 their typical form, and is an excellent source for somewhat advanced
 students; chapters may be assigned for discussion and criticism.




CHAPTER XIX

SPAIN AND PORTUGAL


=197. Extent and power of the Spanish monarchy.=—Pursuing now the
history of modern commerce by studying its development in different
countries, we turn first to the states of the Iberian peninsula, whose
great possessions outside of Europe seemed to assure their commercial
supremacy.

Shortly before the close of the last century of the Middle Ages three
events of great significance occurred in Spanish history. One was the
union of the crowns of Castile and Aragon, which brought the greater
part of the Iberian peninsula under one ruler. The second was the
completion of the centuries old war against the Moors, by the conquest
of their last stronghold in Granada. The third was the discovery of
America by Columbus. The great Spanish king of the sixteenth century,
Charles V, was the most powerful sovereign in the world. He governed at
home with undisputed absolutism; he was ruler by one title or another
of some of the richest European countries outside of Spain (especially
the Netherlands); and he enjoyed in his own right the sovereignty not
only over the greater part of America, but over Asiatic and African
possessions as well.

=198. Rapid development of Spanish industry and commerce.=—The rise to
greatness of the Spanish kings was paralleled by the development of the
Spanish industrial organization. Spain had throughout the Middle Ages
been rich only in her raw materials; she had exported wool, iron, and
wine, and had imported all her manufactures, largely in foreign ships.
The long wars against the Moors had turned people from the industrial
arts, so that manufactures were primitive except in a few cities like
Barcelona. The most advanced classes in manufactures and trade were
not the native Christians but Moors or Jews. A decided advance can be
noted under Ferdinand and Isabella, but the movement did not gain full
headway till the sixteenth century. Then, it is said, the laborers
employed in the textile industries of Toledo rose from 10,000 to 50,000
in about twenty-five years, and still merchants could not supply the
demand and had orders for five or even ten years ahead. The industries
based on wool, it is said, grew till they supported nearly a third of
the population; Spain began to import raw silk and export the finished
product, a reversal of previous conditions; great factories were
established to make soap and other wares; and the amount of business
transacted in Spain made the fairs of Medina del Campo one of the
important clearing houses of Europe. Over 100 ships measuring from 300
to 500 tons left Spain yearly for the colonies, and at least as many
cleared for European ports; 50 ships or more, it is said, often left
the harbor of Santa Maria together, carrying away the salt that was
manufactured there.

[Illustration: The map shows approximately the extent of the Spanish
possessions under Philip II, (1556-1598).]

=199. Economic decline in the following period.=—Astonishing as is
this rapid economic development, it is less striking than the economic
decline that followed. Lack of space forbids the discussion in detail
of the complex causes which brought about, first, an actual decline
of productive power, and then a condition so nearly stationary that
Spain was passed by nearly all the other states of western Europe. One
important factor, the colonial system of the Spanish kings, will be
reserved for discussion later as a separate topic. In this place we
shall take up some of the significant facts showing the decline, and
suggest some influences that make it intelligible.

The most serious symptom of decadence was an actual decrease of
population. In 1723 the total population of Spain was under six
million, three million less than the figures show for 1594, when
the decline had probably already begun. This decrease is the more
significant in that it affected largely the urban groups whose numbers
reflect the prosperity or reverses of industry and trade; large
cities lost half or even three quarters of their population in half
a century. Before the middle of the seventeenth century the wool
manufacture consisted only of a few unimportant factories of coarse
materials; the silk tax of Granada brought in less than a quarter of
what it had yielded under Charles V; and Spain had to rely on other
countries to furnish the manufactured wares for export to her colonies.
The decline affected not only the quantity of the population, but, to
all appearances, its quality as well; beggary and vagrancy became a
national curse.

=200. Causes of decline; faulty political organization.=—The decline
in population cannot be explained by emigrations to America, for the
drain from that source was small, as will be shown later. Executions by
the Inquisition, numerous as they were, could not alone have checked
the population. More serious was the expulsion, under ecclesiastical
influences, of the Moriscoes of the South, numbering perhaps a million.
These people of Moorish blood, the leaders in the agriculture and
industry of Spain, in 1609 followed into exile the Jews who had been
the leaders in trade; the native Spanish were unfit to fill the gaps
thus made in the industrial ranks.

Deeper-lying causes were at work, however. The damage from any single
event could have been repaired if there had been wholesome vigor in
the Spanish political organization, as there was and as there is still
among the Spaniards as a people. It was the fortune of Spain, at this
critical period of her history, to have the control of affairs vested
in the hands of rulers who were negligent of her condition, by the
distraction of their interests or by natural incompetence, and who
wasted her resources. The framework of government offered no chance
for good councils to reach the monarch’s ears. Men of business sense
were excluded from office even in the towns, so far as possible, and
were a rarity in the national parliament; power lay in the hands of lay
and ecclesiastical lords who had inherited feudal ideas, the reverse
of business-like, from the earlier period of the crusade against
the Moors, and who had no understanding of the measures needed for
industrial development. There can be little doubt that the prime evil
from which Spain suffered was (as it still is) bad government.

=201. The burden of taxes.=—The chief political abuse appeared in
the form of taxes so burdensome in their amount and in the method of
collection that industry was stifled. Taxes increased so rapidly in the
sixteenth century that in 1594 it was asserted that they amounted to
30 per cent on a man’s property, and that farmers could not exist no
matter how small a rent they paid; they left Spain or went to prison.
The “alcabala,” a tax supposed to be 10 per cent on a ware every time
it was bought and sold, was raised until it absorbed most of the
profits of trade and was a leading factor in the decline of industry.
A Spanish author of the eighteenth century (Ulloa) shows that a man
engaged in the manufacture of a certain stuff would have had to pay in
taxes actually more than he earned; “hence it follows that he would
have gained more by making nothing, and in Spain it is profitable not
to work.” Some industries, more fortunate, paid 60 per cent or 40 per
cent of the value of the goods as a tax to the government.

=202. Customs duties, on the frontier and inside the country.=—The same
ruinous excesses marked the policy in customs duties. The government
established rates which were for the time enormously high, or absolute
prohibitions with the death penalty for infraction. Commerce would
have ceased almost altogether if it had not been for the absolute need
of foreign wares in Spain after the destruction of home manufactures.
The wares were procured partly by smugglers through the corruption of
the customs guards, partly by the connivance of the government, which
allowed foreigners such favors in measurement and valuation that often
not over a quarter of the nominal duty was paid. This allowed wares
to enter, but it killed the remnants of active Spanish commerce with
Europe, for the favors granted to foreigners were refused to natives.
Other measures almost as monstrous were attempted, and failed only
because the government lacked power to enforce them. Spanish shipping
declined until it practically ceased to exist outside the protected
colonial traffic.

Finally, to complete this picture of the difficulties under which
commerce labored in Spain, duties existed not only on the frontiers but
in the interior of the country, hindering the free passage of goods and
the development of resources. Spanish kings made attempts to abolish
the internal customs frontiers, which failed through the opposition of
interested persons and the royal need for money. It was not until 1717
that the internal duties were done away with, and even then the remedy
was insufficient, and Andalusia kept its internal tariff barriers.

=203. Examples of bad policy; the Mesta.=—An excellent example of the
evils of the government’s economic policy is furnished by the history
of the Mesta, an association of stock raisers largely devoted to the
production of merino wool. The flocks grazed in summer on the highlands
of Leon, and descended in winter to Estremadura. The Mesta got such
privileges that it killed the agriculture within its reach. Where
the sheep had once fed the land could never be alienated for another
purpose; no one could bid against the Mesta for the lease of pastures;
proprietors along the route of the sheep must sit passive and see the
crops destroyed by them. Estremadura, once one of the richest provinces
of Spain, became one of the poorest, and parts of it now are nearly
desert. The policy of favoring one interest, by sacrificing to it other
interests more important, was characteristic of the diseased political
condition of Spain; and the wasting of national resources shown in the
case of the Mesta was but one of many examples of neglect. The canals
and aqueducts of the irrigation system, on which the Moors had lavished
their care, were allowed to deteriorate and go out of use; and the
forests were cut down to the permanent detriment of the soil and water
supply.

=204. Failure to develop colonial trade.=—In the foregoing sketch we
find sufficient explanation of the decline of the domestic industry
and commerce of Spain; we have still left to consider the question
why the evils of the home system were not repaired by the chances
for commercial development which the discovery of America and of the
sea route to eastern possessions opened. Before the attention of
Spanish rulers was absorbed by the attempt to suppress the Protestant
movement in Europe and to subject the Netherlands, the crown had won
an immense area outside of Europe; even to-day the extent of the
Spanish possessions at this period is attested by the hold which the
Spanish language still has on the world. Of all the European countries
Spain was the one which appeared in the sixteenth century to have the
best chance to build up a great commercial empire based on world-wide
possessions. Why was not this chance accepted?

=205. Spanish colonial policy. Taxes.=—It was a misfortune for the
Spaniards that they quickly discovered precious metals in America,
and in seeking to increase their supply were diverted from a more
substantial basis of prosperity. But the final blame for failure lies
again not with the people nor with the nature of the colonies, but with
the government. The explanation is to be sought in the colonial policy
of the Spanish kings. At first the trade to America was comparatively
unrestricted. Before, however, merchants could establish the trade
relations which would have enabled them to develop the resources both
of Spain and the transmarine possessions, the government laid its heavy
hand on the trade and held it down so tightly that it never acquired
vigor. Heavy taxes were levied on trade, and, as in the case of taxes
at home, these often were framed in such a short-sighted way that
they brought far more loss to commerce than gain to the treasury. The
“palmeo,” for instance, was an export duty levied in the eighteenth
century on wares merely according to their bulk, without regard
to their value; its effect was to encourage the export of foreign
manufactures, which had great value in a small bulk so that they could
afford to pay the duty, while the coarser Spanish exports were taxed
out of existence.

=206. Restriction of trade to appointed fleets.=—Ships could not sail
to America as might suit the convenience of merchants, but had to sail
from a given port (Seville or Cadiz), at a given time, to a given port
in America (Porto Bello near the modern Colon, or Vera Cruz). The
government by this restriction made it easier to protect the ships at
sea, and to collect taxes from their cargoes, but it bound the arms of
merchants so fast with its official red tape that they were weak and
helpless. In theory two fleets left Spain each year, one for Central
America and one for South America; in fact there were years together,
especially in the eighteenth century, when fleets did not sail, and
when the colonial possessions might have been entirely non-existent so
far as regarded benefit to the mother-country.

=207. Restriction of the market by the discouragement of
emigration.=—On arrival in America a cargo was sold sometimes for a
tremendous advance over cost. Sometimes, however, and more and more
frequently as time went on, a fleet would find on arrival that there
was no market for its goods, and they would be sacrificed or brought
back to Spain unsold. A special reason for this will appear later,
when we refer to the growth of smuggling. One general cause, however,
for the weakness of Spanish colonial commerce must be noticed in this
place. In contrast to the English, who stimulated emigration and
so built up a market for their wares in the colonies, the Spanish
kings kept emigration under a system of regulation which was almost
inconceivably strict. Colonists were discouraged from settling in the
New World not only by the difficulty of getting permission to go out,
but also by the poor chances for making a living when they arrived.
They were strictly forbidden to engage in any industry which could
threaten to compete with a Spanish industry; they were tied down to
residence in some particular province; and they were prevented from
developing the resources about them by restrictions which applied not
only to trade with the mother-country but also to intercolonial trade.
Trade with the Philippines, for instance, was closely restricted or
even prohibited. Districts in the southern part of South America were
subject to similar burdensome restrictions. A settler on the La Plata
might have to get his European wares by a trip across the Continent to
Lima, then up the west coast, and across the isthmus to Porto Bello.
When the privilege of receiving two ships a year was granted to Buenos
Ayres a customs frontier was established in the interior to prevent
goods from reaching Peru by this route.

=208. Supply of the market by smugglers.=—Spanish colonists increased
but slowly, therefore, in numbers and riches, and furnished a poor
market for Spanish exports. The Indians were even worse customers.
Natives who went barefoot and had no beards were forced, it is said,
to buy razors and silk stockings at exorbitant prices, but of course
they had no natural desire for those or other European wares, and
took only an inconsiderable amount. As the home manufactures declined
in vigor, exports to the colonies came to consist almost entirely of
the wares from other European countries, and even these were obtained
mainly through smugglers. The government could maintain its regulations
against Spaniards, but not against foreigners, who absorbed the most
profitable parts of the trade, and spoiled the market for merchants
who obeyed the restrictions. The English and Dutch islands became the
stations for an illicit trade which flourished as the regular trade
declined. After 1713 England had the right, by treaty, to the monopoly
of the African slave trade with the Spanish possessions, and was
privileged to send out nearly five thousand negroes a year. The English
had moreover the right to send out one trading ship of 500 tons; they
secretly enlarged the capacity of the ship and used accompanying
transports to carry still more cargo.

=209. Wares of the colonial trade.=—Of the products which Spanish
America furnished to commerce silver continued the most important
during the colonial period; the list of a ship’s cargo begins
always with an enumeration of the “plate,” in bullion and coin, of
which but a small part was gold. A fleet which left America in 1582
comprised 37 ships, “and in every one of them there was as good as
thirty pipes of silver one with another, besides great store of gold,
cochinilla, sugars, hides, and Cana Fistula (arrow-root?) with other
apothecary drugs.” Descriptions of cargoes in the eighteenth century
are substantially similar; among additional wares enumerated we find
indigo, cocoa, vanilla, sarsaparilla, “Jesuit’s bark,” (quinine)
“Paraguay tea” (_maté_), etc. The chief export from the La Plata region
was hides, of which two ships brought nearly 40,000 in 1723. Most
agricultural products were too bulky to pay for transportation.

The Spanish exported to the colonies assorted cargoes; one of 1625
included “Wines, Figs, Raisins, Olives, Oyle, Cloth, Cursies (kerseys,
light woolens named from an English town), Linnen, Iron and Quicksilver
for the mines.”

=210. Reform of the colonial system about 1750.=—In the eighteenth
century the old Spanish colonial system went to pieces. The government
recognized at last that it could not execute the laws which it had
made, and that the system which was meant to form the basis of a great
empire resulted only in stifling Spanish commerce and in encouraging
foreigners to great illegal gains. Foreigners were still excluded in
theory; the importance of the change lay in the opening of the trade
to the Spanish who had before been excluded by restrictions and taxes.
Spanish merchants were allowed first to send out ships independent of
the fleets, and then in 1748 the fleets were given up altogether. The
prohibition on commerce between the colonies was removed, and many
new ports in America were opened to the European trade. An indication
of the results that might follow such a change in policy had been
furnished by the experience of Havana. When this city was captured by
the English in 1762 and thrown open to English trade, 727 merchant
vessels entered the harbor in less than a year. Even though the
prohibition of trade with foreigners was still retained, the effect of
the reform in policy was nothing less than magical. In ten years the
trade and the customs duties increased about eightfold.

The reform came too late to benefit the Spanish industrial system. The
colonies were destined to exercise their new strength in breaking their
old bonds; while the home industries had decayed so far that a revival
was impossible in competition with industries of more progressive
nations. We leave Spain in the eighteenth century as we found her in
the fifteenth century, serving the other countries of Europe by the
production of raw materials, and dependent on them for her manufactured
goods. Running through the list of the principal Spanish exports in the
eighteenth century we find among them some that had undergone the first
stage of manufacture, like wine, oil, soap, soda, and iron; but most
were simple raw materials such as wool, salt, fruits, and nuts.

=211. Portugal; promise of commercial greatness in the sixteenth
century.=—The little country of Portugal, numbering perhaps a million
inhabitants, built up in the sixteenth century a commercial empire
worthy to rank with that of Spain, and exceeding in importance that
which any of the more northern states in Europe had yet established. I
have already recounted the achievements of the Portuguese in maritime
explorations. The part which they played in these expeditions prepared
them for the oceanic commerce which developed after the discovery of
America and of the sea route to India. While other nations stronger
than Portugal in resources and industrial development were still
unready to put forth their strength in distant commerce, Portugal
shared with Spain the extra-European world, and gained for herself
the richest part, the East. Da Gama returned to Lisbon in 1499 with a
cargo which repaid sixty times the cost of the expedition. This was the
beginning of a series of voyages devoted especially to the importation
of pepper and other spices, which could be bought so cheaply in the
East that they returned immense profits in Europe. Even the gold and
diamonds which came later from Brazil were less valuable to Portugal
than the monopoly she now possessed in the spices, drugs, dyes, and
manufactures, which formerly had been obtained only by the expensive
land route.

=212. Failure of Portugal to maintain her position.=—Portugal was
favored not only by conditions in Europe, which gave her the start on
other states, but also by conditions in Asia which enabled her able
agents to build up, through naval power, a commercial overlordship
which brooked no competitors, either Asiatic or European.

Portugal was, however, destined to play a great part in European
commerce for only one century. We cannot, as in the case of Spain, say
that a mistaken policy was the cause of her decline, for although the
Portuguese commercial policy was very similar to the Spanish and would
have shown the same weaknesses if it had been allowed to develop, more
important forces were at work to drive Portugal from the rank which
fortune had conferred upon her.

=213. Weakness in resources; bad effects of Spanish rule,
1580-1640.=—Portugal was not only small but industrially undeveloped,
and from the very first depended on other countries for the wares which
she exported to the East. Her explorations and her distant commerce
were due to the energy of the dynasty rather than that of the people,
and it was the misfortune of the country, in the critical period 1580
to 1640, to fall under the rule of Spanish kings whose influence on her
commercial interests was entirely for the bad. Of the 806 vessels which
Portugal sent to India, 1497-1612, only 186 sailed after 1580, and not
only the number but the quality declined in a period which should have
been marked by growth. Countries like England and Holland, which were
far stronger economically than Portugal, refused longer to allow her
the profits of trade while they did the work of production, and the
English broke the power of the Portuguese in India, while the Dutch
drove them from the eastern islands.

=214. Failure of Portugal to recover her position by commerce with
Brazil.=—After the recovery of her independence in 1640, Portugal
could look only to her American possession, Brazil, for the means of
developing her commerce. The Dutch were expelled from that possession,
and the discovery of gold there stimulated the growth of trade.
Comparing the latter part of the eighteenth century with the earlier
part of the seventeenth, the commerce between Portugal and Brazil is
said to have increased twenty-fold. In place of a dozen ships a hundred
sailed every year for America, returning with sugar, tobacco, hides,
brazil-wood, gold, and diamonds.

The profits of this commerce, however, went for the most part to
foreigners. Conditions at home had gone from bad to worse. The slight
advance which the country had achieved in agriculture and manufactures
before the discoveries had been lost by the attraction of all energetic
spirits into commerce and navigation. African slaves took the place of
free men in the fields. Portugal staked everything in the sixteenth
century on the chance of commercial greatness, and when she lost, lost
all.

=215. Dependence of Portugal on England.=—“In 1754 Portugal scarcely
produced anything towards her own support. Two thirds of her physical
necessities were supplied by England. England had become mistress of
the entire commerce of Portugal, and all the trade of the country was
carried on by her agents. The English came to Lisbon to monopolize even
the commerce of Brazil. The entire cargo of the vessels that were sent
thither, and consequently the riches that were returned in exchange,
belonged to them. Nothing was Portuguese but the name.” Reviewing the
list of exports to Brazil we find, in fact, that they were wares which
Portugal was herself unable to produce, and which were supplied by
England: woolens, hats, stockings, gloves, metals, linens, etc. England
had taken advantage of her economic and political weakness to make a
mere dependency of her, imposing treaty obligations which gave the
English producers every advantage in her markets, and which reduced her
to a state of pitiable subjection.

The great Portuguese statesman, Pombal, who made the statements quoted
at the beginning of this section, attempted to reanimate industry, and
succeeded to a slight extent in throwing off the English supremacy.
At the close of the eighteenth century, however, Portugal had still
only one strong national industry, the production of wine (port, so
called from its place of shipment, Oporto) for the dinner tables of
the English upper classes; and in spite of the efforts of Portuguese
statesmen even the wine trade was controlled by English merchants.


QUESTIONS AND TOPICS

 1. What are the chief exports of Spain at present? [Commercial
 geography or Statesman’s Year-Book.]

 2. Write a report on beggary and vagrancy in Spain after 1500. [Moses,
 in Journal Pol. Econ.; Prescott or Motley.]

 3. Write a report on the results (especially the economic results) of
 one of the following:

 (_a_) The Inquisition.

 (_b_) Expulsion of the Jews.

 (_c_) Expulsion of the Moriscoes.

 [See the various books by H. C. Lea.]

 4. Verify the statements concerning the character of Spanish
 government in sect. 200. [Prescott or Motley.]

 5. With reference to sect. 201, what is regarded as a reasonable rate
 of taxation in the U. S. now? [See a manual of Civics, that by John
 Fiske, for instance.]

 6. Write a report on the decline of Spain in productive power as the
 result of bad government. [Moses in Jour. Pol. Econ., Jones in No.
 Amer. Review.]

 7. In what parts of the world is Spanish still the common language?

 8. Write a report on the beginnings of Spanish colonial policy.
 [Bourne, chap. 14.]

 9. Write a report on the Spanish system of fleets. [Bourne, chap. 19;
 Roscher.]

 10. Was there any good reason for the sailing of ships in fleets?
 [See in Oxley the chapter describing the exploits of Drake and other
 freebooters.]

 11. Write a report on the great Spanish fairs in America. [Bourne, pp
 291-293; Roscher.]

 12. Spanish emigration to America. [Bourne, chap. 16; Moses, Spanish
 rule.]

 13. Restrictions on intercolonial trade. [Bourne, p. 289 ff.; Moses;
 Roscher.]

 14. History of smuggling in the Spanish colonies. [Bourne, chap. 19;
 Roscher; manuals of English history in connection with the treaty of
 1713 and the “War of Jenkins’ Ear,” 1739.]

 15. Write a brief report on the characteristics and history as a
 ware of commerce of one of the following: cochineal, cocoa, vanilla,
 cinchona, or quinine. [Encyc.; Willis, Practical flora; manuals and
 encyclopedias of commerce.]

 16. Assuming that most of the manufactures in the list of exports
 from Spain were furnished by other countries, what do you infer as
 to the economic hold of Spain on her colonies—was trade with the
 mother-country a necessity to the dependencies?

 17. Write a report on the reform of the colonial system and the light
 that the results throw on early policy. [Bourne, p. 295 ff.; Roscher.]

 18. History of the Portuguese in the East in the sixteenth century.
 [Stephens, chap. 9; W. W. Hunter, History of British India, vol. 1.]

 19. Effects of the sixty years of Spanish rule. [Stephens, chap. 13.]

 20. History of the Portuguese in Brazil. [Stephens, chap. 10; Keller
 in Yale Review, Feb., 1906.]


BIBLIOGRAPHY

 Reference may be made at this point to C. K. Adams, Manual of
 historical literature, third ed., N. Y., Harper [1888], as a
 bibliographical aid which is far from answering modern requirements,
 but which may still be of use to a teacher in handling such
 collections of books as may be found in a city library. A bibliography
 of Spanish history in the sixteenth century is appended to Cambridge
 Mod. Hist., vol. 1, chap. 11, and is continued in later volumes. A
 bibliography is given also in Martin A. S. Hume, The Spanish people,
 N. Y., 1901, a book which covers Spanish history from the earliest to
 present times, and which pays some attention to social history.

 Of general books on Spanish history, Prescott, Motley, etc., may still
 be put to good use. Attention should, however, be especially directed
 to the writings of *H. C. Lea, which contain valuable social and
 economic, material. A useful paper by Bernard Moses, **The economic
 condition of Spain in the sixteenth century, has been published both
 in the Journal of Polit. Econ., Chicago, 1892-3, vol. 1, pp. 513-534,
 and in Report of Amer. Hist. Assoc., 1893, Washington, 1894, pp.
 123-133. The Story of Spain in the Story of the Nations series is of
 no value for our purposes.

 On the colonial history and policy of Spain the student has
 several excellent books: E. G. Bourne, **Spain in America (with
 bibliography); Häbler, **The colonial kingdom of Spain, in H.
 Helmolt, Hist. of the World, vol. 1, pp. 386-422, N. Y., Dodd, Mead &
 Co., 1902; Roscher, ** The Spanish colonial system, N. Y., Holt, 1904,
 Moses, *The establishment of Spanish rule in America, N. Y., Putnam,
 1898.

 Two scholarly works in the series of Harvard Economic Studies deserve
 the attention of the serious student: Clarence H. Haring, Trade and
 navigation between Spain and the Indies in the time of the Hapsburgs,
 vol. 19, 1918, and Julius Klein, The Mesta, a study in Spanish
 economic history, 1273-1836, vol. 21, 1920.

 The best single reference on Portugal is H. Morse Stephens, *Portugal.
 For the Portuguese colonial ventures see Keller, **Colonization, chap.
 3, The Portuguese in the East, chap. 4, The Portuguese in Brazil.




CHAPTER XX

THE NETHERLANDS


=216. Establishment of the United Netherlands.=—With the decline of
Spain and Portugal the supremacy in European commerce passed definitely
to the countries of the North. The country which first took the lead,
and which we shall consider next, was the Netherlands, or as it is
often called from its main province, Holland. The Netherlands, which
has now an area but one fourth of that of New York State, was a part
of the possessions which by marriage and politics had come under the
rule of the Spanish crown. Its natural resources are slight, and in the
early part of the sixteenth century it was far behind the adjoining
Spanish territory now known as Belgium, which contained the developed
manufactures of Flanders and the great port of Antwerp. The Dutch
were strong, however, in the individual capacities of the people,
and in spite of the disparity of the contest were able to win their
independence from Spain in the Revolution which came in the last part
of the sixteenth century.

A variety of causes combined to urge the Dutch to revolt. They suffered
under Spanish rulers political oppression, and religious persecution
designed to crush the Protestant movement which they had embraced. They
suffered also, however, under the commercial restrictions of Spanish
policy. These they could bear so long as they found an outlet for their
growing commerce by trade with the East through Portugal, but the union
of the crowns of Spain and Portugal in 1580 closed even this outlet,
and forced them to fight for the means of existence and of growth.

=217. Rise of Dutch commerce.=—The Dutch were forced to the sea by the
difficulties of life at home, and had made good progress in commerce
with their European neighbors before their revolt. They had become
used, also, to distant voyages by explorations designed to open up new
routes for trade. In the vain attempt to establish a northeast route
to India by the Arctic ocean they showed especial energy; and the
names Tasmania, Van Diemen’s Land, New Zealand, attest their boldness
later in exploring the southern hemisphere. When, therefore, they had
achieved their independence and needed no longer to fear the threats
of Spanish and Portuguese rulers, they made rapid strides in oceanic
commerce. Before 1602 sixty-five ships had made the return voyage to
India, and throughout the seventeenth century an active commerce was
maintained with both Asia and America.

=218. Dutch commercial policy.=—We are tempted, by the position that
the Netherlands took against Spanish oppression, to ascribe to the
Dutch a greater love of liberty than they actually had. The government
which they established for themselves was marked by serious faults of
oppression and corruption, and their commercial policy was nearly as
narrow as that of Spain. The exclusion of foreigners from trade with
their distant dependencies was only natural in this period of commerce;
even the Dutch, however, were not free to trade as they pleased. The
colonial commerce was absorbed by great companies, which were granted a
monopoly of trade in certain areas, and which regulated this trade with
extreme minuteness. The companies had a complicated organization which
prevented efficiency and encouraged the improper use of personal and
political influence.

=219. The Dutch West India Company.=—The Dutch West India Company,
founded in 1621, controlled the trade west of the Cape of Good Hope,
comprising commerce with the west coast of Africa, and the east
coast of the Americas. This company was an extraordinary specimen
of its kind. It paid high dividends for a time, but its earnings
were necessarily precarious for it made them not from the ordinary
operations of commerce and colonization, but from armed attacks on
the Spanish silver fleets. It was really a corporation of privateers.
The character of the company can be estimated from the fact that it
actually opposed peace between the Netherlands and Spain; in its
remonstrance of 1633 it said that the services desired of it “for the
welfare of our Fatherland and the destruction of our hereditary enemy
could not be accomplished by the trifling trade with the Indians, or
the tardy cultivation of uninhabited regions, but in reality, by acts
of hostility against the ships and property of the King of Spain and
his subjects.”

The Dutch soon lost their possessions in Brazil and New Netherland (New
York), and the original company was dissolved; the possessions which
the Dutch retained on the coast of Guinea and in South America were
unimportant. Small islands in the Gulf of Mexico, which in themselves
produced little of value, served as stations for the Dutch carrying
trade, which continued to be considerable.

=220. The East India Company.=—The East India Company, founded in 1602,
which secured from the Dutch government the monopoly of trade and rule
from the Cape of Good Hope to the Straits of Magellan, enjoyed a longer
existence. It established trading stations on various points of the
Asiatic coast and in South Africa, but found the mainstay of its power
in the rich islands of the Malay archipelago, especially in the small
group of spice islands and in Java. Here it broke the power of the
Portuguese, and gained for itself a partial or total monopoly of some
of the products, which were among the most highly prized luxuries of
Europe.

In 1677 a fleet consisting of one small vessel and six large ships,
of which each carried a crew of about 100 sailors and 25 marines,
brought a cargo booked at nearly two million gulden (or several million
dollars). The cargo included immense quantities of pepper, nutmegs,
mace, and cinnamon; raw silk, and silk and cotton textiles from Persia
and India; indigo, borax, saltpeter, shellac, fine woods, etc. Neither
tea nor coffee appears in this list, but in the next century, when the
Dutch had developed their commerce with eastern Asia and had stimulated
the cultivation of new products in Java, these and other wares became
of the first importance. The cargo of a fleet of 1739 included the
following wares, in the order of their value; tea, coffee, pepper,
sugar, mace, nutmeg, camphor, indigo, cloves, etc.

[Illustration:

  EUROPEAN POWERS
  IN THE EAST
  ABOUT 1700

Note that several powers had established themselves on the coast of
India; the British did not win the position of unquestioned superiority
until toward 1800.]

=221. Leading position of the Dutch in European commerce.=—Historians
often speak of this distant commerce of the Dutch as forming the basis
for their great prosperity in the seventeenth century. Figures are
lacking which would enable us to determine the exact proportion of this
distant trade to the total, but the importance of this new branch of
commerce was probably exaggerated by reason of the strong appeal it
made to the imagination of men of the time. Certainly the Dutch were
not dependent on the Indian trade for the position they took among
commercial nations then. In the seventeenth century more than half of
the Dutch ships sailed for some port on the North or Baltic seas. In
1640, 1,600 ships out of a total of 3,450 passing through the Sound to
the Baltic were Dutch; and at this time a Dutch official declared that
grass would grow in the Amsterdam exchange and ships would be sold for
firewood if the Baltic trade were not kept free.

Thirty to forty Dutch ships went every year to Archangel, then the
chief port of Russia, and carried the products in which the Hansa had
formerly dealt to the Netherlands and to the west coasts of France and
Spain; Dutch ships almost monopolized the trade between Spain and the
northern countries after 1648, exporting 15,000 to 16,000 bales of wool
a year from that country while French and English together exported but
3,000. Dutch exports reached a figure in the seventeenth century which
was not attained by the English until 1740. Even the Dutch fisheries,
which employed over 2,000 boats, were said to be more valuable than
the manufactures of France and England combined. A Dutch contemporary
asserts, indeed, that as many persons were occupied in the fisheries as
in commerce.

=222. Growth of business activity.=—The prosperity of Dutch foreign
commerce was reflected in business activity at home. The Netherlands
rapidly outstripped the southern low countries (now Belgium), which
suffered cruel repression under Spanish rule; and the great commerce
of Antwerp passed to Amsterdam. Speculation and banking developed
in their various forms and the Netherlands became the money center
of Europe. Scholars find in the Dutch business life of this period
many features which are strikingly modern; speculation in stocks,
commercial crises, pools, and “trusts.” Manufactures felt the impulse
of progress, and broke the bonds of the old gild system for more modern
forms of enterprise. Large establishments grew up; new industries were
introduced (hats, silk, tanning, etc.); the Huguenot refugees expelled
from France were granted a welcome for which they gave a rich return.

=223. Commercial decline of the Netherlands.=—When and why did the
Netherlands lose the commanding position in European commerce? What
country took the lead away from it? Those are questions which the
student of the history of commerce must face, and in the following
paragraphs the answers will be given.

There is no doubt about the last point; Netherland lost the leadership
to England. The time when this change occurred can be stated with
almost equal brevity; it was during the one hundred years between 1650,
roughly the date when Cromwell gathered up the scattered forces of
England to use them for her commercial advancement, and 1750, when the
commercial supremacy of England could no longer be questioned.

The reasons for the change are as usual the hardest as they are
certainly the most valuable topics to be studied. One reason can be
stated here as a fact, to be proved afterwards in detail, that England
was growing stronger. On the Dutch side, was the Netherlands growing
weaker, or did it simply fail to keep pace with the English advance?

=224. Reasons for decline.=—So far as the facts are known Dutch
commerce increased in amount till about 1730 and maintained about the
same figures afterwards; but world commerce was growing so rapidly
that relatively the Netherlands fell behind. The very size of the
Netherlands told against the country in a political contest with other
powers. It implied, too, a lack of native resources to support commerce
when the hold of the Dutch on foreign trade was weakening. Furthermore,
the Netherlands was like the Hanseatic League in that it lacked a
strong central power and policy, and gave great independence to the
separate units of which it was composed. The important units, in the
economic aspect, were cities, which were able to carry on a small-scale
commerce very successfully, but which could not unite to bring their
best people to the front in a big-scale organization which could
compete with that of other countries. The Dutch did not pull together
to make the most of what they had, and the inefficiency and corruption
which had always characterized the local governments grew worse with
time. Rule by family rings brought with it favoritism and inordinately
high taxes, under which industries labored and dwindled. Manufactures
which had formerly flourished now declined. Weak at home, and, in
comparison with other European states of the eighteenth century, weak
abroad, the Netherlands fell from the first rank of commercial states,
retaining in its colonies and in its developed banking system only
reminders of its former greatness.

=225. Character of the Dutch East India Company.=—In the eighteenth
century, when the Netherlands was struggling to maintain its commercial
position, it was hindered rather than helped by the East India Company.
The company seemed to have the chance to make stupendous profits, for
it sold its wares for very high prices in Europe, and it paid for them
in Asia very little or even nothing. It used its power to force the
natives to supply it with some of these wares at nominal prices or
absolutely gratis. The very fact, however, that the company could get
its wares in this way, as a state would get them by taxation, suggests
that the company had expenses like those of a state and unlike those
of an ordinary commercial corporation. This was the fact; the company
had to support the civil and military establishment of a regular
government. This government shared, to the full, the political evils of
the time; both at home and in the East it was corrupt and inefficient.
It was strong enough to hold its own against the Portuguese, or against
the English when they began their expansion in the East; but it was no
match for the English when their strength developed in the eighteenth
century.

=226. Decline of the Company after 1700.=—After 1700 the Dutch East
India Company fell behind rapidly. It enjoyed such a high reputation,
and kept its condition secret so successfully, that its credit was
unimpaired, and it continued to pay dividends by borrowing money. For
nearly two hundred years it declared dividends at rates ranging from
12-1/2 per cent to 20, 40, or even 50 per cent; the average dividend
from 1602 to 1796 was over 18 per cent. The crash was bound to come
finally; the company paid its last dividend in 1782, and was dissolved
in 1798, leaving debts of over fifty million dollars, which were
assumed by the Dutch government.


QUESTIONS AND TOPICS

 1. Commerce and industry of the Netherlands in the fifteenth century.
 [Blok, vol. 2, chap. 12.]

 2. Commercial considerations involved in the revolt of the
 Netherlands. [Rogers, Holland, Cambridge Mod. Hist., or one of the
 older books like Motley.]

 3. Beginnings of Dutch commerce with the Indies. [Blok, vol. 3, chap.
 9.]

 4. From what Dutch source were the names Tasmania, Van Diemens Land,
 New Zealand, derived; when and how were they attached to countries
 later bearing them? [Encyclopedia.]

 5. The Dutch in North America; was their commerce with New Netherlands
 important, and did the loss of their possession affect seriously their
 carrying trade? [See manuals of U. S. history and the references given
 in them; note the effect of the English Navigation Acts.]

 6. The Dutch in South America. [See Edmundson, Dutch trade on the
 Amazon, English Historical Review, 1903, 18: 642-663, and later.]

 7. The policy of the East India Company: trade and territorial
 expansion, monopoly, regulation of production. [Day, Dutch in Java,
 chap. 2.]

 8. The Dutch in the East Indies. [Rogers, Holland, chaps. 20, 22.]

 9. Write a report on Dutch commerce at the height of its prosperity:
 countries traded with, wares, shipping, fisheries. [Blok, History,
 vol. 4, book 6, part 3, chap. 1, part 4, chap. 4; vol. 5, book 7,
 chap. 4.]

 10. The Bank of Amsterdam; its peculiarities and historical
 importance. [Rogers, Holland, chap. 24; Adam Smith, Wealth of nations,
 Book 4, chap. 3; C. F. Dunbar, Theory and history of banking, N. Y.,
 2d. ed., 1903, chap. 8.]

 11. Forerunners of modern trusts in the Netherlands. [A. Sayous, Early
 trusts in Holland, Political Science Quarterly, N. Y., 1902, 17:
 369-380.]

 12. The naval war of the English and Dutch in the time of Cromwell and
 Charles II. [Manuals of English history.]

 13. Dutch commerce in the period of its decline. [Blok, History, vol.
 5, book 8, chap. 5; vol. 6, book 9, chap. 3, book 10, chap. 4.]

 14. Internal troubles of the Dutch. [Rogers, Holland, chap. 34.]

 15. The “contingent system” of the Dutch East India Company. [Day,
 Dutch in Java, p. 61 ff.]

 16. Organization of the Dutch East India Company, and its faults
 [Dutch in Java, chap. 3.]


BIBLIOGRAPHY

 The English economist, James E. Thorold Rogers, has included in his
 *Story of Holland, N. Y., Putnam, 1889, several chapters on topics of
 economic importance. A better, though larger and more expensive work,
 is Blok’s **History of the people of the Netherlands. N. Y., Putnam, 5
 vol., 1898-1912.

 I have attempted to cover the colonial and commercial history of the
 Dutch in their most important dependency in The Dutch in Java, N. Y.,
 Macmillan, 1904.




CHAPTER XXI

ENGLAND: SURVEY OF COMMERCIAL DEVELOPMENT


=227. Survey of England’s position and resources about 1500.=—The
importance which English commerce assumed in this period and has since
maintained, justifies us in pausing at the start to consider the
conditions prevailing at the beginning of the period, about 1500.

England and Wales together had an area much smaller than that of
most of the important continental states, about equal to the area of
Illinois, and less than that of New England. Ireland was a sort of
colonial possession, counting for little; Scotland remained till about
1700 an independent kingdom, and continued to be relatively unimportant
after the union. England (a term which will be used roughly for other
parts of the United Kingdom as they were included) had from nature
one endowment of supreme advantage, separation by the Channel from
the Continent, which made unnecessary for defense the government of
a military absolutism, and allowed an early development of popular
freedom.

From the economic standpoint, however, the climate favored grazing
rather than tillage, and the mineral resources, aside from tin, were
still of comparatively little use. England was a poor as well as a
small country in 1500, needing to rely upon the energy of the people
and upon their cooperation among themselves and with the government to
win a place among the leading countries.

=228. England’s chief advantage; her advanced organization.=—Progress
had been made, however, in various lines of which the importance was
to appear as time went on. Serfdom had disappeared from the country
districts, and production was stimulated by a fair reward for work
well done. On the basis of their flourishing sheep industry the
English had built up a cloth manufacture which had outgrown the narrow
restrictions of the old gild system, and won the inestimable advantage
of an organization like that of modern times; the industry was not
so much ruled by antiquated custom or by the laws of politicians, as
guided by specialists who had invested their capital in manufacture or
trade, and who linked their fortunes with progress and extension.

=229. Benefits of the English political constitution.=—Finally, in
summing up the advantages which the English of this period enjoyed, we
must put as perhaps the chief and certainly a very important one, their
political development. They were not only spared from the necessity of
using their resources to repel a foreign invasion, they had attained
to national unity among themselves; and they had a government which,
however crude it may seem now, was much more closely in touch with the
people than that of most states, and which proved capable of further
development at comparatively slight expense, measured in men and money.
The student who, in estimating the commercial assets of England during
this period, left out of account the English constitution would go wide
of the mark. Spanish inquisition and expulsions, Dutch corruption,
French oppression and revolution, German or Italian disunion—to be free
from these was worth great wealth.

=230. Development of the English into an active commercial people about
the fifteenth century.=—The English historian, Seeley, combats the
idea that it is “in the blood” of Englishmen, that it is “the genius
of the race” to be a maritime and colonizing people. During the Middle
Ages, in fact, the English were not great navigators, in spite of the
facilities offered by the excellent harbors and the rivers penetrating
far inland; English commerce was carried on largely by foreigners, as
has been said in a previous section. The advance of the English from
passive to active commerce came at the close of the Middle Ages, in the
fifteenth and sixteenth centuries. In 1400 English merchandise was
mostly borne in foreign ships; in 1500, it is said, English vessels
carried more than half of all the cloth exported, and about three
fourths of all the other wares.

=231. Agencies helping to extend English commerce.=—Among the
influences aiding the development of English commerce in this period
we must put the skilful diplomacy of the sovereigns of the Tudor line,
which secured important privileges for English merchants in other
countries, and the energy of the fellowship of Merchants Adventurers,
which made the most of these privileges. The Merchants Adventurers
differed from the Merchants Staplers (see section 126), in three
important points, each of which marks an advance: they were all native
Englishmen instead of foreigners; they exported manufactured goods,
chiefly cloth, instead of raw materials; they were not bound to a fixed
staple but “adventured” to different places. Though the association was
not nearly so close as that of later stock companies, it was strong
enough to protect the interests of English commerce against abuses by
individual merchants and attacks by foreigners; and was especially
helpful in pushing English trade along the coast of the North Sea
(Flanders, Netherlands, Germany).

=232. Enlargement of the commercial area.=—Beyond these nearby
districts English merchants were building up an important trade with
Spain and Portugal in the South, and with the Scandinavian countries
in the North, where the Hanseatic League was now unable to hold its
own. English ships were voyaging further still. Bristol merchants like
Sturmys and Canning built up merchant fleets of considerable size, and
sent them as far as the eastern shore of the Mediterranean and the
coasts of Iceland and Finland. A London grocer recorded in his diary
about 1550 the voyage of an English vessel to “Russier” laden with
“English bookes of the Scriptures” and with other wares which probably
sold to better advantage.

Nor have we yet reached the limit of English voyages. American readers
are familiar with the exploits of the Cabots, which began a series
of frequent voyages to America, and which were followed by daring
expeditions to the far North in search of a passage to India, either
east or west. These distant voyages were too venturesome as yet to
be the means of regular commerce; they sought rather discoveries or
plunder. The English merchant who went outside the narrow circle of
civilized Europe turned his hand chiefly to smuggling, kidnapping,
robbery, and murder. John Hawkins shared with Queen Elizabeth the
profits of the African slave trade, and was proud to add to his coat of
arms a demi-Moor proper, bound with a cord, to record his achievements.

=233. Relative standing of the English ports.=—An idea of the relative
rank in foreign commerce of the English ports can be gained from the
proportions which they contributed to the customs revenue. The most
striking fact is the immense lead of London over other ports, like that
of New York in the United States now; it contributed half of the total
in the time of Henry VII (say 1500). The second port, Southampton, fell
in this period from 18 per cent to 9 per cent; the Flanders galleys had
ceased coming, and the Guinea trade, by which it revived later, had not
yet begun. Newcastle upon Tyne paid 5 per cent of the total, while the
port of Bristol, destined to be later the great haven for the American
trade, paid only 3 per cent and was exceeded by Boston. No other port
than those named contributed as much as 3 per cent of the total customs
revenue. The list of minor ports comprises some which had been great
in the Middle Ages but which were now rapidly declining in relative
importance (Ipswich, Sandwich, etc.), some, like Hull, which were
destined to grow in importance, while great modern ports like Liverpool
and Cardiff are not yet heard of at all.

[Illustration:

  SPHERES OF TRADE OF
  ENGLISH COMPANIES
  IN THE EARLY 17th CENTURY
]

=234. Partition of the field of commerce among companies.=—The reader
will remember the discussion in a previous section of the difficulties
experienced in this period when commerce was left to individuals, and
the reasons for the association of the merchants who traded to any
country. With that discussion in mind the organization of English
commerce in the period of the later sixteenth century and following
years will not seem so strange as it may appear to be at first. An
ordinary Englishman could trade about 1600 with only three countries:
France, Spain, and Portugal. Commerce with the rest of the world
could be carried on only by members of specific companies, who had
mapped out and occupied the routes of trade much as modern railroads
divide the territory inside a country. Beginning in the North and
going around the compass the companies were as follows: the Eastland
Company, trading to Scandinavia and the Baltic; the Russia Company;
the Merchant Adventurers, controlling trade from Denmark to France,
where the free-trade gap appears; the Levant Company, trading in the
Mediterranean; the Guinea or Africa Company; the East India Company,
with its immense Asiatic field; and then the various companies familiar
to students of American History, the Virginia Company, the Plymouth
Company, later the Hudson’s Bay Company, etc. By means of the trade
of these companies England marketed her surplus wares, especially her
woolen fabrics, and imported the goods of which she stood in need—naval
stores from the Baltic, manufactures and wine from the Continent,
gold from Africa (cf. the English “guinea” of twenty-one shillings),
Oriental products, and furs and fish from America. The colonies which
had been founded in the New World were still too young to affect
greatly the sum total of English trade in the early seventeenth
century, but increased rapidly in commercial importance.

=235. Characteristics of the companies.=—In their organization and
development these companies show such variety that it is impossible
here to do more than indicate some common features of their history.
They tended to one of the two types (joint-stock or regulated) which
have been described, and sometimes wavered between the two. The
monopoly which they enjoyed made them unpopular with the public, who
thought that it was used to secure unduly high profits, and still more
unpopular with private merchants who were prevented from sharing in the
trade. These merchants who could not gain admission to the companies,
because of lack of capital, or distance from London, formed a class of
“interlopers” or smugglers trading inside the companies’ preserves.
Toward the close of the seventeenth century the feeling against the
companies grew so strong that reform was forced upon them; entrance
fees were lowered or exclusive privileges were taken away and the trade
was thrown open. Some of the companies continued to exist, however;
the greatest of them all, the East India Company, kept its hold on
the trade with Asia, and other companies continued as semi-public or
private corporations after their chief privileges had been annulled.
The Levant Company was not dissolved till 1825, and the Hudson’s Bay
Company is still in existence, as an ordinary trading corporation.

=236. Rapid growth of commerce in the eighteenth century.=—The period
in which the companies were most active, roughly the seventeenth
century, was preparatory to the period of individual enterprise which
in the eighteenth century brought England to the leading position among
the commercial states. The advance is shown by the following table,
giving in _millions_ of pounds sterling (and a rough equivalent in
dollars) the annual average of trade in the different periods:

  ====================+========================+===================
      Average of      |         Imports        |       Exports
  --------------------+------------------------+-------------------
      1698-1701       |      £ 5.5  $ 27       |    £ 6.4  $ 32
      1749-1755       |        8.2    41       |     12.2    61
      1784-1792       |       17.7    88       |     18.5    92
        1802          |       31.4   157       |     41.4   207
  ====================+========================+===================

The figures show that the foreign trade of England grew between
five and six fold in the course of the century; that it advanced
considerably in the first half, but moved with the speed of a
revolution in the second.

=237. Relative share of different continents in English commerce.=—An
indication of the direction of the trade, and of the relative
importance of different elements in it, is given in the following
tables, the figures again being simplified to round _millions_. The
commerce of England was distributed as follows:
  =========+============+===========+===========+===========+===========
           |   Europe   |  America  |    Asia   |   Africa  |   Total
  ---------+------------+-----------+-----------+-----------+-----------
  1698-1701| £ 9.2 $ 46 | £ 1.7 $ 8 | £ 0.8 $ 4 | £ 0.1 $ .5|£ 12.0 $ 60
  1749-1755|  13.8   69 |   4.5  12 |   1.8   9 |   0.2  1  |  20.4  102
  1784-1792|  19.6   98 |  10.8  54 |   4.9  24 |   0.9  4  |  36.2  181
  1802     |  39.4  197 |  23.3 116 |   8.7  43 |   1.3  6  |  72.8  364
  =========+============+===========+===========+===========+===========

The student may perhaps need the caution that he should not attempt to
learn outright such statistics as are given here; the attempt would
be a waste of energy. The figures give more concisely than any other
method of description the measurement of a country’s commerce, and are
valuable for reference. They must, however, be translated into a more
simple expression of facts before an ordinary student can grasp their
significance and hold it permanently in mind. In the few lines of text
following the first table the author has suggested the most obvious
conclusions to be drawn from it, and will point out others applicable
here.

The trade with Europe was still by far the most important part of
English commerce, being equal to more than all the rest of the trade
together. It grew steadily throughout the eighteenth century, as the
figures show, but still it was a less important part of the whole in
1800 than it had been in 1700. At the earlier date other continents
furnished but one fourth of the total; in 1800 they furnished nearly
one half. The two most important, America and Asia, were coming up with
nearly equal speed, their commerce increasing roughly fivefold in the
course of the century. America had a clear lead over its older rival,
while Africa counted for very little in the total.


QUESTIONS AND TOPICS

 1. Town life and trade about 1500. [Soc. Eng., 3: 131-145.]

 2. Economic and social conditions in England in the sixteenth century.
 [Harrison’s Description, ed. by L. Withington, London, 1902, readable
 but too diffuse for a student who has not learned to select what he
 needs from a book.]

 3. Significance of the “enclosures” in English agriculture. [Soc.
 Eng., 3: 544-550; 4: 114-118, 239-241.]

 4. Development of the manufacturing system, as seen in the cloth
 trade. [Ashley, Eng. econ. hist., vol. 2, chap. 3.]

 5. Political conditions about 1500. [Seebohm, Prot. rev., 46-55.]

 6. The Merchants Adventurers: who were they, in what did they trade
 and with what countries, principles of organization, services to
 English commerce? [Lingelbach, Merchants Adventurers, Univ. of Pa.
 Pub., 2 series, vol. 2, N. Y., 1902, or Cunningham, Growth; brief
 account in Cheyney, Eur. background.]

 7. English discovery and exploration in the sixteenth century. [Soc.
 Eng., 3: 209-228; 477-508.]

 8. Write an account of the career of Hawkins. [Payne, Voyages; J. A.
 Froude, English seamen, N. Y., Scribner, 1895.]

 9. Write a similar report on Drake. [Same references, or Oxley, chap.
 5.]

 10. Indicate on a sketch map the position of ports named in sect.
 233, drawing a line by each port with a length proportional to the
 importance of the port. What are the chief ports now? [See a later
 section of this book and its note; Statesman’s Year-Book.]

 11. Select one of the companies named in sect. 234 and report in
 detail on its commerce and career. [Hewins, Eng. trade; Cunningham,
 Growth, with references. Brief narratives of the East India Company
 and of the Hudson’s Bay Company will be found in Oxley, chaps. 8. 9.]

 12. Struggle between the East India Company and the interlopers.
 [Cunningham; Hunter, Hist. of British India.]

 13. Prepare a graphic chart of the figures in sect. 236 in the
 following manner. Draw a perpendicular line at the left-hand edge of a
 sheet of paper, mark off two equal spaces, and place the dates, one at
 the top, one in the middle, and the last two on either side of the end
 of the line. Lines are then to be drawn, horizontally, proportional to
 the figures of trade at each date. This can readily be done with the
 aid of a foot rule, divided into fractions of an inch. Choose first
 the largest figures of the table, in this instance those for 1802, to
 be sure of having room enough on the paper for all the lines. Let one
 of the small divisions of the rule represent a sum of a million pounds
 or ten million dollars. If, for instance, 1/16 is taken to represent
 a million pounds, the line for the imports of 1802 will be a little
 short of two inches (31/16). Let this line then be continued by a
 dotted or wavy line to represent exports; the continuation in this
 case would be a little over 2-1/2 inches, and the whole line would be
 a little over 4-1/2 inches (72/16). Pursue the same method with the
 other figures, and the result will be a graphic representation of the
 course of trade during the period.

 The scale may be varied to suit convenience, but of course figures
 cannot be directly compared with each other unless they are plotted to
 the same scale.

 14. Prepare a chart by similar methods, but using different colors or
 characteristic lines to indicate trade with different regions.

 15. Reduce the figures of trade with different continents to
 percentages of the total, at different periods.

 Make up your mind as to the number of conclusions to be drawn from the
 tables which you are capable of remembering—whether one, two, or more;
 resolve to remember those and to refer back to the tables for the
 others.


BIBLIOGRAPHY

 As Gross, Sources, does not cover the modern period, the student in
 search of more extended bibliographical information than that given
 here must rely on less satisfactory guides. Cunningham, **Growth,
 will be the best for an advanced student; see the foot-notes and
 the bibliographical index. Traill’s **Social England contains less
 scholarly but perhaps more useful bibliographies on commerce and
 kindred topics. Some of the school manuals give classified references;
 Andrews’ *History can be especially recommended.

 Of the general works on English history in the period under
 consideration the following pay some consideration to commercial
 development, and those which are starred present information that is
 valuable and easily available: *Busch, Froude, Gardiner, Macaulay,
 Stanhope, *Lecky. If a single work is desired for collateral reading
 the best is Traill’s **Social England, to which I have in large part
 confined my references for topical reading.

 Cunningham, **Growth, is indispensable for this period; I assume
 that this book is in the hands of the teacher and that he will avail
 himself of the abundant material it offers for reading and written
 reports. Besides smaller books on English economic history, already
 mentioned, the following can be made useful: Hewins, **English trade;
 Seeley, *Expansion; Toynbee, Industrial revolution. Bourne, *English
 merchants, is useful; his English Seamen is unfortunately out of
 print. There is a considerable literature, however, on the war and
 merchant navy, especially in the sixteenth century (see references
 in Social England); and Lindsay and Cornewall-Jones cover the entire
 period.




CHAPTER XXII

ENGLAND: EXPORTS


=238. Survey of topics to be considered in studying the development
of English commerce.=—Such is the bare outline of the development of
English commerce in the period preceding 1800. Two chapters will now
be devoted to the discussion of facts which will fill in the outline
and will explain the development. That the reader may follow more
intelligently a survey will be given in this place of the topics to be
considered, and their bearing on the general question.

We must know (1) the character of English exports. The exports of a
country show in what lines it is strong enough to compete with foreign
producers, and are the means by which it buys commodities produced
abroad. We shall then consider (2) the advantages which enabled England
to produce these wares so efficiently that other countries were glad to
buy of her, and (3) the countries in which these wares found a market.
On the other side we want to know (4) the imports, the wares which
England wanted but could not herself produce to advantage, and (5) the
countries from which the imports came. Another factor of importance
will be (6) the development of English shipping. Finally we have to
consider (7) the government policy by which statesmen sought to further
and regulate the development, as manifested in foreign policy and wars,
in the customs tariff, and in the colonial system.

=239. (1) Analysis of exports.=—The total export to foreign countries
of merchandise of English origin (_i.e._, not including goods from
other countries transshipped in England) amounted about 1800 to a
little over £29,000,000. The most important items were as follows, in
millions of pounds: manufactures of wool, 7.7, or over one fourth
of the whole; manufactures of cotton, 4.1; manufactures of iron and
steel, 2.0; haberdashery, 1.5; linens, 1. These five items include over
one half of the total, and no other item amounted to as much as one
million. It is noteworthy that all the raw materials together scarcely
exceeded one million. When we come to study the internal development
of England we must look, evidently, for a great expansion in certain
manufacturing industries to explain the position which their products
now took in trade.

=240. (2) Development of production, explaining the growth of the
export trade. Agriculture.=—Turning our attention now, not to the
foreign commerce of England but to the conditions at home which made
this commerce possible, we find that during the two centuries following
1600 there was a steady development of internal resources. The growth
of population stimulated improvement in agriculture; and cultivators
managed, by new crops and methods, to increase largely the output in
spite of the disadvantages of soil and climate. Root crops (turnips
and carrots) and clover were grown on fields which before had been
allowed to lie fallow, and the produce, converted into meat and manure,
was almost pure gain. By better feeding and breeding the weight of a
head of stock was increased twofold or even more. Potatoes and other
vegetables were introduced from America and the Continent. Capitalist
farmers effected such a revolution in the methods of agriculture,
that pasture farming became relatively much less important, and the
production of cereals increased so that there was a food supply to
maintain a manufacturing population, and sometimes a surplus for export.

=241. Internal commerce and means of transportation.=—The conditions
of internal commerce, measured by the difficulties and dangers of
road transportation, were still bad at the beginning of this period,
but improved rapidly in the eighteenth century. A writer said in
1767: “There never was a more astonishing Revolution accomplished in
the internal system of any country than has been within the compass
of a few years in that of England. The Carriage of Grain, Coals,
Merchandize, etc., is in general conducted with little more than
half the Number of Horses with which it formerly was. Journies of
Business are performed with more than double Expedition. Improvements
in Agriculture keep pace with those of Trade.” The canals, which
were extended rapidly after the success of the Bridgewater Canal,
constructed in 1758 to connect Manchester with coal mines seven miles
distant, lowered the cost of transportation to one quarter or less, in
the districts which they served. As a result manufacturers could rely
on a steady supply of raw material for their works, and of food for
their employees, and had also a chance to put their finished goods on
the market. The eighteenth century, moreover, was a period of great
development in English banking, and the extension of credit operations
was at the same time an effect and a cause of the growth of trade.

=242. Manufactures; advance from the gild to the domestic system and
its significance.=—We turn now to the history of English manufactures,
a topic which is not only, as we have intimated, of great importance
for the growth of English commerce, but which is of general interest as
showing the stages of development through which other countries passed
later.

Gilds still persisted in England, but they had lost the power of
control which they had formerly had and which they still maintained
on the Continent. The more important industries had passed into the
stage known as the “domestic system.” The change, at first view, is
not striking, for the manufacturing was still done by petty artisans
working at home with their own tools. The ownership of the raw
material, however, had passed from the artisans to an employer, who
took the risk of the manufacture and reaped profits corresponding to
his success in conducting it.

Brain power now took a place in manufactures above hand power.
The new class of employers were men who could devote their energy
entirely to studying the larger questions of production. They had
the chance to look away from the petty details of work, which had for
centuries absorbed men’s attention, and to become both broad-sighted
and far-sighted. They studied the needs of the market, at home and
abroad; they bought the raw material wherever it could be had best and
cheapest; and then marketed the product, wherever it would bring them
the best returns.

=243. The new employers aided by the immigration of foreign
laborers.=—Success in manufacture still depended largely on the quality
of labor, and one great advantage which England owed to her political
and religious freedom was the immigration of skilled laborers seeking
refuge from the persecutions of the Continent. Refugees, of whom the
Huguenots from France were the most important, brought with them
improvements in the woolen manufacture and stimulated the development
of other industries: silk, linen, cotton, calico, paper, etc. It is,
however, hard to see how the labor of these people could have had a
great effect in extending foreign trade if they had not been guided by
their employers, who were men of considerable capital, with broad views
and wide acquaintance, willing to take large contracts and eager to
extend the market for their goods. An English pamphlet of the period
says that the towns in which the silk and cotton manufactures developed
owed their industries “to the public spirit of two or three men in
each.” The development of this process, by which artisans lost their
former independence and came to work for an employer, can be seen from
a statement of the economist Adam Smith, who wrote in 1776. “In every
part of Europe,” he said, “twenty workmen serve under a master for one
that is independent.” This was not yet true of “every part” of Europe,
and even in the western states of the Continent the process had not
advanced so far as in England, where the author had made most of his
observations.

=244. Dependence of technical progress on the new class of
employers.=—It is noteworthy that the great inventions to which the
modern development of manufactures has often been ascribed could
not have been made of practical importance unless this system of
organization had developed previously. The gilds were bitterly opposed
to any changes in their system of routine, and independent artisans
would not find it worth their while to introduce costly improvements.
Many inventions had been made before the eighteenth century which would
have been of the greatest importance in manufacture if there had been
any one to take them up and put them through; they fell dead, however,
on the world of their time, or were killed by the opposition of petty
producers. An illustration of the way in which premature inventions
disappeared can be given from the experience of a man who, to all
appearances, had devised a repeating firearm before the end of the
sixteenth century. A German recommended to an English statesman “one
of his countrymen, who had invented a harquebuse, that shall containe
ten balls or pelletes of lead, all the which shall goe off, one after
another, having once given fire, so that with one harquebuse one may
kill ten theeves or other enemies without recharging.” The importance
of such an invention needs only to be suggested, but, so far as the
writer knows, nothing further was heard of it.

=245. The domestic system preparatory to the great revolution in
manufactures in the eighteenth century.=—Not until the latter part of
the eighteenth century were the times ripe for the great technical
changes in manufacture, which the introduction of machinery implied.
Then the advance came with the speed of revolution. In the lifetime
of an ordinary man (1770-1840) the whole face of England changed;
the great textile towns and the “black country” of the coal and iron
industry grew up; canals and railroads cut through the agricultural
districts to connect the industries with each other and with the
outside world; a social and political revolution accompanied the
economic. No attempt can here be made to describe the changes in
detail, and the discussion of the factory system and other features
of the present organization to which they gave rise can better be
postponed. The following paragraphs will suggest the development in
some of England’s chief export industries.

=246. Progress of the cotton manufacture.=—The cotton manufacture was
the first to show the possibilities of the application of machinery.
Two main processes are to be distinguished in the manufacture of
cotton, as in that of other textiles; first, the spinning of the
yarn from the fiber, and second, the weaving of the yarn into cloth.
The first great improvement was the invention by Kay in 1738 of the
fly-shuttle, which saved the time and energy of the weaver and enabled
him to double his output of cloth. Still, the industry was small and
grew slowly. The amount of raw cotton imported from Turkey and the
West Indies would seem now perfectly insignificant, and was exceeded
by the amount of linen yarn imported from Ireland alone. The cotton
manufacture was hampered especially by the slowness of cotton spinning
(six spinners working with the old-fashioned wheel were needed to
supply yarn to one weaver); and by the weakness of the yarn, which
required linen to be used for the warp of cloth. Inventions which met
these difficulties were the spinning-jenny of Hargreaves, patented
1770, which enabled a spinner to make eight threads at once instead
of one (later, twenty, thirty, even one hundred and twenty); and
Arkwright’s roller spinning frame, patented 1769, which made cotton
yarn strong enough for warp, by stretching the strand before it was
twisted. Improvements followed in other processes (carding, printing,
etc.); water-power was used more generally, and a mere beginning
made with the application of steam. A Kentish clergyman, Cartwright,
invented a power loom which greatly increased the possibilities
of weaving but which did not become a practical success until the
nineteenth century; long after 1800 the hand-loom weavers kept up a
hopeless struggle in competition with it.

The full effect of all these changes was not felt until the nineteenth
century, but their importance in this period can be measured by the
imports of raw cotton. In the forty-three years, 1741-1784, the annual
imports rose from 4,000 to 28,000 bales, while in the sixteen years
following they increased to 150,000 bales (1800).

=247. Slower development of the woolen manufacture.=—No such rapidity
of development as this can be traced in the woolen manufacture, for
it had long been England’s mainstay, and changed more slowly partly
because it was so firmly established. Little by little, however, the
spinning-wheel was displaced by the jenny, and other sources of power
than the human body were utilized. As in the case of cotton, power
weaving was not important until after 1800; but the manufacture of
worsteds (in which the fibers are longer than in woolens, and are kept
parallel) was greatly helped by a second invention of Cartwright, for
wool-combing by machinery.

=248. Development of the iron industry with the use of pit-coal.=—The
only other industry of this period which our space allows us to treat
is that of iron. Until the eighteenth century iron was made almost
entirely by smelting with charcoal, the primitive process which can
be traced back to prehistoric times. A ton of iron required two loads
of charcoal, and a load of charcoal two loads of wood, so that the
industry depended largely on the wood supply, and was carried on at
petty forges scattered through England, but established mainly in the
South. A large proportion of the English iron supply was imported from
Sweden. Coal, as we use the word, called then pit-coal or sea-coal,
had for centuries been mined for domestic use, but had no importance
in manufacture. Various men tried to smelt iron by coal or coke, but
their experiments had no practical result till about 1760, when blast
furnaces using coal were successfully established, and the industry
began a period of rapid development, furthered about 1790 by the
application of steam-power to the blast. Henry Cort invented in this
period the processes by which pig was changed to malleable iron in a
coal-puddling furnace, and the malleable iron was worked into bars by
rollers instead of by the slow action of forge hammers. The production
of iron had increased fourfold (17,000 to 68,000 tons) in the period
1740-1788, and in the period of eight years following nearly as much
again was produced (125,000 tons in 1796). The industries depending on
iron passed into a new stage, and the large export of iron and steel in
1800 is explained.

=249. (3) The chief markets for England’s exports.=—The market for
English wares varied, of course, according to the country to which
they were sent. The most favorable market for manufactures was
afforded by the colonies in America, until the outbreak of the war of
independence. The colonists were a high grade of customers; they had
cultivated tastes and were willing to work hard to gratify them. By
reason of natural conditions even more than by legislation they found
it difficult to establish manufactures, and bought manufactured wares
of England with the raw products which their environment afforded
in abundance. A book published just before the revolution says that
the “colonies are furnished from England with materials for wearing
apparel, household furniture, silk, woolen, and linen manufactures,
iron, cordage, and sails, great guns, small arms, ammunition, lead,
brass, iron, and steel, whether wrought or unwrought; in a word England
furnishes them with almost everything needful for the luxuries, as well
as conveniences of life, except provisions.”

In European countries English manufactures did not find such a clear
field. There were some branches (silk, linen, lace, paper, tin-plate,
etc.) in which other countries were distinctly superior, and no
European country depended on England as did the colonies. English
woolens, however, went practically everywhere, and other products of
the textile and metal industries were sure of a ready market in most
countries.

For exports to other continents the English had to choose articles
which would stimulate less civilized people to production and exchange.
Very considerable sums in gold and silver were sent to Asia, and the
half-savage Africans were tempted with gunpowder, iron, rum, spirits,
beads, etc.


QUESTIONS AND TOPICS

 1. Endeavor to get a clear understanding of the meaning of each of
 the topics, and of their bearing on each other, by thinking of the
 present-day commerce of the U. S. and asking yourself: what are the
 main facts about (1) our exports, (2) our natural advantages, etc.
 Then ask yourself how knowledge of any one of these topics will be of
 use to you in understanding the others, and so understanding commerce
 in general. For instance, what bearing has our tariff policy on our
 imports and exports, respectively? What are the weaker points in our
 system of production as shown by imports; what countries are strong
 in those points? The student is most earnestly advised to learn the
 contents of this manual by understanding and not by memorizing. He
 should always be asking himself: what _use_ is this fact to me?

 2. Transform the figures, sect. 239, into a graphic chart, and
 compare the results with exports at the present day. [See Statesman’s
 Year-Book for recent figures.]

 3. Development of English agriculture in the seventeenth century.
 [Soc. Eng., 4: 115-122, 439-445; Prothero, *Pioneers and progress of
 English farming, London, 1888.]

 4. Development of agriculture in the eighteenth century. [Soc. Eng.,
 5: 99-110, 301-305, 452-459; Prothero.]

 5. Condition of English roads and of carriage by land. [Cunningham,
 Growth, vol. 2, sect. 232, and references there; Smiles, Lives of the
 engineers, vol. 1.]

 6. Canals, and their benefits. [Soc. Eng., vol. 5, pp. 322-326;
 Cunningham and references.]

 7. Write an essay on the “domestic” system of manufactures, and
 the contrast it presents with earlier and later systems. [Hobson,
 Capitalism, chap. 2, sect. 11; Cunningham, Growth, vol. 2, sect. 227
 and following.]

 8. The influence on English industrial development of immigration from
 the Continent. [Cunningham, Growth, vol. 2, sects. 172, 199, 229, etc.]

 9. Compare with sect. 244 sects. 283 ff., in the chapter on France, to
 realize the advantages of the English at this period.

 10. Write a report on English manufactures in one of the following
 periods, from the descriptions in Social England.

 (_a_) Seventeenth century [vol. 4, 122-130, 445-454, 581-588.]

 (_b_) Eighteenth century, before the great inventions [vol. 5,
 110-117, 305-322.]

 11. Write a report on the history of one of the great industries
 (cotton, woolen, iron), choosing one of the following aspects of
 it: methods of manufacture, introduction of machinery, change in
 organization (domestic and factory system, etc.), importance in
 commerce. [Besides references like Cunningham and Social England
 the student will find the encyclopedia and Ure’s Dictionary of
 manufactures helpful, and probably easier to use.]

 12. The great inventions. [Social England, 5: 459-474, 591-604.]

 13. Write a biographical sketch of one of the following men:
 Richard Arkwright, Edmund Cartwright, Samuel Crompton, James Watt.
 [Encyclopedia; Dictionary of national biography; or one of the popular
 books on the history of invention.]


BIBLIOGRAPHY

 On the industrial revolution see, besides Toynbee, Charles Beard,
 *The industrial revolution, London, 1901, with bibliography of
 larger works; Usher, *Indust. hist. of Eng., chap. 12-14, treats the
 technical changes in considerable detail, and gives further references
 with brief descriptive notes.

 The best study of the earlier system of manufacture is George Unwin,
 Industrial organization in the sixteenth and seventeenth centuries,
 Oxford, 1904; but Hobson’s *Evolution of modern capitalism, new
 edition, 1916, is better suited to the needs of the elementary student.

 On transportation there are good brief and general surveys by Edwin A.
 Pratt, *History of inland transport and communication, London, 1912,
 and by Adam W. Kirkaldy and A. D. Evans, History and economics of
 transport, London, 2d ed., 1920. The most complete account is provided
 by W. T. Jackman, *Development of transportation in modern England, 2
 vol., continuous paging, Cambridge Univ. Press, 1916.




CHAPTER XXIII

ENGLAND: IMPORTS; SHIPPING; POLICY


=250. (4) Analysis of English imports in the modern period.=—After this
survey of one side of English trade we have to consider the other,
the imports which England purchased with her surplus wares. In round
millions of pounds the imports at the end of the eighteenth century
were as follows, in the order of their values: sugar 7.1, tea 3.1,
grain 2.7, Irish linen 2.6, cotton 2.3, coffee 2.2, wood 1.5, butter
1.0, tobacco 1.0, hemp 1.0. These wares amounted to more than half of
a total import of 42.6. If the list were extended to less important
wares a number of manufactured goods would be found on it, but these
evidently could in general be produced to better advantage in England
than anywhere else. England had already made herself the “workshop of
the world,” and drew from other countries mainly raw materials and
foods which could not be produced at home. Some of the colonial imports
were shipped again, as will be shown later, but a large proportion of
them was consumed at home by a population which was not only growing
in size, but was enabled by means of commerce to gratify its taste for
products comparatively new (sugar, tea, coffee, tobacco).

=251. (5) Sources of the imports.=—At the period when these figures
were compiled war had interrupted the trade of England with France and
the Netherlands, but an active commerce still continued with other
parts of the Continent. The imports from European countries were
largely minor manufactures, which do not appear in the list above,
but raw materials also were furnished by the less advanced European
states. Wool came from Spain; hemp, flax, and tallow from Russia; wood,
iron, and copper from Scandinavia.

For some of the most important imports we must look to countries
outside of Europe. The trade with Asia supplied all of the tea, and
part at least of the other commodities (coffee, cotton, sugar) which
we now associate with America, as well as a considerable amount of
Indian manufactures, especially textiles. This trade still rested in
the control of the East India Company, which had grown to be a great
political power in Asia, with a government and army of its own. At home
it had had a checkered career. As the result of bitter attacks in the
seventeenth century it widened its membership, but it still maintained
the monopoly of trade with Asia till 1793, when it conceded to private
merchants a certain share in the trade with India.

=252. Peculiar character of the English colonies.=—It is to the
continent of America that we must turn for the field outside of Europe
that in its performances and in its promises offered most to English
commerce. After the early period of exploration, treasure-hunting, and
piracy, English colonization in America developed in a form entirely
its own. Emigrants went out, not to seek gold mines or to establish
trading stations, but to found homes. Emigration was not so much a
government policy as a popular movement, that attracted some of the
best stock of English blood. There were great differences between
the people of the different colonies on the Atlantic coast, as every
student of American history knows, and there was again a difference
between the colonies in the South and those on the islands. But in
general it may be said that no European country could vie with England
in the commercial quality of its colonial population. Certainly none
could rival England in the quantity of colonists of European stock.
The first census of the United States in 1790 showed a population
(nearly four million), merely in this group of former English colonies,
amounting to nearly half that in England and Wales.

=253. Resources and industries of the colonies in America.=—Though the
personal qualities of the English were duplicated on the other side
of the Atlantic, the physical environment was absolutely different.
Products of the field, the forest, and the sea, which were eagerly
desired and hard to get in England, were to be had in abundance in the
New World. The conditions for manufacture, on the other hand, were
unfavorable; capital and labor found such an attractive field in the
extractive industries (the production of raw material), that there
was little temptation for the colonies to engage in the finishing of
goods. In the plantation colonies of the South and the islands almost
nothing was manufactured. Even in the center and North, where the
difficulties of life and the talents of the people made manufacture
more practicable, most industries were of a household character,
rough clothing and implements being made in the spare hours at home;
or were ordinary village trades,—milling, tanning, etc. All the fine
manufactures were bought from England with raw or semi-raw products.

=254. Specialties of different colonies.=—The island colonies (Jamaica,
Barbadoes, etc.) sent plantation products. The sugar-cane supplied
sugar and molasses and, by a simple process of manufacture, rum.
American cotton until Whitney’s invention of the cotton-gin in 1793
came almost entirely from the islands, and indigo and various drugs
were secured from the same source. The colonies on the mainland
supplied a greater variety of products, by reason of their climatic
differences. Nearly all of them contributed to the supply of skins and
furs; and lumber and naval stores (pitch, tar, turpentine) were secured
from the forests all the way from New England to Georgia. Different
sections, however, had their specialties; the Carolinas sent rice,
Virginia tobacco, New England codfish and whale-oil.

=255. Commerce with Africa.=—There was a marked peculiarity in the
commerce with Africa. The exports to this country always exceeded
the direct imports by a considerable sum. An English writer of the
eighteenth century tells about the manufactures which were sent out,
and continues: “we have, in return, gold, teeth (_i.e._, ivory), wax,
and negroes; the last whereof is a very beneficial traffic to the
kingdom, as it occasionally gives so prodigious an employment to our
people both by sea and land.” His meaning is this: the slave trade was
so “beneficial” because the slaves which were purchased with beads and
rum were not brought to England but shipped to the American colonies
where they were put to work. The English figured, therefore, that they
got not only the price of the slaves in American products, but also had
the business of carrying them to America, and could hope for a future
return from their labor in the field. It is estimated that 20,000
slaves a year were sent out during the eighteenth century, and the
chief port of the trade, Liverpool, employed 190 ships as slavers in
1771.

=256. (6) Shipping and the carrying trade.=—At the beginning of the
period which we are studying (1500-1600) the English, as we have seen,
where emancipating themselves from their former dependence on foreign
ships. In the course of the period they learned to carry not only their
own goods but those of other nations as well, and took from the Dutch
the leadership in the carrying trade of the world. The reader will
note, if he refers to the figures showing the trade of England about
1800, that the imports amounted to about 42 million pounds, while the
exports of British merchandise were but 29 millions. England would
seem to have been gaining a great amount of goods for nothing, or to
have been going in debt for them. The difference is to be explained in
part by the earnings of English freight, which other countries paid in
wares, but in the larger part by the export of goods which were brought
to England from other countries merely to be transshipped and exported
again. At the close of the century foreign merchandise to the value of
over 11 millions was exported, the wares being mainly those of colonial
origin (coffee, sugar, Indian textiles, tobacco, tea, indigo, etc.).

=257. Struggle of English seamen and government with the Dutch.=—Two
separate sets of forces were at work to raise the English merchant
marine, those of individuals and those of the government. The English
in the seventeenth century could not navigate as cheaply as the Dutch,
since they required larger crews for the same work, but they seem in
the eighteenth century to have been abreast or ahead of the general
development of navigation; and unusual facilities for ship-building
were offered to them in their American colonies. The government, on
the other hand, was eager to foster every effort to extend English
shipping, not only because of its economic advantage, but because
of the addition to the naval resources of the kingdom in war with
other powers. Until after 1650 the English merchant marine, in spite
of individuals and government, was greatly inferior to the Dutch.
Statements which are doubtless exaggerated give us still some measure
of the difference; the Dutch were said to own four fifths of all the
ships engaged in oceanic commerce, or as many as eleven kingdoms of
Christendom; ten Dutch ships traded to Barbadoes for one English. The
latter half of the seventeenth century is filled with a bitter struggle
for supremacy between the English and the Dutch, waged with all the
weapons both of peace and war.

=258. The Navigation Acts; victory of English over Dutch
shipping.=—“The first nail in the coffin of Dutch greatness,” says
an English historian, was the Navigation Act passed under Cromwell
in 1651. This was but one of a series of measures extending before
and afterward, designed to further the English carrying trade at the
expense of rivals. Briefly, goods from a European country could be
brought to England only in English ships or in ships of the country,
so that, for instance, the Dutch could not carry Baltic wares to
England; while the products of other continents could be imported or
exported only in English ships; and some wares that were enumerated
(sugar, tobacco, etc.) must be brought to England before they could
be exported to any other European country. To maintain this policy
the English engaged in a long contest with smugglers in America, and
fought several great naval wars with the Dutch. The result was, as we
have seen, a victory for English commerce over the Dutch, though it is
hard to say how much credit should be given the government policy, and
how much was due to the energy of the individuals who were building up
English business at this period.

The effect of the new oceanic trade was to build up the ports in the
West; Liverpool came into prominence in the eighteenth century, and
Bristol also grew. The distribution of trade among the ports did not,
however, change greatly. An estimate of the eighteenth century gave to
London still two thirds of the total, while the remaining third was
divided in equal parts among the ports of the east, the south, and the
west coasts.

=259. (7) Government policy. Commerce and war.=—Just as in shipping, so
in other commercial interests, the efforts of individuals to make money
for themselves were restrained or furthered by government regulations
aiming to advance the English people as a whole. Every matter of
commerce was at the same time a matter of politics. Mention was made in
an introductory chapter of the part played by England in the great wars
of the period. It will be remembered that English policy in general
was characterized by a shrewd recognition of the commercial advantages
to be gained in war, either by territorial acquisitions or by trading
privileges, and every war in which England engaged ended, as a rule,
with a treaty that gave her some new colonial market or some advantages
in trade with a European country. England fought France consistently,
not because of old traditions of enmity, but because France was a
commercial rival, refusing English manufactures and attempting to
market her own in England, and because France had possessions in
America and India that England desired. England allied herself with
Portugal, on the other hand, because the trade of the two countries was
complementary rather than competitive.

=260. Customs policy.=—The customs policy of the period was governed
by mercantilist ideas, described in an earlier chapter. The government
drew a considerable portion of its revenue from the customs duties,
but nevertheless subordinated the collection of revenue to other
considerations in framing the tariff, and regarded it chiefly as a
means of building up national power in contest with other states. To
further this end the importation of manufactured wares was in many
cases taxed or prohibited, that foreigners might not draw money for
work which Englishmen were thought competent to do. Raw materials, like
wool, which could be used as the basis of English industries, were kept
in the country by duties or prohibitions on export; while the export of
other wares, which put foreigners in debt to England, was encouraged.
Other measures, now inconceivable, were designed to stimulate certain
industries; an Englishman could be buried only in a woolen shroud; a
Scotchman only in Scotch linen; buttons and button-holes were regulated
by legislation; English ships must carry English sails.

=261. Burden of the tariff.=—In a sense it is wrong to speak of
any “system” of customs policy at this time, for the tariff, by
constant changes, had become extraordinarily confused, and included
many inconsistencies. “The collection and administration of such a
complicated system was most wasteful; while the taxes, when taken
together, were so high as to interfere seriously with the consumption
of the article and to offer a great temptation to the smuggler.” The
most rigorous measures failed to stop the smuggling which brought into
England a large proportion of the goods on which duties or prohibitions
were imposed. Reforms attempted by different statesmen alleviated
to some extent the burden of the tariff on merchants, but left it
still so heavy and cumbrous that with the advances of the nineteenth
century it was felt to be intolerable. In this period almost no one
thought of free trade. The tariff undoubtedly stimulated the growth of
certain industries (silk, for example), but it is noteworthy that the
cotton industry, which was destined to become the most important of
any in England, grew up not only without any favor but under actual
discouragements.

=262. Colonial policy.=—An English historian who has been quoted
several times before said that England “conquered and peopled half the
world in a fit of absence of mind,” implying that the movement was one
of natural expansion rather than of conscious policy. This seems true
when we contrast English colonization with that of other powers. Still,
the government held from the first the idea that the colonies were a
part of the home country, and should contribute in special ways to its
advancement, and these ideas grew stronger and took more definite form
as the colonies grew in size. The government permitted the movement
of men and capital to America under the condition that the resources
of the colonies should be made to supplement, not compete with, the
resources of the mother country. We have to note here the regulations
in which the government ideas were embodied.

=263. Restrictions on colonial enterprise, regarded as justifiable at
the time.=—By the application of the Navigation Acts the colonists
were required to employ English ships for their commerce, and to send
certain enumerated wares of their production to England before they
could be disposed of to another country; and by other acts they were
restricted in the manufacture or exchange of certain articles (woolens,
hats, bar-iron, and steel) for which English manufacturers desired
to reserve the market. Aside from these restrictions the colonists
were left free to produce and to trade as they pleased. They paid the
usual duties, as a rule, on wares entering the English ports, but were
allowed a drawback when the wares were exported again.

Comparing these restrictions with, for instance, those of Spain, we are
struck with their liberality; still more so when it is added that the
government gave some special favors to the colonists in the form of
bounties, and colonial ships were put on an equal footing with those
built at home, so that New England was a great gainer by the stimulus
to ship-building and sailing. England was the natural market for
most of the colonial wares, and the colonists, as we have seen, had
few temptations to go into manufacturing. None of these restrictions,
therefore, bore with great weight on the colonists, and an attempt to
interfere in their trade with the French West Indies (by the Molasses
Act of 1733) was evaded. The English colonial system was accepted as
natural and reasonable by the colonists in general until shortly before
the Revolution.


QUESTIONS AND TOPICS

 1. Make a graphic chart of imports and compare with present
 conditions, as suggested above under exports.

 2. Insert the wares named in 251 and the following sections in the
 chart of imports according to continents, sect. 237.

 3. History of the East India Company in the eighteenth century.
 [Cunningham, Growth; B. Willson, Ledger and sword, London, 1903, vol.
 2.]

 4. Compare the colonial market of England with that of Spain (see
 chap. 20) and that of France (see chap. 25).

 5. Write a report on the economic and commercial characteristics of
 one of the thirteen colonies, in the period preceding the Revolution.
 [See the chapters describing the condition of the separate colonies in
 1765, in Lodge, English colonies, N. Y., Harper, 1881, $3.]

 6. English imports of naval stores, and schemes to stimulate exports
 from America. [Lord, Industrial exper., part 2.]

 7. Write a report on the commercial history of one of the island
 colonies, (_a_) Jamaica, or (_b_) Barbadoes. [See encyclopedia,
 and references there; R. Montgomery Martin, History of the British
 colonies, London, 1834, vol. 2, chap. 2, Jamaica; chap. 7, Barbadoes,
 chap. 16, West Indian commerce; Amos K. Fiske, West Indies, N. Y.,
 Putnam, 1899, $1.50, chaps. 18-19, Jamaica; chap. 37, Barbadoes.]

 8. History of the African trading companies. [Cunningham, Growth, vol.
 2, sect. 194.]

 9. History of the slave trade. [Cunningham, index, and references in
 his notes; Weeden, index; Encyc. Brit.]

 10. The plantations, the Royal African Company and the slave trade,
 1672-1680. [E. D. Collins, in Rep. of Amer. Hist. Assoc., 1900,
 Washington, 1901, vol. 1, pp. 139-192.]

 11. History of the merchant navy; development of ship-building and
 navigation. [See the articles on the Navy, by W. Laird Clowes, Soc.
 Eng., vols. 3, 4, 5. The student should endeavor to extract from
 these articles, which are rather fragmentary, only those facts which
 bear on the merchant marine, and should guard against confusing this
 with the war navy.]

 12. Write an essay on the colonial and commercial aspects of
 Cromwell’s foreign policy. [Reference may be made to the following,
 among the biographies of Cromwell: F. Harrison, Lond. 1888, chap. 13:
 Firth, N. Y. 1900, chap. 19; John Morley, N. Y. 1900, book 5, chap. 8;
 Roosevelt, N. Y. 1900, p. 225 ff. See also Frank Strong, The causes
 of Cromwell’s West Indian expedition, Amer. Hist. Review, Jan., 1899,
 4: 228-245; George L. Beer, Cromwell’s economic policy, Polit. Sci.
 Quarterly, 1901, 16: 582-611; 1902, 17: 46-70.]

 13. Of what country would ships have to be, according to the
 Navigation Acts, to carry: wool from Spain; gold from Africa; spices
 from India; furs from America?

 14. The policy of the Navigation Acts and their effects. [Cunningham,
 Growth, vol. 2, sects. 204, 222.]

 15. Rise of the port of Liverpool. [Encyc., and references there.]

 16. Report on one of the three commercial treaties, of 1703, of 1713,
 and of 1786, as illustrating the policy of the period. [Hewins,
 English trade, chap. 5.]

 17. Abuses of the customs duties, and the reform by the younger Pitt.
 [Lecky, Hist., chap. 16, Cabinet ed., 5: 295 ff.]

 18. The commercial legislation of England and the American colonies,
 1660-1760. [See the article with that title by W. J. Ashley, Quarterly
 Journal of Economics, 1899-1900, 14: 1-29; republished in his Surveys,
 London., 1900.]

 19. American smuggling, 1660-1760: to what extent was it practised;
 does it prove the English policy to have been oppressive? [Ashley,
 Surveys, 336-360.]


BIBLIOGRAPHY

 See chapter xxi.




CHAPTER XXIV

FRANCE: SURVEY OF COMMERCIAL DEVELOPMENT


=264. Natural advantages of France in the modern period.=—In preceding
sections we have considered countries which for a time took the leading
place in commerce among the states of Europe. We have now to study the
development of the other states, to understand the share they took in
commerce, and to note so far as possible the causes which kept them
below the leaders.

Taking first France, we find a country which throughout the period
enjoyed the reputation of being the richest state of Europe. Not only
in area and population did it greatly exceed its traditional rival,
England; it had also advantages of soil and climate which caused
it to be regarded as favored beyond all others. Fronting both the
Mediterranean and Atlantic, with easy access to the North Sea and
Baltic, it had a better position for the sea commerce of the period
than any other country, while internal transportation was facilitated
by a remarkable system of navigable rivers, that brought the interior
of the country into easy communication with the coast. Nor can we
say that the French people of this period were inferior to those of
other countries in their economic capacity. Before the beginning of
the period and at intervals during its course they give evidence of
productive ability which would have led to very different results under
conditions such as more favored people, like the English, enjoyed. This
holds true even of manufacturing, a branch of production in which the
French have commonly been considered inferior by natural bent to the
English.

=265. The chief reason why France did not rise to leadership.=—In
spite of size, resources, and population, France did not rise above the
second place mainly through the fault of the French _organization_, the
arrangements that the French nation had for working together. We may
compare the French state to a modern industrial corporation, which has
a large capital invested in a valuable plant, and has good business
openings; but in which the business is wrecked by quarrels among the
stockholders, and by such a poor organization that president and
directors can disregard the interests of the stockholders, can conduct
affairs for their selfish profit, and can waste the company’s resources
in enterprises that do not pay. The point will be made more clear if,
as an introduction to the history of commerce in France, we sketch the
general history of the country from the later Middle Ages to the French
Revolution of 1789.

=266. Progress checked by the Hundred Years’ War with England, and
by religious conflicts.=—In the fourteenth century it seemed as
though France were going to lead Europe in the development of a new
period. Agriculture and manufactures were flourishing; internal trade
was active; and French ship-owners, growing accustomed to longer
voyages, ventured far down the west coast of Africa and established
trading stations even on the coast of Guinea. The country was plunged
again into a condition of medieval chaos by the Hundred Years’ War
(1336-1453), a war that hurt France vastly more than England because
it was fought entirely on French soil. French and English armies, and
“free companies” of organized bandits ravaged the country; the weight
of taxes grew; trade dwindled, cities declined, and artisans emigrated.

The country had hardly recovered from this war (which ended in 1453),
when it was again disturbed, this time by a series of civil wars
between Protestants and Catholics, attended by the same unfortunate
economic effects. The religious conflict was finally closed by a
settlement which was even more disastrous; the French Protestants, to
the number of nearly half a million and making up the most valuable
industrial element in the population, were expelled from France as the
Jews and Moriscoes had been expelled from Spain. The loss to France
can be measured by the gain of other countries; the establishment and
development of important manufactures can be traced in each of three
countries, England, Prussia, and the Netherlands, to the influx of the
Huguenot refugees.

=267. Effect of the absolute monarchy on French development.=—France
secured finally freedom from foreign invasion and from internal
dissension, but at a terrible cost. The whole power of the state was
vested in the hands of the king. The stockholders lost all power to
direct the concerns of the company. Rarely this power was exercised by
a king both wise and strong, like Henry IV. During the long reign of
Louis XIV it was wielded by a king who was strong but who was not wise;
who wasted the rich resources of his country in fruitless wars, while
he neglected the opportunities for reforms at home and for commercial
expansion abroad. Too often the rule was held only in name by the
king, but in fact by the royal favorites, worthless adventurers who by
pleasing the taste of the sovereign gained the power to direct as they
chose the policy of this great country. This evil is especially marked
in the eighteenth century, when England was prepared to take advantage
of every mistake of France, in building up her world power.

=268. Failure to reform conditions inherited from the feudal
period.=—The absolute monarchy played a vital part in the history of
French commerce, not only by its disregard of commercial interests
abroad, but by its lack of business sense in home affairs. As the
details will appear in the following pages it is necessary here to call
attention only to some general points. The kings did not complete the
unification of the country by breaking down the feudal toll barriers,
of which some remained until the Revolution. They encouraged the
separation of classes, just as they allowed the separation of sections;
the French were split into groups, mutually jealous and hostile,
which lacked the feeling of common interest, and were unable to
cooperate. The most serious distinction between classes was in regard
to taxation. Nobles and clergy were granted privileges, often of a kind
that hindered production, while they paid very little to the public
treasury. The productive classes, on the other hand, the business
men and laborers, bore nearly the whole burden. The weight of this
burden was tremendous, for the machinery of government had become more
and more complicated and more and more inefficient with the passage
of time, so that the government had to demand a great deal from the
taxpayers to accomplish very little in the public service. An idea of
the condition in the eighteenth century can be gathered from the fact
that the peasant is estimated to have paid from one half to four fifths
of his gross income to a government which gave him almost nothing in
return.

=269. Bloom of French commerce in the fifteenth century as shown in the
business of Jacques Cœur.=—Returning now from this political survey to
the history of commerce proper, we find before the year 1500 one name
standing out prominently in the history of French commerce, that of
Jacques Cœur, a merchant of Bourges. A contemporary says of him: “His
ships carried to the East the cloths and merchandise of the kingdom. On
their return they carried back from Egypt and the Levant different silk
stuffs, and all kinds of spices. On their arrival in France some of
these ships ascended the Rhone, while others went to supply Catalonia
and the neighboring provinces, competing in this way with the Genoese
and the Catalonians in a branch of trade that up to that time they
alone had exploited.” At the height of his fortunes, about 1450, he
had a silk factory in Florence, did business with England and thought
of establishing an office in Flanders also. The work of Cœur survived
him, and French commerce developed rapidly in the intervals of peace
following. Great interest was felt in France in the explorations of the
sixteenth century, and though the French were behind the Spanish and
Portuguese in the work, they led the English and Dutch, and the names
of Verrazano (an Italian in the French service) and Cartier testify to
their energy.

=270. The bulk of French commerce still with nearby countries.=—France
was still unprepared, however, to engage extensively in oceanic
commerce. The chief part of its trade in the sixteenth century was
with its immediate neighbors; it found the best market for its exports
in Spain, and it sought a large part of its imports in Italy. French
military expeditions to Italy about 1500 had far more effect at the
time than the discovery of the New World or of the sea route to India;
the Italians stimulated and gratified new tastes and introduced new
methods in business. The best days of the Levant trade had passed away,
but the number of French ships engaged in it increased rapidly, until
the outbreak of the religious wars at home. France shared with Venice
the profits of its trade, and was the first of the European states to
secure from the Sultan at Constantinople a “capitulation” in the modern
form, defining the condition on which foreigners could trade.

=271. Decline during the period of the religious wars.=—The
promising development was checked by the religious wars of the later
sixteenth century; France must endure a period of anarchy at home
and powerlessness abroad. French commerce declined at its source, as
production languished; and was attacked abroad by competitors and by
the pirates who infested the coasts. About 1600 the French merchant
marine had almost disappeared from the Atlantic; voyages to foreign
lands had ceased, and even the coasting trade had passed into the
hands of the English, Flemish, and Dutch. Marseilles still maintained
relations with the Levant, but the French merchants there were being
mercilessly bled by Turkish governors, and were being rapidly driven
out of the market by the English and Dutch. France seemed actually
saved from ruin by the few years of peace and good government given by
Henry IV and his minister Sully.

=272. Recovery after 1600.=—The first three quarters of the seventeenth
century, until the disastrous foreign wars of Louis XIV, were on the
whole a period of peace and progress. Under Henry IV taxes were low,
the means of internal communication by land and water were restored
and improved, and new industries were introduced. The revival of trade
was shown in the prosperity of fairs. The great foreign minister,
Richelieu, was interested mainly in questions of politics, and hampered
the development of French resources by heavy taxes, but in some ways
he continued the work of Henry IV. The English of this period called
themselves “Kings of the Sea” and termed Richelieu a “fresh-water
admiral”; French ships, afraid to refuse the English a salute and
unwilling to accord it, sailed under the Dutch flag. Richelieu said, in
the government newspaper, “France, bounded by two seas, can maintain
herself only by sea power,” and began the construction of a navy which
would give confidence to the merchant marine.

=273. Founding of commercial companies, and colonial expansion.=—The
revival of French commerce was evidenced by the incorporation of
companies designed to trade with distant parts of the world, and by
the encouragement and growth of colonization. The list of commercial
companies founded, 1599-1642, including reorganizations, amounted to
twenty-two, including in its scope Canada, the West Indies, Guinea,
the west coast of Africa, Madagascar, East India, and the Malay
Archipelago (Java, etc.). The government accorded great privileges to
the companies, and the royal influence was exerted in every way to
help them; men were forced even by intimidation to invest in them,
and nobles were allowed to participate without lowering the dignity
of their order. The colonies were likewise pushed by the force of the
government; emigration was encouraged and discharged soldiers and
poor girls were sent out by the government to further the growth of
population. The number of Europeans in Canada was perhaps 2,500 in
1660, and increased to 10,000 in the next twenty years; a considerable
number of French settled also in various islands of the West Indies.
France stood next to Spain as a colonial power, measuring merely by
the area to which she could lay claim.

=274. Reasons for the failure of these enterprises.=—Most of these
commercial and colonial enterprises were failures. They showed the
characteristic faults of the time: inefficiency of organization, a
failure to appreciate the difficulties of their task, and impatience
in their attempts to solve the problems. They had special elements of
weakness, moreover, in their rather artificial character, and in the
fact that they carried with them abroad the class distinctions and
prejudices of the home country. Still, the seventeenth century was for
all nations a time of experiment in distant commerce and colonization;
a large proportion of failures was natural, and the French had attained
a sufficient measure of success before 1700 to have enabled them to
enter the international competition of the eighteenth century with
good prospects. Their prospects were blighted, and France lost its
opportunity to become a “world-power” by the fault of the French
political constitution, which put the interests of the people at the
mercy of one man, the king.

=275. Mistaken policy of Louis XIV.=—The “Great Monarch,” Louis
XIV, did not lack good advisers. The philosopher Leibnitz proposed,
at this critical period in French history when the country could
choose to be either a land or a sea power, that it should select the
latter alternative, and base its greatness on control of the sea and
of commerce. He said that France needed peace at home to permit an
expansion of its power abroad, where the richest prizes of power were
to be had; and he urged the occupation of Egypt, to give France the
control of trade to the Levant and the far East. But Louis thought that
the French frontier was too near to Paris and saw tempting morsels of
territory on the other side of it; he found the arrogance of the Dutch
galling to his pride; he wanted to raze the Pyrenees by putting a
French prince on the Spanish throne. He engaged, therefore, in a series
of continental wars continuing nearly fifty years, which returned
little or no gain in Europe, and destroyed the power of France in the
other continents. Louis’ policy prompted his biographer to a comment
of sad significance, “The inhabitants of the several nations of Europe
have scarce ever any interest in the wars of their sovereigns.”

This sovereign found France vigorous and offering brilliant promises of
development; he left her weighted with taxes and debt. A distinguished
Frenchman said toward the close of this reign that a tenth of the
people were reduced to beggary, and of the remainder over one half were
in no condition to give alms, they were so near to beggary themselves.

=276. Decline of the French colonial empire in the eighteenth
century.=—The colonial possessions which France surrendered to England
at the close of the wars (the Hudson’s Bay Territory, Nova Scotia,
and Newfoundland) seem comparatively unimportant, but their loss was
significant. The two countries had chosen different paths. England
continued to build up a colonial empire; France continued to spend her
resources in continental wars, at the cost of her commerce and her
colonies. The Seven Years’ War, ending in 1763, marks practically the
end of the conflict. France surrendered all her possessions on the
North American continent, and some of those in the West Indies and
Africa; and abandoned forever the hope, at one time most promising, of
building up an empire in India. So little were the colonies appreciated
in France that some good Frenchmen rejoiced at their loss, and only
wished that more of “those wretched possessions” might have been
transferred, to ruin the enemy!

=277. Growth, notwithstanding, in the commerce of France.=—The reader
must not infer from preceding paragraphs that French commerce was
stationary or declining in the eighteenth century. Colonial expansion
was often a long-time investment, from which a country could hope to
recover the full return only after the lapse of generations, sometimes
after the colony had established its freedom. The full effect of
the French policy is apparent only in the nineteenth century, and
elements which we have not yet considered must be taken into account
to explain why France has been passed by other countries in the race
for industrial supremacy. In the eighteenth century, in spite of a
misguided foreign policy, in spite of burdensome taxes, and in spite of
a vicious organization of internal trade and manufactures which will
be described later, France profited by her size and resources to build
up a great foreign trade. Some features of this trade will be apparent
from the following table, to which the same remarks apply that have
already been made on the subject of statistics. The figures show in
millions of livres (and a rough equivalent) the trade of France with
the various continents in 1716, when the country was just recovering
from war and commerce was unduly depressed, and 1787, when a short
period of unusually active trade preceded the French Revolution.

[Illustration: FRENCH COLONIAL EMPIRE

From the 17th to the early 19th Centuries]


COMMERCE OF FRANCE BY CONTINENTS

  ============+========================+======================
              |         1716           |         1787
  ------------+------------------------+----------------------
  Europe      |  liv.  176.6  $ 35.    |  liv.  804.3  $ 161
  America     |         25.8     5.    |        269.9     54
  Asia        |          9.2     2.    |         52.1     10
  Africa      |          1.1     0.2   |          6.5      1
              |        ------  -----   |       -------  ----
    Total     |         214.9   43.    |       1153.5    230
  ============+========================+======================

=278. Analysis of French commerce in the eighteenth century.=—Without
attempting to draw too much from figures which are known to be
inaccurate, we can base on this table some few important conclusions.
The commerce of France grew at a rate not far from that of England’s
in the eighteenth century. The commerce of France, however, continued
in much greater degree to be European; the chief trade of the country
was with its neighbors, Italy and Germany, and, after them, with
England and the Baltic. To these countries France sent manufactures
amounting to less than one third of the total exports (122 million),
the remainder being made up of articles of food and drink and various
other raw materials. The failure of France to manufacture goods which
would hold their own in the world market must be regarded as her vital
weakness. We see it especially well illustrated in the trade with the
United States. During the later years of the Revolution (1781-1783)
France sent to the United States exports amounting to over eleven
million livres a year. A few years afterward (1787-1789), when the
restoration of peace should have stimulated the trade, it had dropped
to less than two millions. The French had sent poor wares, and could
not hold the trade when the English were free to compete again.

=279. Value of the French sugar colonies.=—It was the fortune of the
French to keep of their colonies in America just those which were
capable of the most rapid economic development. They were West India
islands in which sugar was produced by slave labor. Comparatively few
Frenchmen had settled in the islands, and in the long run they were to
prove of little advantage to the home country, but in the eighteenth
century they were veritable gold mines. The leading position in sugar
production, which had first been taken by the Portuguese in Brazil,
passed early from them to the English, and was taken before 1750 by the
French, who soon controlled the European market. A part, also, of the
imports from Africa comprised sugar from islands in the Indian ocean,
while the African slave trade was exploited for the benefit of American
planters.


QUESTIONS AND TOPICS

 1. Striking characteristics and chief weaknesses of the political
 system of France. [Seebohm, Prot. rev., 40-46, 210-212; Cheyney, Eur.
 background, 115-121; Taine, Ancient régime.]

 2. Effect of the Hundred Years’ War (_a_) on the people, (_b_) on the
 power of the king. [Adams, Growth, chap. 9.]

 3. Effect upon France of the religious wars, and the emigration of the
 Huguenots. [Adams, 180 ff., 227 ff.]

 4. Write a report on the career of Jacques Cœur. [Encyc. Brit.]

 5. Write a report on one of the French explorers. [Manuals of U. S.
 history and references; Thwaites, France in Amer., chap. 1: Parkman,
 Pioneers of France.]

 6. Write a brief report on the history of the commerce of Marseilles.
 [Encyc.]

 7. Reforms under Henry of Navarre. [Adams, Growth, p. 183 ff.; P. F.
 Willert, Henry of Navarre, N. Y., Putnam, 1893, $1.50, chap. 8.]

 8. Reforms by Richelieu, 1624-1642. [J. B. Perkins, Richelieu, N. Y.,
 Putnam, 1900, $1.50, chaps. 6, 9.]

 9. Economic organization and commerce of the French in America.
 [Bateson in Camb. mod. hist., vol. 7, chap. 3; Thwaites, France, chap.
 8; Parkman, Old régime, part 2.]

 10. Make a written summary of the wars of Louis XIV, showing gains and
 losses of territory, in Europe and in the rest of the world. [Adam
 Growth, p. 216 ff.]

 11. Opportunity lost by Louis XIV to build up an empire by sea power.
 [Mahan, Sea power, chap. 2, and pp. 141 ff., 198 ff., 219 ff.]

 12. Prepare a written summary of the results of the French wars of the
 eighteenth century. [Adams, Growth, chap. 14.]

 13. Prepare a graphic chart from the table of figures, sect. 277, as
 suggested above in the case of England, and study the conclusions to
 be drawn from figures and chart.

 14. Combine the charts for England and for France, and draw
 conclusions from the comparison. Endeavor, if possible, by extending
 your reading, to settle the questions which this comparison will
 suggest. Note, however, that the figures refer to different dates,
 that they are a far less accurate index of the facts than you would
 suppose, and, finally, that the reduction to modern currency is very
 rough.

 15. Write a report on the history and commerce of one of the following
 West India islands under French rule: (_a_) San Domingo, (_b_)
 Guadeloupe, (_c_) Martinique. [Encyclopedia; Homans’ Cyc. of commerce;
 C. B. Norman, Colonial France, or Bryan Edwards’ History, if that book
 is available.]


BIBLIOGRAPHY

 Of the general works on French history, Adams, **Growth of the French
 nation, is excellent.

 Of the works on particular periods all the books of James Breck
 Perkins can be highly recommended for the attention paid to economic
 conditions; I refer above only to the small book on Richelieu. See
 the A. L. A. Catalogue for titles of others. Paul Lacroix, The
 XVIIIth century, London, no date, is a popular illustrated work,
 with a chapter on commerce, of no great importance. Books discussing
 the conditions leading to the French Revolution are valuable for
 the light they throw on the organization of France in the period of
 modern history. Books by Taine, E. J. Lowell, and R. H. Dabney will be
 useful in this connection; and vol. 4, no. 5, of the Univ. of Penn.
 Translations (Typical Cahiers of 1789) is a convenient selection from
 sources.

 A bibliography of French colonial history in America will be found
 in the Guide of Channing and Hart, in the Cambridge mod. hist.,
 vol. 7, pp. 766-771, or in R. G. Thwaites, France in America, N. Y.
 Harper, 1905. The last named book is not so serviceable for purposes
 in view here as others in the same series; and the student will turn
 by preference to Cambridge mod. hist., vol. 7, chap. 3, where the
 subject of the French in America (1608-1744) is treated by Miss Mary
 Bateson, with due regard to economic interests. Of Parkman’s works see
 especially The old régime, Boston, Little, 1902, $2. Norman, Colonial
 France, London, 1886, covers briefly the history of all the French
 colonies; the French West Indies are included in A. K. Fiske. S. L.
 Mims, Colbert’s West India policy, New Haven, 1912, is a scholarly
 study of a particular topic.




CHAPTER XXV

FRANCE: POLICY


=280. History of the French customs tariff.=—After this survey of the
development of French commerce we can gain an appreciation of the
opportunities for still greater growth that were lost, by considering
the obstacles with which the merchant had to contend.

First of all, as a matter of course, there was the customs tariff on
the frontier. This went through the normal course of development in
the period under consideration. The government attempted to reduce to
some sort of system the scattered duties of the earlier period; and
under the influence of mercantilist doctrines it ceased to use the
duties chiefly for raising revenue. The idea of using the tariff to
protect home industries, which was at first held vaguely and applied
only occasionally, gained strength with time and was made by Colbert,
a minister of Louis XIV, the chief point in the tariff system. In
1664, and again three years later, the duties were raised to protect
home manufactures; duties were raised twofold and more, and when
wares were found still entering the kingdom they were in some cases
absolutely prohibited. The high tariff led to reprisals on the part of
other countries, and strained political relations with them; it was
one of the causes of open war with the Dutch. It remained throughout
the period a serious obstacle to commerce with advanced industrial
countries like England and Netherland; the breaches made in it by
commercial treaties were comparatively unimportant; and smuggling
formed in France as in England the real safety-valve of the commercial
system.

=281. Persistence of customs frontiers inside France.=—Far more
serious than the frontier tariff were the customs duties _inside_ of
France. The French kings had made their country by the political union
of feudal fragments, and had never used their great power to abolish
the evidences of former separation and to unify their territory for the
purposes of commerce. We must distinguish three different sections of
the country. The North, roughly speaking, was an area in which internal
trade was free, _i.e._, in which the provinces were not separated
by customs barriers. The South, on the other hand, was composed of
provinces “reputed foreign” which had kept their tariffs, so that trade
here was not free, and wares passing between this and other parts of
France had to pay duty. Still a third section was the East, “provinces
foreign in fact”; these provinces did not form part of France at all,
commercially speaking, for they were outside the national customs
frontier, enjoying free trade with other countries and paying duties
when they sent wares to other parts of France. If the reader will
recall the economic evils that resulted in the Middle Ages from the
separation of districts he will readily appreciate how much France lost
by carrying over a medieval system to modern times. It was impossible
for a district to make the most of its resources by specializing in
production. A producer did not have France for a market; a consumer did
not have France for his source of supply; each was bound by provincial
restrictions.

=282. Persistence of local toll barriers.=—Still the picture is not
complete. There were not only provincial tariffs inside of France but
also local customs inside the provinces. Let us consider the case of a
merchant of Paris who desired to export a package of cloth to England
in the sixteenth century. He had to pay not only the national export
duty, but also at _fifteen_ places on the way down the Seine he had
to pay local customs; at Rouen he must pay provincial customs; and we
must add to his list of expenses freight, pilotage, etc. Wine carried
from Bercy (near the Swiss frontier) to Paris, in the next century, had
to pay sixteen different dues on the way to market. In the sixteenth
century there were over a hundred tolls or customs on the Loire; in the
next century there were still twenty-eight on the stretch from Orleans
to Nantes; and some persisted till the French Revolution. Conditions
improved in the course of time, as the above figures suggest, but
improvement was obstructed by the opposition of local interests and
retarded by the delay of the law; and the Revolution was needed to wipe
away these remnants of the Middle Ages with many others.

=283. Manufactures; the gild system maintained in spite of its bad
effects.=—Before we leave the commercial history of France in this
period we must consider still another subject, the organization of
manufacturing, to understand why the country did not make better use of
its resources, and why it entered the nineteenth century handicapped
in competition with a country like England. Three general topics will
be considered: (1) the gild system; (2) the national regulation of
manufactures; (3) the royal or privileged manufactures.

(1) The gilds which in England during this period gave place to a more
modern and more efficient system persisted in France and even extended
their influence. When the government was in want of money it found the
gilds more convenient subjects of taxation than scattered artisans;
for fiscal reasons, therefore, and not for any economic advantages,
it encouraged and even compelled artisans to unite in gilds on the
old model. The result was a rigid separation of allied trades and a
complication of processes which would seem incredibly stupid to a
modern merchant or to the head of a modern factory.

=284. Separation of trades.=—At Amiens there were nine distinct
corporations, each with its specific regulations, engaged in the
manufacture of woolens alone. Every gild watched jealously to see
that another gild did not infringe on its petty field, and there was
an interminable bickering among them over the question of monopoly.
The quarrel of the goose-roasters and the poulterers lasted half a
century, and went against the poulterers, who were restricted to the
sale of uncooked game; but the roasters emerged from the conflict only
to meet another foe, the cooks, who were flushed with a recent triumph
over the gild of “vinegarers-mustarders” (who made sauces); and after
another half-century the cooks succeeded in limiting the right of the
roasters to sell cooked meat. This is an example of the conflicts which
all the time absorbed the energy and the resources of people who were
engaged in kindred lines of retail trade and manufactures; cobblers and
shoemakers; old-clothes men and tailors; watchmakers and clock-makers;
bakers and restaurant-keepers; and so on through a list that seems
interminable. Some tradesmen had a specially long list of enemies.
The mercers, for instance, who dealt in certain lines of dry-goods,
in the course of a century had sixteen decisions of the supreme court
(Parlement) in their conflict with the glovers; and fought also the
“bonneters-cappers,” and nearly all the other tradesmen whose wares
they sold. The question, who had the right to make and sell buttons,
rose nearly to the dignity of a question of state; search was made
in private houses for illegal buttons, and private individuals were
arrested in the street for wearing them.

=285. Influence of the gilds in preventing technical progress.=—Space
is lacking for a description of all the evils that the gild system
entailed on French industry in this period, and the reader is referred
to the general discussion of the gilds in a previous chapter, with the
assurance that all the evils there enumerated were well represented
in France. We cannot leave the topic, however, without notice of the
obstacles which the gilds put in the way of inventions and technical
improvements. A coppersmith who devised a new helmet was set upon by
the armorers; a hatter, who improved his wares by mixing silk with the
wool, was attacked by all the other hatters; the inventor of sheet
lead was opposed by the plumbers; a man who had made a success in
print-cloths was forced to return to antiquated methods by the dyers.
The gildsmen opposed not only new wares and methods, but also the use
of machinery and production on a large scale. A Lyons silk-weaver
could keep only four looms; a Lille serge-maker secured the right
to have twenty looms, that he might carry on experiments looking to
improvement of the manufacture, only by special privilege and against
the vigorous protest of the city government. In spite of all opposition
there was improvement, but the difficulties were so great that nine
reformers must have failed where one succeeded. The history of the
French gilds of this period is a history of wasted opportunities.

=286. Narrow restrictions imposed on manufactures by the
government.=—(2) Industries were tied down not only by the narrow
regulations of the gilds but also by laws of the central government.
Every government believed in this period that it was unwise to let
manufacturers follow their own ideas in all respects, to stand or fall
according to their success in pleasing the public. Even England had
an extensive system, prescribing the standards for the products of
certain manufactures. The English system, however, did comparatively
little harm, if it accomplished little good, while there can be no
question that a similar system in France was carried so far that
it was a serious check to industrial development. This excessive
growth of government regulation was most marked under Colbert, the
minister of Louis XIV, to whom reference has already been made as a
leader in the extension of the protective tariffs; and the system
continued throughout the period. Taking the cloth manufacture for an
illustration, Colbert fixed by law, for each kind of cloth, the length
and breadth, the dimensions of the selvage, the number of threads
in the warp, the quality of the raw materials, and the method of
manufacture. His instructions for dyeing contained 317 articles, to
which dyers must conform. To fix responsibility and force compliance
all cloth had to bear the special marks of the weaver, dyer, and
finisher, the seal of the gild, and sometimes another mark. These
regulations grew constantly more complicated; an official said in 1787
that the regulations on manufactures filled eight volumes in quarto.

=287. Burden of these restrictions on manufactures.=—There can be no
question, either of the honesty of Colbert’s intentions or of the
energy he showed in carrying them out. He sent out agents everywhere
to study industries and to talk with the manufacturers, that he
might legislate to the best advantage. One man, however, cannot know
a hundred businesses better than the men who are carrying them on.
Colbert and his successors were ignorant of many points, were deceived
in many others. The result was a mass of regulations of which many
were utterly bad, injuring both producer and consumer. The regulation
prescribing a minimum breadth for cloth would have killed an industry
in one part of France that wove strips for flags, an industry in
another part that could sell cloth cheaper by weaving so narrow a
breadth that one man could tend the loom. These industries, after a
tedious and expensive delay, secured exemption from the law; others,
less fortunate, were destroyed. A manufacturer ran always the risk of
having his wares confiscated, not because they were bad and people
did not want them, but because they failed to conform in some point
to hide-bound regulations. An official inspector, shortly before the
French Revolution, said that in every week of years past he had seen
80 or 100 pieces of cloth, good except from the government standpoint,
cut in pieces or burned because they were irregular. Even the French
revolted at some of the regulations, and half of the laws were evaded
with the connivance of officials.

=288. Special privileges granted to certain manufactures; resulting
abuses.=—(3) While the government restricted in this fashion the
natural development of manufactures, it granted not only exemption
from its own rules but liberal grants of money taken from taxpayers to
stimulate favored industries. This practice, begun in the sixteenth
century, grew under and after Colbert. It enabled certain industries
to expand as they would otherwise have been unable to do, and to reach
the higher grade of organization which was coming as a natural growth
in England. Unfortunately, however, the privileges went not to the
most deserving but to the loudest and most adroit claimants. To gain
the privileges, which included everything from exemption from taxes and
handsome subsidies down to titles of nobility, the manufacturer did not
need to show that he had some technical improvement to introduce; it
was sufficient if he promised to bring in a foreign industry or even
to extend one already in existence at home. The royal factories abused
their power to raise prices to the consumers and to lower the wages of
the laborer. Some of them came to be regarded as public calamities.
They showed in general the characteristics of the hothouse plant,
which cannot thrive unaided, and most of them failed after a longer or
shorter career. We can say of them as of many other manifestations of
the French policy of the period; some good may have resulted in ways
unknown to us, but the evils are apparent, and justify us in calling
the policy bad.


QUESTIONS AND TOPICS

 1. The protective policy, as applied by Colbert. [Palgrave’s Dict.; A.
 J. Sargent, Economic policy of Colbert, N. Y., 1899, chap. 4.]

 2. Measure on a map the length of one or more of the stretches on
 which tolls were levied, sect. 282; estimate the average distance
 separating toll barriers; apply to a map of your own vicinity.

 3. If you are familiar with the organization of some modern
 manufacture write an essay showing how efficiency would be impaired by
 insisting on the separation of allied trades. [The advanced student
 will find helpful and suggestive on this and similar topics, Bücher,
 Indust. ev., chaps. 6, 7, 8.]

 4. Write a report on any instances known to you of bad results
 following the strict division of occupations among trade unions.

 5. Write a report on any instances known to you of opposition to
 technical improvements, the introduction of machinery, etc., by modern
 trade unions.

 6. Attempt of Colbert to establish regulations for manufacturers:
 object, methods, variety of regulations, results. [Sargent, Colbert,
 chap. 3.]

 7. With what object and to what extent do governments now seek to
 regulate manufactures? [Farrer, State in relation to trade, London &
 N. Y., Macmillan, $1.]

 8. Compare with the French the English experience with privileged
 manufactures. [Hewins, Eng. trade, chap. 1; Encyc. Brit., article
 Monopoly.]

 9. Origin and early history of the modern system of patents for
 inventions. [Same references; Encyc., article Patents.]


BIBLIOGRAPHY

 See preceding chapter.




CHAPTER XXVI

THE GERMAN STATES


=289. Political survey of Germany about 1500.=—After considering a
country in which the central government was, so to speak, too strong
for the interests of commercial development, it will be instructive to
take up countries in which it was certainly too weak, Germany and Italy.

Germany presented a striking contrast in its political and in its
economic development at the beginning of the period, about 1500.
In political organization, the central government had almost no
power; it was the mere shadow of a reality. The real power rested in
hundreds of petty states, of which some were but a few square miles in
extent. There was no authority which could keep in order these little
states and the different classes of people which composed them. The
history of Germany in this period is a sad story of conflicts between
classes,—peasants, burghers, knights, and princes; conflicts between
Catholics and Protestants; conflicts between the states themselves.
In these struggles the best energies of the Germans were absorbed;
they were marking time or even going backward while the more fortunate
peoples of Europe were advancing. The Germans learned at last to
despair of realizing their dream of a national government. Not all
parts of the country, however, were equally unfortunate; some came
under the rule of princes who managed to build up a strong power at
home and abroad. Two of these local states are of especial importance,
for between them they have divided the fragments of the old Germany,
and made great states in modern Europe. One of them, Prussia, is the
nucleus of what we now call Germany. The other, Austria, which included
the Germans of the South, added to them fragments of territory peopled
by other races, and made the state of Austria-Hungary.

[Illustration:

  GERMANY
  IN THE
  18th CENTURY

_Boundary of the Empire_

 The objects of the map are: (1) to show the possessions of the
 Hohenzollerns (Prussian) and Hapsburgs (Austrian); (2) to show the
 small fragments of which remaining Germany was composed. To preserve
 clearness, many of the smaller fragments are not indicated. Note that
 the Empire included some states not German (Flanders), and did not
 include all German states (East Prussia, Silesia).
]

=290. Development of the economic organization.=—There was a contrast,
it was said, between the political and the economic development.
The very lack of a central power had enabled some of the sections
and classes to advance rapidly by freeing them from control. In the
fifteenth century the agricultural classes, who had been serfs in the
Middle Ages and who were to be reduced again to serfdom later by the
political oppression to which constant wars gave rise, were free and
prosperous. The cities were more rich and populous than those of any
other country north of Italy. Not only had manufacturing and mining
made rapid progress, but banking and commerce too. The Fuggers and the
Welsers of southern Germany were great promoters and financiers, with
interests extending over all Europe, from which they drew enormous
wealth. German merchants showed the most enterprise and energy of
any north of the Alps; they distributed among other countries of the
Continent the Levant wares which they secured from Venice, and they
controlled the commerce of the West of Europe with the North and
East. We shall begin our sketch of the decline of German commerce by
returning now to the history of the Hanseatic League, which we left in
full control of this last branch of trade.

=291. Condition of the Baltic trade.=—The Baltic trade suffered in the
period about 1500 from influences over which merchants had no control.
The Protestant Reformation caused a decline in the demand for some
of its staple wares: wax, which had been largely used for candles in
church services, and fish, of which the consumption had been greatly
furthered by the Catholic periods of fasting. The most valuable fish,
moreover, the herring, ceased to enter the Baltic Sea, and by limiting
their feeding ground to the North Sea enabled the Dutch to become
leaders in the fishing industry. Imitation of Italian fashions in
dress, with which the French became acquainted about 1500, caused less
demand for furs. All these changes hurt the Baltic trade, but they
were far from destroying it. This trade grew, in fact, throughout the
period; it could afford to dispense with the luxuries of commerce for
it controlled the necessaries, grain and meat, lumber and naval stores.
The reasons for the decline of the Hanseatic League are to be sought
not in the character of the trade but in the character of the League
itself.

=292. Decline of the Hanseatic League.=—The League lacked organization.
The many towns of which it was composed were so separated by physical
distance and by divergence of interests that they could not cooperate
efficiently. They were strong enough to crush other towns which sought
to enter their field, but they were unequal to the contest with
national states; and the political consolidation of the countries of
northern and western Europe raised up enemies with whom they could not
compete. In nearly twenty years (1476-1494) only one common meeting of
delegates was held. Dissensions broke out inside the towns, and they
began to quarrel among themselves. Lübeck, in the center, put forth
claims opposed to the interests of towns on the edge of the League, on
the lower Rhine and in Prussia. Rising commercial towns in the western
part of the Netherlands, like Rotterdam and Amsterdam, grew up outside
the League and in opposition to it. The turning-point in the decline
may be put at 1535, when Denmark and Sweden were strong enough to break
the Hansa’s monopoly by opening the passage into the Baltic to the
ships of all peoples. Soon other states were carrying the war into the
enemy’s country. Sweden threw the larger part of the Russian trade to
the Dutch. The English built up a prosperous trade in the Baltic Sea
and on the Arctic Ocean at Archangel. They flooded the German market
with English cloths, and when the Hansa resisted, Elizabeth expelled
the members of the League from England. In 1601 an Englishman could say
of the Hansa towns: “Most of their teeth have fallen out, the rest sit
but loosely in their head.” Of the great League soon only three towns
remained as Hanseatic members, Lübeck, Bremen, and Hamburg.

=293. Decline of the commerce of south Germany.=—While the cities of
north Germany were losing their hold on a growing commerce, the cities
of the South found a large share of their trade taken from them by the
discovery of the ocean route to India. The German cities (Nuremberg,
Augsburg, Ulm, etc.) fought with desperation to maintain their
commerce, and proof exists that they carried on an active commerce with
Italy after they ceased to obtain there the Oriental wares, and had to
content themselves with Italian products. Even this trade, however,
fell to a large extent into the hands of the Italians, who flooded
southern Germany and drove native Germans out of business.

The Germans were not entirely unprepared for the changes following the
discoveries, for they had long gone in considerable numbers to the
Spanish peninsula, by land through southern France or from a French or
Italian harbor to Barcelona. Many Germans had settled in Portugal, and
for a time the great merchants of south Germany shared in the Indian
trade at its source, in Lisbon. The great German financiers shared also
for a brief period in the commerce of the New World. The Ellingers and
Welsers leased the copper mines of San Domingo; the Crombergers had
silver mines at Sultepeque; the Tetzels exploited the copper mines of
Cuba. The Welsers founded Venezuela by a military expedition which they
financed, and held the country for a few years.

=294. The chief cause of decline of German commerce in this period was
political.=—The most obvious explanation of the failure of Germany
to take a place with the other states in the commercial expansion
following the discoveries is the disadvantage of her position. It has
been said that the diversion of commerce to the oceanic routes exposed
the countries of central Europe (Italy, Germany, etc.) to a condition
of commercial glaciation, such as Norway would experience physically if
it lost the warm current of the Gulf Stream. The difference in distance
of a few hundred miles in voyages of thousands does not explain the
matter. No physical differences suffice to explain why Amsterdam rose
and why Hamburg fell so rapidly. The weakness of Germany was not
physical. Nor was it economic; German merchants of this period had
more free capital, more business ability and greater energy than the
merchants of any other country. Germany’s weakness was political. The
payments which merchants and other Germans made in the form of taxes
and loans to political authority did not form a single fund which could
be used for furthering German interests at home and abroad. The money
went to a great number of rival governments, and was consumed in their
particular quarrels, not helping but actually hurting German business
interests.

=295. The natural outlets of commerce stopped by hostile states.=—The
political weakness of Germany enabled other states, now rising
to power, to crumble off fragments of the country, in which they
established a commercial policy hostile to German interests. Before
long the mouth of every one of the large rivers which were the natural
commercial outlets of the country had passed under foreign control. The
Rhine was Dutch; the Weser Swedish; the Elbe Danish; the Oder Swedish;
the Vistula Polish. Tolls hampered the passage of wares as effectually
as though Germany were surrounded by a physical barrier on the sea
side; and German ships almost disappeared from the ocean.

German commerce suffered especially by the rise of the Dutch to an
independent position. So long as Antwerp was the great market of the
Continent Germans traded freely with it, and through it to Lisbon.
The substitution of Amsterdam for Antwerp was a most serious blow to
German interests. The Dutch had very different ideas from those of the
Flemish; they wanted to do all the trade themselves and to force other
people to a position of commercial dependence on them. They made the
lower Rhine practically useless for their rivals, raising the tolls
sixfold and more, and thereby coming into a control of the trade as far
as Frankfort on the Main.

=296. The damage done by internal dissensions and by the Thirty Years’
War.=—Germany was not only cut off from the outside world by tariff
barriers, but cut up inside by the tolls of cities and territories.
Every city on a trade route wanted to make itself a “staple,” _i.e._,
have all goods passing the vicinity brought there for taxation and for
sale. Frankfort on the Oder, for instance, demanded that all boats
passing down the river Warthe should come _up_ to Frankfort before they
could continue their journey down the Oder to Stettin. The cities of
Stettin, Frankfort, and Breslau, all situated on the Oder, instead
of using that river for peaceable exchange, made bitter commercial
war on each other with tolls and prohibitions. Conditions grew still
worse after the Thirty Years’ War (1618-1648), a terrible conflict
which, without exaggeration, cost Germany one hundred, perhaps two
hundred, years of development. The physical means of transportation
declined. On the Elbe, for instance, the dikes ceased to be repaired,
the tow-path disappeared, the banks crumbled; and sand bars and snags
became so common that navigation was difficult and costly. Tolls not
merely doubled; they increased fivefold and more. Space is lacking for
a description of all the evils; they were practically a reproduction of
the conditions which happier states had left behind them five hundred
years before.

=297. Restriction of manufactures by the gilds.=—German manufactures
followed about the same course as that of the French which we have
traced above. The gilds merited the term given them by an economist of
the seventeenth century who said they were the “curse of Germany”; they
seem to have been in some respects even more narrow than the French
gilds. The same old evils reappear, but the reader must be asked to
take these for granted and to direct his attention to some new aspects
of the gild organization. Specially noteworthy are the obstacles put in
the way of any man who desired to become a full member of a gild. Many
gilds succeeded in making the exercise of the trade a family monopoly
by the regulation that no man could become a master who did not marry
the daughter or the widow of a master. One gild expelled a man because
he had married a wife whose grandmother was alleged to have come from
a shepherd’s family; other gilds expelled members because they had
ridden an executioner’s horse or drunk with an executioner. A man had
at best to pay very high fees to become a master, and this artificial
restriction on the number of full members not only kept the ordinary
workmen in a wretched position, but also raised the price of goods to
the consumer.

The monopoly of the gilds became more oppressive all the time. Most
of their money, except the considerable part they spent in carousing,
they used in lawsuits and in quarrels with rivals. For miles around
a German town the gilds permitted no competitors, and they made it a
regular part of their business to hunt down and exterminate independent
producers.

=298. The eighteenth century marked by general depression, with some
signs of improvement.=—In Germany, in general, there was little
improvement in conditions in the eighteenth century. The country was
still intersected with tariff barriers. The Rhine was cut into four
sharply defined parts, and the Elbe, by reason of tolls, had lost its
trade in some wares of the first importance: steel, iron, copper,
olive oil, wine, fish, etc. To the conflicts between cities there was
still no end. The cities of southern Germany, weighted with taxes
and surrounded by closed markets, declined still more in commercial
importance. There were, however, some hopeful signs of progress.
Two cities of the interior, Frankfort on the Main and Leipzig, were
building up a business which rested not only on trade in wares but on
dealings in bills of exchange, currency, commercial loans, etc. Beside
the rise of these banking centers special importance attaches to the
revival of commerce on the coast of the North Sea. Hamburg and Bremen
seized the opportunity offered by the American Revolution and the
European wars to which it gave rise to extend their trade as neutral
carriers, and had soon passed their old rivals, the Dutch.

=299. The rise of Prussia important mainly from the political
standpoint.=—Taking German commerce as a whole, we leave it in 1800
still depressed and sluggish. The picture would be incomplete, however,
if nothing more were said. In one part of Germany there had been
great activity for centuries; in the North and East, namely, where
the ancestors of the present Emperor William II were building up the
state of Prussia. This activity, however, was mainly political, and
the history of it does not belong here; we can refer to it only as
a most remarkable example of state-making, in which commercial and
industrial interests were made subordinate to the establishment of a
strong government over a united people. The Hohenzollern rulers did not
succeed in making a rich state out of a group of scattered territories
of which some were, in natural resources, among the poorest in Germany.
They did make a strong state, which won for itself a place among the
great powers, and later took the lead in unifying Germany.

There was a moment in the history of the Hohenzollerns when it seemed
possible that they might anticipate the idea of William II: “Our
future lies upon the water.” If the Great Elector (1640-1688) had
secured the Pomeranian coast of the Baltic or kept even Stettin, he
might have realized the plans he held to turn Prussia into a sea
power, with fleet, colonies, and transmarine commerce. Fortune fixed
the interests of the state on land, however, and when a good Baltic
harbor was secured later it was too late to change. Frederick the Great
was urged, a century afterward, to direct his policy to the sea, and
actually founded some companies for trade with the East, but the time
had passed, or had not yet come, for the success of Prussia in oceanic
trade.

=300. Reforms in Prussia favoring economic development.=—In regard to
their internal conditions, however, the territories of the Prussian
state enjoyed a great advantage over others in Germany. The obstacles
to trade in the form of tolls and staples were removed when political
interests did not require their maintenance. The tariff systems,
enormously complicated and cumbrous, were revised. The growth of
manufactures was furthered by attracting skilled artisans from other
countries; and the city of Berlin received a great stimulus from the
Huguenots who found a refuge there. Some of the worst abuses of the
gilds were reformed, and manufactures were protected, as in France, by
customs duties and by royal privileges. New methods were applied in
agriculture, and new land was opened to settlement and cultivation; a
large number of the laborers, however, still remained unfree. It would
be easy to add many details, but in closing this section on Germany the
reader is again advised that the important side of Prussian history in
this period was political, not economic. Prussia was preparing herself
for the work of unifying Germany, and to accomplish that work a strong
government was needed rather than a rich people. The riches have come
to Germany in our own time.

=301. Contrast of Prussia and Austria.=—Prussia was a state which
started in the heart of Germany (near Berlin), and remained almost
entirely German as it spread. Austria, on the other hand, was
originally a territory on the southern border of the German people, the
rulers of which managed by skill and luck to extend their power over
fragments of adjoining peoples of a different stock, over Bohemians
and other Slavs (relatives of the Russians), and over the Magyars or
Hungarians (relatives of the Turks). These other peoples were behind
the Germans in their industrial development; they had come into Europe
later, had been less subject to civilizing influences and more exposed
to internal quarrels and wars. Furthermore, the Austrian Germans were
behind the other Germans, on whom they were industrially dependent in
the sixteenth century. Germans from the North took their manufactures
into Austria for sale, carried on the trade of Austria and controlled
the mines of Austria.

=302. Political factors hindering development of the lands subject to
Austria.=—The territories subject to the ruling family of Austria, the
Hapsburgs, began the period, therefore, in a backward condition, and
they had no opportunity throughout the period to catch up. Internal
trade was hindered not only by the national diversity of German, Slav,
and Magyar, but also by the persistence of provincial tariffs, which
underwent no important reform until nearly 1800, and which were not
abolished even then. Austria did not suffer so much as Germany from
civil war, but like Germany went through the crisis of the religious
wars, which nearly ruined Bohemia; and had a plague of its own in
resisting the advance of the Turks from the Balkan Peninsula. Austria
suffered like France, moreover, from an absolute government which too
often used the national resources in the interests of the royal family
and not in the interests of the people as a whole.

=303. Slow progress of industry and commerce.=—It is, therefore, not
surprising that in 1700 Austria stood commercially in about the same
position it had occupied two centuries before. The country exported the
raw products of industry, wool, flax, linen, hides, copper, etc., and
received them again after they had been manufactured by other peoples.
An economist of the time said that the total manufactures of Austria
were not equal to those of a single Dutch city like Leyden. Even this
small amount of manufacture was controlled by gilds, and suffered from
the characteristic faults of the gild system.

In the eighteenth century, however, the government began to appreciate
the importance of national commercial development. It fought the claims
to monopoly put forward by the gilds, and encouraged manufacturers to
extend their business, by premiums and privileges, as in France and
Prussia. Austrian iron and steel wares made a place for themselves in
commerce; the cloth industry of Bohemia, once ruined by war, revived
again under the factory system; stockings, glass, porcelain, etc., were
produced in increasing quantities.

=304. Attempts of the government to stimulate development.=—The
government stimulated the development of manufacture by its customs
tariffs as well as by its internal policy. The duties on articles
which the government thought could be made at home were raised
rapidly, especially after 1700, and became in many cases prohibitory.
Undoubtedly the growth of manufactures was furthered by this policy,
though many industries betrayed the weakness of their origin by failing
after a short period of apparent prosperity. The tariff gave rise,
however, to much smuggling and corruption, and injured greatly some
parts of the country: the Tyrol, which lies between Italy and Germany
and had prospered on the transit trade; and sections like Hungary
which produced only raw materials.

To atone in some measure for these necessary results of a protective
system, the government attempted also to extend aid to foreign
commerce. Triest and Fiume were made free-ports, _i.e._, they were put
on the outside of the tariff frontier to attract trade. Venice was
forced to renounce her claim to the exclusive right to navigate the
Adriatic, and commercial treaties were made with Turkey, Russia, and
states in northern Africa. Consuls were sent out to represent Austrian
interests in foreign countries, and attempts were made to secure a
share even in the trade with India.

=305. Austrian commerce still backward in 1800.=—Still Austrian trade
attained no great development. The government which gave with one
hand took with the other. Special privileges did not make up for the
general weakness of the productive organization. Rulers complained
that in spite of all their efforts commerce languished. Most of the
foreign trade was absorbed by five companies, which divided the field.
Two of them were limited locally, trading with Turkey and with Asia
Minor respectively; while the other three traded in special wares with
various countries. One imported colonial wares like sugar; another
exported linens; while the third exported various raw materials to
Italy, France, and Spain. During the wars beginning in 1776 Austrian
merchants attempted to build up a trade with North America, and an
agent of the government was installed at Philadelphia in 1783, but
during the following years of peace Austria had no chance of success in
competition with trade rivals.


QUESTIONS AND TOPICS

 1. Write a report on the political constitution of Germany at the end
 of the Middle Ages, and the resulting conditions. [Baring-Gould, Story
 of Germany, chaps. 46, 52; Seebohm, Prot. rev., 26-33; Janssen, Hist.,
 vol. 2, book 4, chap. 1; Freytag, Pictures, XVIIIth cent., vol. 1,
 chap. 4.]

 2. Development of business and business methods at the beginning of
 the period. [See above, chap. 18; Cunningham’s chapter on Economic
 change in Cambridge mod. hist., vol. 1; Janssen, Hist., vol. 2, book
 3, chap. 3; Freytag, Pictures, XVth cent., vol. 1, chap. 10.]

 3. Condition of manufacturing. [Janssen, Hist., vol. 2, book 3, chap.
 2.]

 4. Condition of agriculture. [Janssen, Hist., vol. 1, book 3, chap. 1.]

 5. Decline of the Baltic trade. [Zimmern, Hansa towns, period 3.]

 6. Decline of the Hansa in England. [Zimmern, 324-353]

 7. Write a brief report on the commercial history of (_a_) Nuremberg,
 (_b_) Augsburg. [Encyc.; Guide books of south Germany.]

 8. Class conflicts, political and economic troubles about 1500.
 [Seebohm, ** Prot. rev., 136-140; Janssen, Hist., vol. 4, book 7;
 Frank Goodrich, *A social reformer of the fifteenth century, Yale
 Review, Aug., 1896, 5: 168-181.]

 9. Do the Germans control the mouths of all the rivers mentioned in
 sect. 295 at the present time?

 10. Write a report on the effects of the Thirty Years’ War, from the
 economic and commercial standpoint. [S. R. Gardiner; Thirty Years’ War
 (Epoch Ser.), N. Y., 1874, 217-221; Anton Gindely, Hist. of the Thirty
 Years’ War, N. Y., 1884, vol. 2, chap. 11; Freytag, Pictures, XVth
 cent., vol. 2, chaps. 3, 5, 6.]

 11. Write a brief report on the commercial history of one of the
 following towns: Frankfort on the Main, Leipzig (or Leipsic), Hamburg,
 Bremen. [Encyc.; Homans, Cyc. of commerce, for the early nineteenth
 century.]

 12. Effect of the protective tariff in building up the Prussian silk
 industry. [Schmoller, Merc. syst., pp. 81-91.]

 13. Indicate on a sketch map of Austria-Hungary the spaces occupied
 by the following peoples: Germans, Bohemians, Ruthenians, Hungarians,
 Southern Slavs. [Atlas, Encyc.]

 14. The wars with the Turks: how long did they last; how far did the
 Turks penetrate Europe; what was the effect on industry? [S. Whitman,
 Austria, N. Y., Putnam, 1899, $1.50, chap. 16; E. A. Freeman, Ottoman
 power in Europe, London, 1877, chaps. 4, 5.]

 15. Reforms in Austria in the eighteenth century, and their effect.
 [L. Leger, Hist. of Austro-Hungary, N. Y., Putnam, 1889, 379 ff., 388
 ff.].

 16. Write a brief report on the commercial history of Vienna. [Encyc.]


BIBLIOGRAPHY

 Writings in German are voluminous; English books on the history of
 the period are concerned almost entirely with political affairs. The
 translation of Janssen’s *History, St. Louis, Herder, 1897 ff., can be
 recommended for the beginning of the period, and Freytag’s *Pictures
 of German life, London, 1862, contains some readable and useful
 descriptions.




CHAPTER XXVII

ITALY AND MINOR STATES


=306. Political condition of Italy in the modern period.=—In the
history of Germany we have seen the fate of a country that entered the
modern period lacking a political organization that would enable it to
hold its own in competition with rivals. The history of Italy in this
period presents the same conditions and the same results. At the end
of the Middle Ages there were five important states in the peninsula:
Milan, Venice, Florence, Rome, and Naples. None was strong enough to
unite the country; each was strong enough to prevent another from
reaching that end. The border territory of Savoy, whose rulers have
united the peninsula in recent times, resolving, in the words of one,
to “treat Italy as an artichoke, to be eaten leaf by leaf,” counted as
yet for little. The quarrels of the Italian states invited interference
by stronger neighbors, Spanish, French, and Austrian; and Italy became
the prey of adventurers and tyrants who lived as parasites on the
resources that should have nourished industry and commerce.

[Illustration: ITALY 1515]

=307. Position of Venice at the beginning of the period.=—Venice,
which had enjoyed the commercial primacy among the Italian states, saw
in the Portuguese discoveries a threat to her prosperity which only
the strongest measures could avert. There was no physical reason why
Venice should not adopt the sea route to India, and, if necessary,
fight with the Portuguese for the Indian trade at its source. All
her traditions, however, pointed the other way; all her investments
were tied up in the route through Egypt; and, most important, all her
resources were required in the Mediterranean. The island city had
been drawn into an expansion on the mainland which involved her in
continental intrigues and sapped her strength at sea, at the very time
when her sea power was of the greatest importance; the navy of the
Ottoman Turks was rapidly developing and the scourge of the Barbary
pirates (from the Mediterranean coast of Africa) had begun.

=308. Blows at Venetian trade both by sea and land routes to
India.=—For a moment Venice halted undecided between the two routes.
Venetian ambassadors were especially instructed to procure maps,
letters from voyagers, and all other information that would help
the home government determine its policy with respect to the recent
developments. Venice made repeated attempts to buy from Portugal the
right to dispose of all the spices brought to Lisbon, a proposition
that naturally was declined. Venice had to buy in small lots, on what
terms the Portuguese chose to set; more and more silver flowed from
Italy to Lisbon, and it became increasingly difficult to get spices
in Venice. Meanwhile the government was sending explorers eastward,
in the hope of opening one of the old routes to trade, and seriously
considered for a time the piercing of the Suez isthmus with a canal.
Venice found the Ottoman Turks favorable to trade through their
dominions, but had not the strength to maintain her old commercial
connections when Cairo was finally captured by the Turks in 1517.

=309. Relative decline of Venetian commerce.=—From this time the
energies of Venice were absorbed in an unequal conflict with the
Turks in the eastern Mediterranean. Venice had prepared herself in a
measure for the Turkish advance, by removing her chief staple from
Alexandria to the island of Cyprus, but this too was lost in 1571 after
a heroic defense. The battle of Lepanto and others following it were
empty victories; on the east coast of the Mediterranean Venice had to
surrender, and consent to trade on the terms which the Turks imposed.
Trade was still maintained. Aleppo became in the later period a market
in which the Venetians had great establishments, drawing thence the
wares that came by caravan from Bagdad, Persia, and India. Venice
herself became constantly more beautiful, and was in the seventeenth
century, as now, one of the show-places of Europe, where foreign
visitors flocked by thousands. Her manufactures of glass and silk and
many artistic luxuries remained unexcelled. It is, however, by quantity
and not quality that we measure the greatness of a state’s commerce;
Venetian trade scarcely entitled the city to a place even in the second
rank of commercial states, when it finally lost its independence in
1797.

=310. Decline of commerce and industry in Tuscany.=—The history of
decline in other parts of Italy must be dismissed more briefly.
Florence, which at the beginning of this period ranked next to Venice
in manufactures, trade, and banking, found the markets of northern
Europe closed by the Dutch revolution, by the religious wars and by the
tariff barriers of the protective policy. Bankruptcy became frequent in
the latter part of the sixteenth century. The woolen manufactures of
Florence, which, it is said, employed 30,000 men in 1338, employed 971
in 1767. Hampered not only by weakness abroad but also by restrictive
legislation at home, the Tuscan people declined to poverty and
indolence. Prosperity was to be found in only one spot, the city of
Leghorn, which had been made a free port; but this city prospered just
because it had been placed on the outside of Tuscany, and the riches
amassed there went largely into the hands of foreign residents.

=311. Decline in other parts of Italy.=—South of Tuscany conditions
grew still worse. The Roman territory had never been of commercial
importance, and the Neapolitan territory lost in this period what
prosperity it had once had. Under a Spanish government, which was
almost incredibly bad, the national resources were wasted abroad while
Turks ravaged the coast, kidnapping slaves, at home; and the producing
classes were crushed by heavy and unfair taxes.

North of Tuscany conditions were little better. The report of a
commercial agent who was sent by the Austrian state to investigate
upper Italy in 1754 shows commercial weakness everywhere. The country
was divided by tariff barriers into a great number of distinct
territories, of which scarcely any were large enough to give play for
the development of industries which they were endeavoring to protect.
The forces of industry and commerce were scattered and lost among
a great number of small towns, and trade was largely controlled by
foreigners, both Jewish and Christian.

=312. Conditions in the Scandinavian countries.=—It would be
unprofitable to attempt here to trace the course of commerce in all
the other states of Europe during this period, and this part of the
book will close with a brief description of commercial conditions in
the North and East. The districts included in Scandinavia are already
familiar to the reader as forming an important field for the Hanseatic
trade in the Middle Ages. The population was sparse, industry was
undeveloped, towns were few and small; the knowledge and capital
necessary for an active independent trade were lacking, and people were
content to stay at home and let foreign merchants come to them with
manufactures and take away their surplus products. The iron industry
of Sweden, favored by rich ores, extensive forests for fuel and
abundant water power, attained considerable importance; but the exports
continued in general to be raw materials, especially those used in food
and for ship building. Governments attempted to hurry the development
of their peoples by protective duties and by the founding of commercial
companies, with slight success. Gustavus Adolphus, a king of Sweden in
the seventeenth century, formed the bold project of making the Baltic
“a Swedish lake,” by control of the entrance and the coasts, but his
successors proved unable to maintain the position which he won. The
keys of the Baltic fell into the hands of Denmark, and that country
made a good profit by collecting tolls on the flow of a trade to which
it contributed little itself.

=313. Rise of Russia to a position among the European states about
1700.=—Russia was even more backward than the Scandinavian states. Like
them it had been dependent on the Hanseatic merchants for its commerce
with western Europe, and remained passive after their fall, accepting
what wares reached it overland or through the port of Archangel on
the Arctic coast, whither English and Dutch shippers ventured. Until
Peter the Great opened his “window on the West,” by the founding of
St. Petersburg on the Baltic about 1700, Russia was hardly a European
state. Peter attempted, with remarkable energy, to bring Russia to the
European standard in commerce and industry as well as in politics. He
reformed, though he did not abolish, the system which gave the Czar a
monopoly of trade in the most important wares; he revised the tolls
on trade; he sent young men abroad to study commerce, and tried in
other ways to elevate the merchant class. Peter did not succeed in
his attempt to free Russian commerce from its dependence on western
merchants, and his attempt to build up a merchant marine was a failure.
In the East, Russian commerce fared better. Occasional caravans had
gone before this from Siberia to China. The Czar now sent on his own
account caravans which consumed three years on the long trip from
Peking to Moscow; and individuals developed the trade which the crown
had stimulated.

=314. Character of Russian commerce in the eighteenth century.=—Russia
could be regarded in the eighteenth century as a European state. It
belonged, however, to the Europe of the Middle Ages rather than of the
modern period. Most of the population, including even the few who were
occupied with manufacturing, were serfs. The people as a whole were on
a low standard of living, and were densely ignorant. Commercial law
was undeveloped, and trading practices were those of a half civilized
community. The government interfered with exchange by arbitrary and
vexatious restrictions. The country could export, with rare exceptions,
only raw products. From China it imported tea, silk, gold, jewels,
etc., of which only a part was kept at home; while it was dependent
on western Europe for most of its colonial wares (sugar, coffee,
spices, and drugs), and for all the finer manufactures (textile, metal,
pottery, paper, etc.).


QUESTIONS AND TOPICS

 1. Condition of Italy about 1500. [Seebohm, Prot. rev., 21-26, with
 sketch-map.]

 2. Venice about 1500: commerce, government, policy on sea and land.
 [Horatio F. Brown, Venice, chaps. 16, 17; or Cambridge mod. hist.,
 vol. 1, chap. 8, by the same author.]

 3. Contest of Venice with the Turks. [Brown, Venice, chap. 19.]

 4. Decline of Venetian commerce. [A. H. Lybyer, The Ottoman Turks and
 the routes of Oriental trade, English Hist. Rev., Oct., 1915, 30:
 577-588.]

 5. Attempt of Gustavus Adolphus to make of Sweden a great power.
 [Encyc. Brit., Gustavus II.]

 6. Social and economic conditions in Russia about 1700. [W. R.
 Morfill, Story of Russia, N. Y., Putnam, 1900, $1.50, chap. 13; H. M.
 Thompson, Russian politics, N. Y., 1896, chap. 2.]

 7. History of Russia in the eighteenth century. [Manuals of European
 history; Thompson, chap. 3.]


BIBLIOGRAPHY

 Aside from fragmentary sections in the current manuals the reader
 of English will find little literature available on the history of
 commerce in the minor states. Such suggestions for collateral reading
 as are given above will probably satisfy the needs of students who are
 not sufficiently advanced to use foreign languages.


TOPICS FOR REVIEW

 After covering the history of commerce in different countries the
 student will find it profitable to review certain general topics,
 piecing together what he has learned of their local history and
 endeavoring to get a clear conception of the general development. The
 following are suggested for study in the modern period (1500-1800):
 (_a_) shipping; (_b_) transportation on roads and rivers; (_c_)
 production and exchange of foodstuffs; (_d_) production and exchange
 of textile materials (flax, wool, cotton, silk); (_e_) production and
 exchange of finished textiles (linen, woolen, cotton, silk); (_f_)
 production and exchange of iron; (_g_) development of the system of
 manufactures (gild, domestic and factory systems); (_h_) development
 of banking; (_i_) effect of wars on the commerce of different
 countries; (_j_) European colonial systems; (_k_) commercial policy;
 (_l_) trade of Europe with Asia; (_m_) trade of Europe with North and
 South America.




PART IV.—RECENT COMMERCE




CHAPTER XXVIII

COMMERCE AND COAL


=315. Statistical survey of development since 1800.=—In entering the
nineteenth century the student approaches the period in which commerce
has achieved the most notable progress. Great as former advances may
have seemed to the people in whose time they occurred, these sink
almost to insignificance when compared with the growth of commerce
since 1800. A recent estimate by a German author pictures the progress
of the export and import trade of the commercial countries of the
world as follows, in milliards of marks (roughly, units of 250 million
dollars): 1700, 0.5; 1750, 1.0; 1800, 6; 1850, 17; 1899, 76. Some of
the striking features of recent growth are shown in the following
table. It is necessary, however, to warn the student that these
figures, especially those for the earlier part of the century, can be
regarded only as approximations to the truth. It may not be out of
place, further, to advise the student to turn to the end of the chapter
for suggestions as to the best way of studying the figures.

=316. Great growth of foreign commerce.=—Assuming, for purposes of
discussion, a fair degree of accuracy in the figures, some conclusions
from them may be pointed out. The commerce of the world increased in
this century at the astonishing rate of 1,359 per cent. We have before
encountered instances of remarkable commercial expansion, in particular
countries, but we must bear in mind that the figures here are supposed
to include the whole world, the backward as well as the progressive
countries, the many millions in the interior of great continents
who scarcely trade at all, and the Chinese, perhaps in themselves a
quarter of the world’s population, who trade still to but a slight
extent. Clearly the growth of commerce in some countries must have been
enormous to raise the total figures to the point at which we find them.

  FOREIGN COMMERCE AND PRODUCTION OF THE COUNTRIES OF THE WORLD

  =========+=================+========+=============+===========
    Year   |   Aggregate     |  Per   |    Coal     | Pig Iron
           |   Commerce      | Capita |  Production |Production
           |   Thousand      |Commerce|   Million   | Million
           |Million Dollars  |Dollars |    Tons     |  Tons
  ---------+-----------------+--------+-------------+-----------
    1800   |     1.4         |   2.31 |    11.6     |  0.8
    1820   |     1.6         |   2.13 |    17.2     |  1.0
    1830   |     1.9         |   2.34 |    25.1     |  1.8
    1840   |     2.7         |   2.93 |    44.8     |  2.7
    1850   |     4.0         |   3.76 |    81.4     |  4.7
    1860   |     7.2         |   6.01 |   142.3     |  7.2
    1870   |    10.6         |   8.14 |   213.4     | 11.9
    1880   |    14.7         |  10.26 |   340       | 18.0
    1890   |    17.5         |  11.80 |   466       | 27.2
    1900   |    20.1         |  13.02 |   800       | 40.4
    1910   |    33.6         |  20.81 | 1,141       | 65.8
    1913   |    40.4         |  24.47 | 1,443       | 77.4
  =========+=================+========+=============+===========

=317. Increase in the relative importance of commerce.=—Not less
striking than this growth in absolute quantity, as measured in current
values, is the growth compared with the estimated increase of the
world’s population. The value _per capita_ (“by head”) of a country’s
commerce is secured by dividing the total amount of trade by the number
of inhabitants; it shows the average share of each person in commerce,
and furnishes, therefore, some index of the relative importance of
commerce in different times and places. Now, even if this value _per
capita_ had remained the same we should regard the absolute increase
in commerce as a very important fact. Commerce, however, has actually
increased much faster than population; the share of the average human
being in the world’s trade has grown over tenfold. Let the student
reflect on the difference it would make to him whether he had $2 or $20
for spending money in a given time, and consider the extra articles
he could buy with the larger sum; he will then be better able to
appreciate the broadening and deepening of the commercial current in
recent times.

=318. The world now passing through a commercial revolution.=—The
student is now in a position to understand the significance of the
statement of an English writer, that “the commerce of the world may
almost be said to be the creation of the past seventy-five years.”
We are living in the midst of a vast, though silent, revolution.
Reference to the figures will show that the process of change quickened
strikingly in the latter half of the century, and at its close we still
do not dare to say when the movement will slacken. The change which
we find so marked in commerce affects equally other sides of human
life. An American author, Adams, writing in 1871, could say with truth
that “the discoveries of Guttenberg and Columbus have produced more
startling and more clearly defined results upon the destinies of the
human race within the last twenty-five years than in any other equal
period of time during the four previous centuries.” Have the results
been less startling in the quarter-century that followed? Another
American economist, Wells, said about 1890, “When the historian of the
future writes the history of the nineteenth century he will doubtless
assign to the period embraced by the life of the generation terminating
in 1885 a place of importance, considered in its relations to the
interests of humanity, second to but very few, and perhaps to none,
of the many similar epochs in time in any of the centuries that have
preceded it.” Is the generation terminated in 1915 willing to admit
that it takes a less important place in history than its predecessor?

=319. Share of modern countries in the commerce of the world.=—It is
unnecessary, I hope, to say more to impress upon the student the fact
that a period of great change in the world’s history, which began half
a century ago, still continues; and that the coming generation will
be called upon to carry on this change, and guide it for the welfare
of humanity in the future. Leaving, therefore, general discussion and
speculation, and returning to the concrete and well-defined facts that
form the subject of our study, I insert in this place, as likely to be
of use for reference later and of interest now (though not deserving
painstaking study as yet), a table showing the share of different
countries in commerce about 1900.

  RECENT TRADE OF LEADING COMMERCIAL COUNTRIES
  (_Approximate annual averages in millions of dollars, special trade_)

  ====================+================+================+==============
                      |   1891-1900    |   1901-1910    |    1912
                      +-------+--------+-------+--------+--------------
                      |       |        |       |        |Percentage of
                      |Imports|Exports |Imports|Exports |total general
                      |       |        |       |        |trade of world
  --------------------+-------+--------+-------+--------+--------------
  United Kingdom      | 1725  |   1190 | 2525  |  1700  |    16.6
  Germany             | 1140  |    880 | 1800  |  1470  |    12.9
  United States       |  780  |   1050 | 1185  |  1655  |     9.9
  France              |  835  |    710 | 1065  |   995  |     9.0
  Holland[1]          |  660  |    550 | 1020  |   835  |     6.9
  Belgium[1]          |  362  |    309 |  578  |   453  |     4.2
  Austria-Hungary     |  302  |    337 |  464  |   459  |     3.3
  Russia[1]           |  276  |    339 |  386  |   503  |     3.5
  Spain[1]            |  177  |    172 |  201  |   185  |     1.1
  Italy               |  255  |    219 |  480  |   343  |     3.1
  ====================+=======+========+=======+========+==============


A similar statement, showing the relative rank about 1850, would
present only one very striking change; France held at that time the
place second to that of the British Empire, and Germany came after the
United States.

=320. Possible explanations of recent commercial development.=—One
topic of prime importance demands our attention as we enter on the
study in detail of the commerce whose growth has been sketched above.
What were the causes of this great commercial development? When we
know them we shall truly understand the commercial history of the past
century, and shall be prepared to face the problems of the present and
the future.

The topic will be discussed under the heads which have been employed
previously in similar discussions. The advances have been achieved
either by a gain in the power of man to control nature and natural
forces (technical progress); or by the more efficient cooperation
of men in business (industrial and commercial organization), or in
politics (political organization, domestic and foreign policy).

=321. Prime importance of technical factors, especially the use of
coal.=—Hard as it is to disentangle these different factors, all of
which have contributed much to the recent progress of the world, there
need still be no question which has been of the leading importance
during the nineteenth century. This century has been the great era of
material invention, of scientific discovery, and of the increase in
power of man over nature. Technical progress, therefore, is the first
subject to be studied.

Again, there need be no question as to which feature of technical
progress holds first place. Electrical appliances? Machinery? The
steam-engine? Applied chemistry? All those things, with the vast
benefits which they confer on humanity, rest now on practically one
basis: coal. Vegetable matter of past geological ages, that has become
fossilized, has undergone mysterious chemical changes and has shrunk
to one tenth of its former bulk, furnishes now, after hundreds or
thousands of centuries, the means by which we maintain and develop our
material civilization and our great commerce.

=322. Power in coal.=—Coal offers men what all men seek, power. There
is “spring” enough in it, when properly applied, to raise a million
times its own weight a foot high. A man who sends a horse and cart to
fetch a ton of coal, occupying four hours on the way, secures a power
in the coal theoretically 2,800 times that expended in bringing it; and
can probably get from it an amount of useful force exceeding by 100
times or more that of the horse employed in carting. A few decades ago
(1865), when the output of coal was far less than it is now, an English
economist calculated that forests of an area two and a half times as
large as that of the United Kingdom would be required to furnish even
a theoretical equivalent of the annual coal produce; practically, of
course, the use of wood for an equivalent is out of the question. It
was estimated, somewhat later (before 1880), that if the whole area of
England were good land, devoted solely to raising forage, it would
not support a horse-power equal to that obtained from the English coal
mines; and that an area perhaps ten times as large would be required
for the mere food supply of human beings of equivalent force.

=323. Dependence of modern industry on coal.=—It would be a great
mistake to consider coal necessary now only in its most common
application, that of generating steam for engines. The chemical
industry depends largely, though not entirely, on the heat obtained
from coal, to break down its raw materials and build up its finished
products. Metallurgical industries would shrink almost to infinitesimal
proportions if they were denied the use of coal. It has been estimated
that the manufacture of a ton of pig iron requires the use of two tons
of coal or more; while an equal quantity of steel requires six to eight
tons. Still, the use of coal for the steam-engine is undoubtedly its
most important application; and we can gain some conception of the
place that coal has taken in the world’s economy by considering the
growth of steam power.

=324. Importance of coal, estimated in steam horse-power.=—A
horse-power, the technical unit adopted for measuring the working
capacity of an engine, is for practical purposes equal to the force
that can be got from several (perhaps three) horses, or from a number
of men variously estimated at ten to twenty-four. Now in round numbers
the steam horse-power of the world was a million and a half in 1840,
and had increased, at the end of the century, to _fifty_ times that
amount. A simple operation in arithmetic will show the amount of work,
in human equivalent, now done by steam. Taking, for example, a modern
country, Germany, we find engaged in industry and transportation
slightly over ten million people, while we find engaged beside them
another population of mechanical iron slaves (steam-engines), variously
estimated as equivalent to one hundred to two hundred and fifty million
people. These slaves cost for food (coal), attendance, doctor’s bills
(repairs), and burial expenses (including the cost of replacing them
once in twenty-five years), only about $2.50 a year apiece. Admit some
exaggeration in the figures, and still the contrast with the cost of
human labor is most striking.

=325. Technical history of the steam-engine.=—The steam-engine has been
in practical use in Europe since about 1700. The earliest engines,
however, seem ludicrously crude now, and could be used only for
pumping water. Progress was slow until the last part of the eighteenth
century, when James Watt introduced improvements (separate condenser,
double-acting piston, use of cut-off, etc.), which greatly increased
the efficiency of the engine, and caused a gradual extension of its use
from mining to manufactures. The introduction of the non-condensing,
high-pressure engine about 1800 prepared the way for the use of steam
on railroads. The compound engine, in which the steam passes through
two or more cylinders before it is allowed to escape, was invented
about the same time, though it was not brought into general use until
about 1850. Since then improvements in details of the engine and in the
form of boilers have enhanced still further the efficiency of steam
power, until it now produces about two thirds of the work possible
under ideal conditions. Practical engineers expect now no rapid
progress or startling changes. Some measure of the progress achieved
is furnished by the fact that Watt’s engines required ten pounds of
coal an hour for each horse-power, the engines of the next generation
required five, while the best modern engines require but one and a
half, or, in rare cases, one.

The previous paragraph referred to the reciprocating engine in which
the piston moves constantly forward and back. Since rotary motion is
the form in which the power is commonly transmitted and applied, it
would be desirable to get the motion in this form originally, and
many attempts have been made to make rotary engines. Success has
been attained in the case of the steam turbine, in which jets of
steam strike against the blades of a turbine wheel, and cause it to
revolve. Originally applied by Dr. De Laval of Sweden to operate the
centrifugal cream separator which he had devised, it has come into
common use for the generation of electricity and for the propulsion of
ships. While the steam turbine has proved its efficiency for special
purposes it is less adaptable than the old form of reciprocating
engine, and still leaves to that the larger part of the field.

=326. The internal combustion engine.=—In the ordinary power plant
there are two units, the boiler in which steam is generated, and the
engine in which the steam is put to work. An internal combustion
engine is designed to burn the fuel in the engine itself. This is
practicable when the fuel is a gas or a liquid whose vapor will
unite with the oxygen of the air to form an explosive mixture. The
internal combustion engine offers several advantages over the steam
power plant: it uses more effectively the heat that is generated, it
is less bulky, it is more easily tended. In spite of characteristic
disadvantages, particularly the need of an auxiliary starter, and
restricted flexibility as regards speed and power, the internal
combustion engine has proved indispensable. In large units it serves
the steel mills, which put the waste gases from their blast furnaces
to work, and in its application to the automobile it has effected a
revolution in transportation and travel. Although in the manufactures
of the United States in 1914 the internal combustion engine still
accounted for less than 5% of the total horsepower, the aggregate
horsepower of the gasoline engines of automobiles has since that time
considerably exceeded the total horsepower from all sources employed in
manufacturing industry.


QUESTIONS AND TOPICS

 1. Do not attempt to remember _any_ of the figures in sect. 316,
 unless possibly the first two of the last line.

 Prepare a graphic chart in the following way. Lay off the time
 periods on the horizontal line at the bottom of your paper, and on
 the perpendicular, near the right-hand margin, lay off the figures
 of the last line of the table. This will insure space in the chart
 for all the lines. Divide the perpendicular into, say, forty units.
 Each unit may then be made to represent: 1,000 million dollars of
 value; $1 per capita; 40 million tons of coal; 2 million tons of
 iron. Indicate the figures for 1913 on the perpendicular (commerce
 40, per capita commerce 24, coal 36, iron 39); and perform the same
 operation for the figures on perpendiculars above each of the other
 dates. Use for each item a characteristic mark, (cross, circle,
 triangle, square), which will enable you to distinguish it from the
 others. Then unite the marks of each kind by a curved or crooked line.
 Choose a characteristic form of line (dotted, wavy, or colored) for
 each item. If the chart be made on a large scale and with sufficient
 neatness, later tables of statistics (development of railroads, trade
 of particular countries, etc.), can be entered upon it.

 With regard to each one of the items: when was the increase (measured
 by the slope of the line) greatest? When least? What relation is
 apparent in the increase of different items? Many of the questions
 suggested by a study of the figures will be treated in later sections.

 2. Prepare a small chart of the figures, giving the estimated value
 of commerce 1700-1899; note the enormous gains made in the nineteenth
 century.

 3. Development of printing, especially of periodical publications, in
 recent years. [Encyc., preferably the new International or Supplement
 to the Britannica, under Printing, Newspaper, etc. Cf. Scribner’s
 Magazine, 1897, vol. 22, p. 447 ff., on the modern newspaper business;
 Taylor in Depew, One hundred years, chap. 25, Williams in same, chap.
 26.]

 4. Divide the perpendicular on the right-hand side of your chart into
 spaces, indicating the shares of the chief countries in commerce.

 5. Make out a list of three changes coming under each one of the three
 heads discussed. Example: technical progress, wireless telegraphy;
 business organization, trusts; political, international arbitration,
 reciprocity.

 6. Early history of the coal trade. [R. L. Galloway, The rise of the
 coal trade, Contemporary Review, 1892, 62: 569-578.]

 7. Industrial and commercial importance of coal. [Edward Atkinson,
 Coal is king, Century Magazine, 1897-98, 55: 828-830.]

 8. Effect of a stoppage of the coal supply. [Stephen Jeans, The coal
 crisis and the paralysis of British industry, Nineteenth Century,
 1893, 34: 791-801.]

 9. How does the increase in steam horse-power compare with the
 increase in the output of coal? With the growth of commerce?

 10. Earliest history of the steam-engine (to about 1700). [Thurston,
 chap. 1, sect. 1.]

 11. Earliest applications of the steam-engine. [Thurston, chap. 1,
 sect. 2.]

 12. Development of the engine before Watt. [Thurston, chap. 2.]

 13. Development by Watt and his contemporaries. [Thurston, chap. 3.]

 14. Recent improvements. [Thurston, chap. 6; Iles, chap. 5.]


BIBLIOGRAPHY

 Bibliographical aids become broader in the recent period. The great
 literature scattered through periodicals, in which articles of
 lasting value are often to be found, is made accessible by Poole’s
 Index and its continuations; books in print, if not too technical for
 the general public, will be found in the A. L. A. (American Library
 Association) Catalogue, which supplies full titles and prices.

 Various cyclopedias and dictionaries of commerce have been published
 in the nineteenth century; they are useful repositories of
 information, especially of statistics. Among them the following, in
 English, may be mentioned: McCulloch, **Dictionary, various editions;
 Waterston, Cyclopædia, 1847; Macgregor, *Commercial statistics,
 1850; Homans, Cyclopædia, 1858. Statistics are brought up to date in
 various year-books and periodicals; the **Statesman’s Year-Book is an
 indispensable annual, and will meet all ordinary demands of teacher
 and class.

 The student of the history of commerce is often forced to turn to
 narrative political histories for information. Among the general
 histories of Europe in the nineteenth century may be mentioned Charles
 D. Hazen, *Modern Europe, N. Y., Holt, 1920; C. M. Andrews, *Modern
 Europe; N. Y., Putnam, 1899; Seignobos, **Pol. hist.

 Much has been written, of course, on the progress of the century in
 various technical lines. Ure’s Dictionary, various editions, describes
 the advances of the first part of the century; and the student will
 probably find one of the modern encyclopedias (Britannica, with
 Supplement; International) the most satisfactory source of information
 on recent progress. No attempt can be made in this or the following
 chapters to cover the great field of technical literature. Jevons’
 **Coal question should, however, be mentioned as still of great
 interest and value. Nicolls, * Story; Edward A. Martin, *Story of a
 piece of coal, N. Y., Appleton 1896; or R. Meldola, *Coal and what we
 get from it, N. Y., Young, 1897 can be assigned for reading by the
 class. Edwin C. Eckel, Coal, iron and war, N. Y., Holt, 1920, is an
 interesting and suggestive study in the physical bases of national
 industry. On the steam-engine, Robert H. Thurston’s History, N. Y.,
 Appleton, 1902 will probably be found most useful. The biographies
 by Samuel Smiles are a valuable history of technical progress,
 interesting and trustworthy. Of more recent books, designed for
 popular reading, George Iles, Flame, electricity and the camera, N.
 Y., Doubleday, 1900 contains attractive accounts of many features of
 technical progress.




CHAPTER XXIX

MACHINERY AND MANUFACTURES


=327. Development of agriculture.=—Pursuing now our survey of the
technical advances of the century, we must notice first the oldest
and perhaps the most important branch of production, agriculture.
An American reader does not need to be told that farm work has been
greatly changed by the introduction of improved tools and machinery.
Even an implement so old and apparently so simple as the plow will do
now better work with half the force formerly required. Cultivating
and harvesting machines of various kinds spare land and labor. The
introduction of artificial fertilizers has given new freedom and
efficiency to the agriculturist.

=328. Progress less in agriculture than in other branches of
production.=—Still, when all is said, agriculture is the branch of
production which has been affected least by the changes of the century.
The farmer is still bound to the soil and subject to the weather. Steam
power has not made for itself the place which sanguine men once thought
it would win. In Europe reforms have been effected in sweeping away
antiquated institutions affecting the personal liberty and property
rights of cultivators, who now, in free association, can work far more
efficiently than before. In other continents the extension of the
modern transportation system has effected a revolution in the choice
of crops and the means of marketing them. Neither transportation,
steam power, nor machinery, however, has vitally affected the methods
by which crops are grown; and when the first fertility of new land
has been exhausted and a growing population clamors for a cheap food
supply, the world will find that one of its great problems is still
unsolved.

=329. Function of machinery.=—For the great changes effected by the use
of steam we look, of course, not to agriculture but to manufactures and
transportation. These changes have been wrought through the medium of
machinery, and the reader is asked to give particular attention now to
the part which machinery plays in modern life. I spoke above of coal
as offering power to men. How can you apply this power to a useful
purpose? First, you must burn the coal under a boiler to produce steam;
second, you must translate the expansive power of steam into regular
forceful motion in an engine; finally, you must apply the force and the
motion in just the way that is wanted by means of a machine. Evidently
machinery does not depend altogether upon steam. Rude machines, mills
for grinding grain, for example, were run by wind or water power long
before the steam-engine was invented; water power is being transmitted
by electricity in increasing quantities at present; and men hope that
we shall be able to use the heat of the sun or the force of the tides
to run machinery in the future.

=330. Advantages of machines.=—Practically, however, the great
extension in the use of machinery has depended on the power obtained
from coal through steam. Only in the period since the adoption of
improved forms of steam-engine have we realized the possibilities
of machines. They can be applied only to certain classes of work,
especially that involving the constant repetition of an operation which
can be easily regulated either by the machine itself or by a laborer
supervising it. We can use machines, for instance, to make cloth
and even to make clothes, but we do not use them in the operations
of dressing and undressing. In their proper field, however, they
are indispensable. They will accomplish tasks which are too great
or too small for human hands. They repeat a process or copy a model
with absolute fidelity. They never grow tired and they have no human
failings; they often economize time and materials. Finally, and this
is the point of decisive importance, in many lines of work they,
furnish the product at a cost far below that of hand labor.

=331. Revolution in old industries effected by machinery.=—To describe
the manifold applications of machinery in the nineteenth century,
within the limits of this manual, is impossible. Let the reader glance
from the book to the objects surrounding him, and make a list of
the ten objects which first attract his attention. If he will trace
their history he will find, in all probability, that they are all the
products of complicated machinery, which has been developed from the
simplest beginnings in the course of the century. He will probably
experience difficulty in finding a familiar object which has not
been subjected to machine processes unknown in 1800. Machinery has
heightened human productivity in certain lines a hundred or even a
thousand fold. At the Atlanta Cotton Exposition of 1881, two carders,
two spinners, and one weaver, from the mountain region of Georgia,
could produce eight yards of coarse cotton cloth in a day of ten hours.
The same number of persons in a modern cotton factory could produce 800
yards by machinery. The cotton goods produced for home consumption in
the United States by 160,000 laborers at that time, would have required
the services of 16,000,000 laborers without machinery. Again, a skilful
woman can knit 80 stitches a minute by hand; a machine enables her to
make 480,000.

=332. Introduction of new industries.=—Machinery has not only
revolutionized old industries; it has created many new ones. A
distinguished American economist expressed the opinion, about 1890,
that half of all those who were then earning their living by industrial
pursuits did so in occupations that not only had no existence, but
which had not even been conceived of, a hundred years before. I may
write with a steel pen, with a fountain pen, or with a typewriter;
whichever choice I make I am giving employment to a group of mechanical
laborers who did not exist in 1800. Taking a particular city as an
example, the industrial specialities of Leipzig are said to have
increased from 118 in 1751 to 557 in 1890, a growth of 372 per
cent. Nor must we limit our view of the effects of machinery to the
mechanical pursuits which are carried on about us. Increased efficiency
due to the use of machinery has set men free from other pursuits to
engage in commerce, education, domestic service, etc.

=333. Importance of iron in the age of machinery.=—One particular
industry deserves special consideration here, by reason of the quality
of its product rather than of the quantity of laborers employed or
the mere exchange value of the output. Without iron the modern age of
machinery would be, at best, of stunted growth. Jevons characterized
admirably the modern industrial system when he said that steam is its
motive power and iron is the fulcrum and the lever. It is safe, I
think, to challenge the ordinary reader of the present day to name a
machine which is not composed largely or almost wholly of iron. The
whole structure of our modern industry depends on the means of getting
cheap iron. “Without it the engine, the spinning-jenny, the power-loom,
the gas- and water-pipe, the iron vessel, the bridge, the railway—in
fact, each one of our most important works—would be impracticable from
the want and cost of material.”

=334. Scarcity of iron before the nineteenth century.=—Returning to
the period about 1800 we find ourselves in a different world. I have
described in a previous chapter the improvements effected in the
manufacture of iron in the eighteenth century. Great as was the promise
of these improvements, it waited long for full realization; well into
the nineteenth century iron remained relatively scarce and dear and was
spared in every possible way. A youth destined to play a leading part
in the iron age (Joseph Nasmyth) visited the Carron Iron Works in 1823,
and here is the description which he gives of a celebrated foundry and
machine shop, associated with the construction of the first working
steam-engine by Watt. “Much of the machinery continued to be of wood.
Although effective in a general way it was monstrously cumbrous. It
gave the idea of vast power and capability of resistance, while it was
far from being so in reality.” If this was the condition at the Carron
Iron Works, what must it have been in ordinary factories?

=335. Development of machine tools for working iron.=—Iron was little
used, partly because it was hard to get and partly because it was hard
to work. There were in England about 1800 only three good machine
shops, where small steam-engines were built. The equipment of even the
best machine shop would seem now wretchedly inadequate, and Stephenson
was greatly hampered, in building his first locomotive, by the lack
of good machine tools, for working metals. William Fairbairn said in
his presidential address before the British Association at Manchester,
“When I first entered this city [about 1813] the whole of the machinery
was executed by hand. There were neither planing, slotting, nor
shaping machines; and, with the exception of very imperfect lathes,
and a few drills, the preparatory operations of construction were
effected entirely by the hands of the workmen.” About 1825 to 1830,
however, with the growth in demand for iron-working apparatus, there
began a rapid development of this branch of manufacture, one step in
advance leading rapidly to another. We may trace the process in the
description that Nasmyth gives us of his first machine shop, a shed
measuring 24 by 16 feet. “I removed thither my father’s foot-lathe, to
which I had previously added an excellent slide-rest of my own making.
I also added a ‘slow motion,’ which enabled me to turn cast-iron and
cast-steel portions of my great Mandsley lathe. I soon had the latter
complete and in action. Its first child was a planing machine capable
of executing surfaces in the most perfect style; it was 3 feet long by
1 foot 8 inches wide. Armed with these two most important and generally
useful tools, and by some special additions, such as boring machines
and drilling machines, I soon had a progeny of legitimate descendants
crowded about my little workshop, so that I often did not know which
way to turn.” Nasmyth himself made one specially important contribution
to iron-working machinery, by the invention of the steam hammer
in 1839; the old “bit by bit” system of welding became henceforth
unnecessary.

=336. Steel, character and utility.=—While the limits of our space will
not permit us to trace further the development of machine tools, which
have been made marvelously efficient in recent years, and while we must
also forego a study of the details of iron production, the topic of
steel manufacture certainly deserves some consideration. Ordinary cast
iron, while strong and hard enough for many purposes, still is brittle
by reason of the large proportion of carbon and other impurities
which it contains. These impurities may be burned out in the puddling
process, and the nearly pure iron thus obtained, called malleable
or wrought iron, has a toughness enabling it to resist far greater
strains than cast iron can stand. Intermediate between the two irons,
and containing one per cent of carbon, more or less, is still another
product, steel, which may be made even more tenacious than wrought
iron, or even harder than cast iron. Its peculiar property of “taking
a temper” is probably known to most readers. The valuable properties
of steel have been known and prized for ages, but till well into the
nineteenth century it could be used only sparingly; it was commonly
manufactured by first making wrought iron, by the tedious process of
puddling, and then heating the iron bars in contact with charcoal until
they had absorbed the proper amount of carbon. The expense of this
process prohibited the use of steel for most purposes; the wrought iron
cost $75 a ton and the finished steel $250 or more; and the output
would seem to-day inconsiderable.

=337. Recent improvements in the manufacture of steel; the Bessemer
process.=—Many men have contributed to bring the manufacture of steel
to its present efficiency, and we may notice only the names associated
with the greatest improvements. An Englishman, Bessemer, patented in
1855 the idea, as simple as it is ingenious, of turning cast iron
directly into steel by blowing air through it when melted, and so
consuming the excess of carbon. It has not proved possible to make
good steel according to Bessemer’s original idea, but with a slight
modification his process has been wonderfully successful; in present
practice all the carbon is burned out by the air current, and then
the requisite amount is added before the metal is poured out. Ore
containing a large amount of phosphorus is treated by melting it in
a converter lined with lime, which removes this dangerous impurity
(“basic process”).

=338. The open-hearth (Siemens-Martin) process.=—Still another
contribution to modern methods of steel manufacture, known as
the “open-hearth,” or, from the names of its introducers, the
Siemens-Martin process, has been of great importance since about 1870.
The steel is made from ore or from a combination of different kinds of
iron, and, by peculiar devices for economizing the heat of the furnace,
the process may be continued so long and regulated so carefully that
a product of high quality may be turned out at a moderate cost. The
result of all these processes has been to change steel from a luxury to
a necessity of modern life. Modern mild steel is 40 per cent stronger
than iron, and is tough enough to be tied in a knot or punched in
the shape of a bowl when cold. The increase in efficiency due to its
substitution for iron in machinery, railroads, ships, and structural
work is simply incalculable.

=339. Development of the modern chemical industry.=—In detailing at
such length as I have done the exploits of machinists in the past
century, I may tempt the reader to undervalue the contributions of
scientists. To guard against that error let us consider briefly the
development of the chemical industry, which, like the iron industry,
renders a service to modern civilization beyond any measure of dollars
and cents. The Frenchman, Lavoisier, had established chemistry on a
scientific basis before 1800, but industrial chemistry used still the
primitive methods which had been employed for ages. Let us take, for
instance, the single substance, carbonate of soda, of prime importance
in industrial chemistry, for on it depend the various industries of
glass, pottery, soap, photography, paper, etc. This substance was
still obtained in the eighteenth century, by burning seaweed and
seashore plants and treating their ashes; Spain had a considerable
export of barilla, and owed to this product whatever success she
attained in the soap manufacture. Leblanc emancipated the soda industry
from kelp and barilla, by introducing the process based on sulphuric
acid and salt; step by step improvements have been made since then.
Sulphuric acid, discarded in the soda industry, has grown in importance
notwithstanding; it is the controlling element in the manufacture
of other acids, commercial fertilizers, alum, ether, glucose, etc.,
and in oil refining; and it is produced at a price and of a quality
formerly unknown. The discovery of the anilin colors, in 1859, has
revolutionized the art of dyeing. The chemist will make you, from coal
tar, almost any color or shade desired. He will make you perfumes or
flavors; and, if he has failed to construct quinine artificially, he
has at least learned, in his attempts, to make substances such as
antipyrin and phenacetin, of equal value for other purposes.

=340. Influences determining the local distribution of manufactures.=—A
review of the contents of this chapter, with its discussion of the
factors which have built up modern industry, should suggest to the
reader the countries which have enjoyed exceptional advantages in the
modern manufacturing period. Resources of coal and iron, clearly, are
of great importance. That they are not decisive, however, is proved
by the absence of modern manufactures in China, where there are
abundant supplies of coal and iron, and their presence in districts
like the North of Ireland, where, for instance, a great ship-building
industry is fed with imported iron and coal. Factories can exist at a
considerable distance from their source of supply if they are served
by a transportation system which will fetch raw materials and carry
finished products cheaply; efficient transportation is essential.
Many other elements might be suggested as going to form the basis of
national success in manufactures, but of them all I desire here to
emphasize only two: good government and intelligent men. Manufactures
cannot thrive in a country where unwise or corrupt methods of taxation
rob the investor of his gains. Nor can they prosper, whatever other
advantages a country may have, if it lacks intelligent and steady
laborers, or clear-sighted and energetic leaders. The reader will
have an opportunity, in later chapters, to test the truth of these
statements; meanwhile, in anticipation, attention may be directed to
the United States, England, and Germany, as those countries which have
most signally proved their fitness for manufacturing.


QUESTIONS AND TOPICS

 1. Development of the science and art of agriculture in the nineteenth
 century. [Encyclopedia.]

 2. Artificial fertilizers. [Peacock, in Cosmopolitan Magazine, Nov.,
 1895.]

 3. A modern wheat farm. [Scribner’s Magazine, 1897, vol. 22, p. 531
 ff.; Edgar, Story of a grain of wheat. Note that “bonanza” farms are
 not typical of modern agriculture in general.]

 4. What use is coal without a steam-engine? What use is machinery
 without a steam-engine? What use is a steam-engine without coal
 or machinery? Which would the world give up most readily, coal,
 steam-engine, or machinery?

 5. Character and advantages of machinery. [Hobson, Mod. cap., chap. 3,
 sects. 1-3.]

 6. How much have women gained by being relieved of the necessity
 of making cloth for family use? [Read description of the labor of
 spinning, weaving, etc., in colonial times; see Alice M. Earle,
 Colonial dames and goodwives, Boston, 1895, or Syndey G. Fisher, Men,
 women and manners in colonial times. Philadelphia, 1898.]

 7. Effect of the introduction of machinery on the demand for labor in
 different occupations. [Hobson, Mod. cap., chap. 8.]

 8. The growth of factories. [Bourne, Romance, chap. 9.]

 9. Organization of a modern factory. [P. G. Hubert, The business of
 a factory, Scribner’s Magazine, 1897, vol. 21, p. 306 ff.; Fred J.
 Miller, The machinist, same, 1893, vol. 14, p. 314 ff.]

 10. Progress in the iron manufacture. [Iles, chap. 4; R. R. Bowker, A
 bar of iron, Harper’s Magazine, 1893-4, 88: 408-424, F. W. Taussig,
 The iron industry in the U. S., Quarterly Journal of Economics. Feb.,
 1900, reprinted in Bullock’s Selected Readings in Economics.]

 11. Development of machine tools for iron working. [Sellers, in Depew,
 One hund. years, chap. 49.]

 12. Progress in the steel manufacture. [R. R. Bowker, A steel tool,
 Harper’s Magazine, 1893-4, 88: 587-602; Waldon Fawcett, The center of
 the world of steel, Century Magazine, 1901, 62: 189-203.]

 13. Write a biographical sketch of one of the following: Bessemer,
 Siemens, Whitworth, Brown, Thomas, Snelus. [W. T. Jeans, The creators
 of the age of steel, N. Y., 1884.]

 14. Write a report on advances in the manufacture of one of the
 articles named. [Encyclopedias; on coal tar products see Meldola.]

 15. What conditions have led to the rise of the characteristic
 manufactures of your own vicinity? In what regions are their chief
 competitors? What are the relative advantages of different places with
 respect to some particular manufacture?


BIBLIOGRAPHY

 See the previous chapter for books of general reference. The modern
 manufacturing organization and the influence of machinery have been
 treated, from the economic standpoint, by Hobson, Modern capitalism,
 and Schulze-Gaevernitz, The cotton trade, Manchester, 1895. A history
 and analysis of the factory system by C. D. Wright was published
 in the Tenth U. S. Census, 1880, vol. 2; further references to U.
 S. public documents will be given below, in the chapters on the
 United States. The English parliamentary papers and accounts contain
 an immense amount of material on this subject; the last volume of
 Cunningham, Growth, has useful references to them. The technical
 history of manufacturers defies compression. Much interesting material
 may be found in the reports of the U. S. Commissioners to various
 world expositions.

 A good account of the history of machine making is provided by Joseph
 W. Roe, **English and American tool builders, New Haven. Yale Univer.
 Press, 1916.




CHAPTER XXX

ROADS AND RAILROADS


=341. Commercial importance of the subjects of the chapter.=—“Of all
inventions, the alphabet and the printing-press alone excepted, those
inventions which abridge distance have done most for the civilization
of our species.” Macaulay’s celebrated sentence applies to civilization
in general. With regard to the material civilization depending upon
commerce, certainly no factor has been of greater importance than
improvement in the means of transportation and communication. An
improvement in these means has been effected during the past century,
without a parallel in the world’s history; and a description of the
changes deserves the most careful attention of the student in the short
space which can be allowed the subject.

=342. Statistical survey of development.=—For a convenient means of
reference I introduce, in this place, a statistical table (on opposite
page) showing the development of the most important modern instruments
of transportation and communication.

=343. Improvement in the condition of roads.=—Aside from the stretches
of canal which had been brought into operation, the universal means of
inland transportation about 1800 was the road. Some reference has been
made in an earlier chapter to the condition of English highways in the
eighteenth century, and to the improvements which marked that period.
Conditions on the Continent were worse than those in England. French
roads were mere tracks in the first part of the eighteenth century,
and for the most part were still hopelessly bad at its close, when the
system of maintaining the roads by forced labor was abolished.

From near the close of the eighteenth century, however, we may date
the beginning of a period of rapid improvement in the roads of western
Europe. The turnpike system, which allowed tolls to be charged for
the use of improved highways, encouraged the investment of capital in
these undertakings. The teachings of Telford and Macadam, two great
road-engineers who emphasized the necessity of using good materials
and securing proper drainage, were generally applied. In the period
from 1800 to 1850 the roads of Europe were reformed to meet the demands
which commerce made upon them, before the introduction of the railroad,
and were put in the excellent condition which attracts the attention
of American travelers to-day. The cost of freight transportation was
reduced to half or less of what it had been, and the speed of passenger
service increased correspondingly. An Englishman, Porter, notes that in
1798 he occupied nineteen hours in traveling eighty miles by what was
considered a “fast coach”; when he wrote, in 1838, the trip was made in
eight hours.

  =====+========================+========================
       |        SHIPPING        |       RAILWAYS
       |      MILLION TONS      |   TELEGRAPHS CABLES
       +-----+------------------+------------------------
       |Sail | Steam | Carrying |     Thousand Miles
       |     |       |   Power  |
  -----+-----+-------+----------+-------+--------+-------
  1800 | 4.0 |       |    4.0   |       |        |
       |     |       |          |       |        |
  1820 | 5.8 |   .02 |    5.8   |       |        |
       |     |       |          |       |        |
  1830 | 7.1 |   .1  |    7.5   |    .2 |        |
       |     |       |          |       |        |
  1840 | 9.0 |   .3  |   10.4   |   5.4 |        |
       |     |       |          |       |        |
  1850 |11.4 |   .8  |   14.9   |  23.9 |     5. |    .02
       |     |       |          |       |        |
  1860 |14.8 |  1.7  |   21.7   |  67.3 |   100. |   1.5
       |     |       |          |       |        |
  1870 |12.9 |  3.0  |   25.1   | 139.8 |   281. |  15.
       |     |       |          |       |        |
  1880 |14.4 |  5.8  |   37.9   | 224.9 |   440. |  49.
       |     |       |          |       |        |
  1890 | 9.1 |  8.2  |   42.3   | 390.0 |   768. | 132.
       |     |       |          |       |        |
  1900 | 6.6 | 13.8  |   62.1   | 500.0 | 1,180  | 200.
       |     |       |          |       |        |
  1910 | 4.6 | 22.0  |   92.8   | 637.0 | 1,307  | 291.
       |     |       |          |       |        |
  1913 | 3.8 | 26.5  |  109.9   | 690.0 | 1,462  | 330.
  =====+=====+=======+==========+=======+========+=======

=344. Importance of roads in the present transportation system.=—A
word of warning may be advisable before we leave this subject to study
more recent means of transportation. Not many years ago a French
economist estimated that not one twentieth of the settlements of the
inhabited world were within less than a day’s distance from a railroad.
Even in the most advanced countries the extent of roads far exceeds
that of railroads, and only in the rarest cases do products reach the
consumer without having traversed a stretch of common road. The road,
therefore, takes a place in our modern economy more important than, in
our carelessness, we generally admit.

The unit for measuring the expense of transportation is the cost of
moving a ton one mile; on a modern American railroad the average cost
of a ton-mile is less than one cent. Even on the excellent roads of
Europe the cost is ten cents or more; while it has been estimated that
the average cost of moving farm produce to market over the common roads
of the United States is twenty-five cents per ton-mile. Assuming that
the average haul is twelve miles, and that three hundred million tons
are carried in a year, the expense reaches the total of nine hundred
million dollars, a sum greater than the operating expenses of all the
railroads of the United States before 1900.

It has been proved by actual test that the same force which draws one
ton on a muddy earth road will draw four tons on a hard macadam road.
One of the greatest improvements in transportation is still, in large
part, neglected by the American people; and intelligent energy will
find in no field richer results than in the reform of our common roads.
Such a reform would economize time and force, would reduce wear and
tear, and would greatly better the business position of the farmer by
enabling him to choose his own time for marketing his goods and making
his purchases.

=345. Advantage of transportation by water; canals.=—The student may,
perhaps, remember that in the Middle Ages the expense of transportation
by road led people to choose rivers for conveying their goods, whenever
this was practicable. It has been estimated that a horse which could
carry on its back two or three centner (a centner is about 110 lbs.)
could with equal exertion drag twenty centner on a highway, or 1,200
through dead-water. This enormous gain in efficiency, resulting from
the avoidance of the slightest difference in level and from the
reduction of force wasted in friction, suggested to people in early
times the idea of establishing channels for water where none had
previously existed, that is, of building canals. Locks, for controlling
the flow and level of the water, were invented toward the end of the
Middle Ages, and a considerable extent of canals had been constructed
on the Continent before the Bridgewater canal, described above, was
opened in England. The real era of the canal, however, was in the
period which may be limited roughly by the dates 1750 and 1850.

=346. Development of canals, 1750-1850.=—Immense amounts of capital
were invested in canals in this period of their great importance; and
the European and American systems of barge canals were constructed
substantially on the lines which they have since retained. A traveler
could then, as now, voyage through most parts of central and eastern
Europe without leaving a canal-boat. Of a country like England, endowed
by nature with advantages for water communication, it could be said in
1838 that no spot south of the county of Durham was more than fifteen
miles from the means of water conveyance. Factories were established
along the canals, as now along the railroads. Canals relieved the
highways of a large part of the growing traffic, carried many raw
materials which could not have borne the expense of transportation by
road, and enjoyed even a considerable share of passenger traffic.

=347. Relative decline in importance of canals.=—Of canals as of roads
it may be said that their days of usefulness are far from past. One
class, indeed, that of the great ship canals, has grown rapidly in
importance in recent years. Many economists believe that even the barge
canals should be maintained and improved. There is still an active
canal traffic in Europe, especially in Germany, and in the last-named
country a notable project for extending the canal system is under
consideration. The future of canals seems to depend largely on the
introduction of improved forms of motor (electricity, gasoline).

[Illustration:

  WATERWAYS OF
  NORTH CENTRAL EUROPE

  _Bormay Eng. Co., N. Y._
]

The canal has certainly yielded the place of first importance in
internal transportation to the railroad. Its great merit, cheapness,
has declined in importance with the reduction of railroad rates, while
its drawbacks are felt more and more under the conditions of modern
business. The canal is not only much slower and more uncertain than the
railroad; its vital weakness is the fact that in temperate climates its
usefulness is destroyed during at least a part of the winter. Since
1850 canal systems have grown slowly, if at all, and in some countries
they have declined greatly. Nearly half of the English canals are now
controlled by the railroads; some are closed and out of repair, and
traffic is diverted from others by heavy tolls.

=348. Origin of the steam railroad.=—Soon after 1800 the American
inventor, Evans, asserted more than once that he could manage to drive
wagons on railways by steam. He expressed an idea that was by no means
new, and that was then floating in the minds of many men. He said
truly, however, that one step in a generation is enough, and that the
monstrous leap from bad roads to steam railways could not be taken
at once. Roads were improved, canals were extended, and still there
was a demand for better means of transportation. Rails, first of wood
and then of iron, had long been laid to enable horses to draw heavier
loads at mines and quarries. George Stephenson, among others, conceived
the idea of applying steam as the motive power on these railways, and
distinguished himself above all predecessors by constructing, in 1814,
a locomotive, _Puffing Billy_, which proved capable of hauling coal
over a stretch of nine miles, from the mine to tide-water. Stephenson
improved his original model, especially by the introduction of the
steam blast to help the draft and so increase the power of the boiler;
and in 1825 secured the adoption of the locomotive on the Stockton and
Darlington Railway in Yorkshire. The call for this improvement had now
become pressing. The port of Liverpool and the important manufacturing
center, Manchester, distant only about thirty miles, were now connected
by three canals, yet these were so crowded with traffic that it took
sometimes a month for cotton to reach the factories from the sea.
The opening of the Liverpool and Manchester Railway in 1830, with a
locomotive, the _Rocket_, which made twenty-nine miles an hour, may be
taken as the completion of the period of experiment, and the beginning
of the railroad era.

=349. Early period of the railroad.=—Though steam locomotion after
1830 was a proved success, and though railroads were rapidly extended,
and 1,600 miles had been brought into operation in 1835, the men of
the time had still much to learn concerning their new instrument of
transportation. Some men expected from it a speed of 75 or 100 miles
an hour, while the State Engineer of Virginia took it as an admitted
fact “that a rate of speed of more than six miles an hour would exceed
the bounds set by prudence, though some of the sanguine advocates
of railways extend this limit to nine miles an hour.” In certain
localities the steam railroad, from the start, performed great service
in freight carriage. At the Pennsylvania coal mines, for instance, it
reduced the cost of hauling a ton nine miles to the river from $4.00
to $.25. Still the cost in general was high; a charge of ten cents per
ton-mile was authorized in some early charters; and few people believed
that the railroad could compete successfully with the canal in the
transportation of ordinary freight.

=350. Improvements in locomotives.=—The technical improvements which
have extended the usefulness of the railroad far beyond the dreams of
its earlier promoters have been comparatively simple. Mere increase in
size of locomotives and cars has been the greatest factor in increased
efficiency. The engine which Peter Cooper constructed for experiment
on the Baltimore and Ohio, about 1830, had a boiler the size of a flour
barrel, weighed less than a ton, and was about the size of a modern
hand-car. It was of little practical use. The development from early
engines of the class of the _Rocket_, to those of modern American
practice, is shown in the following figures:

  ===========+=============+=======================
             |   Weight    | Hauling Power on Level
  -----------+-------------+-----------------------
  Early      | 5 to 6 tons |         40 tons
  Improved   |     25      |       1,200
  Modern     |     50      |       2,400
  ===========+=============+=======================

In 1914 the average weight of the simple locomotive in the United
States was 82 tons. Not only does a large locomotive put to more
economical use the heat applied; the large train, also, costs far less
in proportion for the services of men employed in running it.

=351. Importance of steel in railroad construction.=—To many readers
practical devices like the air-brake, further reducing the cost and
increasing the efficiency of operation, will be familiar. One factor
in improvement, however, is not so apparent, and deserves special
attention by reason of its commanding importance. The railroad in its
modern form would be impossible if Bessemer and others had not taught
the world to make steel cheaply. Iron rails, even under comparatively
light loads, wore out and had to be replaced constantly. Steel rails,
introduced gradually after 1860, could bear double the load on each
wheel, and still outlive many iron rails. The modern rail, simple
as it appears, is both in material and in proportions a great feat
of engineering, “a beam whose every dimension and curve and angle
are exactly suited to the tremendous work it has to do.” Steel rails
and steel bridges have made possible the economy of the colossal
locomotives of modern times. Steel has enabled men, instead of building
10-ton cars to carry 10 tons of cargo, to build 12-ton cars to carry
20, or 14-ton to carry 30; each improvement of this kind represents a
saving in the dead weight of the train, and a consequent reduction in
cost. Steel has furnished a material for the bridges over which the
cars are carried, enabling a span of 500 feet to be constructed as
readily as a span of 250 feet, with the iron formerly employed.

[Illustration:

  GROWTH
  OF THE
  EUROPEAN
  RAILROADS

  BORMAY ENG. CO.

 The size of the small circles indicates the railroad mileage of each
 country at ten year intervals. To facilitate comparison, the circles
 for 1850 are printed black, and those for 1890 are shaded. Note the
 disproportion of mileage and area.
]

=352. Development of the railroad system after 1850.=—Improvements in
the construction, the equipment, and the operation of railroads, for
the mere suggestion of which there is scarcely space here, explain the
rapid growth of the railroad system shown in the figures at the opening
of the chapter. It will be noted that over 99 per cent of mileage has
been constructed since 1840, and that even in 1850 the world had made
but a mere beginning in railroad construction. About the middle of the
century began a movement toward the consolidation of existing lines,
which had formerly been operated in short stretches by independent
companies. The student should note that this consolidation proceeded
largely along the length of railroads, not in the modern fashion by
the union of parallel and competing lines; and it is almost impossible
to exaggerate the benefits that resulted, in increased efficiency
of management, improved service, and lower rates. About this time
(1854) the first railroad was built across the Alps; the Union and
Central Pacific route was opened in 1869, beginning the era of the
transcontinental roads; and investors and engineers, who found the
older and more advanced sections adequately supplied with railroads,
began now to build lines far out into new territory, to open up fresh
land and develop new trade.

=353. Importance of railroads at present.=—Some attention will be paid
hereafter to the decisive influence which the railroad has exercised
on recent commercial development; and in the history of commerce in
particular countries the thoughtful student will not fail to recognize
this influence even when it is not specifically pointed out. In leaving
the subject at this point, however, the student may be grateful for
a summary estimate of the relative importance of railroads and other
instruments of production in our modern life. A good authority has
estimated that one quarter or even one third of the total invested
capital of civilized nations has taken the form of railroads. It is
doubtful whether the manufacturing establishments of the world are
equal in value to its railroads; while the world’s whole stock of money
would buy but a fraction of them. The railroads of the United States
carried in 1900 a thousand million tons of freight at a cost of a
thousand million dollars, and at the rate of less than three quarters
of a cent per ton-mile. The student may, from these figures, estimate
the service of railroads to the average individual in the country, and
may rest assured that the work they do could not be accomplished by the
means in use a century ago, even if the whole annual product of the
country were squandered in the attempt to carry it on.


QUESTIONS AND TOPICS

 1. See the suggestion on the treatment of the statistics in sect. 315.
 Combine the statistics of the sections 315 and 342 in one chart, if
 practicable. See below, sect. 354, for the explanation of carrying
 power; a steamer is estimated to have four times the efficiency of a
 sailing vessel, in this table.

 2. What is the cost of transportation over roads in your vicinity?
 What system of construction and maintenance is pursued?

 3. Write an essay on one of the following topics, from the circulars
 of the Office of Road Inquiry, U. S. Department of Agriculture.
 (Copies may probably be secured gratis on application.)

 (_a_) The proper method of constructing and repairing earth roads.
 [Circular no. 8.]

 (_b_) Methods of constructing macadamized roads. [No. 21.]

 (_c_) Repair of macadamized roads. [No. 30.]

 (_d_) The best system of maintaining roads. [No. 24.]

 (_e_) Systems of State aid. [No. 32, Minn.; No. 35, N. Y.]

 4. Effect on the agriculture of the U. S. of the present roads.
 [Report of the U. S. Industrial Commission, 1900, vol. 10, pp.
 ccix-ccxvi.]

 5. The place of canals in the transportation system of a modern
 European state. [O. Eltzbacher, The lesson of the German waterways,
 Contemporary Review, Dec., 1904, 86: 778-797.]

 6. Early history of the railroad. [See a biography of Stephenson, by
 Smiles, or in one of the encyclopedias or biographical dictionaries.]

 7. Early locomotives. [Thurston, Hist., chap. 4.]

 8. American improvements in locomotives and cars. [Amer. Railway, p.
 100 ff.]

 9. Improvements in railroad construction. [Same, p. 1 ff.]

 10. Feats of railroad construction. [Same, p. 47 ff.; Vernon-Harcourt,
 chap. 2.]

 11. Modern bridges. [Vernon-Harcourt, chaps. 6, 7.]

 12. Modern railroad management in the United States. [Amer. Railway,
 149 ff.]

 13. Development of railroad organization and its effects. [Same, pp.
 344-359.]


BIBLIOGRAPHY

 A good article on the history of highways will be found in the
 Edinburgh Review, 1864, vol. 119, p. 340 ff. See also Smiles’ Lives
 of the engineers, and, for conditions in England before the railroad,
 Stanley Harris, Old coaching days, London, 1882, or W. O. Tristram’s
 book on the same subject, London, 1893.

 For the bibliography of canals and railroads see Bowker and Iles,
 and Palgrave’s Dictionary. Among the many books the following will
 probably be most serviceable: E. J. James, Canal and railway; J. S.
 Jeans, Water-ways; E. R. Johnson, *Railways; A. T. Hadley, *Railroad
 transportation. All of these include historical and descriptive
 matter, along with economic criticism. **The American Railway, made
 up of articles contributed by various authors to Scribner’s Magazine,
 has much matter of value and interest to the student of the history of
 commerce.




CHAPTER XXXI

MEANS OF NAVIGATION AND COMMUNICATION


=354. Transportation by sailing vessels and steamers.=—Steam has won
for itself, in the course of the century, the commanding place in sea
transportation as well as in land transportation. The struggle with
competitors has lasted longer and the victory has been less complete.
Steam navigation, however, offers such advantages in sureness, safety,
speed, and cost, that sailing vessels have been forced out of some of
the most important branches of commerce, and must content themselves
with what the steamers leave them. Reference to the table at the
opening of the preceding chapter will enable the student to follow the
development of the means of transportation by sea in the course of the
century, and to observe the growth in importance of the steamer. In
explanation of the figures of carrying-power it should be said that a
steamer is regarded as having three or four times the efficiency of a
sailing vessel of equal tonnage; such an estimate is, of course, a mere
approximation, and, indeed, the figures of tonnage, especially in the
earlier part of the century, are themselves very uncertain.

=355. Development of sailing vessels.=—European sailing vessels at
the opening of the century followed substantially the clumsy lines of
the old East Indiamen. The chief credit for the improvement of wooden
vessels is due to the Americans, whose clipper ships, marvels of grace
and speed, were without rivals in their day. The clipper _Dreadnought_
made the passage from New York to Queenstown in less than ten days, and
in 1846 the American _Tornado_, starting from England with an early
steamer of the Cunard line, reached America before her. The _Great
Republic_, an American four-masted clipper, was of 3,400 tons and was
the largest sailing vessel in the world; British ships of this period
rarely exceeded a thousand tons in register.

The suggestion of iron for building ships was met at first with
ridicule; some people, of course, thought that an iron ship would
surely sink, and more serious objections were found in the cost, the
derangement of the compass, and the fouling of the ship’s bottom.
Iron, however, came gradually into use for steamers, and, after 1850,
was applied more and more generally to the constructions of sailing
vessels. Iron vessels were actually superior in buoyancy to wooden,
drawing less water and carrying more cargo with a given tonnage;
they were cheaper in the long run, because they are stronger, more
durable, and less exposed to destruction by fire. Furthermore, iron was
absolutely essential if the size of ships was to be increased. Builders
of wooden ships were limited by the average height of trees, and, in
spite of all devices, could not construct a frame sufficiently strong
for a vessel exceeding about 300 feet in length. The size of an iron or
steel ship is practically unlimited. The cost of ships constructed of
metal has decreased with advances in the manufacture of iron and steel;
remedies, fairly satisfactory, have been found for the derangement of
the compass; and though it has been found impracticable to apply copper
sheathing to steel ships, the fouling of the bottom is an evil of minor
importance.

=356. Relative decline of sailing vessels, notwithstanding
improvements.=—During the second half of the nineteenth century the
wooden ship gradually disappeared from the seas, giving place to
vessels constructed first of iron and then of steel. The country
which suffered most from the change, as will appear later, was the
United States; the country best prepared to profit by it was England.
The English now rapidly enlarged the dimensions of their ships, and
improved their rig and model. Some of the modern steel ships carry
5,000 tons of cargo, or even more. A study of winds prevailing
on the ocean, to which an American officer, Maury, made important
contributions, enabled sailing vessels to choose a course which, on
many routes, shortened the duration of the voyage a third or more.
Steam has been applied for handling the cargo, and for managing the
rudder and sails.

In spite of all improvements the sailing vessel has not been able to
keep its share of sea-borne commerce. So much depends on certainty in
modern business that the merchant will gladly pay a higher freight
rate to be relieved of the element of uncertainty which is bound to
attend navigation by sails. Steamers now exceed the sailing vessels of
the world not only in tonnage, and still more in effective carrying
capacity, but even in number also, if only vessels of 100 tons and
above are counted.

=357. Steamers used at first chiefly for internal navigation.=—American
inventors made a practical success of steam navigation soon after
1800; a brief notice of their work will be given later. The steamer
was used at first, however, chiefly for internal navigation and for
short coasting voyages. It was of immense importance in furthering the
development of the Mississippi Valley in America; and it soon made a
place for itself on the European rivers. About 1840 there was a rapid
development of steam transportation on the German rivers, and this
has not ceased to grow in volume and efficiency. Chains have been
laid along some of the river beds; on the Elbe, for instance, a chain
extends all the way across Germany and even into Bohemia; and by this
means steamboats are enabled to haul their barges up-stream against a
strong current. The application of steam to ocean navigation did not
become of great importance until about the middle of the century. At
that time only one fifth of the steam tonnage entering British ports
came from foreign ports; the rest was employed still in the coasting
trade.

=358. Beginnings of steam navigation of the Atlantic.=—The credit for
the first passage across the Atlantic by steam has often been ascribed
to the American ship _Savannah_, which arrived at Liverpool in 1819
after a voyage of twenty-nine days. This boat, however, should be
classed as a sailing ship with auxiliary engine, rather than as a
steamer; the paddle-wheels were arranged to be removed and hoisted on
deck when the wind was fair. It made most of the distance by sailing,
and the scanty supply of coal gave out before it reached its port, so
that, as the log reads, there was “no cole to git up steam.” A Canadian
boat, the _Royal William_, actually did make the whole passage under
steam in 1833, but stopped at Pictou for coal on the way; while the
first regular steamship to cross without recoaling was the _Great
Western_ in 1838. The considerable intervals between these trips show
that navigation of the ocean by steam was still in its experimental
stage. Indeed, in the very year 1838, in which the _Great Western_
and the _Sirius_ began the period of practical application, a leading
English scientist set out to prove by arguments and statistics that the
project of connecting Liverpool and New York by direct steamer trips
was “perfectly chimerical.” The Cunard Company was founded the next
year; and some measure of the appreciation of the American people is
given by the fact that when Mr. Cunard arrived at Boston in 1840, on
the first trip of the new line, he received (it is said) no less than
1,873 invitations to dinner within twenty-four hours!

=359. Improvement of the means of steam navigation.=—The early steamers
were moved by paddle-wheels, which offer special advantages for use in
shallow water, but which are not so efficient as the screw propeller in
the open sea. They require heavier and bulkier engines which must be
placed in the best part of the ship, they waste power, and they show
the effects of wear and tear more quickly. The _Great Britain_, which
made its first voyage in 1845, was noteworthy on two accounts: it was
the first large steamer (over 3,000 tons) to be built of iron, and it
was the first to introduce the screw in ocean navigation. These two
improvements were adopted by the Inman line (1850) and were gradually
accepted by other builders.

In the second half of the century various improvements have added still
more to the efficiency of the ocean steamer. Early steamers ran under
such a low steam pressure that we find recorded in the log-book of one,
“Broke the larboard steam-pipe, lapped it with canvas and rope-yarn and
proceeded”! Higher pressures were introduced, and after about 1870 the
steam was more fully utilized by compound engines, of which some have
three or even four sets of cylinders. The introduction of twin screws,
first applied to the _City of New York_ (1889), has added rather to the
safety than the speed of a passage, by permitting further development
of the system of water-tight compartments.

=360. Gains resulting from increase in size.=—Another most important
factor in the development of efficient steamers has been mere growth
in size. A ship’s carrying power varies as the cube of her dimensions,
while the resistance offered by the water increases only a little
faster than the square of her dimensions. Large ships, therefore,
consume less coal per ton of cargo, and as large boilers and engines
consume coal more efficiently than small ones, there is a double
gain. Here again, as in the case of railroads, the introduction of
cheap steel has been of immense importance, and may fairly be said
to have revolutionized the art of ship-building since 1875. While in
1880 nine tenths of British steamers were still constructed of iron,
the proportion had sunk in 1890 to less than one twentieth, and the
employment of steel is now almost universal. From steel are constructed
the great cargo-carriers and the fast express steamers of the modern
oceanic service. Some conception of the progress that has been made
can be got by a comparison with earlier conditions. In 1841 the total
steam tonnage of the British Empire was 188,000; nowadays a single
steamer (_Leviathan_, _Majestic_) has a tonnage in excess of 50,000.
The horse-power of British steamers in 1841 was estimated at 75,000;
nowadays a single steamer, has an indicated horse-power almost equal
to that total. The boilers of a modern express steamer (_Teutonic_)
were required to evaporate 120 _tons_ of water every _hour_, yet so
thoroughly is the heat utilized that it was said of a steamer some
years ago that the burning of a sheet of paper would move a ton a mile.

=361. Resulting decline in freight rates.=—Even in 1884 a competent
writer could make this interesting statement: twenty years before, a
steamer of 3,000 tons had to allow for coal and machinery on a given
voyage 2,200 tons, and must confine the cargo to the remaining space;
at the date when he wrote the great improvements had reversed the
proportions, so that only 800 tons were needed for motive power and
2,200 were devoted to cargo. Manifestly steamship owners would be
enabled by a change of this character to lower greatly the charges for
transportation, and freight rates have, in fact, declined steadily in
the course of the century. Lancashire spinners could transport their
raw cotton from the source of supply in America at one sixteenth the
cost which they had to bear sixty years before. Even in the last
quarter of the century ocean freight rates dropped to one half, one
third, or even one fourth, of the figures prevailing in 1874.

Conditions such as have been thus briefly suggested explain the immense
increase in sea-borne traffic during the century. For the carriage
of that traffic the merchant has now at his disposal not only the
sailing ship and the “tramp,” the general-utility steamer, but also
a multitude of special boats for special services: the tank-steamer
for transporting liquids cheaply, the cattle steamer for live stock,
and the steamer with refrigerators for dead meat, the fruit steamer,
etc. The use of oil as fuel and the introduction of explosion motors
of the Diesel type promise to raise still higher the efficiency of
transportation.

=362. Modern ship canals.=—This survey of the development of the means
of navigation may fitly be closed by a brief consideration of the
modern ship canals and their contribution to the growth of trade. There
were, in 1900, a round dozen of these canals, capable of receiving
sea-going ships. Some, serving special ports (Amsterdam, Manchester,
etc.) were of purely local importance. Others have disappointed the
expectations of their promoters. The canal across the isthmus of
Corinth has been a distinct failure, and the Kaiser Wilhelm Canal,
between the North and Baltic seas, has not yet acquired the share of
commerce which its projectors promised for it. Leaving aside the St.
Mary’s canal in America there was up to 1914 but one ship canal which
had proved its commanding importance, namely the Suez Canal.

A map of the world shows two narrow strips of land left by nature
almost as though with the design of stimulating men to pierce them,
the isthmus of Suez and the isthmus of Panama. A canal at either point
unites not countries or small seas, but continents and great oceans,
and saves thousands of miles in the routes of trade. The American
isthmus presents great difficulties to the construction of a canal,
but the Suez route runs through a district composed almost entirely of
sand, with no elevation above 50 or 60 feet and with considerable parts
actually below the level of the sea.

=363. The Suez Canal, and its services to commerce.=—The scheme of
reopening the route across the isthmus of Suez, which, as said in the
first chapter, had been made practicable for small vessels before the
time of Christ, and had been rendered useless in the Middle Ages, was
certain to rise as commerce between Europe and the East increased in
volume. It is said to have been entertained by Napoleon I among others,
but the credit for its accomplishment belongs to a French engineer
and promoter, Ferdinand Lesseps. After more than ten years spent in
preparation, work was finally begun in 1860, and the canal was ready
for use in 1869.

The success of the Suez Canal may be gaged, from the investor’s
standpoint, by the fact that dividends have risen to 20 per cent, from
the public standpoint by the fact that the tonnage accommodated by the
canal in 1891 exceeded ten million, in 1907 exceeded twenty million,
and in general has been roughly equal to the tonnage entering and
leaving any one of the great seaports of the world. The duration of
the voyage to India has been shortened by a third, and more than half
of the voyages to the East are now made through the canal rather than
around the Cape of Good Hope. The canal has been an important influence
in furthering the growth of the world’s steam tonnage, for it is
practically barred to sailing vessels by the difficulties of navigation
in the Red Sea; no sea-going sailing vessel has passed through it
for years. It has made possible the movement of bulky wares formerly
excluded from the trade with the East by the expense of transportation:
rice, wheat, petroleum, and coal. It has not, however, produced one
result which was expected, the diversion of trade to the countries of
southern Europe, as in the time before the passage around the Cape
had been discovered. Three quarters, in tonnage, of the ships using
the canal have been British, and ships from the countries of northern
Europe make up most of the remainder.

=364. The Panama Canal.=—Lesseps could not match in America the success
which he had attained at Suez. A French company promoted by him started
work at Panama in 1881, but became bankrupt before it had made much
progress. Mismanagement at home, disease on the isthmus, above all the
tremendous difficulties which nature has placed in the way of a canal
at sea level, contributed to this result. The United States took up as
a national enterprise a work which now offered but little attraction
to private capital, bought out the French company, and in 1904 made
arrangements to begin operations. Taught by the experience of the past
the government decided on a canal with locks, reaching an altitude of
85 feet above sea level, and took the precautions suggested by sanitary
science to protect the laborers against the menaces of plague, yellow
fever and malaria. Under army engineers the work was carried on to a
successful conclusion, and the canal was opened to traffic in August,
1914. The cost of construction was about $350,000,000.

In the first year of its operation the Panama Canal accommodated
about five million tons of shipping; in the year ending in 1920 the
figure had risen to about ten. The dislocation of traffic caused by
the European War, and interruptions occasioned by earthslides in the
Gaillard cut, made the growth of traffic slow and somewhat irregular.
Figures for the traffic of the Suez Canal given in the preceding
section show that the canal across the American isthmus could not
rival in its early years the position of its older competitor for the
world’s trade. Even more impressive is a comparison with the figures
of traffic through the Sault Ste. Marie canals, on the northern border
of the United States. The cargo tonnage by the lake route in 1920 was
over _eight_-fold that carried through the isthmus. The Panama Canal,
to 1920, had just about paid the expense of operation and maintenance.
There seems no question, however, that apart from important military
considerations, the construction of the canal will be justified by the
contribution that it will make to the commercial development of the
Pacific.

=365. The postal service about 1800.=—Increased facility in sending
communications to a distance has attended the improvement of the means
of transportation by land and sea. During the early part of the century
the postal service was still cramped by old methods and high charges.
In England, for instance, in the period after 1827 and before the
reform, postage of fourpence (eight cents) was charged for the carriage
of a letter any distance not exceeding 15 miles, and the postage
increased with the distance: 8 pence for 80 miles, 12 pence for 300,
15 pence for 600, etc. The government charged, in some cases, nearly
five hundred times the actual cost. Under these conditions little use,
naturally, was made of the post, and it carried, on an annual average,
only three letters for each member of the population. Many letters were
sent illicitly by private means of conveyance, and the postal revenue
remained nearly stationary for many years before 1839, in spite of the
growth of the country in population and business activity. Conditions
were better in some states of the Continent, notably Germany, but would
still be regarded everywhere as backward.

=366. Postal reforms and their results.=—A new era in the English
postal system dates from the introduction by Rowland Hill of the penny
post; after 1840 a letter weighing not over half an ounce could be
sent to any place in the United Kingdom if prepaid by a stamp costing
one penny. Similar reductions were adopted in other countries; and new
facilities were extended for the mailing of cards, printed matter, and
periodicals, samples of merchandise, etc. An international Postal Union
was established in 1874 among the chief countries of the world, which
agreed on common rates of foreign postage, and arranged to cooperate
in carrying on the postal service. This Union has improved greatly
the means of distant postal communication, and has grown to include
practically the whole civilized world, with the exception of China.

It is easy to follow the effects of the various reforms and
improvements in the increased use of the mails. In the United Kingdom,
for instance, the number of letters sent per head of the population has
increased as follows: 1839, 3; 1840, 7; 1872, 28; 1882, 35. The post
has developed from a luxury into a social and industrial necessity, and
the extent to which it is used in any country furnishes a fair index by
which to judge of the country’s advancement. The following countries
may be taken as examples, the figures showing the number of pieces
of mail sent annually about 1900, per head of the population: United
States, 100; United Kingdom, 85; Germany, 81; France, 55; Italy, 17;
Japan, 13; Spain, 12; Russian Empire, 5.

=367. The telegraph before the application of electricity.=—In passing
to another subject, electricity, we may still consider ourselves as
continuing the discussion of the applications of steam, so dependent
are we still on coal and steam for the means of producing and using
this new force. Among the manifold applications of electricity in
modern life we must here confine ourselves to its use as a means of
communication.

The telegraph, a word meaning “far-writing,” existed long before men
thought of applying electricity to its operation. The need of sending
messages quickly to distant places had led in many countries, before
1800, to a system of signaling by means of instruments much like the
semaphores of the modern railroad. The crudeness of such a system is
apparent. Communication depended entirely on clear weather and careful
observers. Under favorable conditions the speed of signaling was
really surprising; a despatch could be sent, for instance, from Paris
to Strassburg, by 45 stations, in 6-1/2 minutes. It was estimated,
however, that of the messages received only a quarter reached their
destination promptly, another quarter were from six to twenty-four
hours late, while half had to be forwarded by the ordinary post. Aerial
telegraphy, therefore, never attained to great importance, and was
restricted largely to government business.

=368. The electric telegraph.=—Practical telegraphy dates from about
1840, when the inventions of the American Morse, and the Englishman
Wheatstone, made the use of electricity possible wherever an insulated
conductor could be laid. Imperfect as were the early instruments they
accomplished their purpose with remarkable success. The telegraph,
indeed, has probably undergone less change in the course of its
extension and practical development than any other invention of equal
importance. We must look, therefore, to explain the great extension
of its use, as shown in the statistics at the opening of the chapter,
not so much for technical improvements as for a recognition of the
value of the telegraph on the part of the public. It found an immediate
application on the railroads, and provided them with a means of
intelligence and control almost as important as is the nervous system
to a human being. It was used at once, moreover, by governments. Little
by little it made its way into business life, where it has found
its chief field of usefulness, and where it has effected some most
important changes, to be noted later.

Since about 1880 the telephone has made a place for itself beside
the telegraph, serving the convenience of individual consumers as
the telegraph serves the needs of the great captains of industry
and commerce, and constantly strengthening its position also as an
instrument for the transaction of business.

=369. Submarine telegraph lines.=—The telegraph, which soon became
of national and international importance, was still of restricted
influence so long as it was confined to the land lines. Experiments
on a modest scale, about the middle of the century, had shown the
possibility of conducting the electric current through an insulated
cable under water, and the world waited only for men of faith and
energy to connect continents by submarine lines. A group of prominent
Americans, of whom Cyrus W. Field was the leader, took up the project
of an Atlantic cable, failed twice in their attempts to lay it,
and succeeded in 1858 only to find, after a few days of successful
operation, that the cable had ceased to work. The project rested during
the Civil War, but in 1866 was finally accomplished. The extension of
submarine cables since that time may be followed in the statistics of
the preceding chapter. Cables now unite the peoples of all civilized
nations, and form an indispensable part of the modern world of thought,
politics, and commerce.

=370. Wireless telegraphy.=—To the men who were struggling to unite
continents by electrical conductors the idea that connection for the
purposes of communication could be established without any conductors
whatever would have seemed an idle dream. Yet this result has been
attained by wireless telegraphy. Electrical waves sent broadcast from
a transmitting station affect delicate instruments “tuned” to receive
them at a distance of thousands of miles, and enable messages to be
sent across unsounded seas or untraversed deserts with equal facility.
Wireless telegraphy has not displaced the older form, which still
is and probably always will be more reliable in operation. For many
purposes, however, it is a useful supplement, and for one important
use it is an indispensable substitute. Wireless instruments can be
established as readily on board ship as on land, and so permit ships to
communicate with each other and with the shore. Ships can summon aid
in time of emergency, and can regularly keep in touch with their agents
so that their movements can be directed to suit the need of markets.
In 1914 over 500 wireless stations had been established on land, and
nearly ten-fold that number on board ship.


QUESTIONS AND TOPICS

 1. American clippers. [Marvin, Amer. merchant marine, chap. 12; Clark,
 in Harper’s Magazine, 1908, vol. 117, p. 92 ff.]

 2. Is it probable that steamers will drive sailing vessels entirely
 from the seas? People once thought that railroads would cause a
 decline in the demand for draft-horses; has that been the case?

 3. The life of the merchant sailor. [W. Clark Russell, Scribner’s
 Magazine, July, 1893, 14: 3-19.]

 4. Early voyages by steam across the Atlantic. [Fry, 33-42.]

 5. Improvement of marine engines. [Thurston, chap. 5: Maginnis,
 chap. 11 (technical, good plates and pictures); Chadwick in Ocean
 steamships, pp. 1-56.]

 6. The building of an ocean steamer. [Rideing, in Ocean steamships,
 pp. 91-111.]

 7. Freight traffic by ocean steamers. [Gould, Scribner’s Magazine,
 Nov., 1891, or in Ocean steamships, p. 217 ff.]

 8. Passenger travel. [Same, Magazine, April, 1891, Steamships, p. 112
 ff.]

 9. Steamship lines of the world. [Hunt, Scribner’s Magazine, Sept.,
 1891, Ocean steamships, p. 253 ff.; Encyc. Brit.]

 10. Write the history of one of the great steamship companies: Cunard,
 Inman, White Star, North German Lloyd, Hamburg American, etc. [Fry,
 Maginnis.]

 11. Engineering achievements in modern ports. [Vernon-Harcourt, chaps.
 9, 10.]

 12. The Manchester ship canal. [Vernon-Harcourt, chap. 13; Porritt in
 Yale Review, vol. 3, 295-310.]

 13. The Corinth Canal. [Vernon-Harcourt, chap. 14; U. S. Monthly
 Summary, Dec., 1901.]

 14. Construction of the Suez Canal. [Vernon-Harcourt, chap. 14; Encyc.]

 15. Effects of the Suez Canal. [Fairlie; U. S. Monthly Summary, Dec.,
 1901.]

 16. Effect of the Panama Canal on routes and traffic. [Hutchinson
 gives a study of results as anticipated; see U. S. Statistical
 Abstract and periodical literature for actual results.]

 17. Development of the English postal system in the nineteenth
 century. [Social England, 6: 237-246; Ward, Reign of Queen Victoria,
 2: 118 ff.]

 18. The railroad mail service. [Amer. railway, p. 312 ff.]

 19. From the figures of trade given in sect. 319 and from the figures
 of population in the Statesman’s Year-Book a table can be constructed
 giving the commerce per head of the people of different states, for
 comparison with the postal statistics in the text. Note, however, that
 these statistics include domestic mail, while figures of internal
 commerce are lacking. The U. S., for instance, would seem to have but
 slight commerce per capita, in spite of the active use of the mails,
 because the bulk of our trade is internal and does not appear in
 statistics.

 20. Development of the telegraph. [Iles, chap. 13.]

 21. Extension of the telegraph system in the United States. [Eckert in
 Depew, One hund. years, chap. 19.]

 22. History of the submarine telegraph. [Iles, chap. 14; Charles
 Bright, The story of the Atlantic cable, N. Y., Appleton, 1903, $1; U.
 S. Monthly Summary, Commerce and Finance, Jan., 1899, pp. 1653-1675.]

 23. Development of the telephone. [Hudson in Depew, One hundred years,
 chap. 20.]

 24. Distribution of wireless stations. [Map in Statesman’s Year Book,
 1914, plate 4.]


BIBLIOGRAPHY

 For carefully studied accounts of ocean transportation in its
 different aspects see Joseph R. Smith, *Organization of ocean
 commerce, Boston, 1905, The ocean carrier, by the same author, N. Y.,
 1908, and Emory R. Johnson and G. G. Huebner, *Principles of ocean
 transportation, N. Y., 1919. These books offer bibliographies which
 may be used to supplement references here given. On the development of
 sailing ships, beside the older books by Lindsay and Cornewall-Jones,
 see Adam W. Kirkaldy, British shipping, London, 1914, A. H. Clark,
 The clipper ship era, 1911, books by Basil Lubbock on ships of the
 clipper period, and references given later for American shipping; on
 steamships there are satisfactory accounts in Fry and Maginnis and in
 the collection entitled Ocean steamships. Excellent chapters on the
 different ship canals, with further references, are given in Johnson
 and Huebner. See also Lincoln Hutchinson, The Panama Canal, N. Y.,
 1915.

 Summary accounts of the development of the postal service,
 satisfactory for the purposes of most readers of this book, will be
 found in the encyclopedias. A scholarly study of the development,
 particularly in the first half of the nineteenth century, is
 provided by J. C. Hemmeon, History of the British post office,
 Cambridge, Harvard University, 1912. The various applications of
 electricity are fully treated by Iles. Other books aiming to describe
 electrical applications for the general public are by Tunzelmann in
 the Contemporary Science Series, Park Benjamin, and Philip Atkinson.
 Consult the A. L. A. Catalogue for further references.




CHAPTER XXXII

THE WARES OF COMMERCE


=371. Effect on commerce of technical progress.=—It is now time to
discuss the effects on commerce of the technical changes which have
been described in preceding chapters. Following back the substance
of those chapters, the effects may be briefly summarized as follows.
First, an improvement in the means of communication and transportation
which has brought men and goods of different regions vastly nearer to
each other than they have ever been before in the world’s history.
Second, a control over the forces and materials of nature which has
enabled men to manufacture old wares more cheaply and new wares which
were before unknown. Third, as a result of the development of the
transportation system, the settlement of new countries with virgin soil
and rich mineral resources, and the connection of these countries with
each other and with the countries of the Old World.

Of these three factors any one alone would be a powerful stimulus to
trade; the three working together account for the astounding growth
of commerce during the nineteenth century. Comparing the present and
earlier periods we may characterize the advance by saying that in the
Middle Ages commerce concerned itself almost entirely with the luxuries
of life; that in the modern period (1500-1800) it served mainly
men’s comfort; while in the recent period, since 1800, it has become
necessary to the very existence of a considerable part of mankind.

=372. Growth of the sphere of commerce and resulting specialization of
production.=—The world has gone far toward realizing the ideal of the
early free trader, that wherever a man might be, he should share in
the productive advantages of all other men, wherever they might be.
Customs tariffs have been able to check the movement of commerce; they
have been powerless to stop it. The sphere of ordinary trade, which was
once the manor, a mere hamlet or village; which grew in time to be the
town with its surrounding country; then included the whole nation; and
became in the modern period international,—this sphere of regular and
ordinary trade is now the world. Whole countries now specialize in the
production of different articles, as individuals or small districts
once did.

Northwestern Europe has become a great factory, drawing its food
supplies and raw materials from distant parts of the world, and
exporting manufactured products in exchange. Beside Europe stands
the continent of North America, supplying in large part the needs of
its own people for manufactures, and producing a surplus for export.
North America, indeed, stands in one aspect above Europe, for it has
unexhausted stores of natural resources which it lavishes on other
parts of the world less richly endowed. The other continents take
subordinate positions. They are enabled by commerce to procure from
Europe and North America the manufactured goods which they require, and
specialize in the production of various food supplies and raw materials
for the means of purchasing these goods.

=373. Abolition of the slave trade.=—The description of the present
world-organization of production, and of the exchange of wares to which
it gives rise, belongs to the department of commercial geography. It is
proper here, however, to call attention to some of the marked changes
in the wares of trade which have taken place since 1800.

One ware which was, before 1800, of great commercial importance, and
which yielded immense profits to those who dealt in it, has disappeared
with the abolition of the slave trade by all civilized nations. Long
before the abolition of slavery itself, humanity revolted against the
horrors of the “middle passage,” and the protests took effective form
about 1800; the states of Europe and America agreed, one after another,
that the slave-trade under their flags, and for the supply of their
territories, should cease.

=374. The great wares of commerce. Coal.=—For the purpose of a
summary survey the most important wares of commerce before 1800 can
be designated as belonging to the two classes, colonial products and
textiles. We shall have to note, in ensuing sections, striking changes
affecting both of these classes, and the addition to the important
wares of commerce of two new classes, mineral products and foodstuffs.

Taking first the mineral products, and including coal with them, as
common usage justifies us in doing, we find, at first sight, that this
article takes a far lower rank among the modern wares than we should
expect from its commanding importance in industrial life. There has
been, it is true, a great growth in the coal trade, and considerable
quantities are exported from England, Belgium, Germany, on occasion
the United States, etc., for use in countries lacking coal mines, or
at sea. There is an immense internal commerce in coal. In 1900 more
than half of the tonnage carried on the railroads of the United States
consisted of mining products; and of these coal certainly formed a very
considerable, perhaps the major, part. Still coal does not rank among
the chief wares of foreign trade.

=375. Metals and Manufactures.=—An explanation of the comparative
insignificance of coal in foreign trade is found in its bulk. An active
industrial people can compress the value of coal, as it were, by using
it near the mines for the production and transformation of other
materials. Coal is transmuted into iron and manufactures, and so loses
its identity, though it remains still the real power behind the exports
of that character.

Commerce in iron and steel, and the manufactures depending on them, has
increased enormously in the course of the century, as the reader may
readily suppose. Supplies of iron and machinery flow from the centers
of production to the less advanced countries, and the simpler tools
penetrate every nook and corner of the earth. Copper has grown greatly
in importance, as its use for electrical appliances has extended, and
now forms a considerable item in exchanges of countries like the United
States and Germany.

=376. Petroleum.=—Nor is the new commercial significance of mineral
products confined to the metals. In the last half century the trade
in mineral oil (petroleum, “kerosene”) has become a necessary part
of the world’s economy. One result of the great improvements in
manufactures and transportation was a demand, from all sides, for more
light. Artificial illumination was needed for the full utilization
of machinery and means of transportation; and to provide light for
the newspaper reading, study, and recreation to which people gave
themselves in increasing numbers. The first half of the century
witnessed many improvements: the invention of matches, the introduction
of glass lamp-chimneys, the spread of gas lighting, and the use of
new oils for illumination. No previous advance, however, compares in
importance with the discovery that crude petroleum could be made the
source of a cheap and efficient means of illumination. The development
of the petroleum trade in the space of little more than a generation
is a matter of common knowledge, and is readily explained by the
importance of the service which it performs.

=377. The grain trade; slight development before 1800.=—Important and
characteristic as the trade in mineral products has grown to be in the
nineteenth century, it is still far from first place among the branches
of the world’s commerce. The primacy belongs, without question, to the
trade in foodstuffs, especially grain.

Before the development of the modern system of transportation commerce
in foodstuffs concerned itself largely with the condiments rather than
the aliments, with spices and seasoning rather than the substantial
food staples. Even at a freight rate of 15 cents per ton-mile (and
the expense of transportation on European roads before 1800 was
certainly far above that), wheat at $1.50 a bushel would be limited
to a trade-radius of 330 miles; the whole value of the wheat would be
consumed in transporting it that distance. Transportation by sea was,
of course, much less costly, and enabled limited amounts of food to
be imported under favorable conditions. Still, food has to be grown
on land, and often on land distant from any means of water carriage;
and the countries of Europe were forced in general to a policy of
self-sufficiency, raising the requisite supplies of food at home under
conditions however unfavorable. We may appreciate the short space of
time separating us from this state of affairs by noting that in France,
even in 1817, people were dying of famine in Lorraine, while wheat was
abundant in Brittany; the carriage of provisions from one province to
the other quadrupled prices. In Russia, even later (Pskov, 1845), the
same conditions prevailed.

=378. Extent and importance of the grain trade at present.=—Grain
formed, therefore, one of the least considerable of the wares of
foreign commerce before 1800. A French economist estimated the
international trade in grain at 30 million bushels at most. From that
figure, comparatively insignificant, the grain trade of the world had
risen, even in 1887, to over 1,500 million bushels; grain formed then,
in value, almost one tenth of the total of the wares of trade, and in
importance far exceeded any other ware. The expense of transportation
had undergone such a vast diminution that one day’s wages of a common
laborer would pay for the carriage over a thousand miles of all the
grain and meat which he needed for a year’s subsistence.

It would be interesting, if time permitted, to note the far-reaching
social and political effects of this revolution. We must, however,
confine ourselves to its economic aspect. The English people, to take
the most striking example, depend for more than half of their food
supply, perhaps two thirds of their wheat supply, on imports from
abroad. It is said that in every month in the year wheat is harvested
in some country, of the northern or of the southern hemisphere, for the
English market; a Floating Cargoes List reported 163 vessels bound
for England with cereals, at sea at one time. As formerly the citizens
of London depended on the farmer of a nearby county for the supply of
his daily bread, so now the inhabitants of England in general depend
upon people in the Dakotas, in California, in the Argentine Republic,
in Egypt, in India, or in Australia. The Englishman is enabled, by
commerce, to share in the agricultural advantages of any and all those
countries; he applies himself to his specialty and exchanges the
product for his food.

=379. Commerce in other foodstuffs.=—In some respects even more
striking, though on the whole of far less importance, has been the
growth of foreign commerce in stock and meat. About 1800 the common
way of marketing meat was to drive it to market on the hoof; the trip
might consume a number of days, and the animal would arrive in poor
condition and with weight diminished. For transportation to distant
countries meat had to be preserved by pickling in brine. Fresh meat
of good quality was a luxury, and the average consumption of meat
was small. Modern progress has solved the problem of using the great
grazing spaces of North and South America and Australia for the supply
of distant peoples, in two ways. Improvements in transportation by
land and sea have allowed the carriage of live-stock for thousands
of miles, in good condition. The use of refrigerating appliances,
especially artificial refrigeration by means of steam power, has
permitted the carriage of dead meat the same distance without
deterioration. Furthermore, the application of scientific principles
to the preservation of meat has enabled supplies of that article to
be utilized which would otherwise be wasted, and has contributed
a new form of ware to modern trade. Other foodstuffs (fruit and
fresh vegetables) have profited by similar advances in the means of
transportation and preservation.

=380. The textiles; changes in relative importance.=—In this brief
survey only two more classes of wares may be noted, the textiles, and
colonial products. Trade in wares of both these classes has undergone
a great development and important transformation in the course of the
century, though it presents no such revolutionary changes as in the
case of wares described above.

The textiles have continued to be among the most important wares of
commerce. A population, advancing rapidly not only in numbers but in
average purchasing power, has demanded constantly increasing supplies
of clothing material. There has been, however, a noteworthy change
in the kind of fabric demanded. Measuring by the weight of the raw
material consumed, the English textiles about 1800 were composed as
follows: over two fifths woolen, over two fifths linen, considerably
less than one fifth cotton. Note now the change as shown by conditions
about 1880: wool made up one fifth of the total, linen little more than
one tenth, while cotton had risen to two thirds. For some purposes
cotton fabrics are better than those of any other material, for
other purposes they present a cheap and satisfactory substitute; and
consequently they have been able to displace other textiles to a large
extent.

=381. Commerce in raw materials for the textile manufacture.=—The
rise in importance of cotton is partly, not entirely, responsible
for a great change in the character of the textile trade. With the
exception of silk, which has always, because of its high price, been of
restricted use, the raw materials for the textiles had formerly been
produced in the country of manufacture. England and the Netherlands,
it is true, had begun before 1800 to import wool from Spain, but
wool was then an object of internal rather than foreign trade, in
general, and flax was raised for home consumption in practically all
the European countries. The introduction of the cotton manufacture
in Europe introduced a change, for in the case of this textile the
raw material as well as the finished product was necessarily a ware
of foreign trade. The past century has witnessed a vast increase in
the commerce in raw cotton, and, moreover, the establishment of an
important trade in raw wool. In 1850 Europe still supplied four fifths
of the wool consumed, and has continued since that date to produce
about the same quantity as then. The proportion which it contributes to
the total supply has, however, declined to less than one third. There
has been an immense increase in the production of wool in South America
and Australia, and a less notable advance in the amounts furnished by
Africa and Asia. At the present time, therefore, raw wool flows to
Europe from all the other continents, and returns to them in the form
of finished goods.

=382. Colonial products.=—The last class of wares to engage our
attention will be that of the so-called colonial products, of which
tea, coffee, and sugar are familiar examples. The wares received their
name because, before 1800, Europe depended entirely on distant parts of
the world for their supply. The reader will remember what an important
part they played in the commerce of countries like England and France,
in the modern period.

At least one ware of considerable commercial importance has been added
to the list of colonial products in the course of the century. Rubber
(using that word to cover also gutta-percha, an article with somewhat
different qualities), counted for little in commerce before 1830. Soon
after that time, however, it was regarded as “promising,” and the
discovery of the vulcanizing process by Goodyear enabled manufacturers
to gain the full benefit of its valuable qualities, elasticity,
impermeability, etc. It is now an indispensable article in many
applications, and though the production has risen to a hundred million
pounds a year the demand for it has increased still more rapidly, and
the price has risen.

The old wares have not only retained but also increased their
importance as elements in human consumption. The people of Germany
consumed, on an individual average, about 2 pounds of coffee in 1840, 6
pounds in 1900; 4 pounds of sugar in 1840, 30 pounds in 1900. Figures
from other countries present, with some variations, the same growth in
demand. The people of the United States now demand over 10 pounds of
coffee _per capita_, and over 70 pounds of sugar.

=383. Rise of beet sugar, and effect on commerce.=—One of the colonial
wares, sugar, demands special attention. The methods of production
have undergone a complete change in the course of the century, and
the former currents of trade in sugar have, in some cases, actually
been reversed. Before 1800 people relied entirely for their sugar
supply on the cane plantations of the colonies. It was known already,
however, that beets contained a large percentage of sugar, and during
the Napoleonic wars, when the Continent was closed in large part
to colonial imports, an attempt was made to secure sugar from this
native source of supply. The attempt was sufficiently successful to
stimulate further efforts. With the aid of liberal protection from the
governments a beet sugar industry was established on the Continent
in the first half of the century. That industry supplied in 1860 one
quarter of the total amount of the sugar of the world, in 1882 one
half, in 1900 nearly two thirds.

The change in the method of manufacturing sugar has had far-reaching
effects on commerce. Countries with cane plantations have seen the
price of sugar fall under the increased output of European factories,
equipped and operated with scientific accuracy; they have lost a
large part of their former market; some of them have been almost
ruined. England, which once made great profit by importing cane sugar
and distributing it among the other European countries, now, on the
contrary, goes to the Continent for the larger part of its sugar
supply; and continental states like Germany and France export sugar
instead of importing it.

=384. The European sugar bounty system.=—The reader should, however,
note carefully that these changes were due in large part to a system
of protection which had grown to formidable proportions. European
governments have found in sugar a convenient object of taxation, but
have desired at the same time to further the growth of the home sugar
industry, and to secure for it a market in foreign countries. They
have sought to combine the two objects by taxing the home consumer,
and by remitting the tax and giving special premiums to the exporter.
A pound of sugar cost far more in a country of Europe where it was
manufactured, than in the country to which it was exported; every pound
sold at home had to bear a tax, and every pound sent abroad received a
premium which enabled it to be sold more cheaply. The orange marmalade
industry, for which the town of Dundee is famous, could flourish in
spite of the expense of transporting the fruit from Spain to Scotland,
because sugar was artificially cheap in the English market. Such a
condition of affairs was admitted to be unwholesome; in some aspects it
became absurd. The burden of the bounty system became intolerable and
the governments of the Continent agreed upon measures of reform, which
went into effect in 1903.


QUESTIONS AND TOPICS

 1. Make a brief written summary of the contents of preceding chapters
 under the heads of section 371.

 2. On an outline map of Europe indicate areas corresponding to the
 sphere of commerce in different periods, with approximate dates.

 3. Suppression of the slave trade. [Schuyler, Amer. diplomacy, N.Y.,
 1886, chap. 5.]

 4. Recent slave trade in Africa. [Biography of a modern missionary or
 explorer.]

 5. The coal trade at the close of the century. [Special Consular
 Report, No. 21, 1900, part 1, Foreign markets for American coal; U. S.
 Monthly Summary of Commerce and Finance, April, 1900, vol. 7, no. 10,
 pp. 2815-2927, or Sept., 1902, vol. 10, no. 3, pp. 663-757.]

 6. On the wares of 375 and the following sections prepare reports,
 indicating, where it is possible, the following points: total amount
 of the world’s product; the leading countries (perhaps six), the share
 of each, and their relative advantages; the chief importing countries;
 peculiar characteristics of the trade. [Commercial geographies,
 encyclopedias.]

 7. Report on one of the following topics:

 (_a_) Development of the uses of petroleum.

 (_b_) History of the production and transportation of petroleum.

 (_c_) The Standard Oil Company.

 [Martin, Coal; encyclopedias; Gilbert H. Montague, The rise and
 progress of the Standard Oil Company, N. Y., Harper, 1903, $1; Ida M.
 Tarbell, The History of the Standard Oil Company, N. Y., 1904.]

 8. Indicate on an outline map the distance from your home to
 which wheat could profitably be carried by different means of
 transportation. [See below, sect. 387, for convenient statistics.]

 9. Character and value of wheat. [Edgar, Story, chaps. 1, 2.]

 10. Explain the great fluctuations in the export of wheat from the U.
 S. in the nineteenth century. [See statistics in U. S. Statistical
 Abstract.]

 11. Wheat in modern commerce. [Edgar, Story, chap. 4.]

 12. Provision trade of the world. [U. S. Monthly Summary, Feb., 1900,
 vol. 7, no. 8, pp. 2297-2347.]

 13. American canning interests. [Judge in Depew, One hundred years,
 chap. 57.]

 14. What amount does an American household, your own for instance,
 spend in a year for each of the chief textiles: cotton, wool, linen,
 silk?

 15. The cotton trade of the United States and of the world. [See
 above, sect. 378, for suggestion of a simple mode of treating a
 large subject; the topic may be amplified as time permits. F.
 Wilkinson, Story of cotton, N. Y., Appleton, $1; S. J. Chapman, The
 cotton industry, London, 1905; George Bigwood, Cotton, London, 1918;
 statistics in U. S. Monthly Summary, vol. 7, no. 9, pp. 2543-2635.]

 16. The wool trade. [John H. Clapham, The woolen industries, London,
 1907; Frank Ormerod, Wool, London, 1918.]

 17. Write a history of one of the following, as a ware of commerce in
 the nineteenth century: rubber, tea, coffee.

 18. History of sugar as a commodity. [See the doctor’s dissertation by
 Ellen D. Ellis, Philadelphia, 1905.]

 19. What amount of tea, coffee, and sugar does your household consume
 in a year? (Note that sugar is frequently purchased in preserves,
 cake, etc.)

 20. History of beet sugar. [Encyclopedias; index to periodical
 literature; U. S. Monthly Summary, Jan., 1902, vol. 9, no. 7, pp.
 2585-2763.]

 21. Some effects of the system of sugar bounties. [Charles S. Parker,
 Free trade and cheap sugar, Fortnightly Review, 1898, 70: 44-53.]

 22. The Brussels sugar conference. [Economic Journal, June, 1902,
 12: 217 ff.; same, March, 1904, 14: 34 ff.; Quarterly Journal of
 Economics, Nov., 1902, 17: 1 ff., Contemporary Review, Jan., 1903, 83:
 75.]


BIBLIOGRAPHY

 As this chapter touches the field of commercial geography I refer,
 for bibliography and general reading, to the current manuals on that
 subject: C. C. Adams, Text-book, N. Y., Appleton; G. S. Chisholm,
 Handbook, N. Y., Longmans; Joseph Russell Smith, Industrial and
 commercial geography, N. Y., Holt.

 References in quantity sufficient for ordinary students are given in
 the Questions and Topics above; further references will be given when
 the history of the commerce of specific countries is considered.




CHAPTER XXXIII

THE MODERN ORGANIZATION


=385. Qualities of modern commerce. Certainty.=—The changes in the
instruments and objects of commerce, described in preceding chapters,
have had far-reaching effects on commercial methods and organization,
to which the reader is now asked to give his attention. As a partial
summary of what has gone before, and a preparation for what is to
follow, modern commerce may be said to have made great gains in four
important qualities: certainty, regularity, economy, sensitiveness.

In former times a merchant who gave an order involving the
transportation of goods over considerable distances took a leap in the
dark. He was fortunate if he could estimate with some accuracy the
expense of transportation; he was almost helpless in estimating the
time that would be consumed. So dependent were men on wind and weather,
heat and cold, war and peace, and all the manifold conditions of nature
and man, that loss was frequent and delay was constant. The element
of chance, great by nature, was heightened by man; carriers were
emboldened to make the most of their opportunities and to extort from
the merchant all that the difficulties of his position might force him
to pay.

Contrast these conditions, as they existed in the period before
1800, with conditions at the present time. The modern system of
transportation has been likened to clockwork. The modern merchant
feels aggrieved if a telegram is delayed a few minutes, a train a few
hours, a steamer a few days. His expectations, indeed, are seldom
disappointed, and even then he is often informed of the probable
duration of the delay, and is enabled to prepare for it. The rates of
transportation now are relatively stable, and, for the most part,
are a matter of public knowledge. We have not yet reached perfection
in this respect, as is shown by the wide-spread complaints against
American railroad managers, but we have approached nearer to it than
would have been imagined possible a century ago.

=386. Regularity.=—Certainty brings with it regularity. Steamers
which are sure to arrive within a certain period can be advertised
to leave on certain days. Merchants and producers are encouraged to
make their preparations, and the whole body of people is stimulated to
new activity and efficiency. Consider the following example, which,
however trivial in itself, is typical of the course of development in
the nineteenth century. “Before the establishment of steam-vessels,
the market at Cork was most irregularly supplied with eggs from the
surrounding district; at certain seasons they were exceedingly abundant
and cheap, but these seasons were sure to be followed by periods
of scarcity and high prices, and at times it is said to have been
difficult to purchase eggs at any price in the market. At the first
opening of the improved channel of conveyance to England (the steamer),
the residents of Cork had to complain of the constant high price of
this and other articles of farm produce; but as a more extensive market
was now permanently open to them, the farmers gave their attention to
the rearing and keeping of poultry, and, at the present time (1838),
eggs are procurable at all seasons in the market at Cork, not, it
is true, at the extremely low rate at which they could formerly be
sometimes bought, but still at much less than the average price of
the year. A like result has followed the introduction of this great
improvement in regard to the supply and cost of various other articles
of produce.”

=387. Economy.=—As to the economy in the carriage of wares resulting
from recent improvements much has already been said in other chapters,
but the student may find in the following estimate, by a German author,
a helpful summary. For $3 a hundred kilograms of wheat (220 pounds, a
little less than 4 bushels) could be carried the following distances
in kilometers (about five eights of a mile): on a common road 100,
on a good road 400, on an early railroad 1,500, on a modern railroad
4,500, on an ocean steamer 25,000. There is little danger that the
student will underestimate the advantage to commerce of this reduction
in the cost of carriage, but he should note also the economy resulting
from the speed and certainty of modern instruments of transportation.
A considerable part of the world’s capital, a century ago, was locked
up in goods in transit or in warehouse. These goods were of no use to
anybody. Nowadays not only are goods put where they are wanted, they
are put there with such speed and certainty that merchants do not need
to keep a large stock on hand, and the stock in transit is relatively
small. In the India trade, for instance, when a voyage around the Cape
of Good Hope took a good part of a year, and the time of arrival could
not be calculated within a month or two, India merchants had to keep
great stocks to meet the varying demand. Now that steamers make the
trip by the Suez Canal in a month, and the time of their arrival is
exact to a day, dealers order goods as they are needed, and the great
India warehouses have been rendered in large part useless for their
original purpose.

=388. Sensitiveness.=—The modern commercial organization has been
likened to clock work, because of its regularity. Carrying further this
comparison, it may be said that it is like a delicate chronometer,
in which every movement is attended with the minimum of friction.
The power of modern commerce appears in the vast quantities of wares
which are exchanged through its agency; its sensitiveness is shown
by the readiness with which the currents of trade are turned or even
reversed to suit the occasion. It has been said that commerce turns
from one side of the globe to the other on a difference of a cent on
a bushel of grain, a dollar on a ton of metal, a quarter of a cent
a yard on a textile fabric, or a sixteenth of a cent on a pound of
sugar. So sensitive has the commercial world become to every stimulus
that it feels also every shock. When the McKinley tariff bill was
passed in the United States, it is said that the next day several
thousand workmen, employed in the manufacture of pearl buttons in a
city of far-off Austria, were thrown out of work. Brief interruptions
of commerce, by the outbreak of epidemic diseases, by storms or other
natural phenomena, or by strikes of workers engaged in transportation,
rouse serious anxiety. The sensitiveness of modern commerce may be
shown, further, by the refinements to which the principle of the
division of labor has been carried. It is said that in the leather
manufacture skins are sometimes sent across the ocean four times, to
effect economies in subordinate treatments.

=389. Importance of the telegraph, illustrated by conditions preceding
its introduction.=—While the various changes in commerce indicated
above can be ascribed largely to the use of steam in transportation,
they would be inconceivable, in their present form, if the electric
telegraph had not been extended over all lands and under all seas.

The importance of the telegraph in commerce can be illustrated by
conditions in Shanghai about 1870, before the cable reached that port.
The rate of foreign exchange, a decisive factor in all commercial
calculations, was at that time determined by European advices brought
by post steamers. The news brought by one steamer would make the
Chinese tael equivalent to 7.25 francs; on the arrival of another
steamer the rate would rise to 8.10. As merchants bought in taels and
sold in francs or other European currency, their profits and losses
were largely dependent on variations in the rate. Two mercantile
houses of Shanghai had found it worth their while to invest a large
sum in the construction of special vessels, which could be made like
modern torpedo boats, practically all machinery and hence very fast,
as the only cargo they had to carry was a single letter, bringing
from Singapore or Hong-Kong the European news affecting the rate
of exchange, many hours in advance of the regular steamer. The few
merchants who enjoyed the benefit of this news service had, of course,
a great advantage over their competitors, buying and selling with
full knowledge of what the rate would be. With the introduction of the
cable, however, all merchants shared alike in such information, and,
furthermore, by the continuous communication thus established, the
former violent fluctations in rates became a thing of the past.

=390. Services of the telegraph to the modern organization.=—Newspapers
spread broadcast the market quotations which are carried by the
telegraph to all parts of the world, and the farmer in the American
West, the cotton grower in the South, or the sheep raiser in Australia,
can learn with ease what prices his staple brings in the great markets
and what price he can ask for it. At the centers of business the great
merchants, in touch, by the post and telegraph, with both consumers and
producers, study to apportion the supply so that it will reach those
who stand most in need of it, and seek to regulate future production so
that there may be neither waste nor want when the product is brought
to market. The remarkable progress of Brazil in coffee production has
been explained by a student of the subject as due in large part to the
spread of the telegraph in South America and the laying of a cable to
Pernambuco in 1874, bringing the country into communication with the
world’s coffee markets.

The telegraph has, moreover, enabled commerce to dispense with a
whole army of middlemen, commission merchants, and brokers, who were
necessary under the old system, but who have now been released to find
more useful employments. Merchants in the wool trade, for example, send
their buyers to the countries of production on fast steamers, transmit
their instructions by telegraph, and bring the wool directly to the
country of consumption, cutting out entirely the middlemen of London,
Antwerp, and Havre, who once controlled the trade. Before the first
Atlantic cable was laid it cost about 3 per cent to get cotton through
the hands of the commission merchant and broker; the cable did away
with the old consignment system, and in a dozen years the charge was
reduced to about 1 per cent.

=391. Functions of the merchant.=—I spoke above of the elimination of
unnecessary middlemen. To many people all middlemen seem unnecessary,
and fit only for elimination. These people regard as worthless drones
all who are not engaged in the work of raising raw materials, of
manufactures, or of transportation; they see no reason why a man who
merely sits in an office, receives reports and writes letters, who
perhaps rarely sees the wares he “handles,” should grow rich off
society.

The defence of the middleman may be given in the words of an English
writer, describing the important part which merchants play in marketing
the great output of the British iron industry. “The merchant usually
has a better knowledge of the conditions affecting different markets
than the producer. He comes more directly in contact with the buyer;
he knows better to whom credit can safely be given, and is prepared
to risk credits that the manufacturer would often refuse; he is well
posted in railway and shipping rates and conditions, understands the
peculiarities, practices, and requirements of particular markets, and
has all other necessary commercial information, including freights
and tariff duties, at his fingers’ ends.” Surely the functions thus
suggested are sufficiently important to keep specialists employed, with
profit to society as well as to the individuals engaged.

=392. Growth in number and variety of the mercantile class.=—In fact,
the class of middlemen, those who are occupied merely in the exchange
of wares, has increased greatly in the course of the century. The great
commercial machine runs now with such power and smoothness, only by
the help of myriads of men who get their livelihood by tending it.
In Prussia, for example, the number of wholesale merchants or firms
increased twenty-fold in sixty years.

The change would lack a large part of its present significance if
it affected only the number of middlemen. It has been a change in
quality as well as quantity. The increase in business has furnished
the opportunity for a redistribution of tasks, and has led to a
specialization which was before impracticable. To be a jack of all
trades nowadays one must be a man of supreme genius; to be master of
one branch of trade is sufficient for the energy and the ambitions of
the ordinary man. It pays a few men to take the position of Charles
Broadway Rouse, to offer to buy anything and to sell everything.
Most wholesale merchants are content to confine themselves to one
branch of trade: lumber, iron, wool, leather, grain, etc. Most of
these merchants, moreover, rely further on specialists to help them
with certain parts of their business. They depend constantly on the
banker, the speculator, the broker, the forwarder, the warehouseman,
the commission merchant, and agents of many different kinds. It
is impossible, in this book, to do more than suggest the complex
commercial organization which has grown up in the course of the
century. Only a few of the most prominent features can be treated in
the following sections.

=393. Insurance and speculation.=—The practice of insurance has made us
familiar with the means by which producers secure themselves against
some of the risks of their business. A farmer can insure his growing
crop against hail, a merchant can insure his stock against loss by
fire, a shipowner can insure his vessel against loss at sea. For a
small annual payment, which the producer can well spare, he secures
himself against a loss which might prove ruinous, if it chanced to
come to him. He gains relief from anxiety, strengthens his credit (he
could not borrow on the security of uninsured goods), and secures that
regularity of operation which is essential to the greatest efficiency.

So obvious are the advantages of insurance that every one accepts it as
a benefit. We have now to see how the same service which is performed
for the producer by the insurance company is performed for the merchant
by the speculator. Among the greatest risks in commerce is that of
price changes due to great events (wet seasons or dry seasons, war or
peace, etc.) which the merchant can neither control nor foresee. A
grain merchant, for instance, who has bought some excellent wheat in
Dakota, has made advantageous arrangements for its transportation, and
is confident of finding a ready sale to an English miller, may find the
whole transaction results not in profit but in loss, if the level of
wheat prices falls before his sale is accomplished, by reason, perhaps,
of the unexpected yield of wheat in a distant country, or by the
conclusion of a great war. Why does he not sell the wheat in advance to
the miller, and so protect himself from this danger? He would simply be
shifting the burden to shoulders still less able to bear it. The miller
is a manufacturer, who needs to give all his thought to the technical
details of his business, and who can ill afford to buy wheat when it
is high, only to find when he comes to market the flour that it has
dropped in price, in sympathy with a decline in wheat.

=394. Services of the speculator to commerce.=—The class of speculators
has grown up in the course of the century, to assume such risks. It
can do great harm to business by creating risks where none naturally
existed, producing artificial scarcity by “corners,” etc.; this danger
should not blind us to the benefits it confers when it confines itself
to its legitimate business. Let us see how, in practice, this business
of speculation serves commerce.

A merchant who has bought wheat or cotton in America, for sale in the
Liverpool market, sells immediately an equal quantity for _future
delivery_, at a time when he expects to have his ware ready for sale
in England. It makes no difference to him then whether the general
price of his ware goes up or down. If prices go up he will have to pay
more to “cover” his sale of futures, but he will also get more for
his real ware. If prices go down he may not be able to get as much
for his real wheat or cotton as he expected, possibly not as much as
he paid for it; but he will make up just the difference, by the low
price at which he can cover. He renounces all chance at great gains,
but also secures himself against great loss, and is glad to pay the
speculator’s commission to attain this result. He makes his profit
by the differences in the price of wheat or cotton not at different
times, but in different places; reference to the section above, in
which the description of the modern merchant was quoted, will suggest
how he earns his living. In a manner similar to this many manufacturers
(millers or cotton manufacturers) protect themselves against variations
in the price of their raw material.

=395. Decline of the market and fair, and rise of the produce
exchange.=—I spoke above of the regularity of modern commerce as one
of its distinctive features. The gain in regularity shows itself
notably in institutions like the market, the fair, and the exchange.
The old system of market-days, under which country people came to
town on stated days to display their wares and enable housewives to
lay in a supply of provisions, has given place to a steady flow of
products through city shops and market halls to the consumers. Fairs
have lost their significance in modern countries, because the volume
of trade is now so great, and the instruments of trade are so highly
developed, that commerce has developed into one permanent fair. The
great expositions, which began toward the close of the eighteenth
century, but of which the London Exposition of 1851 (Crystal Palace)
was the first of world-wide significance, seem to have continued
to the present time the principle of periodical recurrence, but a
tendency to permanence is to be noted even with respect to them. Many
of these expositions have led to the establishment of museums of
industry, art, and commerce, and the use of permanent expositions of
models and samples has come to be a recognized means of furthering
industry and commerce. Finally, the nineteenth century has witnessed
the foundation of most of the modern produce exchanges, which have
proved indispensable to the rapid development of commerce in the great
staples. The experience of Hamburg is significant in this respect. The
coffee trade of that port declined after 1882, when Havre adopted the
system of dealings in futures, and did not recover until 1887, when
Hamburg adopted the system also, and then enjoyed a rapid growth of the
trade. These produce exchanges are to be found, with variations in the
wares handled and in the system pursued, in all advanced countries.
Germany, for instance, offers facilities for the characteristic trade
of a produce exchange (including dealings in futures), in the following
articles: wheat, rye, maize, oats, rye flour, crude alcohol, rape-seed
oil, kerosene, cotton, coffee, raw sugar, granulated sugar, and carded
wool.

=396. Contrast of the character of association in commerce and in
manufactures or transportation.=—A previous section, describing the
specialization of merchants in the nineteenth century, suggests
the gain which commerce has made in the way of cooperation. The
tendency, however, has been to split tasks up into small pieces, and
to distribute these among individuals or small groups, rather than to
associate great numbers of men under one management. We do not find in
strictly commercial undertakings the tremendous aggregations of men
and capital which have become characteristic of modern transportation
and manufactures. Modern trusts, it is true, have invaded the field of
commerce to a certain extent, and have effected some of their chief
economies in improved methods of marketing their products. What the
development may be along the line thus indicated is an interesting
subject for speculation, but a subject which cannot be allowed to
detain us here. Mercantile enterprises are still, for the most part,
carried on by individuals, by partnerships, or by corporations in which
the personal and local element is predominant.

=397. More efficient utilization of capital in modern trade.=—The
middleman, therefore, cannot as a rule secure the capital which he
needs for carrying on his business by offering securities for public
subscription through the stock exchange. He seems, in this respect,
at a disadvantage in comparison with the manufacturer, the railroad,
or the steamship operator. He is, however, better off in at least two
respects than his predecessors of an earlier time. First, he can do
much more business with the same amount of capital than was possible
under the old conditions. The great technical improvements have
resulted in a much more rapid “turn-over” of capital, and a merchant
now sells out and replenishes his stock far more rapidly than he could
formerly do. The instance of the India trade, given in a section above,
illustrates this fact. The “merchant princes” who once ruled this trade
by their great capital have given place to many smaller merchants, who
can make less capital suffice by its rapid turn-over.

=398. Benefit of banks to trade.=—Second, the deserving merchant can
manage with a smaller capital than formerly, because he can borrow more
easily and to much better advantage. The reader must be content with a
summary of the results of the development of banking in the course of
the century, for there is no space in which to treat the details of its
history. Banks have followed business throughout the world. They have
attracted the unused capital of the community until they control now
a fund of enormous dimensions, available for mercantile loans. On the
security of business paper (bills of exchange, bills of lading, drafts,
notes, etc.), merchants secure the use of this capital, and find their
means limited now only by the extent of their business. It is the
function of the banker to judge of the soundness of this business, and
to accord or withhold the use of the bank’s money according to the
promise of the enterprise. Mistakes are made, of course, but they are
comparatively rare because a mistake in either direction compromises
the bank’s success. Special institutions, the commercial and credit
agencies, have grown up since 1841, to aid bankers and merchants in
this delicate task of judging the credit of individuals.

=399. Criticism of the present organization; crises.=—Of the general
power and efficiency of the present organization there can be no
question. It meets the supreme test of maintaining a population greater
than in any previous period of the world’s history, on a scale of
comfort formerly unknown. That it is perfect, however, no sensible
man believes. We cannot discuss the many criticisms directed against
it from various points of view, but must not omit the consideration
of one confessed weakness. The organization is wonderfully efficient
in normal times, but it is unsteady. It passes, at intervals, through
periods of feverish activity, culminating in a crisis and followed
by dull stagnation. A curve showing the course of the world’s trade
during the century would not present a steady rise, but a series of
waves, with distinctly marked crest and trough. There is a waste of
labor and capital in all periods of a crisis. In the good times men
strain themselves to build railroads where they are not needed, or to
make machines for which there is no profitable use. Sooner or later
they come to their senses with a shock, and realize that they have been
wasting their time; then they are as depressed as they formerly were
sanguine, and are too timid for a time to make good use of the capital
which the crisis has left on their hands.

=400. Crises before 1850.=—The tendency of the commercial organization
to these interruptions in its regularity of operation, which was
apparent in advanced countries before 1800, has grown more marked
in the nineteenth century; and, with the spread of the modern
organization, crises now affect the whole world. Crises have occurred
at intervals of about eleven years since 1800. A crisis marked the end
of the Napoleonic wars in 1815. Another followed in 1825, occasioned,
in England, by speculation in banks, turnpikes, and canals, and by
unwise investments in South America. Commerce recovered from its
depression only to decline again after the crisis of 1836-39, which was
felt with particular severity in the United States in 1837. The last of
the crises in the first half of the century, and the first crisis for
which railroad speculation can be held largely responsible, followed
in 1847, and was the more severe on the Continent because it coincided
with a period of political revolution.

=401. Crises since 1850.=—Toward the middle of the century the new
instruments of steam transportation began to work their great changes.
At just this time, moreover, the discovery of gold in California (1848)
and in Australia (1851) led to an immense increase in the world’s stock
of gold, which is said to have doubled in little more than ten years.
The results, inflation and speculation, were as marked as though the
new money had been of paper, and a period of over-trading ceased only
with the outbreak of the crisis of 1857, which spread quickly from the
United States to England and thence to the Continent.

A longer period than usual intervened, broken only by local
disturbances (failure of a great English banking firm in 1866, “Black
Friday” in the United States, 1869). The crisis of 1873 was, perhaps,
on this account, more serious; it led to a depression of many years,
affecting all branches of trade, and even distant countries like
Australia and South America. Beginning, this time, on the Continent,
where the outcome of the Franco-Prussian war and the payment of
the great war indemnity had led to unprecedented speculation, it
found a ready field in the United States, where there had been an
active speculation in land and stocks, and proved to be the greatest
international crisis which the world has known. As though the air had
been cleared by this great storm, succeeding disturbances have been far
more restricted in their action. A banking crisis in France in 1882 and
a railroad crisis in the United States in 1884 were the chief events of
the next period of danger; and in more recent times have followed the
American currency crisis of 1893, and the German industrial crisis of
1901.

=402. Rise in the price level since 1896.=—Toward the close of the
nineteenth century a change became apparent in the very basis of
business, namely in the world’s money in which prices are expressed.
The prices of different commodities never rise or fall exactly in
unison, but it is possible by statistics to show the change in the
average of prices or the price level, as it is called; and a study of
recent statistics shows a rise in prices so extensive and so rapid as
to make it clearly a topic deserving serious attention from the student
of commercial development.

Taking for the basis of comparison the average of prices in the decade
1890-1899, the price of staple raw commodities in the United States
had risen in 1910 by almost 40%; or, comparing 1910 with 1896, when
prices were lowest, by 66.3%, almost two-thirds. The change has been
less marked in manufactured wares, for it has been offset to a certain
extent by improvements in methods of production, but still it is very
great: nearly 30% compared with the decade before 1900, and over 40%
compared with 1896.

=403. Effects of increase in the world’s gold production.=—Countless
factors have contributed to this result, in one way or another, but
economists are generally agreed that the one cause overshadowing all
others is the increase in the world’s output of gold. The metal which
is the basis of the world’s currency system has become so plentiful
that it has cheapened; and the purchaser of wares has now to give more
gold for them, that is, prices have risen.

From the time of the Californian and the Australian gold discoveries,
for almost half a century, the world’s annual gold output was curiously
constant, at a figure somewhat over _one_ hundred million dollars.
The discovery of new gold fields and the perfection of new processes
effected a revolution. The output of 1896 first exceeded the figure of
_two_ hundred million, in 1899 it passed the mark of _three_ hundred,
in 1906 and in succeeding years past 1910 it never fell below _four_
hundred million.

While some classes in the community lose in a period of rising prices,
particularly wage-earners and bond-holders whose income rises slowly in
comparison with the increase in the cost of living, the speculators,
merchants and manufacturers find in such a period a great opportunity
to make money and business rapidly expands. The following pages will
describe a noteworthy development of industry and trade in the period
immediately preceding the World War; and the reader will realize, even
when no reference is made to it, that the change in the price level
has been an important factor in the development. One caution, however,
seems at this point particularly advisable. Many of the statistics
following, in which the development is pictured, are given in terms
of money values. These figures grow with the rise in prices, even when
there is no change in the physical amount of business transacted, and
are an accurate index of the volume of trade only when they are reduced
to an extent corresponding with the rise of prices.


QUESTIONS AND TOPICS

 1. In the example given, sect. 386, distinguish the producer, the
 transporter, and the consumer. Show how each one of these gained by
 the advance in organization. Did any one lose by it?

 2. Of what wares are large amounts still kept in storehouses, and why?
 [Cf. U. S. Monthly Summary, Oct., 1903, vol. 11. no. 4, pp. 1033-1095,
 Warehousing industry in U. S.]

 3. Study, from newspaper accounts, the effect of an interruption of
 commerce by one of the causes suggested in the text.

 4. Distinguishing producer, middleman, and consumer, show what has
 been the effect on each of the introduction of the telegraph.

 5. Service of the postal system to commerce. [James in Depew, One
 hund. years, chap. 5.]

 6. Development of the modern system of advertising. [Ayer in Depew,
 One hund. years, chap. 13.]

 7. Nobody complains because the farmer who grows wheat or wool does
 not also make flour or cloth. Is there any good reason why the man who
 makes the flour or cloth should also market it?

 8. Study the biography of some great merchant, and find out whether
 he made money out of people, or made money for people and kept only
 a share for himself. [James Burnley, Millionaires and kings of
 enterprise, Lond. and Phila., 1901; Fortunes made in business, London,
 1884, 2 vols.]

 9. Make a genealogical chart, showing how, from a single ancestor
 (the medieval artisan) the many specialists in modern manufactures
 and trade have proceeded. [Small and Vincent, Introduction to Study
 of society, contains a chart of this character, which may be used for
 guidance. See the U. S. Census or a business directory for suggestions
 of the present organization.]

 10. If you have personal knowledge of some trade or manufacture, write
 a report on the development of its organization and the resulting
 specialization.

 11. Write a report on the advantages to society of (_a_) fire
 insurance, or (_b_) speculation. [Hadley, Economics, chap. 4, or other
 manual of economics; H. C. Emery, Speculation on the stock and produce
 exchanges of the United States, N. Y., 1896, Columbia Studies, 7:
 283-512.]

 12. Write the history of any institution for periodical trade, like
 a market or fair, which has ever existed in your neighborhood. Has
 it any commercial importance at present? [Residents of the original
 thirteen colonies and of the older States will find in local histories
 and early legislation much information on this subject.]

 13. The London exposition of 1851. [McCarthy, Hist., vol. 1, chap. 21.]

 14. Write the history of some produce exchange. [Emery, Speculation;
 local history and biography, reports of the exchange.]

 15. Note, in connection with sect. 394, that the industrial
 organization has become so complex in recent times that this book
 cannot follow out topics which were treated in earlier periods. For
 the importance of capital and of large scale enterprise at present see
 the books on economics, on railroads, trusts, etc.

 16. Advantages of the modern department store. [Scribner’s Magazine,
 1897, vol. 21, p. 4 ff.; restrictions of space forbid the treatment of
 the organization of retail trade in the text, but many interesting and
 fruitful topics may be found in studying it.]

 17. The business of a modern bank. [Scribner’s Magazine, 1897, vol.
 21, p. 575 ff.; manuals on economics and banking.]

 18. The benefits of commercial and credit agencies. [Question bankers
 and business men; I find no historical treatment of the topic
 available in English.]

 19. Character and course of a commercial crisis. [Manuals of
 economics.]

 20. Write the history of some particular crisis. [Bibliography in
 Jones, Bowker and Iles, and Palgrave; consult narrative histories of
 the period, and periodical articles.]

 21. Effect of the gold discoveries about 1850. [Rand, Ec. hist., chap.
 10, from Cairnes.]


BIBLIOGRAPHY

 This chapter touches so closely the field of economics that it
 seems unnecessary to duplicate the references which are supplied in
 abundance by the manuals on that subject. See for bibliography Bowker
 and Iles, and Bullock’s Introduction to the Study of Economics, N.
 Y., 1897. A full classified bibliography of commercial crises will be
 found in Edward D. Jones, Economic crises, N. Y., Macmillan, 1900, pp.
 225-245. The book which covers most fully the topics treated here is
 Wells, **Recent econ. changes. References on special topics are given
 above.




CHAPTER XXXIV

COMMERCIAL POLICY


=404. War and peace in the nineteenth century.=—Although, for the
convenience of a round number, the date 1800 has been chosen in this
book to fix the beginning of the recent period, the great changes
which marked the passing of previous conditions began with the French
Revolution of 1789. The effects of the revolution were soon felt
outside the country in which it started. In a few years the powers of
Europe were engaged in a war which, with slight intermission, endured
for almost the period of a generation, and ceased finally only with
the defeat of Napoleon at Waterloo. Since 1815 commerce has enjoyed
singular freedom from the vexation of war, and our attention will be
occupied in this chapter mainly with the commercial policy of states at
peace. The convulsive struggle, however, in which the century began,
has such importance, commercial as well as political, that it demands
more than passing comment.

=405. French privateers and English commerce.=—The commercial interest
of the revolutionary and Napoleonic wars centers in the contest between
France and England. These two powers were the greatest commercial
states of Europe, and France still retained important colonial
possessions. England, however, had specialized in the development of
sea power, while France now followed the course to which she had long
been tending and sought to win the victory by the development of her
power on land. After 1795 France abandoned the policy of maintaining
great fleets to oppose the British, sacrificed the merchant vessels
flying the French flag, and sought to destroy the commerce on which
the life of England depended by sending out innumerable privateers to
prey upon it. France enjoyed, apparently, an extraordinarily favorable
position for making this policy effective. The port of London carried
on more than half of British foreign trade; of the ships which
contributed to its annual record of thirteen or fourteen thousand
entries and departures, two thirds had to pass through the English
Channel; and French privateers, sailing at sundown from a home port,
could reach their cruising ground before it was light again. Some of
the French privateers inflicted very serious loss on the British. A
large one, captured in 1799, is said to have taken 160 prizes in four
years, and to have cleared for her owners in Bordeaux five million
dollars. English ships were forced to gather in convoys, sailing under
the protection of ships of war. Fleets of 200 or 300 vessels were not
unusual, and sometimes 500 or 1,000 were seen together, in dangerous
places like the Chops of the Channel or the entrance to the Baltic.
This system consumed the time and money of English merchants, and did
not entirely prevent losses, which amounted perhaps to 2 per cent or
more of the total volume of British trade. Still, the effort of France
to crush her enemy by this means was clearly futile. France, on the
other hand, saw her commerce decline until, as a literal fact, not
a single merchant vessel flying the French flag was on the seas. In
1800 France received directly from Asia, Africa, and America less than
$300,000 worth of goods altogether, and exported to those continents
only $56,000.

=406. Napoleon and the Continental System.=—A new period in the war
against commerce can be dated from the reopening of hostilities, after
a brief interval of peace, in 1803. Napoleon, now the ruling spirit
in France, found that a direct contest with the English on their own
element, the sea, was hopeless. His schemes for the conquest of his
great enemies may be summarized as follows: first, direct invasion,
from which he was always deterred by the English sea power; second,
a blow at England through her eastern empire, to which the Egyptian
expedition was preparatory; and finally, the “commercial strangulation”
of England by the exclusion of her goods from Europe. This last scheme,
to which his efforts finally narrowed themselves, simply continued
a policy which had already been applied in France, of excluding the
wares and ships of British commerce. Napoleon was able, however, by his
extraordinary successes on land, to extend the system of prohibition
far beyond the bounds of France, and make it truly deserving of its
name of Continental System. By 1809 he had closed to English trade all
Europe except Turkey, Sicily, and Portugal. Decrees named from the
place at which they were issued (Berlin, Milan), sought with savage
thoroughness to stop all openings through which the English might carry
on their trade and recruit their resources for the war against him.
Commerce with Europe, according to Napoleon’s plan, was to be carried
on exclusively by his allies or by neutrals like the Americans; and the
English, by being totally excluded, were to be starved into submission.

=407. English reprisals; the position of neutrals.=—To these measures
England replied with various Orders in Council which matched in spirit
Napoleon’s decrees. As Napoleon sought to exclude England from European
commerce, so England sought to drive the commerce of Napoleon’s allies
from the sea, and, furthermore, to make neutral commerce aid her in her
measures against him. An order of 1807 required any neutral trading
with the Continent to stop at a British station both going and coming,
to land and reship the cargo, and to pay certain duties. Its purpose
was to make England the center and warehouse of the world’s commerce.
Neutrals were placed between the upper and the nether millstone. In
obeying the orders of either belligerent they exposed themselves to
the punishment of the other. The merchants of the United States, who
had profited by the early stages of the war to extend their commerce
greatly, were forced into the seclusion of the embargo (to be described
later), and were led in 1812 to the declaration of open war with
England.

=408. Failure of the Continental System.=—England scarcely needed
political allies in a contest in which the material interests of most
of the people of Europe were allied with her own. The obstacles to
commerce with the Continent caused the prices of articles like the
colonial wares to rise to double, triple, even tenfold, what they were
in England. The reader will remember that the practical beginnings
of beet sugar manufacture can be dated from this period of dearth.
Commercial forces were too strong for any political restrictions, and
smugglers brought goods to the people who wanted and would pay for
them, despite all penalties. At a time (1809-10) when all the great
ports from Riga to Triest were closed, goods reached the interior
still, through the Greek islands, Malta, parts of Spain, the Channel
Islands, and Heligoland. Napoleon himself had to recognize the
impossibility of making the Continental System effective. He clad his
own armies in English cloth, sold constantly licenses to evade his
own decrees, and sought to win the profits away from smugglers by
allowing the introduction of colonial products on payment of duties
equivalent to the smugglers’ gain. Certain branches of production and
manufacture were furthered on the Continent by the restrictions on
trade, but the Continental System, on the whole, resulted only in loss
to the people and in the defeat of Napoleon’s own plans. It furnishes a
signal example of the futility of attempting to crush a sea power like
England, without meeting it on its own element.

=409. Effect of the war on England and France.=—The effect of the
war and the prohibitive system was necessarily injurious to British
commerce, and showed itself in a decline of British exports. The
injury, however, far from being mortal, was extremely slight. Smuggling
was incessant, and if one opening to British trade was closed another
was quickly found. When Holland became allied to France and hence
closed to England, British exports to Germany increased rapidly; the
German people were not consuming more British goods, but acted merely
as distributing agents, through whom the goods reached their old
markets. Napoleon could not forever coerce a whole continent, and his
blockade was generally evaded in northern Europe, with the connivance
of the governments, before 1810. On the last day of that year the Czar
of Russia bade open defiance to the Continental System; and it crumbled
beyond hope of repair after the failure of the Moscow campaign. Even
the losses which England suffered were made up, in considerable part,
by the profits which she secured from the expansion of neutral trade.
England gained valuable additions to her maritime empire (Malta,
Heligoland, Cape Colony, Ceylon, etc.), and entered the nineteenth
century with her commercial primacy established beyond dispute. France,
on the other hand, emerged from the struggle weakened at home and shorn
still further of possessions abroad. Hayti (or San Domingo) had been
lost by a native revolt; the Louisiana territory had been ceded to the
United States; and some of her small islands had passed into the hands
of England.

=410. Other wars of the nineteenth century.=—After the conclusion
of this great war the world enjoyed a long interval of peace. The
nineteenth century has been marked by internal political development,
rather than by international strife. The growth of the spirit of
nationality, the idea that people conscious of likeness in language,
religion, etc., should be grouped under the same government, has
led to several sharp struggles between states; but these have, in
general, been short and of no great commercial significance. More
important, from the commercial standpoint, has been the revolution in
South America, which has enabled the people, formerly bound by the
restrictions of the colonial system, to establish independent trade
relations. Commerce was seriously affected, moreover, by the Civil War
in the United States, which closed to the world for a few years its
great source of supply of cotton. Other countries proved incapable of
supplying the lack; a considerable portion of the English people (one
fifth, it was said then), supported by the cotton manufacture, suffered
from the stoppage of work; and consumers were forced to adopt other
clothing materials, and did not, for many years, use cotton as freely
as before. Of the other wars preceding 1914 the only one that had great
economic significance was the war between Japan and Russia in 1905,
which brought into the rank of the great powers an Asiatic country with
far-reaching commercial ambitions.

=411. Removal of old obstacles to commerce.=—The greatest benefit
which Europe enjoyed from the French Revolution and the ensuing wars
was the removal of many remnants of feudal institutions which had
persisted, petrified as it were, to this late period of history. Of
these remnants none was more harmful to commerce than the feudal
institution of the staple. This flourished especially in the German
states, and resulted in depriving of a large part of their commercial
value the German rivers, which were by nature the cheapest and best
means of transportation. It was impossible to travel far on any German
river without reaching a staple, where the boatman was subject to
delay, inconvenience, and considerable expense. On the Rhine, for
instance, there were thirty-two stations of this character where
dues were still levied in 1800. As far as regarded the effect on
commerce the flow of the rivers might as well have been interrupted
by cataracts. It was a great step in progress, therefore, when these
interruptions were removed, as little by little they were in the first
half of the nineteenth century. The principle of free navigation was
extended gradually to include important international rivers like the
Scheldt and the Danube. The reader will remember that in the Middle
Ages various countries tried to monopolize parts of the sea itself.
Denmark had kept its hold on the straits leading into the Baltic Sea,
and required ships to stop at Elsinore and pay toll, until 1857, when
it sold out its right to levy toll on the payment of a lump sum by the
countries interested in free navigation.

=412. Customs tariffs; the prohibitive system.=—The most important
topic which remains to be considered in this chapter is that of
commercial policy as shown in the customs tariffs. The details of
tariff policy must be left to later chapters, in which the different
states will be considered separately; place can be found here only
for a brief review of the general course of development, and for a
consideration of some of the factors which explain the great changes.

Only a few years before the outbreak of the French Revolution France
and England had agreed to a commercial treaty, which marked a great
departure from the restrictive principles of the old mercantilist
policy, and seemed to promise a new era of freedom in trade. The
outbreak of war destroyed the new system almost as soon as it had
been carried into effect, and changed the relations between the two
states into that attitude of fierce antagonism which has been described
above. The return of peace found the tariff systems of both France
and England set in the old lines. The tariffs included a vast number
of duties, both on imports and on exports; the rates were high and
often prohibitive; the protection of national shipping by navigation
acts was maintained. Similar characteristics marked the tariffs of
other European states, and this period may fitly be termed the era of
prohibition in recent commercial policy.

=413. The period of free trade, 1860-1880.=—The prohibitive system
held its ground, however, only by force of custom and by the active
support of small groups whom it favored. The writings of French and
English economists, of whom Adam Smith was the great representative,
had convinced thinking men that the people and countries of Europe
would benefit by greater freedom of trade, and governments waited
only for favorable conditions, political and economic, to lower their
customs duties. The movement toward reform was at first local, finding
place especially in England and Germany. Soon after the middle of the
century, however, it became general in Europe, and led to such sweeping
changes that the period extending, roughly, from 1860 to 1880 has often
been called the free-trade period in commercial history. This was the
time when the technical inventions, especially the application of
steam on a large scale to manufactures and transportation, were first
showing their full power in increasing productiveness. At this time a
state which secluded itself commercially seemed to be renouncing the
chance to share in the great movement of progress. Industrial states
sought markets for their manufactures and sources of supply for their
food and raw materials. Agricultural states found the offers for
their surplus products too tempting to be refused. So many profitable
openings appeared everywhere that there was little dread of competition
and little call for protection.

=414. Reduction of customs duties.=—In this period, therefore,
there was a general overhauling of the old tariffs. Export duties
disappeared. Prohibitions were dropped, and import duties were reduced.
Narrow restrictions, designed to favor merchant shipping, were
reformed. Liberal commercial treaties became the fashion, and Europe
was soon covered with a network of them after England and France had
set the example in 1860. These treaties became of especial importance
because they now included generally the clause of “the most favored
nation,” by which a participant in the treaty was assured that it
should share, without delay and without need of recompense, in any
favors that might be granted to other states. The slightest concession,
therefore, effected a general reduction of duties in Europe. An English
author, writing in 1882, found that in the period from 1860 to 1880
tariffs had been raised in only two of the sixteen European states.
Apart from these two exceptions, which were not important, tariffs had
undergone substantial reductions; of 2,140 items existing in 1860 only
136 had been raised, while 900 had remained the same and no less than
1,104 had either been lowered or removed altogether from the list.
These reforms were undoubtedly responsible in part for the remarkable
growth of the world’s commerce in the period which they covered.

=415. The return to protection.=—The free-trade movement has been
followed, in the last quarter of the century, by a decided reaction
to protection. Since about 1880 increase in the customs duties has
been the rule in Europe, and reductions have been exceptional. No
single cause can be held responsible for this change. The growth of
national feeling and of international tension in Europe since 1870
has undoubtedly disposed governments to listen more readily to the
complaints of citizens who suffer from competition, and ask for
protection against foreigners. Competition, moreover, has widened
its range of action and become more keen. The countries which gained
new markets for their agricultural products, and flourished during
the period of development of steam transportation in Europe, have
lost their foreign markets and find their home markets menaced, as
the transportation system has grown to embrace other continents and
now brings cheap products from across the seas to the door of the
European consumer. Countries which willingly accepted the manufactures
of advanced industrial states when their own industries were in a
primitive stage of development have since aspired to establish modern
factories of their own at home.

In spite of the return to higher duties the present protectionist
policy has retained many of the changes of the period of free trade.
The statesmen who guide the commercial policy of European countries
have discarded prohibitions, and use duties discriminating against
particular countries only exceptionally. Down to the close of the
century they have continued to grant to nations in general the
treatment accorded to the most favored nation, and in some ways have
extended the scope of this practice. The general level of duties,
moreover, though it may seem high in comparison even with the general
average of the period of prohibitions, offers a much less effective bar
to trade, because of the reduction of the expense of transportation.
It is impossible to state accurately the relative height of various
tariffs. The following table gives an estimate of the tariffs on some
important manufactures towards the close of the century: Russia 130 per
cent, United States 72 per cent, France 30 per cent, Germany 25 per
cent, Belgium 13 per cent, New Zealand 9 per cent, etc.

=416. Colonial policy.=—Colonial policy, a topic which has had for
some years a leading place in public discussion, can receive only
brief consideration in this history. The colonial ventures of the
recent period may in time bring forth the commercial results which
their projectors promise; up to the present the results have been
small. Until far into the century European governments showed little
interest in the expansion of their people or the extension of their
power in distant parts of the world. Their attention was absorbed by
the problems of domestic and foreign policy in Europe. The colonial
question, however, like every other political and economic question,
assumed a new aspect under the changes wrought by steam and the
telegraph. Distant continents were, by those changes, brought nearer
to European capitals than parts of the home territory had been before.
The immense increase of transmarine commerce which marked the latter
part of the century was carried on largely by English-speaking people,
and seemed to promise to states of the Continent similar results if
they could spread broadcast their people and power as England had done.
The best parts of the world had already been occupied, it is true, but
great stretches of territory were still free from claimants of European
descent. France began to raise her flag over new territory in Africa,
Asia, and Oceanica; the Belgian king established his authority in the
region of the Congo; the movement quickened to a scramble in the ‘80’s;
and soon all parts of the habitable world except certain countries in
Asia and Africa had been brought under the sovereignty of European
powers. The colonial question—what to do with these possessions now
that they have been secured, how to govern them—has not yet become a
part of history; it is still a question of the day.


QUESTIONS AND TOPICS

 1. Prepare a chronological table of the wars of the nineteenth
 century, from a manual of recent history.

 2. The English navy during the Napoleonic wars. [Social England, vol.
 5, pp. 391-401, 541-544; the sea stories of Captain Marryat.]

 3. The Continental System and its effects. [Levi, Hist. Brit.
 commerce, part 2, chap. 4, reprinted in Rand, Ec. hist., chap. 5; Rose
 in Kirkpatrick, Lectures on hist. of nineteenth century, Cambridge,
 1902, 59-78.]

 4. Effect of Napoleon’s commercial measures on British finances.
 [Audrey Cunningham, British credit in the last Napoleonic war,
 Cambridge, 1910.]

 5. The question of neutral rights. [Schuyler, Amer. diplomacy, chap.
 7; Reeves, Two conceptions of the freedom of the seas, in Amer. Hist.
 Rev., April, 1917, 22: 535-543.]

 6. The movement for independence in South America, and its commercial
 results. [Helmolt, Hist. of the world, vol. 1; History of South
 America, transl. by Adnah D. Jones, London (N. Y., Macmillan), 1899.]

 7. Free navigation of European rivers. [Schuyler, Amer. diplomacy,
 chap. 6, p. 345 ff.]

 8. The Sound Dues. [Same, p. 306 ff.].

 9. Divide your graphic chart of commercial statistics into blocks,
 to correspond with periods of commercial policy; dates may be chosen
 as follows, 1800, 1860, 1880, 1900. Be cautious, however, about any
 conclusions that may suggest themselves.

 10. Relative share of different factors in recent commercial progress.
 [Cf. W. E. Gladstone, Free trade, railways, and the growth of
 commerce, Nineteenth Century (Magazine), Feb., 1880, 7: 367-378; but
 do not regard this article as settling a problem still unsolved.]

 11. Significance of the “most favored nation” clause in tariff
 history. [Reciprocity and commercial treaties, 389-416.]

 12. Various systems of tariff policy. [Reciprocity and commercial
 treaties, 461-467.]


BIBLIOGRAPHY

 The best single reference on the commercial conditions and policy of
 the Napoleonic period is Lingelbach, *Historical investigation and
 the commercial history of the Napoleonic era, in Amer. Hist. Rev.,
 Jan., 1914, 19: 257-281; this provides a scholarly survey of the whole
 literature of the subject and can be used as a guide to further study.
 Of later works should be noted Frank E. Melvin, Napoleon’s navigation
 system, Univ. of Penn. thesis, 1919, N. Y., Appleton.

 On commercial policy in general the best reference is Bastable’s **
 Commerce of nations, which treats international trade, the theory and
 the history of commercial policy briefly but with admirable clearness.
 The history of the commercial policy of particular countries will be
 covered in following chapters. A survey of modern tariff systems is
 provided in * Reciprocity and commercial treaties, published by the U.
 S. Tariff Commission, Washington, 1919; J. W. Root, Tariff and trade,
 Liverpool, 1898, combines a general discussion of the tariff question
 with a review of the tariff policy of important commercial countries.

 Colonial policy can receive but scant treatment in this book. The
 student is referred to the bibliography by A. P. C. Griffin, List of
 books relating to colonization, Washington, second ed., 1900, and to
 the references there given.




CHAPTER XXXV

ENGLAND: COMMERCIAL DEVELOPMENT, 1800-1850


=417. Importance of the commerce of England.=—In returning to the
study of the development of commerce in different countries we shall
take up first the country which at the beginning of the nineteenth
century, and at its end as well, held the leading position, England. An
English author has made the statement that “in the eighteenth century
foreign trade was of so little importance to the majority of the
inhabitants of England, that with one important exception (wheat) the
whole of it might have been destroyed without making any appreciable
change in the habits or wealth of the people.” This statement is an
exaggeration which can hardly be supported, but yet it suggests a truth
of great importance; English commerce in 1800 was merely an aid to the
development and welfare of the country, while it had become in 1900
absolutely necessary to the mere existence of the people.

=418. Statistics of the growth of commerce, 1800-1850.=—The period of
most rapid growth was the second half of the nineteenth century, and
this period will be reserved for special consideration a little later.
The development in the first half of the century is set forth in the
accompanying table, which gives the figures for imports retained in the
country, and for the exports of home produce, according to the system
of valuation in use in this period, with the sum of these items.

As the population doubled in this period it is apparent that foreign
commerce, which more than doubled in value, was taking a more important
place in the national economy than before. In the first quarter of
the century, when England was passing through the struggle of the
Napoleonic wars and was recovering from their effects, trade was nearly
stagnant, but it made up in the twenty-five years that followed for the
time that had been lost before. If we measure commerce not by the value
of the wares, but by their physical quantity, the increase was far
more striking; prices of many articles, especially of the manufactures
exported, fell during this period, and consequently the same bulk of
trade would be represented by much smaller figures in pounds sterling.
If we returned to the old method of measuring trade, which retained
“official” values that did not change with the movement of market
prices, and which therefore affords a means of measuring an increase in
the bulk of trade, we should find, comparing the two years, 1800 and
1849, that exports grew from 24 million to 190 million pounds sterling,
giving the enormous increase of 682 per cent.


ANNUAL AVERAGE TRADE OF THE UNITED KINGDOM. (Millions of Pounds and
Dollars)

  ========+==========+==========+=========
          |  Imports |  Exports |  Total
  --------+----------+----------+---------
  1801-05 | £28 $140 | £33 $165 | £61 $305
  1806-10 |  30  150 |  37  185 |  67  335
  1811-15 |  29  145 |  45  225 |  74  370
  1816-20 |  20  100 |  40  200 |  60  300
  1821-25 |  26  130 |  37  185 |  63  315
  1826-30 |  33  165 |  35  175 |  69  345
  1831-35 |  36  180 |  40  200 |  76  380
  1836-40 |  47  235 |  50  250 |  97  485
  1841-45 |  57  285 |  54  270 | 111  555
  1846-50 |  72  360 |  60  300 | 133  665
  ========+==========+==========+=========

=419. Change in the relative importance of different exports.=—We can
expect, by studying the details of exports in this period, to find
the branches of production in which the English were strong enough to
enable them to supply other people and to extend their commerce. Taking
the figures for 1850, we find the evidence of some important changes.
The old staple of the English export trade, woolen manufactures and
yarn, had increased since 1800 in value, and still more in quantity.
It had ceased, however, to be the standby of the English exporter;
this item formed now less than one seventh of the exports instead
of over one fourth. It had been thrust into the second place by the
rival textile cotton, which had become, as it was destined to remain
throughout the century, the leading item among English exports. Cotton
yarn and manufactures made up 28 out of a total of 71 million pounds
sterling. Among other changes in the list we note the growth of the
iron and steel, the hardware and the coal exports. Some items are
interesting because they are still so small; among those which remained
below the million-pound mark were steam-engines and machinery, pottery,
and tin plate.

=420. Development of English manufactures.=—It is apparent that this
period was marked by a rapid development of English manufactures.
Taking two manufactures, typical of an advanced industrial state, iron
and cotton, we find that the increase in production is estimated at
over tenfold or more than 1000 per cent; as the quantity of population
had merely doubled it is apparent that its quality, or the character
of its occupations, underwent a revolutionary change. It is, in
fact, in this first half of the nineteenth century that the enormous
possibilities latent in the inventions of the eighteenth century became
apparent and were realized. The great inventions were not enough, in
themselves, to transform industry. They needed to be developed by
practical business men, who could secure the necessary capital to
utilize them to the best advantage, who had the talent for organization
enabling them to build up an efficient force of laborers, who could
stimulate further technical improvements necessary to supplement the
great inventions, and who could develop a mercantile system enabling
them to buy and sell large quantities to good advantage. Some English
manufactures remained “domestic” industries carried on in the home
of the workman, but the most important advanced to the factory
system, and were thus enabled to get the full advantage from technical
improvements.

=421. Introduction of machinery.=—It is in this period that the
knowledge and experience necessary to the proper handling of machinery
spread from narrow circles to broad groups of men. The market for
machinery was thus established, and the manufacture of tools and
machines underwent a corresponding development; in 1836 it was
“difficult to point out any leading mechanical process, the details
of which have not been, by this means, simplified, and the article
produced brought nearer to perfection.” Inventors from other countries
sought British shops to perfect their devices, and British factories
in which to introduce them. Some of the best textile machinery of this
period was invented in the United States and other countries, but was
first put to practical use in England.

=422. Steam power and railroad transportation.=—It is in this period,
also, that the steam-engine became a practical force in English
manufactures. The steam-engine had been introduced in Birmingham in
1780, but the number of engines in that rising center of manufactures
was in 1815 only 42 and in 1830 still only 120, while in the nine years
following the number rose to 240, or doubled. In 1835 the textile
factories of England employed only a little over 50,000 mechanical
horse-power, and of this total nearly a quarter was still obtained from
water-wheels. The beginnings of transportation by steam railroads can
be dated, as said before, from about 1830.

=423. Gradual development of the cotton manufacture.=—The statement in
a previous paragraph, that time was needed to develop the inventions
before they could be made to serve the interests of manufacturers
and merchants, is borne out by the history of the most important
manufacture, that of cotton. Most of the basic inventions in cotton
machinery were made in the last quarter of the eighteenth century.
As early as 1812 a man, using the improved appliances, could produce
200 times as much as could be got from the old spinning-wheel. Yet
it was not until 1820 or 1830 that cotton-spinning machinery had
been practically developed and introduced on such a scale that the
yarn exports began to show the full strength of this new force; while
power weaving came even later, and the exports of cloth increased most
rapidly in the second quarter of the century. Other processes connected
with the textile manufacture present the same history. Cotton printing,
for instance, had been practised in the eighteenth century, but in 1800
only 32 million yards a year were printed, while in 1830 the figure had
risen to 347. The growth of the cotton manufacture was reflected in
the development of towns like Manchester, Bolton, and Liverpool, which
increased immensely in population.

=424. Character of the import trade.=—It will be instructive to glance
now at the other side of England’s commercial balance sheet, and
observe the wares imported about the middle of the century. In 1854 the
values were as follows, in round millions of pounds sterling: total
152.3, of which the chief items were grain 21.7, raw cotton 20.1,
timber 10, sugar 9.6, raw wool 6.4, tea 5.5, raw silk 5.3. While it is
not safe to make a direct comparison between these values and those
given previously to show conditions about 1800, a striking change is
apparent in the relative rank of the items. A great growth in the
importance of the imports of breadstuffs is noticeable. We shall see
a little later that the English in this period gave up the attempt to
produce their food at home, and resigned themselves to depending on
foreign countries for supplies which they could purchase with their
manufactures. Wares like sugar, tea, coffee, and tobacco had declined
in relative importance. The actual amount of these commodities imported
for consumption at home had increased much more than would appear from
a comparison of the figures, and their use was constantly extending
among the common people; but they were now overshadowed in trade by
other items. The chief group of imports was formed of raw materials for
the English textile manufacture. The cotton imports, had, of course,
grown immensely; the home supply of wool, which had been almost
sufficient for manufactures in 1800, needed now to be supplemented by
large imports from abroad; silk had taken the third place on the list
of textiles away from flax and hemp.

=425. Increase in importance of trade with distant continents.=—If we
attempt to trace the changes in the direction of English trade in the
first half of the nineteenth century, we find, in the maze of figures
presented for study, some facts standing out as evident and important.
The trade with other countries in Europe grew steadily, but grew slowly
as a rule, and did not keep pace with the progress which English trade
was making in other parts of the world. Most of the continental states
looked with jealousy on England’s industrial development, and checked
the free exchange of commodities by severe restrictions. We must look
outside of Europe for the field of expansion of English trade. Africa
still remained unimportant from the commercial standpoint, but America,
Asia, and Australia dealt in increasing measure with the British
merchant.

=426. Great importance of the trade with the United States.=—The United
States was, far and away, England’s best customer, taking, near the
beginning of the century, when the ports of the continent were closed
by Napoleon, as much as one third of the total English exports, and at
the middle (1849) nearly one fifth. “It affords strong evidence of the
unsatisfactory footing upon which our trading relations with Europe
are established,” wrote an English author in 1838, “that our exports
to the United States of America, which with their population of only
twelve millions are removed to a distance from us of 3,000 miles across
the Atlantic, have amounted to more than one half of the value of our
shipments to the whole of Europe, with a population fifteen times as
great as that of the United States of America, and with an abundance of
productions suited to our wants, which they are naturally desirous of
exchanging for the products of our mines and looms.” The United States
paid for the wares by an export mainly of raw materials, and especially
of cotton.

[Illustration:

  _Longmans, Green & Co., New York_
]

[Illustration:

  THE WORLD

  1902

  _The British Possessions are
  colored Red_
] During most of this period England drew three fourths of her supply
of raw cotton from the southern States.

=427. Trade with other distant countries.=—Other American countries
were good customers of the British manufacturer; Brazil, for instance,
bought more from England in 1849 than did England’s nearest neighbor,
France. Among other independent states China deserves mention. Trade
with that country had been included in the monopoly of the East India
Company until 1834, when it was thrown open to British merchants in
general; the trade grew rapidly thereafter, but suffered from the
restrictions imposed by the Chinese until, as a result of the so-called
Opium War of 1842, the English secured the cession of Hong-Kong and the
opening of a number of ports.

=428. Trade with British dependencies: India.=—In 1850 between one
fourth and one third of the exports of the mother country were sent to
British dependencies. Among these British India, almost a continent
itself if we consider its area, its population almost equal to that
of Europe, and the complexity of its peoples, took the leading place.
British India alone took about one tenth of the English exports. So
long as the trade with this country was controlled by the East India
Company it remained small; and the company declared that because of
the backwardness and peculiar customs of the natives it could not
be increased. The privilege of trading with India was granted to
individual merchants in 1793, but under such burdensome restrictions
that it led to slight results; and the nineteenth century opened
with the Indian trade still but a small item in England’s total. In
1813, however, the trade was at last thrown open, and the effect was
immediately manifest; in the first year of the new policy private
merchants exported more than did the company, and soon they had
developed the trade to an extent undreamed of by the monopolists. India
proved to be just the country which English merchants were seeking as a
market for the expanding cotton manufacture. In the eighteenth century
protection was demanded in England against the competition of Indian
textiles, but soon the tables were turned, and manufacturers in India
complained that they were being ruined by the importation of English
cotton goods; about 1850 British India took more cotton manufactures
than any other country, and nearly one sixth of the total exports of
this most important commodity of England.

=429. Colonies in North America and Australasia.=—Next in importance
to British India came the two groups of the North American and the
Australian colonies. The colonies on the continent of North America
were, in spite of their political allegiance, a far less important
market than the republic on their southern border which had declared
its independence in 1776. They supplied, however, a fairly steady and
a growing demand for English products which put them in sharp contrast
with the West Indian colonies. These island colonies had been, in the
early part of the century, the field of rich returns in trade, but
their productiveness depended on a system of slave plantations, and
when slavery was abolished in them in 1833 their commerce declined
rapidly.

Thanks to the wide extent of her colonial dominions, England could
hope to gain in one part of the world if she lost in another, and the
development of the Australian colonies in this period promised to
atone for any decline in the West. The British flag was first raised
in Australia in 1788. The young colonies were out of the track of the
trade of the time, and seemed of such small importance that one was
made a penal settlement, but the natural resources, especially the
fitness for sheep-raising, induced a steady growth of population, and a
considerable trade, even before the gold discoveries in the middle of
the century.


QUESTIONS AND TOPICS

 1. What do we mean when we speak of the “importance” of a country’s
 commerce? The reader who reflects upon this question will find that
 at least three different standards are taken to measure importance.
 (1) Mere bulk or value. The commerce of the British Empire would be
 called the most important in the world, because it is larger than
 that of any other state. (2) The needs of the people of the country.
 A considerable number of Englishmen would starve without commerce. In
 this sense commerce is even more important to the miners of Alaska,
 for they would practically all starve without it. (3) The needs of
 other countries for the exports of a given country. In this sense the
 United States has perhaps the most important commerce in the world,
 because it supplies so much of the world’s need for cotton, copper,
 foodstuffs, etc.

 Endeavor to find examples, in this book or in others, of the different
 uses of the word; apply it in different uses to different countries.

 2. Treat the statistics in sect. 418 as suggested previously, by
 graphic representation. How did British commerce compare in growth
 with world commerce? Did England keep her share in the world’s trade?
 Try to find in English history reasons for the ups and downs of trade,
 and for its gains and losses in comparison with the world’s trade.
 Beware, however, of hasty conclusions; many pitfalls are concealed
 in commercial statistics. In the table in the text, for example, the
 early figures are those of total exports and imports of merchandise,
 including wares simply passing through English hands to foreign
 customers; the figures for 1816 and the following years show only
 exports of British produce and manufacture, and imports retained in
 the country. This change in the method of measurement, rather than
 the crisis following the Napoleonic wars, explains the drop in the
 figures. This last method of measurement will be followed in later
 tables.

 3. The following list gives the value, in millions of pounds, of all
 items over 1.0, in total exports of 71.3. Coal, etc., 1.2, cotton
 yarn, 6.3, cotton manufactures 21.8, haberdashery and millinery 1.4,
 hardware and cutlery 2.6, linen manufactures 3.9, iron and steel 5.3,
 woolen yarn 1.4, woolen manufactures 8.5. (If various other items were
 grouped we could add: copper about 2., silk about 1.)

 Arrange these items and represent them by spaces on a line, for
 help in realizing their relative importance, and for comparison
 with earlier and later conditions. [See Statesman’s Year-Book for
 present trade. Note that these items include only home produce and
 manufactures, so foreign produce, such as colonial wares, should be
 excluded in making the comparison with another period. Statistics of
 this period give only quantities, not values, of foreign and colonial
 merchandise exported. Values of foreign and colonial merchandise
 exported are available for 1854 and the following years. In 1854 the
 items over one million pounds were: cotton 2.3, indigo 1.2, wool 1.4.
 Among the items under one million were: coffee .7, wine .7, raw silk
 .7, tea .5, rice .5, guano .5, raw sugar .3, unstemmed tobacco .3.
 What changes are suggested by these figures, in comparison with those
 of about 1800?]

 4. Review the substance of sections 245 ff., or read the account of
 the great inventions and their effects in Rand, Ec. hist., chap. 2.

 5. Mining and metal production up to 1846. [Traill, Soc. England, 6:
 194-199.]

 6. Coal mining. [Same, 6: 367-379.]

 7. Development of the English transportation system. [Same, 6:
 199-211; McCarthy, Hist. vol. 1, chap. 4; Ward, Reign, 2: 83-111.]

 8. Development of the textile manufactures. [Soc. England, 6: 69-75.]

 9. Study the items in sect. 424 in the way suggested for sect. 419.

 10. Review sect. 412, on the tariff policy of the period in Europe;
 note that the United States had a low tariff, and that trade in the
 other continents was practically free.

 11. The Opium War. [McCarthy, Hist., vol. 1 chap. 8; Robert K.
 Douglas, China, N. Y., Putnam, $1.50, 1899, chap. 8.]

 12. East India Company in the nineteenth century. [Willson, Ledger and
 Sword, vol. 2, chaps. 12, 13.]

 13. Commerce of British India. [William W. Hunter, The Indian Empire,
 third ed., London, 1893, chap. 19; same author, The Marquess of
 Dalhousie, Oxford, 1890, chap. 10.]

 14. The Hudson’s Bay Company in the nineteenth century. [George Bryce,
 Remarkable history of the Hudson’s Bay Company, N. Y., Scribner’s,
 1900; Willson, The great company, London (N. Y., Dodd), 1900, vol. 2,
 chap. 36; G. R. Parkin, The great Dominion, London, Macmillan, 1895,
 chap. 8.]

 15. Slave plantations in the British West Indies. [A. K. Fiske, The
 West Indies, N. Y., 1899, chap. 10; James Rodway, The West Indies,
 London (N. Y., Putnam), chaps. 7, 10; F. W. Pitman, Development of the
 British West Indies, New Haven, 1917, chap. 1.]

 16. Emancipation of the slaves and its results. [Rodway, chaps. 14,
 15.]

 17. Development of Australia. [Encyclopedia; Helmolt, Hist. of World,
 vol. 2, p. 252 ff.]


BIBLIOGRAPHY

 Useful references can be obtained on England, as on other countries to
 be considered later, by consulting the Subject Index of the British
 Museum Library for books published since 1881, and the A. L. A.
 Catalogue for books in print, of a popular character.

 Of the general histories of England in the nineteenth century, that
 by *Spencer Walpole, 5 vols., London, Longmans, 1878-86, devotes
 considerable attention to economic developments, and is worth the
 teacher’s attention. Justin McCarthy, *History of our own times,
 is better suited to attract the student; it is divided into short
 topical chapters, and written in an interesting style. A shorter
 history has been published by McCarthy in the Story of the Nations
 Series, 2 vols., N. Y., 1899. The last volume of Traill’s Social
 England pays but scant attention to commerce.

 Of smaller books that which deserves most cordial commendation to
 students who desire a description of economic progress in its relation
 to political changes is Gilbert Slater, **Making of modern England,
 London, 1913, revised edition Houghton, Mifflin Co., undated.

 The best history of English commerce is that of **Leone Levi,
 extending from 1763 to 1878; it is unfortunately, out of print.
 Cunningham notices some of the important commercial changes in the
 first half of the century, but devotes most of his last volume to
 other topics; and the smaller manuals of English economic history pay
 comparatively little attention to commercial development. *Bowley’s
 small volume is a useful contribution, noteworthy for a number of
 graphic charts; it is, however, too statistical in treatment to serve
 the needs of the ordinary reader. Chapman’s book, like Bowley’s
 an outgrowth of a successful essay written for a Cobden prize, is
 confined to a special aspect of the trade with a particular country.

 William Smart, *Economic annals of the nineteenth century, London,
 1910-17, covering the years 1801-1830, treats commercial policy at
 length and the history of commerce proper briefly. The same tendency
 marks Commerce and industry, A historical review, 1815-1914, ed.,
 W. Page, London, 1919, 2 volumes, of which the second, **Tables of
 statistics, is a very useful compilation. Other statistical sources,
 of importance to a student making a careful study of the subject,
 are Porter, **Progress of the nation and M’Culloch, **Commercial
 dictionary, of which various editions have been published. A revision
 of Porter by F. W. Hirst, London, 1912, aims to bring his statistics
 down to date.




CHAPTER XXXVI

ENGLAND: REFORM OF COMMERCIAL POLICY


=430. Burden of tariff on trade and manufactures.=—After this survey of
the development of English trade in the first half of the century we
must attend to a most important change in English commercial policy,
which lies mainly in this period. We shall consider three groups of
topics: the reform of the general tariff; the repeal of the corn laws,
protecting agricultural products, especially wheat; and the repeal of
the navigation laws, protecting shipping.

England entered the nineteenth century with a cumbrous mass of tariff
regulations inherited from the past, from which only the worst excesses
had been pruned by statesmen like Walpole and Pitt. Customs laws had
accumulated for 500 years to the amount of 1,500 statutes, “often
confused, often contradictory, sometimes unintelligible.” Hardly any
ware which was obtainable abroad, whether it was a raw material or a
manufactured product, escaped the duties levied under one or another of
these laws. The duties were heavy and were enforced with unreasoning
severity; a man who imported a mummy from Egypt was told that it was
a non-enumerated manufacture, dutiable at nearly $1,000. Internal
taxes reached articles which escaped the customs tariff. The taxes
on the publication of books were so heavy that they amounted on an
ordinary edition to one seventh of the whole cost, and exceeded the
remuneration of the author. The cotton manufacturer had to pay not
only an import duty on his raw cotton (higher when it was brought in a
foreign ship); he had to pay an excise or internal tax on calico which
he printed; and he had to pay taxes, in one form or another, on all
the important materials he used in manufacture,—flour, starch, leather,
soap, dyestuffs, paper, timber, brick, tiles. A man could not build
a factory, or run it, or feed and clothe his workmen, without paying
taxes at every step.

=431. Prevalence of smuggling.=—A partial relief from the burden of
the customs was obtained by smuggling. Tariffs could hinder but could
not absolutely stop the natural movement of commodities. Smuggling was
a regular profession, with a tariff modeled on the regular tariff,
but enough lower to invite business; the smuggler’s charge varied
ordinarily from 15 to 40 per cent ad valorem. Large numbers of the
common people were leagued with the smugglers to defy the law, and the
upper classes, even the legislators themselves, accepted smuggling as
a matter of course. A member of the House of Commons once flourished
his silk bandanna handkerchief before the House, saying: “Here is a
foreign ware that is totally prohibited. Nearly every one of you has a
similar illicit article in his pocket. So much for your prohibition.”
The government framed its duties with an eye to the ease of evading
them; it laid a higher duty on fancy silks than on plain, because the
smugglers were at a disadvantage in handling the former, which had to
be brought in at once, before the fashions changed, while plain goods
could wait the smuggler’s convenience.

=432. Beginning of the reform movement, 1820.=—More and more as time
went on, and England’s commercial capacity increased, were the evils
and abuses of the system appreciated. By 1820 the times were ripe for
a change, and the movement to reform was initiated in that year by
a petition from a group of London merchants. The petition urged the
principle of free trade which the economist Adam Smith had supported
in his “Wealth of Nations” (published in 1776), and prayed that all
restrictive regulations, not imposed on account of the revenue,
including all duties of a protective character, might be repealed at
once.

=433. Reform of the tariff under Huskisson.=—The early stages of tariff
reform, effected under the leadership of Huskisson about 1825, included
the following: (1) The simplification and condensation into manageable
form of the customs laws. (2) Reduction or removal of the duties on
raw materials. (3) Reduction of the duties on manufactures, generally
to 30 per cent or less, on the principle that such a duty was ample
for protection, if a ware could be made at home to advantage. (4) The
removal of most of the restrictions on export. These restrictions had
affected raw materials, partly manufactured goods, and even artisans
themselves. The government had tried to keep skilled workmen at
home, but found that it merely made them discontented, forced them
to evasions, and kept them from coming back when they had once left
the country: it left them henceforth free to emigrate. It was still
unwilling to allow machinery to be exported freely, for fear that
other countries would build up a competition in manufactures, but it
recognized the difficulty of making its restrictions effective, and
relaxed them greatly.

=434. Results and later completion of the reform.=—The results of the
reform exceeded anticipations. Not only did those industries benefit
which (like cotton, for instance) had previously been taxed for the
support of others, but the protected industries themselves gained by
the revision of the laws. The export of woolen stuffs increased rapidly
after the removal of the prohibition on the export of raw wool. The
silk manufacture, which had made slow progress and secured only a small
market under the system of high duties and prohibitions, advanced more
rapidly now in a decade than it had done before in a century.

The work of reform was, however, still far from complete; the tariff
retained many incongruities and was felt still to be oppressive by the
business interests of the country. The second stage in the advance to
free trade was effected under Sir Robert Peel, who in 1842 secured the
reduction of duties on 750 articles, and in 1845 abolished 430 out of a
total of 813 import duties. Peel’s reforms left still a considerable
element of protection in the tariff, and the final acceptance of free
trade waited till Gladstone’s laws of 1853 and 1860, which lowered and
then swept away import duties by the hundred, and left the English
tariff substantially in its present shape. The system of “free trade”
which England has since maintained does not imply a complete lack
of import duties; more than one fifth of the total revenue from
taxes is now yielded by the customs. Import duties, however, have
been restricted to a very few commodities, and are “revenue,” not
“protective” duties, in the sense that they do not encourage the
production in England of anything which can be produced more cheaply
abroad.

=435. The corn laws and their effects.=—Previous to the great changes
which turned England into a manufacturing country, the agricultural
interests which controlled Parliament had assured themselves a good
measure of protection in framing the tariff laws. The importation of
grain was prevented by high duties; and the export was favored by
bounties when the supply was relatively plentiful and the price fell
below about $1.50 a bushel. Export became more and more rare as the
home demand for foodstuffs grew with the increase in the industrial
population; and toward the close of the eighteenth century it became
ever a more serious question whether England could produce at home
sufficient food for her growing people. An attempt was made to arrange
the laws so as to keep the price of wheat steady at about 48s. a
quarter ($1.50 a bushel), but the laws did not succeed in preventing
violent fluctuations in the price. At the close of the great wars, in
1815, English agriculturists demanded a continuance of the protection
which the stoppage of commerce had afforded them and the import of
foreign wheat was prohibited so long as the price at home did not
rise above 80s. (about $2.50 a bushel, or about $.30 for the quartern
loaf of bread). Landlords got high rents as a result, but farmers who
leased their land suffered when prices fell to a reasonable level,
and consumers were forced to pay extortionate prices for a prime
necessity. Hundreds of thousands of the working classes were brought to
the verge of starvation in 1817 by the price of wheat rising to 112s.
(about $3.50 a bushel).

=436. Movement of English manufacturers for a repeal of the corn
laws.=—The House of Commons, even after the electoral reform of 1832,
afforded but little representation to the manufacturing and mercantile
classes; four fifths of its members belonged to the landed interests,
and though they made some slight concessions they refused to grant
adequate relief. It was necessary for the opposition, which organized
under the name of the Anti-Corn-Law League, to carry on its campaign
outside of Parliament; it could report, at the annual meeting of
1843, that nine million tracts had been distributed, and meetings had
been held in 140 towns. Inside of Parliament the movement engaged the
energies of orators like Cobden and Bright, who saw in it a question of
life and death for English manufactures. How was the manufacturer to
pay the wages which such a costly food supply required? To whom was he
to sell his goods when so large a proportion of English incomes had to
be expended for bare necessaries, and when England refused to take from
foreign countries the commodities which they offered in exchange? Even
among the agricultural classes the landlords were the sole gainers. The
agricultural laborers were wretchedly poor; Cobden asserted that none
of them spent more than about $7.50 a year in manufactured articles, if
shoes were excepted, and that they bought a smaller amount of English
manufactures than the people of Brazil.

=437. Repeal of the corn laws and its significance.=—With the passage
of time and with the growth of the industrial population conditions
changed from bad to worse. The combination of a bad harvest and bad
times in business in 1841 forced thousands of the manufacturing
population to seek poor relief, while other thousands were estimated to
be earning on the average less than a shilling a week. It needed only
a shock like that given by the crop failure in the first year of the
Irish famine, 1845, to force the change which had come gradually to be
recognized as inevitable. Peel’s act of 1846 left a slight protection
for a few years; but after 1849 only a nominal duty was to remain, and
even this was abolished later.

The repeal of the corn laws was a momentous act in English history.
It marks the formal and final recognition that England had grown
from an agricultural to an industrial and commercial state. It threw
England, as an English economist said, from corn to coal as the staple
product of the country. Manufactures and trade thenceforth developed
freely. Even the agricultural interest gained in ways which it had not
foreseen: the consuming population increased rapidly both in numbers
and in purchasing power, and demanded increasing quantities of meat,
dairy produce, vegetables, and fruit. The full effect of the change on
commerce will be apparent when we review the history of the last half
of the century.

=438. Reform of the navigation acts.=—This survey of the course of
English policy in the first half of the nineteenth century will be
closed by the consideration of a third topic, the laws protecting
shipping. Reference to a previous chapter will show how severe were
the restrictions meant to prevent the competition of foreign shipping,
in the seventeenth and eighteenth centuries. The period now under
consideration was marked by the removal of all these restrictions, and
by a great growth, notwithstanding, in the English merchant marine.

The establishment of the independence of the United States, and later
of the Spanish American republics, overthrew the colonial theory on
which many of the navigation acts were based, and forced numerous
revisions. The long wars of the Napoleonic period, also, led England
to grant privileges to neutral powers in the carrying trade. Important
breaches, therefore, had been made in the old system before the century
was far advanced, and it was in no condition to withstand the assaults
directed against it by people both abroad and at home whose interests
it injured. The United States adopted a policy of reprisal which
forced England to admit American ships freely to English ports, and
threats of similar action by European countries led in 1824 and the
years immediately following to a series of treaties putting foreign
ships on an equality with English.

=439. Final repeal of the navigation acts.=—The navigation acts had
grown into a most complicated system, and it is impossible to describe
in detail their gradual relaxation. By 1830 English ships had lost
all their privileges except in the coasting trade, and in the trade
with and between the colonies. Even this amount of protection came to
be regarded as a burden not only on commerce but on shipping itself,
and was abolished in 1849 and 1854. Every step in the reform of the
navigation acts was bitterly fought by adherents of the old system, who
prophesied ruin to English shipping if it were denied protection and
left to make its own way. How groundless were the fears of those who
opposed reform can be seen in the following table, giving in millions
the tonnage of English ships in the period 1800-1850: 1800, 1.6; 1810,
2.2; 1820, 2.4; 1830, 2.2; 1840, 2.5; 1850, 3.5.


QUESTIONS AND TOPICS

 1. Are all taxes of equal amount equally burdensome? Would a country
 fare as well if it raised its revenue by taxing saws and chisels
 instead of cigarettes and playing cards?

 2. What are the effects of smuggling on (_a_) the public revenue,
 (_b_) honest merchants, (_c_) consumers?

 3. How do the rates of the English tariff, as established at this
 time, compare with the rates of the present tariff of the United
 States?

 4. On what articles are import duties still levied in Great Britain?
 [See Statesman’s Year-Book, index, Great Britain, customs.]

 5. The corn laws and their effects. [Morley, Cobden, chap. 7; Rand.
 Ec. hist., chap. 9.]

 6. English agriculture under the corn laws. [Traill, Soc. England, 6:
 75-84, 211-217.]

 7. The agitation for repeal of the corn laws. [McCarthy, vol. 1, chap.
 14; Morley, Cobden, chap. 6.]

 8. The repeal of the corn laws. [McCarthy, vol. 1, chap. 15.]

 9. English agriculture after the repeal. [Traill, Soc. England, 6:
 404-421, 599-607.]

 10. What were the main features of the navigation acts? [See above,
 sect. 358, or study the main provisions in Rand, Ec. hist., appendix
 1.]

 11. Conditions at the time when the Acts were repealed. [Lindsay, vol.
 3, chap. 6.]

 12. Development of the merchant marine. [Traill, Soc. England, 6:
 392-404; Ward, Reign, 2: 111-118.]


BIBLIOGRAPHY

 The best single source on the topics of this chapter is Bernard
 Holland, **The fall of protection, 1840-1850, London, 1913. Of more
 comprehensive and more elementary books may be mentioned Mongredien,
 *History of the free-trade movement, and Armitage-Smith, **Free-trade
 movement, which is well suited to topical assignment. Similar in scope
 is W. Cunningham, **Free-trade movement, with concluding chapters on
 recently projected changes.

 The best account of the corn laws is to be found in Morley’s **Life of
 Cobden, and George Macaulay Trevelyan’s **Life of John Bright, London,
 1913. Graphic pictures of conditions of life under the corn laws are
 provided by The hungry forties: life under the bread tax, London,
 1904; and J. K. Snowden’s Corn law memories, in Contemp. Review, 1905,
 88: 64-71. J. S. Nicholson, *History of the English corn laws, London,
 1904, is a thoughtful study in brief compass, but is not suited to
 topical reading.

 The navigation acts are treated by Holland, and at considerable length
 in the third volume of Lindsay. The best recent contributions on the
 subject are in periodical literature: John Rae, **English shipping
 under protection, in Contemporary Review, 1905, 87: 666-675; J. H.
 Clapham, ** The last years of the navigation acts, English Hist. Rev.,
 1910, 25: 480-501, 687-707.




CHAPTER XXXVII

ENGLAND: COMMERCIAL DEVELOPMENT, 1850-1914


=440. Development of English commerce since 1850.=—An accompanying
table sets forth the course of English trade down to the outbreak of
the World War. The figures refer, as in the previous table, to imports
for consumption in the country, and to exports of British and Irish
produce. To indicate, however, the share of commerce which the English
enjoyed merely as middlemen I add a column of re-exports, foreign and
colonial wares imported but shipped away again. If the amount of these
wares be doubled (since they figure both as imports and exports),
and added to the other items, the sum gives the gross foreign trade
(excluding that in precious metals). The system of valuation of imports
changed in 1854; under the old system of “official” values the imports
of that year would have been entered at twenty-eight million pounds
less than under the new system of giving the “real” values. This table,
therefore, is not directly comparable with the table of the preceding
chapter; and to remind the student of this I have left a few years
vacant, making a gap between the two tables.

=441. Importance of England and of British Empire in trade of the
world.=—A mere glance at this table will be sufficient to show the
progress that has been made since 1850. Some idea of the importance
of this trade, not only to England but to the world at large, can
be gathered from the fact that it amounted, about the middle of the
period, to nearly one-fourth (23 per cent) of the estimated total
foreign trade of the world, and at the close of the period, (1912),
in spite of the commercial progress of other countries, it was still
one-sixth. If we extend our view to embrace not only the little
islands in the North Sea, but all the countries depending on them
and forming the British Empire, we find the trade of this group over
one-fourth of the trade of the world.

  ANNUAL AVERAGE TRADE OF THE UNITED KINGDOM, IN MILLIONS,
  STERLING, WITH ROUGH EQUIVALENTS IN MILLIONS OF DOLLARS

  ========+==============+=============+==========
          |   Imports    |   Exports   |Re-exports
  --------+------+-------+------+------+----------
  1855-59 | £146 |  $730 | £116 | $580 | £23
  1860-64 |  193 |   965 |  138 |  690 |  42
  1865-69 |  237 |  1185 |  181 |  905 |  49
  1870-74 |  291 |  1455 |  235 | 1175 |  55
  1875-79 |  320 |  1600 |  202 | 1010 |  55
  1880-84 |  344 |  1720 |  234 | 1170 |  64
  1885-89 |  318 |  1590 |  226 | 1130 |  61
  1890-94 |  357 |  1785 |  234 | 1170 |  62
  1895-99 |  393 |  1965 |  238 | 1190 |  60
  1900-04 |  466 |  2330 |  289 | 1445 |  67
  1905-09 |  522 |  2610 |  377 | 1885 |  85
  1910-13 |  611 |  3055 |  474 | 2370 | 107
  ========+======+=======+======+======+==========

A survey which omits from consideration trade across land-frontiers,
and considers only sea-borne trade, is even more impressive. Of the
total sea-borne trade of the world in 1912 it is estimated that 15% (in
value) was between countries within the British Empire, and 39% was
between the Empire and foreign countries. Thus the trade of which one
or both terminals lay within the Empire was over _half_ of the maritime
trade of the world. The trade of which one terminal was in the United
Kingdom amounted by itself to about 40% of the world’s total sea-borne
trade.

=442. Chief causes of the rapid development of English commerce.=—The
causes of this development may be summarized briefly as follows: (1)
The English people were the most advanced, in industrial and mercantile
ability, of any people in the world. They had the start on others
in manufactures and trade, and reaped the benefits of their early
training in this period. (2) The geographical situation of England,
and the physical resources of the country, especially its coal, made
the English superior to most peoples and equal to any, in this age of
transportation and manufacture by steam. (3) The commercial policy of
the government allowed the people to make the most of their advantages.
Toward the close of the eighteenth century an English statesman had
told Benjamin Franklin of his idea “to make England a free port, for
which he said the English were especially fitted by nature, capital,
love of enterprise, maritime connections, and position between the old
and new world, and the north and south of Europe, and that those who
were best circumstanced for trade could not but be gainers by having
trade open.” This idea waited long for its realization, but on that
account led to the more rapid progress when it was carried into effect.
Within five years of the repeal of the corn laws exports rose fifty to
one hundred million pounds sterling per annum; manufactures and trade
developed by leaps and bounds. Free trade alone cannot be credited with
all the progress that England made in this period. It was, perhaps,
the least of the three factors enumerated, but still it was of such
importance that the other two factors would have been of much less
effect without it.

=443. Character of English exports.=—This trade had now in a more
pronounced form, the characteristics which it had been gradually
assuming and which make it one of the most remarkable examples of
advanced commerce in the world. Considering first the exports, we find
that over three-fourths of them (in value) have consisted of wares
wholly or mainly manufactured. Only one raw material has gone out in
great quantity; this is coal, which has contributed about one-tenth of
the total value of exports. Aside from coal few wares, and those of
relatively slight importance, have left the islands in their crude form.

=444. Leading items among the exports.=—Cotton manufactures kept their
place at the head of the list of exports, comprising about one quarter
of the total. England in 1913 exported the enormous sum of over seven
thousand million yards of cotton cloth a year. The exports of iron
and steel and their products rose in this period to the second place;
England was now purveying to other nations the means of raising the
structure on which modern manufactures and transportation are based.
The growth in the exports of machinery is especially striking; this
item increased over fivefold within the fifty years to 1900, and
doubled again in the short period before the outbreak of the war. Below
these leading items come others with which we are already familiar
(woolen and linen manufactures) and some which had gained promotion
on the list of exports; leather goods, chemicals, jute manufactures,
pottery, etc.

=445. Imports; prominence of foodstuffs.=—The fact suggested by
the list of exports, that England has specialized more and more in
manufactures, is borne out by the list of imports during the past
half century. Since the adoption of the free-trade policy the English
people has been freed from dependence on the home supply of food and
has supplied its necessities by purchases abroad. Among the imports,
therefore, we find that the largest item is that of foodstuffs, which
has grown rapidly both in its absolute value and in its proportion of
the total imports. In contrast with the medieval period, when only
luxuries like wines and spices could pay for their transportation,
we find now the great food staples flowing to England from countries
thousands of miles distant. Improvements in transportation, due
especially to the use of steam, have enabled bulky cargoes to pay for
their passage, and the weight of the imports in tons has increased much
more rapidly than their value. Improved means of transportation and
preservation have moreover enabled the English to import perishable
articles like meat, fruits, and vegetables, and dairy products; and the
imports of these wares have increased from ten to twentyfold in weight.

=446. Imports of raw materials and manufactures.=—The same conditions
have affected the imports of raw materials. A century ago the
manufacture of iron from imported ore would have been thought an
absurdity, but it has become a regular practice now that freights are
so low; and the import of minerals is a respectable item in a list in
which the raw materials for the textile industry are still, of course,
most important. Free trade encouraged also a great increase in the
imports of manufactures, which grew nearly tenfold in the fifty years
to 1900, though they still were less important than foodstuffs and raw
materials. The largest item among them after the crude metals, was
silk, for the manufacture of which other nations have always shown more
aptitude; but the list included woolens, hardware, leather (boots and
shoes), paper, and many other items.

=447. Explanation of the excess of imports over exports.=—A feature of
England’s foreign trade deserving comment and explanation is the great
excess of imports over exports. It is natural to expect that these two
items, which seem to represent the two sides of a balance sheet, should
be nearly equal to each other; but in fact the value of exports has for
many years been far below that of imports, and the difference in the
years toward 1900 amounted to the enormous total of $700,000,000 to
$900,000,000 a year.

England did not receive this surplus of goods as a gift, but earned it
by services in the past and in the present which put other countries
under obligations to her. The English had invested enormous sums
abroad, and had the right therefore to interest and dividends; their
merchant marine did a large part of the carrying trade of the world,
and naturally had a large bill for freight to render to other people;
London was the financial center of the world, and made the foreigner
pay tribute for the services and commissions executed for him. There
were some items on the other side of the account, but on the whole
England had the right every year to take from other countries in the
form of goods vastly more than she exported to them.

=448. Detailed items in England’s international balance.=—The items
which go to make up the credits and debits of England in relation to
other countries may be set forth in the form of a balance sheet, as in
the table below, which gives the estimate of these items for the year
1910. Figures are given in round millions of pounds sterling.

         _Credits_                           _Debits_

  Exports of merchandise        430   Imports of merchandise    678
  Re-exports (foreign mdse.)    103   Imports of bullion         71
  Exports of bullion             64
  Income from investments       178   Capital invested abroad   170
  Earnings of shipping          100
  Banking and business earnings  55   Earnings due foreigners    15
                                 —-                              —-
                                931                             934

The students should note several characteristic features of this
balance sheet. (1) Only the items at the head of the columns are
measured accurately: the others are “invisible” items, represented only
by pieces of paper passing through the mail, but these are, pound for
pound, of equal importance. (2) The inflow and outflow of bullion are
large items, but nearly balance; England has acted as a clearing house
for the payments of the world’s debts, and the distribution of the
world’s gold. (3) In this period England re-invested in other countries
most of the great sum due in interest and dividends. The English
investor may be pictured as receiving a dividend check from the United
States or South America, and as mailing it back instead of cashing it,
asking that it be added to the capital sum of his investment.

=449. Growth of the merchant marine.=—England was the leader among
nations in the carrying trade in 1850, and retained her position still
unchallenged at the close of the century. At the outbreak of the
war in 1914 nearly half of the world’s steam tonnage was under the
British flag; the tonnage of Germany, which came second on the list
of countries, was not one-fourth of the British. The number of ships
in the English merchant marine has actually decreased in this period
of progress, but the carrying capacity has grown immensely by the
increase in size of the ships and by the substitution of steam for
sailing vessels. It will be remembered that the protection afforded by
the navigation acts was removed before the beginning of this period.
The government has made generous payments for the carriage of mails,
but still has refused to pay regular subsidies or bounties for the
encouragement of shipping. English shipping, nevertheless, has held
its own. Of the steam shipping built in the twenty years preceding the
war, two-thirds were built in the United Kingdom, and over one-half was
built to sail under the British flag. While soon after 1850 the English
merchant marine carried not much more than half of the foreign commerce
of the country, the proportion grew in later years to two-thirds and
nearly three-quarters. This proportion declined somewhat in more
recent years, under the competition of Continental steamers, but it is
estimated that in 1913 British shipping carried over one-half of the
total sea-borne trade of the world, including nine-tenths of the trade
inside the Empire, nearly two-thirds of the trade between the Empire
and foreign countries, and nearly one-third (30%) of the trade between
foreign countries.

=450. Relative rank of English ports.=—The great commerce of the United
Kingdom was very unequally distributed among its parts, nine-tenths of
it going to England and Wales and most of the remainder to the lowlands
of Scotland. London still kept its place as the chief port not only in
the United Kingdom but in the world, mainly by reason of its import
trade; it was exceeded in the amount of exports by the second port,
Liverpool, which distanced all rivals in the important trade with the
United States. An immense gap separated these two leading ports from
the others, Hull, Manchester, Glasgow, Southampton, etc. Ports whose
names were famous in the Middle Ages and even in later times have
dropped into obscurity, with fortunate exceptions like Harwich and
Grimsby, which have recovered their positions in recent times. Their
places were taken by ports from which cotton and coal products are
shipped: Manchester, once an inland village but now united with the
sea by a ship canal and standing (1913) fourth on the list, the Tyne
ports, Cardiff, etc.

The importance of ports was measured in the preceding paragraph by
the value of the cargoes imported and exported through them. While
this appears to be the best standard by which to determine commercial
ranking it is proper also to consider not the value of cargoes, but the
volume of shipping entering and clearing from a given port. Measured
by the tonnage of vessels London was but little superior to Liverpool
before the World War, was inferior to New York and to Hamburg, and
about even with Rotterdam and Antwerp.

=451. Relative share of different countries in England’s
commerce.=—Taking up now the direction of England’s trade abroad and
the changes in its course during the last half of the century, we find
ourselves approaching questions which have roused acute political
controversy. Reserving for future consideration changes which have
shown themselves in the most recent period we may note conditions as
they were about 1900. England still found the trade with her European
neighbors the most important part of her commerce, making up about
two-fifths of the whole; this trade had increased by over one-half
during the last forty years of the century. Next in importance to
it was the trade with the British dependencies, a little less than
one-quarter of the whole, which had increased somewhat more slowly. In
the third place we may put, not a continent or group of countries, but
one country, the United States, between which and England the trade was
greater than between any other two countries on earth. England bought
from the United States in 1901 more than twice as much as she bought
from the next largest seller (France); and she sold the United States
in that year more than she sold to all the countries embraced in her
great Empire. This part of English trade, moreover, had grown more
rapidly than any other, increasing by once and a half in the period.
Grouping together all countries beside those enumerated, we find that
the trade with them had remained nearly stationary, and amounted only
to about one-eighth of the total.


QUESTIONS AND TOPICS

 1. Treat the statistics, sect. 440, by graphic representation, in the
 manner that has already been suggested.

 2. Compare the reasons given for the increase of British commerce
 with reasons that may suggest themselves to you for the growth of
 the commerce of the United States. [See sect. 320 for a reference to
 Gladstone’s views.]

 3. The following list gives, in million pounds, the value of the chief
 exports of home produce in 1900: cotton manufactures 62.0, do. yarn
 7.7, woolen manufactures 15.6, do. yarn 6.1, linens and yarn 7.1,
 jute and yarn 2.4, apparel and haberdashery 6.8, ships 8.6, iron and
 steel 32.0, hardware and cutlery 2.1, copper 2.9, machinery 19.6,
 coal, etc., 38.6, chemicals 9.2. Total exports of home produce 291.4,
 exports of foreign and colonial produce 63.0, grand total 354.5. Treat
 the figures as suggested under sect. 419. [The figures are from the
 preliminary report for 1900, Statesman’s Year-Book, 1901, pp. 85, 87;
 details of iron and steel exports will be found p. 88.]

 4. Development of the iron industry. [Jeans, The iron trade of Great
 Britain, London, 1906, or in Ashley, Brit. Industries, 2-37; Bell in
 Ward Reign, 2: 196-237; Lady Bell, At the works, London, 1907.]

 5. Development of the textile industry. [Soc. England, 6: 589-599.]

 6. The cotton industry. [Slagg in Ward, Reign, 2: 153-195; Helm in
 Ashley, 68-92; S. J. Chapman, The cotton industry and trade, London,
 1905.]

 7. The woolen and worsted industries. [Hooper in Ashley, 93-119;
 Graham in Lectures, chap, 10; J. H. Clapham, The woollen and worsted
 industries, London, 1907.]

 8. Linen and flax. [Patterson in Ashley, 120-150.]

 9. Pottery. [Soc. England, 6: 379-392.]

 10. England as a wheat market. [Edgar, Story, chap. 5.]

 11. The food supply of London. [Quarterly Review, Oct., 1899, 190:
 467-486; Jan., 1900, 191: 117-137.]

 12. England’s food supply in time of war; need of the navy. [H.
 Seton-Karr in North Amer. Rev., 1897, 164: 651-663; W. E. Bear in
 National Rev., 1896, 27: 133-144; Quarterly Review, 1905, 203-572-598.]

 13. Project of national granaries for storing a supply of food. [R.
 B. Marston in Nineteenth Century, 1898, 43: 879-889; Yerburgh in Nat.
 Rev., 1896; 27: 197-207.]

 14. British capital abroad and the balance of trade. [Mulhall in No.
 Amer. Rev., 1899, 168: 499-505; Crammond in Quarterly Rev., 1911; 215:
 43-67; C. K. Hobson, The export of capital, London, 1914.]

 15. Development of the merchant marine. [Ginsburg in Ashley, 173-195;
 Taylor in Forum, 1900-01, 30: 463-477.]

 16. British shipping subsidies. [Root in Atlantic, 1900, 85: 387-394.]

 17. Growth of British ports. [Ackland in Nineteenth Century, 1897, 42:
 411 ff.; Browne in Contemp. Rev., Feb. 1918, 113: 190-199.]

 18. The port of London and improvements. [Owen in Lectures, chap. 4;
 Quarterly Rev., 1903, 197: 252-269; Marchant in National Rev., 1902-3,
 40: 715-737, with map; Miller in Fortnightly Rev., 1902, 78: 796-805.]

 19. The supply of British seamen. [Cowie in Contemp. Rev., 1898, 73:
 855-865; Tomlinson in English Rev., 1911, 9: 114-121; Longford in
 Nineteenth Cent., 1912, 72: 1114-1130.]


BIBLIOGRAPHY

 The course of English commerce has attracted interest in increasing
 measure, and publications upon it multiply, as we approach the end
 of the century. Only a few books can be noticed here; the reader is
 referred to the topics for references to other books and periodical
 articles.

 Ward, *Reign of Queen Victoria, contains good chapters on the
 industrial development of the reign. Stephen Bourne, *Trade,
 population, and food, London, 1880, is a careful analysis of the
 decade 1870-80, and furnishes a good starting-point from which to
 survey the course of recent trade. J. W. Root, Trade relations of
 the British Empire, Liverpool, 1903, provides a survey of English
 commerce at the close of the period, with special reference to the
 pending question of tariff changes. Similar books have been written by
 Edward Pulsford and L. G. Chiozza Money. A useful statistical survey
 is provided by John H. Schooling, *The British trade book, fourth
 issue, London, 1911. Lectures on British commerce, with preface by W.
 P. Reeves, is mainly a description of the present organization. A. J.
 Sargent, *Seaways of the Empire, London, 1918, is a good survey of the
 geography of British trade; and Adam W. Kirkaldy, **British shipping,
 London, 1914, includes both history and recent organization. **British
 industries, edited by W. J. Ashley, is, however, the book deserving
 of the warmest recommendation; nowhere else will the reader find such
 good descriptions of the leading industries of Great Britain. Each
 industry is described by a specialist of recognized authority, and
 though the book does not go far into history it gives indispensable
 information on the recent results of historical development. More
 popular and less valuable is Great industries of Great Britain,
 London, Cassell, no date (about 1880?), 3 vols.




CHAPTER XXXVIII

ENGLAND: PRE-WAR PROBLEMS


=452. Relative decline in value and quality of English exports.=—The
questions agitating the minds of English business men and statesmen at
the opening of the twentieth century rose from a consideration of the
immediate past and of the future of English commerce. While the country
had enjoyed a full measure of prosperity in recent years, and had
witnessed a considerable increase in the quantity of its foreign trade,
the quality of this trade awakened forebodings. The increase had been
almost entirely confined to imports. Since 1872 the exports, though
they had increased in bulk, had remained almost stationary in value;
they had kept pace neither with the growth of population in England,
nor with the growth in value of the exports of other countries. In the
twenty years, 1881-1900, foreign countries enlarged their purchases
(imports) by 11 per cent, while England augmented her sales to them
(exports) by only 4 per cent; the British possessions enlarged their
purchases by 17 per cent, while English sales to these dependencies
showed an actual decrease of 1 per cent. The exports of which England
has been most proud, as indicating her superior industrial strength—the
textiles, and iron and steel—had either increased slowly or shown an
actual decline. On the other hand, the exports which had increased in
value were of a kind which the English viewed with disfavor. Many of
them (apparel and slops, preserves, soap, furniture, etc.) were the
product of cheap and unskilled workers and seemed to show a degradation
of English labor. Others of them, potter’s clay and especially coal,
were raw materials which the English would have preferred to use in
their own industry at home.

=453. Growth in exports but decline in relative share of trade.=—The
table of trade of the United Kingdom in the preceding chapter shows
that the period of stagnation in the English export trade ended about
1900, and that there was a marked recovery between that date and 1914,
even after allowance is made, as it should be, for the rise in the
general level of prices, which magnifies the actual growth. Studying
the course of trade during the generation comprised between the dates
1880-1909, the United Kingdom maintained or increased the value of its
sales in all but two of the more important markets of the world; and
the two countries to which British exports have declined, Russia and
Roumania, would not by themselves form very serious exceptions. If,
however, we select for study not the bare figures of export values, but
the figures showing the percentage which British sales to any country
form of that country’s total imports, the result is very different; for
we are then measuring British progress not by the home standard but by
the standard set by commercial competitors.

=454. Illustration by the recent commerce of Japan.=—The distinction is
so important that it deserves illustration by a particular example, and
we may choose for the purpose a country which during the recent period
has furnished a rapidly growing market to the merchants of the world,
namely, Japan.

  ANNUAL AVERAGE IMPORTS OF JAPAN IN RECENT DECADES
  (_Values in millions of yen_)

  ==========+=========+=========+=======+===========+==========
            |   From  |         |       | From      |
            |  United |  From   |  From |  other    | From all
            | Kingdom | Germany |  U.S. | countries | countries
  ----------+---------+---------+-------+-----------+----------
  1881-1890 |    19.6 |  3.4    |   4.2 |     19.3  |     46.5
  1891-1900 |    46.6 | 14.8    |  22.8 |     87.0  |    171.2
  1900-1909 |    84.3 | 36.1    |  65.8 |    199.8  |    386.0
  ==========+=========+=========+=======+======================

The Japanese monetary unit, the _yen_, has declined considerably in
value in the course of the period, and therefore no exact equivalent
for it can be given; but even allowing for this decline the growth
of British export trade to Japan appears satisfactory if the student
regards merely the figures in the first column. If we apply, however,
the comparative standard, and measure the British exports to Japan
alongside those from other countries, the result is not the same.

  PERCENTAGE OF JAPAN’S IMPORTS FROM EACH COUNTRY
  ==========+=========+==========+=======+===========+==========
            |  From   |          |       |  From     |
            | United  |  From    | From  |  other    | From all
            | Kingdom | Germany  | U.S.  | countries | countries
  ----------+---------+----------+-------+-----------+----------
  1881-1890 |   42.2  |    7.2   |   8.9 |    41.7   |    100
  1891-1900 |   27.3  |    8.6   |  13.3 |    50.8   |    100
  1900-1909 |   21.8  |    9.3   |  17.0 |    51.9   |    100
  ==========+=========+==========+=======+===========+==========

=455. Relative decline of the United Kingdom in the world’s
markets.=—Pursuing the comparative method, illustrated by the last
preceding table, we find that the United Kingdom during the generation
1880-1909 showed an increased share of sales in only three of the minor
markets of the world: Spain, Argentine Republic, Sweden. It almost held
its own in France, Switzerland and Norway; but in most of the important
markets of the world it lost ground seriously.

Even in its trade with the British dependencies the United Kingdom did
not hold its own. Comparing the percentage of British exports to a
dependency with its total imports, we find that the United Kingdom kept
its place in only one of its colonial markets, Mauritius, a purchaser
of relative insignificance, while foreign countries gained ground from
it in British India, Australia, Canada and all the other important
colonial markets.

=456. Significance of the decline, and three possible explanations of
it.=—The relative decline in English exports did not imply that the
country was approaching industrial bankruptcy, but it did mean, if
long continued, the loss of industrial leadership; and the causes of
this decline and remedies proposed to meet it are worthy of careful
attention. The decline in exports may be attributed to one of three
factors: (1) weakness in manufacturing the wares which form the staple
of the export trade; (2) weakness in marketing these wares, when they
have been made; (3) the adverse influence of protective tariffs in
other countries.

=457. (1) Competition in manufactures by low-grade labor.=—Considering
the first of these factors, we find English manufactures menaced by
competition from two different directions: from the East (countries
like India and Japan), and from the West (countries like Germany and
the United States). Eastern competition threatened especially England’s
staple manufacture, cotton. The English laborer was superior in every
point to his Asiatic competitor, but not enough better to earn his
higher wages when employed in the manufacture of coarse goods. England
had built up a serious and growing competition by exporting machinery
and sending out skilled managers and foremen to superintend it. During
the past generation there had been an immense development in the
textile manufactures of India and Japan, and these countries were able
now not only to supply a large proportion of their own demand, but also
to reach out into neutral markets like China.

=458. Competition in manufactures of high-grade labor.=—More serious,
because capable of far greater extension, was the competition which
the Englishman had begun to experience from advanced western peoples.
This confined itself to no one branch of production, but spread
over the whole broad field of manufactures. Americans and Germans
had begun to supply not only the British dependencies but England
herself with manufactured wares, in increasing measure. Some of the
reasons suggested to explain their superiority were as follows: (1)
Elementary education had been developed only recently in England,
and had been hampered by sectarian questions; the average laborer in
Germany and the United States was better equipped for modern methods
of manufacture than was the Englishman. (2) It was asserted that trade
unions had seriously detracted from the productiveness of English
manufactures, by preventing the introduction of improved machinery
and by limiting output. (3) Technical education was even more backward
than general education; improved processes were introduced earlier and
developed further in other countries, for lack of a class of trained
manufacturers in England. (4) Finally, and probably the most important
point of all, English manufactures appeared to suffer from the very
fact that they had been long established. An industry was divided
among many independent firms, each clinging resolutely to the plant,
the processes and the methods which had won for it success in the
past. Foreign countries learned all that the English had to teach, and
applied the lessons in a new field in which they could build up great
manufacturing units, with fresh machinery adapted to production on a
large scale, and with a more flexible and more efficient organization.
It was charged that the directing class in England had lost its
original energy, and did not realize its serious responsibilities. An
English expert who investigated the American cotton industry reported
that there was a great difference in the energy, intelligence, and
adventurousness of the managing class in the two countries, all to the
advantage of the United States.

=459. (2) Alleged weakness of the English mercantile organization.=—In
the preceding paragraph we have suggested various elements of weakness
in English manufactures, which in greater or less degree were bound to
affect the power lying behind the English export trade. We have now to
consider another set of conditions, which are easily confused with the
foregoing, but which are better kept separate. English manufacturers
might be strong, and still they would have but a small export trade
if they were not informed as to the wants of their customers, and
did not study their customers’ tastes in supplying goods. This set
of conditions, which may be termed mercantile, the business of the
merchant rather than of the manufacturer, we may study under two heads:
(_a_) finding out what is wanted; (_b_) selling a suitable ware when it
has been made.

=460. Insufficient knowledge of the needs of foreigners.=—(_a_)
The complaint was general that the scouts of British commerce, the
commercial travelers, were too few in number and that they were ill
prepared, especially in their knowledge of foreign languages. The
English exporter shipped goods which he thought were suitable, without
knowledge or regard of the desires of his customers. A business man who
had had seven years’ experience with trade in the Empire said, “There
is a universal complaint: ‘You English will not make your goods to suit
our markets. You send your samples and tell us to take them or leave
them—you don’t care which. If we ask you to alter things you either
refuse to do it or else you demand prohibitive prices.’” In countries
where English is not spoken (Persia, Sumatra, South America, etc.) the
conditions were still worse. The Merchandise Marks Act, the origin of
the familiar “Made in Germany,” was designed to protect the British
colonist from having foreign-made goods palmed off on him as English,
and thus help the English manufacturer; but it served only to advertise
foreign manufactures, and led the colonists to import goods directly
from foreign countries, instead of taking them through English hands.

=461. Unwillingness to adopt foreign trade customs.=—(_b_) Finally,
when wares suited to sale in any market have been manufactured, they
need to be sold, to maintain trade. English exporters were criticised
for allowing their wares to be driven out of foreign markets by other
wares, no better in themselves but for some reason more attractive to
the customer. Here again the commercial traveler was at fault, but
part of the blame lay on the exporter. Sales must be made in small
lots and on long credit in some countries, if they are to be made at
all; and the English had shown a disinclination to adapt themselves to
such conditions which had enabled others (especially Germans) to take
trade from them. When other things are nearly equal slight differences
in packing and shipping may turn the scale. The English lost trade
in Australia because they sent tacks in paper packages instead of
in cardboard boxes, because they sent cartridges in lots of one
hundred instead of lots of twenty-five. An interesting example of an
opportunity well met occurs in the career of an Englishman who left the
field of manufacture to become a leading statesman—Joseph Chamberlain.
He found that the trade with France in his product, wood-screws, was
small; he introduced the metric system of measurement, put up the
screws in packages of the size usual in France and wrapped in blue
paper familiar to the French customer, and developed a large export
trade. If there had been more men like Chamberlain in manufactures in
England there would have been less need of the protective policy which
he advocated as a remedy for the troubles of English business.

=462. Tendency to remedy these faults.=—There is no doubt that there
was a good basis for these charges against the British manufacturer and
merchant, though some of them doubtless were exaggerated, and it is
impossible to apportion exactly the weight that should be allowed to
any one of them. The crisis of the World War was needed to sweep away
the customs and traditions of a long past. The stimulus of a struggle
for national existence, with the insistent demand for the highest
attainable efficiency, effected reforms reaching deeper and further
than those of a whole previous generation. Even before 1914, however,
many men in responsible positions in English politics and business
recognized the need of mending the pace if England was to keep abreast
of competitors in industry and commerce. Interest in elementary and
technical education quickened; inquiry was directed to the means by
which foreign rivals were getting ahead; the government, associations
and individuals worked together or independently to further efficiency.

A parliamentary committee which in the course of the World War made a
careful study of the prospects of British industry and trade reached
the following conclusions as regards conditions in the previous decade.
England had taken but a small part in the development of some modern
industries, particularly the chemical and electrical; the country had
made comparatively little progress in the iron and steel industry, in
which it was entirely overshadowed by Germany and the United States;
but it had shown wholesome vigor and capacity for growth in some great
manufactures, such as the textiles, ship-building and some branches
of machine-making. British trade abroad was found to suffer from the
competition of foreigners who were found, in some cases at least, to be
following methods of organization and marketing that were distinctly
more efficient than those which the British pursued.

=463. (3) Adverse influence of foreign tariffs; proposals to revise
the English policy of free trade.=—Under conditions of adversity there
is always an inclination to lay the blame, rightly or wrongly, on
others. A considerable party in England asserted that the reasons for
the recent decline were political rather than economic, resulting from
the protective tariffs of other states; and this party asserted that a
change in the tariff policy of England and of the colonies was needed
to rescue British commerce.

There can be no question of the main fact, that protective tariffs
had increased considerably during the last quarter of the century. It
is estimated that the principal English exports were burdened with
duties equivalent to 10 to 30 per cent ad valorem in most states, but
amounting to far more than that in some cases (72 per cent in United
States, 130 per cent in Russia). There can be no question that England
suffered from these restrictions; every commercial state suffers from
them. It is, however, open to grave doubt whether England could help
herself by a change in policy; and the question of what change, if any,
ought to be made, remained unsettled.

=464. Demand for customs duties as a means of defense and
retaliation.=—One group of “tariff reformers” clung to the ideal of
free trade, and favored its maintenance as the policy of the country
in general. It would, however, permit deviations from it in particular
cases. The adherents of this view asserted that England stripped
herself of the armor and the weapons of commercial war when she
adopted complete free trade. She could make no effective protest when
other nations raised tariffs against her, marked perhaps by offensive
discriminations; she must suffer everything because she was forbidden
to retaliate. The adherents of this view laid particular stress on the
practice of “dumping,” as it is called. The manufacturers of protected
nations, themselves, secure from England’s competition, market their
surplus output in England at prices which may not cover the costs, much
less the profits, of production. It is cheaper to do this than to break
prices in the protected market at home; it kills the English industries
and enables foreign manufacturers in the long run to raise prices to
a profitable level in the English market. For retaliation against
protective countries, and for defense against “dumping,” this school
demanded that the English government be armed with the power to impose
heavy duties, to be temporary in character and to be removed as soon as
their immediate object has been accomplished. Such a policy has been
adopted in Canada.

=465. Proposal of an imperial customs union.=—Another school of tariff
reformers, led by Joseph Chamberlain, accepted in general the views
just indicated, but laid particular stress on another possibility in
shaping English commercial policy. It would make the whole great group
of English dependencies not only a political unit but a commercial unit
as well, bound together in an imperial customs union (_Zollverein_), so
that trade would flow from place to place within the Empire instead of
crossing its frontier. It is not possible here to discuss the various
aspects of this proposal, of which some of the most important are
political rather than commercial in character. The attractiveness of
the plan is at once apparent; it promises to assure to England a market
for her manufactures in the colonies, and to the colonies a protected
market for their raw materials in England. The practical weakness of
the plan is, however, equally apparent; no law would be necessary
to secure this result if the various parts of the Empire found it
advantageous to trade with each other, and the mere suggestion that a
law is necessary shows that trade would be cramped and the interests of
individuals hurt by such an arrangement.

=466. Obstacles to a customs union.=—The course of trade has, in
fact, taken lines more and more opposed to the scheme of a customs
union. During the first part of the century, when England was still
protectionist, and when the mother country made the laws for its
dependencies, the plan could be carried out with comparatively little
friction; the colonies were engaged chiefly in the production of raw
materials, and were glad to exchange these for English manufactures.
Since about 1850, however, both the political and the economic
organization of the Empire have changed. The self-governing colonies
have received the right to make their own laws, and have used it to
raise protective tariffs, against England as well as against other
countries. Behind the barriers of the tariff they have developed
a considerable manufacturing industry. They were now unwilling,
therefore, to open wide their markets to English manufacturers; and
showed an increasing tendency to buy what manufactures they did import
from other countries than England. They were unable, on the other
hand, to supply in full the English demand for raw materials; and any
measure designed to restrict supplies of raw materials to some source
inside the British Empire threatened injury to producer and consumer
at home. The self-governing colonies gave evidence of the strength of
their political affection by enacting differential tariffs favoring
the British producer. Canada began the practice in 1894, and later
enlarged the concession until it amounted to a remission of one-third
of the regular customs duty. New Zealand, South Africa and Australia
adopted after 1900 the same principle, making their concessions less
extensive. The differential advantage thus offered the English exporter
must evidently have had an effect on the course of trade. The new
policy was keenly resented in Germany, where it was pictured as an
abuse by England of her political ascendancy to deprive other countries
of the benefit that should go to superior economic efficiency. On the
other hand the policy seems to have been less important than ordinary
economic factors in determining the flow of goods, and certainly had no
decisive influence in changing the customary channels of trade.

=467. Relative progress of England and other countries just before the
World War.=—Just before the outbreak of the World War England appeared
to have made a new start in the efforts to keep her place among
commercial countries. It is interesting to compare the advance that she
had made with the progress of Germany and of the United States.

  ABSOLUTE INCREASE IN TRADE OF THE ANNUAL AVERAGE 1910-13
  OVER AVERAGE 1895-99.

  (Figures in millions of £ sterling, with rough equivalent in $)
  =============================+==============+==========+=============
                               |United Kingdom| Germany  |United States
  -----------------------------+------+-------+----+-----+-----+-------
  Net imports for consumption. | £218 | $1090 |£260|$1300|£188 |$940
  Imports of manufactures.     |   72 |   360 |  48|  240|  81 | 405
  Exports of domestic products.|  230 |  1150 | 244| 1220| 221 |1105
  Exports of manufactures.     |  177 |   885 | 170|  850| 140 | 700
  =============================+======+=======+====+=====+=====+=======

The figures, it should be noted, give not the total commerce of any
country, but the gain which each country had made in the period
in question. The figures do not take account of the difference in
population in the three countries; they treat the three different
countries as units. The reader in studying them cannot fail to be
impressed by the closeness in the struggle for commercial leadership,
and will be better prepared to understand how precarious was the
situation if in one of the countries the view was dominant that
commercial interests were group interests, to be furthered by any
assistance which the state could render, if necessary by the sword.


QUESTIONS AND TOPICS

 1. Note the different senses in which the commerce of a country may be
 described as “declining.” (1) Other things remaining the same, there
 may be an absolute decrease in the quantity and value of both exports
 and imports. (2) The decrease may affect only one side of the balance,
 while the total figures may remain the same. Why is the decrease
 viewed with especial apprehension if it affects exports? (3) Other
 things remaining the same, including the quantity of wares, there may
 be a decrease in the value of a country’s commerce, due to a change
 in the level of prices. (4) The quantity and value of a country’s
 commerce may remain the same, and yet be regarded as “declining” if
 the population of the country increases; the share of each person in
 commerce would be diminishing. (5) Similarly, a country’s commerce
 may keep pace with its population, and yet be termed “declining” if
 the commerce of other countries increased more rapidly, so that the
 given country conducted a diminishing share of the world’s trade.
 (6) Previous standards of “decline” have been based on quantity,
 measured either in bulk or value, but there may also be a decline in
 quality. A scientist might gain more income if he adopted the trade of
 an artisan, but he would be thought, nevertheless, to lose in rank.
 Endeavor to make clear to yourself the significance of each one of
 these various changes, and be prepared to distinguish them as you
 study the commercial tendency of different countries. Find examples of
 as many of them as you can.

 2. Pick from following sections a concrete example to illustrate each
 of the three heads suggested in sect. 452.

 3. English industry and Eastern competition. [R. S. Gundry, in
 Fortnightly Review, 1895, 64: 609-620.]

 4. Recent history of elementary education. [Mathew Arnold in Ward,
 Reign, 2: 238 ff.; F. E. Smith in Fortnightly Rev., 1912, vol. 97, p.
 400 ff.]

 5. How trade unionism affects British industries. [E. A. Pratt, Trade
 unionism; B. Taylor in North Amer. Review, 1901, 173: 190-207; in
 defense of trade unions cf. Edwards in Contemporary Review, 1902, 81:
 113-128, and writings of Sidney and Beatrice Webb.]

 6. Technical education in England. [Rawson in Contemp. Rev., 1901, 80:
 584-598.]

 7. Reasons for decline of the English silk trade. [Parker in National
 Review, 1895, 26: 212-225.]

 8. Relative strength of modern countries in manufactures. [Schoenhof
 in Forum, 1901, 31: 89-104 (statistical); Browne in National Review,
 1899, 33: 568-580 (espec. U. S.).]

 9. Faults of English mercantile organization. [Lambert in Nineteenth
 Century, 1898, 44: 940-956; Greenwood in same, 1899, 45: 538-547.]

 10. Meaning of “dumping”; effects; means of prevention. [Ashley,
 Tariff problem; Marshall, Industry and Trade.]

 11. Balfour’s view of the commercial situation. [A. J. Balfour,
 Economic notes on insular free trade, N. Y., Longmans, 1903, $.30;
 Tariff reform, $.10.]

 12. Criticism of Balfour’s proposals. [Quarterly Review, 1903, 198:
 613-648.]

 13. Chamberlain’s view of the commercial situation. [Chamberlain, The
 policy of imperial preference, National Review, 1903-4, 42: 351-370.]

 14. Discussion of Chamberlain’s proposals. [Nelson in North Amer.
 Review, 1903, 177: 183-191; Goschen in Monthly Review, 1903, 12: July,
 38 ff.; Quarterly Review, 1903, 198: 246-278; Edinburgh Review, 1904,
 200: 449-476.]

 15. The project of an imperial customs union. [Mahan in National
 Review, 1902, 39: 390-408; Colquhoun in North Amer. Review, 1903, 177:
 172-182; Giffen, in Nineteenth Century, 1902, 51: 693-705; Bastable in
 Econ. Journal, 1902, 12: 507-513.]


BIBLIOGRAPHY

 I cannot attempt a survey of the vast literature which has sprung
 in recent years from the discussion of the proposal to change the
 commercial policy of England.

 A bibliography of 38 pages compiled under the supervision of A. P.
 C. Griffin, Select list of references on the British tariff movement
 (Chamberlain’s plan), was published at Washington, 1904. For a
 defense of the protective policy the reader may see Ashley, Tariff
 problem; for representative statements of the free trade views see
 William Smart, The return to protection, London, Macmillan, 1904;
 and L. G. C. Money, Elements of the fiscal problem, London, King,
 1903. Considerable historical importance attaches to the books by
 Gastrell and Williams, which did much to arouse interest in the
 great commercial question of the day. Useful surveys are provided in
 translations of two foreign works, Carl J. Fuchs, The trade policy of
 Great Britain, London, 1905, and Victor Berard, British imperialism
 and commercial supremacy, London, 1906.

 Reading of a more substantial character is offered in books which
 analyze the organization of industry and discuss the merits and
 defects of the English. For a survey from the standpoint of theory see
 Alfred Marshall, Industry and Trade, London, 1919, which is adapted
 only to advanced students, and for more concrete discussions, suited
 to topical reading, Arthur Shadwell, **Industrial efficiency, London,
 1906, two volumes, reprinted later in one; Sydney J. Chapman, **Work
 and wages, 3 vol., 1904-14. Interesting comparisons of methods and
 results in England and in the U. S. will be found in Report of the
 Moseley Industrial Commission, London, 1903, American engineering
 competition, N. Y., 1901, and Causes of decay of a British industry,
 (gun-making), by “Artifex” and “Opifex,” London, 1907.

 The analysis of commercial statistics in Schooling and Fuchs is
 supplemented by later studies to be found in the Journal of the Royal
 Statistical Society.




CHAPTER XXXIX

THE GERMAN STATES


=468. Connection of the commercial and the political development of
Germany.=—Standing next to England in the extent of its commerce about
1900 is a country which at the beginning of the century, if not among
the last, was certainly far below the leaders. This country is Germany.
We shall have to note, in this sketch of commercial development in the
nineteenth century, two remarkable examples of commercial expansion.
One of them, furnished by the United States, was due to the spread of
a people, originally small, over a great area rich in resources. The
other, furnished by Germany, was due to different causes. The Germans
of 1800 occupied a territory not greatly different from that which
composed the Germany of 1900, and to which nature has given but a
moderate endowment of resources. There was no Germany at the earlier
date, however; the people were divided up among a great number of petty
states, and their economic forces were cramped thereby so as to hinder
their development. The commercial progress of the century has depended
largely on the reform of these political conditions.

=469. Summary of the political development.=—It will be necessary,
therefore, in the following pages, to refer frequently to the events
of political history, and for the convenience of the reader a brief
summary is here given of the course of that history. The Napoleonic
wars wiped out the smallest and most backward of the German states,
reducing the number from over three hundred to about forty. Then, until
near the middle of the century, progress depended on negotiations
between these states by which the worst effects of their separation
were removed. In 1848 a liberal movement reformed the government of
some of the important states on modern lines, and strengthened the
demand for a unified Germany, leaving still undecided, however, the
question whether Prussia or Austria was to be the leading state. The
war of 1866 between the two states gave the leadership to Prussia; and
the war of 1870 with France led finally to the foundation of the modern
German Empire, under which at last the people found room for commercial
expansion and advanced with astonishing rapidity.

=470. Conditions of Germany about 1815.=—In spite of the service which
Napoleon did Germany by abolishing the smallest states, the country was
still splintered into pieces in 1815. A network of tariff frontiers
covered the land, cutting the great rivers and the natural high-roads
of commerce, and preventing the movement of wares. Not only did each
state have its own tariff; some had internal tariffs in addition.
The single state of Prussia had altogether some sixty tariffs. Some
of the states were made of scattered pieces, interspersed among the
territories of their neighbors; even a small state might consist of
eight or ten fragments. A merchant, to reach the center of the country
from the national frontier, crossed about sixteen tariff boundaries.

Not only the customs tariffs consumed time and money. The separatism
which they represented spread into all parts of the organization;
there were seventeen different postal systems in the country; nearly
threescore different laws on bills of exchange; hundreds of different
coins.

=471. Backwardness of commerce and manufactures.=—The difficulties
of internal commerce were so great that the life of the people was
arranged in large part to enable them to exist without trade. Most of
the people were engaged in agriculture and supplied themselves with
nearly all the necessaries of life. Manufactures were still carried
on almost exclusively by scattered artisans. The German governments
still clung to the old ideas of the gild system and public regulation.
Little by little these ideas fell into the background in the first half
of the nineteenth century, but it is important to note that they were
still a living force in Germany when England had discarded them and was
in the full rush of the developing factory system.

=472. Factories dependent on antiquated sources of power.=—Hindered in
development by the persistence of old institutions, and by the lack of
any considerable market for the product, German manufactures remained
on the same stage on which they had been for centuries previously.
Even the textile and mining industries were conducted according to
the time-honored methods of the past; little progress had been made
in the application of machinery, and the steam-engine was practically
unknown. In Electoral Saxony, the seat now of a great cotton and woolen
manufacture, all spinning was done by hand up to 1786, and in 1812
the small factories were still dependent on this source of power. The
factories of medium size got their power from oxen and horses; only
the large factories were run by water; and no spinning was as yet done
entirely by steam.

=473. Commerce small, and marked by the export of raw materials.=—No
statistics exist which would give an accurate picture of the
development of German commerce in the early part of the nineteenth
century, but we can gain some idea of its backwardness from an estimate
made for so late a date as 1842. At this time German foreign trade was
little over _one-tenth_ of what it was in 1900, and it must have been
considerably less in earlier years, before the reforms which will be
described immediately. The fact that the country was predominantly
agricultural is shown in the fact that the most important items in
export were raw materials and foodstuffs, especially grain. The
industrial population had not advanced far enough to work up even the
raw wool produced in the country, of which considerable quantities
were exported to England. Germany did export, it is true, a number of
manufactured wares, but they were in general those which could be
made from raw materials produced at home, and in the manufacture of
which cheap hand labor was still the important factor. In the products,
however, affected by the improvements which had been introduced in
English factories, Germany confessed her weakness, and purchased large
quantities of yarn and iron of English manufacturers for use inside the
country.

[Illustration:

  DEVELOPMENT
  OF THE
  GERMAN ZOLLVEREIN
]

=474. Formation of the Zollverein (customs union).=—Such conditions
called forth, naturally, remonstrances from the mercantile classes.
Business men and manufacturers in all parts of Germany began soon after
1815 to agitate for a reform. We must content ourselves with noting
only the main steps. Tariffs inside the separate states were reformed,
and the navigation of the great rivers was made easier. Finally, and
most important, the separate states began to draw together in groups,
forming a customs-union (_Zollverein_), with a common tariff on the
frontier and with free trade inside. The movement, slow at first,
culminated rapidly in 1828, when three such groups were formed, one
in the North (Prussia and others), one in the South (Bavaria and
Würtemberg), and a third including states from central Germany to the
coast. No state liked to remain isolated when consolidation had once
begun. Out of this transition stage there had developed by 1834 one
great union, embracing about two-thirds of the area and population out
of which the German Empire was later to be formed. From this time the
union grew more slowly, but the people within it could now afford to
wait, utilizing its new commercial opportunities, and confident that
the other Germans could not long resist its attractions.

=475. Development following the formation of the Zollverein.=—The
introduction of free trade inside of Germany was opposed then, as the
establishment of free trade in the world at large would be now, by
producers who feared the competition of others in the same line of
business. Some producers lost by the change, and were compelled to
seek other lines of work. Many manufacturers, however, who opposed
the change because they feared it would hurt them, found that it led
actually to a great increase in prosperity; it extended their market
and gave a rich reward to those who best served their customers. German
manufactures developed and began to supply a demand which before had
been met by purchases abroad. The importation of foreign manufactures
was checked, while there was an increase in the imports of raw and half
manufactured materials (dyes, coal, iron) and of colonial products
(sugar, coffee), indicating a growth in industrial power and in
welfare. The non-industrial population gained both as consumers, by the
better supply of manufactured wares, and as producers, selling products
to the developing industrial class.

=476. Protection and the free-trade movement.=—The tariff of the
Zollverein of 1834, based on the liberal Prussian tariff of 1818,
was less restrictive and less complicated than that of most of the
European states of the time. Duties which had been moderate, however,
at the time when they were framed, became protective or prohibitory as
prices fell; and some changes toward protection were made consciously
to stimulate manufactures or to retaliate against other countries.
About the middle of the century the current set in the other direction.
Germany was still an agricultural country, exporting grain, and the
agricultural classes secured the aid of merchants and of political
liberals in a contest for lower duties.

=477. Political factors in the tariff question.=—The free-trade
movement was curiously intermixed with matters of national politics,
especially the question which was acute from 1848 to 1866, whether
Prussia or Austria was to lead in the unification of Germany. Austria
had not entered the Zollverein, partly because the Austrian government
had retained the protective or prohibitive duties of the previous
century, and was unwilling to reduce them by entering the German
customs union. It was the policy of Prussia, therefore, to keep the
duties low and to make them even lower, that Austria might be excluded
from influence on the other German states. Neglecting the details,
which are extremely complicated, we may note only the result, which
was a victory for Prussian statesmanship and for the free-trade party.
Treaties with France and with many other states reduced the duties far
in the direction of free trade.

=478. Reaction in customs policy after the founding of the German
Empire.=—At the time of the foundation of the German Empire, therefore,
the tariff was low and the free trade movement was in the ascendant.
The free traders gained one more victory, in 1873, by securing the
abolition of the duties on iron; and in 1877 about 95 per cent of all
imports entered duty free. This victory of the free traders was their
last. The founding of the empire stimulated the growth of national
feeling, and “Germany for the Germans” was a rallying cry of which the
protectionist made good use. A great commercial crisis, following the
war and the expenditure of the huge indemnity received from France,
caused urgent demands for relief from the manufacturers who had greatly
extended their works and found now that they could not market the
product at profitable prices. Of the iron producers it was said that
one-third could continue under the existing tariff, that one-third
could continue only with the aid of protection, and that one-third were
bound to be ruined whether they received protection or not.

=479. Return to protection in 1879.=—Even the agricultural classes
now joined the protectionists; they found their foreign market
appropriated and their home market threatened by grain imports from
Russia, America, and India; they were largely in debt and were paying
the heavier taxes of the empire. Finally, political factors united with
the economic to induce a change. Bismarck found it politic to reverse
his position and to advocate protection instead of low duties or free
trade; with remarkable adroitness he engineered the change which was
realized in the tariff of 1879. The existing duties on manufactures
were raised; old duties which had been abolished were restored; and
duties protecting agricultural products were introduced. This tariff,
with changes which we shall notice later, has formed the basis of the
existing tariff.


QUESTIONS AND TOPICS

 1. Review in one of the smaller manuals of European history the course
 of political development in Germany during the century.

 2. Political condition of the German states at the beginning of the
 century. [Seignobos, first parts of chaps. 12, 14; Henderson, vol. 2,
 chaps. 6, 7; Bigelow, vol. 3, chap. 1.]

 3. The Zollverein. [Rand, Ec. hist., chap. 8; Bigelow, vol. 3, chap.
 4; Seignobos, end of chap. 14.]

 4. The Prussian tariff of 1818. [Bigelow, vol. 3, chap. 17.]

 5. The conflict between Prussia and Austria. [Henderson, vol. 2, chap.
 9; Seignobos, chap. 15.]

 6. The return to protection. [“Veritas,” chap. 5.]


BIBLIOGRAPHY

 The best single reference is J. H. Clapham, **The economic development
 of France and Germany, 1815-1914, Cambridge, 1921. Ogg, ** Econ.
 development, chap. 10, industry, and chap. 14, commerce, is brief on
 the earlier part of the century but gives notably full bibliographies.

 A bibliography of Germany, including references to a number of
 articles in English will be found in Homans, Cyclopedia of commerce,
 N. Y., 1858, p. 814. The student who is confined to reading in
 English must seek in Homans, M’Culloch and similar books, or in the
 general encyclopedias published before 1870, the descriptions there
 given of German commerce in the earlier parts of the century. Most
 of the English reading which is readily available takes up economic
 development only in connection with political history. Topical
 references have been given above to the general narrative histories:
 **Seignobos; Ernest F. Henderson, A short history of Germany, 2
 vols., N. Y., Macmillan, 1902; Poultney Bigelow, History of the
 German struggle for liberty, 3 vols., N. Y., Harper, 1896-1903. An
 anonymous book, by “Veritas”, The German Empire of to-day, London,
 Longmans, 1902, includes chapters on the history of German commercial
 policy which make it a convenient source of information to readers
 of English. The best book in English, however, on German commercial
 policy is W. H. Dawson, **Protection in Germany, London, King, 1904,
 which covers the whole century; it is a book to be studied, not merely
 read. A valuable summary of the history of German American commercial
 relations throughout the nineteenth century is given by G. M. Fiske in
 Review of Reviews, N. Y., March, 1902, 25: 323-328.




CHAPTER XL

GERMANY UNDER THE EMPIRE


=480. Effect on economic development of the establishment of the
Empire.=—Leaving now the topic of commercial policy until we return
to it in a concluding paragraph, we must attend to the material
development of Germany. Down to the foundation of the Empire in 1871,
progress, if steady, still was slow. The best energies of the people
were absorbed in the great political conflicts out of which united
Germany was to emerge; delicate questions of the relations between
the German states had to be settled, and much needed still to be
accomplished in the reform of industrial legislation inside the states.
As late as 1862 it was estimated that five-eights of the people were
still engaged in agriculture or in other extractive industries. In
comparison with this period of preparation the progress which Germany
has made since 1871 is startling. The direct gains which Germany made
in the war with France, the acquisition of the rich provinces of
Alsace and Lorraine, and the receipt of about $1,000,000,000, as a
war indemnity, were large, but still they were less than the indirect
results: the establishment of national unity on a lasting basis,
freeing the people from political anxieties, and encouraging them to
face their economic problems with a new energy and pride in their
strength, and with a new hope in the future. This political factor,
vague and intangible as it may be, is still most important; without it
the recent economic development of Germany could be regarded only as a
miracle.

=481. Development of commerce, 1870-1913.=—In the period between
the founding of the Empire and the outbreak of the World War the
population of Germany increased from 41 to 67 million, about 63%,
while the foreign trade increased almost exactly 250%, _four_-fold as
fast. Comparing the figures in the accompanying table with those given
for the United Kingdom in a preceding chapter we see that in 1872 the
Germans were much behind the English, separated roughly by an interval
of ten years of development, but that they were closing the gap as time
passed, and at the end of the period had passed the English in the
value of their export trade.

  SPECIAL COMMERCE OF GERMANY, SELECTED YEARS IN MILLIARDS
  OF MARKS AND OF DOLLARS.

  =====+================+================
       |     Imports    |     Exports
  -----+------+---------+-------+--------
       | Marks| Dollars | Marks | Dollars
  -----+------+---------+-------+--------
  1872 |  3.5 |    .9   |   2.5 |   .6
  1875 |  3.6 |    .9   |   2.6 |   .6
  1880 |  2.8 |    .7   |   3.0 |   .7
  1885 |  3.0 |    .7   |   2.9 |   .7
  1890 |  4.3 |   1.1   |   3.4 |   .8
  1895 |  4.2 |   1.1   |   3.4 |   .9
  1900 |  6.0 |   1.5   |   4.8 |  1.2
  1905 |  7.4 |   1.9   |   5.8 |  1.5
  1910 |  8.9 |   2.2   |   7.5 |  1.9
  1913 | 10.8 |   2.7   |  10.1 |  2.5
  =====+======+=========+=======+========

While in 1871 60 men out of 100 were engaged in agriculture, the
proportion had fallen in 1907 to 27. The change was brought about not
by an absolute decline of the number in agriculture, though sometimes
that was observable, but by the young men leaving the country for the
mines, factories, and commercial centers. Germany had in 1840 only 12
cities of over 100,000 inhabitants, while at the end of the century
it had 28, of which the chief, Berlin, was growing more rapidly than
Chicago; and in 1910 it had 48. The industrial development during the
generation ending in 1900 may be inferred from the following: coal
production increased over 250 per cent, pig iron production nearly 400
per cent, and shipping 500 per cent.

=482. Character of recent German commerce.=—England was characterized
in a preceding paragraph as “offering one of the most remarkable
examples of advanced commerce in the world.” In an earlier period
England stood alone; it offered _the_ most remarkable example. In 1913
Germany stood alongside England, not merely as regards the quantity
but also as regards the quality of her trade. In Germany as in England
manufactures formed the major part of the exports; their proportion of
the total value approached if it did not reach the English. Exports
of raw materials and crude food stuffs had declined to less than
one-quarter of the total, and among exports of this character coal, as
in England, took the dominant place. On the other hand the imports of
raw material and food stuffs had grown until they amounted to about
three-quarters of the total imports. Of the total value of imports
finished manufactures formed only 13 per cent, a proportion actually
less than that of the English, whose policy of free trade permitted
wares to be brought in which were excluded from Germany by the customs
tariff. If we arrange the wares imported in 1913 in the order of their
value we do not find a single finished manufacture among the first 26
items, which include all those exceeding 100 million marks in value;
crude copper was fifth on the list, but we find no product of factory
industry until we reach the twenty-second item, woolen yarn, which
itself was destined to feed the German factories and in large part to
be exported in a finished form. To understand recent German commerce
we need first of all, evidently, to study the development of Germany’s
manufactures.

=483. Rapid development of factory industry.=—Before the founding of
the Empire most of the people engaged in manufactures in Germany still
worked at home, with simple machinery and no steam power. In Saxony,
for instance, now one of the industrial centers of the country, the
manufactures of cloth, stockings, lace, etc., were still carried on
outside of factories in 1868. The proportion of people working in this
simple way is still large in Germany, but the number has declined in
many lines of work (weaving, milling, shoemaking, etc.), and the great
growth of the recent period has been in the modern factory industry.
Since 1882 the rate of growth of the factory population has been
about fourfold that of the general population. The results of this
development have been indicated in the previous paragraph, and they
furnish a striking contrast to conditions as they were at the time
of the Centennial Exposition of 1876, when the German representative
reported that in the industrial field Germany had received a defeat
equal to two Sedans, that German industry produced only articles of
poor quality and of slight value (“schlecht und billig”), and that
Krupp guns were the only product of which the Germans could be proud.

=484. Resources of coal and iron.=—Germany was favored by some
important physical resources in building up its modern industry. The
country had a rich supply of coal, the great source of modern power,
and took in Europe a place barely second to England in coal production,
far ahead of any other country. Germany was well supplied also with
the raw materials for the staple products, iron and steel. The ore
supplies in the province of Lorraine, taken from France in 1871, are
the most extensive in Europe. At the time when they were acquired they
were thought to be of poor quality, because of the phosphorus contained
in them, but under the basic process they were made to yield metal
of excellent grade, and in addition a valuable fertilizer, obtained
from the phosphate slag. Germany has developed its iron resources
with a rapidity exceeded only in the United States. It contributed
only one-twenty-seventh of the world’s iron supply in 1866, but had
raised its share to one-sixth at the end of the century, and to about
one-fourth before 1914. It passed England in steel production shortly
after 1890, and in iron production about ten years later; it raised
constantly the figure of its output while that of England remained
relatively stationary, and in the decade before the war it was
advancing at a rate seven-fold that of England.

=485. Quality of the people.=—The richest resource of Germany, however,
was its people. The past poverty of the country and the trials through
which it had gone nurtured a steadiness and thriftiness among the
working classes which made them admirable members of the modern
productive organization. An effective system of elementary education
was established in parts of Germany long before a similar step had
been taken in most other countries; and practically all the people had
not only the rudiments of education, but also, what is perhaps more
important, a respect for knowledge, a desire to learn and to make the
best use of their learning, which were in striking contrast with the
careless spirit of other peoples. It has been said that it was the
primary school-teacher who won for the Germans the victories of 1866
and 1870; and the Germans could hope now to beat their industrial
rivals as they beat their military opponents, by method and steady
application rather than by brilliancy and dash.

=486. Superiority in technical training.=—The effects of careful
training were as evident in the class of the responsible managers of
Germany’s industries as in the laboring class. Nowhere in Europe had
technical education reached so high a development. Not only were the
appliances, methods, and system of organization superior to those
of other states; the technical schools reached a larger part of the
population, training them not only in the fundamental subjects of
science, but also in the special branches of production (mining,
weaving, dyeing, etc.).

The results were everywhere apparent in German industry; to instance
chemicals, sugar, glass, and electrical appliances is to pick only a
few examples from a list which could be greatly extended. Especially
noteworthy was the readiness of the Germans to adopt a new process or
machine which was first brought out in some other country. Englishmen
invented processes to make a fast black aniline dye, to manufacture
potassium cyanide for the reduction of gold, to make steel by the basic
process; all these inventions were developed first into commercial
successes in Germany. The Germans imported, if necessary, foreign
machinery and foreign foremen to superintend its action, until they had
mastered the principles of operation and had firmly established the
industry in its new home.

=487. Efficiency of the mercantile organization.=—Similar
considerations account for the success of the Germans in commerce, and
explain the rapid development of their export trade. They took pains
to find out what wares their customers wanted, and to sell them when
they had been made. The report of a consul of the United States in
Chile suggests the methods which led to their success. “Thirty years
ago,” he wrote in 1902, “the trade coming to the Pacific ports was
monopolized by the British and a few American houses. The Germans were
represented only by jobbers and shopkeepers in the coast towns. The
Germans, appreciating the importance of this trade, made well-conceived
plans to gain it. They carefully trained a number of able young men.
When these were versed in commercial affairs and in the language of the
people among whom they were to live, considerable shipments of goods
were made to the British and American houses, and the young men found
places as clerks and were given special charge of these consignments.
They remained there till they acquired a complete knowledge of the
coast trade; then they were provided with ample funds and stocks and
opened German houses, with brilliant success. In many branches they now
have a monopoly, and the British and American houses no longer attempt
competition.”

=488. Commercial travelers and trade papers.=—No country in the world
had commercial travelers so well trained, especially in the command
of languages, as Germany. The Germans were said to be the only
foreign people who had a thorough knowledge of Russia in a business
way; they were able to meet the demand for long credits in that and
other eastern countries, and so build up their trade and still avoid
serious losses. The exporters were not content with sending abroad
their ordinary trade catalogues, as were the English, Americans, and
others; they sent personal representatives speaking the language
of the country, or at least reached a prospective customer by some
communication in his own language. Trade papers for foreign circulation
were printed in Germany in the following languages: English, French,
Russian, Spanish, Portuguese, Turkish, Japanese, and Chinese.

=489. Other factors in commercial development.=—The rapidity of
their industrial and commercial development forced a departure from
the methods of the past, and stimulated new forms of co-operation
in business. The same period which was marked in the United States
by the rise of the great aggregations of capital known generally
as “trusts” produced in Germany the “cartel” of a somewhat similar
nature, which had its shady sides but which made some very important
contributions to efficiency in the making and marketing of goods.
German banks followed a course which in contrast to the conservative
methods of the old established banks of England and the United States
appeared speculative, but which in this period when so many conditions
were favorable proved immensely profitable and effective. The great
German banks promoted and financed to a successful conclusion many new
enterprises in industry and trade. The government played an active
part, not merely by such services as were expected of the State in
other countries, but also by more positive contributions. Its control
of internal transportation, by the system of state-owned railways
and canals, gave it great power in directing and assisting economic
development; and it supported most generously the development of
shipbuilding, and the extension of German lines of shipping, for the
benefit of the exporter.

=490. Deductions to be made in estimating German progress.=—We must
note some factors which help to account for the great development of
German commerce, but which should be offset by other considerations,
and which therefore do not represent net contributions to the world’s
welfare. The Germans themselves were being taxed for the particular
benefit of the export trade. The government so far as possible freed
the export industries from the burden of the tariff, which weighed
heavily on some classes in the country, and beyond that, gave actual
bounties to stimulate exports. These were commonly concealed, for
instance in the form of special rates in transportation, but had
nevertheless to be paid out of the pockets of the German taxpayer and
business man. Furthermore, private organizations followed substantially
the same practice. The great “cartels,” kept prices high at home to
gain resources with which they might finance their fight against
competitors in foreign markets. They won much trade, but they won
it at costs, borne sometimes by Germans and sometimes by outsiders,
which need to be taken into account if a fair balance is to be struck.
Finally, there must be put on the debit side of the account some gains
which the Germans made in commerce, not by greater efficiency but
by less honesty: by the imitation of trade marks, by the bribery of
agents, etc. In this regard they were not the only offenders. They did
not win the bulk of their trade in this way. Their departures from
accepted standards of commercial morality were, at least, sufficient to
establish for German trade methods an unenviable reputation.

=491. Examples of German success in trade.=—If we add all these
influences helping Germans to market their goods, to those which enable
them to manufacture to advantage, we can understand the development
of the German export trade, and can see why German wares, even when
they were no better than the wares of other countries, won foreign
markets. A French brewery got the first prize at Baden Baden, but
German beer was sold all along the Parisian boulevards. German brewers
sent an increasing amount of their beer to the British colonies and
India, because they had learned not only all that English brewers can
teach them, but they had learned, too, the tastes of their customers
in distant countries, and had adapted their product to suit these
tastes, while English brewers clung fast to the old methods. They
had greatly extended their trade in textiles, carpets, etc., “not so
much because they are cheaper, as because they are quicker and more
dexterous in fitting their supply to the changing demands of the
market.” They had taken away a large part of the French export trade
in dolls, by taking pains to fit the doll for the country to which it
is going, getting English cloths in which to dress a doll for England,
reproducing exactly national types of furniture, etc. German wares,
wrote the British consul at Paramaribo, displaced Sheffield wares in
his district, not because they were more serviceable, but because they
were cheaper, were polished and painted, and arranged for display in
shop windows, while the English wares were laid away in brown paper on
a shelf. Measuring German commerce as we have measured that of England,
by noting the percentage which German sales to any country formed of
the country’s total imports, we find that in the period from 1881 to
1909 Germany’s share of sales fell off in only one foreign market of
importance, the Netherlands, and, on the other hand, its share grew,
and in some cases grew greatly, in nine of the ten great markets of the
world.

=492. The German tariff and the agrarian party.=—It is impossible to
say just how far the progress of Germany in this period was furthered
by the government’s commercial policy, for, as will appear, this
policy retarded development in some lines to favor it in others. This,
at least, may be said with assurance, that the policy was strikingly
characteristic of the attitude of the German state, and throws much
light on the conditions preceding the outbreak of the World War. The
recent history of commercial policy in Germany may be discussed under
two aspects: its relation to domestic politics and its relation to
foreign politics.

The protective tariff of 1879 was designed particularly to favor the
growing manufactures of the country. Agriculture had been in the past
an export industry, and the agrarian representatives had favored free
trade. Already, however, there were signs of that far-reaching change
by which cheap food stuffs from distant parts of the world were enabled
to under-sell the domestic product; and a moderate protective duty on
the cereals was granted in the tariff of 1879. The German producers
of bread stuffs and meat found, however, that they had underestimated
the danger to which they were exposed, and that they could keep their
home market only by sacrifices which appeared to them desperate. They
obtained additions to the duties; they managed, under the guise of
sanitary precautions, to subject the importation of certain foods to
expense and delay, even when it was not altogether prohibited; and
in the general revision of the tariff, in 1902, they obtained not
only a general increase in the agrarian duties but also a specific
provision which prevented the government from reducing these duties
below a certain point, in treaties which it might make with other
powers. These favors to the agrarian interest were accompanied by the
revision of rates in the interest of manufacturers, but the government
was evidently taking with one hand from the producer what it appeared
to offer him with the other hand. There is unmistakable evidence that
the higher duties on food stuffs restricted consumption and checked
the rise in the standard of living. The policy threatened to impair
the ability of the industrial and mercantile classes to compete with
foreign rivals who were not thus burdened in getting the necessaries of
life. On the other hand, it offered but slight advantage to the major
part of the German agriculturists, who carried on mixed farming on a
small scale; its benefits were mostly restricted to the owners of large
estates, east of the Elbe river, who specialized in the production of
grain and meat with hired labor. What, then, is the explanation of the
policy? It was, to use the German phrase, a _Machtfrage_, a question
of power. The characteristic agrarian was a Junker, a Prussian squire,
devoted to the military ambitions of the Hohenzollerns, endowed by
custom and indeed by law with superior political influence. In spite of
its industrial development, and in spite of some democratic features
of its constitution, Germany was still at heart a military monarchy.
The course of policy was determined by reference not to the general
economic welfare, but to the interests of those special groups which
shared the political and military traditions of the Prussian monarchy.

=493. International aspects of German tariff policy.=—Likewise in
foreign relations German tariff policy was colored by the traditional
Prussian view that commercial competition was not merely the struggle
of individual producers and merchants, but was a group conflict, in
which the state should take an active part, making the most of the
particular weaknesses of states opposed to it. In 1871 Germany had
forced France to subscribe to the principle that each country would
grant the other all commercial favors accorded another power. Being a
part of the treaty of peace this provision was interminable; it could
be amended only by formal treaty. Germany at the time appeared to get
more than she gave. As she realized her industrial and commercial
strength, however, she became dissatisfied with a position of mere
equality. About 1890, under Chancellor von Caprivi, Germany began the
policy of making special bargains with individual states by treaties
fixing the tariff rates. In the negotiations with Russia each party
stood out obstinately for certain favors, and since agreement appeared
impossible each party sought to punish the other by imposing punitive
rates, amounting to prohibitions. This war of tariffs lasted less
than a year, for it affected so disastrously the commerce between the
two countries, that each was glad to reach an agreement by mutual
concession. The same spirit, however, which marked this contest,
appeared in the commercial relations of Germany with other states;
she conducted similar tariff wars against Spain and against Canada,
and seems to have meditated like action against the United States but
prudently refrained from a breach with a country which was approaching
industrial independence and which was the source of indispensable raw
materials.

=494. The tariff of 1902; Central Europe.=—Before the treaties framed
under Count Caprivi were due to expire Germany prepared for another
commercial campaign. A new tariff was passed in 1902, but was held
in suspense until treaties could be negotiated under it, and was not
put into effect until 1906. The new tariff was ingeniously devised
to enable Germany to offer special favors to individual countries,
in spite of nominal adherence to the principle of granting to every
country with which a treaty was made the concessions granted to the
most favored nation; and gave to the government, on the other hand, if
occasion demanded, the power to wage commercial war by the imposition
of triple duties. Germany is commonly supposed to have driven some
hard bargains in the treaties that were framed under this act, but
did not have recourse, as in the preceding period, to tariff wars as
a means of opening foreign markets. Still, the practice of bargaining
for commercial advantage by treaty, which Germany had so vigorously
developed, introduced a tension in international economic relations
that caused the states of Europe to look forward with apprehension
to the years 1917-1918 when the important German treaties expired.
The project of a customs union of Central Europe, which had long been
discussed in an academic way, and which appeared to many Germans in
the early years of the World War as a practicable plan, shortly to be
realized, did not propose to introduce free trade immediately among
its member states, but it did promise to assure Germany such dominance
over the others that she could use not only their economic but their
military resources as well, to further her plans for commercial
expansion. The plan was characteristic of German ambitions, a summary
of the tendencies that had long been manifesting themselves in German
policy, and a significant index of results that would have followed if
Germany had won the war.


QUESTIONS AND TOPICS

 1. What other examples can you find of countries apparently
 invigorated by a war for independence or national unity?

 2. Recent political development of Germany. [Seignobos, chap. 16;
 Dawson, chap. 11; Schierbrand, chap. 6.]

 3. Development of commerce under the Empire. [Whitman, chap. 12;
 Dawson, Evolution, chap. 4.]

 4. Prepare, in the manner suggested in the chapter on England, graphic
 representations of the chief imports and exports. [Statistics in
 Statesman’s Year-Book.]

 5. Recent commerce of Germany. [Schierbrand, chap. 13; Arndt, Germany
 in international commerce, International Monthly, 1902, 5: 526-546;
 Bernstein, Growth of German exports, Contemporary Review, 1903, 84:
 775-787; Williams, Made in Germany—five years after, National Review,
 1901-2, 38: 130-144; Gastrell, chap. 8 (statistical).]

 6. Development of factory industry and condition of factory labor.
 [Dawson, chap. 3.]

 7. The Krupp iron works. [Schierbrand, chap. 14.]

 8. Methods and results of education. [Dawson, chap. 6; Schierbrand,
 chap. 18.]

 9. Various reasons alleged to explain German superiority in
 manufactures and commerce. [Williams, Made in Germany, chap. 7.]

 10. The German chemical industry, [O. Eltzbacher, in Contemporary
 Review, 1904, 85: 627-639; or Barker, Mod. Germany, chap. 25.]

 11. Effect of education on the mercantile organization. [Findlay,
 Genesis of the German clerk, Fortnightly Review, 1899, 72: 533-536;
 Bashford in Fortnightly Rev., 1905, 84: 692-707.]

 12. The German colonial movement. [“Veritas,” chap. 7; Schierbrand,
 chap. 20; Birchenough in Nineteenth Century, 1898, 43: 182-191;
 Keller, Colonization, chap. 14; Dawson, Evolution, ch. 18, 19.]

 13. Development of German shipping. [Bashford in Fortnightly Review,
 1903, 79: 287-302; Schierbrand, chap. 15; Barker, chap. 24.]

 14. German transportation system and policy. [“Veritas,” chap. 6;
 Dawson, Evolution chap. 11; Barker, chap. 22, 23.]

 15. German tariff policy to about 1890. [Villard in Yale Review,
 1892-3, 1: 10-20.]

 16. Commercial treaties about 1890. [Farnam in same, 1: 20-34.]

 17. The agrarian movement. [Schierbrand, chap. 9.]

 18. Tariff policy about 1900. [Schierbrand, chap. 12; Schoenhof in
 Forum, 1901-2, 32: 105-115; Eltzbacher in Nineteenth Century, 1903,
 54: 181-196; H. Dietzel in Quarterly Jour. of Econ., 1902-3, 17:
 365-416; W. H. Dawson in Econ. Jour., 1902, 12: 15-23.]

 19. Effects of German tariff policy. [Lotz in Econ. Journal, 1904, 14:
 515-526; Mann in Contemp. Rev., 1905, 87: 347-358.]

 20. German methods in the commercial penetration of a particular
 country. [See articles in the Quarterly Rev., as follows: U. S.,
 July, 1919, 232: 16-37; France, 1916, 225: 383-399; Italy, 1915, 224:
 136-149; Turkey, Oct. 1917, 228: 296-314.]

 21. German banks and “peaceful penetration.” [McLaren in Quart. Rev.,
 Jan. 1919, 231: 76-96.]


BIBLIOGRAPHY

 Readers of English will find the recent commercial history of Germany
 treated more fully than that of any other country of the Continent.
 Besides the books by Clapham and “Veritas” named in the preceding
 chapter, may be mentioned: S. Whitman, Imperial Germany, 1901; W. H.
 Dawson, German life, N. Y., 1901, and **Evolution of modern Germany,
 revised edition, 1918; W. von Schierbrand, *Germany, N. Y., 1902
 (better than the later editions); J. Ellis Barker, Modern Germany,
 various editions of which the fourth, N. Y., 1912, is to be preferred.
 Dawson, Protection, and Ogg will continue to be of service in this
 period; and reference may also be made to report of the U. S. Tariff
 Commission, 1919, on Reciprocity and Commercial Treaties, 467-487.

 G. A. Pogson, Germany and its trade, London, 1903, is a compilation of
 statistics for the period preceding 1900, and a convenient statistical
 survey for the period since that date is given by Helfferich,
 Germany’s economic progress, Berlin, 1913.

 Arraignments of German business methods will be found in A. D.
 McLaren, Peaceful penetration, London, 1916; H. Hauser, Germany’s
 commercial grip on the world, London, 1917; Millioud, The ruling caste
 and frenzied trade in Germany, London, 1916; Claes, The German mole,
 London, 1915, (for Belgium).




CHAPTER XLI

FRANCE


=495. Condition of France before the Revolution.=—France was
considered, as the reader will recall, the richest and most powerful
state of Europe till near the end of the eighteenth century. The
population of the country was more than double that of Great Britain,
the resources were envied by all other nations, the commerce was
exceeded only by English commerce and surpassed that in some respects.
The French sugar colonies were considered the most valuable colonial
possession in the world, and France surpassed England in trade with her
direct neighbors (some of the German states, Italy, Spain). Under the
political and economic system, however, which had fastened itself on
the country in the course of time, growth was hampered; and opposition
rose until it burst out finally in the Revolution of 1789. Then
followed a period of twenty-five years of rapid political change and of
bitter war, ending finally with the defeat of Napoleon in 1815.

=496. Effect of the Revolution.=—The losses of France during this
period in men, money, and colonial territory need only to be
suggested; the effect of the wars on French commerce has already been
described. It is proper here to emphasize the good of the Revolution.
In appearance, at least, it swept away all the old institutions, and
liberated the people from burdens which they had been bearing for
centuries. It abolished the former class divisions and inequalities
in taxation; it freed the agricultural classes, and extended the
ownership of land; it amended the former restrictions on the pursuit
of manufactures and handicrafts; and it established perfect freedom of
trade inside the country.

=497. Backward features of industry and commerce.=—No country can make
an entire breach with its past, and France after 1815 was more like
France before 1789 than the reader may suppose. The people had not
acquired the skill and boldness in industry and commerce which the
English had won by generations of experience. The government after
1815 was still highly centralized, with strong absolutist tendencies,
and moved more by personal influences than by far-sighted views of
the welfare of the whole people. These facts appear in the course of
commercial policy followed after the Restoration. France had made
only the barest beginnings in the modern industries depending on
coal and iron, and on the application of machinery, at the time of
the Revolution, and though industries developed when commerce was
interrupted by war, they were weak in organization and technique, and
loudly demanded protection when peace returned, and opportunities for
commerce developed.

=498. The French tariff in the first part of the century.=—The result
was a tariff system which goes far to explain the sluggish development
of French commerce in the first part of the nineteenth century. It gave
protection to shipping, to agricultural products, from wheat to sumac
and garden roses, to the raw materials as well as the finished products
of industry. Colbert’ s tariff of 1664 and 1667 has often been cited
as an example of high protection, but the French tariffs of the period
before 1850 imposed still higher duties on some of the most important
raw materials of industry (wool, cotton, flax, pig and bar iron, steel,
alum); many duties had risen to a prohibitive height, and there were
many actual prohibitions.

=499. Sluggishness of industrial development.=—At the time when England
was building up her system of manufactures, when every decade was
marked by some important step in industrial progress, France resolutely
excluded herself from the influences which would have stimulated
progress at home. While England was endeavoring to keep her improved
machinery in the country, by forbidding export, France aided her by
imposing on machinery duties running up to 100 per cent. Means to spin
linen by machinery were invented by a Frenchman, Girard, in 1810,
but were first utilized in England; and England could show nearly a
million and a half spindles in 1849, against a quarter of a million in
France. A Frenchman estimated in 1827 that the steam-engines in Great
Britain amounted to a force of 6,400,000 laborers, while they amounted
in France to but 480,000. About 1840 there were still less than 2,000
steam-engines in France. The French iron industry was far behind the
English in efficiency and in output, but was secured the home market by
protective duties, and built up large fortunes for the iron producers
at a direct loss to the country estimated to be $10,000,000 a year, and
an indirect loss far larger.

=500. Effect of the tariff on commerce.=—The effect of the tariff in
checking commerce between the two great states in this period can be
seen in the fact that in 1829 less than _one seventieth_ of British
exports were declared for France; England found better customers in
Spain, in Turkey, or in Chile. The amount of trade was in fact somewhat
larger, for smugglers evaded the restrictions of the tariff, and by
a number of ingenious devices (including the use of trained dogs),
succeeded in bringing wares to the people who wanted them.

This one example indicates how the French were losing the opportunities
for commercial expansion which this period offered to them as to other
peoples. No more striking commentary on the history of the commerce of
France at this time can be furnished than the following fact: nearly
sixty years after the French Revolution the special commerce of the
country was only just beginning to exceed the figures which it had
attained at the earlier date.

=501. Reform of the tariff by Napoleon III.=—The astonishing increase
of French commerce in the decade 1850-1860 (from less than two to
over five milliards of francs) was due chiefly to the reform of the
tariff by Napoleon III. Attempts before this time to lower duties had
failed because of the determined resistance and the strong political
organization of the protectionists, but the new Emperor enjoyed
a position of exceptional strength, and was not fettered by the
dependence on the manufacturing class which had stopped action by the
previous government. By his mere decrees he lowered or suspended duties
on agricultural products and on important raw material (coal, iron,
steel, wool, etc.).

=502. Effect of the reform on commerce.=—French industry and commerce,
checked so long in their development, responded with surprising
quickness. In a period of little over ten years (1847-1859) the steam
power of France increased over threefold. The commerce with England,
which in the previous period of twenty years had merely doubled, now
quintupled in ten years. With Portugal and Greece commerce quadrupled;
with Germany, Switzerland, Brazil, etc., it tripled; with Belgium,
the Netherlands, Spain, Italy, the United States, etc., it doubled.
French commerce recovered its lost ground so quickly that, according
to a French estimate, it amounted to more than three-fifths of English
commerce about 1860, and the country took easily second place among the
trading countries of Europe.

=503. The free-trade treaty of 1860.=—At the end of the decade which
we have been studying, in 1860, the movement toward greater freedom
of trade progressed still another stage by the ratification of a
treaty of commerce between France and England. Free traders, of whom
Richard Cobden was the chief, convinced the Emperor that France would
benefit by a further reduction of duties. Cobden asserted that French
operatives worked 20 per cent more time for 20 per cent less wages, and
paid upwards of 10 per cent more for their clothing than the same class
in England; and promised the Emperor that the French would share in the
advantages of the English if they would only adopt a similar commercial
policy. The Emperor, moreover, was desirous of winning the good-will
and support of the English to strengthen his international position;
and agreed to the proposals partly on this account. England abolished
the duties on a number of articles of French origin, and reduced the
duties on wine and spirits; while France removed all prohibitions on
trade, and scaled duties down to about half their former amount in
commerce between the two countries. This treaty, which was to last ten
years from its ratification in 1860, is one of the turning-points in
European commercial policy; it marked the extension of the free-trade
movement from England to the other states of Europe; and it inaugurated
a succession of similar treaties on the part of France and other states
on the Continent.

=504. Results of the treaty of 1860.=—There had, of course, been
opposition in France to the further reduction of duties; and many
people prophesied that the movement to free trade would entail the
industrial ruin of the country. The results did not justify these
predictions. Commerce expanded greatly, as was to be expected; it
grew in the period 1859-1869 from 5.4 to 8 or from 3.9 to 6 milliards
of francs, according as the general or special trade of the country
is taken as the standard of measurement. This commerce, however, was
serving French industry and agriculture, and not destroying them.
There was a marked increase in the importation of the raw materials
of industry; the amount of wool and silk brought into the country
for manufacture more than doubled in ten years, and in spite of the
disastrous effects of the American Civil War there was a considerable
increase in the importation of cotton. The use of coal and iron, both
important indexes of industrial development, extended largely; and the
population engaged in industry and commerce grew by nearly a million
workers in the period 1861-1866. The increase in the products of
French industry found a market both abroad and at home. The exports
of manufactures increased, it is true, but slowly except in the case
of special products; but the consumption of manufactures within the
country extended greatly, as new purchasers appeared for wares which
formerly had been beyond their means.

=505. Return to protection after the war with Germany.=—It has long
been the misfortune of France to have her commercial and industrial
interests at the mercy of politics; and at this point in her growth her
progress was stayed by the outbreak of the great war with Germany. From
the direct losses of the war the country recovered with a quickness
surprising to those who did not realize the thrift and saving power
of the French people. The war led, however, to the overthrow of
the government of Napoleon III, and in time to the overthrow also
of the liberal commercial system which he had established. Though
the commercial treaties were allowed to continue for a few years,
the tendency was strongly toward protection. It was a period of bad
times in business, and French agriculture was beginning to feel the
competition of countries outside of Europe; the new French republic,
with all its merits, lent itself too easily to the representation of
class and sectional interests.

=506. Growth of protective duties.=—In 1881, therefore, a new tariff
was established, which raised many duties about one quarter, though
it allowed many of the higher rates to be abated by treaties with
other states. Proposals to increase duties now multiplied. Not only
manufacturing industry but also agriculture became clamorous for
protection. The duty on a quintal (about 220 pounds) of wheat, which
had been 60 centimes since 1861, was raised to 3 francs in 1884, to 5
in 1887, to 7 in 1894. While in the past the agriculturists had been
free traders they had become by 1890 almost a unit for protection,
whether they raised wheat or cattle, grapes or sugar-beets, hemp or
flax. In 1892 an entirely new tariff was adopted, considerably higher
than that of 1881, affecting some important raw materials, and not
affording the same freedom in the negotiation of commercial treaties.

=507. Attitude of the French toward commerce.=—A writer who published a
study of the French tariff system in 1892 thought that public opinion
would force a revision of the recent tariff if it checked the country’s
commerce. Such was actually its result. Exports and imports did not
reach again the figures of 1892 for five and six years respectively.
Nevertheless the protective duties were raised again in 1910 to a
level far above that which prevailed in the neighboring states of
northwestern Europe. The French had to choose between a career in
commerce and the maintenance of the traditional organization. They
could not extend their trade without lowering the barriers of their
tariff. This step they were unwilling to take, apparently because it
would have entailed efforts and sacrifices in the readjustment of their
industries. The caution and disinclination to change, which mark the
great peasant population of the country, appear to have determined the
course of commercial policy, and to have decided the French to hold
fast to what they had, rather than to take the chances involved in a
struggle for a higher place in the open market of the world. In such a
struggle they were at a disadvantage, because of the scarcity of their
mineral resources and still more because of the many backward features
in their industrial organization. On the other hand they could comfort
themselves with the reflection that few if any of the neighboring
states were qualified as were they to renounce the possible benefits of
trade. The great agricultural resources of the country make possible an
approach to self-sufficiency which elsewhere could not be considered.

=508. Statistics of French commerce in the recent period.=—The table
on page 429, presenting the course of French commerce in the period
immediately preceding the outbreak of the World War, illustrates what
has been said regarding the checks imposed on commercial expansion; and
provides the means of comparison with the commercial development of
other countries.

=509. Position of France in recent commerce.=—In matters of taste
and of artistic finish, in which personal aptitude and training are
the important factors, the French remained unrivaled; in production
on a large scale, in which elaborate organization and the extensive
use of machinery determine success, the French did not compare with
English, Germans, or Americans. Thus the French, though always assured
a respectable position in the commerce of the world, could not hope
to share the progress which other nations attained by the export of
cheap manufactures in great quantities. An Englishman said of the trade
between his country and France in 1878, “Broadly it may be said France
supplies us with our luxuries, and we minister to the necessities”;
even at the close of the century this held true, in general, of the
relations between France and the other great countries. France supplied
objects of art, luxury, and fashion, delicacies and wines, and took
from others in exchange the articles of solid utility, the product of
mines and of power machinery.

  SPECIAL COMMERCE OF FRANCE, SELECTED YEARS IN MILLIARDS
              OF FRANCS AND OF DOLLARS.

  =====================+==================+==================
                       |    Imports       |     Exports
  ---------------------+--------+---------+--------+---------
                       | Francs | Dollars | Francs | Dollars
  ---------------------+--------+---------+--------+---------
  1870                 |   2.9  |    .6   |   2.8  |   .5
  1880                 |   5.0  |   1.0   |   3.5  |   .7
  1890                 |   4.4  |    .9   |   3.8  |   .7
  1900                 |   4.7  |    .9   |   4.1  |   .8
  1910                 |   7.2  |   1.4   |   6.3  |  1.2
  1913                 |   8.4  |   1.6   |   6.9  |  1.3
  =====================+========+=========+========+=========

=510. Failure of the government in its attempts to stimulate
commerce.=—Attempts of the French government to stimulate commercial
expansion have not met the expectations of their promoters. The
government has built up a colonial empire about sixteen times as large
as France, but most of the dependencies are in a backward condition,
and their total commerce (including that of Algiers) was before 1914
only about one-quarter of that of France. So far France has lost
money on her colonial enterprises, and there seems no likelihood, in
view of the extremely small emigration from the home country, that
she will recover it. Nor can the results of attempts to build up the
merchant marine be regarded as satisfactory. Measures to protect French
shipping, which disappeared to a large extent during the period of
the movement to free trade, have been resorted to again since 1880,
and have led to the payment of two to four million dollars a year to
aid the building and renewing of French ships. They have done no more
than keep the French fleet stationary while other merchant marines
were rapidly advancing, and seem to have hurt rather than helped the
interests of French commerce. It is noteworthy that of the total output
of merchant ships in France in 1901, 70 per cent of the tonnage was in
the form of sailing vessels, a means of transportation now out of date
for most purposes of foreign commerce; and that two-fifths of the total
tonnage under the French flag in 1912 were in the form of sailing ships.


QUESTIONS AND TOPICS

 1. Burdens from which French commerce and industry were freed by the
 Revolution. [Review chap. 25, above; Rand, Ec. hist., chap. 3; Adams,
 Growth, chap. 15.]

 2. Hayti as a French colony and as an independent state. [A. K. Fiske
 chap. 20 ff.; Spenser St. John, Hayti, Lond., 1884, chaps. 2, 3, 10.]

 3. Backward political condition of France after 1815. [Adams, Growth,
 chap. 18; Seignobos, chap. 5.]

 4. Write a report on one of the following topics in French commerce,
 about 1850: import and export trade, manufactures, customs tariff,
 colonial system. [Homans, Cyclopedia, p. 710 ff.].

 5. France under Napoleon III. [Seignobos, chap. 6.]

 6. The commercial treaty of 1860. [McCarthy, Hist., vol. 2, chap. 41;
 Morley, Cobden, chap. 32.]

 7. What is the difference between “general” and “special” commerce?
 [Statesman’s Year-Book, France, Commerce.]

 8. France under the third republic. [Seignobos, chap. 7.]

 9. The protectionist reaction. [Herbert A. L. Fisher, in Econ.
 Journal, 1896, 6: 341-355.]

 10. The situation of France in international commerce. [Lebon, in
 International Monthly, 1901, 3: 252-273.]




CHAPTER XLII

MINOR STATES OF CENTRAL AND NORTHERN EUROPE


=511. States of minor commercial importance.=—In the year 1912 four
great states carried on nearly one-half of the foreign commerce of the
world, considerably more than one-half if their dependencies be counted
with them. Three of these, England (including the British Empire),
Germany, and France, have already formed the subject of study, and the
fourth, the United States, will be considered at length in a later
section. We must now attend to the commercial development in other
countries, reviewing their history more briefly as accords with their
minor importance. We shall take up first two countries, the Netherlands
and Belgium, which stand not far below the leaders, and which would
even rank high among them but for their small size. It may not be
unnecessary to remind the reader that Belgium is a creation of the
nineteenth century; the country had formed a province subject to Spain
or Austria until the period of the French Revolution when it was for a
time incorporated in France, then (1815) joined to the Netherlands in
a single kingdom, and finally, in 1830, established as an independent
state.

=512. Commerce of the Netherlands to 1830.=—Dutch commerce had
long passed its best days when, toward the close of the eighteenth
century, it received what seemed to be its death blow in the war with
England, growing out of the American war of independence. Before the
Netherlands had begun to recover from its reverses it was engulfed
in the movements of the French Revolution; was conquered and heavily
taxed by the French; suffered under the ban of Napoleon’s continental
system; and lost for a time its most valuable colonial possessions.
At the close of the wars, in 1815, it recovered its colonies, except
Ceylon, the Cape of Good Hope, and parts of Guiana, which remained in
the possession of the English, but it could not recover its former
commercial position. Other peoples had learned to do for themselves
what the Netherlands had once done for them as a merchant and carrier;
and Amsterdam and Rotterdam saw their commerce pass to London, Hamburg,
and other ports. In striking contrast with the earlier period the
Netherlands had in 1824-5 only 7 large ships under construction while
England had about 800. The union with the Belgian provinces, lasting
from 1815 to 1830, increased the area and the internal trade of the
country, but was a hindrance rather than a help to the development of
foreign commerce. The Belgian industries required protection, and the
tariff, framed to meet both their demands and a protectionist sentiment
in the Netherlands which had grown up in the period of decline,
hampered free commercial relations with other states.

=513. Dutch commerce since 1830.=—The Netherlands, even after the
separation of Belgium in 1830, clung to the protective tariff, and
remained outside the great current of commerce. A colonial policy
known as the culture-system, adopted in their East Indian possessions,
especially Java, returned a large revenue to the government, but
prevented commercial development there, while the West Indian
possessions suffered severely from the lack of labor following the
abolition of slavery. Meanwhile, however, a movement for free trade
had grown up which resulted, after 1850, in a lowering of tariff rates
until they were little more than nominal in amount. The growth of the
European railway system gave to the Netherlands a new importance as a
place of import for wares destined for central Europe; and the country
profited largely by the growth, on either side, of the two great
industrial powers, England and Germany. In the last half of the century
the growth of the Dutch commerce has been rapid and nearly constant.
The annual value of the total special trade (exports plus imports, in
this case including the precious metals) was as follows at ten-year
intervals from 1850 to 1910, in milliards of dollars: .1, .2, .2, .6,
1.0, 1.5, 2.4. Figures for the general trade of the country, including
goods imported and then re-exported, would be considerably larger.

=514. Position of the Dutch in recent commerce.=—The Netherlands
suffers from a lack of mineral resources, as the country is largely
“made” land, composed of sand and silt which the great rivers have
deposited at their entrance to the sea. The Dutch, therefore, have been
handicapped in their attempts to share in the development of modern
industry, and find in agriculture rather than in manufacturing their
chief occupation. They have succeeded in certain special manufactures
(diamond-cutting, chocolate, oleomargarine), in gaining a leading
place, but cannot compete with other nations in the staple machine
industries. They produce a surplus of dairy products for export, and
import raw materials and manufactures which cannot be produced in
sufficient quantity at home; but the striking feature of their trade
is the fact that in general the same products appear among both the
imports and the exports. The Dutch, favored by their national training
and geographical position, and diverted from other means of livelihood
by lack of resources, are the middlemen of Europe, arranging exchanges
between other countries.

=515. Belgium: early industrial development.=—Belgium is far more
richly endowed with mineral resources; in spite of its small area
it produced in 1912 more than half as much coal as France, and has
also rich supplies of ore of iron, and other metals. Even before the
full value of these resources was realized Belgium was a distinctly
industrial state, and for many centuries Flanders and other districts
have been noted for their manufactures. Belgium did not suffer,
therefore, as did the Netherlands, from the period of French
occupation; it was freed by the French from many trammels on industry
dating from the gild period, and it found in France a market for its
manufactures which enabled it to endure the restrictions of the
Continental System. During the period of union with the Netherlands
(1815-1830) Belgian industries continued to develop, with the aid of
Dutch capital, commerce, and colonies; the districts represented by
Ghent, Brussels, Charleroy, and Liege became widely known for the
manufacture of textiles, iron wares, etc. Progress was checked for a
time by the breach with the Netherlands (1830), but this was just the
period when steam began to be applied to manufactures and to railroads,
and with the aid of this new force Belgium quickly recovered her former
position. The prosperity of Antwerp, the one important port of modern
Belgium, was seriously threatened by the act of the Dutch in closing
the Scheldt to navigation; but the Belgians were willing to pay for
this means of access to the sea, and finally bought outright the
privilege of using it.

=516. Belgian commercial policy.=—During the first decades of Belgian
independence the tariff which had been inherited from the period
of Dutch rule was made more strict, and before the middle of the
century it had been changed so as to grant considerable protection
to agriculture, industry, and the carrying trade. Belgium, however,
like the Netherlands, is too small a country to be able to afford high
protection. After 1850 a free-trade movement led to lower duties and to
liberal commercial treaties, the policy which has since been followed
in the main. Many influences were at work in this period to further
commerce, chief among them the technical improvements in manufactures
and transportation; so it is dangerous to argue that the prosperity
of Belgium in the following period was due to the policy of greater
freedom of trade. It is certain, however, that Belgian commerce could
not have attained the development it did without this policy.

=517. Survey of the recent development of Belgian commerce.=—Giving
figures roughly in millions of dollars, the total commerce rose in the
protectionist period, 1840 to 1850, from 70 to 80. In the following
ten years of transition it rose to 190; in 1880, after twenty years of
nearly free trade, it had risen to 560, and in the decades since then
the figures have been 600, 856 and 1480. To this commercial expansion
the port of Antwerp owed its position as second only to Hamburg among
the ports of the Continent. An analysis of the different items of which
the recent trade of the Belgians was composed shows that their strong
exporting industries were manufactures (yarns and textiles, iron,
glass, etc.), while they were obliged to import a large part of their
food supply, and of the raw materials for their industries.

=518. Switzerland: obstacles to industrial development.=—Another
country, small in area but with a commerce exceeding that of many
greater states, is Switzerland. With its agricultural capabilities
restricted by the area covered by mountains, and with no important
mineral resources, Switzerland has to depend upon the character of
its people as its chief industrial asset. In the early part of the
nineteenth century it suffered not only from the restrictive tariffs of
the states surrounding it, but also from the fact that it had itself
not become a political unit, and was cut into small pieces by dues and
tolls on trade. The hindrances to internal trade were finally swept
away in 1848, when Switzerland became a federal republic; and the
people made use of their greater freedom at home and of the lowering of
tariff rates abroad to extend their commerce rapidly.

=519. Position of the Swiss in recent commerce.=—Switzerland has
developed almost entirely along the line of manufactures. The
agricultural population has actually decreased since 1870, as it has
become easier to purchase food products from abroad by the export of
manufactured products: silk and cotton textiles, clocks and watches,
etc. Swiss industries have not reached the development of those in
more advanced countries, and much of the work is still done outside of
factories, and with simple home machinery. These conditions imply hard
work and low returns, but the Swiss must choose between securing in
this way some share in the world’s commerce, or starving in the vain
attempt to support themselves by the scanty resources of their own
country.

=520. Austria-Hungary: survey of commercial development.=—The state
of Austria-Hungary, though it was in size the third in Europe, ranked
only seventh in commerce in 1912, taking place after the Netherlands,
Belgium, and Russia. Reference to an earlier chapter, describing
conditions before 1800, will suggest that Austria-Hungary entered
the nineteenth century handicapped by its economic and political
conditions. It required roughly a full half of the century to remove
the more serious obstacles to progress, and the latter half of the
century has not given time enough to enable the people to win a place
with their more advanced neighbors of the West of Europe.

=521. Obstacles to the growth of commerce and industry.=—Of the
difficulties under which commerce labored the following are among the
most important: (_a_) the character of the government, which was a
personal absolutism like that in France before the French Revolution,
absorbed by the family interests of the ruling house and by questions
of foreign policy, and attending but slightly to the interests of the
people as a whole; (_b_) the system of prohibitive tariffs, which was
maintained more strictly than in any other state of central Europe;
(_c_) the separation of different parts of Austria-Hungary by tolls and
tariffs; (_d_) the slight development of manufacturing industry, due
not to the lack of natural resources but to the backwardness of the
people and to the persistence of restrictions dating from the period of
the gilds.

=522. Gradual removal of these obstacles.=—(_a_) The revolution of 1848
began a movement for constitutional government, which led in time to
the fall of absolutism and the introduction of modern representative
assemblies. At the same time, however the spirit of nationalism was
awakened among the various peoples, and their conflicting claims
(especially in Hungary and in Bohemia) have seriously affected the
working of the parliamentary system. (_b_) The prohibitive system,
which had absolutely excluded the most important manufactures or had
allowed them to be imported only as a special favor and by payment of
high duties, was abandoned after 1848 for a more moderate system of
protection, and commercial treaties with various states were made to
facilitate the movement of wares. (_c_) The freedom of internal trade
was secured for the Austrian half of the monarchy in 1826, and for the
whole state (with slight exceptions) in 1851. (_d_) The restrictions
on industry continued even after 1850. A man could not exercise
any trade requiring the use of a machine, or any but the simplest
household employments, without securing a public license; a man might
exercise only one trade, and a cabinet-maker might not upholster the
furniture he made, nor might a baker make confectionery. Most of these
restrictions were abolished in 1860.

=523. Growth of commerce since 1850.=—Commerce and industry, which had
developed with exceeding slowness before 1850, were quick to respond to
the change in conditions, aided by the extension of the railroad system
which marked this period. In spite of heavy taxes and a depreciated
paper currency there was an extraordinary increase of energy and growth
of business. Foreign trade more than doubled in twenty years, and
each part of the monarchy developed along the line of its strongest
resources; the Austrian lands, especially Bohemia, extended their mines
and built up their backward manufactures, while the Hungarian lands
exported increasing quantities of agricultural products (wheat, flour,
stock, etc.). A reaction toward protection, felt since the ‘70’s, did
not check the growth of commerce; a more serious danger appeared to
be the possibility that a tariff barrier would again be established
between the two parts of the monarchy as the result of the national
aspirations of the Hungarians.

=524. Position of Austria-Hungary in recent commerce.=—Austria-Hungary
carried on by far the largest part of its commerce with its neighbor,
Germany, and found the greatest hope of the future in building up
the trade with the Balkan states, and along the route to Salonika
and Constantinople. Hampered by its position, it has not succeeded,
in spite of generous bounties, in developing its shipping trade to
important proportions. The first ships to pass through the Suez canal
in 1869 were three steamers of the Austrian Lloyd, but in 1913 less
than one twentieth of the tonnage using the canal was Austrian. The two
ports that served the monarchy, Trieste for the Austrian part and Fiume
for the Hungarian, were favored by every sort of assistance that the
government could render, but remained still ports of the second class,
surpassed in importance by a score of other ports in Europe.

=525. The Scandinavian states; their position in recent commerce.=—The
Scandinavian states (Sweden, Norway, Denmark) held a lower rank among
commercial countries than others which will be mentioned later, but in
a geographical grouping they may be properly considered here; and their
commerce was important, at least, in proportion to the irrelatively
small population. These states were characterized, in general, by a
lack of coal and by the slight development of manufactures; and by a
soil and climate which are disadvantageous to the ordinary operations
of agriculture. The difficulties of life have forced many inhabitants
to emigrate, and forced those who stayed at home to make the most of
their extractive industries (forestry, mining, dairying), the products
of which they could exchange for the wares of more favored nations.
The time when the Baltic trade was one of the great branches of world
commerce was long past. The rest of Europe would have been but slightly
affected if it had been separated from the Scandinavian countries,
while such a separation would have entailed ruin on them.

=526. Denmark.=—The little state of Denmark, with a population of but
slightly over two million, had taken advantage of modern commercial
facilities to specialize in the dairy industry, in which it has been a
leader and teacher of Europe. When we add to butter the pork products
raised in connection with the dairies, and the eggs from Danish poultry
yards, we have the articles which made up more than two thirds of the
total value of the country’s exports.

=527. Norway; Norwegian shipping.=—In Norway, also, a country so barren
that far less than 1 per cent of its area is suited to cultivation by
the plough, dairying has been an important industry; and the dairy
and forest industries supplied most of the exports. The difficulties
of life on land were so great that the people were forced to take
to the sea; they gained one tenth of the national income from the
fisheries, and had, in proportion to their numbers, more merchant
shipping than any other people. In 1913 Norway ranked second in tonnage
of sailing ships (after the United States), fourth in total tonnage
(after Germany), and fourth in tonnage of steamers. The position of
Norwegian shipping was even higher before the use of iron ships had
become general, and when Norway could utilize its forest products in
shipbuilding. Norway enjoyed the most brilliant period of its shipping
in the generation following 1850, when it took the place of the United
States as one of the great carrying nations of the world.

=528. Sweden.=—Sweden was somewhat more fortunate than the other
Scandinavian countries in its agricultural resources, and during part
of the century has been able to export a surplus of grain. It has
been recently, like the others, reduced to importing the cereals, and
found its chief strength in products of the forest, the pasture and
the mine. From its rich iron deposits it contributed raw materials for
maintaining the iron industry in other countries, especially England.


QUESTIONS AND TOPICS

 A profitable exercise on each of the minor countries treated in
 this and in the following chapters is a study of the statistics of
 present-day commerce, and a reduction of these statistics to the form
 of a graphic chart. [Statesman’s Year-Book.]

 1. Experience of the chief Dutch colony during the Napoleonic wars.
 [Day, Dutch in Java, chap. 5.]

 2. The culture system. [Same, chaps. 7, 8.]

 3. Political and social conditions in the Netherlands. [Hough, Dutch
 life, N. Y., 1901; Campen in Westminster Review, 1890, 134: 479-492;
 National Review, 1890, 15: 748-763.]

 4. Recent political history of Belgium. [Seignobos, chap. 8.]

 5. Recent history of the Swiss. [Seignobos, chap. 9.]

 6. Labor conditions in Switzerland. [Scaife in Forum, 1901, 31: 30-46.]

 7. Conditions in Austria-Hungary in the period of the absolute
 monarchy. [Seignobos, chap. 13.]

 8. Political development of Austria-Hungary in the last half of the
 century. [Same, chap. 17.]

 9. Austria-Hungary’s colonial experiment. (Bosnia-Herzegovina.)
 [Monthly Review, 1902, 8: 72 ff.]

 10. Recent commercial policy. [Philippovich in Economic Journal, 1902,
 12: 177-181.]

 11. The conflict of nationalities. [Edinburgh Review, 1898, 188;
 1-36; Quarterly Review, 1901, 194: 372-395, with map; Coubertin in
 Fortnightly Review, 1901, 76: 605-614.]

 12. Recent history of the Scandinavian states. [Seignobos, chap. 18.]

 13. Danish agriculture. [Westenholz in Monthly Review, 1904, 14: Feb.,
 69-77; Givskor in Economic Rev., 1902, 12: 410-419.]

 14. Modern Iceland. [Quarterly Review, 1894, 179: 58-82; Statesman’s
 Year Book.]

 15. The Danish West Indies. [Waldemar Westergaard, The Danish West
 Indies, N. Y., 1917.]


BIBLIOGRAPHY

 The narrative history of the minor states is well treated in
 Seignobos; present conditions are described in volumes of the series
 Our European Neighbors, N. Y., Putnam.

 On Belgium, see Belgium, its institutions, industries, and commerce,
 Brussels, 1904, a handbook published by the government for the
 Louisiana Purchase Exposition. Similar handbooks have been published
 for the Scandinavian peninsula; they include much historical material
 and are valuable sources for our purposes. See Norway, edited by
 Sten Konow and Karl Fischer, Kristiania, 1900; Sweden, its people
 and its industry, edited by Gustav Sundbärg, Stockholm, 1904.
 Drachmann, Industrial development and commercial policies of the three
 Scandinavian countries, published for the Carnegie Peace Endowment
 in 1915, is the best survey of commercial development, but is not an
 easy book for the elementary student to use. Kiaer has published a
 valuable historical sketch of the development of Scandinavian shipping
 in Journal of Polit. Econ., 1891-2, 1: 329-364.

 On Switzerland see The Swiss Confederation, by Francis O. Adams and
 C. D. Cunningham, London, 1889, and W. H. Dawson, Social Switzerland,
 London, 1897. On Austria-Hungary see S. Whitman, The realm of the
 Habsburgs, N. Y., Lovell [1893], and the volume by F. H. E. Palmer in
 the series of Our European Neighbors, N. Y., Putnam.




CHAPTER XLIII

STATES OF SOUTHERN EUROPE


=529. Condition of Italy in the first half of the century.=—Of the
countries of southern Europe none has gained so rapidly as Italy in the
latter part of the nineteenth century. The explanation, however, must
be sought largely in the fact that none was sunk so low as Italy in the
first part of the century. Conditions of an earlier period, described
in the previous chapter on Italy, lasted far into recent times. Here
is the description given by an English author, writing in 1878:
“Before 1848, Italy, all except Piedmont, seemed hopelessly crushed.
Austria, the Pope, and the Bourbons held her in their grasp. Even the
comparatively native sovereigns of Tuscany had turned oppressor, and
all Italy groaned like a man in the grasp of the torturer. Commerce
languished, divergent fiscal laws and arbitrary raids on private wealth
choked up the channels of intercourse between one part of the kingdom
and another; without shipping, without manufactures or foreign trade
of a solid kind, possessed of no political security, Italy was, thirty
years ago, more insignificant in the eyes of neighboring nations
than Greece or Spain is now.” In southern Italy the government was
incompetent to perform the first of its public duties, the protection
of its citizens. It could not withstand even the half-civilized
corsairs of Tripoli, who pillaged the Neapolitan ships, and finally,
long after the United States had shown the proper way to deal with such
pirates, bought from them a disgraceful peace.

=530. Lack of political and commercial union.=—The peninsula was
divided among seven independent states, so stratified as to cut the
natural lines of trade, and to prevent effectually the development of
any national commercial life. Of these states six had the protective
tariffs characteristic of the prohibitive period, and toll stations
existed even inside the frontiers. A Milan manufacturer, shipping
silks to Florence (about 1840), had to pass eight customs stations in
150 miles; a merchant on his way from Bologna to Lucca was stopped
at seven stations in the stretch of about 125 miles. Commerce would
have been in desperate straits except that all but two of the states
touched the sea, and hence could find some opening for trade. It is
noteworthy, however, that the leading commercial city of Italy in
this period was one which many people now would be puzzled to place
on the map, Leghorn. It owed its commercial importance, not to the
advantages of situation or to the productive resources of surrounding
territory; it stood, about 1900, sixth in the list of Italian ports,
and had but a fraction of the trade going to Naples or Genoa. It gained
its prosperity at this time simply by “the comparative security and
freedom” which foreigners found there, and which they were denied in
other parts of Italy.

=531. Establishment of Italian unity.=—The example of Germany, in
extricating herself from a somewhat similar situation by the formation
of customs unions, made, naturally, an impression in Italy, and led
in 1847 to an attempt there to form a similar union. The attempt was
paralyzed by the opposition of Austria, who saw in it a blow aimed at
her political influence in the peninsula. The Italian states, unlike
the German, could secure commercial union only as a result of national
unity, not as a means of preparation for it. National unity was in
preparation, nevertheless, in the brain of a great statesman, Cavour,
and was obtained through his far-sighted plans and the cooperation of
the king whom he served, Victor Emanuel, ruler of Piedmont. In the few
years following 1859 a real kingdom of Italy was established, and the
country, which for nearly fifteen hundred years had formed the prey
of rival powers, became at last a power herself, worthy to rank with
the other great states of Europe. The old barriers to internal trade
disappeared, and the whole country accepted the customs tariff of
Piedmont, which was extremely liberal. Rarely, if ever, in the history
of commerce, have changes of such sweeping importance taken place so
quickly. The tariff of the Kingdom of the Two Sicilies, to choose
an extreme example, which levied a duty of over $2,500 on a centner
of silk goods, gave place to a tariff of United Italy, in which the
corresponding duty reached a minimum of $10.

=532. Survey of Italian commerce since 1860.=—The effect on commerce of
this great political upheaval was instantaneous. Contrasting the two
years, 1859 and 1861, we find that in this brief interval the value
of imports into Italy more than doubled. It will be convenient to
insert here figures giving the total value (exports plus imports) of
the special trade of Italy, at ten year intervals from 1860 to 1910.
Reduced to dollars and given in round figures of millions they are as
follows: 130, 320, 440, 440, 590, 1,020. The reader will note that
trade grew at a rapid rate from 1860 to 1870, and more slowly to 1880.
Then came a stoppage; in some years there was an actual decline, and
the value of exports was considerably less at the end of the decade
than at its beginning. There was a recovery in the ten years closing
in 1900, and a rapid advance thereafter. The figures show, however,
that Italian commerce advanced but slowly in the latter part of the
century, and a study of conditions at its close would show that Italy
had a commerce then far from commensurate with the country’s large
population. The average share of each Italian in the annual movement
of commerce was much less than that falling to the inhabitants of most
of the other states of Europe. Among the great states only Spain and
Russia ranked lower, in this respect.

This survey suggests the topics which demand discussion in the
following sections. We must know the reasons for the rapid development
of Italian commerce till about 1880, and for the check to progress
after that date; we want an explanation of the comparatively slight
share which the average Italian has had in the world’s commerce.

=533. Development of agriculture and commerce after 1860.=—When Italy
secured national unity, about 1860, the country was almost purely
agricultural. The ordinary trades, of course, were exercised to satisfy
local needs, and the silk manufacture had not altogether perished, but,
to use the phrase of a modern writer, though there were industries in
Italy there was no Italian industry. Restrictive taxes and tariffs
had prevented the development of any considerable manufacture. When,
therefore, comparative freedom of trade was introduced, the people made
full use of the opportunity to purchase the cheap wares of the factory
industry of other countries; they imported manufactures in increasing
amount, and paid for them by exporting their surplus agricultural
products. The railroad system, which grew from 800 to 5,000 miles
in the period 1860-1880, gave greatly improved facilities for the
marketing of wares, and affected distinctly the course of foreign
trade; the proportion of commerce carried on across the land frontier
rose in this period from a third to nearly a half of the total.

=534. Increase of customs duties; protection; tariff war.=—The Italians
realized at once the benefits of the movement which led to national
unity, but ever since they have been carrying its burdens. The expense
of the national movement was enormous, especially in view of the
poverty of the country; it weighted the government with debt, and
required a constant increase in taxes. The treasury, reaching out in
every direction for money, and forced to some fiscal devices which seem
now positively iniquitous, did not spare commerce. Duties were raised
from time to time, and a general revision of the tariff in 1878, while
it reformed some old abuses, tended still to raise the general level of
duties, and introduced a distinct element of protection. The revised
tariff, however, did not go far enough to satisfy the demands either of
the treasury or of the protectionists, and was altered again in 1887.
Commerce labored henceforth under high revenue duties, under increased
duties designed to protect Italian manufactures, and, furthermore,
under new or increased duties on agricultural products.

One disastrous result of the new tariff appeared quickly in the
outbreak of a tariff war between Italy and France. France had been
Italy’s best customer, taking at one time nearly half of her total
exports and furnishing about a quarter of her imports. Trouble between
the two countries had, however, been brewing for years; they were
following different lines in foreign politics, and the protectionists
on both sides of the frontier viewed with jealousy a commerce which
stimulated the development of international rather than national
industries. The tariff of 1887 called forth a reply in kind from
France; this was met by a rejoinder from Italy; and so the duties grew
rapidly on either side, and had soon reduced the commerce between the
countries to a small part of its former dimensions. The most important
export industries of Italy (wine, raw silk, fruits, live stock, eggs)
suffered severely, and many producers were absolutely ruined.

=535. Italian agriculture; poverty of the people.=—The course of tariff
policy explains, in large part, the check which Italian commerce had
experienced in the last decades of the century. Reasons why this
commerce was so small in proportion to the population will appear as we
review now some features of the Italian productive organization.

Few of the large states of Europe showed so large a proportion of the
people engaged in agriculture, so small a proportion in manufactures,
as were found in modern Italy. Considerably more than half the people
lived directly from the land. Not only did Italy show backwardness
in this respect; the character of Italian agriculture was itself
backward. The land was worked largely “on shares,” a system which
does not encourage improvement or stimulate efficiency. A government
commission reported in 1881 that production depended almost entirely
on mere labor, and that capital and intelligence contributed only a
minimum. Antiquated implements and wasteful and careless methods of
treating the crop, went far to nullify the natural advantages of soil
and climate. When we consider that, of the small surplus which the
agriculturist obtained, the government demanded a good share for taxes,
we can understand why the mass of the people were wretchedly poor, and
must content themselves with a bare living. It is worth noting that
about 1900 the consumption of sugar in Italy was only about six pounds
per head, less, even, than in Turkey, while in most European countries
people consumed from 20 to 50 pounds or even more. Salt itself was a
luxury, which was heavily taxed. The protective tariff appeared to
extend favors to farmers as well as to manufacturers, but the people
who gained by it were chiefly the great landlords, while the mass of
the people simply paid more for bread because of it.

=536. Manufactures.=—As agriculture was the strongest branch of
production in Italy, it was bound to suffer more than any other from
the protective tariff. Italian agriculturists did not need protection
for most of their products, and they did need the chance to market
their products in free exchange for industrial wares imported from
abroad. We have now to see what success the Italian tariff had in
building up the native industry on which the people were forced, in
large part, to rely.

Italian manufactures, in 1880, had scarcely advanced beyond the meager
beginnings which we found in 1860. Nearly all conditions were adverse.
Capital was scanty. Of important raw materials the country lacked all
but silk and hemp. Coal, the mainstay of modern manufacturing, had to
be imported at an expense which nearly doubled its price. Most serious,
perhaps, of all difficulties was the lack of a class of industrial
leaders, men of technical knowledge and business energy. We may take
as typical the case of a macaroni manufacturer in Naples, who declined
some important foreign orders, for no other reason than that he had,
as it was, enough business to make both ends meet, and saw no reason
for adding a new worry to life. The single important advantage which
Italian manufacturers enjoyed was that of cheap labor. The government
was lax in its factory legislation, and allowed employers to secure
their labor supply from women and children, at an extremely low rate.

The great development, therefore, which Italian manufacturers have
shown in the last decades of the century has been due not to any
natural fitness of the country, but solely to the tariff, which has
raised prices paid by consumers enough to counterbalance natural
disadvantages, and to attract men into manufacturing industry. The
artificial character of Italian manufactures is shown strikingly by the
fact that at the very close of the century not one of the protected
manufactures was strong enough to contribute in any considerable degree
to the exports of the country.

=537. Shipping; colonies.=—Some of the most unfortunate features of
Italian policy seem to have been the result of national vanity, of the
desire on the part of Italians, now that they had made for themselves
a great state, to make their state resemble the other great powers
in all respects. This feeling was certainly responsible in part for
their determination to build up a system of national manufactures,
regardless of expense. It led them to profuse expenditures for the
encouragement of shipping, which resulted, indeed, in a growth of the
merchant marine, but created in it merely a costly luxury. The Italian
navigation companies charged high freight rates, and included in their
fleets many antiquated vessels.

The instinct of imitation, finally, led the Italians to follow the lead
of other powers in colonial expansion. They did not escape the colonial
fever prevalent in the eighties, and spent money and lives lavishly, in
the attempt to build up a dominion on the African side of the Red Sea.
Their attempt ended in disastrous failure (Adowa, 1896), and popular
opposition to such enterprises grew so strong that the government did
not dare to carry out a later project for the establishment of an
Italian station on the coast of China (San Mun, 1899).

=538. Recent progress of Italy.=—The preceding sections have been
avowedly critical in tone, and are designed to make clear the great
gap which separates Italy from the leaders in the world’s industry and
commerce. It is important, however, that the reader should distinguish
Italy, on the other side, from such backward countries as Spain and
Portugal. Though Italy was poor it was not so poor as they, and it
offered vastly richer promises for the future. In the closing years
of the century it showed marked advances in many lines. Italian
agriculturists awakened to the possibilities of their profession; they
showed an eagerness to improve their methods, and by various forms of
association and cooperation they scored great advances. The exports of
dairy and poultry products doubled in about ten years, and became more
important than the export of wine. Italian manufacturers secured now
from natives the technical assistance for which they formerly depended
entirely on foreigners. They emancipated themselves, in part, from
coal, by their skilful management of water power, and have come to
enjoy a high reputation for electrical appliances for the transmission
of power and other purposes. The tariff has been made more liberal by
treaties with other states and by a reconciliation with France; and
commerce in the period before 1914 gave evidence of the capacity for
healthy growth.

=539. Spain.=—Spain, with an area much larger than that of Italy, and
with a population more than half as large, had in 1912 a commerce less
than half that of the Italian. The fault lay not with the country,
which in mineral resources is perhaps the richest in Europe, and which
under the skilful agriculture of the Moors was made to bloom like
a garden, but with the people who have neglected or misused their
opportunities. Spain furnishes a striking example of the evil that bad
politics can work in economic development. The personal absolutism of
the period before 1800 has been shaken off in the nineteenth century,
but experiments in constitutional government under monarchs of various
families and even under a republic, have not succeeded in bettering
conditions greatly. The mass of the people remained ignorant, and
most of their leaders were inefficient and corrupt. There can be no
wholesome economic life under these conditions. Shrewd politicians used
economic enterprises merely as a means to draw money from the public
treasury or from the pockets of consumers, while the investor or worker
without political influence was deterred from enterprise by the heavy
taxes which were heaped upon him.

=540. Spanish commerce in the first half of the century.=—A partial
reform of the Spanish colonial system toward the close of the
eighteenth century led to a growth of trade with the colonies, so
that it formed, if the figures can be trusted, a considerable part of
the total Spanish commerce, which was small at best. The promise of
commercial development inside the Spanish Empire was of short duration.
While Spain was still harassed by the Napoleonic wars, revolutions
began among the Spanish colonies on the American continent; and as
soon as they had achieved their independence they used it to trade
with states like England rather than with the country which had asked
so much of them and could offer them so little. The commerce of Spain
with other countries was hampered by the Spanish commercial policy,
which an Englishman of the time called “one of the most pernicious
and restrictive of all the systems of trading exclusion.” Duties were
levied both on imports and on exports, and included not only rates
of 50 to 100 per cent but also many absolute prohibitions. Spanish
commerce would have been starved out of existence if the government
which set these rules had not, by its inefficiency and corruption,
furnished the means of evading them. A veritable army, including, it is
said, 300,000 persons, of whom one third were armed, found its chief
occupation in smuggling; Spanish manufacturers maintained factories
only to mask the sale of contraband goods, and even members of the
government engaged in the contraband trade.

=541. Recent commerce of Spain.=—The turning-point in the recent
history of Spanish commerce came about the middle of the century, when
the worst abuses of the old tariff were shorn off. The reform was
followed by a rapid increase in the country’s trade, which grew to
more than fourfold in the forty years following. Especially noteworthy
was the increase in this period of the importation of the implements
and raw materials of industry (coal, machinery, textile fibers, etc.),
showing that Spain was at last beginning to seek a place for herself
among modern commercial nations. Such indications of progress must not,
however, blind our eyes to the fact that it was attained by a colonial
and commercial policy which retained many of the old restrictive
features. The loss of the remaining important colonies to the United
States in the war of 1898 was a severe blow to Spanish industries, and
they have been supported since then by a protective tariff which bore
heavily on many producers as well as on all the consumers in Spain. The
considerable development in mining (iron, copper, quicksilver, etc.)
has been due to foreign energy and capital, and the native Spaniards
offered as exports to other countries little more than dessert for
their dinner tables: wine, fruit, nuts, and raisins. It is noteworthy
and significant that Spain suffered seriously from the competition of
California in the sale of fruit in Europe; this most perishable of
wares, in which a nearby country ought to control the market without
effort, was packed and transported in such a slovenly fashion by the
Spaniards that a people 6,000 miles distant could excel them in the
quality they offered to the consumer in Paris or London. In the period
from 1890 to 1910 the figures showing the value of Spanish commerce
remained almost stationary.

=542. Portugal.=—In all the respects which concern a student of recent
commerce Portugal is but a miniature of Spain, with the faults of
Spain exaggerated rather than lessened by the weakness and smaller
size of the country. “It is scarcely credible, but it is nevertheless
a fact, that agriculture is nearly in the same condition as it was
some hundreds of years since”; these words of an English author would
apply now nearly as well as when they were written in 1843. Few of the
inhabitants were engaged in occupations other than agriculture; rich
mines remained unworked, and manufacturing has remained insignificant
throughout the century. After 1850 it could still be said of the
Portuguese that “their entire faith is reposed in protectionism,
monopolies, restrictions, and high duties.” Portuguese trade, nearly
ruined already, received a further blow by the separation of Brazil
about 1820; and though considerable colonial possessions in Africa and
the East were retained, the Portuguese have shown no capacity to base
on them commerce of any importance. By exports, of which wine and cork
were the most important, the Portuguese were able to satisfy their most
pressing necessities; but the backwardness of commerce can be seen when
it is realized that the trade of this country, approximately equal in
population to the Netherlands, was in 1911 less than one twentieth of
Dutch trade.


QUESTIONS AND TOPICS

 1. Social and economic conditions in Italy after 1800. [King, Hist.,
 vol. 1, chaps. 3-5.]

 2. Formation of United Italy. [Seignobos, chap. 11, middle part.]

 3. Commerce of Italy about 1850. [Homans, Cyclopedia, p. 1114 ff.]

 4. Burden of debt and taxes. [King and Okey, p. 270 ff., chap. 15;
 Villari, chap. 4; W. Calkins, Taxation and business in Italy, Forum,
 1902, 33: 333-345.]

 5. Italian agriculture. [King and Okey, chap. 8; Villari, chap. 11.]

 6. Life of the agricultural classes. [Phillipps, Peasants of Romagna,
 Fortnightly Review, 1897, 68: 407-417.]

 7. Poverty of the people. [King and Okey, chap. 6; Villari, chap. 4;
 Strutt, Monthly Review, 1901, 4: August, 62 ff.]

 8. Emigration. [King and Okey, chap. 17; Schuyler, Italian immigration
 into the United States, Polit. Science Quarterly, 1889, 4: 480-495.]

 9. Italian manufactures. [King and Okey, chap. 7: Villari, chap. 12.]

 10. The Italian colonial venture. [Edwards in Westminster Review,
 1897, 148: 477-489; Keller, 517-531.]

 11. Recent commerce of Italy. [Statesman’s Year-Book; treat exports,
 imports, countries traded with, etc., as has been already suggested.]

 12. Commerce of Italy with the United States. [Luzzatti, in North
 Amer. Review, 1903, 177: 247-259.]

 13. Recent development of agriculture. [King and Okey, chap. 9.]

 14. Political conditions in Spain. [Dillon in Contemporary Review,
 1898, 73: 876-907, 74: 305-334; Foreman in National Review, 1897, 29:
 721-734, 30: 547-560.]

 15. Commerce of Spain about 1850. [Homans, Cyclopedia, p. 1739 ff.]

 16. The recent commerce of Spain. [Statesman’s Year-Book.]

 17. Resources and industries of Spain. [E. D. Jones in North Amer.
 Review, 1898, 167: 39-47.]

 18. Recent commerce of Portugal. [Statesman’s Year-Book; see Homans,
 Cyclopedia, for conditions about 1850.]


BIBLIOGRAPHY

 For the general history of Italy, see besides Seignobos, Bolton
 King, History of Italian unity, N. Y., Scribner, 1899, 2 vols., with
 bibliography. The book by the same author in collaboration with Thomas
 Okey, **Italy to-day, London (N. Y., Scribner), 1901, is excellent for
 recent conditions, and has a full classified bibliography. Villari,
 *Italian life, N. Y., Putnam, 1902, is more popular and depends in
 part on King and Okey, but still is good. Orsi’s book in Story of the
 Nations Series is mainly political.

 On Spain good reading in English is as scarce as on Italy it is
 plentiful. Seignobos is dull, and Hume’s histories are almost entirely
 political. There is, however, a good book in the series of British
 Colonies and Foreign Countries, W. Webster, *Spain, London, 1882; and
 Higgin, Spanish life, N. Y., Putnam, 1902, has some material of value.
 The U. S. Monthly Summary, Commerce and Finance, published several
 reviews of Spanish commerce at the time of the Spanish war (March,
 June, 1898, April, 1899), and a considerable amount of material on
 various aspects of Spain appeared about that time in the periodicals.

 The close commercial relations between Portugal and England have
 given rise to two excellent books on the condition of Portugal in the
 nineteenth century, J. J. Forrester, *Portugal and its capabilities,
 third ed., London, 1856; Oswald Crawfurd, *Portugal, old and new,
 London, 1880.




CHAPTER XLIV

EASTERN EUROPE


=543. Great size and small commerce of the Russian Empire.=—The
attention and imagination of men have long been impressed by the
size of the Russian empire, which included an area greater than that
presented by the moon at the full. Combining the characteristics
both of Europe and of Asia, Russia was almost a world in herself,
and, indeed, was called by one of her rulers “a sixth part of the
world,” worthy to rank as a continent. Yet this great state took a
place in modern commerce below petty countries like the Netherlands
and Belgium. A country of such vast size might, of course, secure
by internal trade many of the advantages which smaller countries
must seek in international exchange. The United States presents an
example of a territory so large and so richly endowed that it can
afford, in considerable degree, to renounce commerce with the rest
of the world, and can still maintain from its own resources a high
industrial civilization. Russia has not enjoyed a similar success. It
had a comparatively sluggish internal trade; and it lacked industrial
civilization. We must seek in the history of commerce an explanation of
these facts.

=544. Historical reasons for backward development.=—The few paragraphs
devoted to Russia in a previous chapter suggested the main reason for
the country’s backwardness. During many centuries, while the peoples
of the West were advancing in civilization, the people of Russia were
facing away from Europe, occupied in defending themselves against
Asiatic princes. Russia shared in none of the great movements of early
European history: feudalism, chivalry, crusades, rise of towns,
Reformation, Renaissance. It was devoted entirely to the struggle
for self-preservation. When it became part of the European world,
therefore, about 1700, it brought with it into modern times many
characteristics of an unformed, half-developed organization; and since
that date it has been trying, and it is now still trying, to catch up
with the rest of Europe.

=545. Russian commerce about 1800.=—The movement toward progress,
initiated by Peter the Great about 1700, continued, with various
fluctuations, during the century. In so far as it found expression in
commerce we can regard the last fifty years before 1800 as a time of
rapid advance; commerce grew to nine fold the volume which it showed
in 1750. So slight, however, had been the beginnings of Russian trade,
that it amounted in 1802 only to about fifty million dollars.

Russia was still practically in the position which it had occupied
in the time of the Hansa, dependent on the West for all its finer
manufactures, and supplying raw materials in exchange. Hemp and flax,
crops which rapidly exhaust the soil, and for the cultivation of
which the great tracts of fresh land in Russia offered an advantage,
were the chief exports. Among others on the list were wood, grain,
tallow, hides, furs, feathers, etc. The Russian nobles exported a
certain amount of linen, which they forced their serfs to make for
them that they might have the means of purchasing foreign luxuries,
and manufactured also iron for sale abroad. The appearance among the
exports of this metal, which we are used to associate with advanced
industrial countries, is explained by the fact that charcoal was still
an important source of fuel for the iron manufacture, and of this the
boundless Russian forests offered an abundant supply.

=546. Means of transportation.=—Almost nothing had been done as yet
to unite by means of transportation the vast stretches of territory
in Russia. Roads were practically non-existent, and goods were
transported by land only in winter, when they could be sledged over
the rough ground on the snow. The waterways, with which the country
is so abundantly provided, had been connected by a few important
canals, and were the chief means of transportation. Goods were brought
to them on sledges in winter, to await the high water of the spring
freshets. They were laden on flat-boats, holding sometimes several
hundred tons, but built to draw only two or three feet of water, and
were floated down with the current when the ice melted. The boats were
rudely constructed, and were broken up for timber or fire-wood at the
end of the trip. The inconvenience and uncertainty of such a system of
transportation are obvious, but it was, nevertheless, remarkably cheap;
rates on some water routes were only one or two cents per ton-mile.

=547. Chief ports.=—The conditions of transportation confined almost
all the foreign trade of Russia to the sea, and the commerce across the
western frontier was insignificant. Archangel, situated on the river
Dwina, a few miles from the coast of the White Sea, and the leading
port of Russia before the time of Peter the Great, still retained a
respectable share of commerce, and was visited every year by ships from
England and the Netherlands. In relative importance, however, it had
declined greatly after the foundation of St. Petersburg, which soon
became the most important outlet for the country’s trade. A rival was
at this time, however, growing up in the South, where Russia had only
recently secured the territory on the shore of the Black Sea. Odessa,
which was founded in 1793, rose rapidly in commercial importance,
especially during the Napoleonic wars, when the Baltic trade suffered a
severe check.

=548. Development up to the Crimean War (1854-1856).=—During the first
half of the nineteenth century Russian commerce grew steadily but
slowly; the rate of increase was much behind that of the preceding
fifty years. A partial explanation of this check to progress can
be found in the adoption, in 1822, of a prohibitive tariff; the
importation of many foreign manufactures (clocks, textiles, porcelain,
glassware, etc.), was absolutely forbidden. Shortly after the middle
of the century, however, came a turning-point. The Crimean War, in
which England and other states were engaged with Russia, is generally
admitted to have yielded to neither of the chief combatants advantages
proportional to the costs which it involved. It was in one way,
however, of immense benefit to Russia. It awakened the country to a
realization of its backwardness. It raised a demand for reform of
antiquated conditions in economic and political life, which the Czar
himself was the first to heed.

=549. Reforms; growth of the railroad system.=—The reform movement bore
fruit in many lines to which we can pay but scant attention. It led to
the emancipation of the serfs in 1861, by which a considerable part of
the Russian people were liberated from a condition resembling medieval
bondage, and became free land-holders. It secured at least a partial
improvement in the system of government. It was, finally, to name the
result of the greatest influence on commerce, the occasion for the
introduction of the modern railroad system in Russia. The government
had found itself so hampered in carrying on the war by the lack of
transportation facilities, that it now bent every energy to remedying
the defects. The railroads of Russia measured at the outbreak of the
war only about 600 miles. In the ten years following the railroad
system grew to over 2,000 miles, and in the next decade to about
10,000. Though the first lines were built mainly to serve military
purposes, those constructed later were designed to develop the economic
resources of the country; and it is hard to overestimate the importance
of this development of the means of modern transportation, to a country
which stood in such sore need of it as Russia.

=550. Development of commerce.=—The results of the reforms can be
followed in the growth of Russian commerce after the middle of the
century. In the decade 1860-1870 the foreign commerce of the country
increased to more than double what it had been, and was growing at
this time faster than the commerce of any other country in Europe,
except that of a neighboring state, Austria-Hungary. Some significant
changes, moreover, appeared in the direction and character of Russian
trade. The great gains of the period were made by southern Russia,
where the wheat fields of the rich “black-earth” district were brought
within reach of a market. It was about this time that wheat won the
first place among the exports away from flax and its products. Commerce
by way of the Black Sea increased very rapidly, while the Baltic did
not keep its proportional share in the commerce of the country, and
the proportion of trade finding its outlet by the Arctic Ocean had
sunk to insignificance. Commerce with the west of Europe across the
land frontier, which formerly had been restricted by the difficulty of
transportation, grew even faster than the Black Sea commerce, and gave
an entirely new importance to trade relations with neighboring states.
England had enjoyed the largest share of Russia’s commerce during the
first part of the century, but could not hold her own henceforth in
competition with Germany. This last-named country, then in course of
rapid industrial development, was enabled by the railroads to win her
way rapidly in Russian commerce, and soon was the largest sharer in it.

=551. Character of industries and commerce.=—Russia, like many other
of the European states, enjoyed the greatest freedom of trade in the
period following closely after the middle of the century. The customs
duties levied in Russia at this time would have been considered high in
western Europe, but they were much lower than the rates ruling in the
first half of the century, and much lower than the rates in force at
the century’s close.

Russia at this time was still almost exclusively agricultural. The
serfs had learned to supply their simple needs for clothing and
implements by domestic industries, but nothing like the western factory
organization, with its extensive use of power machinery, had as yet
appeared. Attempts to stimulate such an organization, by privileges
and protection, had resulted in failure. The Russians are not a people
with a gift for mechanism. It has been said of them that their only
invention is the samovar, their apparatus for making tea. The world
exposition of 1867 displayed samples of Russian industry, but most
of these were the products of village craftsmen, and the few samples
of modern manufacture came from factories owned for the most part by
Germans. The exports of the country were still almost entirely raw
products, and the manufactured wares which the country contributed to
the commerce of the world were of the most simple description: yarn of
flax and hemp, cordage, string, and sacking.

=552. Recent history of the tariff.=—In spite of these conditions the
government pursued since about 1870 a policy of protection, which grew
constantly more strict with the passage of time, and which furnished
at the end of the century the most extreme example of protection to be
found among civilized states. Comparing the tariff of 1868, which was
comparatively liberal, with the tariff of 1891, we find that duties on
some important manufactures rose in the following measure: on cotton
goods and glassware, to double; on rails and locomotives to quadruple
or more. Even more striking and more serious was the increase on partly
manufactured wares. Duties rose on leather and yarns to twofold or
more; on petroleum and wrought iron to threefold; on sulphuric acid
to four or seven fold; on cast iron to tenfold. This is the period in
which Germany was seeking commercial advantage by bargaining in tariff
rates with other countries, and in which occurred the tariff war with
Germany that has been noted above. At this time and again later Germany
was able to bring her eastern neighbor to terms by financial pressure;
Russia was a great borrower and needed the support of the Berlin money
market. Russia raised still more, however, the rates of the tariff in
a revision in 1903, and even after these had been reduced by treaty
bargains they left the general level higher than before.

=553. Development and cost of manufactures.=—The protectionist policy
in Russia gained its object, an increase in the manufacturing industry
of the country. The product of home manufactures rose greatly in value,
and the importation of foreign manufactures declined in proportion.
This object, however, was attained at a great cost. Russia was even
less suited to the modern system of manufactures than Italy or
other states which we have considered. It lacked capital, technical
knowledge, leaders, laborers of steadiness and intelligence—practically
everything except raw materials, which were present in abundance.
Manufactures, therefore, were conducted at an expense far above that
common in other countries, and could be maintained only by forcing the
people to pay far higher prices for their wares. A person could not get
so much as a sewing needle without contributing an extra sum to the
support of the home manufactures. The policy was the more questionable,
as the profits of these manufactures went in large part to foreign
stock holders, who utilized an opportunity for which the native
Russians were still unprepared. Even from the political standpoint the
policy of protection in Russia was attended with danger; many events
indicated that the factory laborers would be the first to turn against
the autocracy which had brought them into being.

=554. Effect of the tariff on agriculture.=—The most serious aspect,
however, of the Russian tariff was its effect upon agriculture. The
great plains of the country were peculiarly adapted to the use of
modern cultivating and harvesting machinery, such as contributed
so much to the progress of agriculture in America. The tariff made
such machinery so costly, whether it were imported or manufactured
in Russia, that it was introduced to only a slight extent. A Russian
estimated that the farmers of the United States found it profitable
to spend nearly twenty times as much for agricultural implements and
machinery as the Russians. The peasants could not afford even plows,
harrows, or scythes of a modern type, and still used antiquated
makeshifts. The mass of the people, at best, were ignorant and bound
by custom, showing still the bad effects of the servile condition from
which they had so recently emerged; and needed every encouragement to
be induced to advance to better methods of cultivation. Even artificial
fertilizers, however (superphosphates, etc.), were burdened with a
duty, because there seemed a chance to manufacture them in the country;
the result, naturally, was an increase in price, and a restriction in
the use of this important aid to production.

=555. Effect on railroads.=—We must note further the effect of the
tariff on the railroad system. Russia has never gone through the period
of transportation by highroads. It passed from conditions described
above as existing during the first part of the century, to the use of
the railroad, without the transition such as was marked by the use of
turnpikes in England. Even in 1914 the highroads of the country were
of the crudest character, and internal trade depended mainly upon the
waterways and railroads, contributing nearly the same tonnage to each.
The railroads, therefore, had peculiarly important functions to perform
in Russia. They served agriculture, moreover, to an unusual degree; the
cereals supplied in 1897 more tonnage than any other ware carried on
Russian railroads. Yet if we measure the development of railroads by
comparing their length with the area or population of the country, we
find that even at the close of the century the Russians had made but a
beginning, and took the lowest rank among all important peoples. Taking
merely Russia in Europe, and contrasting it with the United States, a
country which also has a vast area and great vacant spaces, the Russian
railway system in 1913 had not reached one ninth the development of the
American in comparison with population, not one tenth in comparison
with area. An important reason for this backwardness was the increased
expense of the construction, equipment, and operation of railroads due
to the high tariff on railroad supplies. Iron may be said, roughly, to
cost double or more of what it cost in other countries. The government
has not always been blind to these facts, and has made concessions from
time to time, but the general tendency of its policy has been made
only more glaring by these occasional exceptions.

=556. Commercial reasons for Russia’s eastern movement.=—Preceding
sections have sketched some of the historical influences which
prevented Russia from taking a part in world commerce commensurate
with the space she covered on the map. This great state, which in the
sixties took only sixth place in commerce among European countries,
rose above Belgium and the Netherlands in the early part of the
seventies, and secured fourth place, only to be passed again by these
little states and for a time even by Austria-Hungary. In 1912 Russia
still ranked sixth among European countries, eighth among all countries
of the world, in the value of foreign trade.

This decline in commercial importance was due largely to the conscious
and voluntary action of the government, which restricted commerce
between its people and the people of the West. No government, however,
regards all commerce as injurious, and the Russian government
endeavored to atone for losses in the West by expansion in the East.
In that direction Russia met people who were her industrial inferiors.
By trade with them she hoped to secure imports which would not compete
with her own products, and sought to win a market for her newly founded
factories. The manufactured products which were too high in price to
compete in European markets could be sold in the East so long as the
cheaper wares of western Europe did not reach the field. As commerce
extended, however, in the last decades of the century, Russia saw that
her eastern markets were threatened unless she could apply to them the
same policy of protection which she had established in the West; and
the government was forced into the policy of military and political
expansion, designed to close the doors of eastern markets to other
powers, which received its check in the the war with Japan.

=557. Course of the Asiatic trade.=—In no period of the nineteenth
century has Russian commerce across her Asiatic frontier formed any
important fraction of her total foreign trade. At the beginning
and end of the century it was about one tenth of the total; in the
intervening time it was rather less. The difficulty of transportation
over the great stretches of almost trackless territory confined the
trade with the Far East to objects comprising great value in small bulk
(tea, cloth, etc.), and directed Russian commerce rather to the Asiatic
countries on her southeastern frontier (Persia, etc.). In the second
half of the century, for reasons noted above, the government showed an
increased interest in this branch of trade, and lent liberal aid in
furthering Russian interests in the East. The most striking evidence
of the determination of the Russian government to extend its influence
toward the Pacific Ocean was the construction of the Siberian Railway
(1891). This was rather a political than an economic undertaking; it
was enormously expensive, and failed to develop sufficient traffic to
pay its way as a commercial enterprise. Its failure also in the field
of international politics was signalized by the victory of Japan in the
war with Russia in 1905, which checked definitely Russia’s ambitions to
play a dominant part in the Far East and put in her place an Asiatic
power.

[Illustration:

  THE
  TRANS-SIBERIAN
  RAILROAD
]

=558. States of the Balkan Peninsula.=—If the reader will examine a map
of Europe about 1800 he will find that at that date the state of Turkey
occupied the whole of the Balkan Peninsula, and included considerable
territories even to the north of the Danube. The nineteenth century has
witnessed the liberation of most of this land from Turkish rule; and
some half dozen independent states have emerged and taken their place
in the European system. These states, however, have neither in their
political nor in their economic organization reached maturity. Like the
Russians, the peoples of southeastern Europe belonged for centuries to
Asia rather than to Europe, and the period of Turkish misrule, lasting
down into very recent times, has effectually checked their development.
Their states were still in the making, constantly disturbed by racial,
religious, and dynastic quarrels. Their economic organization was
still, in large part, medieval. Roads were scarce, and good roads were
almost unknown. The implements and methods of agriculture were of the
most primitive description. Some cultivators still used for a plow a
crooked piece of wood with a single handle, and threshed their grain
on the open ground by driving horses over it. Manufactures were still
in the stage of the handicrafts, and were, in some cases, exercised by
gilds like those of the Middle Ages.

=559. Commerce of the Balkan States.=—Conditions have been rapidly
changing, as railroads and steamers have reached the peoples of the
Balkans, and have brought them in touch with the advanced civilization
of the West. The commerce of the Balkans, however, has been as yet
important rather by its promise than by its performance. The total
commerce between the contiguous states Servia and Bulgaria amounted in
1882 to less than a million dollars. The aggregate commerce of the four
Balkan countries, Roumania, Bulgaria, Servia and Greece, in 1910-11,
amounted to considerably less than one per cent of the total trade of
the world, and was exceeded by the commerce of Sweden or Spain or even
of the little country Denmark. The foreign commerce of the kingdom of
Greece depended almost entirely on one product, the so-called Zante
currant, a seedless raisin which got the name of currant from Corinth,
whence it was carried to the island of Zante. The pig took in Servia a
position almost equal in importance to that of the currant in Greece;
great herds of swine were kept in the oak forests, and contributed
largely to the chief export, that of animal products. On the plains
of Roumania wheat was grown for export by a wretched population of
tenants and laborers, who were still serfs until 1864. The governments
of some of the states have endeavored by protective tariffs and various
privileges to stimulate the growth of a mining and manufacturing
industry; but the countries of the Balkan Peninsula will find in
agriculture their chief resource for a long time to come, and will
develop their commerce most rapidly by exchanging their surplus of raw
products for the manufactures of central and western Europe.


QUESTIONS AND TOPICS

 1. Character of internal trade in Russia. [Wallace, chap. 12; Palmer,
 chaps. 10-12; Schierbrand, chap. 9.]

 2. The period of Mongol rule and its effects. [Wallace, chap. 14;
 Rambaud, History of Russia, N. Y., Burt, $2, vol. 1, chap. 10;
 Thompson, chap. 2; Noble, chap. 3.]

 3. Condition of people and production in the time of serfdom.
 [Wallace, chap. 28; Palmer, chap. 5.]

 4. Traveling by roads and rivers in modern Russia [Wallace, chap. 1.]

 5. The Crimean War. [Seignobos, chap. 27, first part.]

 6. The period of reforms. [Wallace, chap. 27.]

 7. Faults of the Russian administration. [Wallace, chap. 24,
 Schierbrand, chap. 11; Thompson.]

 8. Emancipation of the serfs. [Wallace, chap. 29; Thompson, chap. 4;
 Noble, chap. 7.]

 9. What were the chief exports and imports of Russia; with what
 countries was the most important commerce of Russia conducted?
 [Statesman’s Year-Book.]

 10. Character and significance of the foreign trade of modern Russia.
 [Hourwich in Journal of Polit. Econ., 1892-3, 2: 284-290.]

 11. Domestic manufactures. [Palmer, chap. 20.]

 12. Recent fiscal policy and protection. [Wallace, chap. 36;
 Schierbrand, chap. 3.]

 13. Manufactures in modern Russia. [Palmer, chap. 19; Schierbrand,
 chap. 4; Oseroff, The industrial development of Russia, Forum, 1899,
 27: 129-144.]

 14. Condition of the agricultural population after emancipation.
 [Wallace, chap. 31; Palmer, chap. 8; Schierbrand, chaps. 5, 6;
 Thompson, chap. 4; Noble, chap. 7.]

 15. Political, social, and economic life of the rural population.
 [Palmer, chap. 4; Wallace, chaps. 6-9.]

 16. Famines in modern Russia. [Articles by various authors in
 Fortnightly Review, 1891, 56: 636-652; Forum, 1892, 13: 575-582:
 Nineteenth Century, 1892, 31: 1-6; Century, 1893, 46: 560 ff., etc.]

 17. Faults of the modern system of agriculture. [Hourwich in Yale
 Review, 1892-3, 1: 411-433; in greater detail, in Columbia Studies,
 vol. 2, N. Y., 1892.]

 18. Russian trade in China. [Calderon in Contemporary Review, 1900,
 78: 389-396.]

 19. Russia’s hold on Persia. [Forum, 1900, 29: 147-153.]

 20. Russian railway policy in Asia. [Long in Fortnightly Review, 1899,
 72: 914-925, with map.]

 21. Territorial expansion in the East. [Wallace, chap. 38; Noble,
 chap. 10; Schierbrand, chap. 1.]

 22. The Siberian railroad. [See A. L. A. Catalogue, or use one of
 the following periodical articles: Norman in Scribner’s, 1900, 28:
 515-541; Davidson in Century, 1904, 67: 940 ff.; Kinloch in Monthly
 Review, 1901, 2: 60-71, with map, and with special reference to trade
 possibilities; Mikhailoff, in North Amer. Rev., 1900, 170: 593-608;
 Colquhoun in Monthly Review, 1900, 1: Nov., 40-55, with two maps.]

 23. Choose one of the more important states (Turkey, Roumania,
 Bulgaria, Servia, Greece) and

 (_a_) Trace its political history during the century. [Seignobos,
 chaps. 20, 21.]

 (_b_) Study its recent commerce. [Statesman’s Year-Book.]


BIBLIOGRAPHY

 Though no history of Russian commerce has appeared in English, there
 are many good books on the history and conditions of the Russian
 Empire; and a considerable number have been published within a few
 years. For bibliography see the A. L. A. Catalogue and recent issues
 of the American Historical Review; a more complete bibliography, with
 chronological classification, will be found in Skrine, pp. 347-358.
 Compare, also, A. L. Morse, Reading list on Russia, Univ. of State of
 N. Y., State Library Bulletin, Jan., 1899, Bibliography, nos. 15-17.
 References to articles on Russian commerce in the first half of the
 century, in English and American periodicals, will be found in Homans,
 Cyclopedia, p. 1659.

 Mavor, *Economic History of Russia, London, 1914, 2 vol., is a
 monumental work, particularly valuable for its study of institutional
 development. The history of Russia in the nineteenth century is
 treated by Seignobos, adequately for most purposes; more fully by
 Skrine, Expansion of Russia, London, 1900 (N. Y., Macmillan), in the
 Cambridge Historical Series.

 The most useful books for our purposes are the descriptive works, most
 of which contain considerable historical material. First of these
 should be mentioned D. M. Wallace, **Russia, N. Y., Holt, 1877, 1905;
 references in the topics are to the revised edition, 1905. Anatole
 Leroy-Beaulieu, ** The empire of the tsars, N. Y., Putnam, 1893, has
 the rank of a classic, but a large part of its three volumes treats
 topics removed from our direct interest. Among the smaller books the
 most useful are the following: Francis H. E. Palmer, *Russian life, N.
 Y., Putnam, 1901, W. von Schierbrand, *Russia, N. Y., Putnam, 1904,
 Edmund Noble, Russia, Boston, Houghton, 1900, H. M. Thompson, Russian
 politics, N. Y., Holt, 1896.

 A work deserving special mention is **Industries of Russia, published
 for the World’s Columbian Exposition at Chicago, and edited in the
 English translation by John M. Crawford, St. Petersburg, 1893, 5 vols.
 with maps and charts. Volumes 1 and 2, paged continuously, cover
 Manufactures (with historical surveys) and Trade (brief on foreign
 commerce); volume 3 covers Agriculture and Forestry; 4, Mining; 5,
 Siberia and the Trans-Siberian Railroad. I cannot cover here the
 mass of literature on Russia’s eastern policy, and refer for that to
 the bibliographical aids mentioned above. The U. S. Monthly Summary,
 Commerce and Finance, April, 1899, contained a compilation of various
 material on the Russian Empire and the Trans-Siberian railroad, with a
 map; another monograph, on European Russia, appeared in this series in
 1904.

 On Finland, a distinct part of Russia for the treatment of which the
 text offers no space, see N. C. Frederiksen, **Finland, London, 1902,
 with bibliography; this is an excellent book, especially full on
 economic matters.

 The Balkan States have attracted more attention from writers than
 accords with their recent commercial importance; for a general survey
 see Laveleye, *The Balkan Peninsula, N. Y., Putnam, 1887. On the
 conditions of commerce in the peninsula just before the World War see
 Day, The pre-war commerce and the commercial approaches of the Balkan
 Peninsula, Geographical Rev., N. Y., May, 1920, 9: 277-298.


TOPICS FOR REVIEW

 Among topics suitable for general review of the recent period,
 (1800-1900), the following may be suggested: (_a_) shipping; (_b_)
 transportation by canals; (_c_) transportation by railroads; (_d_)
 production and exchange of raw textiles; (_e_) finished textiles;
 (_f_) coal; (_g_) iron and steel; (_h_) introduction of steam and
 power machinery in manufactures; (_i_) commercial policy.




PART V.—THE UNITED STATES




CHAPTER XLV

THE ORGANIZATION OF PRODUCTION, 1789


=560. Comparison of conditions in 1789 and in 1914.=—The United States
was in 1914 recognized as one of the greatest countries of the world
in area, in population, in wealth, in efficiency of the organization
of production and business, and in the volume of internal trade and
foreign commerce. Little more than a century before, when it began its
career as an independent state, it was an aspirant struggling merely
for a respectable position among the minor powers. Its population,
which in 1914 was nearly one hundred million, was in 1790 less than
four million, placing it in this respect far below the great states
of Europe, and not far above such little states as the Netherlands,
Portugal, or Sweden. The whole settled area, comprising a strip along
the Atlantic coast, and the mere beginnings of settlement beyond the
Appalachian Mountains, was less than the area of the present state of
Texas. The people were poor, and backward in industrial development.
The amount of internal trade was small, even in proportion to the
scanty population. The people were forced into foreign commerce by
the necessities of their condition. They were as yet unable to supply
the needs of civilization by wares of their own production. They had
as yet developed no resources which assured their economic position
in commerce with European powers, and in their political and military
position they were so weak that they must beg as favors rather than
demand as rights the opening of markets which were essential to their
commercial growth.

[Illustration:

  NORTH AMERICA
  in 1782
]

The sharp contrast between 1789 and 1914 indicates clearly the
importance of the subject which will be treated in the following
chapters of the book, the history of the commerce of the United States.
The student is asked to give his attention first to a detailed study of
conditions existing about the year 1789. A survey of conditions at that
date will furnish a summary of the development of the colonial period,
and a basis for appreciating the national progress of more recent times.

=561. Chief exports in 1790.=—Following the plan pursued in earlier
chapters we shall attend first to the exports of the country, composed
of those wares which could be produced to such advantage that the
people could sell a surplus of them abroad, and so secure the imports
of which they stood in need. The following table gives the chief items
for the first year of our national existence:

  EXPORTS, 1790, IN MILLIONS OF DOLLARS

  Northern products.—Flour                      4.5
                      Wheat                     1.3
                      Lumber                    1.2
                      Corn                      1.0
                      Fish                       .9
                      Potash                     .8
  Southern products.—Tobacco                    4.3
                      Rice                      1.7
                      Indigo                     .5
                                               ----
     Total (including decimals omitted)        16.6
     Total exports, including items omitted    20.2

One characteristic of this table is noteworthy because it has marked
the exports of the country from this early time to the present. The
exports of the United States have always consisted not of a great many
articles sold in small quantities, but of a few great staples sold in
large quantities. Nine items, it will be observed, comprised over three
fourths of the total value, and the two items, breadstuffs and tobacco,
made up over half.

=562. Predominance of agriculture; experiments with crops.=—The table
shows clearly that the strength of the United States at this time
lay in what the economists call extractive industries, devoted to
the production of raw materials. Some of the wares, it is true, had
undergone the first stages of manufacture (flour, lumber, potash,
indigo), but their chief value consisted still in the original
material. In contrast with present conditions it was estimated at
this time that nine tenths of the people were engaged in agricultural
pursuits, and that even in New England, where industrial pursuits were
most diversified, only one eighth were employed in manufactures, trade,
or other occupations besides agriculture. Of twenty-one presidents of
the United States (to 1880) fifteen were farmers or the sons of farmers.

The agricultural products of the table above represent the results of
nearly two centuries of experiment in the search for profitable crops.
It is not easy to determine what cultures will pay under the conditions
of a new country. Early settlers had extravagant hopes of supplying
the European market with silk, wine, olive oil, drugs, dyes, etc., and
learned only by bitter experience that the conditions of nature and man
destined America to a commercial career different from that of southern
Europe or Asia. Most of the important crops and grasses were introduced
to this country from other continents, Indian corn being, of course,
the notable exception; and so thoroughly had the process of experiment
been carried out that in the hundred years following the Revolution
only one species of cultivated plant (sorghum) was introduced, of
sufficient importance to be enumerated in the census.

=563. Breadstuffs.=—The crop of greatest importance to the people of
the American colonies was, without question, maize or Indian corn. This
crop, of native origin, flourished in all parts of the colonies, and
yielded, under the conditions of a primitive agriculture, far richer
returns than could be secured from any of the European grains. To
the domestic food supply it was indispensable. For export purposes,
however, it was less desirable, and though moderate quantities were
shipped abroad every year, the demand of foreign markets, as appears
in the table, was chiefly for wheat and wheat flour. Wheat was at this
time a costly luxury in New England, but it could be grown to advantage
in the middle colonies and in Virginia; and in the particular period
which we are studying it assumed a leading position among the exports.
European countries had formerly been unwilling to receive a product
which competed with their own agriculture, but the failure of crops in
Europe, the outbreak of the French Revolution (1789), and the long wars
following, caused a great increase in the demand for our food products,
and gave rich returns to the wheat farmers who had been suffering from
the lack of a market.

=564. Other products of northern agriculture.=—Aside from the cereals
the agricultural exports of the middle and northern colonies were
unimportant. Many attempts had been made to grow flax and hemp, to sell
in competition with the produce of Russia and other Baltic countries.
The seed of the flax was exported, but the preparation of the fiber
was too troublesome to pay the producer, and though coarse fabrics for
home wear were made of it and it was used for sewing shoes until the
invention of the wooden shoe peg, the export of flax and hemp fiber
remained insignificant.

The second place among exports of northern agriculture, after
breadstuffs, was taken by stock and meat products. The abundance of
pasture land encouraged farmers to raise a surplus of live stock for
sale, though as yet they paid but little attention to breeding or to
the proper care and fattening of the animals. Horses were shipped to
Canada and to the West Indies, while salt beef and salt pork had a
ready sale for provisioning ships, and for export to the West Indies.
The export of live animals and provisions amounted, however, to less
than one million dollars.

=565. Southern staples; tobacco.=—Many of the export products above
mentioned could be raised in the southern colonies, and all of them
were, in fact, produced there to some extent. The people of the South,
however, were fortunate in finding conditions suited to the production
of some special crops, which, unlike those of the North, could not be
produced to advantage in Europe, and which therefore were more readily
taken in trade. The Southerners followed their interests, therefore, by
raising of foodstuffs only what they absolutely needed, and by applying
themselves to their special staples. Of these tobacco was by far the
most important throughout the colonial period. It was asserted at one
time that a man could provide grain for five men and clothes for two,
by the sale of the tobacco which he could grow unassisted. Until the
rise of the cotton culture tobacco was king among the southern staples,
and had no rival export at the North of equal importance; through the
eighteenth century it formed about half of the total exports of the
colonies to England, and only just before the close of the century
did it yield the leading place to wheat. Disadvantages of a one-crop
system, entailing sharp fluctuations in price and periods of dearth,
the rapid exhaustion of the soil under tobacco, and the encouragement
of negro slavery,—all these evils could not turn the planters of
Maryland and Virginia from a crop which, on the whole, yielded rich
returns.

=566. Rice and indigo.=—In Carolina rice took the position held by
tobacco in other southern colonies. Its cultivation became of practical
importance only toward 1700, starting, it is said, from the gift of
a small parcel of rough rice by the captain of a ship bound from
Madagascar to Liverpool, who was forced to put into Charleston for
repairs. The grain found a ready market in southern Europe and in the
West Indies, and became soon an important article of export, though the
modern method of water culture was not introduced until nearly 1800.

The only other item of southern produce deserving special mention in
this place is indigo. This plant, the reader will remember, was the
source of a blue dye which at the time was highly prized and which,
indeed, has only recently been displaced by anilin colors. Attempts
had been made in the early colonial period to raise indigo, but no
success attended them until about 1750. After that date the culture
flourished in South Carolina and Georgia; aided by a bounty from
the British government the planters exported large quantities and
secured handsome returns. The preparation of indigo was, however, an
unwholesome occupation, as the plant, after being soaked in water,
was left to rot, giving out an offensive odor and drawing innumerable
flies. It was an indication of progress, therefore, that indigo culture
declined rapidly after 1790; planters gladly took up the cotton
culture, and the United States soon secured by importation from abroad
the ware of which it had formerly produced a surplus.

=567. Methods of agriculture.=—Though agriculture as a source of wealth
overshadowed all other industries in the colonies, it was conducted
with methods which we should now consider extremely inefficient and
wasteful. Washington wrote to an agricultural specialist in England:
“An English farmer must have a very indifferent opinion of our American
soil when he hears that an acre of it produces no more than from 8 to
10 bushels of wheat; but he must not forget that in all countries where
land is cheap and labor is dear the people prefer cultivating much to
cultivating well.”

The plow, the most important implement of agriculture, was still at
the time of the Revolution substantially unchanged from the models
of ancient times. The mould-board, of wood as the name implies, was
sometimes plated with sheet iron or with strips made out of old
horseshoes. President Jefferson improved the shape of the mould-board,
and about the end of the century the cast-iron plow began to come
into common use. The sickle gave place to the scythe and cradle, but
threshing was still done with a flail or by driving horses over the
grain. There was a marked increase in the interest in agricultural
science and methods about the time when the national government began,
agricultural societies were founded in many states, and progress
thenceforth was more rapid.

=568. Forest products; potash.=—If the reader, after this review of the
agricultural exports of the country at the beginning of its national
existence, will refer again to the table above, he will find that
export products of considerable importance were derived also from the
fisheries and the forests.

The eastern slope of the country was so heavily wooded that trees were
regarded rather as a hindrance than a help by the colonists. It was
good philosophy, however, to make the best of them; and the British
government, during the colonial period, encouraged the export of forest
products, to avoid depending on the Baltic countries for the supply of
wood and naval stores. The most spectacular export of this description
was that of the great masts and spars, which formerly had been reserved
for the government by the mark of the broad arrow, and which were
hauled out of the woods in winter by fifty yoke or more of oxen. Most
of the wood, however, left the country in smaller form: staves and
heading, which were sent to the West Indies and there set up into casks
and hogsheads for the carriage of sugar products; boards, shingles, etc.

When wood ashes are leached, and the water evaporated, the product is
potash; if this be refined by heating it is termed pearlash. It is an
impure carbonate of potassium, and at this early stage of chemical
industry it had an immense importance in the arts, being used in
bleaching, the manufacture of glass, soap, etc. Besides enjoying a
ready sale potash had another peculiar advantage in this period; it
was, besides the naval stores (pitch, tar, turpentine, rosin), the
only wood product which could be readily transported on land. It was,
therefore, a great resource when land was cleared; and practically
every new settlement, in the northern colonies at least, had its potash
works, in which useless wood was converted into a valuable export
product.

=569. Fisheries.=—“The fisheries first and mainly placed New England
on its legs.” The people of the northern shore were driven to the
sea by the difficulties of life on land; and used the proceeds of
the fishing industry as the means of purchasing their imports from
abroad, and part even of their food supply from other colonies. They
had advantages over European competitors in their nearness to the great
fishing grounds and in their skill in building and navigating boats;
and though the proportion of the total population engaged in fisheries
was never large (about one thousandth at this time), the product was
sufficiently important to take a respectable rank among the exports of
the country. Every year more than five hundred boats left the towns
of the Massachusetts coast, especially Gloucester and Marblehead, for
the banks of Newfoundland, while Nantucket and New Bedford became the
source of whaling voyages that reached from the Arctic to the Antarctic
oceans.

In comparison with the fisheries the fur trade had become of little
importance; the European demand for furs was met at this time by
territory lying to the north of the limits of the United States.

=570. Chief imports, 1791.=—The method, or rather the lack of method,
followed by the government in keeping its commercial statistics in
early days, renders it impossible, unfortunately, to present here
a table of imports in 1790 comparable in accuracy and in detail to
the table of exports given above. We must content ourselves with the
following estimates for the year 1791.

  IMPORTS, 1791, IN MILLIONS OF DOLLARS

  Articles paying duties _ad valorem_       17.0
  Wines, spirits, malt liquors               2.6
  Colonial wares.—Sugar                     1.6
                   Molasses                  1.4
                   Coffee                     .5
                   Tea                        .3
                                            ----
  Total, Colonial, including minor           4.0
  Total, including minor items omitted      25.0

=571. Classes of wares imported; manufactures.=—The table shows,
on its face, only one thing with clearness, that the people used
already a considerable part of their surplus to purchase articles
of food, of the nature rather of luxuries than of necessaries, which
could not be produced to advantage at home. This feature has ever
since characterized the import trade of the country. In the recent
commerce of the United States we find, beside the class of colonial
products, two other classes comprising the bulk of the remaining
imports, manufactures and material for manufacturing. Were articles
of these two classes masked behind that large item of the table which
classifies the imports only with reference to tariff schedules?
The answer can be given, without hesitation, in the affirmative.
Raw materials for manufacturing were still, however, comparatively
unimportant; most of the imports to this country, at the beginning
of its national existence, were finished manufactures. The statement
made by a writer in 1818 held true at this time: “Our imports consist
chiefly of articles which habit and fashion have made necessary for our
consumption: but a very small proportion of them is subservient to our
arts and manufactures.”

To describe the character of these imported manufactures in detail
would be an arduous task, for they included the products of practically
all the handicrafts and factories of Europe. In contrast with the
exports of the country, which have been restricted always to a few
great staples, the imports, from earliest times to the present, have
been extraordinarily diversified. The imports included, besides the
items specified in the table above, a large part or the whole of the
metals used in the country (tin, copper, lead, pewter, brass, and
iron), and manufactures of metal. They comprised, further, a great
quantity of the various textiles, of woolen, cotton, linen, and silk;
and miscellaneous manufactures such as glass and earthen ware, paper,
leather wares, etc.

=572. Significance of the import of manufactures.=—Accepting now as
the most important characteristic of the imports of this period the
preponderance of manufactured articles, we must seek to realize why
this was so, and what it signified. Anticipating the substance of
following sections it may be said, in summary, that the people of the
United States supplied their need for manufactured articles by their
own handiwork, so far as possible, but that they found it unprofitable
to attempt to make wares the manufacture of which required high
technical skill, the use of machinery, and an advanced organization
of business. They depended on Europe, therefore, for all the finer
manufactures. The total amount of manufactures imported annually was
not large in proportion to the population, being less than $5 per head;
yet this amount comprised most of the comforts and luxuries as well as
many of the necessaries, which the people enjoyed. Even at the end of
the colonial period the average American led a life of struggling and
privation, and could think himself fortunate if he won by his toil on
land or at sea a surplus sufficient to provide him with a few articles
beyond the bounds of his absolute necessities.

=573. Household self-sufficiency.=—In contrast with the modern scale
of living the simplicity of the standard of life at this period can
scarcely be exaggerated. Most of the articles consumed in a family
were produced at home. The house was begun with the help of neighbors,
and was finished, perhaps long afterwards, by the inmates themselves.
Domestic utensils, household furniture, and farm implements were
still made, to a large extent, on the farm where they were used. The
every-day clothing of the people, made from linen or wool or from a
combination of the two (“linsy-woolsey”), was spun and woven, cut out
and made into clothes, with comparatively little professional help.
Carpets were made from woolen yarn spun in the family, sent away only
to be dyed, and then woven either at home or in the neighborhood. The
self-sufficiency of the family group was not so complete in 1800 as it
had been in 1700, but it continued still to be the dominant feature in
economic life, and in some districts lasted for decades to come.

=574. Town self-sufficiency.=—Articles which were not made in the
household were, as a rule, made in the town, and did not contribute
to the volume of distant trade or of foreign commerce. The important
unit in the economic organization of the United States at this period
was the rural group of perhaps a few hundred inhabitants. Most of the
people were farmers, as has been said above, and very few were entirely
independent of farming. Some, however, had the skill and implements
which enabled them to supply the needs which could hardly be met by
household production. Nearly every village had a gristmill, and, if
conditions favored, a sawmill. The village blacksmith was to be found
in almost every settlement, and performed an astonishing variety of
work for the people. Toward 1800, moreover, a tannery had become a
common though not a universal feature of village life, and most towns
could now boast of a shoemaker. Some still depended, however, on the
itinerant cobbler, and few were large enough at this time to furnish
paying custom to special artisans; and relied on traveling tinkers,
glaziers, coopers, curriers, etc., to perform the services proper to
their trades.

=575. Development of household manufactures.=—Only in a few lines of
manufacture had the organization developed beyond the simple lines
sketched above. The making of cloth is an operation requiring much
time, considerable technical skill, and, for some processes, machinery
such as few households would possess. By 1700 it had become customary
to rely upon professionals for fulling, the process which compacts the
fibers of the cloth, and fulling mills were widely distributed in 1800.
Carding machines, for straightening the fibers of wool before spinning,
were to be found in many towns, and it was more and more common, also,
to have the weaving done out of the house, though this process was
ordinarily attended to in the immediate neighborhood. With outside aid
of this character the people of some parts of the country were able to
produce cloth in excess of their needs, and could use the surplus in
trade.

Nearly every town, moreover, in the northern and central colonies, had
some industry which utilized the spare time of the inhabitants, and
gave them the means of exchange with people in the colonies or abroad.
For a characteristic description take the following of Raynham, Mass.,
1793, when the town had a population of about 1,000: “Besides the usual
business of husbandry, numbers are here employed in the manufactories
of bar iron, hollow ware, nails, irons for vessels, iron shovels,
potash, shingles, &c.”

=576. Appreciation and criticism of American manufactures at this
time.=—It would be tedious and unprofitable to study in detail the
petty manufactures which cropped up in the various towns of this
period. Let us accept as a summary the following statement, applying to
the decade ending in 1800: “The domestic manufactures best established
are those of leather, iron, flax, potters’ wares, including bricks,
ardent spirits, malt liquors, cider, paper of all kinds, hats, stuff
and silk shoes, refined sugars, spermaceti and tallow candles, copper,
brass and tin wares, carriages, cabinet wares, snuff, gunpowder and
salt.”

In studying this description the reader should bear certain facts in
mind. First, the list, however long it seems, is far from including
all the wares required for the satisfaction of ordinary wants. Second,
though these manufactures are stated to be the ones best established,
there was, among them all only one sufficiently strong to produce a
considerable surplus for sale outside the country; this was the rum
manufacture. The people still relied largely on importations from
foreign countries for many of the wares enumerated. Third, many of
these manufactures (bricks, cider, snuff, and salt, for example;
flour and sawmill products might properly be included) were of a very
simple character, requiring no great technical skill or elaborate
machinery. Water power was used widely, but steam power had not yet
been applied, and improved machinery had not yet been introduced from
Europe. The factory system, with its extensive use of machinery and its
strict organization of labor, was first permanently established in the
United States in 1790, at Pawtucket, R. I.; and the American factories
did not, for many years, reach the English standard of efficiency.
An English committee reported in 1791 that the American cotton
manufactures were of a coarse grade, of worse quality and of higher
price than those produced at Manchester.


QUESTIONS AND TOPICS

 1. How do the population and settled area of the United States in 1790
 compare with those of the State in which you live now?

 2. Has any country ever enjoyed such growth as that of the United
 States in the nineteenth century? What country or countries come near
 us in rapidity of progress?

 3. Prepare a chart, in the way previously suggested, and preserve it
 for comparison with the exports in later periods.

 4. What is the proportion of persons now occupied in agriculture in
 your State? in the State where the proportion is highest? [Abstract of
 Census.]

 5. What are the comparative advantages and disadvantages of corn and
 wheat as commercial crops? Which crop occupies the greater acreage in
 your vicinity, and why?

 6. Write a report on one of the following crops, its preparation,
 uses, and history in the United States:

 (_a_) Flax. [Encyclopedias; E. A. Whitman, Flax culture, Boston, 1888,
 Barker in Quarterly Jour. Econ., 1917, 31: 500-529.]

 (_b_) Hemp. [Encyclopedias; C. R. Dodge, Report no. 8, U. S. office of
 fiber investigations.]

 7. Profits and losses in the colonial tobacco culture. [Bruce.]

 8. Do you know of any region which suffers from the evils of the
 single-crop system now?

 9. Advantages and disadvantages of rice as a crop; where is it chiefly
 grown now? [Encyc.; commercial geographies.]

 10. Experience of a woman as an indigo planter. [Earle, Colonial
 dames, Boston, Houghton, 1895, $1.50, pp. 76-83.]

 11. What is the average crop of wheat per acre now, in the U. S., and
 in your vicinity? [Census.]

 12. Details of colonial agriculture. [Coman, 47-62.]

 13. The lumber industry in New England. [Lord, Indust. exper., part 3,
 chap. 1; Wright, 71-79.]

 14. History of the American fisheries. [Coman, index; Van Metre in
 Carnegie Hist., vol. 2, part 2.]

 15. The whale fishery. [Weeden, chap. 11; McMaster, Hist., 1: 63, with
 references.]

 16. Manufactures imported by Virginia in the colonial period. [Bruce,
 chaps. 15, 16.]

 17. What parts of the United States are now in a position like that
 of the colonies, devoting their labor to the production of raw
 materials and importing manufactures from the regions of advanced
 industry? What foreign countries are still in this position?

 18. Write a report on the household industries of the colonial period.
 [Books by Alice M. Earle.]

 19. What household industries are declining now? [The preserving of
 fruit may suggest other examples.]

 20. A typical New England town. [See the description of Braintree,
 Mass., in C. F. Adams, Three episodes, Boston, 1892.]

 21. The textile industry in the colonial period. [Wright, Ind. ev.,
 43-60.]

 22. The rise of manufactures and the attitude of Great Britain. [Lord,
 Indust. exper., part 3, chap. 2; Coman, 62-76.]

 23. The iron industry. [Wright, Ind. ev., 80-103.]


BIBLIOGRAPHY

 GENERAL BIBLIOGRAPHY.—Channing, Hart and Turner, Guide, revised ed.,
 Boston, 1914, (general); Bogart, Lippincott, Emery in Cambridge Mod.
 Hist., 7: 825-829, (classified); Coman, (alphabetical); E. R. Johnson,
 (railways); Dewey, Financial History, N. Y., Longmans, (fiscal); A.
 L. A. Catalogue, (popular books in print). The Literature of American
 History, ed. J. N. Larned, Boston, 1902, has been continued (for most
 years, to and including 1917), by annual lists, Writings on American
 history, published since 1912 by the Yale University Press.

 GENERAL.—The most important single works are the **Contributions
 to American economic history from the Department of economics and
 sociology of the Carnegie Institution of Washington: History of
 domestic and foreign commerce of the U. S., by E. R. Johnson, T.
 W. Van Metre, G. G. Huebner and D. S. Hanchett, 2 volumes (cited
 hereafter as Carnegie History); History of transportation in the
 U. S., before 1860, under direction of B. H. Meyer; History of
 Manufactures in the U. S., 1607-1860, by Victor S. Clark. Foreign
 trade is treated in connection with other topics in N. S. Shaler, ed.,
 *The U. S., N. Y., Appleton, 1894; C. M. Depew, ed., *Amer. commerce;
 T. D. Woolsey, ed., First century of the Republic, N. Y., Harper,
 1876; McMaster, *Hist. (general narrative); Bogart, *Econ. hist.,
 (manual); Lippincott, *Econ. development (manual); Wright, Ind. ev.
 (manual); Coman, *Ind. hist. (manual). On special branches of foreign
 trade see S. J. Chapman, History of trade between United Kingdom and
 U. S., Lond. and N. Y., 1899; F. R. Rutter, The South American trade
 of Baltimore, Baltimore, 1897; J. M. Callahan, American relations in
 the Pacific, Baltimore, 1901.

 COMMERCIAL POLICY.—On tariff history **Taussig is by far the best
 guide; of the many other books on the subject (see bibliographies
 above) most are too prejudiced to be put in the hands of immature
 students. On the merchant marine and shipping policy see **W. L.
 Marvin, **J. R. Spears, and *W. J. Abbot. For defence of protection
 and subsidies, W. W. Bates, American marine, Boston, 1893, American
 Navigation, Boston, 1902; for criticism, D. A. Wells, Our merchant
 marine, N. Y., 1890.

 SPECIAL TOPICS.—Readers should consult the bibliographies listed above
 for references on particular industries. The histories of Ringwalt,
 Hammond, and Swank are likely to prove especially useful.

 SOURCES.—The chief source is the annual report on commerce and
 navigation, which is cited hereafter by abbreviation, Com. & Nav.
 Reports for the years from 1789 to 1823 are in the collected set
 of American State Papers; later reports must be sought in the set
 of Congressional documents. The Check-list of Public Documents,
 Washington, 3d. ed., 1911, is an indispensable aid in using government
 publications.


EARLY AMERICAN COMMERCE

 COLONIAL.—**Weeden, **Bruce, **Beer. More general in character are
 the various writings (see A. L. A. Catalogue) of *John Fiske, *C.
 M. Andrews, *Alice Morse Earle, *Sydney G. Fisher. On commercial
 policy of the colonies see (besides Beer, and Hill cited below) A.
 A. Giesecke, American commercial legislation before 1789, Univ. of
 Penn., N. Y., 1910. On manufactures see Rolla M. Tryon, *Household
 manufactures in the U. S., 1640-1860, Univ. of Chicago Press; on
 shipping, R. D. Paine, *Ships and Sailors of old Salem, N. Y., 1909,
 and R. E. Peabody, *Merchant venturers of old Salem, Boston, 1912.

 EARLY NATIONAL PERIOD.—Mahan, **War of 1812, vol. 1; Fiske, **Critical
 period, Boston, Houghton, 1899, $2; McMaster, **History, and **Chapter
 9 of Cambridge Mod. Hist., vol. 7. On the development of the
 commercial organization, S. E. Baldwin, American business corporations
 before 1789, Amer. Hist. Review, April, 1903, 8: 449-465; G. S.
 Callender, **Early transportation and banking enterprises, Quarterly
 Jour. of Econ., Boston, Nov., 1902, 17: 111-162. On commercial policy,
 William Hill, **First stages of tariff policy, Pub. Amer. Econ.
 Assoc., 1893, 8: 452-614; T. W. Page; **Earlier commercial policy,
 Journal of Pol. Econ., Chicago, 1901-2, 10: 161-192; Henry C. Adams,
 *Taxation in U. S., Baltimore, 1884.




CHAPTER XLVI

INTERNAL TRADE AND FOREIGN COMMERCE, 1789


=577. Development of internal trade 1789-1914.=—It will be impossible,
in the later chapters of this book, to describe in detail the
development of the internal trade of the United States. This trade has
grown to such proportions that, at the present day, it far outranks in
volume and importance the foreign commerce of the country. The reader
may be trusted to realize this fact, and to have some knowledge of the
character and organization of internal trade at the present day. It is
not probable, however, that he knows the humble origins from which this
trade has risen; and a description of the conditions and character of
internal trade about 1789 will enable him to appreciate the progress of
the past century, even though the different steps in progress receive
but scant mention in the narrative.

=578. Condition of the roads; effect on freight traffic.=—The roads,
which furnished the only means of communication and transportation
by land, were still the earth roads of the colonial period, thick
with dust in summer, and absolute sloughs, with mud a foot or more
deep, during the thaws of winter and spring. During the greater part
of the colonial period wagons were a rarity, because there was so
little opportunity to use them. Men used mere sledges on the farm,
and traveled or carried their produce from one farm to another on
horseback. In the northern States the facilities for land carriage were
good in only one season, winter, when the periods of sleighing enabled
the people to make the market trips and visits which were impracticable
at other times. Even near the large towns laden carts had to be drawn
by two to six oxen, when there was no snow on the ground.

When there was no other means of transportation, as in the case of the
settlements west of the Alleghany Mountains, wares were carried over
the roads in wagons, sometimes for a distance of hundreds of miles; but
such instances of extensive land transport were exceptional, and the
freight charges were so high that only articles of the first necessity,
as salt and iron, could pay for carriage.

=579. Sparsity of passenger traffic.=—Some men lived and died in the
town where they were born, without visiting another town a dozen miles
distant. There was so little intercourse between the adjoining towns of
Easthampton and Southampton, on Long Island, that each town preserved
individual peculiarities of pronunciation down even to 1800. Throughout
the colonial period, and even in the days of the early Federal
government, it was very difficult to collect delegates at a political
gathering; and it was not uncommon for men to make their wills before
starting to a State convention in Pennsylvania. Travel by stage-coach
did not become of importance until well into the nineteenth century.
In 1783 two stage-coaches, consuming a week or ten days on the trip,
sufficed for the travel between Boston and New York; though a few years
later (1794) twenty stages were employed. Postage rates for a single
letter ranged from 8 to 25 cents, according to the distance, and mails
were infrequent.

=580. Relatively great importance of waterways.=—Like the people
of the Middle Ages, the inhabitants of the United States at this
period were driven to the use of water transport by the difficulty
of transportation on land. Rivers which are used now only by canoes
and pleasure boats were then important means of communication and
transportation. The Connecticut River has now a scant traffic as
far as Hartford, about forty miles from its mouth; in 1816 we read,
“The Connecticut River is navigable 200 miles above Hartford, for
Boats, of 15 tons, and 50 miles higher, for Floats and Pine Timber”;
large quantities of potash were carried down the river even from the
Canada line. The Hudson and other rivers were the channels through
which export products were collected and brought to the sea, and the
farmers of central and western New York sent their wares to market by
rafts and “arks” on the Delaware and Susquehanna. Waterways were of
especial importance in the southern States, where the means of land
transportation were even less developed than in the North; tobacco was
brought to the wharves on inlets and rivers by “rolling-roads,” rough
tracks over which the hogsheads were rolled with the assistance of a
horse.

=581. Importance of the country store.=—The great institution of
trade at this period was the country store, which collected the
surplus products of the townspeople and gave them in exchange the
wares imported from abroad. Every town of any size had one of these
stores, and only the largest towns had distinct shops for the sale of
special articles. The stock in trade of one of the typical country
stores included all of the articles which have been mentioned among
the imports of the country: sugar, molasses, tea, coffee, metals, and
hardware, cloth, thread, books, glass, earthenware, etc. The list on
the other side of the store-keeper’s books would be as long, for it
included all the export products of the country, and some wares which
were sent to market in the large towns or in other States. The merchant
must always be prepared to receive in pay for his goods “Grain of
all kinds, beef, pork, poultry, cheese, butter, eggs, nuts, berries,
hides, tallow, candles, lard, domestic flannels, feathers, quills,
braided straw hats, potatoes, apples and other fruits, both green and
dried, home-made brooms, flax and flax seed, cider and domestic wines,
etc.” At the period which we are studying, well past the close of the
colonial period, barter was still the usual form of exchange, and money
rarely passed at the transactions in the store or in the trade between
the townspeople and the village artisans.

=582. Benefits and disadvantages of the country store.=—The country
store was the focus of the village, not only in economic but in
political and social life as well. There was no better training school
in the world for the study of human nature and the development of
business sense. Practically all of the business life of the times was
concentrated in these stores, and it is, therefore, not surprising,
that few men rose to eminence later in the mercantile world who had
not passed a period of apprenticeship in one of them. Charles Tiffany,
Levi P. Morton, E. D. Morgan, H. B. Claflin; of a later period Marshall
Field, Pullman, Pillsbury, Armour, J. D. Rockefeller, J. J. Hill, and
many others; all these rose from the position of clerk in a general
store to the place which they attained in later life.

From the standpoint of the villagers, however, it was a great
disadvantage to have the market for their produce restricted to the
store in their immediate vicinity. The store-keeper in the smaller
towns had no competitors, and enjoyed a practical monopoly of trade of
which he took full advantage in driving his bargains. In the northern
colonies, where the difficulties of transportation were leveled by
the snows of winter, the people could attain a certain measure of
independence of the country store by making market trips to one of
the larger towns. Neighbors would agree upon a date and set off,
sometimes in a troop of fifty or sixty. They loaded their sleighs
with a supply of food for the journey, and with the produce of the
farm and household, and sought out the nearest large town, Portland,
Newburyport, Boston, Providence, Springfield, Hartford, etc. In one of
these market centers they could make much better bargains than at home.

=583. Relative smallness of interstate trade.=—When the products of
the country had been collected at the large coast towns by the farmers
and store-keepers, they were, for the most part, exported to foreign
countries. Interstate commerce was as yet comparatively small. There
was, it is true, an active coasting trade, but this was employed
chiefly in the collection and distribution of goods along short
stretches of coast. Small vessels plied frequently from the large ports
like Boston, New York, Philadelphia, and Charleston, to the country
districts on either side, but rarely made extensive trips, as from
Boston to Charleston, for instance.

Commerce between States as distant even as Massachusetts and South
Carolina existed and was by no means insignificant in absolute amount.
The northern colonies sent a part of their surplus of rum, live stock,
dairy products, and home-made cloth to the South, and brought back
tobacco or bills on England which they could cash. Still, comparing
this trade with other elements of internal trade, with the foreign
commerce of the time, or with interstate commerce of later times, the
striking thing about it is not that it was so large, but that it was so
small.

=584. Share of different States in foreign commerce.=—The relative
contributions of different parts of the country to its foreign
commerce can be shown by the following summary, giving the exports by
localities in the year 1791. The chief States ranked as follows, giving
values in millions of dollars and indicating the leading ports in
parenthesis: Pennsylvania, 3.4 (Philadelphia); Virginia, 3.1 (Bermuda
Hundred, Norfolk); South Carolina, 2.6 (Charleston); Massachusetts, 2.5
(Boston); New York, 2.5 (New York); Maryland, 2.2 (Baltimore). No other
State or port exported as much as one million; and exports from all the
other States together amounted to little over one tenth of the total of
nineteen millions.

The striking feature of the table is the relative importance of the
southern States in foreign commerce, an importance which they were
destined to hold for a long time to come, as the cotton industry was
developed. It must be remembered, however, that the figures refer only
to the export trade, and that there would be considerable changes in
rank if we could include the import trade. Taking as a rough means of
measuring imports the amount of duties collected, we find, for example,
in the first year of the national government, that though Pennsylvania
again headed the list, the second and third in rank were New York and
Massachusetts respectively, while the southern States ranked lower
by very considerable amounts. This period which we are studying was,
moreover, one of rapid change, marked especially by the development of
the central and northern colonies. Taking the year 1795, when these
colonies were profiting by a great increase in their food exports, and
when the cotton trade was still undeveloped, New York had risen to the
second place in exports and Massachusetts to the third.

=585. Development of the chief seaports into cities.=—The seaports
named in the preceding section had gained from trade an amount of
wealth and population, which, however small it may seem from the modern
standpoint, put them in a class above the ordinary towns, and made them
the representatives of a more advanced business organization. The most
populous of these places had in 1790 a population of only about 30,000
(in thousands, New York 33, Philadelphia 28, Boston 18, etc.); and the
total number of people living in towns of over 8,000 inhabitants was
still only about 130,000. In other words, only one person in thirty
lived in a large town or city. The budding cities retained many of
the rural characteristics of the towns from which they had grown. A
mere beginning had been made in paving the streets, and many people
still kept kitchen gardens. The price of provisions, however, was
rising rapidly, and the cities had become dependent on trade with the
country districts for most of their supply. Cattle were fattened in
the Connecticut valley for the New York and Philadelphia markets, and
wood for heating and building was brought by coasting vessels from
considerable distances.

The large towns could boast of a diversified industrial population, in
which many special branches of manufacture were represented, and of
numerous shops; Boston was credited with 366 stores in the enumeration
of 1789. The first commercial bank of discount and deposit in the
United States began operations in Philadelphia in 1782, and about 1800
there were 33 banks of this kind in the country.

=586. Foreign countries of the greatest commercial importance to the
United States.=—An indication of the direction of commerce is furnished
by the following table, showing the chief countries to and from which
the United States shipped wares in 1790. Figures give the values in
millions of dollars.

                                            _Exports_   _Imports_
  Great Britain and her dominions              9.3       15.2
    Including British West Indies      2.0
  France and her dominions                     4.6        2.0
    Including French West Indies       3.2
  Spain and her dominions                      2.0         .3
    Including Spanish West Indies       .1
  The Netherlands and her dominions            1.9        1.1
    Including Dutch West Indies         .6
  Portugal and her dominions                   1.2         .5

The figures of imports are based on estimates, and no sum is given for
the total amount of the year; the total exports were but slightly above
twenty million, and countries the names of which do not appear received
but insignificant amounts of our goods.

=587. Insignificance of direct trade with Asia and Africa.=—Some
reasons for the direction of American commerce at this period will
appear in the next chapter, in which the commercial policy of European
countries will be discussed. I propose here merely to point out some of
the striking facts shown by the table, and to indicate their connection
with the development of American commerce in the colonial period.

Attention may be drawn, first of all, to the significance of omissions
from the table. In the year in question the United States sent to
the two great continents of Africa and Asia less than one third of a
million dollars of exports. The imports, especially from Asia, were
probably somewhat larger, for American vessels had begun to frequent
the ports of East India and China, and to bring direct from them the
rich cargoes which formerly had reached America through the hands of
English middlemen. Still, any reasonable estimate of the trade with
distant continents would leave it insignificant in comparison with the
European trade, which formed the mainstay of American commerce.

=588. Unique position of England in trade with the United States=.—Of
the European countries there was one which occupied a position of
commanding prominence. Great Britain received of our goods more than
all the rest of Europe together, and sent us of her own far more
than all the other European states could supply. It is noteworthy,
and was so regarded at the time, that this country, after a bitter
struggle for political and commercial independence, and after having
broken the bonds which were supposed to hold her in subjection to
the English market, should voluntarily resume the trade relations
which had formerly been considered so oppressive. The great amount
of our trade with England is the more remarkable, as it covered a
considerable amount of trade with other countries. England felt as yet
no great need for our export products, and forwarded to other countries
a considerable part of what she received. Of the imports which we
received from England, on the other hand, while the greater part was
doubtless the product of English manufacturing industry, there were
many wares which came from other countries, but which we found could be
purchased more conveniently in England than at the original place of
production.

=589. Commerce with the rest of Europe.=—It was but natural that the
United States should have a commerce of some importance with states
like France and the Netherlands, which were still among the leaders;
and it can only be regarded as surprising that this commerce was so
small in comparison with that with England. Our trade with eastern
Europe was carried on so largely through England that Germany and
the Baltic countries would make but an insignificant showing if they
were included in the table. Our trade with southern Europe, however,
was evidently governed by other conditions. Portugal and Spain could
furnish few desirable wares of their own production, except wine; the
table shows that the imports from those countries were small. They
offered, however, what we sought in vain in northern Europe, a ready
market for our fish, cereals, and other foodstuffs, and were hence of
great importance to our export trade. Commerce with the Mediterranean
countries, which had been interrupted during the Revolution, had not
since then been developed to any considerable proportions, because of
the ravages of the Algerine pirates. These countries had formerly taken
a quarter of our fish exports, and about one sixth of our wheat and
flour shipments; and trade with them revived later when our navy had
brought the pirates to terms.

=590. Importance of the West Indies as an outlet for wares excluded
from Europe.=—A place of very peculiar importance in the commercial
economy of the American people, in the colonial period and well past
the time which we are now studying, was taken by the West Indian
islands. Of the chief products of the United States those coming from
the South, especially tobacco, were sure of a good market in Europe,
and were a ready means of purchasing the manufactures which the people
needed to import. The chief products of the North, however, including
breadstuffs, provisions, and fish, enjoyed no such favorable reception.
The statesmen of England and other countries clung still to the plan
of protecting domestic agriculture by assuring it the home market, and
desired to encourage domestic fisheries as a means of supporting the
navy. In the colonial period, therefore, the staple products of the
central and northern colonies were kept out of England and other states
by heavy duties or by prohibitions. The people of those colonies,
therefore, were at a great disadvantage in their trade with the mother
country: they found it difficult to secure the means of paying for the
English manufactures which they imported, and were forced to rely in
some measure on the crude products of their own domestic manufactures,
as described in a previous chapter.

=591. Character of commerce with the West Indies; triangular
trade.=—The very products, however, which were rejected in Europe,
were keenly desired in the West Indies. The islands had become the
great source of the world’s sugar supply, and the advantages of
sugar production, under the system of slave labor, were so great
that planters neglected all other crops and did not produce even a
sufficient amount of food for their laborers. They were eager to
purchase food either by the direct exchange of sugar and molasses, or,
what amounts to the same thing, by giving the seller bills on Europe
drawn against sugar products shipped thither. They offered a ready
market, therefore, for the wheat, flour, corn, meat, and fish of the
mainland, and purchased also large quantities of lumber and shingles
for building, staves for hogsheads, etc. The colonies of the mainland
took in pay considerable amounts of sugar and molasses for their own
use, and took molasses also for the manufacture of rum, of which part
was exported. On the whole, however, the mainland exported to the
islands more than it received from them, and had thus a credit balance
with which it could liquidate its debts for European manufactures. The
conditions thus gave rise to a triangular trade: the mainland shipped
food and lumber to the West Indian islands; the islands shipped sugar
products to Europe; and Europe shipped manufactures to the American
mainland, thus closing the transaction. So strong was the economic
demand for a trade of this description, that the attempts of European
governments to check it had proved entirely unsuccessful in the
colonial period; restrictions were evaded by smugglers or were openly
defied. The problems of policy relating to this and other parts of the
American trade after 1789 will be treated in the next chapter.

=592. Development of ship-building in the colonial period.=—A resource
of the United States which deserves to be mentioned, before we close
this survey of the conditions of commerce about 1789, was the building
and sailing of ships. The colonies were at first dependent on the
mother country for the vessels which they used. Most of the raw
materials for ship-building were, however, abundant in America; and
the construction of ships, unlike other manufacturing industries,
was rather helped than hindered by British colonial policy, which
put colonial vessels on the same footing as those which were built
at home, and protected them from the competition of the ships of
other countries. An active ship-building industry grew up, therefore,
especially in New England, where ship timber of the finest quality was
abundant, and where the difficulties of life and the discouragement of
staple exports forced the people to make the most of every resource. A
petition of Boston citizens in 1746 calls ship-building “the ancient
and almost the only Manufacture the Town of Boston ever had.” In the
Massachusetts towns a ship could be built of oak for $24 a ton, while
in England, France, or the Netherlands an oak vessel cost $50 to $60
a ton, and even the fir vessels, built on the Baltic, inferior in
strength and durability, cost $35 a ton. The colonies, therefore, could
supply not only their own wants, but also could sell ships abroad;
before the Revolution more than a third of British tonnage, it is said,
was American built.

=593. Extension of American shipping.=—The colonists were as proficient
in the sailing as in the building of ships, and carried on a large
part of the ocean traffic which served the needs of American commerce.
In the first year of the national government considerably more than
half of the tonnage entering the ports of the United States from
foreign countries was American, and English ships were the only
serious competitors. The bulk of American shipping was engaged in the
West India trade, but American ships carried also nearly half of the
commerce between the United States and Europe, in spite of the adverse
policy of European states, designed to exclude American ships from
commerce with them and with their colonies. Driven further afield by
this policy, American skippers began to seek commercial connections
with more distant countries, from which wares had reached them hitherto
only through middlemen. An American ship sailed for the first time to
China in 1784; in 1788 two ships were advertised as loading at Boston
for the Isle of France (Mauritius) and India, and “anybody wishing to
adventure to that part of the world may have an opportunity of sending
goods on freight”; soon afterward a Philadelphia ship made the round
voyage to China in less than a year. A vivid impression of the boldness
and skill of American mariners of this period is given by the voyage of
the _Experiment_ to China. This boat, a sloop of eighty tons, no larger
and no more seaworthy than the sloops which now bring bricks down the
Hudson River to New York, carried her crew of fifteen men and boys
safely to Canton and back, despite the perils of the sea and of pirates.


QUESTIONS AND TOPICS

 1. Name another country in which transportation was easier in winter
 than in summer, before the introduction of railroads.

 2. History of the navigation of the Connecticut River. [W. D. Love,
 Proc. Amer. Antiq. Society, April, 1903, reprinted Worcester, 1903.]

 3. Write an essay on the economic, social, and political importance of
 the country store, in the past and present.

 4. Write a biographical sketch of one of the business men named in
 section 582. [Poole’s Index and continuations; current biographical
 dictionaries.]

 5. What is now the interstate commerce of the State in which you
 live? To what States does it export its products, what products of
 other States does it import? How does its commerce with other States
 compare with its foreign commerce in bulk and value? [Ask questions of
 railroad and steamship men; visit freight yards.]

 6. Comparing the figures of sect. 584 with the figures for total
 exports, sect. 561, what do you guess formed the bulk of the exports
 from each State or port?

 7. Write a brief commercial history of one of the cities named. [Local
 histories; Encyc.; commercial cyclopedias.]

 8. Episodes of Boston commerce. [M. A. D. Howe, Atlantic Monthly,
 1903, 91: 175-184.]

 9. Prepare and study a graphic chart, sect. 586, and preserve it for
 comparison with later conditions.

 10. The African slave trade. [Weeden, chap. 12; Abbot, chap. 3.]

 11. What reasons occur to you why the Americans should have traded
 with England so much more than with other states of Europe?

 12. History of the commerce of the colonies with the West Indies.
 [Pitman; Weeden or Bruce, Index, West Indies.]

 13. Character of production and commerce in the West Indies at this
 time. [Pitman; Fiske.]

 14. History of ship-building in the colonies. [Weeden, 252-267,
 573-581; Wright, 23-42; Marvin, chaps. 1, 2.]

 15. Pirates and privateers of the colonial period. [Weeden, chap. 9,
 559-565; Abbot, chap. 5, Howard Pyle, The buccaneers.]


BIBLIOGRAPHY

 See preceding chapter.




CHAPTER XLVII

COMMERCE AND POLICY, 1789-1815


=594. Importance of commercial policy in this period.=—The two
preceding chapters have described the conditions of commerce in the
United States about 1789, with but an occasional reference to the
influence which governments exercised in directing and restricting
the movement of wares. In every period governments interfere with the
free exchange of commodities, that the interests of the people as a
whole may not suffer from the selfishness of individual merchants. In
the period under consideration, lasting through the second war with
England, the influence of governments on the fortunes of our foreign
trade was more pronounced than it has ever been in later times; and
the topic of commercial policy must occupy the leading place in this
present chapter.

=595. Questions of policy.=—The Revolution of 1776, by which a group
of English colonies was transformed into an independent state,
claiming to rank as England’s equal, shocked the ideas of European
statesmen to an extent which we can hardly conceive. There was no
place in the political system of the time for an independent American
state. For centuries the states of Europe had been the sole source of
active political and commercial power; in other continents were to be
found only semi-civilized states, subject to European influence, and
colonies, under the complete control of the mother countries. Each
European state had regulated as it pleased the commercial relations of
its colonies with the mother country, with other European countries,
and with their colonies. Now that the United States had won its
political independence, was it to be treated by England as though it
was still an English colony, and given its former privileges though it
was no longer subject to the former restrictions? Were other European
states to welcome its commerce, now that England could no longer
prevent, or were they to treat it like a European state, and restrict
its trade with themselves and with their colonies? Finally, what
attitude was the United States itself to adopt, now that it could frame
its policy as it pleased? These were among the serious problems that
perplexed the statesmen of the Old and New Worlds, as the success of
the American Revolution became assured.

=596. Policy of England.=—Reference has been made in a previous
paragraph to the striking fact that the colonists had no sooner won
the war of independence than they returned to an active commerce with
the country against which they had been fighting. Comparing the six
years preceding the Revolution with the six years following the treaty
of peace (1783), we find that the volume of trade between the United
States and England was substantially the same. The American people
suffered during the war for lack of the manufactures which they had
been accustomed to purchase from England, and which they found then
could be purchased to such advantage nowhere else; and as soon as
peace permitted they began eagerly to buy English products again. For
a moment it appeared that England was ready to welcome this trade; the
English statesman, Pitt, introduced a bill which aimed to encourage
the American trade not only with England but also with her colonies.
Such a policy implied too serious a breach in the old system, and was
not carried into effect. The Americans were, indeed, permitted and
encouraged to trade still with England; that country could not afford
to give up the growing market for its manufactures which the United
States afforded. The ports of the West Indies, however, were closed
to American merchants; the Americans were to be punished for their
insubordination by exclusion from a branch of commerce which was to
them of the first importance.

=597. Policy of France and other states.=—The Americans learned,
not only from England but also from other European powers, that
an independent state must shift for itself and could hope for no
commercial favors. They might fairly suppose that the countries
which had joined in their war against England (France, Spain, the
Netherlands) would take advantage of the successful issue of the
conflict to seek to secure the American trade which England had
hitherto monopolized. They found, indeed, that these and other
countries were willing to sell their goods to the United States; but
still these countries were reluctant to take in exchange American wares
for which they felt no special need, and were most reluctant to open
the trade of their colonies to people of any nationality but their
own. John Adams might say of France in 1780, “All the world will allow
the flourishing state of her marine and commerce, and the decisive
influence of her councils and negotiations, to be owing to her new
connections with the United States”; whatever truth there might be in
the statement, France certainly refused to express her gratitude by
the grant of commercial privileges. France found, actually, that after
the return of peace the Americans ceased to buy her manufactures, and
flocked for trade to the English markets. French merchants complained
that none of them ever gained in commerce with the United States: when
all the best part of the American custom went to English merchants,
why should France or any other country on the Continent relax the
restrictions which were designed to protect the home market and the
colonial market for the benefit of natives?

=598. Conditions of American trade with Europe in 1789.=—In spite of
the unfavorable attitude of the powers which controlled the great
markets of the world, the United States maintained a considerable
commerce, as was shown by the descriptions of previous chapters.
This commerce was, however, carried on under serious disadvantages.
Reviewing the staple exports of the country we find that breadstuffs
were generally subject to prohibitory duties in England, and that
fish and salt provisions were actually prohibited in England, and were
heavily dutied in France. The southern staples fared little better,
for they competed with the products of European colonies even though
they did not threaten European industries. Tobacco and rice were
subject either to actual prohibitions or to heavy duties in most of the
important European markets.

=599. Conditions of trade with the West Indies.=—Conditions of trade
with the West Indies were even worse. Spain and Portugal absolutely
forbade all direct intercourse with their colonial possessions; and
wares destined for their colonies had either to be carried by smugglers
or else exported to Europe and then re-exported in ships of the mother
country. England closed her possessions on the American mainland
completely, and while, as a temporary favor, she admitted some wares
to her West India colonies, by proclamations renewed from year to
year, she prohibited salt provisions and fish, and excluded American
ships from the trade. Her vessels alone could take our produce and
bring back the molasses, sugar, etc., which formed the objects of the
return trade. The French West Indies, also, were open to us only as a
temporary concession, and in them and in the colonial possessions of
other powers the trade was burdened with duties.

=600. Weakness of the United States at this time.=—These were by no
means all the hardships under which American commerce labored at
this time. The government was too young and weak to furnish adequate
protection to ships flying the American flag in foreign waters and on
the high seas, and it had as yet obtained no guarantee that American
fishermen would be allowed to pursue their calling as before the
Revolution. Furthermore, the attention of American statesmen was
distracted by the need of getting the machinery of the new government
in running order, and by the serious fiscal difficulties which pressed
for settlement. These were the dark days of American commerce. From the
lofty position which the United States has reached to-day, courted for
its commerce and its political influence by other great powers of the
world, it is hard to realize how humble was our national position in
1789, and how precarious seemed our commercial future.

=601. Survey of American commerce, 1789-1815.=—Starting from these
beginnings we have now to trace the course of our commerce through the
period. So sharp were the fluctuations in this early stage that I give
the annual statistics, and, for reasons which will be apparent later,
call particular attention to the distinction between domestic exports,
of articles produced in the United States, and foreign exports, of
articles brought from some other country and re-exported. No exact
figures for the imports of this period can be given, but it is safe
to say that the value of the imports did not diverge greatly from the
value of the exports.

  EXPORTS OF THE UNITED STATES, IN MILLIONS OF DOLLARS
  (_Fiscal years, ending Sept. 30 of the date given_)

  =====+==========+=========+=======
       | Domestic | Foreign | Total
  -----+----------+---------+-------
  1790 |    ----  |   ----  |  20.4
  1791 |    ----  |   ----  |  19.0
  1792 |    ----  |   ----  |  20.7
  1793 |    ----  |   ----  |  26.1
  1794 |    ----  |   ----  |  33.0
  1795 |    ----  |   ----  |  47.9
  1796 |    40.7  |   26.3  |  67.0
  1797 |    29.8  |   27.0  |  56.8
  1798 |    28.5  |   33.0  |  61.5
  1799 |    33.1  |   45.5  |  78.6
  1800 |    31.8  |   39.1  |  70.9
  1801 |    47.4  |   46.6  |  94.1
  1802 |    36.7  |   35.7  |  72.4
  1803 |    42.2  |   13.5  |  55.8
  1804 |    41.4  |   36.2  |  77.6
  1805 |    42.3  |   53.1  |  95.5
  1806 |    41.2  |   60.2  | 101.5
  1807 |    48.6  |   59.6  | 108.3
  1808 |     9.4  |   12.9  |  22.4
  1809 |    31.4  |   20.7  |  52.2
  1810 |    42.3  |   24.3  |  66.7
  1811 |    45.2  |   16.0  |  61.3
  1812 |    30.0  |    8.4  |  38.5
  1813 |    25.0  |    2.8  |  27.8
  1814 |     6.7  |    0.1  |   6.9
  1815 |    45.9  |    6.5  |  52.5
  1816 |    64.7  |   17.1  |  81.9
  1817 |    68.3  |   19.3  |  87.6
  =====+==========+=========+=======

=602. Fluctuations in the export trade; share of domestic and of
foreign exports.=—If the reader will cast his eye down the column of
totals he will appreciate at once the unsteadiness of our trade during
the period under consideration. For a few years the figure of exports
was almost constant. Then, in 1793, began a rapid rise; the export
trade doubled, tripled, more than quadrupled. A check to this growth
was apparent in the few years after 1801, but it began again, and the
figures of exports reached their highest point in the years 1806 and
1807. They had grown more than fivefold in fifteen years. The year of
1808 showed a precipitous decline, and, after an interval of partial
recovery, the figures reached their lowest point in 1814. At the close
of the period prospects seemed brighter.

Returning to the table, to analyze the part borne in the changes by
domestic and by foreign exports respectively, we find that the foreign
exports were chiefly responsible for the great fluctuations. No figures
can be given for the earlier years, but it can be stated with assurance
that of the total exports in 1790 only an insignificant fraction,
probably much less than one million, was composed of the products
of other countries. There had been a tremendous gain, therefore, in
this branch of our trade, before 1796, and it proved capable of great
expansion afterwards, while, on the other hand, it declined in one year
almost to nothing. Domestic exports, also, showed a great increase in
the early years of the table, but they soon came near to the limit
of their expansion, and hovered generally about the figure of forty
millions; the table shows, moreover, that they resisted depressing
influences better than the foreign exports.

=603. Varying fortunes of foreign trade not explained by conditions
at home.=—The reasons for the growth of American trade after 1790 are
to be sought mainly in conditions abroad. There was no development of
resources at home sufficient to account for the great expansion of
trade. The United States, it is true, gained a new export product in
cotton, which was shipped in rapidly increasing quantities after the
invention of the cotton-gin in 1793. Cotton took the first place among
southern exports after 1800, and the extension of the cotton culture
helps to explain the growth of domestic exports. Still cotton did not
rise to the position of king among exports until the following period,
and the description of the rise of the cotton trade will be referred to
a later chapter.

We cannot give American statesmen the credit for removing the
restrictions on our commerce, described above, and so enabling it to
expand uncramped. In spite of all their persistence and ingenuity they
secured only slight and partial concessions. The treaty with England,
negotiated by John Jay in 1794, removed some of our grievances, but
proposed to open the West India trade on such humiliating conditions
that the offer was indignantly refused. A treaty with Spain gave us
merely the right to navigate the lower Mississippi River, without other
commercial privileges; and even the acquisition of Louisiana, in 1803,
had but an inconsiderable effect on our commerce at the time.

=604. Conditions abroad; effect of the European wars on domestic
exports.=—We owed our rapid commercial growth not to our own strength,
and not to the favor of European states; we owed it to the necessities
of the position in which the countries of Europe found themselves after
the outbreak of the wars following the French Revolution. These wars
were of decisive importance to our commerce in two ways. In the first
place they caused an immense increase in the demand for our foodstuffs.
When the states of Europe were fighting for their very existence they
could not afford to uphold the principles of their former protective
policy, and welcomed the means of subsistence, from whatever source
they might come. The withdrawal of men from agriculture to serve in the
armies diminished the supply of food in Europe and called for large
exports from the United States, for which high prices were paid. Taking
for illustration the little country of Portugal, we find that our
exports to that country increased about ten-fold in the course of the
period, being especially large in the years from 1810 to 1813. These
years mark the time when the Peninsular War was at its height, and when
the large armies quartered in the country demanded a supply of food
which could not possibly be met from native sources.

=605. Effect on foreign exports and the carrying trade.=—The European
wars were not only responsible for a great gain in our domestic
exports; they were the sole cause of the tremendous increase in the
foreign exports, which figured so largely in our commerce at this
period. The wars involved most of the important states of Europe. A
ship flying the flag of France or of any of her allies was constantly
exposed to capture by British cruisers; a ship flying the flag of
Great Britain or of one of her allies was a fair prize for the French
privateers which swarmed over the seas. In the great conflict there
was but one country, with an extensive merchant marine, which managed
to maintain neutrality, and this was the United States. The carrying
trade of the world fell into our hands. The countries of Europe,
forced by the exigencies of war, gave up the cherished principles of
their colonial policy, and threw open the trade with their colonies
and themselves. The rights of neutral states in time of war were, it
is true, still unsettled. American ship captains and merchants were
subject to arbitrary and humiliating interference on the part of the
belligerents. In the early part of the war, however, the results
of this interference were of sentimental rather than of practical
importance, and means were found to evade the restrictions which
the belligerents imposed. When England forbade all trade between
her enemies (France, Spain, the Netherlands) and their colonies,
American skippers did not sail direct from the West Indies to Europe,
but touched at some port of the United States, entered the cargo
for import, and sometimes actually landed it. It was not meant for
consumption in this country and was soon withdrawn and exported to its
destination in Europe, as though it were composed of domestic products.

=606. Prosperity of American commerce and shipping.=—The European wars,
therefore, introduced American commerce to a new era of prosperity.
“No one was limited to any one branch of trade; the same individual
was concerned in voyages to Asia, South America, the West Indies,
and Europe.” Our ships gathered the products of distant countries,
coffee, sugar, tea, pepper, etc., and purveyed them to the people of
Europe. In many years the value of foreign exports exceeded that of
domestic exports; in 1806 it was half as large again. The reader will
better appreciate the contrast with present conditions when he learns
that in 1914 the foreign exports of the country amounted only to one
sixty-seventh part of the domestic.

The merchant marine of the United States grew rapidly under these
favoring conditions, and in spite of complaints that former conditions
had been reversed, and that ships could be built cheaper abroad than
at home. The national tonnage engaged in foreign trade, which in 1789
appeared to be not much in excess of 100,000, exceeded 500,000 in 1795,
and 900,000 in 1810. The proportion of American ships in the total of
those entering the ports of the United States grew correspondingly; and
the merchant tonnage of the United States was second only to that of
Great Britain and superior to that of any other country in the world.

=607. Checks to prosperity after 1800.=—The check on the growth of
our commerce apparent in the figures for the few years after 1801 is
explained by the conclusion of a peace between the states of Europe,
which lasted from 1801 to 1803. Had the peace proved permanent
there would have been, without doubt, a further decline in American
commerce, as the European countries resumed their former commercial
relations. With the reopening of war, however, the Americans enjoyed
the advantages of their previous position; the exports of 1806 and 1807
exceeded a hundred millions in value, and marked a height which exports
did not again reach for nearly twenty years. Our commercial prosperity
at this time was very precarious. It was the period in which Napoleon
and England were waging war over the Continental System, as described
in a previous chapter. Each belligerent looked on the neutral carrier
now not as a source of gain to itself so much as a source of help to
the enemy, and determined to restrict neutral trade, even though it
were necessary to destroy it. In the period between 1803 and 1812
some 1,500 American ships were seized in Europe, and the greater part
of them condemned, for violating the restrictions then carried into
effect. The best sailors were impressed from American ships to fight
the battles of England. American shipping was involved in an unequal
struggle.

=608. Decline of commerce; embargo and war.=—The United States was
not prepared to enforce by arms the rights which it claimed for its
merchants and sailors. The government shrank from war, and adopted
instead the policy of commercial restriction, hoping to bring the
European powers to terms by refusing to trade with them until they
reformed their conduct. A short trial was made with an act forbidding
the importation of English manufactures, and in December, 1807, a
general embargo was laid on all vessels, forbidding them to leave port
for a foreign country. The embargo was evaded in various ways, but its
effect on our foreign commerce and export industries was disastrous,
and forced the substitution of milder measures in February, 1809. Our
commerce, now suffering both from the attacks of its enemies abroad and
the restrictions of its friends at home, could not recover the position
which it had reached before the embargo, and declined still further
after the declaration of war with England, to which we were finally
forced in June, 1812.

=609. Effect of the decline of commerce on the development of American
manufactures.=—While the people maintained an active commerce with
Europe they obtained most of their manufactured wares from that
source, as they had done in colonial times. The interruptions of
commerce due to acts like the embargo and to the war with England
cut them off from this source of supply, and home manufactures grew
up as commerce declined. The letters of Jefferson, written at this
period, contain many references to the growth of manufactures in his
State, Virginia, and in other parts of the country, especially in New
England, the development of a native manufacturing industry was even
more marked. American manufactures began, in this period, to outgrow
the simple forms of domestic industry, and to attract the capital
necessary for the establishment of regular factories. Many companies
were incorporated to manufacture goods by means of power machinery, and
industrial methods which had long been practised in England were now
first introduced in this country on an extensive scale. The development
of the textile industries was especially rapid. It was estimated that
in 1800 the cotton factories of the country had consumed only 500 bales
of raw material, while in 1810 the number had risen to 10,000 and in
1815 to 90,000. A cotton factory established by Francis C. Lowell at
Waltham, Mass., in 1814, is said to have been the first in the world
in which all the processes involved in the manufacture of goods, from
the raw material to the finished product, were carried on in one
establishment, under a carefully studied system.

=610. Considerations determining early tariff policy.=—The development
of manufactures at this time gave rise, in the following period, to
a demand for protection which marks a turning-point in the tariff
history of the country. When the first national tariff was adopted, at
the founding of the Federal government in 1789, the legislators had a
difficult problem of policy to solve. They found the commerce of the
country fenced in by foreign tariffs composed of high duties and of
some actual prohibitions. They desired the reduction of these duties
that American commerce might expand. Many of them expressed their
belief in a policy of retaliation, if no other means availed to secure
the reduction. At this time, however, the commercial position of the
country was not strong enough to permit the tariff to be used as a
weapon with which to menace foreign states. Other countries showed but
a languid desire for the products which were then our staple exports,
and we had great need of the foreign wares composing our imports.
We could not afford even to discriminate against the importation of
manufactured goods, with an idea of protecting native manufactures;
our manufactures were then so weak that a policy of high protection,
to exclude foreign wares, would have caused serious distress to the
consumers at home.

=611. Survey of tariff policy.=—Barred by these considerations from a
tariff of high duties, the legislators framed the first tariff mainly
as a revenue measure. Comparatively few articles were placed upon the
free list, duties being levied on articles like tea and coffee as well
as on manufactured wares, which might possibly be produced at home. The
general scale of duties was much lower than in foreign countries at the
time, or in the United States later; it was estimated that an assorted
cargo paid about 7-1/2 per cent. Of the results of the first tariff
a recent investigator says: “The most careful examination fails to
show that it affected the volume, variety, or direction of our foreign
trade in the slightest degree.” In the course of the period the tariff
was frequently amended, and rates were raised considerably; but the
tariff continued to be used chiefly as a source of revenue, and was not
seriously affected by protectionist ideas until after 1815.


QUESTIONS AND TOPICS

 1. Prepare yourself for studying the policy of this period by mentally
 reviewing the present commercial policy. Does the government now
 encourage or discourage exports or imports? Does it grant favors to
 one foreign country over another? Do foreign countries prohibit or
 restrict trade with their dependencies? What is the present policy of
 this and other countries with respect to shipping?

 2. When England excluded the United States from trade with the West
 Indies, what classes would be hurt, what classes would be helped, in
 England, in the West Indies, and in the United States?

 3. Indicate on a rough sketch map the markets wholly or partially
 closed to American commerce about 1789.

 4. Financial, military, and naval weakness of the United States in
 1789. [Manuals and standard works on U. S. History.]

 5. Make a chart first of the figures of total exports in sect. 601;
 then indicate the relative share of foreign and domestic exports.
 Leave room at the top or bottom, where the dates are written, to write
 in the chief historical events affecting the course of commerce in the
 period.

 6. It has been generally believed that the adoption of the Federal
 Constitution led to a great growth in business and prosperity. Prof.
 G. S. Callender has suggested that the growth of prosperity, due to
 influences acting from outside America, caused, on the contrary, the
 Constitution to be popular and successful. What facts support this
 latter view?

 7. Prepare a list of the dates showing the beginning and spread of the
 European wars, and insert on the chart as suggested above.

 8. Study the relative importance of foreign exports to total exports
 in the last half of the century, as a contrast to conditions about
 1800. [U. S. Statistical Abstract, Index, Exports, merchandise, total
 values.]

 9. Expansion of the merchant marine, 1789-1800. [Marvin, chap. 4.]

 10. Grievances of neutral carriers, leading to the second war with
 England. [Marvin, chap. 7; Coman, 171-180; McMaster, Hist.]

 11. The Embargo. [Manuals of U. S. history; references in Channing and
 Hart.]

 12. Rise of manufacturing industry. [Coman, 180-193; Wright, 117-131.]

 13. Considerations determining the earlier commercial policy. [Page;
 see above, chap. xlv.]


BIBLIOGRAPHY

 See chapter xlv for general works; Henry Adams, *History, N. Y.,
 1889-91, covering the period 1800-1817 in nine volumes, is the most
 complete general narrative. Mahan, **War of 1812, Boston, Little, 2
 vols., is now by far the best special account. Ralph D. Paine, The
 fight for a free sea, New Haven, 1920, is an interesting description.
 The commercial statistics of the period may be found elaborated in
 Adam Seybert, *Statistical annals, Phila., 1818, or in Timothy Pitkin,
 *Statistical view, New Haven, 1817, 2d ed., 1835.




CHAPTER XLVIII

NATIONAL EXPANSION, 1815-1860


=612. Survey of commerce, 1815-1860.=—In contrast with the period
ending in 1815, the next period which we study, extending from 1815
to 1860, was marked by the slowness and the comparative steadiness in
the growth of foreign commerce. An indication of the course of trade
in this period is given by the following table, in which the figures
represent millions of dollars.

           Imports   Exports    Total

  1820        74        69       144
  1830        62        71       134
  1840        98       123       221
  1850       173       144       317
  1860       353       333       687

Though the statistics of selected years can give only a rough picture
of commercial development, the figures here given suggest the striking
features of our trade in this period with sufficient accuracy. For
about twenty years after 1815 the foreign commerce of the country was
nearly stationary, or actually declined. Not until 1835 did our exports
reach again the mark attained in the year 1807. Towards the end of the
period, however, they showed increasing strength; the figures for 1860
show the upper limit which they attained, but for some years previously
they had been approaching the sum of three hundred millions.

=613. Reasons for slowness of growth.=—The reasons for these changes
in our foreign trade must be sought both abroad and at home. Our
prosperity in the preceding period had been due mainly to the European
wars. With the return of peace the states of Europe escaped from their
commercial dependence on the United States. Our domestic exports of
breadstuffs and provisions declined as Europe returned to the policy of
protecting the domestic food supply; and our foreign exports declined
even more rapidly when we lost our privileged position of the great
neutral carrier, and our merchants had to face not only the active
competition but also the adverse legislation of other countries.
Through most of the period the annual foreign exports of the country
were about twenty million dollars in value. Not until near the end of
the period did conditions change to our advantage. The repeal of the
English Corn Laws in 1846, as was noted in a previous chapter, marked a
departure in commercial policy, which offered new openings to American
export industries.

=614. Absorption of the national energy in territorial expansion.=—At
home, moreover, the people of the United States were occupied in
this period with tasks which turned their thoughts and interests to
a large extent away from foreign trade. It was a period of great
territorial expansion. A comparison of maps indicating the distribution
of population shows that extraordinary changes occurred in the
interval between 1810 and 1860. At the former date the people were
still gathered mainly along the Atlantic seaboard, face to face with
Europe; and most of the territory west of the Appalachian mountains was
still left to the Indians. The center of population was not far from
Washington, D. C. In 1860, on the other hand, the center of population
was near Chillicothe, Ohio. This change indicates an enormous movement
of population westward. The country extending west to the Mississippi
river had, by 1860, been covered almost continuously with settlements;
many people had spread out on the great plains facing the Rocky
Mountains; and the population on the Pacific Coast was sufficient to
entitle that district to the two States California and Oregon.

=615. Relative decline in the importance of foreign trade.=—The
expansion of population, necessary as it was to the development of
the country, proved in its early stages to contribute comparatively
little to the growth of foreign commerce. The growth of our trade did
not keep pace with the growth of population. While the share of the
average inhabitant in foreign trade was over $30 in 1800, it was little
over $20 in 1860, and ranged between $10 and $15 through much of the
intervening period.

[Illustration:

  UNITED STATES
  ACQUISITION OF TERRITORY
  1783-1853
]

It seems as if the people of the country, after the close of the war of
1812, had turned their gaze away from Europe, the continent which they
had for centuries regarded as the source of civilization, and had fixed
their attention on their own continent, with the determination to make
its resources satisfy their needs, so far as they were able. Many of
the settlers in the western country led lives of extreme simplicity,
unable to find a market for the surplus which the fertile soil returned
to them, and consequently forced to restrict their purchases of foreign
goods to the bare minimum.

=616. Importance of the problem of transportation in this period.=—As
the American people expanded and occupied territory far beyond the
limits of their original settlements, the question of transportation
became one of increasing importance. The early colonists had evaded
rather than solved the problem of transportation, by choosing for
settlement districts connected with the sea by short water routes, and
by renouncing, in large part, the attempt at intercommunication by
land. The problem could no longer be set aside, as the people spread
out in the great interior valley. The resources of the West could be of
no advantage to the people of the East, and could contribute nothing to
the foreign commerce of the country, unless means were found to bring
the wares to market with a profit.

In the remaining sections of this chapter, therefore, we shall study
the development of the means of transportation in this period, that we
may be better able to appreciate the details of the export and import
trade, described in following chapters.

=617. The turnpike era.=—Even in the earlier period, following 1789,
the condition of the common roads was felt to be intolerable, and a
movement for their reform set in. Stock companies were chartered, to
improve the more important roads, and were allowed to secure a return
on their investment by charging toll on traffic—so much for a one-horse
cart, so much for a two-horse wagon, etc. Hundreds of turnpike
companies were chartered in the different States, and in Pennsylvania
alone over 2,000 miles of improved roads had been constructed by them
at the close of the first quarter of the century.

Until better means of transportation were provided the turnpikes were
important channels of trade. They united the districts of the interior
with the coast and with navigable rivers, and made possible throughout
the year a freight traffic which formerly had been restricted to the
sleighing season. A great highway, like the Mohawk and Hudson turnpike,
running from Schenectady to Albany, was studded so thickly with taverns
that the traveler was never out of sight of the swinging sign-boards.

=618. Failure of the turnpikes to meet the country’s demands.=—The
success of the turnpikes stimulated the national government to
construct a road from Cumberland, on the Potomac River in the western
part of Maryland, to Wheeling on the Ohio River. This road was designed
to furnish the connection, that was so keenly desired, between the
districts lying on either side of the mountains; and was for many
years an important route for passenger travel. The expense of wagon
transportation, however, prevented a great growth of freight traffic on
this or on other land routes of considerable length. The cost of moving
freight over the roads of this period has been estimated roughly at ten
cents per ton-mile, and this cost prohibited the movement of ordinary
freight to a great distance. The turnpike, therefore, did not solve
the problem of transportation for the country, and turnpikes declined
as better means of transportation were brought into use. About the
middle of the century the idea of building roads of wood took strong
hold of the minds of men, and plank roads were constructed with great
vigor for a few years; but the idea proved impracticable and led to no
important results.

=619. Importance of the western waterways.=—Vastly more important in
its effects on the internal and foreign commerce of the country was
the development of the means of water transportation. It has been said
of North America that no other continent, with perhaps the exception
of South America, offers such excellent natural facilities for
intercommunication as is furnished by the system of rivers and lakes
lying east of the Rocky Mountains. Early in the history of our western
settlements traders used the rivers flowing into the Mississippi to
secure connection with the market at New Orleans, then under Spanish
rule; and the Louisiana purchase of 1803 gave the United States
control of the river route from source to mouth. A line of packet
boats plying between Pittsburg and Cincinnati was started in 1794, and
many flatboats were employed to float cargoes down the Mississippi.
The swift current of that river, however, made ascending navigation
difficult. The crews of the flatboats had to return home by land, going
generally on foot through nearly a thousand miles of wilderness, and
using about six months on the round trip. The stream could be ascended
only in small boats propelled by poles and sails. Though the freight
rate down the river was as low as one cent per ton-mile, the charge
in the other direction was about six times as much. The need of some
better means of propelling boats against the current was strongly felt;
and long before the steamboat had been made a practical success the
prediction was common that it would be developed to serve the needs of
commerce on our western rivers.

=620. Invention and application of the steamboat.=—The steamboat, like
many other instruments of technical progress, was not the invention of
a single man, but was developed by contributions from several different
sources. Before the adoption of the Federal Constitution (1789) Fitch
and Rumsey had constructed steamboats which maintained a speed of
four to seven miles an hour against the current of the Potomac and
Delaware rivers; and these successful experiments were followed by
many others in this country and in Europe. Robert Fulton, therefore,
scarcely deserves the credit commonly accorded him for invention, but
his service was not the less important. He combined the ideas and
inventions of others, and transferred the steamboat from the sphere
of technical experiment to that of practical business operation. The
Clermont, which started from New York August 7, 1807, and arrived in
Albany, 150 miles distant, in 32 hours, was the first steamboat in the
world which maintained a regular and continuous traffic in the public
service.

[Illustration:

  RIVER
  TRANSPORTATION
  IN 1860
]

=621. Development of river transportation.=—Within a few years of
Fulton’s success steamboats were introduced on the western rivers,
and after an interval of trial proved their capacity for meeting the
conditions. In ten years (1817) a steamboat made the trip from New
Orleans to Louisville in 25 days instead of the three months consumed
by barges; after another ten years (1827) a steamboat made the trip
in little over a week. The steamboats did more at first to reduce the
time of voyages than to reduce the rates of transportation, but the
cost of carriage declined gradually as the means of transportation
were improved. The following figures, giving the number of steamboats
employed on the rivers of the West, show how rapidly steam navigation
increased in importance: 1818, 20; 1829, 200; 1842, 450; 1848, 1,200.
Size and carrying capacity were growing also, and it is said that in
1847 the steam tonnage of the Mississippi Valley exceeded that of the
whole British Empire. “Pittsburg city, the Pennsylvania great western
emporium,” as it was styled in a book published in 1830, grew great by
steamer traffic, and other cities, as Cincinnati, Louisville, and St.
Louis, flourished under the same influence. The most obvious effect of
the extension of steam navigation was the growth of internal trade,
especially that between North and South. This trade, however, was
indirectly of great importance to our foreign commerce, for it enabled
the people of the South to apply themselves almost exclusively to the
growth of export products, like cotton, relying on other parts of the
country for food and manufactures.

=622. Demand for canals in this period.=—While the river system
offered great opportunities for developing the resources of the
West, it was necessarily incomplete in the connections it afforded
with other parts of the country. It left gaps, to be filled by other
means of transportation, between three important sections of country,
drained respectively by the Mississippi and its tributaries, by the
Great Lakes, and by the rivers flowing into the Atlantic. The need of
bridging these gaps in the transportation system was felt acutely in
the second quarter of the century, as population spread in the interior
of the country, and was first met, with some degree of adequacy, by the
construction of canals.

There had been many projects for canals in the colonial period, and
some short stretches were constructed before 1800. People contented
themselves in general, however, with the natural waterways, and sought
merely to regulate their channels and to regulate the flow of water by
means of dams. The era of activity in canal construction began after
the close of the second war with England, in 1815.

=623. The Erie Canal (1825), and others.=—The easiest route by which
a canal might be carried through the Appalachian mountain ridge lay
in the State of New York, along the valley of the Mohawk River. The
advantages of this route were recognized in the colonial period, and
the advisability of utilizing them was felt especially during and after
the war of 1812, when the political danger of leaving the country
without means of intercommunication became apparent. The construction
of a canal along this route was begun in 1817, and in 1825 the first
boat passed from Lake Erie to the Hudson River. Other canals were
constructed to connect Lake Champlain and Lake Ontario with the Erie
Canal, and further south, in New Jersey and Pennsylvania especially,
the people entered actively into the work of canal building.

Further west, canals were constructed to unite Lake Erie with the Ohio
River, and Lake Michigan with the Mississippi River (1848), and just
before the close of the period which we are studying the St. Mary’s
Falls Canal (1855) opened the passage from Lake Superior to the other
lakes to boats with a draft of twelve feet.

=624. Commercial benefit of the canals.=—The canals effected a
reduction in transportation charges which placed trade on an entirely
new footing along the lines that they covered. In contrast with the
cost of ten cents per ton-mile, on the turnpikes, we find a cost of
movement of about one cent, and tolls which brought the total charge
to about three cents. The tolls varied on different articles and were
not the same on different canals, but the total charges represented a
great saving in transportation even in the early days of the canals,
and tended to grow less with the passage of time. The crops which grew
in abundance on the fertile lands of western New York had gone begging
before the construction of the Erie Canal, and the inhabitants had
been able to purchase few manufactured or foreign articles. A letter
from the Genesee country (east of Buffalo), written in 1799, said that
grain was so low in price as to be scarcely worth the raising, while
European goods were very dear; it took the produce of one acre to buy
a pair of breeches. Conditions had improved somewhat before 1825, with
the extension of turnpikes and with the increase in the navigation of
the Susquehanna River, but the Erie Canal brought nevertheless a new
era of prosperity to this district, and first made its rich resources
available for consumption in the New York market and for extensive
export.

=625. Canals less important than rivers for distant
shipments.=—Important as were the canals, their influence in this
period was local rather than national. Managers were slow to adopt
the practice of reducing rates on a long haul, to stimulate distant
traffic, and the canals served mainly local needs. We read, it is true,
of cotton being carried from Alabama to Philadelphia by canal, and of
wheat reaching New York over the Erie route from Ohio and Indiana. It
is noteworthy, however, that even in 1840 only one seventh of the
freight carried on New York canals came from outside the State. The
river system of the Mississippi proved still to be the most valuable
outlet for the products of the great interior valley, and about 1850
the value of the wares which it carried to the coast was double that
reaching the seaboard by the Hudson River and its canals. A line
drawn east and west through the center of Ohio marked the commercial
watershed between the competing routes; north of that line practically
all goods were shipped by lake and canal, while south of it only
articles like tobacco, wool, and manufactured wares were sent by that
route, and most products were shipped by way of the Mississippi.
Indiana and Illinois showed a still more decided tendency to the river
route. In the reverse direction, however, the northern route, by canal
and lake, had the advantage, and the movement to the interior by this
route was double that ascending the Mississippi.

[Illustration:

  CANALS
  OF THE
  UNITED STATES
]

=626. Demand for further improvement met by railroads.=—Reviewing
the substance of preceding sections, we find that of the new means
of transportation adopted to develop the resources of the country
and to make them available in internal trade and foreign commerce,
none had yet proved adequate to meet the conditions. Transportation
on the turnpikes was too expensive to permit the carriage of bulky
freight over great distances. River navigation, valuable as it was
in opening the interior to commerce, still was tied fast to channels
cut by nature; the rivers must at least be supplemented by feeders
and by connections across the country. Canals were of great service
as supplements to the rivers, but they too, were restricted in their
course by the conditions set by nature, and, like the rivers, could
be used in northern districts during only part of the year. What the
country needed was a means of transportation available throughout the
year, free to follow the paths toward which the interests of merchants
most inclined, and cheap enough to encourage the exchange of common
articles between points widely separated. The need was met, in the
course of time, by the development of railroads.

=627. Early American railroads little used for freight traffic.=—The
operation of steam railroads began in this country and in England at
almost the same time; the Baltimore and Ohio railroad was in course
of construction in 1830, when the Liverpool and Manchester line was
opened. In this early period, however, the railroad was a much more
valuable instrument in the Old World than in the New. In England
and other European countries the railroad found great manufacturing
and shipping centers already established, with large volumes of
valuable freight to be carried short distances; the task before it
was comparatively easy. Conditions were somewhat similar along our
eastern seaboard, but in the United States in general the railroad was
wanted to develop agricultural districts with a comparatively sparse
population, separated from industrial and shipping centers by hundreds
of miles. The traffic offered by these districts could not bear the
high charges imposed by railroads in their early period; these charges
greatly exceeded those paid for canal transportation and seem in some
cases to have equaled those paid for carriage on turnpikes. Aside from
coal and cotton the early American railroads carried comparatively
little freight; and they played but a slight part in the development of
commerce.

=628. Extension of the railroad system in the West after 1850.=—In 1850
there were still few railroads west of the Allegheny Mountains. In
contrast with nearly seven thousand miles of line in the States along
the eastern coast the States of the upper Mississippi Valley could show
little over one thousand. Not a mile of railroad had been built in
Iowa and Minnesota, and there was no railroad connection with the East
in all the country west of the Mississippi and north of the State of
Missouri.

Conditions were ready at last for the extension of the railroad system
through the interior of the country and the West saw many thousand
miles of line constructed in its territory in the decade ending in
1860. The New York Central, the Erie, the Pennsylvania, the Baltimore
and Ohio, and other lines united the roads of the interior with the
East; many roads were built from Lakes Erie and Michigan to the Ohio
and Mississippi rivers; while another set of roads extended north from
the Gulf of Mexico, aiming to attract the traffic of the great valley
southwards.

=629. Effect of the improvements in transportation, especially
marked in the following period.=—The commerce of the country got the
full benefit of the railroad system only after 1860, when various
improvements led to a great reduction in freight rates, and stimulated
an immense increase of traffic. The period before the Civil War must be
regarded as one of preparation for the great commercial expansion in
the period following; the lines were laid, in large part, but men had
not learned to make the best use of them. Even before 1860, however,
the railroad had become an indispensable instrument to the commerce of
the country. While it did not displace other means of transportation,
it forced them to improvement, and gave service in forms which they
could not supply. There will be little space in the two following
chapters to refer to the development of the means of transportation
described here, but the student must bear in mind this factor, as
contributing always and in very important measure to the growth of the
country’s commerce. We may close this summary of the subject by giving
an illustration of the effect of transportation on the value of the
resources of Ohio; the price of farm produce in that State rose 50 per
cent after the completion of the canals, while the railroads appear
to have doubled the price of flour, trebled the price of pork, and
quadrupled the price of corn.

=630. Prosperity of the American merchant marine.=—The period from
1815 to 1860, in which the country first grappled successfully with
the problem of internal transportation, was also the period in which
the American merchant marine reached the pitch of its prosperity.
Even after the conclusion of peace in Europe in 1815, which subjected
our ships again to the competition of foreign carriers and to the
restrictions of other countries, American ship-builders and sailors
were able to hold their own; and the period is marked by a great
increase in our merchant tonnage. Down to about 1850 the wooden sailing
ship was still supreme in its control of the ocean carrying trade.
American builders developed the ship to its highest type, the clipper,
and led the world in the art of naval construction. Their skill, and
the cheapness of good ship timber, more than offset the higher prices
which the tariff forced them to pay for materials and equipment such
as iron, copper, cordage, and sail-cloth. The officers and crews
of American vessels enjoyed an international reputation for their
efficiency.

[Illustration:

  RAILROADS
  1850
]

[Illustration:

  RAILROADS
  1860
]

=631. Position and prospects of the merchant marine in 1860.=—In 1855
the tonnage built in the United States was greater than ever before
or since; the California gold discoveries had caused a great increase
in the demand for transportation to the Pacific Coast, from which
the government excluded foreign vessels, and the Crimean War forced
European governments to charter many American vessels for transport
service. At the close of the period (1861) the tonnage of the United
States, including that engaged in domestic trade, was not far from
one third of the total tonnage of the world; the British Empire had
slightly over one third; and the tonnage of all other countries grouped
together was but little more than our own. Our merchant fleet exceeded
by half the amount necessary for the carriage of all our exports and
imports, and earned a large revenue from the foreign countries which
sought its service.

In one important point, however, the prospects of the American merchant
marine were not bright. We were not keeping pace with the peoples of
Europe in the construction of steamers for ocean service, and of iron
vessels in general. American steamers were not able to win a place
of any importance in the foreign carrying trade; and before 1860 a
slackening of activity in the building of wooden sailing ships was
noticeable.

=632. Navigation policy: reforms and restrictions.=—The period
was marked by the removal of many of the restrictions on foreign
shipping which had been a regular feature of government policy in
previous centuries. Our ships were burdened at first by heavy dues
or by prohibitions in foreign ports, and it was but natural that our
government retaliated by taxing foreign ships entering our ports.
The disadvantages of this system became apparent as commerce grew in
the nineteenth century, and a series of reciprocity treaties removed
the former discrimination, and put the ships of all nations on
substantially the same footing. The United States held fast, however,
to certain features of the old navigation policy. The coastwise trade,
which was interpreted to include the trade to the Pacific coast by way
of the Isthmus of Panama or around Cape Horn, was reserved absolutely
to American vessels; and no vessel could secure American registry
unless it had been built in this country. Ships built abroad could not
sail under the American flag even though they had been purchased and
were owned by citizens of the United States.


QUESTIONS AND TOPICS

 1. Prepare a chart, sect. 612. [Figures of commerce for the
 intervening years, showing fluctuations, will be found in the U. S.
 Statistical Abstract.]

 2. Review, in previous chapters, the accounts of the commercial policy
 of European states during this period.

 3. The westward movement of population. [Manuals of U. S. history;
 maps in Atlas of the Census.]

 4. The population of the country was as follows, in round millions
 (counting half a million or over as one): 1790, 4; 1800, 5; 1810,
 7; 1820, 10; 1830, 13; 1840, 17; 1850, 23; 1860, 31. Determine the
 average commerce per capita, and indicate it on the chart.

 5. The commercial history of a western town. [Select a town in one of
 the States of the Mississippi Valley, admitted during this period, and
 determine, from local histories and biographies, the extent of its
 trade with other parts of the country and with foreign countries.]

 6. What towns of the colonial period were situated at a distance from
 the sea? What towns grew to considerable size in the interior of the
 country in this period, and what were their means of land or water
 transportation? [Consult historical maps, as those in Hart’s Epochs of
 American History.]

 7. (_a_) Write a report on the history of turnpikes in the State in
 which you live. [Consult State and local histories, making full use
 of table of contents and index.]

 (_b_) Development of roads in the U. S. [Hulbert, vol. 11, chap. 1.]

 (_c_) The Pennsylvania State Road in 1796. [Hulbert, vol. 11, chap. 2.]

 (_d_) The Catskill turnpike. [Hulbert, vol. 12, chap. 6.]

 8. The Cumberland Road. [Hulbert, vol. 10; see especially chap. 4,
 stages and freight traffic.]

 9. What are the chief river systems of the country; what gaps exist
 between them? How do the facilities for river transportation in
 different countries of Europe compare with those of the United States?

 10. Development of the boats used for river traffic. [Hulbert, vol. 9,
 chap. 4.]

 11. Character and life of the western river men. [Same, chap. 5.]

 12. The invention of the steamboat. [Encyclopedias; U. S. histories;
 Thurston’s Fulton, N. Y., 1891; S. Bullock in Conn. Magazine, 1905, 9:
 440-455, an excellent article with illustrations.]

 13. Write a report on the influence of the steamboat in building up
 one of the cities named. [Local histories.]

 14. Early canal projects. [Hulbert, vol. 13, chaps. 2, 3.]

 15. The Mohawk River route. [Hulbert, vol. 14, chap. 1.]

 16. Early projects for a canal in the Mohawk Valley. [Same, chap. 2.]

 17. The Erie Canal. [Same, chap. 4.]

 18. Economic effects of the Erie Canal. [Hulbert, vol. 14, chap. 5.]

 19. Origin of American railroads. [Johnson, chap. 2.]

 20. Did any European country present conditions like those of the U.
 S., in respect to railroad development? What has been the history of
 railroads in Russia? [See chap. 44.]

 21. Growth of the American railroad system. [Johnson, chap. 3; Hadley,
 chap. 2; Coman, 234-242.]

 22. Because the Ohio farmer received more for his products, does it
 follow that railroads have raised the price of articles and forced
 consumers to pay more for them?

 23. Development of the merchant marine, 1815-1860. [Marvin, chaps. 9,
 11, 12; Abbot, chaps. 1, 2.]

 24. American whalers. [Marvin, chap. 8.]

 25. Navigation laws of the U. S.: history and criticism. [Wells,
 Merch. marine; Carnegie History, chap. 39.]


BIBLIOGRAPHY

 See chapter xlv for general works.

 Special Accounts.—Worthy P. Sterns, **Foreign trade of U. S. from 1820
 to 1840, Jour. Pol. Econ., Chicago, Dec., 1899, 8: 34-57, 452-490;

J. McGregor, *Commercial statistics; J. S. Homans, *Cyclopedia; J. D.
B. DeBow, *Industrial resources.

SPECIAL TOPICS.—Hulbert, Historic highways, and more briefly in The
paths of inland commerce, New Haven, 1920; E. R. Johnson, Amer.
railway, (with references); A. T. Hadley, Railroad trans.; C. F.
Adams, Jr., Railroads; U. B. Phillips, History of transportation in
the eastern cotton belt to 1860, N. Y., 1908. Shipping: Samuel E.
Morison, **Maritime history of Massachusetts, 1783-1860, Boston, 1921;
R. D. Paine, *The old merchant marine, New Haven, 1920; A. H. Clark,
The clipper ship era, 1843-1869, N. Y., 1910; A. T. Verrill, The real
story of the whaler, N. Y., 1916; John H. Morison, History of American
steam navigation, N. Y., 1903. River navigation: H. W. Dickinson,
Robert Fulton, London, 1913; D. L. Buckman, Old steamboat days, N. Y.,
1907; W. E. Verplanck and M. W. Collyer, The sloops of the Hudson, N.
Y., 1908; H. M. Chittenden, History of early steamboat navigation on
the Missouri River, N. Y., 1903. Canals: H. W. Hill, Historical review
of waterways and canal construction in New York State, Buffalo, 1908,
(Buffalo Hist. Soc., vol. 12); N. E. Whitford, History of the canal
system of the State of New York, Albany, 1906, 2 vol., (Supplement to
Rep. of State Engineer for 1904-05); E. J. Benton, The Wabash trade
route in the development of the Old Northwest, Baltimore, 1903. The
West: K. Coman, ** Economic beginnings of the Far West, 2 vol., N. Y.,
1912; R. G. Thwaites, The fur trade in Wisconsin, 1812-1825, Madison,
Wisc., 1912; I. Lippincott, History of manufactures in the Ohio valley
to 1860, N. Y., 1914.




CHAPTER XLIX

EXPORTS, 1815-1860


=633. Chief exports in 1860.=—The following table gives the chief items
among the exports of the country in 1860, and corresponding items made
up from the annual average of the years 1802-1804, as a basis from
which to appreciate the changes.

EXPORTS OF U. S., MILLIONS OF DOLLARS

  =================================================+=======+========
                                                   |1802-4 | 1860
  -------------------------------------------------+-------+--------
  Vegetable foods                                  |  13   |   27
  Cotton                                           |   6   |  191
  Tobacco                                          |   6   |   15
  Animal products                                  |   3   |   20
  Fish products                                    |   2   |    4
  Forest products                                  |   4   |   13
  Manufactures                                     |   2   |   37
                                                   |  --   |  ---
  Total of these items, omitting decimals          |  36   |  307

      Total domestic exports including items omitted  39         316
      Total foreign exports                           28          26
      Exports of precious metals                                  56
  ==================================================================

=634. Changes since 1800.=—It will be noted, as said above, that the
foreign exports of the country did not increase during the period,
and were actually less in 1860 than they were about 1800. Comparing
the figures for the total exports of domestic merchandise we find
that this, the most important branch of our commerce, increased about
eightfold in value between the years chosen for comparison. All of the
separate classes of wares contributed to the growth of our export
trade, but in very different measure, as is apparent when the figures
are compared. The export industries which were most prominent in the
colonial and early national periods had not kept their place in the
movement of progress, and their output for export had merely doubled,
roughly, in this period. There is apparent, on the other hand, a great
growth in the export of manufactured wares; and the export of cotton,
which in 1789 was practically nothing, and about 1800 was less than
seven million, had risen to the enormous sum of one hundred and ninety
million, considerably more than half in value of the total exports of
the country. The history of commerce presents no parallel to the rapid
rise of cotton in the commerce of the United States at this period, and
the subject demands careful consideration.

=635. Cotton before 1800.=—The word cotton, now applied exclusively
to the fibers attached to the seed of a shrub of the mallow family,
was formerly a general term used for vegetable fibers coming from
several different sources. The fibers acquired from the present cotton
shrub, or from a vine or tree, had been used for textile fabrics from
ancient times. The manufacture of cotton goods, however, was neglected
in Europe until the eighteenth century, and at the beginning of our
national existence much of the supply of raw cotton still came from the
ancient seat of the cotton industry in Asia. From almost the beginning
of the colonial period in American history experiments had been made
with cotton culture, but the colonists found no incentive to devote
themselves to cotton cultivation on a large scale. The separation of
the fiber from the seeds was a tedious process, there was no market
for raw cotton in the colonies, and other crops were found to return
larger profits to the cultivator. Cotton was grown successfully on some
of the islands of semi-tropical America, but the territory now forming
the United States counted for nothing as a source of cotton when the
national government was established in 1789. So weak, in fact, was the
cotton industry at this time, that it was protected by a duty of three
cents a pound on imported cotton, included in the first national tariff.

=636. Growth in importance of cotton.=—Various influences, however,
combined about 1789 to bring into prominence the possibilities of
cotton as a regular crop. The great improvements in textile machinery
caused at this time an increased demand for the raw material. The
other crops which were then raised in the territory now occupied by
cotton were not flourishing. The indigo culture, for reasons which have
been noted above, was unpopular; rice culture had declined during the
Revolution, as the war had broken up the organization of slave labor in
the rice districts; tobacco was giving smaller returns, as the land was
exhausted by continuous cropping. A new variety of cotton, moreover,
had recently been introduced from the Bahamas, known as sea-island or
long-staple; the fibers were long and silky, suited to the manufacture
of fine threads and fabrics, and they were more readily separated from
the seeds than were the fibers of the ordinary short-staple or upland
variety. The cultivation of this variety was an assured success in
the narrow strip along the coast where it could be grown; and further
inland, where sea-island cotton could not be raised, people began to
strive persistently to overcome the difficulties of the cultivation of
the upland variety.

=637. Demand for efficient means of cleaning cotton.=—The chief
obstacle to the cultivation of upland cotton was now the difficulty
of separating the fibers from the seeds. To perform the process by
hand-picking was out of the question, as a man in this way could clean
only one pound of cotton in a day. Various simple machines had been
devised to effect the separation of the seeds, and these were fairly
successful when applied to sea-island cotton, enabling a man to clean
fifty or sixty pounds. None of them, however, was a success when
applied to upland cotton, whose short fibers adhered very tenaciously
to the seeds.

The problem was solved by a native of New England, Eli Whitney,
who had gone south as a teacher, and who invented the cotton gin
(engine) which proved capable of cleaning upland cotton, and so made
the cultivation of that crop a commercial possibility. The conditions
may be described in Whitney’s own words, used in a memorial to the
government, asking for an extension of his patent. He showed “That,
being in the state of Georgia in the year 1793, he was informed by
the planters that the agriculture of that State was unproductive,
especially in the interior, where it produced little or nothing for
exportation. That attempts had been made to cultivate cotton, but that
the prospect of success was not flattering. That of the various kinds
which had been tried in the interior none of them were productive,
except the _green seed cotton_, which was so extremely difficult to
clean as to discourage all further attempts to raise it. That it was
generally believed this species of cotton might be cultivated with
great advantage, if any cheap and expeditious method of separating it
from its seeds could be discovered, and that such a discovery would be
highly beneficial both to the public and the inventor.”

=638. Invention of the saw gin by Whitney, 1793.=—Encouraged by the
terms of the national patent law, on which he relied for a monopoly of
his invention, Whitney set to work, and in a short time had devised a
form of cotton-gin which, with minor alterations, has remained in use
ever since. The raw cotton was fed through a wire grating to a cylinder
on the surface of which were wires or saw teeth, that caught the fibers
and pulled them through, the seeds being retained by the grating. The
gin was a complete success, enabling a man to clean several hundred
pounds of cotton in a day. Whitney himself reaped comparatively little
benefit from his invention, as he found it impossible to prevent
infringements; he said in 1812, with slight exaggeration, that the
total amount which he had realized was less than the saving in cost
effected in one hour by his machines then in operation. The country,
however, was an immense gainer, for the last obstacle to the successful
cultivation of cotton was removed.

=639. Extension of cotton cultivation, and increase of exports.=—The
exports of cotton, which in 1793, the year of Whitney’s invention,
had been only two thousand bales, rose by leaps and bounds. In 1802
they passed one hundred thousand bales, in 1822 five hundred thousand,
in 1834 one million, in 1843 two million, in 1858 three million. The
States along the Atlantic coast, in which cotton culture first sprang
up, continued for many years to be the main seat of the industry.
After the war of 1812, however, the cultivation of cotton spread in
the Southwest, where rich river bottoms and prairie lands offered soil
of exceptional fertility, and where the numerous rivers facilitated
transportation. The exports of cotton from New Orleans increased
tenfold in the years 1816 to 1830, and at this later date the western
States produced the larger part of the cotton supply. At the close of
the period which we are studying (1860) over half of the total crop was
raised in the three States Alabama, Mississippi, and Louisiana.

=640. King cotton.=—The success of the cotton culture in this country
was attended by far-reaching results in economic and political history.
We must restrict ourselves here to the commercial aspects of the cotton
industry, without discussing such topics as its relations to slavery
and its influence in bringing on the Civil War.

Never in the world’s history have producers enjoyed such an exalted
position in commerce as that which was held by the planters of the
cotton States. The larger part of the world’s supply of an article
regarded as of the first necessity came from a comparatively restricted
area in the South. The people of Europe and other continents had become
used to cotton textiles, great factories had grown up to manufacture
them, but it seemed as though people must go unclad and factories must
stop work, if the United States should refuse to deliver raw cotton.
For years before the Civil War fear of a cotton famine had haunted the
minds of European manufacturers.

Cotton took a position in national commerce equal in importance
to that which it occupied in international trade. Not only did it
furnish directly more than half of the total exports of the United
States; it shared its prosperity with other industries, and influenced
the development of every part of the country. Northern merchants
made fortunes in handling and transporting southern cotton; the
manufacturers of every district found in the South a market where
people had plenty of money to buy goods which they were too busy to
make; the farmers of the Northwest supplied in considerable part the
needs of the South for food. The people of the South were not blind to
these facts, and tended, indeed, to exaggerate their importance. As a
sample of their attitude this extract from a speech by Senator Hammond
in 1858 may be taken: “Without firing a gun, without drawing a sword,
should they make war on us, we could bring the whole world to our feet.
What would happen if no cotton was furnished for three years? I will
not stop to depict what every one can imagine, but this is certain,
England would topple headlong, and carry the whole civilized world with
her. No, you dare not make war on cotton. No Power on the earth dares
to make war on it—cotton is king.”

=641. Slight contributions of the South to exports, aside from
cotton.=—In the period before the Civil War, when southern plantations
were worked by slaves, it was considered to be the best policy to
plant cotton continuously, without alternation or diversification of
crops, though this policy led necessarily to exhaustion of the soil
and required frequent removals to fresh land. Cotton was, therefore,
the single product which the South contributed in great quantities
to the internal and foreign trade of the country. The rice culture
was maintained on the eastern coast and was extended along the Gulf,
but there was little increase in the export of rice, as the crop was
consumed largely at home. Indigo disappeared from the list of American
products. Tobacco production spread in the States of the Ohio valley,
and the exports of this ware rose after the middle of the century to
double the value which they had about 1800, but a comparison of the
figures given at the opening of the chapter shows that tobacco declined
still further from the position it had held in colonial times.

=642. Trade between the North, the South, and Europe.=—In 1860 only one
third, approximately, of the total exports of the country came from the
North. Conditions in this period resembled closely those of colonial
times, with the substitution of the southern States for the West Indies
in the triangle of trade. The North imported from Europe far more than
it could export in return; it shipped South, however, large quantities
of foodstuffs and manufactures; and the South gave in exchange bills
on Europe which were drawn against the great quantities of cotton sent
thither. Cotton from the South to Europe, manufactures from Europe to
the North, manufactures and foodstuffs from the North to the South:
such were the three sides of the triangle.

=643. Chief exports from the North.=—The North could no longer look
to colonial industries, like fisheries and forestry, to provide the
means of purchasing the foreign wares which it required. The exports
from those industries had increased, it is true, but were still so
small that they had become items of slight importance in the total. The
exports of manufactures, on the other hand, had grown very rapidly, and
formed now a considerable item in our trade. The South contributed to
this class some wares (manufactured tobacco, turpentine, cottonseed oil
cake), but the products of developed manufacture came almost entirely
from the North; manufactures of cotton and of iron were the leading
items. The rise of these manufactures will be treated in the next
chapter. At the North, however, as at the South, agricultural products
held the first place among the exports. Foodstuffs and animal products
were exported to the value of about fifty million dollars, and these
wares came chiefly from the North. The total is small in comparison
with that of the cotton export (one hundred and ninety million), and
gave little promise of the remarkable expansion which was to follow
after the Civil War; still, foodstuffs and animal products were the
mainstay of the Northern export trade.

=644. Gradual increase in the exports of foodstuffs.=—The increase
in the exports of northern agriculture was rather less than would be
expected from a people rapidly increasing in numbers and provided with
an abundance of fertile land. For many years after the close of the war
of 1812 commerce in wheat and flour languished, and even toward 1840
the export of those articles was less than it had been at the opening
of the century. There was talk, even, of imposing a duty on wheat, to
protect the farmers of the Atlantic seaboard from imports. As late as
1835 Ohio was the only grain-exporting district of the West, and the
first grain shipment on the Great Lakes, of which there is record, was
made about that time. Chicago became of importance as a center of grain
shipments only about 1850. In the decade from 1850 to 1860, however,
the Chicago shipments increased (roughly) from two to twenty million
bushels, and the total exports rose rapidly; canals and railways were
at last bringing the cheap grain from the West to the people of Europe,
who at last were ready to welcome it. The export of animal products was
growing also. Lard and pickled pork were the chief items under this
head, for the lack of modern appliances prevented the export of fresh
meat; but the price of hogs at Cincinnati doubled in the fifteen years
preceding 1860, and western farmers were encouraged to give increased
attention to the supply of animal products.

=645. Exports of precious metals; result of the California gold
discoveries.=—The last item in the list of exports given at the
beginning of the chapter is that of precious metals, which we shipped
abroad to the value of more than fifty million dollars. Ordinarily the
exports and imports of precious metals are not included in the figures
of a country’s trade. Coin and bullion are used to make up the balance
of accounts between different countries; they may leave a country
one year and may return to it the next year; and they represent,
therefore, no contribution to commerce like that of the shipment of
merchandise. An exception must be made, however, in the case of the
few countries which produce such quantities of gold and silver that
they can regularly export a surplus. The mines of precious metals are
to these countries as much a commercial resource as are the coal or
iron mines to countries like England and Germany. The United States
was not at first among these favored countries: it produced little
gold and less silver, and needed to import most of the precious metals
which it required for use as currency and in the arts. These conditions
were suddenly reversed by the discovery of gold in California in 1848.
The gold production of the country, which had been formerly less than
a million dollars a year, had risen by 1850 to fifty million, and
provided the country with a handsome surplus which it could afford to
exchange abroad for merchandise.


QUESTIONS AND TOPICS

 1. Prepare a graphic chart of the figures, sect. 633, for comparison
 with earlier and later conditions.

 2. Review the distinction between domestic and foreign exports. The
 principal foreign wares exported from the U. S. in 1860 were as
 follows, in millions of dollars: coffee 2.2, sugar 2.1, tea 1.9, hides
 1.6, tobacco 0.7. From what countries do you think these wares came?

 3. Write a report on one of the following topics:

 (_a_) The cotton plant and cotton fibre.

 (_b_) Different varieties of cotton.

 (_c_) History of cotton, outside America, before 1800.

 (_d_) History of cotton in America before 1800.

[Encyclopedias; commercial geographies; Hammond, pp. 3-33, references
in bibliography.]

4. Invention of the cotton gin by Whitney, [Hammond; Amer. Hist.
Review, Oct., 1897, 3: 90-127.]

5. What changes have been made in the cotton gin since its invention?
[Encyclopedia.]

6. How long do you think the world would have had to wait for an
efficient gin if Whitney had not supplied the need?

7. Importance of cotton in southern agriculture before the Civil War.
[Hammond, 67-119; J. A. B. Scherer, Cotton as a World power, N. Y.,
1916.]

8. What other wares have held the position of “king” in the commercial
countries. In what period and in what country were the following wares
especially important among the exports: tin, silk, wool, spices, silver?

9. Connection of cotton and slavery. [Hammond, 34-66.]

10. The cotton trade, 1815-1860. [Hammond, 243-277.]

11. Rice culture before the Civil War. [Depew, chap. 38 by Talmage;
DeBow, vol. 2.]

12. Later history of American fisheries, and international questions to
which they have given rise. [Census; McMaster and Moore in Cambridge
Mod. hist., vol. 7, 363 ff., 657 ff.; Carnegie History, vol. 2, part 2.]

13. Trade in turpentine and rosin. [Census, 1900, 9: 1001-1012.]

14. The development of the American lumber industry. [Depew, chap. 30,
by Fernow.]

15. Development of Cincinnati or Chicago as a market for meat and
breadstuffs. [Local histories.]

16. What countries were the chief sources of supply of gold and silver
before 1850? [Encyclopedias.]

17. The California gold discovery. [Narrative histories of U. S.]

18. Commerce of California before the discovery of gold. [Read the
interesting narrative of a sailor’s life by R. H. Dana, Two years
before the mast, Boston, Houghton.]

19. The overland route to California. [Henry Inman, The old Santa Fe
trail, N. Y., Macmillan, 1899. Salt Lake trail, N. Y., 1898.]

20. Development of gold and silver mining. [C. H. Shinn, Story of the
mine, N. Y., Appleton, 1896.]


BIBLIOGRAPHY

 See chapter xlviii.




CHAPTER L

IMPORTS, POLICY, DIRECTION OF COMMERCE, 1815-1860


=646. Chief imports in 1860.=—The imports of the United States have
been so varied in character that it is impossible to classify them
with any exactness. An attempt will be made in this section, however,
to indicate the leading items in our imports in 1860, giving values in
round millions of dollars. Of the total of the year, 354, the largest
share fell to manufactures. Under this head the chief place was taken
by the textiles (wool 38, silk 33, cotton 32, linen 10); nearly one
third of the total imports of the country was derived from these
four leading branches of the textile manufacture. Most of the other
manufactures imported fell below the mark of 5 millions; a noteworthy
exception is the item of iron and steel in various forms, amounting to
21 millions. In comparison with the amount of manufactures imported,
the class of raw materials, to be used for manufacture in this country,
was still small; we purchased abroad considerable amounts of hides and
skins, wool, etc., but in general we either manufactured our wares out
of materials procured at home or sent abroad for the finished product.
The colonial wares had gained both in value and in the proportion
which they formed of the total imports; the chief items in this class
were sugar 31, coffee 21, tea 8, cigars and tobacco 6, molasses 5,
altogether amounting to about one fifth of the imports of the year.

=647. Significance of the import trade at this time.=—The general
character of our import trade, evidently, had not changed greatly in
the seventy years since the establishment of the national government.
The attractions of farming were so great, when fertile land was to be
had in abundance and when there was an eager demand for such products
as cotton and foodstuffs, that the American people still gave most of
its energy to raising raw materials; and found it profitable still to
look to other countries for much of its supply of manufactured wares.
The policy of protection, which was established in the period under
consideration, had not as yet succeeded in building up manufactures
capable of supplying the wants of the home market. The comparatively
small amount of materials imported for our factories showed that our
manufactures were still local in character, without the strength, or
else denied the opportunity, to reach out and draw from distant sources
the raw materials which they could work up and return to the currents
of the world’s trade.

The growth in the imports of colonial products represented the increase
of general prosperity, enabling the people to consume luxuries in
greater quantity. Dividing the amount of these wares imported by the
population of the country, and so securing a rough idea of the share
falling to each individual, we find that the per capita consumption
rose as follows from 1790 to 1860: coffee from about 1 pound in 1790 to
over 5 pounds in 1860, sugar from less than 5 pounds to over 30.

=648. Growth of domestic manufactures.=—Though the imports of
manufactured wares increased greatly in the course of this period, it
must not be assumed that the United States was as wholly dependent
on foreign manufactures in 1860 as it had been in 1790. A population
growing rapidly both in numbers and in welfare caused a demand for
manufactures which stimulated some producers to choose manufacturing
instead of farming for their livelihood, and the government aided
these individuals by taxing imported wares, and so giving the domestic
producer an advantage in the home market. In the following sections we
shall survey the chief branches of manufacture which grew up in the
United States at this time, and consider the bearing of the protective
tariff on their development.

=649. Increase in the use of coal.=—Some idea of the development
of modern forms of manufacture in the United States can be gained
by tracing the history of coal, the great source of power for the
developed system of factory industry. The demand for coal was still
very small in the first quarter of the century; in 1830 the total
production was less than half a million tons, and the United States was
surpassed in coal output by four of the states of Europe. The second
quarter of the century was marked by a great extension in the use of
steam power, and the successful application of coal to iron making; by
1850 the United States had reached the second place among the countries
of the world in coal production, with an output of over six million
tons. Small as this seems in comparison with the output of Great
Britain at that time (54 million), or the output of the United States
in 1913 (over 500), it marked a tremendous advance over conditions as
they were about 1800, and showed that at least the country had passed
through the preparatory stage of industrial development.

=650. Sluggish development of the iron industry.=—While the use of coal
is perhaps the best index of a country’s development in the modern
forms of manufacturing and transportation, the use of iron is also
certainly of great significance; iron is the fulcrum through which the
power of steam is applied, to repeat Jevons’ figure of speech. Great
importance attached, therefore, as has been noted in previous chapters,
to the improvements introduced in the English iron manufacture
towards 1800, by which it was freed from dependence on charcoal, and
was enabled to turn out increased quantities of pig and bar iron at
reasonable prices. American iron makers showed a slackness which
we find it hard now to forgive in adopting the improved processes.
Coal and coke were not used in the American iron manufacture until
about 1840, and the new methods of puddling and rolling, which had
transformed the English iron industry, were applied in this country
only shortly before that date, about half a century after their
introduction in England. Some excuse can be found for our delay in
the lack of transportation facilities for bringing the iron ore and
coke together. The result, at any rate, was unfortunate. A heavy duty
was laid on imported iron, to protect the home producer, but did not
make up for his inefficiency. It was necessary, therefore, throughout
the period, to import a considerable part of the necessary pig and bar
iron and steel, paying the higher prices caused by the tariff; and the
machine industries could not but suffer from the added expense. Down to
1860 our iron industry was not strong enough to export crude iron in
any quantity, though American ingenuity succeeded in finding a market
for considerable quantities of iron manufactures.

=651. Success of the cotton manufacture.=—With one of the branches of
textile manufacture, that of cotton, the Americans had more success.
Thanks to the alertness of the cotton manufacturers in introducing
improved machinery, and to the advantages they enjoyed in their supply
of raw material, they had soon outgrown the need of protection. The
higher wages which they paid to American laborers were more than offset
by the quantity of work turned out, and in the manufacture of the
common sorts of piece goods they did not fear the competition of any
other country. Large manufacturing towns grew up in New England to meet
the demand for cloth which formerly had been made in the household of
the consumer, and by 1850 there were as many cotton spindles at work
in New England as there were inhabitants. American cottons were sold
so readily in South America and other foreign markets that English
manufacturers condescended to imitate them, and our exports of cotton
manufactures in 1860 amounted to over ten million dollars, more than
double the export of fish products, and not far below the export of
forest products. The strength of the American cotton manufacture lay
in the production of plain cloth; the bulk of the imports consisted of
finer and fancy products.

=652. Failure to establish a strong woolen manufacture.=—The United
States was, of course, peculiarly fortunate in its supply of raw
material for the cotton manufacture. It enjoyed no such advantage with
respect to wool. The wool fibers from American sheep were comparatively
short, and unsuited to the manufacture of the finer woolens and
worsteds. Manufacturers were hampered in their use of other wools by a
tariff designed to protect the sheep growers, and paid for other raw
materials higher prices than their competitors in England, while they
could not, as in the cotton industry, make up for the higher wages
in this country by the skilful application of machinery. Under these
conditions the duties designed to check the importation of woolen
manufactures from abroad were only a partial protection to the American
producer; and the woolen manufacture did not flourish in this country.
We could in large part supply the demand of the home market for coarser
fabrics (flannels, blankets, etc.), but we manufactured no wool for
export, and we continued to import the finer fabrics.

=653. Other manufactures.=—In the manufacture of other textile products
which were imported in considerable amounts, silk and linen, the United
States made no important progress during this period. Sewing silk and
silk trimmings were made in the country, but the great bulk of silk
manufactures were bought in France and England, while there were only
the beginnings of a linen manufacture in this country before the Civil
War.

Other manufactures existed besides those named, but the most important
of them were devoted chiefly to the first processes in working up raw
materials, and scarcely correspond to our ideas of manufacturing at
the present time. This point is illustrated by the list of domestic
manufactures exported from the country in 1860, as given by the
government. Of the total of 37 millions, the items cotton 10.9 and
iron 5.7 were the product of developed manufacture, and the same may
be said, perhaps, of the item copper and brass and their manufactures,
1.6. Among the other items, however, the leading products were of a
different character, and showed strength in raw materials rather than
in manufacture (manufactured tobacco 3.3, spirits of turpentine 1.9,
oil cake 1.6, household furniture 1.0).

=654. Dependence of the South on the North for manufactured wares.=—It
is noteworthy that most of the manufactures which grew up in the United
States in this period were established in the North. The prevalence of
slavery in the South and the attractions of agriculture in that section
prevented the rise of any considerable manufacturing industry; and the
South manufactured even of its staple product, cotton, less than one
fifth as much as the mills of the North. Conditions were thus adapted
to the triangular trade, as it has been termed above, by which surplus
shipments from the North to the South balanced surplus shipments from
the South to Europe. The results were set forth in the following
extract from a book published by a Southerner in 1857:

“In one way or another we are more or less subservient to the North
every day of our lives. In infancy we are swaddled in Northern muslin;
in childhood we are humored with Northern gewgaws; in youth we are
instructed out of Northern books; at the age of maturity we sow our
‘wild oats’ on Northern soil; ... in the decline of life we remedy
our eyesight with Northern spectacles; in old age we are drugged with
Northern physic; and, finally, when we die, our inanimate bodies,
shrouded in Northern cambric, are stretched upon the bier, borne to
the grave in a Northern carriage, entombed with a Northern spade, and
memorized with a Northern slab!”

We shall see in the following sections, reviewing the course of
tariff policy, that the North and the South took opposite sides with
respect to the protective tariff. The South, which had practically no
manufactures, desired free trade, that it might make its purchases in
the cheapest market, while the North desired protection for its growing
manufactures.

=655. Beginning of the system of protective tariffs, 1816.=—In previous
sections (609-611) attention was directed to the fact that the
earliest tariffs were but slightly protective. The establishment of
manufactures was stimulated much more by the interruption of commerce
at the time of the embargo and of the war with England than by any
deliberate policy of protection. At the close of the war of 1812,
however, the time seemed to have come for the legislators to intervene
in favor of American manufacturing industries. The privations of the
war period awakened people to the dependence of the United States on
Europe, which seemed unworthy of a free state and which seemed unsafe
from the military standpoint. The manufactures which had grown up
during the war were exposed, at the return of peace, to a flood of
imports which threatened to reconquer the American market for the
foreign manufacturer. The tariff of 1816, therefore, included a number
of duties designed to restrict imports for the benefit of the American
producer; the scale of duties was moderate, the highest permanent duty
being 20 per cent.

=656. Course of tariff policy, 1816-1860.=—The conflict of interests
between different sections of the country led to many changes in the
tariff schedules, and occasioned some bitter political contests.
Without attempting to recount the details, it may be said in summary
that the course of the tendency was toward higher duties till about
1830, when some of the duties amounted to 40 per cent and 50 per cent
or more.

The high duties were particularly obnoxious to Southerners, who
considered them a tax taken from their pockets for the benefit of
the North, and who fought persistently for a reduction. They finally
secured a hearing; and duties were steadily reduced in the period from
1833 to 1842 until they stood, at the later date, at a general level
of 20 per cent. The tariff remained at this low level only two months,
when it gave place to another tariff with higher duties; the average
of the duties levied _ad valorem_ was 33 per cent, while some duties
rose far above this rate. Finally, from 1846 until the Civil War, the
country was under a low tariff; duties were reduced until the maximum
protective duty was 24 per cent, while the general level was about 20
per cent.

=657. Effect of the tariff on industrial development.=—What effect
did the tariff policy have upon the industries and the commerce of
the country? To this question the only safe answer is that the effect
of the tariff was much less, for good or for bad, than has commonly
been stated by writers on either side of the controversy between
protection and free trade. The country has grown rich from the wealth
of its natural resources and the character of its people. The tariff
diverted into manufacturing more people than would otherwise have
chosen that branch of production, but it did not succeed in making
them all prosperous. Manufactures which were suited to the conditions
of the time, as the cotton manufacture, grew strong under the tariff,
and would have grown strong without it; other manufactures, such as
those of iron and wool, were still feeble after years of protection.
Commerce must have felt the effect of the tariff, for protection could
be effective only as it restricted the exchange of wares with foreign
countries. We are tempted to ascribe the rapid increase in imports and
exports after 1846 to the reduction in duties. Yet, even here, many
other influences favored the growth of our foreign trade, and it is
impossible to determine which of them all was most effective.

=658. Changes in the relative importance of shipping ports; southern
ports and the export trade.=—In the course of this period the
development of new land in the West and Southwest, and the rise in
importance of the cotton crop, effected some notable changes in the
relative rank of the ports of the country. Measuring importance by the
value of the domestic exports, we find that New York now held the first
place; this port was in 1860 the shipping point for nearly one third
of the total export values of the country. A considerable part of the
value of exports from New York, however, was formed of precious metals,
attracted there by the banks and the facilities for rapid voyages on
passenger vessels. If we confine ourselves to the shipment of ordinary
merchandise, we find that New York, in spite of the western connections
afforded by the railroads and the Erie Canal, took second place,
showing but two thirds of the export values leaving the country by way
of New Orleans. This port was the natural outlet for the cotton-growing
country of the lower Mississippi valley, and its export of the one
ware, cotton, exceeded in value all the merchandise shipped from New
York. It was cotton, again, that gave standing to the ports next in
rank, Mobile, Charleston, and Savannah; the exports from these cities,
aside from that single staple, were insignificant. Old ports like
Boston and Baltimore had sunk to the sixth and seventh place, while
Philadelphia, once the leader, was still lower on the list, and was
outranked by San Francisco, if the gold shipments from that port be
counted.

=659. Northern ports and the import trade.=—The reader who remembers
what has been said above about the triangular course of trade in this
period will not be surprised to learn that the figures of imports tell
a very different story. New York enjoyed an import trade nearly double
that of all the other ports of the country together; it was the great
distributing point for European manufactures, from which the various
ports of the country secured most of their supply. Second in rank, but
separated by an immense interval, was another northern port, Boston;
while New Orleans was but a poor third, and Philadelphia and Baltimore
followed in the order named. Other southern ports, ranking high in the
value of their exports, had only an inconsiderable import trade.

=660. Changes in the direction of trade. New character of the trade
with England.=—There had been changes also in the direction of our
trade abroad. The following brief table gives figures in round
millions, for 1860, which may be compared with the figures for 1790
given in section 586.

It will be noted that our trade with English-speaking people formed
still the most important part of our total commerce. A noteworthy
change had taken place, however, in our trade with the British
possessions. At any earlier period we imported from them far more than
we could sell to them in return; the balance of trade was against
us, as men said. This condition had been reversed by the rise of the
cotton trade, and was to be still further affected by our export of
foodstuffs. Great Britain was now dependent on us for the raw material
of her most important manufacture, and was seeking from us also
increasing supply of food, for her factory population.

  =====================================+=========+========
                                       | Exports | Imports
  -------------------------------------+---------+--------
  Great Britain and her dominions      |     228 |    177
  Including Canada                     |  11     | 18
        British West Indies            |   5     |  1
  France and her dominions             |      57 |     43
  Spain and her dominions              |      20 |     44
  Including Cuba                       |  11     | 34
  =====================================+=========+========

=661. Trade with Canada and the West Indies.=—Our trade with Canada was
of comparatively recent growth. Restrictive duties had formerly checked
exchange with our northern neighbor, but as population and industries
developed on either side of the frontier a demand for greater freedom
of exchange made itself felt; duties were reduced, a reciprocity treaty
was negotiated (1854), and under it many articles were exchanged free
of all duties.

It will be noted that trade with the British West Indies had not
developed to a similar degree; and it would be apparent, if other
figures were included in the table, that our West India trade in
general was far less important than it had been in the earlier period
of our history. Trade with the French and the Dutch West Indies was, in
fact, less in 1860 than in 1790. Among all the West India islands Cuba
alone was a prominent exception to this tendency to decline. Slavery
was still maintained in that island; and the sugar industry, which had
felt severely in other islands the abolition of slavery, continued to
flourish there.

=662. Expansion of American commerce in Europe, South American, and the
Far East.=—It may be said, in general, that our commerce had broken
through the rather narrow bounds which had formerly directed so much
of it to England and to the West Indies. We were building up our trade
with the continent of Europe. Our trade with France had increased
greatly under the liberal commercial policy of Napoleon III, and we
were establishing profitable connections with other European states, as
is shown by the following figures for our total trade with them in 1860
(millions of dollars): German states 33, the Netherlands 10, Italian
states 9.

Still more noteworthy is the extension of our commerce to the South and
to the Far East. During the period under review the states of Central
and South America had won their independence from Europe, and were now
free to establish such trade relations as they chose. With Mexico and
various states of South America (especially Brazil and the Argentine
Republic) we had in 1860 a commerce amounting to about sixty million
dollars. Our trade with China amounted to about twenty million; and
while our trade with Japan (about $150,000) gave no immediate reward
for the American enterprise which had opened the ports of that country,
it was at least a promise for the future.


QUESTIONS AND TOPICS

 1. See sect. 695 for figures of imports which may be charted for
 comparison with later development.

 2. How did the import trade of the U. S. compare with that of England
 at about this time?

 3. Why was it cheaper for the Americans to buy manufactures abroad
 than to make them at home?

 4. What is the effect of a protective tariff, (_a_) on commerce, (_b_)
 on production, (_c_) on the price of the product?

 5. Industrial development, 1790-1860. [Wright, 132-142.]

 6. American coal fields. [Nicolls, part 1; commercial geographies.]

 7. Early transportations of coal by rivers and canals. [Nicolls,
 chaps. 17, 18.]

 8. Assuming that the protective duty on iron raised its price to
 purchasers, what must have been the effect on manufactures and
 transportation? [Compare the sections on Russia, above.]

 9. Development of the American iron industry before 1860. [Taussig;
 Depew, chap. 46 by Huston; Swank.]

 10. Difficulties of the woolen manufacturer. [Taussig; North in Depew,
 p. 482.]

 11. Contributions of the U. S. to improvements in machine tools.
 [Depew, chap. 49 by Sellers.]

 12. Cotton manufactures in the South before the war. [DeBow, 1: 233,
 2: 101 ff., 3: 24 ff.].

 13. Industrial conditions at the close of the War of 1812. [Histories
 of U. S. by McMaster and Henry Adams.]

 14. Tariff of 1816. [Taussig.]

 15. Why was the South opposed to protection in this period? [Review
 the description of the industries and commerce of North and South, and
 try to see what effect a protective duty on manufactured wares would
 have on Southerners.]

 16. Study in detail the influences, economic and political,
 determining the character of _one_ of the following tariff acts: 1824,
 1828, 1832, 1833, 1842, 1846, 1857. [Tariff histories by Taussig and
 others; narrative histories of the U. S.]

 17. Study the commercial history of one of the ports named, sects.
 645-6. [Local histories; Encyclopedias.]

 18. Commerce of the South before the War. [Maury in DeBow, vol. 3, 1
 ff.]

 19. Reviewing the list of ports, which of the following factors seems
 to have been most important in determining their relative rank in the
 import trade: nearness to Europe, excellence of harbor, facilities
 for distributing goods by waterways, railroad facilities? Can you add
 other factors of importance to the list?

 20. Make a chart of the figures, sect. 660, and compare it with the
 chart for the earlier period.

 21. Effect on commerce with Canada of the reciprocity treaty of 1854.
 [Haynes, Robinson.]

 22. History of the commerce between the United States and South
 America. [Rutter; Curtis in Senate Exec. doc., first session, 51st
 Cong., vol. 8; check list 2685.]

 23. Development of American commerce in the Pacific. [Callahan.]


BIBLIOGRAPHY

 See chapter xlviii.




CHAPTER LI

NATIONAL DEVELOPMENT, 1860-1914


=663. Survey of commercial development, 1860-1914.=—In the chapters
introductory to the history of commerce in the nineteenth century,
attention was directed to the increasing rapidity of movement, which
makes the second half of the century a period by itself, distinguished
above all others by its wonderful commercial development. That the
United States enjoyed a full measure of the world’s progress in
commerce is shown by the following table, which gives the figures of
imports and exports in millions of dollars.

  ==========+=======+========+=======+=======
            |       |Domestic|Foreign| Total
            |Imports| exports|exports|general
  ----------+-------+--------+-------+-------
  1860      |   534 |    316 |    17 |    687
  1870      |   436 |    377 |    16 |    829
  1880      |   668 |    824 |    12 |  1,504
  1890      |   789 |    845 |    13 |  1,647
  1900      |   850 |  1,371 |    24 |  2,244
  1910      | 1,557 |  1,710 |    35 |  3,302
  1913      | 1,813 |  2,429 |    37 |  4,279
  ==========+=======+========+=======+=======

Prices were falling in the last quarter of the century, so that the
figures in the text, giving the value of imports and exports, do not
do justice to the growth in the physical volume of trade. On the other
hand prices began to rise just before 1900 and, therefore, the figures
exaggerate the increase of trade in the most recent period. Prices of
1913 were, however, only about one-third higher than in the decade
1890-99 so that after allowance is made for their rise the growth of
American commerce in this period remains extraordinary.

=664. Internal development of the country.=—During this period the
natural growth of population was augmented by a steady stream of
immigration, which has increased with time and has made to appear small
in comparison all previous movements of people to the country. In
spite, however, of this growth, the increase in the value of foreign
trade has been even more rapid, and the share contributed by the
average person to the commerce of the country was greater at the close
of the century than at any previous period. The average inhabitant had
in 1913 a share of about $18 in the imports, and of about $25 in the
exports.

While the preceding period was called the period of national expansion,
the period lasting from the Civil War to the close of the century may
fitly be termed that of national development. The population continued,
it is true, to spread out within the national frontiers. It occupied
the great plains leading up to the Rocky Mountains region, and the
strip of fertile land along the Pacific Coast, and penetrated the
mountains and semi-arid region in all parts where mineral wealth and
agricultural possibilities promised returns to the laborer. The most
striking feature, however, in the progress of the last forty years
has been not so much the breaking-in of new territory as the improved
means adopted for making the most of all resources, in old and new
territory alike. Improvements of a technical character have transformed
the methods of transportation and manufacture, and new methods of
cooperation have changed the aspects of business life completely.

The first subject requiring attention is the development of the
transportation system.

=665. Extension of railroads.=—In the recent history of the
transportation system of the United States the most noteworthy feature
has been, of course, the development of railroads. The railroad mileage
of the country in 1860 was divided almost equally between the North,
the South, and the West, each section having roughly 10,000 miles.
The section which felt most keenly the need of increased railroad
facilities was the agricultural West, where the products of rich farm
lands were wasted and where corn was not infrequently used for fuel,
for lack of means to reach a market. After 1860 the railroads were
rapidly extended through the upper Mississippi Valley, and in 1869 the
first transcontinental route was completed (Union and Central Pacific).
Railroads reaching out like feelers into new regions attracted
population and stimulated traffic not only in the new country but also
in the older settled districts, where the opportunities for profitable
business were multiplied by the increased supply of raw materials and
by the widened market for finished products. Old lines were extended
and new lines were built until, in 1913, the mileage of the country had
risen from about 30,000 as it was in 1860, to over 250,000, showing an
average gain of about 40,000 miles in a decade, a greater amount than
the total of 1860.

=666. Improvements in the operation of railroads.=—Equal in
practical importance to the extension of the railroad system were
the improvements effected during the period in the construction and
operation of the lines. This was the time in which steel rails and
bridges were introduced, which permitted the use of more efficient
locomotives, drawing heavier trains, and so reducing the expense of
carriage. Lines which had been constructed in short sections under the
control of different companies were now merged in great corporations,
operating thousands of miles of track. The railroads had previously
been so independent of each other that there was not even a standard
gage for the track; some lines set the rails 6 or even 7 feet apart,
a California law fixed the gage in that State at 5 feet, while the
Missouri Pacific had a gage of 5 feet 6 inches. A difference in
gage necessitated, of course, the unloading and reloading of wares
in passage from one line to another, and prohibited distant freight
movements. Soon after 1860 a movement toward the present standard,
4 feet 8-1/2 inches, brought a uniform gage into use, and when the
consolidation of railroads was under way there was no longer a thought
of varying from the standard. The first consolidation of a through line
from Chicago to the sea was effected in 1869 under the management of
Cornelius Vanderbilt (Lake Shore and Michigan Southern and New York
Central and Hudson River); and the movement soon spread to other lines
(Pennsylvania, etc.). The benefits were greater than the reader may
be inclined to suppose. The management of railroads was made at the
same time more efficient and less expensive; uniformity of policy was
established in such matters as the track gage; and, most important, a
new policy of freight rates, designed to stimulate distant shipments,
became practicable.

=667. Reduction of railroad rates.=—The charges for freight movements
before 1860 rarely fell below 2 cents per ton-mile. Railroad managers
believed that the lowest rates which they could profitably make were,
roughly, 2 cents for heavy agricultural produce, 3 for groceries,
4 for dry goods. The improvements effected in road-bed and rolling
stock after 1860 suggested the possibility of reducing rates, and the
reorganization of small railroads in large systems made it possible
to institute reductions to stimulate distant freight movements. The
results exceeded all expectations. The railroads found that a reduction
brought such an increase of traffic that the lower rates were not only
an advantage to the shippers, but also a benefit to themselves; and
rates have fallen almost constantly in the course of the period. In
1914 the average freight rate was only three quarters of a cent per
ton-mile, and some of the lines between Chicago and the Atlantic coast
had reduced their charges very close to half a cent.

=668. Contribution of the railroads to recent national
development.=—The importance of this change in a country of great
distances can scarcely be exaggerated. It has transformed the railroad
from a luxury for the use of passengers and high-class freight
to a necessity for the producers and consumers of the commonest
articles. In 1860 even a ware like wheat could not pay the expense
of transportation over a distance exceeding many hundred miles, and
distant freight traffic was restricted to manufactures and the most
valuable of farm products, such as live stock. The reduction in
charges has opened a profitable market for the commonest agricultural
products of distant western States, and has made accessible the natural
resources of all kinds, which otherwise would count for nothing among
the economic assets of the country. In 1913 more than half of the
tonnage carried on the railways of the United States consisted of
ores, coal, and other products of mines, which could scarcely have
been carried at all in 1860. The railroads now carry a tonnage far
exceeding that transported through other channels (rivers, lakes,
canals, and coasting trade); and it may be said in sober earnest that
a considerable proportion of the people in the country would starve,
without the means of earning a livelihood, if the railroad improvements
that have come since 1860 were suddenly swept away.

Some idea of the growth of railroad service in the United States in
recent years can be gained from the accompanying brief table, which
pictures the contribution of the railroads in their two important
activities, the carriage of freight and the carriage of passengers.

  RAILROAD SERVICE IN THE U.S., 1890-1910
  (_Figures in milliards: 000,000,000 omitted_)

  ==============================+======+======+======+======+======
                                | 1890 | 1895 | 1900 | 1905 | 1910
  ------------------------------+------+------+------+------+------
  Tons carried one mile.        |  77  |  85  | 141  | 186  | 255
  Passengers carried one mile.  |  11  |  12  |  16  |  23  |  32
  ==============================+======+======+======+======+======

=669. Relative decline in transportation by canals and rivers.=—The
development of the railroad system has not entirely done away with
the previous systems of internal transportation, but it has reduced
them to subordinate importance. The decline is especially noticeable
in the case of canals. Even in 1880 nearly half of the total canal
mileage had been abandoned and a large number of the canals remaining
in operation were not paying expenses. The cost of transportation on
the canals has been reduced by deepening them to take in larger boats;
tolls have been entirely abolished, as in the case of the Erie Canal;
and still the superior speed and certainty of transportation by rail
have robbed the canals of the bulk of the traffic. Some of the river
routes have fared better. The Mississippi River system, notably, is
still an important channel of trade, but even in the territory it
serves the railroads far outrank it in importance, and most of the
inland waterways have lost their previous significance.

=670. Importance of the Great Lakes; St. Mary’s Canal.=—While the
country could now renounce, without very serious loss, the rivers and
canals which were formerly so important as means of transportation, it
could ill afford to dispense with the Great Lakes along its northern
boundary. In the first half of the century Lake Erie was a useful
means of communication with the growing States of the West, and gained
greatly in importance with the construction of canals after 1825. It
was not until the second half of the century, however, that the three
western lakes showed their possibilities as channels through which the
national resources might be conducted to districts where they could be
best utilized. Between 1860 and 1900 the tonnage on the Great Lakes
grew sixfold, and increased even more in carrying capacity as wooden
sailing vessels gave place to large steel steamers. Freight rates have
fallen below one tenth of a cent per ton-mile, and immense amounts of
ore, coal, grain, and lumber have thus found a cheap means of access to
market.

In 1855 a canal was completed to avoid the rapids in St. Mary’s River
at the outlet of Lake Superior, and this canal, since deepened and
improved, has become one of the great commercial channels of the world.
The Lake Superior region has proved to be wonderfully rich in iron,
copper, timber, and other products essential to modern industry. In
1913 the tonnage of vessels passing through the St. Mary’s Canal was
greater than the tonnage entering the seaports of the United States
from all foreign countries, and was more than double the tonnage
passing through the Suez Canal.

=671. Decline of American shipping.=—In contrast with the great
development of the means of internal transportation we have to note,
in this period, a decided decline in the American shipping engaged in
foreign trade. The total tonnage of the country was in 1913 nearly
double what it had been in 1860, and entitled the United States to
a position high up among trading countries. About one third of this
total, however, was employed on the Great Lakes, and most of the
remainder was engaged in the coasting trade. Both of these branches of
navigation could be, and were, protected by law against the competition
of foreign ship-owners. The trade of this country with other countries,
however, could not be restricted to American vessels without danger of
retaliation; and the attempts of the United States to favor its own
vessels in foreign trade, by taxing foreign vessels at the port of
entry, had been given up before 1860. Now in this branch of shipping,
in which the vessels of all countries of the world compete on equal
terms, the tonnage of the United States declined from 2.5 million in
1860 to 1.0 in 1913.

=672. Effect of the Civil War on the merchant marine.=—Of this great
loss in tonnage the larger part fell in the years immediately following
1860, the period of the Civil War. The southern States, unable to break
the blockade which closed their ports and prevented the sale of their
cotton, sought to retaliate by loosing swift cruisers to prey on the
ships which sailed under the United States flag. The most celebrated
of these cruisers, the _Alabama_, was fitted out in England, and for
two years, until its destruction by the _Kearsarge_ in 1864, haunted
the chief routes of trade, and captured no less than 69 vessels. Other
cruisers were less successful, but altogether 261 Northern vessels were
taken. The fear of capture caused a decline in tonnage far greater
than the actual losses at sea; American ship-owners found their
profits eaten up by heavy insurance charges, and sold their vessels to
foreigners, who could navigate them in safety under a neutral flag.
Altogether the country came out of the war with about a million tons of
shipping less than it had owned at the beginning.

=673. Other causes of decline.=—The American merchant marine would have
recovered from the losses of the war but for other difficulties which
it faced. This was the period in which steamers began to gain rapidly
on sailing ships, and in which iron began to be extensively used in
ship-building. The Americans had at this time neither the resources
nor the experience to compete with the English in the new forms of
naval construction, and even before the war it was apparent that the
English were drawing ahead. Moreover, the war had, indirectly, a great
influence on the fortunes of American shipping, for it led to a great
increase in the tariff and to heavy taxes of all kinds. It cost more
both to build and to navigate an American ship than it had cost before
the war or than it cost an English owner. Add to these influences the
fact that the country was just entering the period of great railroad
extension, and that the West now offered wonderful opportunities for
the investment both of labor and capital; and it is not surprising that
the American people turned from the sea to the land, and resigned the
high position which they had formerly held in foreign carrying-trade.

=674. Recent position of the merchant marine.=—Since 1860, therefore,
the United States has relied mainly upon foreigners to carry its
freight across the seas. Of the tonnage that cleared from ports of the
United States for foreign countries in 1913 about one quarter sailed
under the American flag. The effective service of American ships
did not, however, correspond to this proportion; they carried only
about one-tenth in value of the exports that went out by sea. Various
attempts have been made to stimulate the construction and navigation of
American ships by the grant of subsidies from the national government,
but the success has been very moderate, and the people have been in
general unwilling to levy taxes for the support of this particular
industry. In one respect legislation has become more liberal; the
Panama Canal Act of 1912 made it at last possible, under somewhat
severe restrictions, to register under the American flag foreign built
vessels engaged in foreign trade.

=675. Development of national manufactures.=—Part of the energy
diverted from the sea found a fruitful field of labor in the developing
manufactures of the country. The period from 1860 to 1914 marked the
advance beyond the age of trial and experiment in the history of
American manufactures; at the close of this period the United States
was the greatest manufacturing country of the world, supplying most
of its own requirements for manufactured wares, and producing a
large surplus for export to other countries. The development of the
transportation system was the indispensable condition of this progress.
The railroads have brought all parts of our great national domain so
closely together, in a commercial sense, that the choicest natural
resources of the continent have been made available at the centers
of production. Abundant labor has been supplied both by the growth
of the native population and by the increasing flow of immigrants.
Leaders have arisen from the people, stimulated to energy by the rapid
promotion which has been granted on proof of signal ability; and the
necessary capital has been contributed by investors in all parts of
the world, who have sought eagerly the opportunity to share in our
industrial gains. Finally, our factories have enjoyed an advantage
beyond those of any country, in the great market which has stood
waiting to receive their products. Within boundaries, each of which
measures thousands of miles, lay an area absolutely free to trade,
provided with the most efficient instruments of transportation and
communication, and settled by a people numbering nearly a hundred
million, of prosperous producers and educated consumers.

=676. Coal production and the use of steam power.=—Not until this
period did the country realize the full value of its hidden mineral
wealth. The coal deposits of the United States are thought to be richer
than those of any other whole continent, and the Ohio Valley has coal
mines together with iron deposits and rich agricultural resources in
a combination which is unmatched. The coal production of 1860 (13
million tons) was considerably larger than in previous decades, but
it seems insignificant in comparison with 240 million of 1900, or
the 509 million of 1913. Bituminous coal, the kind chiefly used in
manufactures, formed only one third of the total output in 1850 and
only one half even in 1870, while in 1913 it comprised four fifths of
the whole. In coal production the United States now led the world.

The vast increase in the coal product was used in innumerable ways,
but it found its chief employment in furnishing motive power to the
transportation system, and to the factories of the country. In studying
the history of coal production one is inclined to say that the country
did not really enter the age of steam until after the Civil War. The
total horse-power employed in manufactures in 1869 (2.3 million), was
derived from steam and water in almost equal proportion. In the period
closing in 1914 the power employed increased about ten-fold (to 22.5
million), and of the increase steam supplied nearly three-quarters.

=677. Machinery.=—That the Civil War really marks a dividing line in
our industrial progress is shown by the history of the Patent Office;
within a few years after the close of the war the number of patents
granted increased greatly, and the new level thus established was
steadily maintained. American machine manufacturers made in this
period their great contributions to mechanical progress: the system
of interchangeable parts, automatic and specialized machines, the
utilization of by-products, etc. Brass screws at one time could
be produced only at great expense; it is characteristic that some
manufacturers would now make them absolutely free of charge, if the
customer would furnish the brass rod and would allow them to keep the
chips of brass which were cut off in the process.

It is impossible here to trace the history of manufactures in
detail, but a single manufacture, that of carpets, may be taken for
illustration. In the carpet industry about 1835 modern factory methods
were unknown; weavers worked at home with old-fashioned hand looms,
producing 7 or 8 yards of inferior carpet per day. Power looms were
invented, and were introduced little by little, but even after the
Civil War nearly half the carpets were still woven on hand looms.
Since that time has come the great advance in the industry, by the
introduction of improved power machinery, which has reduced the price
of fine tapestries and Brussels to that formerly paid for the rudest
ingrain, and which has stimulated an immense increase in consumption.

The rapid development of the national manufactures in this period may
be shown by brief statistics, in thousand millions of dollars; the
capital invested grew from 1.0 to 22.8 while the value of the product
grew from 1.9 to 24.2.

=678. Extension of manufactures in the West and South.=—There had been,
moreover, a noteworthy change in the distribution of manufactures
throughout the country. The northeastern States had greatly extended
their manufacturing plants, and relatively to population no European
state rivalled New England in output: but American manufactures had
extended also into the West and the South. The southern States, instead
of sending their raw cotton to the North or to Europe, began to
manufacture it in increasing quantities, and now competed with northern
mills for the markets of the Mississippi Valley. The development of
iron production in the South was phenomenally rapid. The rich coal
and iron fields of the Southern Appalachian range were opened, and
contributed now an important share of the total output, while large
industrial centers were growing up in Chattanooga, Birmingham, and
other Southern cities.


QUESTIONS AND TOPICS

 1. Chart the figures as before; if the same scale is used the chart
 may be pasted to that previously made.

 2. Industrial aspects of the Civil War. [Wright, 143-158.]

 3. The population of the country was as follows, in round millions:
 1860, 31; 1870, 39; 1880, 50; 1890, 63; 1900, 76; 1910, 92. Calculate
 the commerce per capita, and insert the line on the chart.

 4. What has been the gain in population of your own State in this
 period, compared with earlier periods? [Abstract of the Census.]

 5. Write a report on the history of one of the western railroads. [Cy
 Warman, Story of the railroad, N. Y., Appleton, 1898, $1.50.]

 6. Technical improvements in railroads. [See references in chap. xxx,
 and Johnson, chap. 4.]

 7. Development of railroad organization. [Hadley, chap. 5.]

 8. Contributions of railroads to industrial development. [Hatfield,
 Lectures, 81 ff.]

 9. Freight service of the modern American railroad. [Johnson, chap. 9.]

 10. Present and future of the Erie Canal. [Encyclopedia; Poole’s
 Index.]

 11. Possible future of ship canals in the United States. [Report of
 the Deep Waterways Commission, House Doc. 192, 54th Cong., 2d. sess.]

 12. River transportation in the Mississippi Valley. [Abbot, chap. 8;
 Census, 1890, Transportation by water, pp. 393-465; Report of Indust.
 Comm., 1900, 9: clxxxiv-clxxxviii.]

 13. Place of the Great Lakes in our modern transportation system.
 [Tunnell; Marvin, chap. 17; Abbot, chap. 7.]

 The St Mary Canal. [Tunnell; Fairlie, Ship canals, p. 67 ff.]

 14. What would be the effect on lake traffic of commercial union with
 Canada?

 15. The coasting trade of the United States. [Marvin, chap. 15; Van
 Metre in Carnegie History, vol. 1, chap. 20, 21.]

 16. Effect of the Civil War on shipping. [Marvin, chap. 14; Cambridge
 Mod. Hist., vol. 7, chap. 17, by Wilson; Rhodes, Hist.]

 17. Decline of American shipping since the War. [Marvin, chaps. 16,
 18; Wells.]

 18. The question of subsidies. [Ringwalt, Briefs.]

 19. Ship building in the United States. [Depew, chap. 18 by Cramp;
 B. Taylor in Fortnightly Rev., 1899, 71: 284-299; John H. Morrison,
 History of New York ship yards, N. Y., 1909.]

 20. Taking the heads suggested (natural resources, labor, capital,
 means of transportation, market), how would the following countries,
 in your opinion, compare with the United States as a field for the
 development of manufactures: Belgium, China, Germany, Russia, France?

 21. Industrial development, 1860-1890. [Wright, 159-188.]

 22. Transportation of coal by railroads. [Nicolls, chaps. 19, 20, 21.]

 23. Geography and organization of the coasting trade in coal.
 [Nicolls, chap. 22.]

 24. Methods employed in American coal mines. [Nicolls, part 2.]

 25. Power employed in manufactures. [U. S. Census, Manufactures,
 General report, Abstract of the census of manufactures.]

 26. The New South. [Coman, 292-298.]


BIBLIOGRAPHY

 BIBLIOGRAPHY.—See chap. xlv and add: Poole’s Index and its
 continuations, Annual library index and Readers’ guide to periodical
 literature; debaters’ handbooks, ed. R. C. Ringwalt, E. R. Nichols,
 and Debaters’ handbook series.

 GENERAL.—Wells, **Rec. econ. changes; Edward Atkinson, *Industrial
 progress, N. Y., 1890, *Distribution of products., N. Y., 1892; H. R.
 Hatfield, ed., *Lectures on commerce, Chicago, 1904; J. F. Rhodes.
 *History of U. S., N. Y., 1893 ff.; R. Mayo-Smith and E. R. A.
 Seligman, **Commercial policy, 1860-1890, Leipzig, 1892.

 SPECIAL.—Railroads: J. Moody, **The railroad builders, New Haven,
 1920; Cy Warman, *The story of the railroad, N. Y., 1898; C. F.
 Adams, Jr., and Henry Adams, Chapters of Erie, Boston, 1871. Lake
 trade: J. C. Mills, **Our inland seas, Chicago, 1910; G. Tunnell,
 *Transportation on the Great Lakes, Jour. of Pol. Econ., June, 1896,
 4: 332-351; Charles Moore, editor, The Saint Marys Falls canal,
 Detroit, 1907, S. V. E. Harvey, Jubilee annals of the Lake Superior
 ship canal, Cleveland, 1906. Industrial: H. Thompson, **The age of
 invention, New Haven, 1921; J. W. Roe, *English and American tool
 builders, New Haven, 1916; B. E. Hazard, Organization of the boot
 and shoe industry before 1875, Cambridge, Harvard Press, 1921; M. T.
 Copeland, The cotton manufacturing industry, Cambridge, 1912.

 SOURCES.—Material in government documents becomes in this period much
 richer and more varied. Beside the reports on Commerce and Navigation
 (including many special reports on Internal Commerce) and Commercial
 Relations, see the Statistical Abstract, Monthly Summary of Commerce
 and Finance (including current statistics and useful monographs),
 the Census, Reports and Statistics of the Interstate Commerce
 Commission, Report of the Industrial Commission, 1900-02, Reports of
 the Tariff Board and Tariff Commission (including noteworthy reports
 on cotton and wool manufactures, 1912.) The Bureau of Manufactures,
 later termed Bureau of Foreign and Domestic Commerce, issued in its
 Miscellaneous series, a number of reports useful for a survey of
 commercial conditions just before the outbreak of the World War; no.
 11., American manufactures in foreign markets; no. 14, Annual review
 of the foreign commerce of the U. S., 1913; no. 15, Trade of U. S.
 with the world, 1912-13; no. 38, do. for 1914-15; no. 23, Trade of the
 U. S. with other American countries, 1913-14; no. 33, Ports of the U.
 S. (terminal facilities, commerce, port charges, etc., at 68 selected
 ports).




CHAPTER LII

EXPORTS, 1860-1914


=679. Chief exports in 1913.=—The principal items of the export trade
of the United States in 1913 are given in the following table, with
which should be compared the table in section 633.

  EXPORTS OF U.S., 1913, MILLIONS OF DOLLARS

  Cotton                                           547
  Iron and steel and manufactures                  305
  Breadstuffs                                      211
  Provisions, including dairy                      154
  Copper and manufactures                          140
  Mineral oils                                     137
  Wood and manufactures                            116
                                                 -----
      Total of these items, omitting decimals    1,610
      Total exports of domestic merchandise,
          including items omitted                2,429
      Total foreign exports                         37
      Exports of precious metals                   149

=680. Noteworthy changes since 1860.=—The table shows that in one
general respect the export trade of the country remained unchanged;
seven items made up nearly two thirds of the immense total of the
exports. While the country continued to rely upon a few great staples
for the means of purchasing foreign wares, there had been since 1860
some noteworthy changes in the relative rank of the chief items and
in the general character of the export trade. Cotton continued to be
a leading item, and was still at the head of the list in 1913. In
intervening years it had for a time yielded first place to breadstuffs;
and another item associated with the agriculture of the northern
and western states, provisions, had risen to prominence. This item
includes dairy products as well as various kinds of meat, but does
not include live animals. In general, however, the agriculture of the
country no longer occupied the commanding position which it had once
held in our export trade. In 1860 American agriculture supplied more
than four fifths of the value of domestic exports of the country;
in 1913 it supplied less than half. American industry had become
diversified. While the country still depended largely on the raw
products of its natural resources for the means of exchange in its
foreign trade, it had broadened the field of its activities to include
its mineral as well as its agricultural wealth, and had begun to sell
an increasing share of its products in the form of manufactured or
partly manufactured wares.

=681. Change in character of the export trade.=—The change in the
general character of American export trade through this period can
be best illustrated by comparing the whole group of foodstuffs,
both raw and manufactured, with the group of industrial products
(manufactures for further use in manufacturing, and manufactures ready
for consumption). The table of figures shows that in the generation
from 1880 to 1910 these two groups practically changed places in the
part that they played in American export trade. The value of the total
product of agriculture at home did not cease to grow, and indeed rose
rapidly and steadily. The home market, however, grew so fast that the
surplus available for export remained nearly stationary, and formed a
constantly smaller part of the expanding total. The country began to
look to its industrial resources to buy what it wanted from foreign
lands.

  ===============+=========================+=========================
  Exports of U.S.|         Foodstuffs      |         Manufactures
  ---------------+--------------+----------+--------------+----------
    Fiscal year  |Value millions| Per cent |Value millions| Per cent
                 |  of dollars  | of total |  of dollars  | of total
  ---------------+--------------+----------+--------------+----------
        1880     |      459     |    55    |     121      |     14
        1885     |      325     |    44    |     150      |     20
        1890     |      356     |    42    |     178      |     21
        1895     |      318     |    40    |     205      |     25
        1900     |      545     |    39    |     484      |     35
        1905     |      401     |    26    |     611      |     40
        1910     |      369     |    21    |     766      |     44
        1912     |      418     |    19    |   1,020      |     47
  ===============+==============+==========+==============+==========

[Illustration: Products of the United States.]

=682. Reasons for the increase of agricultural exports.=—The great
growth in the exports of northern agricultural products was due to the
improvements in transportation, which opened the markets of the Old
World to the food supplies produced so abundantly in the New. There is
general agreement that no other part of the earth’s surface presents
an area that can compare in quantity and quality of agricultural land
with the Mississippi Valley. The larger part of this area still awaited
cultivation at the close of the Civil War, and was brought under the
plow in the period following it. Good land could be had free of charge
by settlement under the homestead laws, or could be bought for prices
little above what European farmers had to pay as rent or interest.

=683. Improvement of agricultural implements.=—The productiveness of
American agriculture was furthered in this period by still another
factor, the improvement of farm implements and machinery. American
ingenuity, always proverbial, applied itself to the problem of getting
the largest crops with the least labor, and devised means which were
peculiarly suited to the conditions of the country and the times. The
automatic reaper, on which inventors had long been working, had become
a practical success by the middle of the century, and spread rapidly
after its merits had been advertised at the Crystal Palace in 1851. An
agricultural writer expressed himself as follows in 1866: “The reaper
and mower have become ‘institutions’—a necessity, and no farmer of any
standing ignores their use. The machinery for raking and loading hay in
the field, and the unloading in the barn and on the stack, the potato
digger, the corn cutter, the bean puller, the cultivator, the corn
and bean planter and seed sower, threshing machines, corn shellers,
fanning mills, straw and root cutters, hay rakes, tile ditchers, &c.,
&c., though not all of recent introduction, have all been greatly
simplified and improved; in short every implement of farm husbandry,
from the hoe to the reaper, has undergone various transformations for
the better since the late change of the times....”

Every step in advance led to another. The reaper was displaced by the
harvester, which accomplished the same results with less labor; and
this in turn gave place to the twine binder, which showed still greater
efficiency.

=684. Wheat and flour.=—The leading place among the breadstuffs
exported fell to wheat. A large part of the American wheat crop had
found its market in the southern States, before the Civil War. The
closing of this market by war threw the whole surplus on Europe, and
the wheat exports increased actually ninefold from 1860 to 1863. They
declined for a time, when the South was opened to trade, but rose
again as the soldiers from the disbanded armies and other colonists
settled on the western prairies; and about 1880 grew to very large
figures. The method of transportation was improved by building great
elevators and introducing machinery to handle the grain at all points
of transshipment; a system of grading and classification enabled the
wheat to be carried in bulk, without regard to small specific lots;
and the charges for storage and movement fell greatly. The instruments
of modern transportation carried a ton of wheat from Minneapolis to
Liverpool for less than it cost a farmer, thirty years before, to haul
it by wagon a hundred miles.

For many years after 1860 most of the wheat was exported as grain, and
was milled abroad. The introduction of European improvements, producing
flour not by the old millstones but by gradual reduction between
rollers, established again the reputation of American flour; and about
half in value of the wheat export left the country in the manufactured
form.

=685. Indian corn.=—No other cereal compared in value with wheat
among the exports of the United States. In his “Indian corn speech,”
delivered in 1877, Tilden predicted a great increase in the export of
corn, which yields a much larger supply of food from a given area,
and hence can be sold more cheaply. The corn crop was one of the most
valuable assets of the country; it served not alone for food, but
supplied also raw materials for the manufacture of starch, alcohol,
glucose, etc. Its most important use, however, was for feeding and
fattening stock, and its contribution to the exports of the country was
mainly indirect, in the form of animals and animal products.

=686. Stock, meat, and dairy products.=—Live stock, chiefly beef
cattle, were exported in large quantities in this period; the railroads
offered every facility for bringing them to the seaboard, and special
steamers transported them across the Atlantic in about ten days.
Still more important, however, was the export of animal products.
The refrigerator car, patented in 1868, enabled the meat of animals
slaughtered in the West to be carried to market in all parts of the
country, and stimulated the development of an immense packing industry
in the regions where stock were raised and fattened. The export of
fresh meat, which began about 1875, increased constantly in the last
quarter of the century, and formed a considerable item. Of even greater
value was the export of bacon and hams, while lard, tallow, pickled and
canned meats contributed in varying proportions to the total of animal
products exported. The dairy products occupied a less important place
in foreign than in internal trade; and before the end of the period the
export of these products had declined to insignificance.

=687. Relative decline in importance of exports from the South.=—The
exports which have been considered hitherto come mainly, though by no
means exclusively, from the northern and western States. The South
contributed still one great item, cotton, but lost the commanding
position in the export trade which it held before the Civil War. It
would be a mistake, however, to suppose that the war was the cause
of this change. It did, for a time, nearly annihilate the commerce
of the South, and it absorbed so much of the capital as to cripple
productive power for a considerable period. It swept away the system
of slavery, and forced the people to adjust themselves to this most
serious of changes. It left untouched, however, the natural resources
of the country, and the New South, which has risen since 1880, devoted
itself to the task of developing these resources with energy and
success. Meanwhile, however, parts of the country which hardly counted
in foreign trade before 1860, had been brought within reach of the
seaboard, and had been settled by millions of active producers. The
balance of commercial power was thus changed, not by the decline of the
South but by the rise of other parts of the country.

=688. Cotton.=—English manufacturers, who had been in great straits for
cotton during the Civil War, and had in vain endeavored to find the raw
material in sufficient quantity and of satisfactory quality in other
parts of the world, returned gladly to their former source of supply,
the southern States. The cotton crop brought high prices, the records
of cotton production and export in the years before the war were soon
reached and surpassed, and the cotton culture continued to grow down
to the end of the century. There have been years since 1890 when the
price has fallen so low as to leave little profit for the producers;
and it has often been suggested that the South was suffering from an
over-production of its staple crop, and would fare better if it grew
less cotton and more of other crops. Southern farmers were constantly
advised to diversify their products. They seem to have followed this
advice to a certain extent, and have begun to furnish the northern
States with a considerable supply of food products, especially fruit
and vegetables, in direct contrast with the course of trade before the
Civil War when most of the food shipments were in the other direction.
They seem, however, to have found no substitute for cotton as an export
product, and have made that still their single great staple in foreign
trade.

=689. Export of mineral products: iron.=—It has been asserted by
an eminent geologist that North America is richer than any other
continent in the mineral substances which have most contributed to
the development of man. Every metal except tin has been found in
quantities of economic importance. We must concern ourselves here
chiefly with the one metal, iron, that which has held the chief place
in economic progress in recent times, and in the production of which
the United States has made surprising advance. Before 1860, as noted
above, the United States had merely followed England at a respectful
distance, in the methods of iron making. Since 1860 the iron makers
of America have outstripped all competitors, in the efficiency of
their methods and in the quantity of their output, and have made the
United States the leading country of the world in iron production. The
American iron industry has shown itself competent not only to meet the
immense demands of the home market, but also to produce for export in
competition with other countries the large amounts shown by the figures
at the opening of this chapter.

=690. Recent development of the American iron industry.=—The following
table shows that the advance of the iron industry was slow for a long
time, and that its present power is of very recent growth.

  =====+======================+=========================
       |                      |   COMMERCE IN MILLIONS
       |PRODUCTION IN MILLIONS| OF DOLLARS, IRON, STEEL,
       |        OF TONS       |     AND MANUFACTURES
       +-----------+----------+-----------+-------------
       |  Pig Iron |  Steel   |  Imports  |  Exports
  -----+-----------+----------+-----------+-------------
  1860 |     0.8   |          |     26    |      5
  1870 |     1.7   |   0.07   |     32    |     11
  1880 |     3.8   |   1.2    |     53    |     12
  1890 |     9.2   |   4.3    |     41    |     25
  1900 |    13.7   |  10.2    |     20    |    121
  1910 |    27.3   |  26.1    |     40    |    179
  1913 |    31.0   |  31.3    |     34    |    305
  =====+===========+==========+===========+=============

Among the causes contributing to this result one of the most important
has been the development of the rich ore deposits of the Lake Superior
region and Alabama. Economies in handling the ore, by means of steam
shovels and carriers, and in transporting it by water and railroad,
have enabled it to be brought to the heart of the coal and coke regions
at comparatively slight expense. In the reduction of the ore and in the
various processes of manufacture the American iron makers in recent
times have been quick to introduce improvements discovered in other
countries; and have themselves contributed important devices by which
the efficiency of the labor employed in iron manufacture has been
greatly increased.

=691. Machinery=.—The least valuable part of the iron export is that
which leaves the country in the raw or partly manufactured state. The
single item of machinery (electrical, sewing machines, locomotives,
typewriters, etc.), makes up nearly half the value of the iron and
steel exports; while other items (agricultural implements, cars,
bicycles, etc.), made up largely of iron and steel, would swell the
importance of the exports of iron manufactures still further, if they
were included in the list.

The Americans have recently taken the place of leaders among the
machine builders of the world, and no country, however high it may
have ranked in the past, can afford now to neglect the contributions
offered by American machinists. The cheapness of raw materials, iron
and steel, has aided the recent development of the American machine
industry, but has not caused it. We must look further, to the ingenuity
of inventors encouraged by a liberal patent system, and to the genius
of business leaders who have known how to make use of the contributions
of technical science to industrial efficiency. We must recognize
that the Americans got some positive benefit from the fact that they
entered late into this part of the field of production. They were not
tied to the past by heavy investments, or by methods sanctified by
tradition. Finally, we must note again the stimulus of the American
market, the broadest and richest in the world, constantly expanding and
offering unparalleled rewards to those who met its demands for improved
instruments.

=692. Copper.=—Copper is a metal which has long been prized as one of
the components of brass, and which has been still more highly valued
since the development of electrical industry has increased the field
of its use. Until after the middle of the century, however, the United
States had to rely upon foreign countries, chiefly Chile, for most
of its supply, and the importance of copper as an article of export
dates from recent times. The opening of the mines of the Lake Superior
region, the richest copper mines of the world, enabled the country
by 1860 to supply the demand for this metal from native sources, and
the later development, including new sources of supply in Arizona and
Montana, has furnished since 1880 a large surplus for sale abroad. The
copper mines of Michigan, which reach a depth of nearly a mile, are
said to be the best examples in the world of skilful and economical
mining, and improved processes of reduction have made available copper
ores which formerly would not pay the working.

=693. Petroleum.=—Even in colonial times the presence of mineral oil
in the country was known by the film which collected on the surface
of certain springs, and which took fire when a light was applied to
it. A well of oil which spouted fifty feet was discovered on the bank
of the Cumberland River in 1830, but, as stated in a book published
in 1853, “it was found to be useful only medicinally, and is bottled
and exported for that purpose.” The interest in this new product,
which seemed to offer possibilities beyond its use as a proprietary
medicine, led to the organization in 1854 of a “Rock Oil Company”; and
the first oil well was driven near Titusville, Pa., four years later.
Soon after 1860 the export of oil to foreign countries began, with
little idea that the trade thus started was to become one of the great
features of American foreign commerce. Mineral oil was in 1913 one of
the leading exports of the country, and would take a still larger place
in the exports as given at the beginning of this chapter if various
by-products, such as paraffin, were included in the figures.

=694. Development of the oil industry.=—The chief obstacle to the
development of the oil trade in its early years was the difficulty
of transportation. The extension of the railroad system after 1860
furnished the means of bringing the oil to market with profit, and in
recent times the transportation and manufacture of oil products have
been developed to wonderfully high efficiency. Tank cars have given
place to pipe lines; refineries have been extended and perfected, that
the reduction of the crude oil might be carried on with the greatest
economy and with full utilization of all by-products; and the market
for oil products at home and abroad has been enlarged by a great
reduction of prices.


QUESTIONS AND TOPICS

 1. Chart the figures, as previously suggested, for comparison with
 earlier conditions.

 2. What other parts of the world come nearest to the Mississippi
 Valley in quality and quantity of agricultural land? How do they
 compare in the character of the people, and the facilities for
 transportation?

 3. History of farm machinery. [Quaintance in Pub. Amer. Econ. Assoc.,
 1904, vol. 5, pp. 799-809; Census, 1900, 10: 341-377; Depew, chap. 50
 by Fowler.]

 4. Effect of improved farm machinery on production. [Quaintance, pp.
 810-826.]

 5. Agricultural progress, 1850-1900. [U. S. Census, 1900, 5: xvi-xxxv.]

 6. Cultivation of wheat in the U.S. [Edgar, Story, chaps. 7, 8.]

 7. The grain trade of the U.S. [Monthly Summary, Jan., 1900.]

 8. Grain elevators and warehouses. [Rep. Ind. Comm., 1900, 10:
 cccxvii-cccxxxix; Monthly Summary, Oct., 1903.]

 9. The flour milling industry. [Edgar, Story, chaps. 10, 11; Depew,
 chap. 39 by Pillsbury; U.S. Census.]

 10. What are the various products obtained from maize? [Encyc.;
 commercial geographies.]

 11. The packing industry. [Depew, chap. 55 by Armour; Census, 1900, 9:
 385-429, 1910, 10: 333-353.]

 12. The dairy industry. [Census, 1900, 5: clxv-clxxxvi; Rep. Ind.
 Comm., 1900, 6: 268-296.]

 13. Economic effect of the Civil War on the South [Cambridge Mod.
 hist., vol. 7, chap. 19 by Schwab; Rhodes, Hist. U. S.]

 14. The cultivation of cotton since 1860. [Hammond, pp. 120-228.]

 15. Recent development of the cotton trade. [Hammond, pp. 324-350; U.
 S. Mo. Summary, March, 1900; Depew, chap. 34 by Edmonds.]

 16. By-products of the cotton industry. [Depew, chap. 67 by Chaney;
 Census, 1900, 9: 585-594.]

 17. Recent history of the Virginia tobacco industry. [B. W. Arnold,
 History, Baltimore, 1897, $. 50.]

 18. Recent development of the American iron industry. [Depew, chap. 46
 by Huston; Crowell in International Monthly, 1901, 4: 211-250; Census,
 1900, 7: cxlix, 10: 1-77; Monthly Summary, Aug., 1900.]

 19. The steel industry. [Hatfield, Lectures, 131 ff.; Thurston in
 Century Magazine, 1900-1901, 61: 562-568.]

 20. The mining of iron ore. [Fawcett in Century Magazine, 1900-1901,
 61: 712-725; Census, Mines, 1902, pp. 393-431.]

 21. The transportation of iron. [Fawcett in Century Magazine,
 1900-1901, 61: 851-863.]

 22. Write a report on one of the following topics, using volumes of
 the U. S. Census, Manufactures, Reports for principal industries.

 (_a_) Manufacture of machine tools.

 (_b_) Sewing machines.

 (_c_) Typewriters.

 (_d_) Watches.

 23. Development of the American copper industry. [Depew, chap. 47 by
 Cowles; chap. 27, p. 182, by Rothwell; Census, Mines, 1902, 467-506.]

 24. The uses and production of petroleum. [Census, 1880, vol. 10,
 first monograph; Mines, 1902, pp. 710-764; Encyc.]

 25. Development of the American oil industry. [Depew, chap. 31 by
 Folger; G. H. Montague, The Standard Oil Company, N. Y., Harper, 1903.]


BIBLIOGRAPHY

 See chapter li.




CHAPTER LIII

IMPORTS, POLICY, DIRECTION OF COMMERCE, 1860-1914


=695. Survey of the import trade, 1860-1914.=—The development of the
import trade of the United States since 1860 is shown in the following
table, which gives the values in millions of dollars of merchandise
imported:

  ===================================+================++================
                                     |      1860      ||      1913
                                     +--—---+--—--—++--—---+--—--—
                                     | Value |Per cent|| Value |Per cent
  -----------------------------------+-------+--------++-------+--------
  Foodstuffs, crude                  |   36  |   10   ||  212  |   12
  Foodstuffs, manufactured           |   54  |   15   ||  194  |   11
  Raw materials for manufacture      |   37  |   10   ||  635  |   35
  Manufactures for further use in    |       |        ||       |
    manufacture                      |   24  |    7   ||  349  |   19
  Manufactures ready for consumption |  200  |   57   ||  408  |   23
                                     +-------+        ++-------+
  Total, incl. miscellaneous         |  534  |        ||1,813  |
  ===================================+=======+========++=======+========

=696. Changes in the character of imports.=—The percentages of the
table furnish a ready means of comparing the relative importance of
different classes of imports at the beginning and end of the period.
The most striking change is the decline in importance of the class of
manufactured articles ready for consumption, which amounted to over
one half of the total value of imports in 1860, and sank to less than
one quarter in 1913. The indication here given that the country was
learning to supply its need for manufactured wares, without depending
so much as previously on foreign producers, is confirmed by another
item in the table, giving the imports of raw materials for domestic
industries. This item increased greatly in importance in the course of
the period, and took now the place which was formerly held by the item
of finished manufactures. We now imported raw materials and made the
goods at home, instead of sending abroad for the finished product.

=697. Character of foods imported.=—The large item of food supplies
imported would seem to show that the United States resembled the
countries of western Europe in being unable to nourish its population
from its own resources. Such an idea would be wide of the facts. The
figures of the previous chapter have shown that the country could
spare for export immense quantities of the staple foods, such as wheat
and meat, and the item of food imports covered mainly luxuries, which
the country could afford to buy abroad in increasing quantities as it
gained in spending power. We may take as characteristic the case of the
so-called Zante currants, seedless raisins which are used in cakes,
puddings, etc., and which are so clearly a superfluous luxury that in
England they are made the object of a revenue tax. The imports of Zante
currants into the United States were small and scattering before the
Civil War, rarely exceeding a thousand tons in a year. The imports rose
rapidly to five thousand tons after the war, and at the close of the
century were about fifteen thousand, in spite of the fact that part of
the supply was now raised in the country, and imports were restricted
by protective duties. Other similar cases might be mentioned to show
the peculiar character of our food imports.

=698. Question of producing these foods in the United States.
Sugar.=—The chief items among the imported foods were the products of
tropical or semi-tropical agriculture, their values in millions of
dollars being as follows in 1913: coffee 119, sugar 104, fruits and
nuts 43, tea 17, cacao 17. Some of these articles could be produced in
this country, and would undoubtedly be grown at home if they could not
be procured so cheaply abroad. In general it has paid the American
farmer better to cultivate crops like cotton and wheat, which are
peculiarly adapted to the conditions of soil, climate, and labor in the
United States, rather than those crops which can be grown as well or
better abroad.

There has been a determined effort, lasting for more than a century,
to raise the necessary supplies of sugar at home. The growing of
sugar cane was an established industry in Louisiana by 1800, and has
been continued ever since in that State. During most of the time the
industry has received the help of protective duties or of bounties, but
it suffers in this country from the danger of early frosts, and it has
never grown strong enough to relieve the United States from dependence
on foreign sources of supply.

Better prospects seem to favor the beet-sugar industry. Sugar-beets
were first grown successfully on a commercial scale in California
about 1890. Since that time the culture of sugar-beets spread to the
prairie and mountain States, and after 1907 beets furnished more sugar
than American cane. Including all sources of supply, however, the
sugar product of the continental United States was still less than one
quarter of the amount required by the people.

=699. Increase in raw materials imported.=—Turning now to other classes
of imports we are faced by the great increase in articles, both crude
and manufactured, used to supply the needs not of consumers but of
producers. Articles of this character had always formed a part of our
imports, but the growing use of them in this period is clear testimony
to the internal development of the country. American industries, which
previously had attained strength only when they were supported by a
generous supply of raw materials close at hand, were prepared now
to reach out to all parts of the world for the supplies which they
required.

It is significant, also, that the great increase in these supplies took
the form of raw materials. Articles wholly or partially manufactured
were imported still for use in American industries. These articles
were of many different kinds; to name one very important class, that
of chemicals and dyes, will suggest their general character. These
articles increased greatly both in absolute value and in relative
importance, but in neither respect did they keep pace with the increase
of crude materials imported.

=700. The chief raw materials among imports.=—Of the raw materials
imported for domestic industries in 1913 nearly five sixths in value
were comprised in the wares enumerated in this section. Values are
stated in round millions of dollars.

The revolution in the metal trade of the country since 1860 is shown by
the fact that tin was the only metal which was imported in the crude
state in considerable quantities (53 millions); the country could
now supply itself with most of the necessary mineral substances. An
exception must, however, be made in the case of precious stones, 50.
Of the products of the animal and vegetable kingdoms the raw materials
for the textile industry were most prominent. The first place was
taken by raw silk, 85; then follow the vegetable fibers, 49 (sisal
grass, Manila hemp, jute, flax); wool, 36, cotton, 23. The single item
of greatest value in the whole list was that of hides, 117; while
India rubber, 101, represented the importance of an industry that was
still comparatively new, but that was rapidly growing to a place of
prominence.

=701. Decline in importance of finished manufactures imported.=—While
the imports of raw materials increased greatly in value, the imports
of finished manufactures, ready for the consumer, showed a great
relative decline. Taking first the textiles, the most important group
among the finished manufactures imported, we find that the total value
in 1913 was indeed greater than the value in 1860, but the increase
was only about two-thirds while the increase in the import trade
as a whole was over four-fold. In round millions the value of the
manufactures imported was as follows in 1913: cotton 60, vegetable
fibers and grasses 77, silk 31, wool 16. Between the two dates there
had been a great growth of population and of wealth in the country,
but the increase in consumption was met mainly by the development of
home manufactures. The list of textile raw materials imported for
manufacture in America, given in the preceding section, shows a great
gain in every staple. The growth of domestic manufactures had caused
in the case of two important textiles, wool and silk, an absolute
decline in the value of the manufactured imports; while the only case
of a great increase is to be noted in the manufactures of the vegetable
fibers, jute, etc., which had not come into extensive use until after
the middle of the century.

=702. Variety of imported manufactures.=—If we seek to explore the
imports of manufactures, outside the single group of the textiles,
we are confronted by the same bewildering variety of articles as in
previous periods. We find earthenware, china, and glass; jewelry,
clocks, works of art, and books; paper and leather wares; matting,
manufactured furs, and various manufactures of metal. Roughly, a
round dozen of articles like those named above can be found, of which
each showed imports ranging in value from two or three to ten or more
millions of dollars.

It is probable that the United States will always continue to import
manufactured wares like those named above, in great variety and
amounting in the total to considerable value. We cannot afford to
refuse the contributions of peoples who have specialized in various
lines, and by reason of inherited taste and skill, or with the aid of
exceptional natural resources, can offer us what we cannot readily
produce ourselves. Since 1860, however, we have come to depend less and
less on our foreign trade for the manufactures which serve the simpler
household needs, and the home product of many of the wares named
greatly exceeds the amount imported from abroad.

=703. Change in tariff policy since the Civil War.=—The growth of
American manufactures, to which I have alluded frequently in preceding
sections, has often been explained by the change in tariff policy which
came at the time of the Civil War. The reader must look in other books
for a discussion of that question, on which opinions differ so widely.
I shall attempt here merely a brief summary of our recent tariff
history.

At the outbreak of the war a tariff with moderate protective duties
was in force. The strain of the conflict forced the government
at Washington to adopt every available means of raising revenue.
Heavy taxes were laid on manufacturers and other producers in the
country, and the tariff was raised, to secure increased revenue from
the importers and consumers of foreign wares. Such an increase was
necessary, not only to raise revenue but also to enable the American
manufacturers to hold their own in the home market, in spite of the
taxes which they paid. Actually, however, the increase was greater than
was necessary for these purposes, and by the act of 1864 the average
rate on dutiable commodities had risen to nearly 50 per cent.

=704. Increase in protective duties.=—The high duties of the war period
were imposed with the idea that they should be repealed when the war
was over and the country had returned to normal business conditions. At
the return of peace, however, when the internal taxes on manufactures
were repealed, and the peculiar conditions which had formed the
occasion for the high tariff no longer existed, the protective duties
were kept unchanged or were actually raised. The people in general
did not pay so much attention to the tariff as to other questions of
politics, and did not realize that it was a tax on them as consumers;
while the manufacturers vigorously opposed any reduction. Duties which
had been raised by 10 per cent to 30 per cent during the war were
kept at the higher level which they had reached, and duties on some
special articles were arranged so that they furnished the unprecedented
protection of 100 per cent or even 150 per cent. The duty on steel
rails, for example, amounted to more than the cost of the product which
England was ready to sell us, and Americans who built railroads about
1880 had to pay $61 to $67 per ton for rails which could have been
purchased in England for $31 to $36.

=705. The tariff at the close of the century.=—After 1880 a reduction
of the tariff was seriously urged by various individuals and parties
in the country. The tariff was changed in details, but the general
tendency was rather toward increase than reduction of the protective
duties. At the close of the century the average duty was not far from
50 per cent of the value of the goods. The British Board of Trade
estimated that the important wares imported into this country from
England paid about 70 per cent. Such a high tariff was unheard of in
earlier times, in the United States or in Europe; and was exceeded in
1900 only by the tariff of Russia. The Payne-Aldrich act of 1909, the
first general revision of the tariff that had taken place for twelve
years, amended some details but left its general character unchanged;
the Underwood act of 1913 went further, and is credited by a competent
authority with making the greatest change in the tariff system since
the Civil War. It made considerable reductions on some items, but left
rates as high as before on about half of the chief dutiable commodities
imported. Before the effect of this last measure could fairly be judged
the outbreak of the war in Europe set loose forces which changed the
currents of the world’s trade with little regard to the policies of
lawmakers.

=706. Leading ports, 1860-1914.=—The continued importance of the
eastern seaboard, in the foreign trade of the country, is shown by the
fact that in 1913 nearly two-thirds (64 per cent) of the total commerce
in merchandise passed through the Atlantic ports. It should however be
noted that these ports were declining in relative importance; in 1900
they enjoyed nearly three quarters (73 per cent) of the whole. Next in
rank were the ports of the Gulf of Mexico (1913, 15 per cent), and the
customs houses on the northern frontier, (12 per cent); commerce by
the southern and northern gateways was growing more rapidly than the
old established trade by the Atlantic. In comparison the trade of the
Pacific Coast (6 per cent) was unimportant.

The port of New York still stood without a rival in importance. Over
one half of the total imports was received through its harbor, and
though its share of exports was smaller, it conducted nearly half (46
per cent) of the total trade of the country. No other port had as much
as 10 per cent. New York stood even higher, however, in the middle of
the period (56 per cent in 1882), and the tendency of recent years had
been to distribute among other ports an increasing share of our great
foreign trade. The concentration of traffic at the New York gateway
had apparently led to congestion, entailing heavy charges and delays,
and encouraging the use of transportation lines to other ports whose
facilities were not so thoroughly exploited. There have been many
changes in the relative standing of the individual ports; the order
of their importance in 1913 was as follows, the figures giving the
percentage of the total commerce of the country (values of merchandise
imports and exports) passing through each: Galveston, 7; New Orleans,
6; Boston, 5; Philadelphia, 4; Baltimore, San Francisco, and Puget
Sound, 3 each. The Gulf ports owed their position mainly to their
export trade, in which cotton was the leading item; the secondary ports
on the Atlantic seaboard had a more diversified traffic, by which the
pressure on the port of New York was somewhat relieved.

=707. Direction of commerce abroad.=—The changes in the distribution
of our foreign trade from 1860 to 1913 are apparent in the following
table, which gives the _percentage_, in round numbers, of the total
exports and imports of the United States in its commerce with the great
divisions of the world. For convenience of comparison the figures for
1800 are included:

  ==============+=======================++=======================
                |Imports of U.S. from --|| Exports of U.S. to --
                +-------+-------+-------++-------+-------+-------
                | 1800  | 1860  | 1913  ||  1800 | 1860  | 1913
  --------------+-------+-------+-------++-------+-------+-------
  Europe        |   51  |   60  |   49  ||   58  |   78  |   60
  North America |   35  |   21  |   20  ||   38  |   13  |   25
  South America |   --  |   10  |   12  ||   --  |    4  |    6
  Asia          |   13  |    7  |   15  ||    2  |    3  |    5
  Oceania       |   --  |    1  |    2  ||   --  |    1  |    3
  Africa        |    1  |    1  |    1  ||    2  |    1  |    1
  ==============+=======+=======+=======++=======+=======+=======

=708. Relative commercial importance of different parts of the
world.=—The figures bring out in a striking manner the close connection
of commerce and civilization. The continent of Europe, in spite of
its small area and in spite of its inferiority to Asia in population,
contributed far more than half of our commerce throughout the century.
The proportion of our trade with Europe grew during the first part
of the century, to decline again during the latter part, leaving the
figures for 1913 very nearly equal to those of 1800. The percentage
share of imports from Europe reached its peak before the Civil War
(1850, 70 per cent); the greatest concentration of exports in the
direction of Europe came later (1880, 86 per cent). Even in 1913 the
trade with Europe exceeded in importance that with all other parts of
the world together.

The commerce with our immediate neighbors in North America shrank
in importance in the first half of the nineteenth century, when the
countries of this continent were rivals in the export of raw materials
to Europe, but showed a recovery in more recent years, when the
diversification of industries in the United States encouraged exports
from this country of a kind that had formerly been obtained from the
Old World. In comparison with these two most important parts of our
trade the remaining branches showed a gain, but one which was in
absolute figures so small that it gave no reason to expect any sweeping
change in the direction of our commercial interests. In the markets of
South America and Asia we appeared still as buyers rather than sellers,
importing from those continents special foodstuffs and raw materials
for industry, but exporting to them a relatively small share of our own
products. Trade with Oceania and Africa had grown, with the growth of
a civilized population in those parts, but remained still only a small
fraction of our aggregate commerce.

=709. Importance of the English trade.=—England still headed the
list of the countries with which we traded. Our imports from the
United Kingdom in 1913 formed 16 per cent of our total import trade,
exceeding, therefore, our imports from the whole continent of Asia
or from the continents of South America, Oceania and Africa together;
while our exports to the United Kingdom formed nearly one quarter (24
per cent) of the total exports, and exceeded the aggregate of our
exports to all four continents named above. The country which stood
next in importance in our commercial relations in 1913 was another
English-speaking country, our Canadian neighbor, and the value of
our commerce with these two members of the British Empire was almost
exactly one-third of the total value of our foreign trade.

[Illustration:

  COURSE OF
  STEAMSHIP LINES
  IN 1880
]

=710. Trade with other countries: Europe.=—The relative importance of
other countries in their commercial relations with the United States
can be seen in the following list, which gives the share each took in
our total commerce in merchandise in 1913: United Kingdom, 21 per cent;
Canada, 13; Germany, 12; France, 7; Cuba, 5; Netherland, Brazil and
Japan, 4 each; Mexico, British East India, Italy and Belgium, 3 each.
An extension of this list would confuse rather than aid the student. If
we divide the twelve countries named into groups of four we find that
the first group, four countries, accounted for more than one half of
our total commerce; the first two groups, eight countries, accounted
for more than two-thirds; the whole twelve together accounted for more
than three-quarters.

Among the European states we note that France had not kept her place of
relative importance; commerce with that country had grown but slowly,
and Germany had won precedence among our customers in Continental
Europe by her high industrial development and her growing demand for
our raw materials. Reviewing the other states of Europe the reader
will note the absence from the list of the great empires of Russia
and Austria-Hungary, and the presence of such little states as the
Netherlands and Belgium. Area and population are obviously factors
which have no decisive influence on the commercial importance of a
country.

=711. The Americas and Asia.=—Attention has already been directed to
the fact that although the major part of our commercial interests
still lay in Europe the concentration of our interests there had
grown gradually less with the passage of time. The reader will note
the evidence of this tendency to dispersion in the fact that of the
twelve countries named as the most important in their commercial
relations with the United States in 1913, six were extra-European. Two
of these were our immediate neighbors in North America; exchange with
these countries became more active as the United States took on the
character of an industrial state, offering finished products for the
raw materials of industry. The other two American states on the list
owed the importance of their position in our trade largely to their
ability to meet special demands of the American consumer, for sugar
and for coffee respectively. These and other states to the south of us
made relatively small purchases in the American market. Our relations
with British East India were of the same kind; that group of countries
bought from us in 1913 less than one tenth of the value of the products
(coarse textile fibers, burlap, skins, etc.) which it sold to the
American importer. A tendency similar but less marked showed itself in
the trade with Japan which supplied 5 per cent of the total American
imports, but took less than 3 per cent of our exports. Noteworthy
is the absence from the list of China, numbering over three hundred
million inhabitants, but accounting for less than 2 per cent of the
trade of the United States in 1913.


QUESTIONS AND TOPICS

 1. Chart the figures, sect. 695, and note the changes in the
 _relative_ as well as the absolute importance of different classes of
 imports.

 2. Contrast the import trade of the United States in 1913 with that of
 England or of Germany. Study the indications of trade between the U.
 S. and other countries given by these comparisons.

 3. The decline in import of manufactured wares implied either that the
 country was growing poorer, and so was unable to buy finished products
 abroad, or else was growing more competent to supply its own needs.
 Which is the correct view?

 4. What food supplies, used in the household in which you live, come
 from foreign countries?

 5. Has there been any change in the relative amount of foreign food
 products consumed in your household in the past generation?

 6. If an American farmer can get more sugar by raising cotton or wheat
 and exchanging his surplus, is there any reason why he should raise
 sugar?

 7. The American cane sugar industry. [Depew, chap. 37 by Searles; Pub.
 Amer. Econ. Assoc., 1904, 5: 79-98; Census, 1900, 6: 443-494; 1910,
 10: 477-483; U. S. Bureau of Manufactures, Misc. Series, no. 53, 1917.]

 8. The beet sugar industry. [Census, 1900, 9: 543-555; 1910, 10;
 471-477; Rep. Ind. Comm., 1900, 10: ccli-cclxxiv; House Doc. 396, 55th
 Cong., 2d Session; Poole’s Index.]

 9. The chemical industry of the U. S. [Depew, chap. 63 by Bowers:
 Census, 1880, 2: 985-1028; 1900, 7: clii, 10: 523-569; 1910, 10:
 531-550; Bureau of Foreign and Dom. Commerce, Misc. Series, no. 82,
 1919.]

 10. Write a report on the history, sources of supply, commerce and
 uses, of one of the raw materials mentioned in sect. 700. [Encyc.,
 commercial geographies, U. S. Census.]

 11. Write a report on one of the following industries, with respect to
 production at home and importation from abroad:

 (_a_) Glass. [Depew, chap. 40 by Gillinder; Census, 1880, 2:
 1029-1152, 1900, 9: 947 ff.; 1910, 10: 975-884; U. S. Bureau of
 manufactures, Misc. Series, no. 60, 1917.]

 (_b_) Earthenware and potteries. [Depew, chap. 41 by Moses; Census,
 1900, 9: 899 ff.; 1910, 10: 849-871; U. S. Bureau of Manufactures,
 Misc. Series, no. 16, no. 21.]

 (_c_) Hides and manufactures of leather. [Depew, chap. 75 by
 Foerderer; Census, 1900, 9: 699-738; 1910, 10: 717-732.]

 (_d_) Boots and shoes. [Depew, chap. 87 by Rice; Census, 1900, 9:
 739-767; 1910, 10: 697-714; U. S. Bureau For. and Dom. Commerce, Misc.
 Series, no. 76.]

 [See Depew and Census for many other industries; see Statistical
 Abstract for exports and imports of products of industries.]

 12. Study in detail one of the following chapters in recent tariff
 policy:

 (_a_) The war tariff.

 (_b_) The failure to reduce the tariff after the war.

 (_c_) Increase of duties above war rates.

 (_d_) The Act of 1883.

 (_e_) The Act of 1890 (McKinley Tariff).

 (_f_) The Act of 1894 (Wilson Tariff).

 (_g_) The Act of 1897 (Dingley Tariff).

 (_h_) The Act of 1909 (Payne-Aldrich).

 (_i_) The Act of 1913 (Underwood).

[Taussig or Mayo-Smith and Seligman. The student may also consult
tariff histories by Stanwood, Rabbeno, etc., narrative histories and
contemporary periodical articles.]

13. The following figures give, in millions of dollars, the commerce
in merchandise passing through the eight principal ports in 1900.
On a sketch map of the country draw lines from the different ports
proportional to the figures and extending out to sea; thus giving
graphic representation of relative importance of the ports. The first
figure is that of imports, the second that of exports. New York,
1,048, 918; Galveston, 8, 281; New Orleans, 82, 170; Boston, 147, 70;
Philadelphia, 93, 76; Baltimore, 33, 116; San Francisco, 63, 66; Puget
Sound, 51, 63.

14. The figures, sect. 707, may best be charted by the use of colored
crayons, giving each grand division its own color. Draw a line composed
of 100 equal units, by the use of dividers or a scale; a foot rule,
divided into sixteenths of an inch, may be employed, making the line
6-1/4 inches long (16 × 6-1/4 = 100). Chart imports and exports
separately, and study the charts as representing the _relative_
importance of our trade with the different continents at different
periods.

15. Note carefully that the figures of the text, page 585, are
percentages, not total values. The total values are given below, with a
slight difference of arrangement; each unit of the figures represents
ten million dollars, and dashes are inserted when the values do not
come within one decimal place of a unit.

                  (Units of ten million dollars.)
  ===================================================================
                |     1800       ||     1860       ||     1913
                |----------------||----------------||----------------
                |Imports| Exports||Imports| Exports||Imports| Exports
  --------------|-------|--------||-------|--------||-------|--------
  Europe        |   5   |    4   ||  22   |   31   ||  89   |  148
  North America |   3   |    3   ||   8   |    5   ||  36   |   62
  Asia          |   1   |    0.1 ||   3   |    1   ||  28   |   12
  South America |  --   |   --   ||   4   |    2   ||  22   |   15
  Oceania       |  --   |   --   ||   0.3 |    0.5 ||   4   |    8
  Africa        |   0.1 |    0.1 ||   0.4 |    0.3 ||  3   |    3
  ====================================================================

To illustrate the use of the figures: the imports from Oceania in 1860
were roughly three million dollars in value, in 1913, forty millions
(the precise figure was $37,543,441).

The figures may be used in studying our commercial relations in the
following ways:

(_a_) To show the development of our commerce with different continents
take three large sheets of paper, for the three different dates. Lay
off the largest figures (Europe, 1913, 89 imports plus 148 exports) to
a convenient scale at the top of one sheet, and below it draw other
lines showing the total commerce with each of the other grand divisions
at that date. Distinguish either imports or exports by the use of wavy
or dotted lines. Prepare the other charts, using the same scale. These
charts will show the _growth_ of American commerce, while the charts
based on figures in the text show only changes in _proportion_.

(_b_) To show the relative commercial importance of the continents
(excluding Oceania) at a certain time, as in 1913, the following
method may be adopted. Rule a sheet of paper in equal squares, or
procure a sheet of plotting paper already ruled. Draw on the paper
a map of Europe to such a scale that the land area will include
as nearly as possible 237 squares (89 imports plus 148 exports.)
Exactness is impracticable, but a few experiments should make the
result sufficiently accurate; an error of 10 or 20 squares is of little
importance. Draw then the maps of the other continents so that each
one contains the number of squares corresponding to its share in our
trade (North America, exclusive of U. S., 98; Asia, 40; South America,
37, etc.). The contrast between the continents will be sufficiently
striking even if other maps, showing the continents in their true
proportions, are not made for comparison.

16. Methods similar to those already employed may be used in studying
the commerce of the U. S. with separate countries. Full statistical
information is comprised in the Reports on Commerce and Navigations.


BIBLIOGRAPHY

 See chapter li.


TOPICS FOR REVIEW

 The following topics are suggested for use in a general review
 of American commerce: (_a_) history of American shipping; (_b_)
 transportation by road, river, canal and lake; (_c_) transportation
 by railroad; (_d_) production and exchange of wheat and flour; (_e_)
 cotton; (_f_) animal products; (_g_) textiles, (cotton, wool, silk);
 (_h_) iron and steel; (_i_) other mineral products; (_j_) commerce
 with European countries; (_k_) commerce with Asia; (_l_) commerce with
 the West Indies and South America; (_m_) history of American seaports;
 (_n_) tariff history.




PART VI.—THE WORLD WAR




CHAPTER LIV

COMMERCE AND THE WORLD WAR, 1914-1918


=712. Commercial antecedents of the war.=—To picture the World War
of 1914-18 as a necessary result of the commercial conditions in the
period immediately preceding would be a distortion of the facts.
The recourse to arms is a voluntary act, and this war, like others
preceding it, would not have taken place if one party to it had not
consciously chosen to use force to obtain what it wanted. War is
never a necessary and inevitable result of economic conditions. On
the other hand, there are periods in which commercial competition is
so intense that it puts a strain on international relations, tempting
one or another party in the struggle to further the interests of its
people by threats of force or by force itself. The economic strain is
particularly likely to lead to rupture if the political system of the
period is faulty, if international politics provide no effective way
for the just settlement of differences, and if national politics fail
to represent the interests of the people as a whole but sacrifice these
to the selfish interests of a group. Keen competition does not cause
war, but keen competition and faulty politics in combination are apt to
do so.

=713. Germany and the outbreak of war.=—The danger-spot in the
international situation before 1914 was Germany. That country had
achieved extraordinary success in its recent economic development.
Its progress, moreover, was due only in minor degree to its endowment
of natural resources; it proceeded from the industrial virtues of
the people, from the efficiency of the organization, and from the
leadership of scientific experts. The Germans were proud, and had a
right to be proud, of their success. They could not complain of the
reward which had been accorded them. They were troubled, however,
about their future. They had come to depend upon world-trade, and
found the world largely under the political control of rival states.
It is true that in that very world they enjoyed abounding prosperity;
but the foundations of their prosperity appeared to them uncertain.
Inheriting antiquated ideas about the power of the state to guide
economic development and to further commercial interests, they imputed
to other countries political designs which were the products of their
own peculiar ways of thought. They saw in the high tariffs of the
United States and Russia, in the spread of the idea of a customs union
in the British Empire, in the expansion of French influence in Morocco,
so many evidences of a plan of their rivals to hem them in, and misuse
political power to rob them of their deserts. Should they not, before
it was too late, “break through the iron circle,” establish a great
state in central Europe extending down to the Mediterranean and the
Persian Gulf, take the place in “world-politics” which accorded with
their economic merits, and so—for this was the sincere conviction of
many Germans—not merely win their own “place in the sun,” but also
direct in the right path the civilization of the world as a whole?
Given the prevalence of ideas like these, given an antiquated political
system that allowed exaggerated influence to dynastic and military
interests, and the forces impelling Germany to war were strong; given
the old-fashioned and outworn system of international diplomacy, the
stress was irresistible and the rupture came.

=714. Direct costs of the war.=—For generations to come the effects
of the World War will be working themselves out. This chapter and the
following will attempt merely a survey of some of the more obvious
effects upon the history of commerce. It will be convenient to have
at hand for reference some estimates of the costs of the war, and the
table gives those that were represented by the direct expenditure
of money by the states involved. Some of the states advanced funds
to their allies for the prosecution of the war, so a distinction is
made between the gross sums raised, and the sums directly expended by
each country; the cost of the war would be exaggerated if the same sum
were counted twice. On the other hand it is apparent that the table of
net cost is an accurate measure of the burden of the war on different
countries only on condition that the advances to allies are treated as
interest-bearing loans. To assist in an appreciation of the meaning
of the costs estimates are supplied for some countries of the total
national wealth in 1914.

           (_Approximate figures in milliards of dollars_)
  ==============================================================
                         | National | Gross | Advances| Net cost
                         |  wealth  |  cost |to allies|
  -----------------------|--------------------------------------
  United States          |   204    |   32  |    9    |    23
  United Kingdom         |    71    |   44  |    9    |    35
  Rest of British Empire |   ...    |    4  |   ..    |     4
  France                 |    58    |   26  |    2    |    24
  Russia                 |    58    |   23  |   ..    |    23
  Italy                  |    22    |   12  |   ..    |    12
  Other Entente allies   |   ...    |    4  |   ..    |     4
                         |          |-------|---------|---------
      Total              |   ...    |  145  |   20    |   125
                         |          |       |         |
  Germany                |    81    |   40  |    2    |    38
  Austria-Hungary        |    30    |   21  |   ..    |    21
  Turkey and Bulgaria    |   ...    |    2  |   ..    |     2
                         |          |-------|---------|---------
      Total              |   ...    |   63  |    2    |    61
                         |          |       |         |
  Grand total            |   ...    |  208  |   22    |   186
  ==============================================================

=715. Indirect costs of the war.=—Even the figures of direct costs are
subject to correction on various accounts, and must be taken merely as
approximate indications of the value of the wealth that was devoted to
destruction. Still more uncertain, necessarily, are the estimates of
losses due to the war which were not recorded in the expenditures of
governments. Figures in the accompanying table give some idea of the
nature and extent of these indirect costs.


INDIRECT COSTS OF THE WAR

  (_Figures in milliards of dollars_)

  Money value of lives lost, military            34
  Money value of lives lost, civilian            34
  Property losses on land                        30
  Property losses at sea                          7
  Loss of production by diversion of labor       45
  Voluntary war relief                            1
  Loss to neutrals                                2
                                                —-
      Total                                     153

  Grand total, direct and indirect costs        339

A few words of explanation will make some of the items more clear.
Human beings have not, since the days of slavery, been counted in a
census of national wealth, but they represent nevertheless in every
country the heaviest investment and the largest source of income. The
figures in the text are based on the assumption of about 13 million
deaths in military service, and a money value of the individual ranging
from about $2,000 (southern and eastern Europe) to $5,000 (United
States). The assumption that the war caused at least as heavy a loss in
the civil as in the military population is probably conservative. The
loss due to the diversion of labor from production is figured on the
basis of 20 million men, of an average productive capacity of $500 a
year, withdrawn from industry for four and one half years.

=716. Effects of the war on commerce.=—In a modern country there is a
small group of men known as wreckers, whose business it is to tear down
and destroy. During the war the world went into the wrecking business
on a grand scale. The figure of twenty million men engaged in it is an
average for the whole period; at the close of the war nearly double
that number were under arms. We have now to study some of the effects
of this situation on commerce.

In every country that entered the war there was an immediate and
imperative demand for the tools of the wrecking trade, first of all for
guns and ammunition. The wrecker was engaged in an arduous occupation;
he demanded more food than he had been used to consume, and wasted
more; he used up clothes and shoes and implements at an appalling
rate; he was always on the road, requiring subsistence and shelter in
all sorts of out-of-the-way places. War therefore put an immediate
strain on the industries serving these needs: chemical, metallurgical,
agricultural, textile, and the industries providing and operating the
equipment of transportation on land and water. On the other hand war
withdrew workers from constructive industry, and restricted supply at
the very time it intensified demand. Every country at war, therefore,
sought by means of commerce to relieve the strain on its own resources,
importing needed supplies from abroad; each group of belligerents
sought to prevent the other group from profiting by this process. The
tendency to an increase of imports was accompanied by a tendency to a
decline in exports. A country at war could not afford to do business as
usual in its foreign trade. If it could supply its military necessities
by paying actual cash for its imports, or by promising to pay for them
at some future time, it could withdraw workers from export industries,
serving the needs of foreigners, and make them serve more pressing
needs at home.

=717. Commercial position of the Central Powers and of the
Entente.=—Germany and her allies, Austria-Hungary, Bulgaria, Turkey,
enjoyed a great military advantage of which the character is suggested
by their name, the Central Powers; they had interior lines of
communication and could move their forces from one to another front
much more easily than could their opponents. They would have enjoyed
a corresponding commercial advantage if they could have brought the
war to a conclusion with stocks of supplies accumulated at home or
acquired in invaded territory, which they could mobilize in one part or
another of their territory as they pleased. The powers of the Entente,
on the other hand, desired in vain to effect an exchange of the wheat
of Russia for the guns and ammunition of France or England. In a long
war, however, in which the decision was to be effected not by stocks
accumulated in the countries immediately engaged but by a mobilization
of the resources and activities of the whole world, the Central Powers
were at a critical disadvantage. They had immediately open to them only
the territory of small neutral states (the Netherlands, Switzerland,
the Scandinavian states); the path to richer sources of supply lay
across the sea; and control of the sea rested, from the beginning to
the end of the war, in the hands of the Entente.

=718. The war against commerce.=—The conditions were much like those
of a hundred years before, when England was engaged in the desperate
struggle with Napoleon. In neither period had the belligerents any
scruple in departing from established principles of international law.
The Entente proposed to starve Germany into surrender. It stopped the
outlets of Germany across the territory of neutral states by edicts
which amounted in substance to a rationing of the people of those
states; these people might have enough food, fodder, cotton, etc., for
their own immediate needs, but no surplus that they might transfer to
Germany. Germany protested against this infraction of the principle of
freedom of the seas, and retaliated by proclaiming a war zone about the
British islands, within which German submarines ruthlessly destroyed
the merchant shipping on which England depended for her supply of
food. These measures on either side, took shape in the early years of
the war. The measures of the Entente were effective in sealing the
Central Powers from commercial intercourse with the outside world. The
German policy failed. It remained a menace, which grew more serious in
the latter part of the war when the danger to England was very real,
but in its moral influence, instead of breaking the spirit of the
English, it did much to rouse the spirit of neutral countries. As the
occasion for the entry into the war of the United States on the side
of the Entente it was a decisive factor in bringing the conflict to a
conclusion.

=719. The war on shipping.=—The war on shipping resulted in the
destruction by enemy action of a tonnage amounting to more than one
quarter of the world’s total tonnage in 1914. The figures in the
following table indicate the extent and distribution of the losses,
and show at the same time how rapidly they were repaired by the
construction of new ships. Changes in the relative standing of the
different countries, were affected also by another factor, namely by
the distribution among other countries of ships of the Central Powers,
taken during and after the war. Germany was second in rank among
maritime nations in 1914, with a tonnage of 5.5 million; in 1920 its
tonnage had been reduced to less than 1 million, almost entirely by
forced transfer.

                  (_Figures in millions of gross tons_)
  ==================================================================
                           |Tonnage, 1914| War losses |Tonnage, 1920
  -------------------------|-------------|------------|-------------
  United Kingdom           |    21.0     |    7.8     |    20.6
  United States[2]         |     5.4     |    0.4     |    16.0
  France                   |     2.3     |    0.9     |     3.2
  Japan                    |     1.7     |    0.1     |     3.0
  Italy                    |     1.7     |    0.8     |     2.2
  Norway                   |     2.5     |    1.2     |     2.2
                           |-------------|------------|-------------
      Total of these items |    34.6     |   11.2     |    47.2
                           |             |            |
  Total for world          |    49.1     |   13.0     |    57.3
  ==================================================================


=720. Influence of the war on the issue of paper money.=—War is itself
abnormal. Naturally, the World War gave a peculiar cast to the commerce
of the period and left behind it commercial conditions very different
from those that had prevailed in the earlier period of peace. These
results of the war involve reference to questions of currency and
foreign exchange which can be treated only superficially in a book on
the history of commerce, but which were of such practical importance
that they cannot be omitted altogether.

The governments involved in the war had, of course, to strain every
resource to get the funds for their necessary expenditures. An
expedient which they all adopted was the issue of paper money. Let
us consider, to illustrate the matter, the case of a country which
had been doing business with a gold currency of say 100, using that
figure to express the number of million francs, marks, dollars or
other unit. If the government now printed 10 of paper money and used
these to meet its extraordinary expenses, there would be a total of
110 in circulation. Price would rise roughly to correspond; that is,
the unit would buy less than before. The gold unit would, however, be
worth roughly as much in other countries as it was before, and would
be sent abroad to make purchases, instead of being used at home where
its purchasing power was diluted, as it were, by the issue of the paper
units. After a period of readjustment 10 of gold would have gone out;
the currency would have returned to its former level. The government
has made a net gain of 10, for the paper money cost practically nothing
to print. Has anybody lost? No; not if the paper money circulates
readily at home, and does the work which an equal amount of gold money
had formerly done. The country has simply “realized” part of its gold
stock, using a cheap substitute for money purposes, and selling the
dear gold to other people who were glad to exchange products for it.

=721. Effect upon the flow of gold.=—From the very beginning of the
war the governments of the European states practised this expedient,
paying out paper money and getting in return for it the goods and
services which they needed for military operations. Gold went out of
circulation and was replaced by paper. The government did not choose,
however, to let private individuals profit by the exchange of this
gold with people abroad. By an appeal to patriotism and by the threat
of penalties each government sought to bring into its own treasury[3]
the gold which had been in the pockets and in the cash-boxes of its
people. It opened the way for the circulation of its paper as well by
locking up gold in its vaults as by sending it abroad. It cherished the
gold as a precious asset: a sign of solvency and a ready resource in
time of need. The gold reserves of some of the belligerents increased
considerably in the course of the war.


GOLD RESERVES OF EUROPEAN BELLIGERENTS

    (_Figures in millions of dollars_)

                     _1913_  _1918_
                      ----    ----
  United Kingdom       170     528
  France               679     664
  Italy                288     244
  Germany              279     539
  Austria-Hungary      251      53

These gold reserves, as the name implies, were _not_ in active
circulation. Gold passed entirely out of circulation. It flowed into
the treasury, and part of it was retained there. The larger part flowed
_through_ the treasury, and was employed by the government in purchase
of war material abroad. Some part of this outflow from the belligerent
states remained in Europe; Spain and the Netherlands showed in the
course of the war a notable increase in their gold holdings. By far the
greater part of the gold left Europe altogether, most of it going to
the United States, very considerable amounts going to the Far East and
to South America.

=722. Over-issue of paper money; worldwide inflation.=—Let us return
now to a consideration of the case which was assumed to illustrate the
working of paper money. If we suppose the government issues 10 units,
20 units, and so on up to 100 units we may assume in each case that
a corresponding amount of gold is driven out of circulation, to be
impounded in the treasury or sent abroad; in either event the number
of units in circulation and the price level remain the same as before.
Suppose the issue of an additional 100. The paper money has no value
abroad. The government will not keep it in the treasury. The government
would not have issued it except as a means of purchasing services or
supplies, and must reissue it when it comes back to the treasury in
the payment of taxes, else it would renounce all its advantages in the
collection of the tax. There would be left then double the number of
units in circulation; prices would double; the unit would buy only half
as much as before. Depreciation would follow inflation. The government
would gain still by the issue of paper money, but it would have to
issue twice as many units as before to get a given purchasing power;
the dose would need to be constantly increased to produce a given
effect. Furthermore, the government from now on would get its gain only
at the expense of its people. Its gain would be offset all along the
line by the losses of individuals who would receive for their services
and products perhaps a greater number of monetary units but certainly a
smaller actual purchasing power.

Not even the neutral countries could escape the effects of the issue
of paper money by the belligerents. Even when they remained on a gold
basis they had now so many more units, driven out from the belligerent
countries, that the gold unit itself depreciated. The dilution of
currency spread over the world and resulted in a world-wide inflation.

=723. Statistics of currency inflation and of prices.=—I have described
conditions, in preceding sections, in an artificially simple form, and
have neglected many elements that would have to be included if there
were space for a more precise and complete treatment. The general
tendencies and results were in rough accordance with the description
given, as may be seen from the figures of the table below. In both
columns the year 1913 is taken as the basis of comparison; the increase
of currency of all kinds, and of wholesale prices, may be measured by
comparing the figures given for 1919 with par, 100, in 1913.

                    _Units of     _Average of
                    currency_  wholesale prices_

  United Kingdom      244            257
  France              365            330
  United States       173            206

The inflation of currency and prices presented in these figures was
moderate in comparison with conditions in central and eastern Europe,
where the flood of paper money broke all bounds; the quantity of
currency in 1919, compared with 1913, was in Germany 875, in Rumania
over 1,100, in Austria and in Poland higher still.

=724. Effect upon foreign exchange.=—Leaving aside the grave effects
of these rapid changes in the price level on the earnings and income
of different classes, there is a particular reason for studying them
in their relation to international trade. We have had occasion to note
previous changes in the price level, such as the rise in prices before
1914; but these earlier changes were more moderate, and what is still
more important, were about the same in different countries. The changes
resulting from the issue of paper money were not only more abrupt; they
were different in individual countries, as can be seen from the figure
in the last section. The price level in any country depended upon the
particular amount of paper money which the government of that country
felt obliged to issue. The prices of Europe were no longer gold prices,
steadied at a common level by the inflow and outflow of gold; they had
no common level, they lost their former steadiness. With these changes
the time-honored basis of international transactions, the old par of
foreign exchange, disappeared.

=725. Par of exchange on the gold standard.=—The significance of the
change can be most readily appreciated if we consider a simple case,
say that of an English spinner who buys raw cotton in the United
States. The American wants dollars; the Englishman has pounds sterling
to offer. It does not matter in which unit the bargain is expressed,
whether the American gets the right to draw an order on the Englishman
for so many pounds sterling and sells this to a bank for dollars, or
whether the price is fixed at so many dollars, and the Englishman makes
payment by buying a bill for that amount with his pounds sterling. In
either event one party to the bargain must deal in the monetary unit
of the other. Under the old system both units were perfectly definite
weights of gold. A merchant knew, within narrow limits, how much he
had to pay or to receive. The gold in £1,000 was equal to the gold in
$4,866. Sterling exchange was at par in New York when the pound was
quoted at 4.866. Exchange could not vary far from par, for the cost of
shipping the gold itself was only about two cents per pound sterling,
and the gold of either country was perfectly acceptable in the other.

=726. Foreign exchange on a paper standard.=—Consider now the situation
after England has driven gold out of circulation by the over-issue
of paper money. The pound sterling has become a “paper pound,” of
which the value stands in no fixed relation to a definite weight of
gold, but is determined by a new set of factors, particularly by the
condition of the English treasury and the prospect of an expansion or
contraction of the paper currency. The American can no longer count
with any assurance on the value to him in dollars of a sum due him
in pounds sterling three months hence; the Englishman is no longer
in a position to calculate how many pounds sterling he will need to
pay a debt contracted in dollars. The rate of exchange, instead of
being fixed close to 4.866, may go down to 4.50, 4.00, 3.00—there is
no limit to its depression or to the sharpness of its fluctuations.
The student should note particularly two elements which are important
in an analysis of the situation. First, international transactions
involve a considerable time interval, say three months, within which
events may occur that will make sweeping changes in rates. Second, the
purchasing power of paper money at home, where prices are fixed by
contract or affected by custom, does not change in accordance with the
rate at which it is estimated in foreign exchange. As a result there is
a “spread” in the factors determining profit or loss in international
transactions which makes foreign trade extremely speculative, and makes
its flow fitful and irregular.


QUESTIONS AND TOPICS

 1. Dangers arising from the German political constitution. [W. H.
 Dawson, What is wrong with Germany?, London, 1915; Veblen, Imperial
 Germany, Chap. 5.]

 2. “German industry considered as a factor making for war.” [H.
 Hauser, Economic Germany, London, 1915, a pamphlet of 33 pages.]

 3. Commercial aims of Germany in the war. [Snow and Kral, German trade
 and the war, Washington, 1918, pp. 11-14.]

 4. How do you explain the fact that the direct expenditures for war by
 the Entente were more than double those of the Central Powers?

 5. What portion of the cost of the war fell upon your individual
 family? [Tabulate money costs under taxes, contributions, losses. Who
 bears the cost of government bonds? Estimate “real” costs in the form
 of extra exertion, diminished consumption, decline in purchasing power
 of the family income.]

 6. The question of neutral rights, 1914-1916. [Ogg, National progress,
 chap. 18; Paxson, Recent history of U. S., chap. 44.]

 7. Assuming that both parties to the European conflict departed from
 established principles of international law, why did the United States
 choose the side of the Entente?

 8. Have previous wars led to the issue and over-issue of paper money?
 What was the experience of the United States in the Revolution; in the
 Civil War?

 9. Did your family gain or lose by the inflation of currency and the
 rise of prices? Does the country as a whole gain or lose by these
 movements?


BIBLIOGRAPHY

 James D. Whelpley, *The trade of the world, N. Y., 1913, is an
 account, popularly written, of the commerce of the more important
 European states just before the outbreak of the war. General histories
 of the war give incidental attention to the course of commerce, but
 treat fully only the topic of submarine activity.

 Of the references on the responsibility of Germany, given under
 Chapter XL and in the Questions and Topics above, Veblen, Imperial
 Germany and the industrial revolution, London, 1915, is the most
 thoughtful; the work by Snow and Kral is a government report, Bureau
 of Foreign and Domestic Commerce, Misc. Series no. 65, useful for
 matters of fact.

 Preliminary economic studies of the war, published for the Carnegie
 Endowment for International Peace by the Oxford University Press, and
 cited hereafter under the heading Carnegie Peace, comprise careful
 studies in various parts of the field, of which the most important for
 present purposes are no. 24, Ernest L. Bogart, Direct and indirect
 costs of the great World War, N. Y., 1919, and no. 9, J. Russell
 Smith, Influence of the great war upon shipping, N. Y., 1919.

 The topics of money, prices, and foreign exchange lead the student
 into a great mass of literature quite apart from his usual sources.
 On questions of fact a convenient compilation is presented by the
 Secretariat of the League of Nations, Currencies after the war,
 London, 1920, and a wealth of material is comprised in the reports
 of the Brussels International Financial Conference of 1920. For
 current facts and discussion see Bulletin of the Federal Reserve Board
 (Washington, monthly), The Annalist, a weekly publication of the N.
 Y. Times, and, besides the other financial papers, the bulletins of
 New York banks (Federal Reserve, National City, Guaranty Trust).
 The ordinary student will best employ his time by a careful review
 of the principles of paper money and of foreign exchange, as they
 are presented in manuals of economics. F. W. Taussig, **Principles
 of economics, 2 vol., 3d ed., N. Y., 1921-1922, deserves particular
 recommendation.




CHAPTER LV

THE UNITED KINGDOM, 1914-1920


=727. Statistics of English trade, 1913-1919.=—Statistics of the
general trade of the United Kingdom in the war period are given in the
following table, to which is added a column showing the excess value of
the imports of merchandise and a column showing the excess value of the
import (I), or export (E), of gold.

  (_Figures in millions of pounds sterling._)
  =========================================================
         |  Total  | Domestic | Foreign | Excess  | Excess
         | imports |  exports | exports | imports |  gold
  -------|---------|----------|---------|---------|--------
   1913  |   769   |    525   |   110   |   134   |  I  13
   1914  |   697   |    431   |    95   |   170   |  I  28
   1915  |   852   |    385   |    99   |   368   |  E  29
   1916  |   949   |    506   |    98   |   345   |  E  21
   1917  |  1,064  |    527   |    70   |   467   |  E 150
   1918  |  1,316  |    501   |    31   |   790   |  I  51
   1919  |  1,626  |    799   |   165   |   662   |[4]
  =========================================================


=728. Interpretation of the statistics.=—Statistics of commerce in the
war period are necessarily inaccurate, and two points particularly
should be borne in mind in analyzing these figures. (1) The statistics
omitted an immense trade in government-owned goods; figures of the
actual movement of merchandise should be much larger to give an
accurate idea of the facts. The correction would apply particularly
to the earlier years of the war, and would affect imports more than
exports.[5]

(2) Prices were rising rapidly, with the inflation of the currency;
in 1919 they were about two-and-one-half-fold the prices of 1913. The
correction to be applied, to ascertain the physical volume of trade,
would affect both imports and exports.

Clearly the trade of the United Kingdom, if measured not in paper
values or in gold values but in quantities of physical goods, declined
during the war. The shrinkage was most marked in re-exports, of foreign
and colonial merchandise. The English had to renounce most of the
business that they had been used to transact as middlemen, distributing
through the world the goods of other countries. The values of domestic
exports also declined at the beginning of the war, and though they
returned later to about their former level, the volume of actual
wares must have shrunk seriously, to half or less. Only in the case
of imports do we find a rise in value that keeps pace with the rise
in prices, and indicates a flow of goods that persisted and perhaps
increased in amount. These results are what we should anticipate.
“Business as usual” is a motto favored by the private merchant, but one
which spells ruin for a people engaged in war. To make war effectively
they must abandon their usual employments, turn away their regular
customers, seek from outsiders only the things that offer a military
advantage, but seek all that they can get of those things.

=729. Problem of acquiring and of paying for the imports.=—The most
serious problem for England was to get the goods across a sea infested
by submarines, in ships that had constantly to be renewed, through
terminals choked by an extraordinary congestion of traffic. This was
the vital problem, which strained the energies both of the military and
industrial forces of the country, but which by their cooperation was
solved. A problem of secondary importance at the time, but important
always, was that of paying for the goods.

England had long been used to import goods in excess of those exported.
The figures for 1913, £134 million excess value of imports over
exports, may be taken as a normal measure of conditions in the recent
period of peace. Let the reader, however, glance down the column giving
the excess of imports in the years following, amounting 1914-1918 to
more than £2,000 million, and he will appreciate the magnitude of the
problem involved.

=730. Details of the method of payment.=—One mode of payment is
indicated in the table, in the column of gold shipments. £200 million
of gold were exported (in excess of imports) in the three years
1915-1917. The fact that in the year 1914 and particularly in 1918
England was able to add to the government’s gold reserve is striking
evidence of the country’s financial strength. The net excess of gold
exported, 1914-1918, amounted only to about £120 million, and went but
a little way toward payment for the excess of merchandise imported.
Reference to an earlier chapter (section 448) will indicate other
resources which the country had at its disposal. British ships which
carried freight for foreigners during the war received extraordinarily
high rates, but many ships were pressed into government service, many
were lost, and considerable sums had to be paid to neutral carriers.
Net earnings on shipping could hardly have maintained the level of
the period before the war, although in one estimate they are credited
with a contribution, 1914-1918, of £600 million. A more considerable
resource, ideal as a “liquid” asset and adequate in amount to more than
any demand that was made upon it, lay in the vast investments that
England had made in other countries. The sum of these investments is
estimated to have amounted in 1914 to £4,000 million—twice the total
adverse balance of merchandise imports. If they had been kept intact
the annual returns from them in the five years 1914-1918 would have
amounted to nearly half of the bill to be met. Actually they were
“mobilized” by the government early in the war, by an arrangement under
which the holders exchanged them for government bonds; they were then
used as collateral for loans abroad or were sold outright. Estimates of
the amount of foreign investments thus sold vary from £500 to £1,000
million. Finally the government borrowed abroad over £1,000 million;
that is, it paid the foreigner for the merchandise which he had shipped
by getting another foreigner to advance the money to him.

The figures given above are in most cases rough estimates, but even
at the minimum they amount to a total considerably above the £2,000
million which was suggested as the sum required. In fact, England was
herself lending large amounts abroad in the very period in which she
was herself borrowing. She found it necessary to support some of her
dominions and allies by loans which amounted altogether to about
£1,800 million.[6]

=731. Character of exports and imports.=—In general character the
trade of the United Kingdom remained unchanged through the war.
Four-fifths of the exports, roughly, continued to be articles wholly
or mainly manufactured; coal was the all-important item among the
raw materials. On the other side of the account three-quarters of
the imports continued to consist of food-stuffs, raw materials and
articles mainly un-manufactured. On both sides of the account, however,
there were great changes in the relative standing of the items in
detail, to accord with the shifts in demand occasioned by the war. The
exports of textiles were fairly well maintained; they were largely
produced by women, and the factories were not adapted to serve other
military needs. The exports of iron and steel and their products to
all countries except France declined sharply. The production of iron
remained nearly constant, and the production of steel increased by
one-half, but the metal was urgently needed for military purposes, the
shops that worked it up were turned into military establishments, and
their products were in large part withdrawn from general trade. In
recent years before the war the United Kingdom had exported every year
nearly 5 million tons of iron and steel and manufactures thereof. The
quantity fell in 1914 to below 4, in 1915-1916 to about 3, in 1917-1918
to about 2. The metal was still leaving the country in this period,
but it was destined to a more grim purpose than money-making, and was
not recorded in the statistics. Among the imports those items showed
the most marked increase which served the primary needs of subsistence
(rice, wheat flour, bacon and hams, cheese, milk, cocoa, etc.), or were
directly available for military use (fuel oil, gasoline, copper, arms
and ammunition, chemicals, etc.).

=732. Sources of imports.=—The war entailed changes even more sweeping
in the direction of English trade than in the items composing it.
Among the countries of the world Germany had an importance second only
to that of the United States as a source of imports into the United
Kingdom. If to Germany be added the other Central Powers, and Belgium,
of which all but a small fragment was soon occupied, a territory was
cut out which in 1913 had furnished over one-sixth of the imports for
consumption in the United Kingdom. The following table indicates how
these losses were made good, and where the additional supplies were
procured which the war demanded.

PERCENTAGE OF VALUE OF IMPORTS FOR CONSUMPTION

  ===================================================================
                           | 1913| 1914| 1915| 1916| 1917| 1918| 1919
  --—--—--—--—-|---|---|---|---|---|---|---
  From British Possessions |  20 |  23 |  28 |  29 |  32 |  32 |  34
  From United States       |  20 |  21 |  30 |  33 |  37 |  40 |  35
  From all other           |  60 |  56 |  42 |  38 |  31 |  28 |  31
  ===================================================================

The extent to which England satisfied her needs, within the Empire
is the more remarkable because of the distance of some of the most
important possessions, which put an additional strain on shipping
that already had to do double duty.[7] Most striking, however, of any
feature of the table, is the position of extraordinary importance it
gives to the United States, to be explained by the fact that this
country was relatively near, was blessed with an abundance of the
commodities required, and was inclined to the Entente even before
it entered the war. In the years 1917 and 1918 the United States is
credited with having “furnished from 50 to 95 per cent of the United
Kingdom’s total imports of wheat, wheat flour, corn, oats, barley,
bacon, hams, glucose, kerosene, motor spirits, lubricating oil, fuel
oil, pig iron and crude steel, raw copper, spelter, raw cotton,
tobacco, etc.”

=733. Markets for exports.=—In times of peace a country is in general
more interested in markets for its exports than in sources from which
to supply its imports. The condition is reversed in time of war, for
reasons that have already been suggested. The Central Powers and
Belgium took 13 per cent of the exports of the United Kingdom in 1913,
but the closing of this market was of relatively slight consequence
at the time. The volume of British products available for export
diminished so much that there were few markets to which the flow of
goods was maintained. Exports even to the United States barely held
their own, in spite of the phenomenal increase of imports from this
country.

One country, France, was an outstanding exception to the general rule.
The United Kingdom had been used to import from that country more in
value than it exported thither. The war effected an abrupt reversal of
the situation; imports from France declined, exports thither increased
enormously.

  SPECIAL TRADE OF UNITED KINGDOM WITH FRANCE, 1913-1919.

  =================================+====+====+====+====+====+====+====
                                   |1913|1914|1915|1916|1917|1918|1919
  ---------------------------------+----+----+----|----+----+----+----
  Imports into U. K., £ million    | 41 | 33 | 27 | 22 | 20 | 32 | 44
  Exports from U. K., £ million    | 29 | 26 | 70 | 93 |112 |131 |147
  Per cent total exports from U. K.|  5 |  6 | 18 | 18 | 21 | 26 | 18
  =================================+====+====+====+====+====+====+====

The interpretation of these changes is simple. France was the
battlefield on the western front. British exports thither were either
supplies for the front, or were destined to relieve French labor and
products for military service.[8] Toward the end of the war France was
taking about two-thirds of the total British export of iron and steel
manufactures.

By a concentration of resources and energies such as pictured here
the war was won. Meanwhile, however, England was neglecting her
old customers in various parts of the world, both in the British
Possessions and foreign countries. The countries of South America were
forced to turn to the United States for manufactures which had formerly
reached them from Germany or England; the countries of the Far East
were forced to turn to Japan. One of the most serious of the problems
of the period following the war was to England the recovery of the
markets which she had had to sacrifice in the stress of the conflict.

=734. Effects of the war on agriculture.=—To follow out the influence
of the World War on the internal organization of the countries engaged
is beyond the scope of this book. A revolution in commerce such as that
described in the last few pages reflected, of course, a corresponding
change in internal conditions. The war dissolved old traditions and
loosed new forces; the countries engaged in it will never be again what
they were before 1914. There is space here only to sketch briefly a few
of the changes.

The imperative demand for food, when incoming cargoes were constantly
being sunk before they reached port, put on British agriculture a
strain which was felt more keenly because of the large proportion of
agricultural laborers drawn into military service. One result which
promised to have a lasting effect was the introduction of improved
mechanical equipment, particularly the modern tractor. The heavy
taxes on the owners of large estates forced into the market great
areas of land which had been held as a social rather than an economic
investment; and laws were passed designed to put agriculture on a more
businesslike basis, and particularly to further the growth of small
holdings. So deeply rooted, however, are the traditions of English
rural life that it would be hazardous to predict the issue of these
changes.

=735. Effects on industrial organization.=—In the more important field
of manufacturing industry the changes were likewise sweeping and the
permanence of their effect appears to be more certain. Government
control was general and despotic. It was heavy-handed, and was often
ineffective. It was attended by much friction and waste. It did at
least accumulate and disseminate the best technical information and it
was ruthless in scrapping antiquated equipment. It stimulated original
and constructive thought, if only by reaction against its own arbitrary
rules. When manufacturers escaped from it at the close of the war they
had already learned much about their business that was new and valuable
to them, and were in the way of learning more by their own initiative.

The English, like other peoples, had depended very largely on Germany
for synthetic dyes; that is, those dyes which are manufactured in the
laboratory by chemical processes, and which have driven most of the
natural coloring matters from the field of industry. After the outbreak
of the war they suffered for this dependence on two accounts; first
in their textile industry by the lack of dyes of good quality and of
the requisite variety, second in the field of military operations
by the superiority of the Germans in the manufacture of explosives,
to which the plant of dye factories is well adapted. Early in the
war, therefore, in 1915, “British Dyes, Limited” was formed with the
encouragement and financial support of the government. This was a
combination of manufacturers using dyes, designed to organize the
production of synthetic dye-stuffs by the most advanced methods and
with a liberal provision for scientific research. This company did
not drive from the field individual producers, who actually made great
progress during the war. It is significant, however, of a tendency
toward combination, which had been less marked in England than in
Germany or in the United States, and which had hampered the English
in competition with their rivals. Government control during the war
greatly facilitated the movement, which appeared in other industries
and promised to break down the separatism of the old-fashioned English
manufacturers.

=736. Effects on mercantile and financial organization.=—In the broader
fields of marketing and finance the English took stock of their
deficiencies and set to work to remedy them. There was a noteworthy
movement toward amalgamation in the banking business, reducing the
number of competing units and making more effective the resulting
institutions. Particularly significant was the organization under royal
charter of the British Trade Corporation, with an authorized capital
of £10 million. This company was actually a bank, much like the great
German banks of the period before the war, but it was not officially
so styled, because it was meant to offer services which had not been
characteristic of conservative English banking.

“It will not endeavour to compete with the business of existing British
banks and merchants, and it will not accept deposits at call or short
notice, except from parties who are proposing to make use of its
overseas facilities. Its aim will be to assist with the co-operation
of banks and other institutions the inception of new undertakings, and
for this purpose it will promote the formation of syndicates and the
placing of issues. When British capital is raised by its means for
overseas enterprises, it will seek to secure that orders in connection
with new undertakings are placed in this country. It will pay special
attention to the study of new schemes, and for this purpose it will
develop an Information Bureau with representatives abroad which will
keep in touch with the Department of Commercial Intelligence of the
Board of Trade. It will also be ready to give financial assistance
to arrangements for promoting the better organisation of British
industries.”

=737. Effects on labor.=—In the world of labor, as in the sphere of
leaders, the war wrought far-reaching changes. The sudden demand for
men in the field necessitated the withdrawal of laborers from industry
at the very time when the demand for service at home to support the
military establishment was most urgent. There followed a strain on
the forces of labor which in some cases was allowed to over-tax the
capacity of the worker, not only to his own personal injury but also to
the disadvantage of the public; while in some cases the laborer, not
properly educated in patriotism and thrift, exploited the situation
to extort high wages which he spent extravagantly. In the course of
time these extremes were evened out, but they illustrate the stresses
which permeated the whole industrial structure and which persisted in
one form or another until the end of the war. There was necessarily
a great “dilution” of skilled labor, with the labor of women and of
unskilled men and youths. Trade unions for a time renounced the strict
application of their rules, while at the same time they extended
greatly their membership. Conflict with employers was postponed, in
general, during the course of the war. But the feeling grew strong in
the ranks of labor that an undue share of the burden was thrown upon
the worker, and that the capitalist-employer had an undue share of
the returns and too nearly absolute control. The Russian revolution
appears to have had only a very slight influence on the spread of these
doctrines, which can fairly be considered the natural product of war
conditions in an industrial democracy. With the close of the war a
number of labor conflicts came to a head, and one in coal-mining which
was long continued, had a particularly serious effect upon industry in
general.

=738. Control of commerce and commercial policy.=—Early in the war the
trade of the United Kingdom was placed by the government under strict
control. In the emergency of the war it was obviously proper to assure
the priority of national over private interests, and the shortage of
ships made regulation doubly important. The importation of some wares
was prohibited outright, of some wares was restricted to a definite
quantity, of some wares was allowed under government license. Similarly
exports were placed under control, to keep the needed stocks at home,
and to make sure that enemy powers did not profit by British trade.
All these measures had a military object, and had no significance with
regard to the traditional policy of free trade. In the second war
budget, however, taking effect in 1915, the list of dutiable imports
was extended to include some manufactured wares (cinema films, clocks
and watches, motor cars, and musical instruments), which were subjected
in general to an import duty of 33-1/3%. The measure was designed to
give revenue, not protection, and it had little practical importance;
the importation of most of these articles was soon absolutely
prohibited. As a departure from the principles that had been followed
in the preceding half century it had considerable significance.
Significance attached also to the arrangement in a later budget by
which preferential rates, usually two-thirds or five-sixths of the full
rate, were established on most of the articles subject to duty, and
an opportunity was thus afforded to make some return to the British
dominions for the preferences which they had long allowed.

=739. Report of the Committee on Commercial Policy.=—An Economic
Conference of the Allies was held at Paris in 1916, at which was
discussed the commercial policy to be pursued by the allied powers
at the close of the war. The conference was probably designed to
frighten the Germans into making peace, and had no practical results
of importance. It did, however, bring to the attention of the English
the questions of policy which they must face, and occasioned the
appointment of a Committee on Commercial and Industrial Policy after
the War, including a number of prominent and influential members, which
made its final report in 1918. The substance of the report was as
follows.

The committee condemned the plan of establishing a comprehensive
tariff to be used in bargaining with other countries, to force
concessions in rates from them; and also the plan to impose duties
on manufactured imports as a source of revenue. On the other hand it
favored duties in specific instances to prevent “dumping,” the sale
of goods in a foreign market at prices lower than in the country of
manufacture; and it urged, in the light of experience of the war that
protection should be afforded, “at all hazards and at any expense,”
to industries which it described as “key” or “pivotal.” Such were the
industries providing synthetic dyes, zinc, tungsten (for high-speed
steel), magnetos, optical and chemical glass, hosiery needles,
precision gages, and certain drugs and chemicals. The United Kingdom
had depended on other countries, particularly Germany, for the supply
of these products, and had then paid dearly for the lack of them.
Finally, the Committee approved the principle of imperial preference,
and advised that preferential treatment be accorded to the British
Possessions in the case of all customs duties established.

=740. Safeguarding of Industries Act, 1921.=—By an act of Parliament
which went into effect in 1921 the most important recommendations of
the committee were given the force of law. The act imposed an import
duty of 33-1/3% _ad valorem_ on a long list of articles, perhaps 3,000
altogether, defined in detail by the government Board of Trade. The
general character of these articles has been already indicated in
the preceding section; they were the products of “key industries,”
without which other and larger branches of industry would be lamed
in operation. Another section of the act was designed to prevent
“dumping.” It empowered the Board of Trade to protect industries in the
United Kingdom by a duty of 33-1/3% from the competition of articles
offered for sale there at prices below the cost of production in
the country of origin, or at prices abnormally low by reason of the
depreciation of the currency in that country.


QUESTIONS AND TOPICS

 1. Chart the statistics of British trade, 1913-1919, continuing if
 practicable the graph previously constructed.

 2. Immediate effects of the war on the course of British trade.
 [British oversea commerce in war time, Quarterly Rev., Jan. 1915, 223:
 252-265; Trade in war time, Polit. Quarterly, 1916, no. 7, 99-121.]

 3. The balance of trade in 1916. [H. J. Jennings in Fortnightly Rev.,
 1917, 107: 302-312.]

 4. In what way did each of the imports in the list of those supplied
 by the United States contribute to maintain military efficiency?

 5. Effects of the war on agriculture. [J. B. Firth in Fortnightly
 Rev., 1917, 107: 595-605; A. W. Ashby, in Edinburgh Review, 1917, 225:
 343-363; H. Wyatt, Development of the agricultural motor, Quarterly
 Rev., 1917, 227: 194 ff.]

 6. Agricultural policy. [L. Smith Gordon in Quarterly Rev., 1917, 227:
 178 ff.; F. D. Acland in Contemp. Rev., May, 1917, 111: 570-578; E.
 Lipson in Fortn. Rev., 1917, 107: 100 ff.]

 7. Industrial efficiency in the war. [A. Shadwell in Edinb. Rev.,
 Jan. 1915, 221: 151-177; B. S. Rowntree, Nineteenth Cent., 1917, 81:
 399-412.]

 8. The British Trade Corporation. [H. J. Jennings in Fortn. Rev.,
 1916, 106: 841-851; R. H. I. Palgrave in Quart. Rev., Jan., 1918, 229:
 143-153; C. S. Addis in Edinb. Rev., July, 1918, 228: 43-58.]

 9. The labor movement during the war. [G. D. H. Cole in Amer. Econ.
 Rev., Sept., 1918, 8: 485-505; J. A. Hobson in Contemp. Rev., Nov.,
 1920, 118: 638-645; R. S. Rowntree in Contemp. Rev., Oct., 1917, 112:
 368-379.]

 10. Railroads in and after the war. [E. A. Pratt in Nineteenth Cent.,
 1916, 80: 398-410; J. H. Balfour-Browne in Nineteenth Cent., 1918,
 83: 619-636; Edinb. Rev., Jan., 1917, 225: 84-103; W. M. Acworth in
 National Rev., 1919-20, 74: 256 ff.]

 11. Shipping at the close of the war. [J. Hilton in Edinb. Rev.,
 Apr. 1918, 227: 359-382; S. Brooks in Nineteenth Century, 1918, 84:
 1116-1129; C. Maughan in Quart. Rev., Oct., 1919, 232: 471-488; A.
 Hurd in Fortn. Rev., 1920, 113: 584-597.]

 12. Proposals of the Paris Conference of 1916, regarding trade policy
 after the war. [H. Cox in Edinb. Rev., July, 1916, 224: 189-208; J. A.
 R. Marriott in Nineteenth Century, 1916, 80: 1097-1112.]

 13. Report of the Committee on Commercial Policy. [Beauchamp in
 Contemp. Rev., May, 1917, 111: 545-552; L. J. Reid in same, July,
 1918, 114: 35-40.]

 14. Tariff policy at the close of the war. [H. Cox in Edinb. Rev.,
 Apr. 1917, 225: 379-408, and Oct., 1918, 228: 387 ff., with many
 references to contemporary opinion.]


BIBLIOGRAPHY

 Most of the statistical facts of primary commercial importance are
 to be found in the annual volumes of the Statistical Abstract of the
 United Kingdom. A useful compilation is offered by William A. Paton,
 *The economic position of the United Kingdom, 1912-1918, Washington,
 1919, Bur. of For. and Dom. Commerce, Misc. Series no. 96.

 Of the publications of the Carnegie Peace Endowment the following
 pay special attention to the United Kingdom: vol. 11, B. H. Hibbard,
 Effects upon agriculture; vol. 18, C. W. Baker, Government control and
 operation of industry; vol. 7, F. L. McVey, Financial history; vol. 4,
 F. H. Dixon and J. H. Parmelee, War administration of the railways;
 vol. 14, M. B. Hammond, British labor conditions and legislation. J.
 A. Salter, Allied Shipping Control, Oxford, 1821, is the first of a
 British series of publications of the Carnegie Peace Endowment which
 promises to make important contributions to our knowledge of the war
 period. Howard L. Gray, War time control of industry: the experience
 of England, N. Y., 1918, is accepted by competent British critics as
 an excellent presentation of the subject.

 The British Association for the Advancement of Science stimulated
 inquiries into “Labour, finance and the war,” which have been edited
 by A. W. Kirkaldy and published under that title.

 The National Civic Federation published a report on The labor
 situation in Great Britain and France, N. Y., 1919, which aimed to
 describe impartially conditions and policies. In the writings of G.
 D. H. Cole (Labour in war time, London, 1915, etc., etc.) will be
 found a vigorous criticism of the existing system; for a corrective
 see L. L. Price, Mr. Cole on labour problems, Economic Journal, June,
 1919, 29: 186-201. Space is lacking here for reference to the many
 publications on Whitley Councils, Gild Socialism, etc., and to the
 various aspects of “reconstruction.” A brief report entitled Economic
 reconstruction, from the Bureau of For. and Dom. Commerce, Misc.
 Series no. 73, Washington, 1918, attends particularly to commerce and
 commercial policy, and is relatively full on the United Kingdom; it
 can if necessary be made to serve as a substitute for the full report
 of Lord Balfour of Burleigh’s committee on commercial and industrial
 policy [Cd. 9035], which was published in the parliamentary set for
 1918, vol. 13, with an extensive report on shipping and other reports
 on special industries.




CHAPTER LVI

FRANCE AND THE PROBLEM OF REPARATIONS


=741. Effects of the war upon the commerce of belligerent and of
neutral states.=—The commerce of the United Kingdom in the period of
the war has been treated at considerable length not only because it was
itself an important factor in determining the outcome of the struggle,
but also because it illustrated the general conditions of the period.
War brought to the other belligerent states the same urgent need of
imports, affected in a similar way the organization of production, and
restricted exports. To the neutral states the war brought some dangers
and some losses, but it brought also a great commercial opportunity.
If they were in a position to supply the needs of the belligerents
they could charge unheard of sums for their services. Individual
merchants who seized the opportunity made great fortunes, in the
Netherlands, in the Scandinavian states and in Spain. In neutral as
well as in belligerent states, however, the waste of war brought loss
and suffering; while some few individuals grew richer the mass of the
people grew poorer.

=742. Statistics of French commerce, 1913-1919.=—The most important
features in the commerce of France in the period of the war appear in
the accompanying table. As the table does not take into account the
depreciation of the French currency in the course of the war and gives
merely nominal exchange equivalents, the reader should be cautious in
the comparison of figures in the upper and lower part of a column, and
in the comparison of these “paper” figures with figures representing
actual gold dollars, as given in the statistics of the United
States.[9] Figures in any horizontal row are strictly comparable, since
they represent an equal amount of depreciation.

  TRADE OF FRANCE, 1913-1919.

  (_Figures in hundred millions of dollars; 1 signifies approximately
  $100,000,000. The left-hand column under every heading gives imports;
  the right hand column gives exports._)

  =======+===============+==============+==============+=============
         | Food products | Material for | Manufactures | Total trade
         |               |   industry   |              |
         +-------+-------+-------+------+-------+------+-------+-----
         |   I.  |  E.   |   I.  |  E.  |   I.  |  E.  |   I.  |  E.
  -------+-------+-------+-------+------+-------+------+-------+-----
   1913  |    4  |   2   |   10  |  4   |    3  |  7   |   16  |  13
   1914  |    4  |   1   |    7  |  3   |    2  |  5   |   12  |   9
   1915  |    6  |   1   |    9  |  1   |    6  |  5   |   21  |   8
   1916  |    8  |   1   |   13  |  2   |    9  |  7   |   29  |  10
   1917  |   13  |   1   |   23  |  2   |   17  |  8   |   53  |  12
   1918  |   10  |   1   |   18  |  2   |   12  |  5   |   40  |   8
   1919  |   12  |   1   |   18  |  3   |   11  |  7   |   41  |  12
  =======+=======+=======+=======+======+=======+======+=======+=====

=743. Changes in imports and exports.=—Attending first to the
horizontal row giving conditions in 1913 we find France able to
enjoy a surplus of imports by reason of her foreign investments,
in Russia and other countries; the imports consisted mainly of
industrial raw materials, to a less extent of food products, still
less of manufactures. The country made payment for its imports mainly
by finished manufactures, but exported also raw materials and food
products. Now following down the vertical columns the reader will
note an absolute decline of the value of exports, even in terms of a
depreciated currency; this implied, of course, a much more serious
shrinkage in the quantities of wares sold abroad. Accompanying this
movement was a rapid expansion in the nominal value of the imports,
sufficient in some branches to indicate an actual increase in the
volume of trade, and resulting in a divergence in the values of imports
and exports which signified that France was incurring a heavy debt
abroad.

=744. Changes in the direction of trade.=—From Germany France had
received in 1913 about 13 per cent of the total value of her imports,
from Belgium about half as much; so that the closing of those two
countries alone involved the source of one-fifth of the French import
trade. Russia had not been so important as a source of supply,
and trade with the Central Powers aside from Germany had not been
considerable. The following table indicates the sources to which France
turned to obtain the means for carrying on the war.

  IMPORTS INTO FRANCE, BY COUNTRY FROM WHICH OBTAINED

  (_Figures in hundred millions of dollars; .1 signifies approximately
  $10,000,000._)

  ================+=====+=====+=====+=====+=====+=====+=====
                  | 1913| 1914| 1915| 1916| 1917| 1918| 1919
  ----------------+-----+-----+-----+-----+-----+-----+-----
  United States   | 2   | 2   |  6  |  9  | 19  | 13  | 11
  United Kingdom  | 2   | 2   |  6  |  8  | 13  | 11  | 10
  Spain           |  .5 |  .4 |  1  |  1  |  3  |  1  |  1
  Italy           |  .5 |  .3 |  1  |  1  |  2  |  1  |  1
  Argentine       |  .7 |  .4 |  1  |  1  |  2  |  2  |  2
  Algiers         |  .6 |  .6 |  1  |  1  |  1  |  1  |  1
  ================+=====+=====+=====+=====+=====+=====+=====

The exports of France, measured even in the inflated value of
the period, declined in the case of most countries of commercial
importance; the noteworthy exception was Italy, to which, in the course
of the war, exports were double or triple the usual value of the
preceding period of peace.

=745. French finances during the war.=—French finances were in bad
condition at the outbreak of the war. Expenditures had increased
greatly in the decade before 1914, and the government was slow to
recognize the necessity of heavier taxes. In the years 1908-1914 every
year but one had shown an actual deficit. After mobilization, which
even in August, 1914, had called out nearly 4 million men and early in
1915 had called over 5 million, it was particularly difficult to devise
and apply new taxes; while in the meantime the enemy had occupied
some of the richest industrial districts, contributing normally about
15 per cent of the public revenue. In consequence the government
raised by taxation only a small proportion of the funds required
by the expenditures of the war period (Aug. 1, 1914—Apr. 1, 1919),
about one-eighth, as compared with one-quarter in the United Kingdom
and one-third in the United States. Stating figures approximately in
milliards of francs the government incurred a total expenditure of 181,
and met it as follows: 22 by taxes, 86 by loans placed at home, 26 by
loans from the Bank of France, 27 by foreign loans, leaving a floating
debt of 20 still to be provided for in 1919. The last three items had
an important bearing on the commercial relations of France. Loans from
the Bank of France took the form of bank notes, paper money, which
inflated the currency and tended to raise the rate of foreign exchange
on other countries far above the normal par; the unsettled finances
evidenced by the floating debt tended to cause violent fluctuations of
the rate; a foreign debt would, if interest were paid on it, involve
remittance at high rates and would require an increase of exports if no
other resource were available.

=746. Damage done to the devastated districts.=—The amount of the
damage done to property in that part of France where the fighting took
place will probably never be known with any approach to accuracy. The
area affected was not very large, perhaps 10 per cent at most of the
total area of France, of which the smaller part, perhaps 4 per cent
of the total, lay in the devastated districts where the fighting was
fiercest. Unfortunately for France her best coal and iron mines and
almost one-third of her manufacturing industry lay within the area of
invasion; from one-half to nine-tenths or more of some of the textile
manufactures (woolen, cotton, flax and linen) and half of the metal
workers, were in the occupied zone. France was seriously handicapped
during the war by her inability to draw upon the resources of the
occupied regions. Her dependence on imports from the United States
and the United Kingdom would not have been nearly so great if she had
been able to maintain her productive organization unimpaired. She
suffered from the lack of product, but in spite of that she and her
allies won the war. Then she faced a greater loss, that of plant, the
accumulated capital of generations, represented not only in mines and
factories, but also in dwelling houses, in roads and bridges, in the
very fields themselves. In the devastated districts peace restored to
her not an asset but a grievous liability. She owed to her own people
the obligation of repairing the damage and restoring that which had
been destroyed, at a time when she was crippled by other burdens which
the war had cast upon her. Conservative estimates of the loss ranged
from 10 to 15 milliards of gold francs; other estimates (unquestionably
exaggerated for political purposes) went up to 65 or 75 or more.

=747. Territorial gains of France.=—The treaty of peace rendered France
some benefits that may be put on the other side of the account. Most
important to her, among the territorial changes, was the restoration
of the provinces of Alsace and Lorraine, which Germany had taken and
had held since 1871. Lorraine included the richest bed of iron ore in
Europe; from that province Germany had derived, since the development
of the basic process of steel manufacture, three-fourths of her annual
supply of ore. The phosphate slag, which was a by-product of the basic
process, was a valuable fertilizer; and a great bed of potash in Alsace
offered another important agricultural resource. To atone to some
extent for the wanton damage done to the French coal mines, which could
not be repaired for years, Germany ceded ownership in the coal mines
of the Saar basin, on the border of Lorraine, which did not, however,
become a part of France, but was left under international control.
These changes doubled French capacity for iron production. They left
her still short of coal, particularly of the coking variety needed for
blast furnaces; and promised to render her the greatest return if she
shipped her ore to the Ruhr district of Germany to be smelted.

=748. The question of reparation; Germany’s quick assets.=—Important as
were these territorial changes for the future of France they offered
little help in her present emergency. She needed immediately a great
fund of fluid wealth, which could be used to repair the damage done to
her by the war, and felt that she had the right to look to Germany, the
deliberate aggressor in the conflict, to make good the losses which she
had suffered.

Reference to the table of costs of the war in a preceding chapter
will show the lamentable inadequacy of German resources to make good
the total losses for which Germany was responsible. The costs could
have been met only in small part even if the total national wealth
of Germany as it was before the war could have been expropriated.
Some parts of that wealth, indeed, could be and were taken; such were
securities representing German investments in foreign countries, and
ships, which could be moved to any part of the world without losing
their value. In the aggregate these items went but a little way toward
meeting the total costs. Another item, the stock of precious metals
which the German government had accumulated and retained, was not so
readily available as it appeared to be; on that stock was based the
whole structure of public and private credit in Germany, and a drain
upon it, if excessive, would cause a collapse that would seriously
affect the solvency of the country. Germany was in such desperate
straits at the close of the war that the allies of the Entente were
forced to allow her to buy food from the outside with part of the gold
reserve, and saw it melting away before their eyes. In sum, the “quick
assets” of Germany were pitifully small to meet the bill of costs; they
were estimated to amount to several milliard dollars, but when the
necessary deductions were made they offered scarcely one milliard for
reparations.

=749. Principle conditioning Germany’s capacity to pay.=—Most of the
wealth of Germany was fixed in the country, and was not directly
available for reparation. There was no sense in confiscating and
distributing it. The reader will better understand that essential point
if he will face the question: how could the benefits arising from
the ownership of that wealth be transferred to other countries to be
enjoyed in them? Suppose that you are granted, to repair your losses
in the war, the ownership of a German farm or factory; how will you
get any good from it? You want some real material good, something that
you could enjoy yourself, or could exchange to advantage. A piece of
paper would not satisfy you. Gold would be acceptable, but the Germans
had little of that left, needed a minimum amount to enable them to
continue in business, and could get more only as they bought it abroad.
To pay you something real the Germans would have to ship out something
real, whether they paid it directly to you or bought with it “foreign
exchange,” that is, the right to something real, gold or its material
equivalent, in the country in which you live. After the initial payment
of the country’s quick assets, _Germany could pay only a sum equal in
value to the excess of German exports over imports during any period
of time that might be determined_. This was the fundamental principle
limiting the amount of payment in reparations that could effectively be
imposed.

=750. Practical limits of amount and period of payments.=—There were,
therefore, two factors to be considered in fixing the amount to be
exacted: the amount per year that Germany could pay, and the number
of years over which payments should extend. Trustworthy investigators
reached the conclusion that Germany _before the war_, with its
productive organization unimpaired, would have been able to pay about
one milliard dollars a year. Here was given the maximum for one factor.
Various considerations set a limit to the other factor, the period
of time during which payments should be exacted. On this as on other
points there was no general agreement; the situation at the close
of the war was too tense to permit participants in it to judge the
question calmly. Fair-minded friends of the western allies believed,
however, that the interests of the allies themselves required the
limitation of the period during which the payment should be made to a
definite and reasonably short time, say thirty years, the span of a
human generation. This restriction was prompted by regard to justice,
by the impropriety of visiting on future generations the sins of their
ancestors. It accorded with considerations of political expediency; the
payment of reparations was certain to introduce an element of strain
in international relations, both economic and political, which must
not be too long continued. Finally, and practically of the greatest
importance, the benefit to be derived from reparations grew rapidly
less as the time of payment was extended. The reader doubtless knows
how quickly sums mount up when they are put at compound interest.
He should realize that payments to be made in the future shrink
correspondingly when their present value is computed by a process of
discount. How much will you give for my pledge to pay one dollar fifty
years hence? You are foolish if you offer more than a small fraction
over five cents, when the rate of interest is 6%.

With due regard to all the factors in the settlement sober and
competent students of the question believed that the maximum payment
which should be imposed on Germany might amount to a lump sum in
present value of ten to fifteen milliards of dollars.

=751. Provisions of the Treaty of Versailles regarding reparations.=—By
the Treaty of Versailles (article 231) Germany accepted “the
responsibility of Germany and her allies for causing all the loss
and damage to which the Allied and Associated Governments and their
nationals have been subjected as a consequence of the war imposed
upon them by the aggression of Germany and her Allies.” The treaty
itself recognized that the resources of Germany were not sufficient
for complete reparation, but, most unfortunately, did not itself fix a
definite sum, the maximum which Germany might reasonably be expected to
pay with reference to the practical factors which have been sketched in
the preceding section. Some of the European leaders in the Entente had
held out extravagant prospects of indemnity to their people, and were
unwilling as yet to confess the facts. The exact terms of payment were
therefore left to be settled later by a Reparations Commission which
was given far-reaching powers to get the most it could up to a limit
set so high that it manifestly exceeded German capacity to pay. Then
followed a period of bitter contest in which the Allies by threats, by
fiscal penalties, and by actual occupation of German territory sought
to make good their claims, while the Germans fell behind in payment
and stolidly professed their inability to meet the demands imposed
upon them. Recovery and reconstruction were seriously delayed, both in
western and in central Europe.

=752. London settlement of May, 1921.=—A substantial approach toward
a practicable settlement of the question of reparations was made in
conditions drawn up in London in May, 1921, and imposed on Germany
under threat of an occupation of the district of the Ruhr. The terms
are complicated, and are not worth a detailed description for they will
probably be amended, but they are of interest as indicating the form
that the final settlement may possibly take. A summary of the most
important provisions follows: figures are stated in milliards of gold
marks, a unit roughly equal to 250 million dollars.

Germany was bound to annual payments under two heads: first a fixed
sum of 2 milliards, second, a sum equal in amount to about one quarter
(26%) of the value of German exports for the year, but not less than
1 milliard. On the basis of these annual payments of a minimum of 3
milliard the allies were to issue German bonds of a face value of 50
milliard, on which 5% interest could be paid and still leave available
half a milliard a year to be employed in a sinking fund toward the
extinction of the debt; after a period of about thirty-seven years
Germany would be free. The allies hoped to realize the present value
of the bonds by selling them to investors, and thus get ready funds
for economic reconstruction; while they professed to believe that the
minimum of 3 milliard marks a year was well within the German capacity
to pay. Germany before the war had, indeed, an export trade amounting
to 8 milliard marks and over, while this arrangement assumed only about
4 milliard, but assumed that the exports could carry the burden of a
heavy tax. The provision for the variable payment of 26% of the exports
assured the allies that they would share in Germany’s prosperity if it
actually did return; and arrangements were made for the possible issue
of more bonds on this basis up to the amount of 82 milliard, making the
total capital sum 132 milliard—over thirty thousand million dollars.
The bonds were to be distributed among the allied states in the
following proportions: France 52 per cent of the issue, United Kingdom
22, Italy 10, Belgium 8, and the remainder to other countries.

=753. Objectionable aspect of reparation payments.=—Attention should
now be directed to an interesting and important feature of the
reparation question. Germany, as has been said, could pay an indemnity
only by a surplus of exports over a long period of years. Likewise, the
allies in the long run could receive an indemnity only in the form of
a surplus of imports. Might not this flow of goods, forced by pressure
on Germany, be a curse rather than a blessing to the country receiving
it; might it not undermine home industries? Or, if a tariff protected
the producer at home might it not simply divert this flow to neutral
markets, where the British or French exporter would find himself
crowded out by a competition that was fierce and unyielding because of
the military pressure behind it—the military pressure of his own home
government! If Germany endured the strain would she not at the end of
a generation rule the markets of the world, win the world by losing
the war? The situation sounds so paradoxical that it is hard to realize
how serious is its import. Only by a surplus of exports could Germany
pay. What form could these exports take which would not injure some
interests in the allied countries?

It is probable that considerations of this kind will lead in time to
a considerable moderation of the demands imposed upon Germany. And it
is significant that even in 1921 arrangements were being made for the
payment in kind, by the delivery of coal, timber, building material of
all kinds, of a considerable fraction of the sum due to France.


QUESTIONS AND TOPICS

 1. Report upon one of the neutral states during the war:


 (_a_) Switzerland. [Report of Bureau of For. and Dom. Commerce, Misc.,
 series no. 90.]

 (_b_) Netherland. [Same series, no. 91; B. Abraham, in Fortnightly
 Rev., 1917, 107: 443 ff., 1918, 110: 110 ff.; P. Geyl in Contemp.
 Rev., 1918, 113: 228-294.]

 (_c_) Scandinavia. [E. Björkman in American World’s Work, Feb., 1918,
 35: 437-447.]

 (_d_) Spain. [L. A. Bolin in Edinb. Rev., July, 1917, 226: 134-152; E.
 J. Dillon in Nineteenth Cent., 1918, 83: 386-402.]

 2. Recovery of Belgium. [E. Cammaerts in Contemp. Rev., March, 1920,
 117: 349-365; J. M. Price in Fortnightly Rev., 1920, 113: 467-477.]

 3. The financial effort of France during the war. [J. F. Bloch in
 Annals of Amer. Academy Soc. and Pol. Sci., Jan., 1918, 75: 201-206.]

 4. Territorial gains of France in Europe. [Bowman, The new world,
 86-91; Haskins, in What really happened, etc., 45-66.]

 5. Alsace-Lorraine. [Haskins, Some problems, chap. 3.]

 6. The Saar Basin [Haskins, Some problems, chap. 4; Tardieu, chap. 8.]

 7. Territorial interests of France outside Europe. [Bowman, 91-118.]

 8. Reconstruction in France. [R. L. Buell in Amer. Polit. Sci. Rev.,
 Feb., 1921, 15: 27-51; H. A. Gibbons in Fortnightly Rev., July, 1919,
 112: 64-76; Tardieu, chap. 12.]

 9. The question of reparations: the French position. [Tardieu, chap 9.]

 10. The question of reparations: criticism of the settlement [Keynes,
 chap. 5.]

 11. The question of reparations: the American position. [Lamont, chap.
 11, and Young, chap. 12, in What really happened, etc.; Baruch, 13-75.]

 12. Working of the reparation settlement. [Tardieu, chap. 10.]

 13. Contributions of the peace treaties to the control of commercial
 practices and policy. [Young, in History of the Peace Conference, ed.
 by H. W. V. Temperley, vol. 5, London, 1921, chap. 1, part 3.]


BIBLIOGRAPHY

 B. M. Anderson, Jr., Effects of the war on money, credit and banking,
 N. Y., 1919, Carnegie Peace, vol. 15, covers both France and the
 United States, and describes the course of commercial affairs in
 connection with the question of foreign exchange. An excellent survey
 of the course of French finance is provided by Gaston Jèze., *The
 economic and financial position of France in 1920, in Quarterly
 Journal of Economics, Feb., 1921, 35: 175-214; see also Gide in Econ.
 Journal, June, 1919, 29: 129-137, and both the writers named in Annals
 Amer. Acad. Soc. and Pol. Sci., May, 1921, 95: 151-160.

 On the peace settlement, **What really happened at Paris, by
 American delegates, ed., E. M. House and C. Seymour, N. Y., 1921,
 is well-informed and represents the American position with regard
 to points at issue better than any other book. C. H. Haskins and
 R. H. Lord, **Some problems of the Peace Conference, Cambridge,
 Harvard Univ. Press, 1920, is restricted to territorial questions.
 I. Bowman, **The new world, Yonkers, 1921, treats particularly the
 problems in political geography arising from the settlement, but pays
 due attention to historical and economic factors, and includes many
 valuable maps; the book is indispensable.

 On the subject of reparations the best brief account is that by Lamont
 and Young. Bernard M. Baruch, *The making of the reparation and
 economic sections of the treaty, N. Y., 1920, is more extensive; it
 reprints all clauses of the Versailles treaty which are of economic
 interest. Further material will be found in the elaborate History of
 the Peace Conference, ed. H. W. V. Temperley, of which five volumes
 had been published in 1921.

 André Tardieu, The truth about the treaty, Indianapolis, 1921, is
 an eloquent plea for French claims in their entirety; J. M. Keynes,
 The economic consequences of the peace, N. Y., 1920, condemns the
 reparations settlement as too severe. Either book may mislead an
 uncritical reader.

 Convenient sources of information on the changing conditions of the
 time will be found in Current History, a review published monthly
 by the N. Y. Times, and in Economic Review of the Foreign Press,
 published weekly in London.




CHAPTER LVII

CENTRAL AND EASTERN EUROPE, 1914-1920


=754. Territorial losses of Germany.=—By the terms of peace Germany
ceded territory in the west to France and Belgium, in the north to
Denmark, in the east to Poland. The most serious losses were comprised
in the provinces of Alsace and Lorraine, and in part of the province
of Silesia. Upper Silesia contained mineral deposits, particularly
coal, which the Germans asserted to be indispensable to the industrial
development of their country, and the contest over the rights involved
delayed a decision for more than two years after the signing of the
Treaty of Versailles. The final award, rendered by a commission of the
League of Nations, divided between Germany and Poland the territory in
dispute but arranged that for a period of fifteen years the whole area
be kept under the control of a commission which should recognize the
mixture of interests and should maintain free economic intercourse.

The total losses of Germany, measured in area, population, agricultural
and industrial resources, ranged from 10 to 15 per cent. Losses in
particular resources of great industrial importance were still more
serious. The country was obliged to abandon mines supplying about
one-quarter of the annual output of coal, three-quarters of the iron
output, even a higher proportion of the output of zinc.

=755. Internal losses of the country.=—These losses fixed by the terms
of peace were added to the loss which Germany had already suffered in
the course of the war. The population in 1914 was 68,000,000. Deaths
in the army amounted to 1,800,000, and the number of wounded was over
4,000,000. In the civilian population, also, the mortality in the
latter part of the war had been very high and the vitality of survivors
was impaired. An indication of the extent and character of the losses
is provided by some statistics of Prussia, which show a decline in
population, 1914-1919, in every province but three, and show a serious
decline in the proportion of males. In 1914 there were 102 women to 100
men; in 1919 the proportion was 109 to 100.

Germany emerged from the war not only short in man power, but also
weakened by the depreciation of capital and in serious need of some of
the most important raw materials. The demands of the army had taken
precedence over any other consideration, and had in the four years of
war stripped the country almost bare.

=756. Effects of the blockade.=—The weakening of German resistance
and the final surrender were due in large measure to the inexorable
blockade maintained by the allies of the Entente. Germany made an
extraordinarily effective use of what resources she had. Her scientists
produced nitrates from atmospheric nitrogen and so freed her from
dependence on imports from South America for her explosives. Her
manufacturers made clothing for the people from paper and nettle
fibers. Her officials scoured the country for copper and brass
implements, when the stock of copper for munitions was depleted, and
gleaned a surprising amount of metal for military use. Her military
leaders systematically looted the districts which they occupied.
There are limits, however, to the achievements of the most scientific
synthetic chemistry, or of the most unscrupulous and efficient
administration. A substitute (_Ersatz_) was provided for almost
everything, as the supply of the original good ran low. However
successfully the substitute might imitate the original in appearance it
rarely proved to have the same efficiency in action. German locomotives
deteriorated because they were lubricated with substitute oils and
grease; the German people ran down in vigor and power of resistance
because they were fed and clothed with substitutes.

=757. Commerce of Germany during the war.=—Germany maintained active
commercial relations with the other Central Powers, importing
particularly foodstuffs from the rich plain of the Danube basin, and
lignite (brown-coal) from Bohemia. Trade with the more distant allies,
Bulgaria and Turkey, proved difficult and relatively unimportant.
Railroad facilities were in such demand for the transfer of troops
and the movement of munitions to the front, that they could hardly be
spared for distant service in southeastern Europe; water carriage on
the Danube was preferred but was slow and ineffective.

There was a marked increase in the value of trade with neutral states,
of which three, Switzerland, Netherland and Denmark, were directly
adjacent, while Norway and Sweden were separated only by water which
lay outside the control of navies of the Entente. These states
accounted for about one-seventh (14%) of the total trade of Germany
in 1913, and took on a new importance when Germany was denied other
sources from which to supply her wants. The German government has not
supplied statistics by which to measure changes in trade during the
war, but they can be traced in the commercial statistics of the neutral
states, and are illustrated in the following table.

  FOREIGN TRADE OF DENMARK, 1913-1919

  (_Values in million crowns; crown equals $.27_)

  =====+=========+=========+==========+==========+=========+==========
       |  Total  | Imports |  Total   | Domestic |  Total  | Foreign
       | imports |  from   | domestic |exports to| foreign |exports to
       |         | Germany |  exports | Germany  | exports | Germany
  -----+---------+---------+----------+----------+---------+----------
  1913 |    855  |   328   |    637   |    159   |    84   |    20
  1914 |    795  |   265   |    780   |    275   |    87   |    26
  1915 |  1,157  |   200   |    979   |    436   |   150   |    50
  1916 |  1,357  |   265   |  1,177   |    653   |   132   |    38
  1917 |  1,082  |   237   |    968   |    482   |    97   |     6
  1918 |    946  |   316   |    710   |    307   |    48   |     1
  1919 |  2,605  |   335   |    740   |    187   |   268   |    79
  =====+=========+=========+==========+==========+=========+==========

A feature of the table which deserves particular attention is the
relatively small amount of foreign wares which reached Germany through
Denmark. Doubtless wares of this kind were smuggled across the border
in considerable quantities, and so do not appear in the statistics; but
the strictness with which England, in behalf of the Entente, regulated
the importation of these wares by the neutral countries, allowed no
large surplus for export to Germany, and strangled the overseas trade
of that country.

Germany imported from all these neutral countries foodstuffs,
especially meat and fats; from particular countries she imported iron
ore, metals, and special textiles for military purposes. Payment was
made largely in coal and iron products, for which the small states had
been used to rely on Germany, and which they sorely needed.

=758. Effects of the political revolution.=—Sections above enumerated
various losses which Germany suffered as a result of the war. To
appreciate the condition and prospects of the country after 1918
it is necessary to consider another element of weakness, of which
the importance cannot be questioned, even though it may be hard to
estimate. This is, namely, the political revolution which accompanied
the armistice.

All the faults of the military monarchy of the Hohenzollerns appeared
prominently in the outbreak and in the conduct of the war. The world
paid a tremendous price to be rid of it, and did not count the cost.
The evils inherent in the old political system should not be allowed,
however, to blind our eyes to some merits that it had, notably its
honest and efficient administration. They should not obscure the
important fact that the old system, however bad it might be, was that
to which the German people were used, and without which they were at a
loss. The monarchical system was deep-rooted in German life. Most of
the people accepted it with sincere conviction; the opposition to it,
as exemplified in the party of the Social Democrats, was perfunctory
rather than popular. In reliance on the monarchy the people had
been content to retain a passive attitude; they lacked a sense of
individual political responsibility, and lacked political initiative.
When, therefore, the people realized at last that their trust had been
misplaced, that the war which was to be over (so they had been assured
at its beginning) by Christmas, 1914, was never to be ended until they
had confessed to utter defeat, they swept away the old system but did
not know how to operate the political machine which they erected in
its place. Attempts at social revolution by the radical Spartacists,
infected by Russian doctrines, and at reaction by adherents of the
old military monarchy, rendered the new republic insecure at its
foundations; while the desperate conditions of life prevailing at the
close of the war shattered the former administrative organization and
rendered the new administration costly and ineffective.

=759. Peculiar importance to Germany of sound politics.=—A decline in
political efficiency will have a more serious effect on the productive
organization in Germany than it would have in other countries for two
reasons. (1). The state has taken a particularly active part in the
control of economic affairs. Its power over them was greatly extended
in the course of the war, and is still so great that much depends on
the wise exercise of this power. (2). The state will transmit to the
people by taxation the burden of paying reparations. This burden will
be and ought to be a heavy one. The minimum amount to be paid annually,
under the terms of the London Settlement of 1921, is variously
estimated by German economists to amount to 8 or 16 or 28 per cent of
the total real income of the country. The proportion, if we choose the
middle figure, does not seem unduly high. Many, perhaps most, American
families could sacrifice one-sixth of their income, and still retain
the essentials of health and happiness. Conditions were very different
in Germany at the close of the war. A considerable part of the people
was on a stage of living which may fairly be termed a minimum;
depression below that stage implied an actual loss in productive
efficiency. Under these conditions it was of peculiar importance that
the tax system should be just in principle, economical and impartial
in administration. No slight importance, therefore, attaches to the
fact that the government even in 1921, three years after the armistice,
was still unable to balance its budget, and was meeting its domestic
obligations by issuing more and more paper money, a tax which in the
long run is of all taxing devices the least effective and in its
immediate effects is the most iniquitous.

=760. Dismemberment of Austria-Hungary.=—Some time before the end of
the war, while the power of resistance in Germany still was strong,
Austria-Hungary gave evidence of distress. The state had been held
together by the military dominance of a minority, and as the end of the
war approached and the failure of the military party was evident, the
state dissolved into its component parts by a natural process quite
independent of any action of the Entente.

Fragments of the old dual monarchy were absorbed by bordering
countries. Galicia, the great crescent-shaped province lying to the
east of the Carpathian mountains, went to the new state of Poland. It
had been grievously ravaged in the course of the war, but promised
to develop in time considerable agricultural resources, and was
particularly prized for its supply of petroleum in the east and
the coal mines of the Teschen district attached to it in the west.
Transylvania, with parts of some adjacent provinces, brought to
Rumania an area rich in forest products, with some mineral resources
and some fertile grain land (Banat of Temesvar). Rumania became by
these accessions and by the acquisition of Bessarabia, on the Russian
border, one of the larger states of Europe, with a population (about
16 million) double that of Jugo-Slavia, the next largest state in
the Balkan peninsula. This new state grew out of the old Kingdom of
Serbia, in which the World War began, and which was finally rewarded
for its sufferings in the war by union with the kindred people along
the Adriatic coast and in the southwest of the old dual monarchy. The
trials of Jugo-Slavia were not ended with the war, for it had still to
make good its claims to Fiume, its natural outlet at the head of the
Adriatic. The justice of its claims were not, in the opinion of the
writer, open to serious dispute, but Italy, which had already pushed
its Alpine frontier far past the Austrian districts occupied by an
Italian population, was jealous of a possible rival in the Adriatic,
and refused to agree to the occupation of Fiume by another power. The
unfortunate exploits of the Italian bravado, D’Annunzio, complicated
the issue, but it was at least settled by a compromise between the two
powers which promised in the course of time to give Jugo-Slavia the
commercial outlet essential to its prosperity.

=761. Czecho-Slovakia.=—Of the new states formed within the
boundaries of Austria-Hungary that which gave the greatest promise
of prosperity was Czecho-Slovakia, comprising the old kingdoms of
Bohemia and Moravia, and extending to the southeast to include the
Slovak population which had formerly been included in the kingdom of
Hungary. This new state took that part of the old monarchy which was
most richly endowed with natural resources and which had attained the
highest industrial development. Stating the proportions approximately
it included only one-fifth of the area of Austria-Hungary, but in that
fraction comprised one-third of the factory workers and over one-third
of the mining population. The land was fertile and highly cultivated,
supporting a dense population and providing a surplus of food for
export. The Czechs could look back with pride to a period in the past
when they were one of the leading peoples of Europe, and they had
prepared themselves for self-government by long struggles against the
oppressions of German rulers.

Although Czecho-Slovakia is far distant from the sea it has means of
access to it both by the Elbe and by the Danube, and is at the heart
of the railroad system of central Europe. Provided with a surplus of
products keenly desired in neighboring states, particularly coal, iron
and food, its commercial future appears to be assured.

=762. Magyar Hungary; German Austria.=—Far less favorable was the
condition of the two states, Austria and Hungary, which had been the
seat of the power of the Hapsburgs in the past, and which had prospered
when they had been supported by the labor of subject peoples, but which
were now shorn of this support, and given each its own way to make in
the world.

The Magyar state of Hungary offered at least tolerable prospects of
success. Although it lost the border lands which had formerly supplied
practically all its forest products and much of its minerals, it
retained a compact and fertile territory, one of the granaries of
central Europe, and could hope to exchange its surplus wheat for the
products which it needed.

German Austria was left by the terms of peace in a pitiable condition.
It retained a population of only 6 million, including less than half
of the German-speaking people in the old dual monarchy. Of this total
nearly one-third (1.8 million, 1920) was comprised in the single city
of Vienna, which had grown to this size largely by the political
advantage that it enjoyed as one of the capitals of a great state.
Much of the area of the new state was mountainous, suited to grazing
but not adapted to intensive agriculture. Before 1914 the territory
of the present state was able to produce perhaps two-thirds of the
necessary food supplies consumed by its inhabitants; in 1920, with
powers depleted by the war, it could render only one-quarter. Endowed
with only one mineral resource, iron mines in Styria, Austria could
buy the food required for the maintenance of life only by the exchange
of industrial products made with imported coal out of imported raw
materials. At the close of the war the situation of the country was
indeed desperate, for the people had no resource with which to make a
start in the process of foreign trade. Gradually markets were opened,
and some basis of credit was found for the beginning of commercial
transactions, but meanwhile the government had plunged deep in the
issue of paper money, which depreciated so far that itself formed a
grave obstacle to economic recovery. Austria seemed destined for years
to come to rely upon charity, whether private, public or international;
and many questioned the wisdom of the peace settlement which forbade
the union of this fragment of the German-speaking people with the rest
of Germany.

=763. Poland; earlier history.=—The World War made its greatest
change in the map of Europe not by the transfers of territory between
bordering states, important as these were to the parties concerned,
not by the creation of new states like Czecho-Slovakia but by the
resurrection of an old state, Poland. Poland had played no great part
in commerce in the previous period of its existence. The surplus
supplies of wheat grown on the great estates of its landlords had been
carried by road and river to Danzig, to be shipped to western Europe
in exchange for metals, manufactured wares and exotic products that
made the life of the Polish nobleman more comfortable. The country as a
whole was too backward and too far removed from the centers of European
progress to become an important member of the commercial system of the
time.

The partitions of Poland at the end of the eighteenth century keenly
as they were felt by patriots, made little difference in the life
of the mass of the people. The divided people went their separate
ways: neglected by Austria, schooled and drilled by Prussia, given in
Russia at least access to an enormous market which was later to be a
great stimulus to manufacture. Most of the people were employed in
agriculture under a system of serfdom like the medieval. They were
freed from this in the nineteenth century, and acquired in small
holdings much of the land which had formerly been held in great
estates. A turning point in the economic history of the Polish people
came in the last quarter of the nineteenth century, when manufactures
developed rapidly in Russian Poland, fostered by the high protective
tariff.

=764. Resources of the new Poland.=—The new state of Poland was
welcomed and supported by the Entente as a check on Germany. With a
population of about 25 million it had claim to a place among the larger
powers of Europe. Its economic endowment was adequate if not abundant;
besides a sufficiency of arable land and great forests it had coal
supplies comparable in amount to those of France, the oil of Galicia,
and other mineral resources. Its gravest lack was that of experience
in organization, group-action, both in economics and in politics. In
manufactures the Poles have looked to Jews and Germans for leadership;
the Poles have supplied labor, but have only by exception taken a place
among those responsible for control. Their manufactures showed a high
labor cost and heavy capital charge per unit of product. Behind the
barrier of the Russian tariff they prospered. They could doubtless be
maintained for the supply of domestic needs by protection, but they
have shown slight capacity to win in the world market the opening which
was formerly afforded to them by Russia.

=765. Prospects of Poland.=—In the field of politics, as in economic
affairs, the Poles have yet to prove their mastery of the complicated
problems that arise in the organization of a modern great state. In
the years following the armistice that closed the war they showed a
readiness for military adventure that boded ill for the future of a
country needing all its resources for economic reconstruction. They
soon contracted a heavy debt, by the accumulation of huge deficits in
the budget and the endeavor to pay their way by printing paper money.
The Polish mark, nominally equal to the German and therefore worth
about $.24, declined to a point (Sept., 1921) at which 6,700 were
exchanged for the American dollar. The position of Poland is difficult
at best, and the prospects of the new state will be seriously impaired
if a more sober spirit does not prevail in the national councils.

=766. Russia and the revolution of 1917.=—From the beginning of the war
southern Russia was cut off from commercial contact with the Entente
by the closing of the straits leading into the Black Sea. In the north
the Baltic was likewise closed. Contact was maintained only on Russia’s
Arctic coast, and by the Siberian railroad. Means of access by both
routes were difficult and expensive; the exchange of products was
restricted to those that served imperative military needs.

Since the Russian-Japanese war of 1904 the forces of revolution had
been gathering in Russia. The World War brought these to an explosion
by the sufferings that it imposed upon the people and by the exposure
that it made of the weakness and corruption of the autocratic
government. In March, 1917, an outbreak at Petrograd initiated a
revolution that in six months ran through nearly as many stages,
tending always in a radical direction and leaving the government
finally in the control of the Communist or Bolshevik party.

=767. Soviets and Bolsheviks.=—In the earlier stages of the revolution
great influence was exercised by _soviets_, councils, formed on a
democratic basis to represent workers in factories, peasants and
soldiers, against the traditional leaders of the old régime. The
soviets were features of a world-wide popular movement, which found
their counterpart in the shop-councils of England and of the United
States. The close of the war left the future of this movement still
in doubt, but it appeared to offer a wholesome and welcome change in
industrial relations, provided the workers were willing to accept
responsibilities corresponding to the powers that they claimed. It is
important to an understanding of the Russian revolution to realize that
the democratic features of the soviet system were soon abandoned. The
Bolsheviks counted less than a million in a population of 120 million;
they numbered certainly less than 2 per cent of the adult population.
By their boldness and vigor they dominated the situation, and while
they maintained the pretence of deferring to the popular will they
acted as tyranically and unscrupulously as the autocracy which had
preceded them.

=768. Difficulties of the Bolsheviks.=—The Bolsheviks accepted
as gospel the economic doctrines of Karl Marx, the founder of
modern socialism, and many enthusiasts for social experiments
(“parlor-Bolsheviks”) have expressed regret that they did not have a
better field in which to try out these doctrines. Russia was already
war-worn to desperation when the revolution took place. Fighting
continued, not alone on the external front but now also in civil
conflicts which ravaged the face of the country. The states of the
Entente found not merely that they had lost an ally, but also that a
new enemy to them had arisen, preaching doctrines subversive of the
established order and threatening to undermine their power when the
struggle with Germany was at its height. They stimulated in Russia
opposition to the rule of the Bolsheviks, and sought so far as they
were able to seal Bolshevik Russia in isolation lest it profit by the
exchange of goods, and spread its doctrines.

=769. Failure of Bolshevist communism.=—Under the conditions Bolshevism
was a disastrous failure. Curiously enough it showed its greatest
efficiency in the field of military affairs. In its own particular
department, the production and distribution of economic goods, it
brought Russia to destitution. Fixed capital inherited from the old
order wore out and was not replaced. Railroads and factories ceased
to function properly, not only because of depreciation of equipment
but also because of a decline in the efficiency of laborers. The yield
of agriculture declined so far that a large part of the population
was threatened with the starvation that visited whole provinces.
Pretensions to forms of social service which other governments did not
render were too often found on critical examination to be mere shams;
they certainly counted for nothing over against the gross neglect to
provide for the elementary needs of the people.

=770. Prospects of Russia.=—Years after it had begun the Russian
revolution was still in process of development, and promised to
disturb the life of the people for years to come. By 1921 communism
was a recognized failure, but the lines that would be followed in the
re-establishment of society on the basis of private property defied
prediction. Of this we may be sure, that for decades, perhaps for a
generation following the war, Russia will count for little in the
history of commerce. Little by little its economic structure will be
re-organized. The leaders in the process will be private individuals
from other countries, including probably a large proportion of Germans.
The process will be slow because it will be retarded by political
instability. Russia can hardly be divided into parts; Russia can
hardly be governed as a whole. Economic recovery will be a tedious and
painful process because it must wait upon the political education of
a people who in 1914 had made but the barest beginnings in national
self-government.


QUESTIONS AND TOPICS

 1. Territorial losses of Germany in the peace settlement. [Haskins in
 What really happened, etc., chap. 3; Bowman, chap. 10.]

 2. Effect of the blockade on Germany. [A. E. Taylor in American
 World’s Work, Oct., 1919, 38: 590-600; W. J. Ashley in Quart. Rev.,
 Oct., 1915, 224: 444 ff.]

 3. German war finance. [W. S. Ford in Fortnightly Rev., Apr., 1919,
 111: 616-624.]

 4. The new government in Germany. [W. J. Shepard in Amer. Polit. Sci.
 Rev., Aug., 1919, 13: 361-378.]

 5. Partition of Austria-Hungary. [Seymour in What really happened,
 etc., chap. 5.]

 6. The enlarged state of Rumania. [Bowman, chap. 15.]

 7. Jugo-Slavia. [Bowman, chap. 14.]

 8. Problem of Fiume and the Adriatic. [Johnson in What really
 happened, etc., chap. 6.]

 9. Czecho-Slovakia. [Bowman, chap. 13; M. O. Williams in Nat. Geog.
 Magazine, Feb., 1921, 39: 111-156.]

 10. The new Hungary. [Bowman, chap. 12.]

 11. The republic of Austria. [Bowman, chap. 11; Fortnightly Review,
 April, 1919, 111: 625-635; S. Hoare in Nineteenth Century, 1920, 87:
 409-423.]

 12. The resurrection of Poland. [Lord in What really happened, etc.,
 chap. 4; in Haskins and Lord, Some problems, chap. 5.]

 13. Problems of the new Poland. [Bowman, chap. 19.]

 14. Agriculture and landownership in Poland. [Arctowski, Geog. Rev.,
 Apr., 1921, 11: 161-171.]

 15. Elements in the Russian revolution. [Sir S. Buchanan in
 Fortnightly Rev., 1918, 110: 819 ff.; P. Vinogradoff in Quarterly
 Review, July, 1917, 228: 184-200.]

 16. The Soviets. [Spargo, chap. 2, 3.]

 17. The land question and the revolution. [Spargo, chap. 5.]

 18. Industry under the Soviets. [Spargo, chap. 8.]

 19. Nationalization of industry. [Spargo, chap. 9, 10.]


BIBLIOGRAPHY

 The German government supplied no official statistics of trade during
 the period of the war, and the student is obliged to look to the
 publications of other governments for information. C. D. Snow and J.
 J. Kral, *German trade and the war, Washington, 1918, Bureau of For.
 and Dom. Commerce, Misc. Series no. 65, will be found a convenient
 compilation; this covers trade, manufacture, raw materials and
 substitutes, cartels, labor, finance, etc.

 References to the effect of the peace settlement on the interests of
 Germany and Austria-Hungary will be found in the Questions and topics,
 and in the bibliography of the preceding chapter.

 Literature on the new states in central and eastern Europe is mainly
 in foreign languages; readers of English have to depend on accounts in
 annual encyclopedias, on statistics gathered in annuals such as the
 Statesman’s Year Book, and on reports of American and English consular
 agents. On Poland the reader may consult a brief encyclopedic account
 edited in the English version by E. Piltz, entitled *Poland; her
 people, history, industries, etc., London, 1916; A. B. Boswell, Poland
 and the Poles, N. Y., 1919; and an elaborate study on The Polish
 peasant in Europe and America, by W. S. Thomas and F. Znaniecki, in 5
 volumes, Chicago 1918, Boston 1919-1920.

 On the Russian revolution John Spargo, **The greatest failure in all
 history, N. Y., 1920, can be recommended as a book filled with facts,
 which has in general stood well the criticism of those inclined to
 favor the Bolsheviks. The failure of Bolshevism is amply evidenced
 by the writings of honest partisans of the revolution, such as
 Albert H. Williams, Lenin, N. Y., 1919; Arthur Ransome, The crisis
 in Russia, London, 1921; C. L. Malone, The Russian republic, N. Y.,
 1920; Bertrand Russell, The practice and theory of Bolshevism, London,
 1920. Maurice G. Hindus, *The Russian peasant and the revolution,
 N. Y., 1920, gives a good account of the agrarian question, and a
 questionnaire prepared from documentary material by the International
 Bureau of Labor, entitled in the English version Labour conditions
 in Soviet Russia, London, 1920, throws much light on the industrial
 conditions.




CHAPTER LVIII

THE UNITED STATES, 1914-1920


=771. Statistics of American Commerce, 1914-1920.=—The course of the
commerce of the United States during the war and the few years of peace
immediately following appears in the statistics of the accompanying
table, in which, for reasons that will appear later, the movement both
of merchandise and of specie is indicated.

  TRADE OF UNITED STATES, 1914-1920

  (_Values in millions of dollars; calendar years, ending Dec. 31_)[10]

  =====+==========================+===================+=========+======
       |      Merchandise         |       Gold        |         |
       |                          |                   | Silver  | Price
       +-------+--------+---------+---------+---------+         | level
       |Imports| Exports|Excess of|Excess of|Excess of|Excess of|
       |       |        | exports | exports | imports | exports |
  -----+-------+--------+---------+---------+---------+---------+------
   1914| 1,789 |  2,114 |     324 |   165   |         |    26   |   100
   1915| 1,779 |  3,555 |   1,776 |         |   421   |    19   |   101
   1916| 2,392 |  5,483 |   3,091 |         |   530   |    38   |   124
   1917| 2,952 |  6,226 |   3,274 |         |   181   |    31   |   176
   1918| 3,031 |  6,149 |   3,118 |         |    21   |   181   |   196
   1919| 3,904 |  7,920 |   4,016 |   292   |         |   150   |   212
   1920| 5,279 |  8,228 |   2,949 |         |   107   |    26   |   243
       |------ | ------ |  ------ |   ---   | -----   |   ---   |   ---
  Total|21,127 | 39,675 |  18,548 |   457   | 1,259   |   471   |
  =====+=======+========+=========+=========+=========+=========+======

=772. Interpretation of the Statistics.=—With the figures of this table
should be compared those given in section 663, covering the course of
trade from 1860 to 1913. Attending only to the figures giving the value
of merchandise the reader will note that the imports in the early years
of the war remained about at their former level, that they increased
in the latter part of the war, and particularly after its close. The
exports, on the other hand, showed the effect of the war almost from
its beginning. They had first exceeded 1 milliard dollars in 1896, and
had grown steadily with the growth of population and with the rise
in prices due to the increase in gold output, passing the mark of 2
milliards in 1911. From that level they now shot up to 3, 4, 5, 6,
6, 8, 8 milliards in the individual years; history does not provide
another example of such prodigious growth. As a result the excess value
of exports over imports, which had in recent years been about half a
milliard, grew to 1, 2, 3, even 4 milliard dollars a year.

Part of the increase in the value, both of imports and of exports,
was of course due to the rise in prices which accompanied the war. To
enable the student to make the necessary correction for this factor
a column of the table supplies the “index-number” of the Department
of Labor, showing what the average wholesale prices were in any year
compared with the years 1913-1914. Evidently if prices in 1918-1919
were double what they had been just before the war, the figures for the
value of trade in those years should be divided by 2 to give an idea
of the actual quantities of goods exchanged. Applying this process of
correction the student will note that the volume of imports actually
shrank in the course of the war, but that the exports, in spite of this
process of reduction, reached a level which had not before been dreamed
of. In fact the figures for exports in 1918 and for parts of 1917 and
1919 do not take account of the great quantities of stores shipped from
the country in transports of the government, and therefore not reported
to the customs officials; the figures should be raised by perhaps
one-third to give a comprehensive idea of the total quantity of goods
sent out in that period of greatest national exertion.

=773. Increase in value of exports to Europe.=—Not only did the
thoughts of the whole world center in Europe during the war; the wares
of the world flowed thither, in unexampled volume, to be used to
destroy and to be destroyed. For reasons already given the European
belligerents cut down their exports, and strove so far as they could
to increase the volume of their imports. The United States was in
the reverse position. While it was still neutral, and likewise after
it entered the war (April, 1917), it was the great source from which
the European states supplied the needs which they had not time or
strength to supply themselves. Although the larger part of central and
of eastern Europe was cut off by the blockade and by the difficulties
of transportation, the exports of the United States to Europe, which
before the war had run a little over 1 milliard, increased to 2, 3 and
4 milliards. In the first full year of peace, 1919, when the larger
part of Europe was again open to trade, and the exhausted peoples were
endeavoring to restock, the value of exports to Europe exceeded 5
milliard dollars in value.

=774. Increase in value of exports to other continents.=—The figures of
the preceding section give, however, but a partial and misleading idea
of the peculiar position which the United States assumed in the economy
of the world during the war. In spite of the great increase in value,
and increase in quantity, of exports to Europe, the _proportion_ of the
total exports which went to Europe rose very little. As shown above
(sect. 708), the United States had tended, in the years before the war,
to distribute its exports more widely. The proportion which exports to
Europe formed of the total dropped from four-fifths in the ‘80’s to
three-quarters about 1900, then to two-thirds; in 1913 the proportion
was 60 per cent.

The figures for the war period were 71, 69, 69, 63; in 1920 the figures
dropped to 54. It is apparent that there was a great expansion of
exports in this period, not only to Europe but to other parts of the
world as well.

To understand this situation we must remember that the United States
had not only to meet the demands of the emergency in Europe, but also
had to take the place of the great industrial states of Europe in
meeting the demands of the rest of the world. England, Germany, and
France were unable to sell goods in their usual markets, and the United
States for the time took over their old customers.

=775. Statistics of distribution of exports.=—Exports from the United
States, therefore, increased greatly in value, not only to Europe
but also to other continents. The following table indicates the
distribution of exports in the period of the war; Oceania and Africa,
taking together five per cent or less of American exports, are omitted.

  EXPORTS OF THE UNITED STATES, IN MILLIONS OF DOLLARS, TO

  ===========+==========+===========+===========+==========
             |  Europe  |   North   |   South   |   Asia
             |          |  America  |  America  |
  -----------+----------+-----------+-----------+----------
    1914     |   1,486  |     529   |    125    |    113
    1915     |   1,971  |     477   |     99    |    114
    1916     |   2,999  |     733   |    180    |    279
    1917     |   4,325  |   1,164   |    259    |    380
    1918     |   3,732  |   1,236   |    315    |    447
    1919[11] |   5,188  |   1,296   |    442    |    701
    1920[11] |   4,466  |   1,929   |    624    |    772
  ===========+==========+===========+===========+==========


The distribution of American exports in Europe has already been
described. Of the countries grouped under the heading North America,
Canada accounted for rather more than half of the total; Cuba and
Mexico also bought greatly increased amounts of the exports of the
United States. In South America, Argentina, Brazil, and Chile increased
their purchases three-or four-fold; in Asia, Japan raised the value of
its purchases from about 50 to over 300 million dollars.

=776. Changes in the composition of exports.=—This expansion was shared
unequally by the different groups of commodities which together
made up the total exports. Raw materials for manufacture declined in
importance; before the war they had accounted for about one-third of
the total exports, but by 1917 they made up only about one-eighth. On
the other hand there was a great increase in the export of foodstuffs.
The United States had tended in the period immediately preceding the
war to consume an ever-increasing proportion of the foodstuffs that it
produced. The export of foodstuffs, raw and manufactured, had declined
to about 500 million dollars in the years 1910-1913. In the early years
of the war it rose to about 1 milliard; in 1918 it amounted to almost 2
milliards, and in the first two years of peace it exceeded that figure.

That part of American trade which showed the most extraordinary
expansion was the export of manufactures. Before the war the value
of finished manufactures exported had averaged about 700 million. In
1915 the figure exceeded 1 milliard; in 1916 and succeeding years, 2
milliards; in 1920, 3 milliards. The growth was particularly noticeable
in trade with non-industrial countries, which had previously relied in
large part on Europe for manufactured wares and found now the supply
from that source cut off. Exports of manufactures from the United
States to Asia, South America, and Africa increased about five-fold,
comparing the years 1914 and 1920. Exports of manufactures increased
even to Europe, including such important items as railroad supplies,
agricultural implements, machinery, petroleum products, etc.; and it
was estimated that in 1920 the United States was supplying one-third of
the total demand for manufactured wares in the trade of the world.

=777. Effect of the war upon the import trade.=—The United States made
its commercial contribution to the World War, as has already been said,
by following a course which was the reverse of that of the European
belligerents; it expanded its exports, and restricted its imports.
Of necessity it renounced a very large part of that trade which had
been the greatest source of supply, the trade in imports from Europe.
Before the war Europe supplied about half of our needs (49 per cent
of total value of imports, 1913). In the last year of the war imports
from Europe amounted to less than one-seventh of the total (14 per
cent in the year ending June 30, 1918). The varied manufactures which
we had been used to import from the industrial states of western
Europe were no longer in the market. Many of these wares were luxuries
appealing indeed to the taste of the consumer, but not involving any
serious economic consequences when the supply failed. Others, notably
the chemicals and the special kinds of glass and porcelain which had
previously been imported from Germany, played an important part in
industrial processes, and had if possible to be replaced. American
manufacturers entered a field which the Germans had long regarded as
their own peculiar province, and which, indeed, they would probably
have long continued to dominate if they had not broken the peace.

Forced to an extension and diversification of industry by the demands
not only of the American but also of many foreign consumers, the
country imported an increased proportion of crude materials for use
in manufacturing as the proportion of finished manufactures ready for
consumption declined. Raw wool, raw silk, crude rubber and items of
that character rose toward the top of the list of wares imported, and
gave a new importance to the trade with South America and Asia.

=778. The excess value of exports over imports.=—The war led, for
reasons already given, to an enormous increase in the excess value
of exports over imports. The table at the beginning of the chapter
presents figures which were without parallel in the history of this, or
indeed of any other country: an annual excess in the years 1915-1920
averaging over 3 milliard dollars a year, a total excess for the period
1914-1920 amounting to 18.5 milliards. The following table shows how
unequal was our balance in trade with the different continents, and
indicates the close connection of the great excess of exports with the
European war.

  BALANCE OF TRADE IN MERCHANDISE OF UNITED STATES, 1913-1920

  (_Calendar years; figures in millions of dollars, giving excess value
  of imports, [-], or of exports, [+], of the U. S._)

  ========+========+=========+=========+========+=========+========
          |        |  North  |  South  |        |         |
          | Europe | America | America |  Asia  | Oceania | Africa
  --------+--------+---------+---------+--------+---------+--------
    1913  |   +635 |  +211   |   -52   |  -155  |   +47   |   +5
    1914  |   +556 |   +40   |  -139   |  -168  |   +29   |   +6
    1915  | +2,027 |   +49   |  -178   |  -156  |   +31   |   +3
    1916  | +3,180 |  +266   |  -207   |  -152  |   +12   |   -8
    1917  | +3,511 |  +389   |  -287   |  -327  |   +16   |  -27
    1918  | +3,541 |  +351   |  -308   |  -408  |   -31   |  -26
    1919  | +4,437 |  +138   |  -246   |  -340  |   +41   |  -14
    1920  | +3,238 |  +266   |  -137   |  -512  |   +78   |  +15
  ========+========+=========+=========+========+=========+========

Taking Europe alone the excess of exports to the credit of the United
States was over 20 milliards in the years 1914-1920. North America
was the only other continent showing a large “favorable” balance, and
Canada was the single country that accounted for most of this. The
balance in trade with South America and with Asia was against the
United States, as had been usual in the past, but to an extent which
passed the bounds of any previous experience.

=779. Items in the international balance before the war.=—In
approaching the subject of the balance of trade of the United States
during the war it is desirable to have in mind the most important items
which, before 1914, constituted the international credits and debits
of the country. The table below pictures these items in the form of a
simple balance sheet, as they were estimated in 1910.[12] The figures
are given in round sums, indicating that they make no pretence to
statistical accuracy; they are to be understood merely as showing the
tendency of a normal year. In the case of several items no attempt is
made to do more than indicate the net balance that might be expected,
year in and year out.

  INTERNATIONAL BALANCE OF THE UNITED STATES BEFORE THE WAR

  (_Figures in millions of dollars_)

  ========================+========+=======+================
                          | Credit | Debit |    Balance
                          |        |       +----------------
                          |        |       | Credit | Debit
  ------------------------+--------+-------+--------+-------
  Merchandise             |  2,000 | 1,500 |   500  |
  Bullion                 |        |       |    30  |
  Freight, etc            |        |       |        |    25
  Remittances             |        |       |        |   150
  Tourists                |     30 |   200 |        |   170
  Interest and dividends  |     75 |   300 |        |   225
  Investment              |        |       |    40  |
                          |        |       |   ---  |   ---
                          |        |       |   570  |   570
  ========================+========+=======+========+=======

=780. Explanation of the “favorable” balance.=—The most important
feature of the table is the great credit item due to the excess of
exports over imports. Ever since 1873, with rare exceptions (only
four years altogether) the United States has shown a credit balance
of this kind, a “favorable” balance as it was called in the days when
people believed that it would bring precious metals into the country.
Actually, the “favorable” balance implied nothing more than that we
were a debtor country, bound to export more than we could import from
the rest of the world, to meet our obligations. The character of these
obligations is indicated in the column of debit balances. Foreigners
did more ocean carriage for us than we did for them, and had a
balance due to them on that account; the figure in the table would be
considerably larger if the freight bill had not been partially offset
by the considerable purchases of coal and stores made by foreign ships
in our ports, which counted of course to the credit of the United
States. The remittances of private persons, largely of immigrants to
this country sent to agents or relatives in their old home, amounted
to a surprisingly large aggregate. Funds would be remitted, say, by a
postal money-order, but of course the foreign government that honored
this order would look for payment to the American post-office, which
would have to depend on our surplus of exports to meet the debt. So in
the case of the other items, expenses of American travelers and the
claims for interest and dividends of European investors, we were bound
to make heavy payments, and made them by delivering our cotton, copper,
petroleum products, and so on, to a value much exceeding the value of
our imports.

=781. Movement of specie in the period of the war.=—Some part of the
total exports of the war period was a free gift. The food, clothing,
and medical supplies that were donated by private individuals, by
associations, and by the government, demanded no commercial return and
no acknowledgment of indebtedness from the foreigner. Large as were
these gifts in absolute value, they can be omitted from consideration;
they may have formed a considerable portion of a milliard and still
be negligible. For most of the exports that appear in the commercial
returns the foreigner had to pay in the present or promise to pay in
the future.

One means of payment was hard cash. In the few years immediately
preceding the outbreak of the war the European banks, nervous because
of the political outlook, had been trying to build up their reserves,
and had been drawing gold from the United States. In the single month
of July, 1914, over $40,000,000 were shipped from New York. American
bankers and business men owed at this time several hundred million
dollars, maturing before the end of 1914; the city of New York owed
$80,000,000. For a brief period sterling exchange rose far above the
normal par; an American was willing to pay over $5 for the right to
a pound sterling payable in London. Soon the tide set in the other
direction. The total gold stock of the United States at the outbreak of
the war was about 1.8 milliard dollars. In 1920 it was 2.7 milliard,
roughly one third of the world’s total stock of gold used for monetary
purposes. In the interval the United States received from Europe over
1.2 milliard dollars in gold, of which it kept the larger part.

Reference to the table at the beginning of the chapter will show
that silver flowed in the opposite direction. The United States as a
silver-producing country, has had regularly a surplus to export, but
parted with the very large sums appearing in the table in the years
1918-1919 as a means of liquidating part of the balance owed to Asia.
The demand for silver to be shipped to the East was so strong that for
a brief period the bullion in the silver dollar, which so recently as
1915 was worth only forty cents, was actually worth more than a dollar
in gold.

=782. Securities and loans.=—Another means of payment employed by the
peoples of Europe to meet the balance against them was the sale in
the United States of American securities owned abroad. It is supposed
that in the period 1914-1920 Americans repurchased 4 to 5 milliards in
value of stocks and bonds that had been issued in the United States
and held by foreigners. For example, of the common stock of the U. S.
Steel Corporation 1,286,000 shares, over one-fourth of the total issue,
were in 1914 held abroad. At the end of 1918 the number had dropped to
484,000, and in 1919 it declined still further.

American investors, furthermore, purchased several milliard dollars
worth of foreign, mainly European securities, issued by governments, by
municipalities, by railroads, and by business enterprises. Evidently
the European, in debt to the American for the goods sent across the
sea, could square the account by selling his stocks and bonds in this
country and paying the proceeds to his creditor here.

Finally, and most important, the American government, after the entry
into the war of the United States (April, 1917) took upon itself the
task of financing the purchases made by associated European governments
in this country, and advanced to them a sum amounting to nearly 10
milliards of dollars. In July, 1921, the account stood as follows,
including only the advances made under the Liberty Loan acts, and
omitting considerable sums due to the United States for the sale of
surplus war material and for grain supplied to impoverished districts.

  (_Figures in millions of dollars._)

  United Kingdom                      4,166
  France                              2,951
  Italy                               1,648
  Belgium                               348
                                      -----
  Total of these items                9,113
  Total including items omitted       9,435

=783. Position of the United States as a creditor country.=—Although
it is not possible to describe with perfect precision the process by
which the European peoples arranged to pay for the excess exports
of the United States, the general situation is well enough known to
warrant one conclusion of the greatest significance. The process
resulted in turning the United States from a debtor country to a
creditor country. Even if we disregard the 10 milliard loans made by
the American government, and take account only of the investments made
by private citizens in this country, it is apparent that the United
States at the close of the war, instead of owing every year a balance
to other countries on account of interest and dividends, was entitled
to demand such a balance from abroad. So many items enter into the
general international balance that this single one cannot be taken as
determining the outcome, and deciding that after the war there would
be in normal years an excess of imports over exports. The country
will doubtless remain a debtor under some heads (private remittance,
tourists). At the close of the war it certainly was not collecting
interest and dividends in the form of an excess of imports, as the
figures show. It continued to invest capital in foreign countries,
particularly in Europe, in North America, and in South America;
the capital value of the loans far exceeded any annual interest
charge on them. Perhaps this process will continue in the period
of reconstruction. So long as the flow of capital for investment in
other countries exceeds the annual charges due from them, the surplus
of exports (so far as determined by this one item) will continue.
It is reasonable to believe, however, that sooner or later the tide
will turn, and the United States will have, year in and year out, a
surplus of imports over exports. The change will require a readjustment
of ideas that have been fixed by generations of habit. Investors,
demanding interest payments from foreign debtors, will no longer be
able to maintain the attitude that imports menace the prosperity of
the country and should be cut down by the restrictions of the tariff.
Exporters will find that the current is set against them, and that
they can broaden their market only as they stimulate still greater
growth in the import trade. The American people will realize at last
that, without a conscious exercise of their will, they have become
a “world-power,” and that in their own interest, quite apart from
humanitarian motives, they must accept new responsibilities and take an
active part in international affairs.

=784. Shipbuilding before the war.=—An excess of imports into the
United States, over the exports from this country, will come sooner and
will be larger if the country resumes an important position in ocean
shipping, as some believe it will. The United States continued, before
the World War, to build shipping in considerable volume. The statistics
of Lloyds Register show that in the first decade of the twentieth
century, American shipyards contributed about one-seventh of the total
tonnage built in the world. Most of the vessels built, however, were
destined for service on the Great Lakes or in the coasting trade; the
tonnage of steamers built for the foreign carrying trade was relatively
unimportant. Foreign ships carried regularly about nine-tenths of our
sea-borne trade in merchandise.

=785. Shipbuilding by the American government.=—In the first year of
the war the tonnage of ships built actually declined. The provision of
adequate cargo space became, however, a matter of urgent importance,
as ships were drawn into service as transports and the ravages of the
submarine extended. The government established in 1916 a Shipping
Board, for the construction of ships as a public enterprise, and
when it entered the war in 1917 it proposed to make one of its most
important contributions to the war by the supply of new tonnage. The
results are presented in the statistics of the accompanying table.

  VESSELS BUILT IN THE UNITED STATES, 1914-1920

  (_Figures in thousands of gross tons; fiscal years ending June
  thirtieth._)

  =========+===========+==========+=========
           |  Sailing  |  Steam   | Total[13]
  ---------+-----------+----------+---------
    1914   |     14    |   224    |   316
    1915   |      8    |   142    |   225
    1916   |     15    |   238    |   325
    1917   |     43    |   461    |   664
    1918   |     84    | 1,000    | 1,301
    1919   |     79    | 3,107    | 3,327
    1920   |    132    | 3,603    | 3,881
  =========+===========+==========+=========


=786. American shipping at the close of the war.=—Comparing the
figures of the table with the years of the war (and noting that each
year of the table ends June 30, not Dec. 31) it is apparent that the
contributions of the United States to relieve the dearth of shipping
were of real importance in the last year of the war, but that the new
industry developed slowly and reached its maximum of output only after
peace had been declared. The peak of monthly production was attained
in August, 1919, when about 400,000 tons of sea-going steel steamers
were constructed. The sudden expansion of the industry, demanding the
training of nearly a million men called from other occupations, was
necessarily expensive. In three years, ending in 1920, the Shipping
Board expended about 3 milliard dollars, a sum greater than the book
value of the total shipping of the world in 1914. As a result of its
activity the government owned about 8 million tons of ocean shipping.
In the period of depression which followed the war fully half of this
amount was idle, and the operation of ships by the government proved to
be a losing venture. An act of 1920 directed that the ships be sold to
private owners, but the close of the period left their future still in
doubt.

=787. Foreign exchange at the close of the war.=—To understand the
commercial position of the United States at the close of the war it
is necessary to return again to questions of currency and foreign
exchange. The situation appears in the following table.

  AVERAGE ANNUAL RATE OF EXCHANGE IN NEW YORK

  ==============+=======+======+=======
                | 1913  | 1919 | 1920
  --------------+-------+------+-------
  On London     |  100  |   90 |   75
  On Paris      |  100  |   71 |   36
  On Rome       |  100  |   56 |   26
  On Berlin     |  100  |    7 |    7
  ==============+=======+======+=======

The table signifies, for example, that the American in New York could
buy in 1919 for $90 or in 1920 for $75 as many pounds sterling as
had cost him $100 before the war; that he could pay a debt at Rome
with half as many dollars in 1919, with a quarter as many dollars in
1920, as he would have had to pay in 1913. During the war the rate of
exchange, like many other prices, was subject to government control;
the figures for 1919 and 1920 show the tendency of the rates when
they were left free to represent the actual value of the different
currencies in international transactions.

=788. Effect of depreciation in stimulating exports.=—The table shows
a great depreciation of the European currencies compared with the
American. The United States had had a great expansion of bank credit
during and after the war, but, after all, had in its enormous stock
of gold the means to maintain the dollar on a gold basis, while the
European countries had in circulation varying amounts of irredeemable
paper. The reactions of this situation on international transactions
were manifold, but two of them are worth particular attention.

When the issue of paper money continued, as in Germany for example,
the value of the mark in foreign exchange fell more sharply than its
purchasing power in the home market. An American importer would be
able to buy more marks for the dollar. The mark would not buy as much
as before in Germany, but the dollar’s worth of marks would buy more
than before; and the importer would find a transaction profitable which
previously he would have been unable to undertake. Unequal depreciation
of this kind acted as a stimulus or premium on exports from Germany,
which was seriously felt by competing producers in other countries.

=789. Effect upon the international money market.=—The situation had
also an important effect on the course of international loans. Let us
assume for example the case of Brazil, desiring to place a loan abroad.
If it borrowed in New York it would get gold dollars and would feel
assured that when it came to repay the loan it would repay it in the
same currency, with units of approximately equal value. If, on the
other hand, it borrowed in London, in terms of pounds sterling, it
would get paper pounds, at a discount in comparison with gold, but must
look forward to repaying the loan with gold units if in the interval
the English had succeeded in putting their currency on a gold basis and
thereby bringing their exchange to par. Even if Brazil desired to make
the loan for financing some expenditure in the European market it would
do better to buy dollar credit in the first instance, and buy with
that the foreign currency that it needed; and to accomplish this end
it would be willing to pay higher rates in New York than in London. It
would be hazardous to assert that as a result of the war New York will
replace London as the world’s money market, but it is clear that the
position of London is seriously prejudiced so long as English currency
is at a discount in comparison with gold.


QUESTIONS AND TOPICS

 1. Chart the statistics of trade as in previous exercises.

 2. Divide the figures of imports and exports by the figure for the
 price level of the year (1.01, 1.24, etc.,), so reducing values to
 the level of 1914, and enter results on chart with a dotted line that
 gives approximately _volume_ of imports and exports.

 3. What was the relative importance of foreign and of domestic trade
 in the United States in this period? [B. M. Anderson, in Annalist of
 N. Y. Times, Jan. 3, 1921, 17: 9.]

 4. What exports of the United States, (_a_) increased most in value,
 (_b_) increased most in quantity, in this period? [Statistical
 Abstract, 1920, Table of domestic exports, quantities and values, by
 years 1911-1920.]

 5. What exports declined in quantity and in value? [Same].

 6. Compare the exports from the United States to a particular country
 at the beginning and at the end of the war. [Use Bureau of Foreign
 and Domestic Commerce, Misc. Series, no. 38 and no. 106, Trade of U.
 S. with the world, 1914-15 and 1918-19. The student may, for example,
 take Argentina, Chile, Japan, or British India.]

 7. Using sources given above, report upon the history of a particular
 import, or on the imports from a particular country, during the war.

 8. How the dyestuffs crisis was met. [E. Hendrick in American World’s
 Work, March, 1918, 35: 531-535.]

 9. The problem of potash and nitrates. [F. P. Stockbridge in American
 World’s Work, May, June, 1918, 36: 28-34, 191-197.]

 10. The balance of international payments. [F. W. Taussig, Principles
 of Economics, vol. 1, chap. 33.]

 11. The trade balance of the U. S. before the war. [G. Paish,
 reference in note to sect. 779.]

 12. Probable tendencies in the trade balance of the U. S. [J. R.
 Smith, The American trade balance, National Foreign Trade Council, N.
 Y., 1919.]

 13. Function of imports in our foreign trade. [G. E. Roberts, National
 City Bank, Foreign Commerce Series, no. 2, N. Y., 1920.]

 14. American loans to Europe. [Noyes in Scribners’ Magazine, 61: 131
 ff.; Atwood in American World’s Work, 33: 243-250, 399-403.]

 15. Application of American methods to the construction of ships.
 [Hurley, chap. 5, 8.]

 16. Concrete ships. [Mattox, chap. 13.]

 17. Development of shipyards. [Hurley, chap. 6; Mattox, chap. 15.]

 18. The shipping problem at the close of the war. [E. R. Johnson in
 Friedman, chap. 13.]

 19. Foreign investments. [F. H. Sisson in Friedman, chap. 19.]


BIBLIOGRAPHY

 In addition to sources previously cited see the Miscellaneous Series
 of the Bureau of Foreign and Domestic Commerce, numbers 15, 38, 63,
 78, 106, etc., giving details of foreign trade by countries. On
 the subject of gold movement, foreign exchange and international
 finance reference must be made to reports of the Secretary of the
 Treasury, Director of the Mint, and Bulletins of the Federal Reserve
 Board. References given under chapter 54 are also applicable here. A
 monograph on Depreciated exchange and international trade was issued
 by the U. S. Tariff Commission, Washington, 1922.

 The student should relate the history of commerce during the war to
 the military and political history of the period, and should have in
 mind the narrative as presented in general accounts such as those by
 Charles Seymour, **Woodrow Wilson, 1921; J. S. Bassett, **Our war with
 Germany, 1919; J. B. McMaster, *The U. S. in the World War, 1918; F.
 L. Paxson, *Recent history of U. S., 1921, chap. 44-56.

 The most complete account of industrial and commercial activity
 organized for the conduct of war will be found in Benedict Crowell and
 R. F. Wilson, **How America went to war, New Haven, Yale University
 Press, 1921, 6 vols.: The giant hand (mobilization and control of
 industry and natural resources); The road to France, 2 vols.; The
 armies of industry, 2 vols.; Demobilization. The subject of shipping
 is covered by E. N. Hurley, *The new merchant marine, N. Y., 1920, and
 W. C. Mattox, Building the emergency fleet, Cleveland, 1920. On the
 various problems of reconstruction see the symposium edited by E. M.
 Friedman, American problems of reconstruction, N. Y., 1918, and Isaac
 Lippincott, Problems of reconstruction, N. Y., 1919. Many special
 topics of commerce, industry and finance are treated in periodicals,
 in reports of banks (e.g., Foreign commerce series of National City
 Bank) and in government reports (e.g., dyestuffs in Bureau of For. and
 Dom. Commerce, Special Agents Series, numbers 96, 11, and 121).


TITLES OF BOOKS CITED BY ABBREVIATIONS

NOTE.—Books of which the full titles have already been given are not,
in most cases, included in the following list, which is supplementary
to the bibliographies and by no means a substitute for them. The list
includes only titles of those books which have been cited so many times
that a repetition of the full title would waste space, and which have
been cited in so many different places that the reader’s time would be
wasted in hunting for the entry of the full title. I have thought it
unnecessary to give full titles of standard narrative histories, of
current manuals in the allied subjects of history and economics, and of
local sources in the history of the United States.

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FOOTNOTES:

[Footnote 1: Figures are averages for the decade 1900-1909, not
1901-1910.]

[Footnote 2: The figures of the table, quoted from Lloyd’s Register
in Report U.S. Department of Commerce, 1920, p. 170, differ slightly
from U.S. official figures. It should be noted that the gross tonnage
of American vessels employed in foreign trade was very much less: 1.0
million in 1914, 9.9 million in 1920, according to official figures.]

[Footnote 3: I do not pretend to recognize technical distinctions in
this elementary exposition.]

[Footnote 4: Figures of gold movement for 1917 and 1918 are unofficial;
figure for 1919 is lacking.]

[Footnote 5: In July, 1917, and thereafter the accounts included
merchandise imported and exported in public as well as private
ownership, except exports for the use of British troops in the field.
Before July, 1917, the figures of exports included property of the
allied governments, but omitted a large part of that of the British
government; figures of imports omitted property both of the British and
of allied governments, except that they included all articles of food.
Some idea of the divergence of the figures from the facts may be got by
comparing the American statistics of exports from the United States to
the United Kingdom with British statistics for the same calendar year
of imports from the United States.

  =======+==================+=================
         | American figures | British figures
         |   $ millions     |   £ millions
  -------+------------------+-----------------
   1913  |        591       |       142
   1914  |        600       |       139
   1915  |      1,198       |       238
   1916  |      1,887       |       292
   1917  |      2,009       |       376
   1918  |      2,061       |       515
   1919  |      2,279       |       542
  =======+==================+=================

Normally the British figures of imports, c.i.f., would exceed the
American figures of exports, f.o.b., as they did in 1913. The
divergence in the opposite direction of the two sets of figures in
following years is sufficiently striking even if the pound sterling is
rated at $5.]

[Footnote 6: War loans on the books of the British government stood as
follows, 1920, (figures in million pounds sterling):

  To dominions and colonies     120
  To France                     515
  To Russia                     568
  To Italy                      457
  To Belgium                     99
  To other allied governments    85
                              -----
                              1,844
]

[Footnote 7: In 1915 Egypt was changed in the British classification
from the position of foreign country to that of British Possession.
Imports from Egypt were in 1913 £16,000,000 and increased rapidly
toward the end of the war, to £5,000,000 in 1918.]

[Footnote 8: These figures of exports omitted, before July, 1917,
most British government property, and even after that date government
supplies for British troops in the field. The inclusion of these items
would make even more impressive the concentration in France of the flow
of goods from England.]

[Footnote 9: The franc, nominally worth $.193, declined rapidly in
purchasing power in the course of the war, but was kept close to par in
foreign exchange by the action of the allied governments in “pegging”
the exchange. When the government ceased to control the rate, in the
Spring of 1919, it fell sharply; it was below $.10 in Dec., 1919, was
below $.06 in Dec. 1920, and then made a recovery.]

[Footnote 10: The table is taken from Report of Comptroller of the
Currency, 1920, vol. 1, p. 14, a convenient source because both
merchandise and specie are enumerated by calendar, not fiscal year.
I have corrected the table by reducing by 1 milliard the figure for
exports in 1914, to accord with verified commercial statistics, and
have altered the figures of excess of exports in 1914, and for total
exports and total excess to accord with this correction. The student
who checks the figures by reference to U. S. Statistical Abstract,
1920, p. 773, should not be dismayed by finding there the exports for
1915 listed at 2,555 millions; it is another example of a milliard
dollar error.]

[Footnote 11: Calendar years; 1914-1918 fiscal years ending June 30.]

[Footnote 12: I have adapted the figures from the report of George
Paish to the National Monetary Commission, 61st Congress, 2d session,
Senate Document No. 579, pp. 153-213.]

[Footnote 13: Figures of total tonnage include gas vessels, canal boats
and barges, not separately enumerated in the table.]




INDEX


  Aegina, 19.

  Africa, circumnavigation of, 10, 130;
    commerce with England, 221;
    with the United States, 491, 586, 651.

  Agriculture, medieval, 35;
    modern, 139;
    recent, 280.

  Agricultural implements, 569.

  Alexander the Great, 10, 11, 21.

  Alexandria, 22, 27.

  Alum, 82.

  Amber, 103.

  America, discovery of, 133.
    Spanish, 180-184.

  Amsterdam, 159, 194.

  Antioch, 22, 27.

  Antwerp, 74, 109, 154, 434.

  Archangel, 267, 456.

  Arkwright, 214.

  Asia, in Middle Ages, 128. See also China, India, Japan, Levant.

  Assize of bread, 51.

  Assyria, 11.

  Athens, 19 ff.

  Australia, commerce with England, 361.

  Austria-Hungary, modern, 259;
    recent, 436, 639 ff.;
    and Prussia, 396.

  Austria, Republic, 641.


  Babylon, 11.

  Bagdad, 84.

  Balboa, 133.

  Balkan Peninsula, 465.

  Baltic trade, medieval, 102 ff.;
    modern, 252;
    recent, 350.

  Baltimore, 489, 548, 585.

  Banking, early, 120, 150;
    recent, 339.

  Barcelona, 99.

  Belgium, 433. See also Flanders, Netherland.

  Bessemer, 285.

  Bill of exchange, 120.

  Bismarck, 406.

  Bodeck, John von, 142.

  Bolsheviks in Russia, 644.

  Bordeaux, 74.

  Boston, 489, 490, 548, 585.

  Brazil, 185.

  Bremen, 257.

  British Dyes, limited, 615.

  British North America, 221.

  British Trade Corporation, 616.

  Bruges, 75, 97, 105, 109, 115.

  Bulgaria, 465.

  Bullionist policy, 167.


  Cable, submarine, 313.

  Cadiz, 14.

  Cabral, 133.

  Canada, commerce with United States, 549, 589, 651.
    See also, England, colonists.

  Canals, 211, 292 ff. See also United States, waterways.
    Ship, 307.

  Caprivi, 418.

  Carthage, 14, 22, 27.

  Cartwright, 214.

  Cavour, 443.

  “Central Europe,” 419.

  Chamberlain, Joseph, 392, 394.

  Champagne, Fairs of, 65 ff.

  Charlemagne, 29, 57.

  Charleston, 489, 548.

  Chemical industry, 286.

  China, commerce with England, 363;
    with Russia, 268;
    with United States, 491, 495, 550, 589.

  Coal, 274 ff., 319.
    and iron, 215, 275.
    in England, 359, 386;
    in United States, 542, 560.

  Cobden, Richard, 372, 425.

  Coeur, Jacques, 232.

  Colbert, 242, 246.

  Colonial policy, modern, 171;
      recent, 354.
    of England, 226, 395;
    of France, 234, 236;
    of Spain, 180, 183.

  Colonies, see under name of mother country.

  Columbus, 133.

  Commenda, 116.

  Commerce, ancient, 9-29;
      early medieval, 36;
      late medieval, 44;
      modern, 128;
      recent, 270;
      and World War, 593.
    general, 1.
    obstacles to, 2.
    political conditions, 4, 31, 123, 161.
    qualities of contemporary, 329.
    risks of, 3.
    statistics, recent, 271, 273, 396.

  Commercial organization, medieval, 115 ff.;
    modern, 141 ff.;
    recent, 392 ff.

  Commercial policy, manorial, 35;
    municipal, 50;
    national, 126;
    recent, 345 ff;
    See also under name of country.

  Companies, medieval, 115;
      modern, 144;
    in England, 202 ff.;
    in France, 234;
    joint stock, 146 ff;
    regulated, 145.

  Compass, mariners’, 73.

  Constantinople, 29, 86, 87, 90, 92.

  Continental system, 346 ff.

  Copper in the United States, 575.

  Corinth, 19, 22.

  Corn, see grain, wheat.

  Corn (maize), in United States, 471, 472, 570.

  Corn laws, English, 371, 372.

  Cort, Henry, 215.

  Cotton, 82, 323.
    in United States, 503, 531, 566, 572.
    manufacture, in England, 214, 360;
      in United States, 543.

  Crimean War, 456.

  Crises, commercial, modern, 158;
    recent, 339 ff.

  Crusades, 86 ff.

  Cumberland road, 515.

  Currency, in Middle Ages, 118.
    and prices after 1500, 135.
    in World War, 600.

  Czecho-Slovakia, 640.


  Damascus, 84.

  Denmark, 438.
    commerce with Germany in World War, 636.

  Drugs in Levant trade, 80.

  Dyestuffs, 81, 287.


  East India Company, Dutch, 192, 196.
    English, 204, 220.

  Egypt, 9, 85, 612 note.

  Embargo in United States, 507.

  Engine, internal combustion, 277. See also steam.

  England, medieval, 109 ff.;
      modern, 199 ff.;
      recent, 357 ff.;
      in World War, 607 ff.
    agriculture, modern, 210;
      recent, 371;
      in World War, 614.
    balance of trade, 380.
    colonial policy, modern, 226;
      recent, 395.
    colonies, modern, 220;
      recent, 364.
    commercial policy, modern, 224;
      recent, 368 ff.;
      about 1900, 393 ff.;
      in World War, 618 ff.
    exports, modern, 209;
      recent, 358 ff.;
      1850, 378;
      1900, 386;
      in World War, 611 ff.
    imports, modern, 219 ff.;
      recent, 361; 1850, 379; 1900, 386;
      in World War, 609 ff.
    internal trade, 210.
    labor in World War, 617.
    manufactures, modern, 210;
      recent, 359 ff., 389;
      in World War, 615.
    mercantile organization, 390, 616.
    political development, 199, 212, 372.
    ports, modern, 202;
      recent, 224;
      1850, 382.
    shipping, medieval, 110;
      modern, 222;
      recent, 374;
      1850, 381;
      in World War, 599.
    statistics, 1700-1800, 205, 206;
      1801-1850, 358;
      1850-1913, 377;
      1913-1919, 607.
    and the United States, 362, 383;
      policy, 1789, 499.

  Erie canal, 519, 557.

  Evans, 295.

  Exchange, produce, modern, 154 ff.;
      recent, 337.
    stock, 156.


  Factors, 142.

  Fairs, medieval, 163 ff.;
    decline, 337.

  Feudalism, 32, 56.
    decline of, 123, 161.

  Fish, in Baltic commerce, 103, 252.
    in United States, 471, 476.

  Fiume, 261, 640.

  Flanders, 97, 109.

  Flanders galleys, 97.

  Florence, 98 ff., 265.

  Fondaco dei Tedeschi, 95.

  Foreign exchange, 603 ff., 651.

  France, modern, 229 ff.;
      in Napoleonic wars, 348;
      recent, 422 ff.;
      in World War, 622 ff.
    colonies, modern, 236;
      recent, 429.
    commercial policy, modern, 242;
      recent, 423;
      to United States, 501.
    finances in World War, 625.
    manufactures, modern, 244;
      recent, 423, 426, 428.
    political development, medieval, 123;
      modern, 255;
      recent, 422, 427.
    shipping, modern, 234;
      about 1800, 346;
      recent, 429, 599.
    statistics, modern, 238;
      recent, 429;
      in World War, 623.

  Frankfort on the Main, 45, 156, 257.

  Free trade period, 351.

  Fugger family, 151 ff.

  Fulton, Robert, 518.

  Furs, in Baltic trade, 103-252;
    from America, 477.


  Galveston, 585.

  Genoa, 90, 98.

  Germany, medieval, 95, 104;
      modern, 250;
      recent, 400;
      in World War, 636 ff.
    commercial policy, 401, 404 ff., 416 ff.
    manufactures, modern, 256;
      recent, 401, 410 ff.
    mercantile organization, 413.
    political development, medieval, 124;
      modern, 255;
      recent, 400, 637.
    and Reparations, 627 ff.
    shipping, 414, 599.
    statistics, 409.
    and the World War, 593, 597.

  Gilds, craft, 49, 140;
    in England, 211;
    in France, 244;
    in Germany, 256;
    merchant, 47 ff.

  Gladstone, W. E., 371.

  Gold, in Australia, 342, 364;
    in California, 537.
    and prices, about 1900, 341.
    in the World War, 600.

  Grain trade, recent, 320.

  Greece, ancient, 17;
    recent, 465.


  Hamburg, 74, 156, 257, 335.

  Handicrafts, 36, 43, 48.

  Hanseatic League, 104 ff.;
    decline, 252.

  Hargreaves, 214.

  Havana, 183.

  Hawkins, John, 202.

  Henry IV of France, 234.

  Henry the Navigator of Portugal, 130.

  Huguenots, in England, 212;
    in Netherland, 194;
    in Prussia, 258.

  Hungary, Magyar, 641.

  Huskisson, 370.


  India, British, 363.

  Indigo, 81;
    in United States, 471, 474, 535.

  Industrial Revolution, 214.

  Insurance, 159, 335.

  Iron, medieval, 37;
      modern, 215;
      recent, 283 ff.;
      as a ware, 319.
    in England, 359, 379;
    in Germany, 411;
    in the United States, 542, 573.

  Italy, medieval, 84;
      modern, 263 ff.;
      recent, 442 ff.
    agriculture, 446, 449.
    colonies, 448.
    commercial policy, 443.
    manufactures, 445, 447, 449.
    political development, 124, 263, 442 ff.
    shipping, 448.


  Japan, recent commerce, 387.
    conflict with Russia, 462.
    and the United States, 550, 589, 651.

  Jews, ancient, 12;
    medieval, 84, 117;
    in Poland, 643.

  Jugo-Slavia, 639.


  Kay, 214.


  Law, John, 159.

  Leghorn, 265, 443.

  Leipzig, 257.

  Levant trade, 79 ff.

  Linen, 83, 323.

  Liverpool, 224, 383.

  Loire, 58, 61.

  London, 38, 41, 74, 156, 202, 224, 382.

  Louis XIV of France, 235.

  Lubeck, 105, 253.


  Machine tools, 284.

  Machinery, 281 ff.;
    in England, 360;
    in France, 423;
    in Germany, 403, 410;
    in United States, 481, 561, 574.

  Manor, medieval, 34, 41 ff.

  Manufactures, medieval, 42;
      town, 48;
      modern, 140;
      recent, 281.
      See also names of chief countries.
    domestic system, 211.
    local distribution, 287.

  Magellan, 134.

  Marco Polo, 129.

  Market, medieval, 33;
    town, 51;
    decline, 337.

  Marseilles, 18, 99.

  Mercantile system, 167.

  Merchant, early, 39;
      medieval, 113;
      modern, 141;
      recent, 334.
    commission, 142.
    wholesale, 142.

  Merchants Adventurers, 201.
    Staplers, 110.

  Mesta, 179.

  Mesopotamia, 10.

  Miletos, 18.

  Mobile, 548.

  Money, medieval, 118;
    modern, 136;
    in World War, 600.


  Napoleon I, 345.
    III, 424, 427.

  Nasmyth, James, 283.

  Navigation, early, 13;
    medieval, 38, 72, 129;
    modern, 136;
    recent, 302.

  Navigation Acts, English, 223, 226;
    reform, 373.

  Necho, 10.

  Netherlands, modern, 190 ff.;
      recent, 431 ff.
    colonial and commercial policy, 432.
    manufacturers, 433.

  Neutral trade, 347.

  New Orleans, 548, 585.

  New York, 489, 490, 547, 584.

  Newspaper, 143.

  Nineveh, 11.

  Norway, 439.

  Nuremberg, 45.


  Odessa, 456.

  Orders in Council, 347.


  Panama Canal, 309.

  Partnership, 116 ff.

  Pedler, 113.

  Peel, Sir Robert, 370.

  Persia, 11.

  Peter the Great, 267.

  Petroleum, 320;
    in United States, 575.

  Philadelphia, 489, 490, 548, 585.

  Phoenicia, 12.

  Piracy, 75, 136.

  Pisa, 90, 98.

  Pittsburgh, 51, 61, 518.

  Poland, 639, 642.

  Pombal, 186.

  Ports, medieval, 74;
    modern, 137.

  Portugal, modern, 184 ff.;
    recent, 451.

  Post, modern, 143;
    recent, 310 ff.

  Potash in United States, 471, 476, 535.

  Prices, modern, 136;
    recent, 341;
    in World War, 602.

  Privateers, medieval, 76;
    modern, 144;
    recent, 345.

  Provisions, 322;
    in United States, 473, 536, 566, 571.

  Prussia, rise of, 257;
    and Austria, 405;
    and Germany, 417.


  Railroad, 295 ff.;
    in England, 360;
    in Russia, 461;
    in United States, 522, 553.

  Reparation and the World War, 627.

  Rhine, 58, 61, 255, 347.

  Rhodes, 23.

  Rice in United States, 471, 474, 535.

  Richelieu, 234.

  River trade, medieval, 55;
    in Russia, 455;
    in the United States, 486, 520.

  Roads, Roman, 28;
      medieval, 33, 54;
      recent, 290 ff.
    in American colonies, 485;
    in Russia, 455;
    in United States, 514.

  Rome, 26 ff.;
    provinces, 27.

  Roumania, 465, 639.

  Rubber, 324.

  Russia, modern, 267;
      recent, 454 ff.;
      in World War, 643 ff.
    agriculture, 460.
    commercial policy, 456, 459.
    manufactures, 458, 460.
    ports, 456.
    transportation, 455, 457, 461.


  Saint Mary’s Falls Canal, 557.

  Saint Petersburg, 267, 456.

  San Francisco, 585.

  Savannah, 548.

  Seleukia, 22.

  Servia, 465.

  Shipping, ancient, 13;
    Scandinavian, 70;
    Mediterranean,
  71;
    modern, 137;
    recent, 302;
    in World War, 599.
    See also names of countries.

  Siberia, 462.

  Sidon, 13.

  Siemens-Martin steel, 286.

  Silk, 82, 323.

  Silver, 135, 182.

  Slave trade, medieval, 37, 79;
    modern, 222;
    recent, 318.

  Smuggling, on the Continent, 348;
    in England, 225, 369;
    in France, 242, 424;
    in Spain, 178, 182.

  South America, 349.
    commerce with United States, 550, 589, 651.

  South Sea Bubble, 158.

  Soviets in Russia, 644.

  Spain, medieval, 99;
      modern, 174;
      recent, 499 ff.
    colonies, modern, 180;
      recent, 450.

  Speculation, modern, 156;
    recent, 335 ff.

  Spices, ancient, 38;
    in Levant trade, 79.

  Staple, 110, 127;
    in Germany, 225;
    abolition of the, 350.

  Steamboat in United States, 516.

  Steam engine, 275 ff.

  Steamships, 304 ff.

  Steam turbine, 276.

  Steel, recent, 285 ff.;
    in railroads, 297.

  Stephenson, 295.

  Store, country, in United States, 487.

  Stourbridge Fair, 67.

  Strassburg, 45.

  Suez Canal, 10, 308.

  Sugar, medieval, 80;
    modern, 136, 239.
    beet, 325.
    in United States, 494, 579.

  Sweden, 266;
    recent, 438.

  Switzerland, 435.

  Syracuse, 22.


  Telegraph, 311 ff.;
    in recent commerce, 332;
    wireless, 313.

  Telephone, 312.

  Textiles, medieval, 83;
    recent, 322.

  Tin, ancient, 13;
    medieval, 109.

  Tobacco, from America, 136;
    in United States, 471, 473, 535.

  Tolls, medieval, 57 ff.;
    in France, 243;
    in Germany, 255, 258;
    abolition, 350.

  Triest, 261.

  Turnpikes, in Europe, 291;
    in United States, 514.

  Tyre, 13.


  United States, recent, 469 ff.;
      in World War, 648 ff.
    and Africa, 491, 586, 651.
    and Asia, 491, 586, 651.
    and China, 491, 495, 550, 589.
    and England, 362, 383, 492, 499, 548, 586, 608, 613.
    and West Indies, 491, 493, 499, 501, 549.
    agriculture, 472, 475, 567.
    balance of trade, 653.
    canals, 519, 556.
    commercial policy, 498, 508, 545, 582.
    exports, 471, 502, 530, 566, 650.
    fisheries, 476.
    imports, 477, 540, 578, 652.
    manufactures, 476, 507, 541, 560, 580, 653.
    ports, 489, 547, 584.
    railroads, 521, 553.
    roads, 489, 514.
    shipping, 495, 501, 505, 523, 558, 599, 659.
    statistics, 471, 477, 502, 511, 530, 549, 552, 566, 567, 578, 585,
      591, 648, 651, 654.
    waterways, 486, 516, 556.


  Vasco da Gama, 132.

  Venice, 72, 75, 79, 84, 87, 90 ff.;
    modern, 263 ff.

  Vicko von Geldersen, 115.


  Wares, ancient, 9, 12, 19;
    medieval, 37;
    modern, 135;
    recent, 317 ff.

  Wars, modern, 165;
    Thirty Years’, 255;
    recent, 345;
    World War, 593 ff.

  Watt, James, 276.

  Wax, 103, 252.

  Wheat, in United States, 471, 473, 536, 570.

  Whitney, Eli, 533.

  Winchester Fair, 68.

  Wool, medieval, 110;
    recent, 323.

  Woolen manufacture, in England, 215;
    in United States, 543.


  Zollverein, 403.