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a
reGENERAL
ECONOMIC HISTORYADELPHI ECONOMIC SERIES

GENERAL ECONOMIC HISTORY
Max Weber

eS I

CYCLICAL FLUCTUATIONS

Simon Kusnstz

SOCIAL ECONOMICS
F. Von Wieser

MONEY
Karl Helfferick

a Ae

ae ar

a eRe

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i
!
I
iGENERAL
ECONOMIC HISTORY

BY
MAX WEBER

Translated by

MRAN Ke EH KONIGH SEHD

Professor of Economics in the
University of Iowa

AN ADEL PAL PUBLENCATION
GREENBERG:PUBLISHER

NEW YORKPray

er COPYRIGHT, 1927, GREENBERG, PUBLISHER, INC.

Published May, 1927

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©

Pe eee

oe TB

5 a

ese eve

MANUFACTURED IN THE UNITED STATES OF AMERICA
BY THE VAIL-BALLOU PRESS,

INC... BINGHAMTON, N. Y.

ae a a Leet Ll es ttre SsCONTENTS

PART ONE

HOUSEHOLD, CLAN, VILLAGE AND MANOR

Cuapter I.

AGRICULTURAL ORGANIZATION AND THE PROB-
LEM OF AGRARIAN COMMUNISM. . .

The German agrarian organization, 3.—Settlement re-
lations, 4.—Property relations, 7.—Class relationships
in the peasantry, 8.—Spread of the Germanic settle-
ment form, 10.—Westphalia, 11—Alpine economy, 11.
—The Zadruga, 12.—Vestiges of Roman field divisions,
12.—Origin and dissolution of the Germanic agrarian
system, 12.—The Celtic agrarian organization, 15.—
The Russian Mir, its effects on economic life and its
origin, 17.—The Dutch—East-Indian field system, 21.—
Chinesé agrarian organization, 22,—Indian agrarian
organization, 22.—The German Gehéferschaft, 23.—Th e

PAGE

theory of primitive agrarian communism, 24.—Primi-
tive agriculture, 24.

Cuaprer II]. Properry Systems anp Socian Groups . ~ . 26/
(A) Forms of Appropriation j A fees ae 26
(B) The House Community and the Clan 98

The small-family, 28.—The socialistic theory of ‘the ori-

gin of marriage, 28. Prostitution, 30.—Sexual free-

dom and its forms, 33.—Other historical stages of

sexual life in the socialistic theory, 34.—Legitimate

marriage under patriarchal law and its contrasts, 36.

economic life; the theory of the three eco-
nomic stages, 37 —Division of labor between wine sexes
and types of communalization, 38.—The men’s house,
39.—The struggle between patriarchal and aaerarchal
law, 41—Group marriage, 43.—Patriarchal authority
of the man, 43.

Primitive

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pepnerlesesc a

CONTENTS

PAGE

(D) The Evolution of the Clan ee a ee ey
Types of clans, 43.—Organized and unorganized clans,
44.—History of the clan, 44——Prophecy and the clan,
45.—Bureaucracy and the clan, 46.

(E) Evolution of the House Community io AG
The primitive house community and property relations,
46.—Development into other forms of economic organi-
zation, 47.—The patriarchal house community, 47.—
Its dissolution, 48.—Monogamy as the exclusive mar-
riage form, 49.

So eo Sees

CuapTer III. THE ORIGIN OF SEIGNIORIAL PROPRIETORSHIP 51

The small-family as point of departure, 51.—Roots of
seigniorial proprietorship: Chieftainship, 51.—Con-
quest of hostile populations, commendation, seigniorial
land-settlement and leasing, 52.—Magical charism, 54.
—Individual trade, 54.—Fiscal roots of seigniorial pro-
prietorship, various forms, 56.—Individual trade of
princes, irrigation culture of the modern orient, 56.—
Oikos-economy, 58.—Taxation systems of princes, 538.—
Methods of exploiting the taxing power, 59.—Delega-
gation of taxation to chieftain or landed proprietor, 60.
—Seigniorial proprietorship in colonial regions, 61.—
The occidental, Japanese and Russian feudal systems,
62,

Fg aaa a ad

a NS ae

RNR

GHapremylV;. THe MANOR. 35.6 oe = «65

Conditions back of the development of the manor, 65.—
Immunity and judicial authority, 65—Precaria and
beneficitum, 66.—The manorial holding (fronhof), 67.
—Political (‘‘socage”) district (Bannbezirk) and
manorial law, 68—Freedom and unfreedom of the
peasant, 69.—Exploitation of the peasant by rent ex-
actions, forms of these, 72.

a See eT a

CHapter V. THE PosiITION OF THE PEASANTS IN VARI-
OUS WESTERN COUNTRIES BEFORE THE EN-
TRANCEVORUCAPITATISM 9-2 “2 = . 32", (4

Frarce, 74.—Italy, Germany, 75.—England, 77.

terete ee D

Cuaprer VI. Capiraistio DEVELOPMENT OF THE Manor . *79 )
(A) The Plantation eee ee Q
Types of plantations, 79—Plantations in antiquity, 80.
—The southern states of the U. S. A., 82.
(B) Estate Economy eu ar eee ee «| 84.
Types of estates, 84.—Stock raising without capital
or with little capital, 84.—Intensive capitalistic pas-

eSCONTENTS vil

PAGE
toral economy, 85.—Cereal production in England, 85.
—Russia, 86.—Germany, the west, 87—the east and
“hereditary dependency,” 89.—Organization of an east-
Elbe estate, 90—Poland and White Russia, 92.

Causes and Processes of liberation of land and peas-
ants, 92.—Various countries: China, 95;—India, the
near east, 96; Japan, 96;—Greece and Rome, 96;—
England, 98;—France, 98:—South and west Germany,
99;—East Germany, Austria, 100;—Prussia, 103;—
Russia, 106. The present agrarian organization, 108.
—Inheritance law, primogeniture, 108,—fidei-commissa
and entails, 109.—Political results of the break-up of
feudalism, landed aristocracies, 110.—Private property
in land, 1ll.

PART TWO

INDUSTRY AND MINING DOWN TO THE BEGINNING
OF THE CAPITALISTIC DEVELOPMENT

CHAPTER VII. PrincipAL ForMs oF THE ECONOMIC OR-
GANIZATION OF InpUsTRY . . . . . 116

Scope of the concept of industry, 115.—Types of raw-
material transformation, 115.—Industry in the house
community, division of labor between the sexes, 116.—
Specialization and communal labor, 117.—Skilled
trades, 117.—Relation of the worker to the market,
118—to the job, 118—to the place of work, 119—to
the fixed investment, 120.

CHaprer VIII. StTaGes IN THE DEVELOPMENT OF INDUSTRY
AND MINING oe tg AZZ

House industry and tribal industry, 122.—Types of
inter-group specialization, castes, 123.—Local speciali-
zation, demiurgical labor, 124. Specialization in vil-
lage industry and on the feudal manor (Fronhof), 124.
On the estate or oikos, 124.—Transition to production
to order and for the market, the worker as labor power
or as rent-payer, 126.—Shop industry and ergasterion,
126.—Differences in the labor organization of antiquity
and of the middle ages, slavery, 130.—Medieval crafts-
men and the town, 133—and industrial organizations,
134.

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CHaptrer IX. THe Crart GuIbps. . . ay ees. 136

The nature of the guild, 136.—Unfree guilds, 136.—
Ritualistie guilds, 137—Guild policy, internal, 138,—
external, 141.—Later products of guild policy, 142.

CuHaprer X. THE ORIGIN OF THE EUROPEAN GUILDS . . 144

The manorial law theory, 144,—criticized, 145.—Pro-
duction of skilled craftsmen by the feudal manor, 146.
—Free and unfree craftsmen, 147.—Guild, town and
town lord, 147.—Livelihood policy of the guilds, 149.
—Guild struggles, with rural workers, laborers, mer-
chants, 150.—Guild wars, 15l.

CHAPTER XI. DISINTEGRATION OF THE GUILDS AND DEVEL-
OPMENT OF THE DomeEsTIC SysteM . . 153

Displacement of the guild, rise of craftsmen to posi-
tion of merchant and factor, 153——Subdivision and fu-
sion of guilds, 154.—Relation to importer and exporter,
154.—Domestic industry, its varying development in
European countries, 155.—Stages in the development
of the domestic or putting-out system, 159.—Domestic
industry over the world, 160.

CHapTerR XII. SHop Propucrion. THE Factory AnD Its
WORE-RUNNERS! sc) eeu ee ot) op) LOZ

Forms of shop production, factory and manufactory,
162.—Prerequisites of the factory, steady, mass demand
and efficient technology, 163,—supply of free labor,
164.—Fore-runners of the factory in the west, com-
munal establishments, 165, private establishments
(early English factories), 167—-New developments
through the interaction of specialization and combina-
tion of labor and application of non-human power, 169.
—The market of the specialized large industry, political
demand, luxury demand and substitute luxuries, 169.—
Monopoly and state concession as basis of older large-
scale industry, 171.—Relation between factory, craft
work, domestic industry and machinery, 173.—Results
of factory industry for entrepreneur and laborer, 174.
—Obstacles to development of shop industry into the
modern factory in various countries, 175.

CHapTer XIII. Minina Prior To THE DEVELOPMENT OF
MopERN CAPITALISM . . . LS

Mining the first field industrialized, 178.—Legal prob-
lems, 178.—History of mining law and of mining, earli-
est mining outside the occident, 179,—Greece, 180,—CONTENTS 1x

PAGE
Rome and the middle ages, 181,—Germany, 181,—other
western countries, 182.—Periods in the history of Ger-
man mining in the middle ages, 183.—Development of
industrial forms down to the appearance of modern
capitalism, 186.—Smelteries, 190.—The ore trade, 190.
Coal mining, 190.

LOAN AT

PART THREE

COMMERCE AND EXCHANGE IN THE
PRE-CAPITALISTIC AGE

CHAPTER XIV. Points oF DEPARTURE IN THE DEVELOP-
MENT OF COMMERCE ..... . 195
Oldest trade that between ethnic groups, 195.—Ped-
dling, 195.—Trading castes, 195.—The Jews as an out-
cast commercial class, 196.—Seigniorial trade and its
varieties, 196.—Gift trade and trade of princes, 197.

She ee eee eon ae

1 aS ee aD

LOST DEES

CHAPTER XV. TECHNICAL REQUISITES FOR THE TRANSPOR-
TATION) OK GOODS =) a 2 eS
Primitive transport conditions, 199.—Land transport
and its primitive possibilities, 199.—Water transport,
199.—Navigation, 200.—Development of sailing, 200.

aaa Oe ae te

CHAPTER XVI. Forms OF ORGANIZATION OF TRANSPORTA-
TION AND OF COMMERCE ... . . 202

(A) The Alien Trader i i 2a ee
Ocean commerce and piracy, 202.—Merchant shipping
of princes and private persons in the ancient world,
202—Roman conditions, 202.—Shipping and mercan-
tile organization in Greece and Rome, 203.—Legal
forms of commerce, 204.—Sea loans in antiquity, 204.
—Medieval conditions, 205.—Shipping partnerships
and sea loans, 205.—Commenda and societas maris,
206.—The turnover of medieval sea trade, 207.—Land
commerce, means of transport, 208.—Turnover, dura-
tion of voyage and commercial organization, 209.—
Inland shipping in the middle ages, 211.—Protection

of the merchant, safe conduct, 212.—Legal protection,

reprisal, proxenia, hostage, the hanse, 212.—Settle-

ments of merchants, 213.—Market organization, 214.

902

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CHaPTerR XVII.

CHapTeR XVIII.

CHAPTER XIX.

CONTENTS

(B) The Resident Trader Ge ee Oe

Town origin of the resident merchant, 215.—Stages in
the development, 215.—Retail trade dominant in me-
dieval commerce, 216,—Struggles of the resident trader
for monopoly of the town market, 216,—for internal
equality of opportunity, 218, prohibition of forestalling,
right of sharing, 218.—Street and staple compulsion,
219.—Struggles with consumers, 220.—Beginnings of
wholesale trade, 220.

Nature of the fair, 220.—The fairs of Champagne, 220.
—Other fairs, 222.

ForMs oF COMMERCIAL ENTERPRISE

Calculability and association of interest, 223.—Position
numerals, accounting and the trading company, 223.
—The commenda as occasional enterprise, 225.—Ori-
gin of permanent organization for commercial enter-
prise, 226.—Credit and the means of guaranteeing it,
house-community and joint liability, 226.—Separation
of the property of the company, 228.—The commandite,
229.—Hanseatic company forms, 229.

MERCANTILE GUILDS

Nature of the mercantile guild, 230.—Local guilds of
foreigners in the west, the hanses, 230.—Guilds of resi-
dent traders in China and India, 230,—in the west, 232.
—History of the occidental guilds, 233—Commercial
policies of guilds, especially the German Hanse, 234.

Monty AND Monetary History

Money and private property, 236.—The functions of
money, money as means of payment only, domestic
money, 236.—Money as means of accumulation and
mark of class distinction, 237.—Money as a general me-
dium of exchange, 238.—Varieties of money, 238.—
Valuation of different forms, 239.—The precious metals
as the basis of the monetary system, 241.—Coinage,
241.—Technique of coining, 242.—Metallic standards,
243.—History of gold and silver values, eastern Asia
and the ancient east, 244.—Rome and the middle ages,
244.—Coinage debasement in the middle ages, 247.—
Free coinage, 248.—Increase in overseas production of
the precious metals from the 16th century, 248.—Ob-
stacles to the rationalization of money, 250.—Modern
monetary policies, 251.

PAGE

215

223CHAPTER XX. BANKING AND DEALINGS IN MONEY IN THE

Character of the oldest banking transactions, 254.—
Banking in Rome, 256.—Temple banks and state mo-
nopolization of banking in antiquity, 256.—Functions
of the medieval bank, 258.—Liquidity, establishment
of banking monopolies, 260.—The bill of exchange, 261.
—Banking in England, the Bank of England, 263—

CONTENTS

IPRE-CAPITALISTICIVAGE) 9 4). rect.

Banking outside of Europe, China and India, 265.

CHAPTER XXI.

Jews, 270,—of Protestantism, 271.

PART FOUR

THE ORIGIN OF MODERN CAPITALISM

CHAPTER XXII.

THE
MopDERN

MEANING AND

PRESUPPOSITIONS OF

CAPITATIS M70 arte

Capitalism a method of provision for want satisfaction,
275.—Capitalistic supply of everyday requirements pe-
culiar to the occident, 276.—General requisites for the

existence of capitalism, 276.—Calculable law, 277.

CHAPTER XXIII.

Commercialization,

Ture Externat Facts In THE EVOLUTION

CAPITALISM
279.—The

stock company, Wwark-

loans, 279.—Financing of commercial undertakings, the
regulated company, 280.—The great colonial companies,
281.—Finanecing by the state, administration without
a budget, tax farming, 282.—The exchequer, the special-
levy system, 283.—Monopolies, 284.

CHAPTER XXIV.

PAGE

INTERESTS IN THE PRE-CAPITALISTIC PERIOD 267

Absence or prohibition of interest in early society, 267.
Evasion of the prohibition, the chattel loan, 268.—
Medieval methods of meeting the need for credit, ec-
clesiastical prohibition of interest, 269.—The role of the

279

Tue First Great SPECULATIVE CRISES . 286
Speculation and Crises, 286.—The tulip craze, 286.—
John Law, 286.—England, the South Sea Company, 288.
Later speculative crises, 290.—Capital creation, the age

of iron, 290.

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CHAPTER XXV. FREE WHOLESALE TRADE iat <

Separation of wholesale from retail trade in the 18th
century, forms of wholesale organization, 292.—The
fair and the exchange, 293.—News service and the
wholesale trade, 294-—Commercial organization and
transportation, 296.

CHAPTER XXVI. COLONIAL POLICY FROM THE SIXTEENTH

TO THE EIGHTEENTH CENTURY. .

Accumulation of wealth through colonial exploitation,
298.—Slavery and the slave trade, 299.—Colonial trade
and capitalism, 300.—The end of capitalistic exploita-
tion of colonies with abolition of slavery, 300.

CHAPTER XXVIII. THE DEVELOPMENT OF INDUSTRIAL TECH-

NIQUE... (56s; sans hee
Factory, machine and apparatus, 302.—The earliest
true factory in England, 302.—Cotton manufacture
crucial in the rationalization and mechanization of
work, 303.—Primary role of coal and iron, 304.—
Results, liberation of production from the limitations
of organic materials and of labor, and from tradition,
305.—The recruiting of the labor force, 306.—The
market of the factory, the military demand, 307—The
luxury demand, 309.—Mass demand, 310.—The price
revolution of the 16th and 17th centuries, 311.—In-
ventions, 311.—Characteristics and causes of western
capitalism, 312.—Historical conditions of its develop-
ment, 313.

CuHaprer XXVIII. CrrizENSHIP

Citizenship as an economic, political, and social- Tass
concept, 315. —Contributions of the city ‘in various
fields of culture, 316.—Various meanings of the term
city, 317.—City as a unitary community “peculiar to the
oceident, reasons for this, 318.—Origin in oath of
brotherhood, 319.—Rise of cities in the east prevented
by peculiarities of military organization, 320.—Irri-
gation culture and administrative organization, 321.—
Obstacles in ideas of magic, 322.—Similarities between
cities of antiquity and ‘of the middle ages,
tween classical and medieval democracy, 324.—Con-
trasts between classical and medieval democracy, ab-
sence of the guild and guild policy in the former, 326.
—Antiquity characterized instead by conflict between
landowners and landless, 328,—and by increasing
sharpn of class distinctions with growth of democ-
racy (620) The ancient city as a political guild with
military“acquisitive interests, and chronic war as its

302CHaprer XXX. Tue EvoLutTionN OF THE CaAPITALISTIC

CONTENTS

PAGE

normal condition, 331.—Contrasts in urban develop-
ment between south and north in medieval Europe,
332—The city and capitalism, irrational capitalism,
334.—Rational capitalism a product of the occident
since the close of the middle ages, 334.—In antiquity
the cities lose their freedom to the bureaucratically
organized state and world-empire, which throttled cap-
italism with compulsory contributions and services,
336.—In modern times they lose it to competing na-
tional states which are forced into alliance with cap-
italism, 336.

CHapreR XXIX. Tue RationaL STATE. . «. - - .

(A); The State Itself; Law and Officialdom te le Seta
Phe rational state peculiar to the occident, 338.—
Administration by specialists and rational law, 339,—
Roman law, rationalization of procedure through inter-
action with canon law, 340.—Revival of Roman law and
capitalism, 34]1.—Historical descent of characteristic
institutions of capitalism, 342.—Formalistic law and
capitalism, 342.

(B) The Economic Policy of the Rational State
Fiscal interests and public welfare the two types of
state economic policy before the development of mer-
cantilism, 343.—Obstruction of deliberate economic pol-
icy in the east by ritualism, caste, and clan, 344.—The
occident, beginnings of economic policy on the part of

rulers under the Carolingians, 345.—Economic policy ,

of the Church, especially of the monasteries, 345.—
The Emperor and the territorial princes, 346.—Eng-
land, 347.

(C) Mercantilism” . 2 (2k a ee
\Nature and significance of mercantilism, 347.—Its pro-
gram, 347.—England distinctively its home, 348.—Two
forms of mercantilism, (a) class-monopolies, 349,—
(b) nationalistic mercantilism, 350.—Development of
capitalism in England alongside mercantilism ; eapital-
ism and Puritanism, 351—End of English mercantil-
ism, 35l.

SPIRIT (5 eo ee ee
Neither population growth nor importation of preciou
metals crucial in creating western capitalism, 352.—
External conditions of its development, 354.—Rational
istic economic ethic decisive, 354.—History of economic
ethics; at the beginning, traditionalism, steyeotyping

343

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NOTES

CONTENTS

PAGE

of conduct, 354.—Intensification of traditionalism by
material interests and by magic, 355.—Traditionalism
not overcome by the economic impulse alone, 355.—
Breakdown of opposition of internal and external
ethics, 356.—Capitalism necessarily arises in a region
with an ethical theory hostile to it, 357.—Economic
ethics of the Church, 357.—The Jews had no part in the
creation of modern capitalism, 358.—Judaism gave
Christianity its hostility to magic, 360.—Overthrow of
magic by rational prophecy, 362.—Prophecy absent in
China, in India created a religious aristocracy, 362.—
—Judaism and Christianity plebeian religions, 363.
Significance of asceticism for rationalization of life,
Tibet, medieval monasticism, 364.—Diffusion of the old
religious asceticism over the worldly life by the Refor-
mation, 365.—The Protestant conception of the call-
ing, and capitalism, 367.—Protestant-ascetic economic
ethics stripped of its religious import by the Enlighten-
ment; social consequences, 368.

+ . - . . . > ” - . .

INDEX: ORDNIAMES* 6 5° es Se a Ss ee

SUBJECT IUNDEX © 2° 5 5S ee es ee

371
383
385TRANSLATOR’S PREFACE

Max Weber is probably the most outstanding name in
German social thought since Schmoller, and a recent sur-
vey finds him the most quoted sociologist in Germany.
(See American Journal of Sociology, November, 1926,
p. 464.) At a time when the main emphasis in English, and
particularly American, economic thought has shifted from
general deductive theory to the other two corners of the
methodological triangle, namely, psychological and histor-
ical interpretation on the one hand and statistical study on
the other, there is abundant reason for making available to
English readers this last product of Weber’s thought, his
economic history. Though Weber was not, as the German
editors of the work observe, a specialist in this field, the
preparation of a course of lectures on general economic his-
tory offered an exceptional opportunity for bringing to-
gether and presenting in moderate compass the leading
ideas interpretive of economic life and change for which he
was already famous in other lands as well as his own.

In preparing this English version, intended for stu-
dents of the social sciences and the general reader, any-
thing of the nature of re-editing the text has been ex-
pressly avoided, but a few departures from the German
edition have seemed advisable. The highly technical in-
troduction on ‘‘Definitions of Concepts’’ (Begriffliche
Vorbemerkung) prepared by the German editors has been
omitted. In several places, especially in the first chapter,
matter has been transferred from foot-notes to the body of

the text. Other foot-notes have been omitted or condensed,
xv

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Xvl TRANSLATOR’S PREFACE

and the extensive bibliographic references, consisting
largely of German books and articles, have been reduced
to titles in English, references to Max Weber’s other writ-
ings, and a few general works in German and French; all
retained notes are grouped at the end of the volume.

It is perhaps fair to remark to the critical reader that
the translation of a work surveying so large a field of knowl-
edge with so much learning and yet so briefly, has presented
problems. In places, notably in the sections dealing with
medieval institutions, historical exactness would in any case
be impossible without vastly greater length of treatment,
and the shade and scope of meaning of many expressions
in the original is not clear. Moreover, many of the facts
dealt with have no close parallel in English history and
many terms have no close equivalent in English usage.
Especially since the significance of the book lies in its inter-
pretive brillianey rather than accuracy of detail, it was
clearly preferable to use broad terms giving the general
sense and not to enter upon explanations or comparisons
which would grow to undue length. On several points of
usage, my former teacher in the field of economic history,
Professor A. P. Usher, has kindly answered questions and
given valuable advice and suggestions.—Finally, it may be
a hint useful to some readers to say that both the intrinsic
interest of the material and the significance of what the
author has to say increase progressively through the book,
to the very last chapter, which summarizes Weber’s famous
discussion of the relation of religion to the cultural history

of capitalism.
RHE KeFROM THE PREFACE BY: THE
GERMAN EDITORS

Max Weber delivered the lectures which are here given to
the public, under the title ‘‘Outlines of Universal Social
and Economie History,’’ in the winter semester of 1919-20.
In doing so, he yielded unwillingly to the pressing solicita-
tion of the students, for his interest was entirely centered
on the great sociological labors which he had taken up.
But after he had given his consent he threw himself into
them with that unreserved devotion of his whole power and
personality which was characteristic of him. It was the last
class which he was allowed to complete; in the middle of
his next course, on politics and the general theory of the
state, which he began in the summer semester of 1920, he
was removed by death.

Even if Weber had lived longer he would not have given
his Economie History to the public, at least not in the form
in which we have it here. Utterances of his prove that he
regarded the work as an improvisation with a thousand de-
fects, which had been forced upon him, and, like every great
scholar, he was his own most exacting critic. The ques-
tion thus put up to Frau Weber and the editors selected
by her, as to whether publication was at all permissible, has
been answered by them, after much hesitation, in the af-
firmative. They are convinced that science has a claim to
this work of Max Weber. The significance of the work lies,
not in the detailed content—Max Weber was not a special-
ist, and specialists will find enough in the book to take ex-
ception to—but in the penetration of the conception ac-
cording to which a scheme of analysis of economic life is

fitted to the exposition of the preparation for and develop-
xviifeceaetecmaae eee tad

—

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xvii PREFACE BY THE GERMAN EDITORS

ment of modern capitalism, and in the masterly skill with
which the results of the investigation are utilized in the
service of this idea.

The situation just pictured set the task of the editors
and made it a difficult one. No manuscript or even coherent
outlines by Weber himself were available. There were
found in his papers only a bundle of sheets with notes
little more than ecatchwords set down in a handwriting
hardly legible even to those accustomed to it. Consequently,
the text had to be restored from notes by students, who
willingly made their notebooks available for several months.
For the possibility of giving to the world an economic his-
tory under Max Weber’s name, thanks are due in the first
place to them. The editors hope to have succeeded by this
means in restoring the course of the argument. Unfortu-
nately the forceful, dramatic mode of expression has been
almost entirely lost as it could only appear in an incom-
plete and unclear form in the notes, and defied all effort at
restoration. As it was impossible to avoid taking some hand
in the form of the work, the editors have thought that a
somewhat fuller organization and connection of the differ-
ent parts into paragraphs and subheads would facilitate
reading and understanding it. Here, however, their work
stopped, with what is essentially only a linguistically con-
servative mission. It could not be their task to take any
position in regard to the material presented by the author,
to enter into controversy or attempt to remove in advance
doubts such as were certain to arise in regard to his argu-
ment. Only in a few places, and then only occasionally and
briefly, have they felt permitted to correct an obvious er-
ror of the author or essay to complete his statements.

S. HELLMANN.
M. Paty.
Munich and Berlin, April, 1923.

L5LITIORED DUETED CTU DR GRS LIL ODE LE PECL OOS E 20 TE SSE ey enWheeecthehisas

Ee E

PART ONE
HOUSEHOLD, CLAN, VILLAGE AND MANOR?

(The Agrarian Orgamzation)

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THE AGRICULTURAL ORGANIZATION AND THE PROBLEM
OF AGRARIAN COMMUNISM *

The idea of a primitive agrarian communism at the be-
ginning of all economic evolution was first suggested by
investigations into the ancient German economic organiza-
tion, especially by Hanssen and von Maurer.* These men
originated the theory of the ancient German agrarian com-
munism, which became the common property of scholar-
ship. Analogies from other lands to the ancient German
rural organization led finally to the theory of an agrarian
communism as the uniform beginning of all economic
development, the theory developed especially by H. de
Laveleye. Such analogies came from Russia and from
Asia, especially India. Recently, however, a strong tend-
ency has set in to assume private property in land and a
manorial type of development for the most ancient periods
accessible to us, whether in Germany or in other economic
systems.

If we consider first the German national agricultural or-
ganization as it presents itself to us in the eighteenth cen-
tury, and go back from it to older conditions poorly and
scantily illuminated by the sources, we must begin by re-
stricting ourselves to regions originally settled by the
Teutons. Thus we exclude, first, the previously Slavic
region east of the Elbe and Saal; second, the region for-
merly Roman, that is, the Rhine region, Hessia, and South

Germany generally south of a line drawn roughly from the
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+ GENERAL ECONOMIC HISTORY

Hessian boundary to the vicinity of Regensburg; and
finally, the region originally settled by Celts, to the left of
the Weser.

The land settlement in this originally German region
had the village form, not that of the isolated farmstead.

Connecting roads between the villages were originally quite
absent as each village was economically independent and
had no need of connections with its neighbors. Even later
the roads were not laid out systematically but were broken
by traffic according to need and disappeared from one
year to the next until gradually in the course of cen-
turies an obligation to maintain them was established, rest-
ing upon the individual holding of land. Thus the
General Staff maps of this region today give the impres-THE AGRICULTURAL ORGANIZATION 5

sion of an irregular network whose knots are the villages.

In the sketch, the first or innermost zone contains the
dwelling lots, placed quite irregularly. Zone Two con-
tains the fenced garden land (Wurt), in as many parts
as there were originally dwelling lots in the village.
Zone Three is the arable (see below), and Zone Four
pasture (‘‘Almende’’). Each household has the right to
herd an equal number of livestock on the pasture area,
which, however, is not communal but appropriated in
fixed shares. The same is true of the wood (Zone Five)
which incidentally does not uniformly belong to the vil-
lage; here also the rights to wood cutting, to bedding, mast,
ete., are divided equally among the inhabitants of the
village. House, dwelling lot, and the share of the in-
dividual in the garden land, arable (see below), pasture
and forest, together constitute the hide (German Hufe,
cognate with ‘‘have.’’)

The arable is divided into a number of parts called
fields (Gewanne) ; these again are laid off in strips which
are not always uniform in breadth and are often ex-
tremely narrow. Each peasant of the village possesses
one such strip in each field, so that the shares in the
arable are originally equal in extent. The basis of this
division into fields is found in the effort to have the mem-
bers of the community share equally in the various quali-
ties of the land in different locations. The intermixed
holdings which thus arose brought the further advantage
that all the villagers were equally affected by catastrophes
such as hailstorms, and the risks of the individual were re-
duced.

The division into strips, in contrast with the Roman
custom, where squares predominate, is connected with the
peculiarities of the German plow. The plow is universally,
to begin with, a hoe-like instrument wielded by the hands

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6 GENERAL ECONOMIC HISTORY

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or drawn by animals, which merely scratches the soil and
makes grooves in the surface. All peoples which did not
get beyond this hoe-plow were compelled to plow the fields
back and forth in order to loosen up the soil. The most
suitable division of the surface for this purpose was the
square, as we find it in Italy from Cesar’s time on, and
as the general staff maps of the Campagna and the outer
boundary marks between the individual land holdings still
show it. In contrast, the German plow consisted, as far
as we can tell, of a knife which cut the earth vertically,
a share which cut it horizontally, and finally, at the right,
a moldboard which turned it over. This plow made the
criss-cross plowing unnecessary, and for its use the division
into long strips was most appropriate. The size of the
separate strips was usually determined in this connection,
by the amount which an ox could plow in a day without
giving out—hence the German names ‘‘Morgen’’ (English,
‘“‘morning’’ but equivalent to acre) or ‘‘Tagwerk’”’ (Eng-
lish, day’s work). In the course of time these divisions
underwent much confusion, since the plow, with its mold-
board on the right, had a tendency to work over to the
left. Hence the furrows became uneven, and since there
were no balks, originally at least, between the separate
strips, only boundary furrows being drawn, strips of land
belonging to another were often plowed up. The original
arrangement would be restored by ‘‘field juries’’ with the
rod or later the so-called spring circle.

As there are no roads between the single allotments,
tillage operations can only be carried on according to a
common plan and at the same time for all. This was nor-
mally done according to the three field system, which is
the most general though by no means the oldest type of
husbandry in Germany. Its introduction must be set
back at least to the eighth century, since it is assumed as

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a matter of course in a document of the Rhenish monastery
of Lorsch of about the year 770.

The three-field husbandry means that in the first place
the whole arable area is divided into three tracts, of which
at any one time the first is sown to a winter grain and the
second to a summer grain, while the third is left fallow and,
at least in historical time, is manured. Each year the fields
are changed in rotation, so that the one sown with win-
ter grain is the next year put to summer grain and in the
year following left fallow, and the others correspondingly.
There is stall feeding of livestock in the winter, while in
summer they run on the pasture. Under such a system of
husbandry it was impossible for any individual to use
methods different in any way from those of the rest of the
community; he was bound to the group in all his acts.
The reeve of the village determined when sowing and
reaping were to be done, and ordered the parts of the arable
which were sown with grain fenced off from the fallow
land. As soon as harvest was over, the fences were torn
down; anyone who had not harvested on the common har-
vest day must expect the cattle, which would be driven on
to the stubble, to trample his grain.

The hide belonged to the individual and was hereditary.*
It could be of varying size and was different in nearly every
village. Frequently, as a sort of norm, an extent of 40
acres was taken as the amount of land necessary to support
a typical family. The part of the holding consisting of
dwelling lot and garden land was subject to free individual
use. The house sheltered a family in the narrow sense of
parents and children, often including grown sons. The
share in the arable was also individually appropriated,
while the rest of the cleared land belonged to the com-
munity of hide-men or peasant holders (Hiifner), that is,
of the members in full standing or freemen of the village.

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8 GENERAL ECONOMIC HISTORY

These included only those who held title to some share in
each of the three fields of arable. One who had no land or
did not have a share in every field did not count as a hide-
man.

To a still larger group than the village belonged the
common ‘‘mark’’ which included wood and waste land and
is to be distinguished from the almend or pasture. This
larger group was made up of several villages. The begin-
nings and original form of the mark association (Mark-
genossenschaft) are lost in obscurity. In any case it goes
back before the political division of the land into districts
by the Carolingians, and yet it is not identical with the
hundred. Within the common mark there existed, joined
in inheritance with a certain farm, a ‘‘head official’’ of the
mark (Obermarkeramt), an office which had usually been
pre-empted by the king or feudal lord, and in addition a
‘‘wood court,’’ and an assembly of deputies of the hide-
men of the villages belonging to the mark.

Originally there was in theory strict equality among the
members in this economic organization. But such an equal-
ity broke down in consequence of differences in the number
of children among whom the inheritance was divided and
there arose alongside the hide-men half and quarter hide-
men. Moreover, the hide-men were not the only inhab-
itants of the village. There were in addition other sections
of the population. First, younger sons who did not suc-
ceed to holdings. These were allowed to go and settle on
the outskirts of the holdings on still uncleared land and
received the right of pasture, for a payment in both cases
(Hufengeld, Weidegeld). The father could also give them,
out of his garden allotment, land on which to build a house.
From the outside came hand workers and other neighbors
who stood without the organization of associated hide-men.
Thus there arose a division between the peasants and

ARI CIDRDS Dy ea ey 4THE AGRICULTURAL ORGANIZATION 9

another class of village dwellers, called in South Germany
hirelings or cottagers (Seldner, Hdusler), and in the north
‘‘Brinksitzer’”’ or ‘‘Kossaten.’’ These latter belonged to
the village only on the strength of their ownership of a
house but had no share in the arable. However, they
could acquire such a share if some peasant, with the con-
sent of the village reeve or of the overlord (originally
the clan) sold them a part of his share or if the village
leased them a piece of the almend. Such parcels were
ealled ‘‘rolling holdings’’ (walzende Acker) ; they were not
subject to the special obligations of the hide holding or to
the jurisdiction of the manorial court, and were freely
transferable. On the other hand their holders had no share
in the rights of the hide-man. The number of these people
of reduced legal status was not small; it happened that vil-
lages transformed up to half of their arable into such roll-
ing holdings.

As a result the peasant population became divided into
two strata as regards land ownership, the hide-men with
their different subclasses on the one hand, and on the other
those who stood outside the hide organization. But there
was also formed above the hide-men a special economic
stratum who with their land holdings also stood outside the
main village organization. In the beginning of the Ger-
man agricultural system, as long as there was unclaimed
land available, an individual could clear land and fence its
so long as he tilled it, this so-called “‘ Bifang’’ was reserved
to him; otherwise it reverted to the common mark. <Ac-
quisition of such ‘‘bifangs’’ presupposed considerable pos-
sessions in cattle and slaves and in consequence was ordi-
narily possible only for the king, princes, and overlords.
In addition to this procedure, the king would grant land
out of the possessions of marks, the supreme authority over
which he had assumed for himself. But this granting took

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10 GENERAL ECONOMIC HISTORY

place under other conditions than the allotment of hide
land. In this case the allotment affected forest area with
definite boundaries, which had first to be rendered tillable,
and was subject to more favorable legal relations by being
free from the open field obligations. In measuring off these
grants a definite area came into use called the royal hide,
a rectangle of 40 or 50 hectares (1 hectare — 2% acres,
nearly).

The old German settlement form with the hide system
spread out beyond the region between the Elbe and the
Weser. Countries into which it made its way include,
first, Scandinavia—Norway as far as Bergen, Sweden up to
the river Dalelf, the Danish Islands and Jutland; second,
England, after the invasions of the Anglo-Saxons and
Danes (the open field system) ; third, almost all northern
France, and a large part of Belgium, as far as Brabant,
while North-Belgium, Flanders and a part of Holland be-
longed to the realm of the Salic Franks with a different
settlement form; fourth, in south Germany, the region be-
tween the Danube and Iller and Lech, including parts of
Baden and Wurtemberg, as well as upper Bavaria or the
region around Munich, especially the vicinity of Aibling.
With German colonization, the old German form of set-
tlement also spread over the Elbe eastward, though in a
somewhat rationalized form, since the aim of making the
country take up the largest number of settlers led to the
establishment of ‘‘street villages’’ with favorable property
institutions and with the greatest possible freedom of eco-
nomic life. The house lots lay not in irregular groups but
to the right and left'along the village street, each one on its
own allotment or hide, which allotments lay adjoining each
other in long strips: but here also the divisions into fields
and the compulsory common tillage were retained.

With the expansion of the German land settlement sys-THE AGRICULTURAL ORGANIZATION at

tem beyond its original home, notable distinctions arose.
This was especially true in Westphalia, which is divided
by the river Weser into regions sharply distinct as regards
the mode of settlement. At the river the Germanic set-
tlement form stops suddenly and on the left begins the
rezion of settlement in isolated farmsteads. There is no
village or common (Almend), and mixed holdings occur
only to a limited extent. The separate farms are cut out
of the common mark which is originally uncultivated land.
By clearing, new field areas are made which are allotted to
the members of the community, called ‘‘Hrbexen.’’ More-
over, by the process of division other settlers were admitted
to the mark, corresponding more or less to the ‘‘ Kossaten’’
farther east—craftsmen, small peasants and laborers who
stand in the relation of renters to the erbexen, or are de-
pendent upon them as wage workers. The Westphalian
erbex or farmer is in possession of land to the extent on the
average of 200 acres, a result of the mode of settlement, and
is in a much more independent position than a peasant
with intermixed holdings. The individual farmstead sys-
tem dominates from the Weser to the Dutch coast and thus
embraces the main territory of the Salie Franks.

In the southeast the German settlement region abuts on
that of Alpine husbandry and on the territory of the South
Slavs. The Alpine husbandry is based entirely on cattle
raising and grazing, and the common pasture or almend is
of predominant importance. All economic regulations are
therefore derived from the necessity of ‘‘stooling’’ (Schat-
zung, Seyung), that is, the control of opportunity for shar-
ing the utilization of the pasture by those entitled to it.
Stooling involves division of the pasture into a number of
‘“strikes’’? (Stdsze), a strike being the amount of pasture
necessary to support one head of stock through the year.
The economic unit of the South Slavs in Servia, in the

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12 GENERAL ECONOMIC HISTORY

Banat and also in Croatia, is in historical times not the
village but the house community or zadruga, the age of
which is a disputed point. The zadruga is an expanded
family living under the leadership of a male head of the
house and ineluding all his descendants, often with mar-
ried couples numbering up to forty or eighty persons, and
carrying on economic life on a communistic basis. They
do not indeed ordinarily live under a single roof, but in pro-
duction and consumption they act as a single household
using the ‘‘common kettle.”’

In the southwest the Germanic rural organization came
in contact with the remains of the Roman method of dis-
tributing the land, in which we have the seigniorial estate
in the midst of small dependent establishments of colons.
In lower Bavaria, Baden, and Wurtemberg there came to
be a considerable mixture of these two systems, and es-
pecially in the upland and hilly districts the Germanic
system tends to disappear. There are mixed holdings but
on the other hand it also happens that the cleared land of
the village falls into unified sections in which the posses-
sions of the individual lie in divisions without there being
any effort at equality in sharing or any discoverable princi-
ple of division. The origin of this ‘‘hamlet distribution,’’
as Meitzen ealls it, is uncertain; it may have originated
through the granting of land to unfree persons.

The origin of the specifically Germanic agricultural sys-
tem is obscure. In the time of the Carolingians it is al-
ready present, but the division of the open field into equal
strips is too systematic to be primitive. Meitzen has shown
that it was preceded by another system, a division into
so-called Lagemorgen (‘‘locus acres’’). The Lagemorgen
designates that quantity of land, varying widely according
to the quality of the soil, the ‘‘lie’’ of the field, distance
from the dwelling lot, ete., around which a peasant couldTHE AGRICULTURAL ORGANIZATION 13

plow with a yoke of oxen in a forenoon. The Lagemor-
gen thus forms the basis of the open field or Gewann,
which always shows this irregular form wherever the old
division has survived, in contrast with the geometrical form
given to it by later division into strips of equal size.

This view rejects the recent attempt of Rietschel to prove
a military origin for the German land and tillage system.
According to this theory, the system developed out of the
organization into ‘‘hundreds.’’ It holds that the hundred
was at the same time a tactical unit and a political group-
ing of about a hundred hide-men, whose holdings must have
been at least four times as large as the later community
hide. The central figure of the organization would be
available for military service, since they lived on an in-
come derived from the labor of their serfs and could be
spared from the community. Thus the hide (Hufe), like
the later Anglo-Saxon hyde, was an ideal unit, suitable for
carrying the burden of supporting a full-armed mounted
warrior. Out of a hide organization of this sort, it is
argued, grew the community hide by a process of rational-
ization, through the division of the holdings of the great
hidemen into four, eight or ten parts. It is decidedly
against this theory that the field divisions of the German
hide organization did not originate by any rational process,
but grew out of the Lagemorgen. On the other hand,
there remains the difficulty that in northern France the
hide organization arose only in the territory over which the
Salie Franks extended their conquests, and not in the ter-
ritory which belonged to them originally.

The original German settlement form no longer survives.
Its disintegration began rather early, and not as a result of
steps taken by the peasants, who were not in a position to
make such changes, but through interference from above.
The peasant very early fell into a position of dependence

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14 GENERAL ECONOMIC HISTORY

upon a political superior or feudal overlord; as a com-
munity hide-man (Volkshufner) he was weaker in an eco-
nomic and military sense than the royal hide-man. After
the establishment of permanent peace, the nobility took an
increasing interest in economic affairs. It was the man-
agerial activity of a portion of the nobility which destroyed
the rural organization, especially in south Germany. The
imperial abbey of Kempten, for example, began in the 16th
century the so-called ‘‘enclosures’’ (‘‘Vereinddungen’’)
which were continued into the 18th century. The cleared
land was re-distributed and the peasant placed upon his
compacted and enclosed farm (the so-called Hinddhof)
and as nearly as practicable in the center of it. In north
Germany the state set aside the old distribution of land in
the 19th century, in Prussia by the ruthless use of force.
The ‘‘Gemeinheitsteilungsordnung’’ or Decree for the Di-
vision of Communities, of 1821, which was intended to
force the transition to an exchange economy, was issued
under the influence of liberal ideas opposed to mixed
holdings, and the common mark, and pasture. The com-
munity with mixed holdings was set aside by compulsory
unification and the common pasture or almend distributed.
Thus the peasant was forced into an individualistie eco-
nomic life. In south Germany the authorities were content
with the so-called ‘‘purification’’ of the common field sys-
tem. To begin with, a network of roads was laid out be-
tween the different field divisions. As a result there were
many exchanges among individual holdings looking toward
consolidation. The almend remained, but as winter feed-
ing of stock was introduced, it was extensively transformed
into arable, which served as a source of supplementary in-
come for individual villagers or as provision for old age. In
Baden especially, this development was characteristic.
Here the aim towards secure provision for the populationTHE AGRICULTURAL ORGANIZATION 15

was persistently dominant and led to an especially dense
settlement. Bounties on emigration even had to be
granted, and finally in places the situation gave rise to
attempts to separate old settlers and place those later ad-
mitted to rights of common in special almend communities
within the village community.

Many students have seen in the German rural organiza-
tion the echo of an original agrarian communism uniformly
valid for all peoples, and have sought elsewhere for ex-
amples which would permit them as far as possible to reason
back beyond the German system to stages no longer his-
torically accessible. In this effort they have thought to
find in the Seotch agricultural system down to the time of
the battle of Culloden (1746)—the ‘‘runridge system’’—
a resemblance to the German system which would permit
of inferences as to primitive stages. It is true that in
Seotland the arable was divided into strips, and holdings
intermingled ; there was also the common pasture; thus far
there is real resemblance to Germany. But these strips
were re-distributed by lot annually or at definite times, so
that a diluted village communism arose. All this was ex-
eluded in the German Lagemorgen, which lies at the basis
of the oldest German field division accessible to us. Along
with this arrangement, and frequently as a part of it, there
arose in the Gaelic and Scotch regions the ‘‘cyvvar,’’ the
custom of communal plowing. Land which had been in

grass for a considerable time was broken up with a heavy
plow drawn by eight oxen. For this purpose the owner of
the oxen and the owner of a heavy plow, generally the
village smith, came together and plowed as a unit, with
one to guide the plow and one to drive the oxen. The
division of the crop took place either before the harvest or
after a joint harvest.

The Scotch system of husbandry was distinguished fromsemst

eee et nese Le eral

ears

Od eee ied ”
enn

neal

arte

Oe a es Tan ee

en ee ee eters
I ET AN SN IS OTST

et ee a ee ee

(eke Pel
th rea

16 GENERAL ECONOMIC HISTORY

the German by the further fact that the zone of arable was
divided into two sub-zones. Of these the inner was ma-
nured and tilled according to a three-field rotation, while
the outer was divided into from five to seven parts, only
one of which was put under the plow in any one year, while
the remaining ones were in grass and served as pasture.
The character of this ‘‘wild field grass’’ husbandry ex-
plains the development at the time, of plow associations,
while inside the inner zone the individual Scotchman
farmed on his own account like the German peasant.

The Scotch agricultural system is very recent and in-
dicates a high development of tillage; for the original
Celtic system, we must go to Ireland. Here agriculture
was originally based entirely on cattle raising, due to the
fact that, thanks to the climatic conditions, cattle could
remain in the open throughout the year. The pasture
land is allotted to the house community (‘‘tate’’) the head
of which ordinarily owns from 300 upward head of stock.
About the year 600, agriculture declined in Ireland and
the economic organization underwent a change. As be-
fore, however, the land was not permanently assigned, but
for a lifetime at the longest. Redistributions were made
by the chieftain (tanaist) down as late as the 11th century.

Since the oldest form of Celtic economy of which we
know anything is exclusively connected with cattle rais-
ing, little conclusion can be drawn from it, or from the
Scotch eyvvars, in regard to the primitive stages of Ger-
manic husbandry. The typical German agricultural sys-
tem, as known to us, must have originated in a period when
the need for tillage and for stock raising were approxi-
mately equal. Perhaps it was just coming into being at
Cesar’s time, and apparently at Tacitus’ time wild field
grass husbandry predominated. However, it is difficult
to work with the statements of either of these Roman writ-THE AGRICULTURAL ORGANIZATION 17

ers, of whom Tacitus especially arouses suspicions by his
rhetorical embellishment.

In sharp contrast with the German land system is that of
the Russian mir (opsehtschina). This dominated in Great
Russia, but only in the inner political districts, while it
was absent in the Ukraine and in White Russia. The vil-
lage of the Russian mir is a street village, often of remark-
able extent, including up to three or five thousand inhabi-
tants. Garden and field lie behind the dwelling lot.
Newly founded families settle at the end of the row of
allotments. Besides the arable there is utilization of a com-
mon pasture. The arable is divided into fields and these
again into strips. In contrast with the German land sys-
tem these are not in Russia rigidly assigned to the single
dwelling, but the allotment takes into account how many
mouths or how much labor force a dwelling musters. Ac-
cording to the number of these, strips in proportion are
assigned, and hence the assignment cannot be final but only
temporary. The law contemplated a twelve year interval
of redivision but in fact it usually took place oftener, every
one, three, or six years. The right to the land (nadyel)
pertained to the individual soul and related not to the house
community but to the village. It was perpetual; even the
factory worker whose forefathers had emigrated from
the mir generations before might come back and assert the
right. Conversely, no one could leave the community
without its consent. The nadyel found expression in the
right to a periodical redivision. However, the equality
of all members of the village usually existed on paper only,
as the majority required for a redistribution was almost
never obtainable. In favor of redivision was every fam-
ily which had increased in a large ratio; but there were
other interests arrayed against them. The decision of the
mir was only nominally democratic; in reality it was

ATA D

SA eee en ee

Ss a So mma te Ne be

ae
rysS

———

eee ent eS ictarert n nt eer

SonnerE es

aor

See re or 2 ra

cr ae

RE ek fl [ata cers

ee ne erate aera

18 GENERAL ECONOMIC HISTORY

often capitalistically determined. In consequence of the
need for provisions the single households were usually
to a varying extent in debt to the village bourgeoisie or
‘‘kylaks,’’ who held the mass of the propertyless in their
power through money lending. According to whether they
were interested in keeping their debtors poor or allowing
them to acquire more land, they controlled the decision
of the village when redivision was in question.

Concerning the economic workings of the mir there were
two opinions down to the dissolution of the system in
Russia. One view saw in it, as contrasted with an individ-
ualistic rural organization, the salvation of economic life.
It regarded the right of each emigrant worker to return
to the village and demand his portion as the solution
of the social question. Holders of this view admitted that
obstacles were opposed to progress in agricultural methods,
and otherwise, but asserted that the right of the nadyel
compelled the inclusion of everyone in an advance. Their
opponents regarded the mir as a hindrance to progress un-
conditionally, and the strongest support of reactionary
ezaristie policies.

The threatening growth in power of the social revolu-
tionaries at the beginning of the 20th century led to the de-
struction of the mir. In his agrarian reform legislation
of 1906-07, Stolypin gave the peasants the right to with-
draw from the mir under specified conditions and to de-
mand that their portion be granted them free from lability
to later re-apportionment. The share of a withdrawing
member had to be in unified form, a single piece of land,
so that, similar in principle to the enclosures of Allgau,
the farmers were scattered, each individual being placed
in the midst of his holding to carry on individually. Thus
came to pass the result which Count Witte as minister had
demanded, namely, the destruction of the mir. The liberalTHE AGRICULTURAL ORGANIZATION 19

parties had never dared to go so far, or, like the Cadets,
had believed in the possibility of reforming it. The imme-
diate result of Stolypin’s agrarian reform was to make the
more well-to-do peasants, those in possession of considerable
capital, and those who had relatively much land in pro-
portion to the members of the family, withdraw from the
mir, and the Russian peasantry was split into two halves.
One half, a class of wealthy large farmers, withdrew and
went over to a system of individual farms; the other, much
more numerous, which was left behind, already possessed
too little land and found itself robbed of the right of re-
distribution and hopelessly given over to the status of a
rural proletariat. The second class hated the first as vio-
lators of the divine law of the mir; the latter was driven
over to unconditional support of the existing regime, and
if the World War had not intervened would have furnished
a new support and ‘‘cudgel guard’’ for ezarism.

Russian scholarship is divided in regard to the origin
of the mir. According to the most generally accepted view,
however, it was not a primitive institution but a product
of the taxation system and of serfdom. Until 1907 the
individual member of the mir not only held against the
village his nadyel right, but the village reciprocally held an
unquestionable claim to his labor power. Even when he
had gone away with the permission of the headman of the
village, and taken up an entirely different calling, the
village could call him back at any time to impose upon
him his share of the common burdens. These burdens
arose especially in connection with the amortization of the
indemnity for the release from serfdom and the purchase
price of freedom from taxation. On good land the peasant
would obtain a surplus above the share of these burdens
falling to him; consequently the town laborer not infre-
quently found it to his interest to return unsolicited to

SAA

ar
ete

Oe a eT et ae nt eerie ee De Rte

Peat amet

yom
Se a

SaSoe

Te ae

a Se ee eer aie eree- or renee

ree na ge we oe een

aaa

20 GENERAL ECONOMIC HISTORY

the village, and the mir often paid, in such cases, an indem-
nity for relinquishment of the nadyel. But where taxes
were too high and indicated a possibility of higher earnings
elsewhere, the tax burden was increased for those who
remained behind, since it was a joint obligation. In this
case the mir would force its members to return and take
up their life as peasants. Consequently, the solidarity
limited the individual member’s freedom of movement and
amounted merely to a continuation through the mir of the
serfdom which had been abolished; the peasant was no
longer a serf of the lord but a serf of the mir.

Russian serfdom was unusually harsh. The peasants
were subject to torture; an inspector every year joined
pairs of marriageable age together and outfitted them with
land. In relation to the overlord there were only tradi-
tional rights, no enforeeable law; he could undo the ar-
rangement at any time. In the period of serfdom the re-
division was carried out, either, in the ease of poor land,
according to the number of workers in the individual
peasant’s household, or in the ease of good land, according
to the number of mouths. The obligation to the land dom-
inated over the right to the land, while in the one case
as in the other the community was held jointly for the
payments to the overlord. At the same time the Russian
manor exploited the peasants down to the present day to
the extent that the overlords furnished almost nothing, but
tilled the land with the capital and horses of the peasant.
The land was either leased to the peasants or tilled under
the direction of the lord’s bailiff with forced labor by the
peasants and their teams.

Joint liability to the overlord, and serfdom, have existed
only since the 16th and 17th centuries. Out of them de-
veloped the custom of redividing the land. The custom of
redivision did not arise in the Ukraine and those parts ofTHE AGRICULTURAL ORGANIZATION 21

Russia, especially in the west, which were not brought
under Muscovite domination in the 16th and 17th cen-
turies. Here the land was permanently assigned to the
separate dwellings.

On the same principle of joint liability was based the
economic system followed by the Dutch East India Com-
pany in their possessions. The company made the Desa or
community jointly responsible for the dues of rice and to-
bacco. This joint lability led to the result that the com-
munity would finally compel the individual to remain in
the village to help pay the taxes. With the abandonment
of joint liability in the 19th century, the community with
compulsory membership was also allowed to decline.

The economic system included two methods of rice cul-
ture, the dry culture (fegal) which was relatively unpro-
ductive, and wet culture (sawah) under which the field
was surrounded with dykes and sub-divided within to con-
trol the running off of the water collected for the purpose.
One who had established a sawah held an hereditary in-
alienable property right to it. The tegal land was sub-
ject to a nomadic husbandry similar to the wild field grass
economy of the outer zone in the Scotch village community.
The village cleared in common while the individual tilled
and harvested singly. The cleared land was cropped from
three to four years and then had to be put to grass while the
village moved and broke up new land. The older condi-
tions make it clear that only the ruthless and exploitative
system of the Dutch East India Company brought about
the system of redistribution.

The system introduced by the company gave place in the
thirties of the last century to that of Kultur-stelsel.
Under this system the individual had to cultivate one-
fifth of his land for the benefit of the state, in which con-
nection also the crop to be grown was prescribed. This

ere

aes
SON nea

eeeSa al

ee a
sen

eo
a

BE pene NN NO ae hs

ee oe eer eeceemaere srt

Cert ne an cet oe oe

ip
nt
i
1
fi

Sig

22 GENERAL ECONOMIC HISTORY

system in turn disappeared in the course of the 19th cen-
tury, giving place to a more rational mode of husbandry.
A similar system once obtained for a time in China,* ac-
cording to the reports of the Chinese classical writers.
The arable land was divided into tracts of nine squares
each, of which the outer squares were assigned to individual
families, the inner ones being reserved for the emperor.
The family received the land only for use; at the death of
the head of the house, redivision was earried out. This
system was of only passing significance and dominated only
in the neighborhood of large rivers where rice culture by
flooding was possible. In this case also, the communistic
organization of agriculture was dictated by fiscal consider-
ations and did not arise out of primitive conditions. The
original Chinese economic organization is found instead in
the clan economy stil} common in the Chinese villages,
where the clan has its little ancestral temple and its
school and earries on tillage and economic life in common.
The last example of a supposed communistic agricultural
system is that of India. Two different forms of village
organizations are met with. Common to the two is the
common pasture and a garden area corresponding to the
tract of arable on which in the German system wage
laborers and ecottagers lived. Here are settled craftsmen,
temple priests, (which in contrast with the Brahmins play
only a subordinate role), barbers, laundrymen, and all kinds
of laborers belonging to the village—the village ‘‘estab-
lishment.’’ They hold on a ‘‘demiurgic’’ basis; that is,
they are not paid for their work in detail but stand at
the service of the community in return for a share in the
land or in the harvest.° The villages differ in regard to
land ownership. In the ryotvari village the land own-
ership is individual and the tax burden likewise. At the
head of the village is a reeve. The peasants have no shareTHE AGRICULTURAL ORGANIZATION 23

in the common mark, which belongs to the king (rajah).
One who wishes to clear land must pay for the privilege.

Another type is represented by the village placed under
a ‘‘joint body,’’ a community of a number of privileged
nobles, a village aristocracy of full free-holders or hidemen
without an individual head. These farmers (“‘Erbezen’’)
grant out the land and to them belongs the common mark;
thus they stand between the true cultivators and the rajah.
Within this category two classes of villages may be fur-
ther distinguished: One is the pattidari village, where the
land is definitively divided out and appropriated. On the
death of the occupant his share goes to his descendants
by blood and is redivided when it again passes by inheri-
tance. The other is the bhayachara village. Here the
land is distributed in accordance with the labor force or
the rank of the individual holders. Finally, there are
also villages in which an individual is in complete control
as tax farmer and overlord. These are zamindari vil-
lages, and the pattidari villages also developed through
the partition of feudal holdings. The special feature of
Indian conditions is that a large number of rent collectors
have intervened between the sovereign and the peasantry
through the farming out and re-farming of the taxes.
Frequently a chain of four or five rent receivers will have
originated in this way. Within this group of rent re-
ceivers and large farmers a nominal communism has been
evolved. Where several peasants carry on a communistic
husbandry they divide the harvest, not the land, and the
rent is apportioned among the owners entitled to share.
Thus, this case of agrarian communism also traces its or-
igin to fiseal considerations.

In Germany, again, students thought to find in the
holdings called ‘‘Gehdferschaften’’ of the Moselle the re-
mains of a primitive agrarian communism, until Lamprecht

ere reer

meneame

opp a EES EEE EY EE

enna reenter Seisene

a
aa

= We

eR eae a Se ee

Se an

eae ee ee a re eae ar teaeeneneeea e-SP R oe ape

ee eee a ee

24 GENERAL ECONOMIC HISTORY

recognized their true character. Down to the present these
holdings have consisted chiefly of woodland, but they for-
merly contained also meadow and arable which were divided
out after the manner of common fields, periodically and by
lot. This arrangement is not primitive, but arose out of
seigniorial policies. Originally the Gehdferschaft was a ma-
norial farm or estate which was tilled by the labor of small
peasants, members of the mark community. But when the
overlords became knights and were no longer in a position
to direct operations personally, they found it more advan-
tageous to enlist the self-interest of the peasants, and
granted them the land on the terms of a fixed rent. Here
again we meet with the principle of joint obligation. The
mark organization either undertook a definitive division
of the interests, or redistributed periodically by lot.

Not all of these examples serve to prove the thesis of
Laveleye that at the beginning of the evolution agrarian
communism existed in the sense of communistie husbandry,
and not merely that of joint ownership of the soil—two
things which must be carefully distinguished. This is
not the ease since, in fact, husbandry was not originally
communal. Here there is a sharp conflict in viewpoint.
While the socialistic authors view property as a fall from
grace into sin, the liberals carry it back wherever possible
to the time of the putative ancestors of the population.
In reality, nothing definite can be said in general terms
about the economic life of primitive man. If we seek an
answer in the relations of populations untouched by Euro-
pean influences, we find no unanimity but ever the sharpest
contrasts.

In primitive agricultural life, the so-called hoe-culture
predominates. Neither plow nor beasts of burden are
used ;® the implement of tillage is a pointed stick, with
which the man goes about over the land and makes holes

SESE RADA PATE TEDW
FIC THLEI ELTA Lae CAD OS ha panaTHE AGRICULTURAL ORGANIZATION

in which the woman drops the seed. With this method,
however, quite different forms of organization may be
associated. Among the Guatoes in the interior of Brazil,
individual economy is found with no reason for assuming
the previous existence of any other organization. Every
household is self-sufficient, without specialized division of
labor among them, and with limited specialization among
the members of the household, and also with limited ex-
change relations between tribes. The opposite extreme is
the assembly of work in a large central dwelling, as in the
long-house of the Iroquois. Here the women are herded
together under the leadership of a head woman who ap-
portions the work, and likewise the product, among the
separate families. The man is warrior and hunter, and
undertakes in addition the heavy tasks, clearing the land,
building the house, and finally herding the cattle. The
latter counted originally as an exalted occupation because
the taming required strength and skill. Later, the esteem
in which it is held is traditional and conventional. We
find similar conditions in all parts of the earth, especially
among negro tribes; everywhere among these the field work
falls to the women.

25y
ay

a
aero

pea a lta emt el els

A et

Se Ree

Stan Cie te og

CUHPASe IVs lr
PROPERTY SYSTEMS AND SOCIAL GROUPS
(A) Forms or APPROPRIATION

The forms of appropriation are quite as diverse as the
forms of husbandry. The proprietorship everywhere vests
originally in the house community; but this may be either
the individual family, the zadruga of the South Slavs, or
a still larger association, as for example that of the Iro-
quois long-house. Appropriation may be carried out on
two different bases. Either the physical means of labor,
especially the soil, are treated as implements, in which ease
they frequently appertain to the woman and her kindred;
or, the land is treated as ‘‘spear land,’’ territory which has
been conquered and is protected by the man; in this case
it belongs to an agnatic clan or some other masculine group.
In any case purely economic considerations do not uniquely
determine the form of primitive appropriation and di-
vision of labor, but military, religious, and magical mo-
tives also enter.

In the past the individual had to adjust himself to a
plurality of organizations to which he belonged. The fol-
lowing are the types:

1. The Household. Its structure is diverse but it was al-
ways a consumption group. The physical means of pro-
duction, especially movable goods, might also pertain to the
house group. In that case appropriation might be carried
farther within the group, the weapons and masculine ac-

coutrements for example belonging to the man, with a
26PROPERTY SYSTEMS AND SOCIAL GROUPS 27

special mode of inheritance, the articles of adornment and
feminine accoutrements to the woman.

2. The Clan. This also may hold goods in varying de-
grees of proprietorship. It may own the land; in any
ease, the members of the clan regularly keep as a rem-
nant of originally widely extended property rights certain
claims against the possessions of the house community,
such as the requirement for its consent in case of sale, or
a prior option to purchase. Further, the clan is respon-
sible for the security of the individual. To it pertains the
duty of avenging, and of enforcing the law of vengeance.
It also has a right to share in head money, and a joint
proprietorship over the women belonging to the clan,
hence, a share in bride purchase money. The clan may
be masculine or feminine in constitution. If property and
other rights pertain to a masculine clan we speak of pa-
ternal succession or agnation, otherwise of maternal or
cognation.

3. Magic Groupings. The most important group is the
totem clan which arose at a time when certain beliefs in
animism and spiritual entities were dominant.

4. The Village and Mark Association, essentially eco-
nomie in significance.

5. The Political Group. This organization protects the
territory occupied by the village and consequently possesses
extensive authority in connection with the settlement of
the land. In addition it requires of the individual mili-
tary and court services, giving him corresponding rights ; 7
it also enforces the feudal services and taxes.

The individual must also take into account under differ-
ent conditions the following: 6. Overlordship of land,
when the soil which he tills is not his own. 7. Personal
overlordship when the individual is not free but is in bond-
age to another.etn ate a el ee a i

aot:

nee =

Se EE

re tear eee sie rer at

Ree eee ete on Cn er Le Peer

;
\.

FIL eepees

28 GENERAL ECONOMIC HISTORY

Every individual German peasant stood in the past in re-
lation to an overlord of land and person, and to a political
sovereign, one or more of whom had some claim to his
services. Agricultural development took various forms ac-
cording as these different persons were distinct or identical ;
in the former case, the rivalry of the different overlords
favored the freedom of the peasant, while in the latter the
trend was toward servility.

(B) THe House COMMUNITY AND THE CLAN

Today the house community or family household is com-
monly a small-family, that is, a community of parents and
children. It is based on legitimate marriage presumed to
be permanent. The economic life of this small family is
unitary in regard to consumption, and at least nominally
distinct from the productive organization. Within the
household all property right vests in the master of the
house as an individual, but is limited in various ways in
regard to the special belongings of the wife and children.
Kinship is reckoned alike on the paternal and maternal
sides, its significance being practically limited to the matter
of inheritance. The concept of the clan in the old sense
no longer survives; only rudiments of it can be recognized
in the right of collateral inheritance, and even here there is
a question as to the age and the history of these relations.?

The socialistic theory proceeds from the assumption
of various evolutionary stages in the marriage institution.
According to this view the original condition was one of
spontaneous sex promiscuity within the horde (endogamy),
corresponding to the complete absence of private property.
Proof of this assumption is found in various alleged sur-
vivals of the original conditions: in religious institutions
of an orgiastic character among primitive peoples, meat,PROPERTY SYSTEMS AND SOCIAL GROUPS 29

alcohol, and narcotic orgies, in which the restraints upon
sexual relations disappear; in freedom of sexual relations
before marriage, for women as well as men, such as is
found among various peoples; in the sexual promiscuity of
the hieroduli of the ancient east who gave themselves in-
discriminately to any man; finally, in the institution of
the levirate found among the Israelites and in various
places and involving the privilege and duty of the clan
brother to marry the widow of a deceased man and pro-
vide him with heirs. In this arrangement is seen a rem-
nant of primitive endogamy which is supposed to have
become gradually narrowed down to a claim upon a par-
ticular individual.

The second evolutionary stage according to this social-
istic theory is group marriage. Definite groups (clan or
tribe) form a marriage unit in relation to other groups,
any man of the one being regarded as the husband of
any woman of the other. The argument rests on infer-
ence from the absence of terms for any kinship except that
of father and mother among Indian peoples; at a certain
age these terms are applied indiscriminately. Further evi-
dence is drawn from isolated cases of marriage groups in
the South Pacific Islands where a number of men possess
simultaneous or successive sexual rights over a particular
woman, or conversely a number of women over a particular
man.

Socialistie theory considers the ‘‘mother right,’’ (Mut-
terrecht) as a fundamental transition stage. According to
the theory, at a time when the causal connection between
the sexual act and birth was unknown, the house commun-
ity consisted not of families but of mother-groups; only
the maternal kinship had ritualistic or legal standing.
This stage is inferred from the widespread institution of
the ‘‘avunculate’’ in which her mother’s brother is the=

ee er

EEE

Se LI

eR aa ee

—

Cee eee ene nen ne ee emanate ne eratsese eRe?

\ Saag

30 GENERAL ECONOMIC HISTORY

woman’s protector and her children inherit from him. The
matriarchate was also regarded as a developmental stage.
Under this arrangement, met with in various communities,
the distinction of chieftainship was fixed exclusively in
the woman, and she was the leader in economic affairs, espe-
cially those of the household community. From this con-
dition it was supposed that the transition to father-right
took place through the institution of marriage by capture.
Beyond a certain stage, the ritualistic basis of promiscuity
was condemned and exogamy displaced endogamy as a gen-
eral principle, that is, sexual relations became restricted to
persons in other groups, involving commonly the obtaining
of the woman from these groups by violence. Out of this
practice should have developed marriage by purchase. An
argument for this course of development is found in the
fact that even among many civilized peoples who have long
since gone over to contractual marriage the marriage
ceremonies still symbolize forcible abduction. Finally, the
transition to patriarchal-law (Vaterrecht, father-right) and
legitimate monogamy is in socialistic thinking connected
with the origin of private property and the endeavor of
the man to secure legitimate heirs. Herein takes place the
great lapse into sin; from here on monogamous marriage
and prostitution go hand in hand.

So much for the theory of mother-right and the social-
istic doctrine based upon it. Although it is untenable in
detail it forms, taken as a whole, a valuable contribution
to the solution of the problem. Here again is the old
truth exemplified that an ingenious error is more fruitful
for science than stupid accuracy. A, eriticism of the
theory leads to consideration first of the evolution of pros-
titution, in which connection, it goes without saying, no
ethical evaluation is involved.

We understand by prostitution submission to sexual re-PROPERTY SYSTEMS AND SOCIAL GROUPS 81

lations for a price, in order to secure a money income, and
as a regular profession. In this sense prostitution is not
a product of monogamy and private property, but is of
immemorial age. There is no historical period and no
stage of evolution in which it is not to be found. It is un-
usual in Mohammedan civilization and is absent among
a few primitive peoples, but the institution itself and
punishment for both homosexual and heterosexual prosti-
tution are found among the very peoples pointed out by
the socialistie theorists for the absence of private property.
Always and everywhere the profession is segregated as a
social class and generally given an outcast position, with
exceptions in the case of sacerdotal prostitution. Between
professional prostitution and the various forms of marriage
may intervene all possible intermediate arrangements of
permanent or occasional sexual relations, which are not
necessarily condemned ethically or legally. While today
a contract providing for sexual pleasure outside of mar-
riage is void, turpi causa, in the Egypt of the Ptolemies
there was sexual freedom of contract with enforceable
exchange by the woman of sex gratification for sustenance,
rights in estates, or other considerations.

Prostitution, however, not only appears in the form of
an unregulated sexual submission but is also met with in
the sacramentally regulated form of ritualistic prostitution,
as for example, the hieroduli in India and the ancient
east. These were female slaves who had to function in the
temple in connection with the religious services, of which
a part consists in their sex orgies. The hieroduli are also
found submitting themselves to the public for pay. The
institution of the hieroduli goes back to sacerdotal sources,
to animistic magic of a sexual character, which has a way
of running into sexual promiscuity in view of the progres-
sive self-excitement of an ecstatic situation.aon ad hall

a ees St em) ei at ee at eee
EI

7 eo

Sa ece

RN pe BN NNN MR a a Na ee a ae a a a

Se Lr eee oe rel ag aera Sree

32 GENERAL ECONOMIC HISTORY

Copulation as a form of magic for stimulating fertility
is widespread among agricultural peoples. The sexual
orgy was even carried out on the ground itself with the
expectation of increasing its productivity. Out of partici-
pation in this sacramental process arose in India the calling
of the bayaderes which play an important role in the cul-
tural life of India as free hetaerae, similar to the Greek
women so designated. But in spite of the favorable con-
ditions of their lives they ranked as outcasts, and as is
shown by the Indian bayadere dramas, regarded it as the
highest peak of good fortune to be elevated through a
miracle to the class of married women living under very
degraded conditions.

Besides the hieroduli there are found in Babylon and
Jerusalem the temple prostitutes proper, whose principal
clients were the traveling merchants. These kept to their
occupation after its loss of sacramental and orgiastie char-
acter, under the protection of the material interests of the
temple. The struggle against officially legitimatized pros-
titution, and its source the orgy, was carried on by the
prophets and priests of the great religions of salvation,
Zarathustra, the Brahmans, and the Prophets of the Old
Testament. Tkey carried on the fight partly on ethical
and rational grounds; it was the battle of those who wished
to deepen the inner life of man and saw in subjection to
eroticism the greatest obstacle to the triumph of the reli-
gious motive. In addition, the rivalry of cults played a
part. The God of ancient Israel was a hill God, not a
ehthonian deity like Baal, and the police power stood be-
side the priests in this struggle, as the state feared the
rise of revolutionary movements of the lower classes out
of the emotional excitement connected with orgiastie phe-
nomena. Nevertheless, prostitution as such survived after

Bie ooeay ae:PROPERTY SYSTEMS AND SOCIAL GROUPS 33

the discontinuance of the orgy, which was under suspicion
of the state; but it was outlawed and illicit. In the middle
ages, in spite of the church doctrine, it had official recog-
nition and was organized as a guild. In Japan also the oe-
casional use of the tea-house girls as prostitutes continued
down to the present and not merely has not caused them to
lose caste, but has made them especially desired in mar-
riage.

The reversal in the status of prostitution did not begin
till the end of the 15th century, when it followed the
serious outbreak of sexual diseases during the campaign
of Charles VIII of France against Naples. From that
time began its strict segregation while up to then it had
been allowed to lead a mild ghetto existence. The out-
bursts of ascetic tendencies in Protestantism, especially in
Calvinism, worked against prostitution, as did subse-
quently, but more mildly and cautiously, the rules of the
Catholic church. The results were here similar to those
of Mohammed and the makers of the Talmud who had like-
wise taken up the struggle against orgiastic practices.

An analysis of sex relations outside of marriage must
distinguish between prostitution and the sexual freedom
of woman. Sexual freedom for the man was always taken
for granted, being first condemned by the three great
monotheistic religions, and in fact not by Judaism until the
Talmud. The originally equal sexual freedom of woman
finds expression in the fact that among the Arabs at the
time of Mohammed temporary marriage in exchange for
support, and trial marriage, existed side by side, although
permanent marriage was already recognized. Trial mar-
riages are also found in Egypt and elsewhere. Girls of
upper class families were especially reluctant to submit
to the harsh domestic confinement of the patriarchal mar-—s

arabia

SSSI rare ee en SRN

ie a
ners

De ee nn ONS oe a a oo

ee ee en

eae has

34 GENERAL ECONOMIC HISTORY

riage, but clung to their sexual liberty, remaining in their
parental homes and entering into contracts with men to
whatever extent they pleased.

Beside this example of personal sexual freedom must be
placed the possibility of the woman being exploited for
gain by the clan and hired out in exchange for provisions.
Sex hospitality, so-called, must also be recognized, that is,
the obligatory giving of wife and daughters to honored
guests. Finally, there developed concubinage, which is
distinguished from marriage by the fact that it does not
give complete legitimacy to the children. It is always
conditioned by difference in social class and involves cohab-
itation across class barriers, after class endogamy has been
established. In the period of the Roman Empire it had
held full legal recognition, especially for soldiers, to whom
marriage was forbidden, and for senators, whose marriage
opportunities were limited by social class considerations.
It was maintained during the middle ages and first ab-
solutely forbidden by the Fifth General Lateran Council of
1515. But it was condemned by the Reformation churches
from the beginning, and since that time has disappeared
from the western world as a legally recognized institution.

Further investigation of the socialistic theory of
mother-right shows that none of the stages of sexual life
which it asserts can be shown to exist as steps in a general
evolutionary sequence. Where they are met with, it is
always under quite special circumstances. Promiscuity,
where it exists at all, is either an especial phenomenon of
an orgiastie character or a degenerative product of an older
strict regulation of the sexual life. On the side of the
mother-right theory, it must be admitted that the history of
animistic religious belief shows that the connection between
the act of generation and birth was not originally under-
stood. In consequence, the blood bond between father andPROPERTY SYSTEMS AND SOCIAL GROUPS 35

children was not recognized, just as today illegitimate chil-
dren live under mother-right. However, purely maternal
organizations under which children live with the mother
alone, without the father, are not at all general, but occur
only under quite specific conditions.

Endogamy within the house or brother and sister mar-
riage is found as an aristocratic institution for maintaining
the purity of the royal blood, as among the Ptolemies.

Priority of the clan, under which the girl must be offered
to members of her clan before marrying outside of it,
or their claim must be bought off, is explained by differ-
entiation in wealth and is a defense against the dissipation
of property. The levirate also does not correspond to
primitive conditions, but arises from the fact that extine-
tion of a male line was to be avoided on military and re-
ligious grounds; the family without a warrior must not be
left barren and abandoned to die out.

After social stratification has appeared, class endogamy
arises in the further sense that the daughters must be
reserved for the members of a particular political or
economie group. This was carried out within wide limits
by the Greek democracy, in order to keep the property
within the citizenship of the city and to monopolize politi-
eal opportunities for the citizen class by restricting its
multiplication.

Endogamy also takes the form of hypergamy, in the
case where very intense class differentiation develops, as
in the Indian caste system. While the man of a higher
caste can enter into sex relations or marry below his level
at will, this is forbidden to the woman. As a result the
woman of a lower caste may be sold for money while on
behalf of the girl of the higher caste, offers may be made
to secure a man in exchange for money. The arrange-
ments are made in childhood, and the man may be mar-

eat eet

eee
ReeceOe a ES NR ET r=

n oe a

EO a a EL

poate ee oe Re Ree aL a 5
SS Ee

Se ee a er

ee tree or rock er ere e

36 GENERAL ECONOMIC HISTORY

ried to a number of women and be supported by their
parents, travelling from one household to another. In
India, the English government put an end to this condition,
enforcing the support of the women on the part of the
nominal husband. "Wherever endogamy is found, it is to
be assumed that it is a phenomenon of retrogression, not
a stage of progress.

Exogamy with regard to the household has obtained
everywhere and always, with few exceptions. It arises
from the effort to forestall jealousy of the men within
the household, and out of the recognition that growing up
together does not permit a strong development of the sexual
impulse. Exogamy of the clan is generally connected with
animistic ideas belonging to the institution of totemism.
That this ever spread over the world is, however, unproven,
although it is met with in such separated regions as Amer-
ica and the Indian Archipelago. Marriage by capture is
always regarded as illegal by the kindred affected, justi-
fying blood revenge or exaction of head money, but at the
same time is also treated as a knightly adventure.

The distinguishing mark of legitimate marriage accord-
ing to patriarchal law, is the fact that from the standpoint
of a certain social group only the children of a certain wife
of the man in question have full legal standing. This social
group may be of several kinds: 1. The house community ;
only children by marriage have the right of inheritance,
not those of secondary wives and concubines. 2. The clan;
only the children by marriage share in the institutions of
blood vengeance, head money, and inheritance. 3. A mil-
tary group; only children by marriage have the right to
bear arms, share in booty or conquered territory, or in the
distribution of land generally. 4. A class group; only
children by marriage are full members of the class. 5. A
religious group; only legitimate descendants are regardedPROPERTY SYSTEMS AND SOCIAL GROUPS 37

as fit to carry on the ancestral ritual, and the gods will
accept sacrifice only at their hands.

The possible arrangements other than legitimate mar-
riage according to patriarchal law are the following: (1)
The pure matriarchate. The father, recognized as legiti-
mate hcad of the group, is absent; kinship is recognized
only between the children and the mother or the kindred of
the latter. Pure maternal groupings are found especially
in connection with men’s societies. (See below.) (2)
Pure paternal (agnatic) groupings. All the children of
a father have equal standing, including those of secondary
wives, concubines, and female slaves, and also adopted chil-
dren. Both children and women are subject to his un-
restrained authority. Out of this condition developed
legitimate marriage according to patriarchal law. (3)
Suecession in the maternal line in spite of a house com-
munity including both parents. The children belong to
the mother’s clan, not that of the father. This condition
is found in connection with totemism and is a survival of
the organization of the men’s-house organization. (See
below.)

Treatment of this question calls first for a general survey
of primitive economic life. The scheme of three uniformly
distinct stages of hunting economy, pastoral economy, and
agriculture, current in scientific discussion, is untenable.
Neither purely hunting nor purely nomadic peoples are
primitive, if they are met with at all, free from dependence
upon exchange among themselves and with agricultural
tribes. The primitive condition on the contrary is one of
nomadie agriculture on the level of hoe-culture, and gen-

Ee eran ete neers eaeve

_
ns

TAS aera a

= I ot ee eee ee aL ee

io ecm a I SRN SAA a DR SO MONE NS SS ZN AO NW NS

LP WES SEG

38 GENERAL ECONOMIC HISTORY

erally associated with hunting. Hoe-culture is husbandry
without domestic animals and especially without beasts of
burden ; the plow represents the transition to agriculture in
our sense. The domestication of cattle required a long
period of time. It probably began with work animals, milk
animals coming later, while still today there are regions
in the East in which milking is unknown. Use of animals
for meat followed both. As an occasional phenomenon,
slaughtering is certainly older; it took place in a ritualistic
connection for the purpose of the meat orgy. Last of all
we find the taming of animals for military purposes. Be-
ginning with the 16th century before Christ we meet with
the horse which is used on the plains for riding, everywhere
else as a draft animal; and the epoch of knightly chariot
fighting, common to all peoples from China and India to
Ireland, begins.

Hoe-culture could be carried on individually by the small
family or with group labor, through the coming together
of households even to hundreds of persons. The latter
mode of husbandry is the product of a considerable develop-
ment of technique. Hunting must originally have been
carried on in common, though its socialization was the result
of circumstances. The keeping of cattle could be carried
on individually and must have been; in any ease, the social
groups engaged in it could not have been very large on
account of the scattering of large herds over extensive areas.
Finally, extensive agriculture could be carried on by all
methods, but the clearing of land called for community
action.

Cutting across these distinctions in the mode of hus-
bandry is the form of the division of labor between the
sexes. Originally, the tilling of the soil and the harvesting
fell mainly to the woman. Only when heavy labor, with
the plow instead of the hoe, was required, the man had toPROPERTY SYSTEMS AND SOCIAL GROUPS 39

participate. In the house work proper, in which textiles
take the leading place, the woman alone was involved.
Man’s work included also hunting, tending domestic an-
imals as far as cattle were concerned—while the small
animals were again the woman’s province—wood and metal
working, and finally and before all, war. The woman was
a continuous worker, the man an occasional one; only very
gradually, with the increasing difficulty and intensity of
work, was he led on to continuous labor.

Out of the interaction of these conditions arise two types
of communalization, on the one hand that of house and
field work, and on the other that of hunting and fighting.
The first centers around the woman and on the basis of it
she often occupies a dominant social position; not in-
frequently she was in complete control. The women’s
house was originally the workhouse, while the socialization
of hunting and fighting gave rise to the men’s society. But
whether the head of the household was a man or, as among
the Indians, a woman, there was always a traditional bond-
age and a corresponding patriarchal position within the
house. In contrast, the socialization of hunting and fight-
ing was carried out under the leadership based on merit
or charism of a chieftain chosen for this purpose. Not his
kinship connections but his warlike and other personal
qualities are decisive; he is the freely chosen leader with a
freely chosen following.

Corresponding to the house community in which the
economic activity of the women is carried on, is found the
men’s house. During a precisely limited period of life,
embracing from 25 to 30 years, the men live together in a
club-house apart from their families. From this as a
center are carried on hunting, war, magic, and the making
of weapons and other important iron implements. The
young men frequently obtain wives by capture, carried outPad

Sara

a
or

AITO

a en ee eee aecerer a

eee ee

eee oe re

sxx

3
i

bt be aes _
parece ne

pe OR Rtas at eee eae Se

40 GENERAL ECONOMIC HISTORY

in groups, so that the marriage has a polyandrous char-
acter, or they buy them. Women are forbidden to enter
the men’s house, in order to guard its character of secrecy.
It is kept sacred by fear-inspiring surroundings, such as
the duc-duc of the South Pacifie Islanders. The avuncu-
late is regularly connected with the institution of the men’s
house and often though not always with maternal kinship,
while exogamy of the clan regularly obtains. As a rule
also the group of men is divided into age classes. After a
certain age they withdraw from the men’s house and repair
to the village and their wives. Generally the men’s house
also recognizes a novitiate. At a certain age the boys are
taken out of the families, carried through magic pro-
cedures (circumcision being commonly included), receive
the consecration of young manhood, and take up their life
in the men’s house. The place is a sort of barracks, a mil-
itary institution giving rise on its disintegration to various
lines of development, as for example, a magical association
or a political secret society on the pattern of the Italian
Camorra. The Spartan dvdpeov, the Greek phratry, and
the Roman curia (coviria) are examples of the institution.

This primitive military organization did not everywhere
come into being and where it arose it disappeared quickly,
either through a course of demilitarization or through the
development of a military technique favorable to single
combat with the requirement of heavy weapons and a
special course of training for the warrior. Chariot and
horseback fighting worked especially in this direction. The
consequence was regularly that the men joined their
families, living with their wives, and military protection
was secured not through the communism of the men’s house
but through an arrangement which gave the individual
warrior special rights in the land, enabling him to equip
himself. At this time the blood tie becomes of especialPROPERTY SYSTEMS AND SOCIAL GROUPS 41

significance, while accompanying it is the primitive theology
of animism or belief in spirits, which everywhere in the
world puts in its appearance in some form.

In the institution of the men’s house is apparently to
be sought the origin of totemism,* resting on animistic
grounds, although later it becomes independent of the
latter. The totem is an animal, a stone, an artefact, any
object whatever, which is viewed as possessed by a spirit,
the members of the totem group standing in animistic kin-
ship with this spirit. When the totem is an animal, it must
not be killed, for it is of the same blood as the community ;
and out of this prohibition grow various ritualistic food
prohibitions. Those belonging to a totem form a culture
union, a peace group, whose members must not fight
among themselves. They practise exogamy, marriage be-
tween members of the totem being considered incestuous and
expiated by terrible punishment. Thus one totem stands
over against others as a marriage group. Im this regard
the totemie group is a ritualistic conception which often
cuts through household and political groupings. Although
the individual father lives in domestic communion with his
wife and children, maternal succession is rather generally
the rule, the children belonging to the mother’s clan and
being ceremonially alien to the father. This is the factual
basis of the so-called matriarchate which is thus, along with
totemism, a survival from the period of the men’s house.
Where totemism is absent we find a patriarchate, or pater-
nal dominance with paternal inheritance.

The struggle of the growing tendency toward the patri-
archate with an older maternal system might be decided
according to the established land tenure. Hither the soil
was allotted in line with economic principles, that is, it was
regarded as the work place of the woman, or in line with
military principles, in which case it was viewed as theaime

Pe td

Mee

easy

Wi
i
f
it

aE ae

to pa hea ee a Sl ee

Fa Nena eS Se ee ereeeereiee gs Ore ag ae PEL Se

eee oe ee ee

42 GENERAL ECONOMIC HISTORY

fruit of conquest and a subject for military protection. If
the main burden of tillage fell on the woman, the land was
inherited by the maternal uncle as guardian of the children.
If on the contrary it was viewed as “‘spear land’’ the title
rested in the military organization; the children were
counted as belonging to the father, and a further conse-
quence was the exclusion of the women from rights in the
land. The military group sought to maintain the economic
basis of military service on the part of its members by
keeping the allotment of land as a function of the paternal
clan. Out of this endeavor sprang the levirate as well as
the law regarding female heirs, to the effect that the near-
est of kin had the right and duty of marrying a female
descendant who was the last of a line. This institution is
met with especially in Greece.

The other possibility was that individual property rela-
tions decided between the patriarchate and a maternal or-
ganization. Between economic equals the older form of
marriage was apparently exchange of wives; * especially as
between households, youths exchanged their sisters. With
differentiation in economic status, the woman is regarded
as labor power and is bought as an object of value, as a
work animal. The men who cannot buy a wife serve for
her or live permanently in her house. Marriage by pur-
chase and marriage through service, the one with patri-
archal law and the other with maternal, may exist side by
side and even in the same household; hence, neither is a
universal institution. The woman always remains under
the authority of a man, either in her own house community
or in that of the man who has bought her. The marriage by
purchase, like marriage through service, may be either
polyandrous or polygamous. While the well-to-do buy
wives at will, the propertyless, especially brothers, often
club together for the purchase of a common wife.PROPERTY SYSTEMS AND SOCIAL GROUPS 43

Back of these relations is the ‘‘group marriage’’ which

probably developed out of marriage barriers of a magical
significance, as between totem groups or house communities.
The man takes a group of sisters either one after the other
or at the same time, or a number of women have to be taken
over from the other house community, when they also be-
come the property of the group thus ‘‘marrying’’ them.
Group marriage oceurs only sporadically and is apparently
not a general stage in the evolution of marriage.

The wife obtained by purchase is regularly subject to
the absolute patriarchal authority of the man. This su-
preme power is a primitive fact. It was always present in
principle, as a characteristic of primitive peoples.

(D) THE EvoLuTION OF THE CLAN

The evolution of the clan will now be described. The
Gaelic word clan means ‘‘blood kindred,’’ and like the cor-
responding German word Sippe is identical with the Latin
proles. Different sorts of clans are first to be distin-
guished.

(1) The clan in the sense of a magical kinship of the
members with each other, with food prohibitions, rules for
specific ritualistic behavior toward each other, ete. These
are totemic clans.

(2) Military clans (phratries) are associations such as
originally occupied a men’s house. The control over
descendants which they exercised has very extensive signif-
ieance. An individual who does not go. through the
novitiate of the men’s house and submit to the exacting
practices and tests of strength connected with it, or who
is not received into the cult, is in the terminology of
primitive peoples a ‘‘woman”’ and does not enjoy the polit-
ical privileges of men or the economic privileges which go

ieee

mene

Se PI Dare aintSRE eee EEO ae ed

44 GENERAL ECONOMIC HISTORY

with them. The military clan maintains its earlier signif-
icance long after the disappearance of the men’s house;
in Athens, for example, it is the group through which the
individual holds his citizenship.

(3) The clan as a blood kinship group of a certain scope.
Here the agnatie clan is most important and the present
discussion will relate solely to it. Its functions are, first
to perform the duty of blood vengeance against outsiders;
second, the division of fines within the group; third, it is
the unit for land allotment in the case of ‘‘spear land,”’
and in Chinese, Israelitish, and old German law the agnates
possess down to historic times a claim which must be
satisfied before land can be sold outside the clan. The
agnatic clan is in this connection a select group; only the
man who is physically and economically competent to equip
himself for fighting is recognized as a clansman. One who
eannot do that must ‘‘commend’’ himself to an overlord
or protector, in whose power he also places himself. Thus
the agnatie clan practically becomes a privilege of prop-
erty owners.

A clan may be organized or unorganized, the original
condition being rather intermediate. The clan had regu-
larly an elder, although this is often no longer true in his-
torical times. In principle he was only a primus inter
pares. He acted as arbiter in disputes between members
of the clan, and divided the land among them, proceeding,
to be sure, according to tradition rather than arbitrarily,
as the clan members either had equal rights or were subject
at least to a definitely regulated inequality. The type of
clan elder is the Arabian sheik, who controls his people
only by exhortation and good example, as the principes
of Tacitus’ Germans rule more by example than by com-
mand.

The clan met very different sorts of fate. In the Oc-

ne art

OR Ra Pea me a ae en a ae ae el al og

= FTE nee

ne
So eee PAO REE

TO cS og ce ON ee te Ee aera amon ane eae

Ui)

it
tyPROPERTY SYSTEMS AND SOCIAL GROUPS 45

cident it has completely disappeared, and in the Orient
been just as completely maintained. In the period of
antiquity the ¢vdai and gentes played a large role. Ev-
ery ancient city was composed originally of clans and
not of individuals. The individual belonged to the city
only as a member of a clan, a military organization
(phratry) and an organization for the distribution of
burdens (phylum). In India also, a membership in a clan
is obligatory among the upper castes, especially the knightly
caste, while the members of the lower and later established
castes belong to a devak, that is, a totemie group. Here
the significance of the clan rests on the fact that the land
system is based on enfeoffment through the head of the
clan. Thus we find here also a hereditary distinction or
charism as the principle of land distribution. One is not
noble because one possesses land, but conversely one has an
inherited right to a share in the land because one belongs to
a noble clan. In the feudal system of the Occident, on the
other hand, the land is divided by the feudal lord, in inde-
pendence of clan and kinship, and the fealty of the vassal
is a personal bond. In China today the economic system is
still semi-communistic and based on the clans. The clan
possesses schools and storehouses within its separate village,
maintains the tillage of the fields, takes a hand in matters
of inheritance, and is responsible for the misdemeanors of
its members. The whole economic existence of the in-
dividual rests on his membership in the clan, and the credit
of the individual is normally the credit of his clan.

The disintegration of the clan took place as a result of
two forces. One is the religious foree of prophecy; the
prophet seeks to build up his community without regard to
clan membership. The words of Christ,—*‘I came not to
send peace, but a sword. For I am come to set a man at
variance against his father, and the daughter against her

sae ee

PRA
Pern ee Rar een

~~ Se

nti

ste oe a be een ee

FISTSere

a
ba i Se eT)

Pe a a a De la

RPA

ee ee et a — -" — tae — -

< ats

46 GENERAL ECONOMIC HISTORY

mother’’ (Matthew 10:34-35); and “‘If any man come
to me and hate not his father, and mother, and wife, and
children, and brethren and sisters—he cannot be my
disciple’? (Luke 14:26) express the program of every
prophet in regard to the clan as an institution. In the
middle ages the church strove to abolish the rights of the
clan in inheritance so that it might retain land willed to
it, but it was not alone in this regard. Among the Jews,
certain forces have worked quite similarly. The clan re-
tained its vitality down to the exile. After the exile it is
true that the plebeians were enrolled in the clan registers
which had earlier been kept for the upper class families.
But this division into clans disappeared later, probably be-
cause the clan, being originally military in character, had
no roots in the demilitarized Jewish state and there re-
mained only membership in a confessional group based on
descent or on personal adhesion.

The second force which aided in the disintegration of
the clan is the political bureaucracy. In antiquity, we find
the greatest development of the latter in Egypt, under the
New Empire. There no trace of the clan organization is
left because the state does not tolerate it. In consequence,
there is equality between man and woman and sexual free-
dom of contract; children receive as a rule the name of
their mother. The royal power feared the clan and en-
couraged the development of the bureaucracy; the result
of the process contrasts with that in China, where the state
was not strong enough to break the power of the clan.

(E) EvoLuTion or THE HousE COMMUNITY

The primitive house community is not necessarily a pure
communism. There is frequently a considerable develop-
ment of proprietorship, even over the children, and furtherPROPERTY SYSTEMS AND SOCIAL GROUPS 47

especially over iron tools, and textile products. There is
also a special right of inheritance of the woman from the
woman and of the man from the man. Again we may find
the absolute patria potestas as the normal condition, or it
may be weakened by other organizations as for example the
totemie group or the maternal clan. In one respect the
house community is almost always a pure communism,
namely in regard to consumption, though not in regard to
property. From it as a basis proceed various courses of
development, to various results.

The small family may evolve into an expanded house-
hold and this either in the form of a free community or in
that of a manorial household, as the oikos of a landed
baron or a prince. The first resulted generally where the
centralization of work developed on economic grounds,
while the manorial development resulted from political
conditions.

Out of the house community developed among the South
Slavs the zadruga, in the Alps the commune. In both cases
the head of the household is generally elected and generally
subject to deposition. The primary condition is pure com-
munism in production. One who withdraws from the
group forfeits all rights to share in its common possessions.
Occasionally in other places, as in Sicily and in the Orient,
a different course of development took place, the community
being organized not communistically but on the basis of
shares, so that the individual could always demand a
division and take his portion wherever he cared to go.

The typical form of the seigniorial development is the
patriarchate. Its distinguishing characteristics are the
vesting of property rights exclusively in an individual,
the head of the household, from whom no one has a right
to demand an accounting, and further the despotic position
inherited and held for life by the patriarch. This despo-

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48 GENERAL ECONOMIC HISTORY

tism extends over wife, children, slaves, stock, and im-
plements, the familia pecuniaque of the Roman Law, which
shows this type in its classical perfection. This domimum
is absolute and it is a deviation from principle to speak in
connection with the woman of manus or in connection with
the children of potestas. The power of the house father
extends with only ritualistic limitations to the execution, or
sale of the wife, and to the sale of the children or to leas-
ing them out to labor. According to Babylonian, Roman,
and ancient German law, the father can adopt other chil-
dren in addition to his own and into full equality with
them. There is no distinction between female slave and
wife or between wife and concubine, or between acknowl-
edged children and slaves. The former are called libers
only because of the one distinction between them and slaves
that they have a chance sometime to become heads of
families themselves. In short, the system is that of a pure
agnatic clan. It is found in connection with pastoral econ-
omy, also in eases where a knighthood fighting as in-
dividuals forms the military elass, or finally, in connec-
tion with ancestor worship. Ancestor worship must, how-
ever, not be confused with worship of the dead; the latter
may exist without the former, as for example in Egypt.
Ancestor worship involves rather a union of worship of
the dead with clan membership; on this union rested in
China and Rome, for example, the invulnerable position
of the paternal dominium.

The patriarchal house community no longer exists in its
original condition, unmodified. Its breakdown resulted
from the introduction of class endogamy, according to
which the upper-class clans married their daughters only
to equals and demanded that they receive a status superior
to that of female slaves. As soon, moreover, as the wife
ceased to represent primarily labor power—which also hap-PROPERTY SYSTEMS AND SOCIAL GROUPS 49

pened first in the upper classes—the man ceased to buy her
as labor power. Then a clan which wished to marry off a
daughter had to provide her with a dowry sufficient to main-
tain the standards of her class. The operation cf the class
principle gave rise to the distinetior between legitimate,
monogamous marriage, and the patriarchal potesias. Mar-
riage with dowry became the normal m irriage, the woman’s
clan stipulating that she was to be the head wife and that
only her children could succeed as heirs. It is not true,
as the socialistic theory has assumed, thu‘ the interests of
the man in legitimate heirs for his property open2d the
way to the development of marriage. The man’s desire
for heirs could have been secured in numerous ways. It
was the interest of the woman in having assured to her chil,
dren the property of the man that was decisive. ‘hig
development, however, by no means involved by abso-
lute necessity, monogamous marriage. In general, partial
polygamy persisted; in addition to a head wife secondary
wives were kept, whose children possessed limited rights of
inheritance or none at all.

Monogamy as the exclusive form of marriage first arose,
so far as we know, in Rome, being ritualistically prescribed
by the form of Roman ancestor worship. In contrast with
the Greeks, among whom monogamy was known but re-
mained very flexible, the Romans maintained it rigorously.
To its support came later the religious power of the Chris-
tian commandments, and the Jews also, following the
Christian example, established monogamy, but not until the
time of the Carolingians. Legitimate marriage involved a
distinction between concubines and the regular wife, but
the female clan went farther in protecting the interests of
the woman. In Rome it first carried through complete
economie and personal emancipation of the woman from
the man, in establishing the so-called free marriage, which

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50 GENERAL ECONOMIC HISTORY

could be terminated at will by either party, and which
gave the woman complete control over her own property,
although she lost all right over the children if the marriage
was dissolved. Even Justinian was not able to abolish this
institution. The evslution of legitimate marriage from
the marriage with d¢.wry is manifest for a long time in the
distinction found in many legal systems between marriage
with dowry and marriage without dowry. Examples are
the Egyptians, and tue Jews of the middle ages.CHC ANP TR) aiok
THE ORIGIN OF SEIGNIORIAL PROPRIETORSHIP

The small family may be the starting point of the de-
velopment of a communistic household, but it may also
evolve into the large-scale manorial household. Viewed in
its economie relations, the latter is primarily the medium
of development of agricultural proprietorship and hence of
Grundherrschaft, the manor and feudalism.

The differentiation in wealth which lies at the base of
this development has different sources. One is chieftain-
ship, whether in the chieftain of a clan or of a military
eroup. The division of the land among the members of the
clan was in the hands of the clan chieftain. This tradi-
tional right often developed into a seigniorial power which
became hereditary. The respect which a clan owed to such
hereditary distinction was expressed in gifts and aids in
connection with tillage and house building, request services
to begin with, but developing into obligations. The leader
in war might win the title to land through internal dif-
ferentiation or through conquest outside the clan. Every-
where he has a privileged claim in the distribution of booty
and in the division of conquered land. His followers also
demanded privileged treatment in the allotment of land.
This seigniorial land did not ordinarily share in the bur-
dens of the normal field divisions—as, for example, in the
ancient German economic system—but on the contrary was
cultivated with the aid of the occupiers of the ordinary
holdings.

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52 GENERAL ECONOMIC HISTORY

Internal differentiation developed through the appear-
ance of a professional military class, which resulted from
the progress of military technique and improvement ir the
quality of military equipment. Neither the training nor
the equipment were available for men in a dependent
economic position. Thus arose a distinction between those
classes which by virtue of their possessions were in a posi-
tion to render military service and to equip themselves for
the same, and those who could not do this and consequently
were not able to maintain the full status of free men. The
development of agricultural technique worked in the same
direction as military progress. The result was that the
ordinary peasant was increasingly bound to his economic
functions. Further differentiation came about through the
fact that the upper classes, skilled in fighting, and provid-
ing their own equipment, accumulated booty in varying de-
grees through their military activity, while the non-military
men who could not do this became more and more subject
to various services and taxes. These were either imposed
by direct force or resulted from the purchase of exemp-
tions.

The other course of internal differentiation is through
the conquest and subjugation of some enemy people.
Originally, conquered enemies are slaughtered, under some
circumstances with cannibalistic orgies. Only as a sec-
ondary matter develops the practice of exploiting their
labor power and transforming them into a servile class of
burden bearers. Thus arises a class of overlords who by
their possession of human beings are placed in a position to
clear and till land, a thing impossible to the common free-
man. The slave or servile population might be exploited
communally, remaining in the possession of the group as a
whole, and used for collective tillage of the soil, as was
partly the case with the helots in Sparta; or, they might beSEIGNIORIAL PROPRIETORSHIP 53

u__..ed individually, being allotted to individual overlords
for the tillas> of their personal land holdings. This latter
development establishes a nobility of conquest.

In addition to conquest and to internal differentiation
must be recognized voluntary submission of the defenseless
man to the overlordship of a military leader. Because the
former needed protection he recognized a lord as patronus
(in Rome) or as senior, among the Merovingian Franks.
Thus he established a claim to representation before the
court, as in the Frankish empire, to a champion in the
trial by battle, or to the testimony of the lord instead of the
compurgation of the clansmen. In return he furnished
services or payments, the significance of which is not, how-
ever, the economic exploitation of the dependent. He can
be called upon only for service worthy of a free man, espe-
cially for military service. In the last days of the Roman
Republic, for example, various senatorial families in this
way called out hundreds of their clients and colons against
Cesar.

The fourth mode of origin of seigniorial proprietorship
is through land settlement under feudal terms. The chietf-
tain with large possessions in human beings and work ani-
mals is in a position to rec!aim lend on a quite different
scale from the ordinary peasant. Ert wleared land belonged
in principle to him who krougi't «t w2der tillace, as long as
he was able to cultivate it. Thas the differential command
over human labor power, where it appeared, worked indi-
rectly as well as directly in the field of winning land for a
seigniorial class. An example of such exploitation of a
superior economic position is the patricians’ exercise of
the right of occupancy on the Roman ager publicus.

The seigniorial land, after it was broken up, was regu-
larly utilized by the method of leasing. Leases were granted
to foreigners,—for example to craftsmen, who then stood

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eee54 GENERAL ECONOMIC HISTORY

under the protection of the king or chieftain—or to -
poverished persons. Where the latter are c»ncerned we
find, especially among nomadic peoples, the leasing of cattle
also; otherwise in general the placing of settlers upon
baronial land under obligation to make payments and
render services. This is the so-called colonate, met with
all over the East, in Italy, in Gaul, and also among the
Germans. Money fiefs and grain fiefs, essentially loans,
are also frequently a means to the accumulation of serfs
and of land. Alongside the colons and slaves, the peons
or nexi play a large role, especially in the economic life of
antiquity.

Frequently there was an intermixing of those forms of
dependency which grew out of clan relations with those
deriving from seigniorial power. For landless men in the
protection of an overlord, or for foreigners, membership in
a clan was no longer in question and the distinctions be-
tween clan members, mark members, and members of the
tribes disappear in the single category of feudal dependents.
A further source in the development of seignorial claims
is the profession of magic. In many cases the chieftain de-
veloped, not out of a military leader, but out of a rain-
maker. \Whe medicive men cculd lay a curse on certain
objects, whieh taen became protected by ‘‘taboo’’ against
all molestation. The «ristecraey of magic thus acquired
priestly prcperty, and wuere the prince allied himself with
the priest he employed the taboo to secure his personal pos-
sessions; this is especially common in the South Sea Islands.

A sixth possibility for the development of seigniorial
property is afforded by trade. Regulation of trade with
other communities originally lies entirely in the hands of
the chieftain, who at first is required to use it in the in-
terests of the tribe. He makes it a source of income for
himself by levying duties which, to begin with, are onlySEIGNIORIAL PROPRIETORS

a payment for the protection he grants to foreign me:-
chants, since he grants market concessions and protects
market dealings—for a consideration always, as need not be
said. Later the chieftain often goes on to trade on his
own account, establishing a monopoly by excluding the
membership of the community—village, tribe, or clan.
Thus he obtains the means of making loans, which are the
means of reducing his own tribesmen to peonage, and of
accumulating land.

Trade may be carried on by such chieftains according
to two methods: either the regulation of trade, and hence
its monopolization, remains in the hands of the individual
chieftain, or a group of chieftains unite to form a trad-
ing settlement. This case gives rise to a town, with a
patriciate of traders, that is, a privileged stratum whose
position rests upon the accumulation of property through
trading profits. The first is the rule among many negro
tribes, as on the coast of Kamerun. In Ancient Egypt,
monopolization of trade was typically in the hands of an
individual, the imperial power of the Pharaohs resting in
large part on their personal trade monopolies. We find
similar conditions among the kings of Cyrenaica, and later,
in part, in medieval feudalism.

The second form of chieftain trade, the development of a
town nobility, is typical for antiquity and the early mid-
dle ages. In Genoa, and in Venice on the Rialto, the noble
families settled together are the only full citizens. They
finance the merchants, without themselves taking part in
trade, through various forms of credit. The result is In-
debtedness of the other population groups, especially the
peasants, to the municipal patriciate. In this way arose
the patrician janded proprietorship of antiquity, alongside
that of mélitary princes. Thus the ancient nations are

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SRAL ECONOMIC HISTORY

__wuivy of large land owners interested in trade. The
culture of antiquity retained a coastal character down into
the Greek period. No town of this older period lies farther
than a day’s journey inland. In the country, by contrast,
were the seats of the baronial chieftains with their tenants.

Seigniorial property may also have fiscal roots, in the
organization of taxation and the officialdom of the state,
and under this caption there are two possibilities. Hither
there arose a centralized personal enterprise of the prince
with separation of the administrative officials from the
resources with which they worked, so that political power
belonged to no one except to the prince, or else there was a
class organization of the administration with the enter-
prises of vassals, tax farmers and officials, functioning in a
subsidiary role alongside that of the prince. In the latter
case, the prince granted the land to the subordinates who
paid all the costs of administration out of their own pock-
ets. According to the dominance of one or the other of
these systems, the political and social constitution of the
state would be entirely different. Economic considerations
largely determine which form would win out. The east
and the west show in this regard the usual contrast. For
oriental economy—China, Asia Minor, Egypt,—irrigation
husbandry became dominant, while in the west where set-
tlements resulted from the clearing of land, forestry sets
the type. :

The irrigation culture of the Orient developed directly
out of primitive hoe-culture, without the use of animals.
Alongside it developed a garden culture with irrigation
from the large rivers, the Tigris and Euphrates in Mesopo-
tamia, and the Nile in Egypt. Irrigation and its regula-
tion presupposed a systematic and organized husbandry
out of which the large scale royal enterprise of the near
east developed, as is shown most characteristically in theSEIGNIORIAL PROPRIETORSHIP 57

New Empire of Thebes. The military campaigns of the As-
Syrian and Babylonian kings, which they undertook with
their masses of retainers going back to the men’s house
system, were primarily man hunts for the purpose of secur-
ing the human material for building canals and bringing
stretches of the desert under tillage.t

The king retained control of water regulations, but re-
quired for its exercise an organized bureaucracy. The
agricultural and irrigation bureaucracies of Egypt and
Mesopotamia, the foundation of which is thus economic,
are the oldest officialdom in the world; it remains through-
out its history an adjunct of the king’s personal economic
enterprise. The individual officials were slaves, or depend-
ents of the king, or even soldiers, and were often branded
to prevent escape. The tax administration of the king
was based on payments in kind, which in Egypt were stored
up in warehouses from which the king supported his of-
ficials and laborers. Such a provision is the oldest form of
official salary.

The result of the system as a whole was to place the
population in a servile relation to the prince. This rela-
tion found expression in the obligatory services of all the
dependents and the joint liability of the village for the
burdens imposed, and finally in the principle designated
under the Ptolemies as i8¢a. Under it the individual peas-
ant was not only bound to the soil but to his village as
well, and was in fact an outlaw if he could not prove
his ista2. The system obtains not only in Egypt but in
Mesopotamia as well and also in Japan, where from the
seventh to the tenth centuries we find the ku-bun-den
system. In the one case as in the other, the position of
the peasant corresponds throughout to that of the mem-
ber of the Russian mir.

Out of the obligatory services of the subject population

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58 GENERAL ECONOMIC HISTORY

arose gradually the money economy centering in the prince.
This development also might take various courses. One
was through an individual economy with production and
trade carried on by the prince; or, the prince made use of
the labor power politically subject to him to produce goods
not only for his own use but also for the market, as was
the case in Egypt and Babylonia. Trade and production
for the market would be earried on auxiliary to a large
household, with no separation between household and in-
dustrial establishment. This is the type of economic or-
ganization which Rodbertus has designated as ‘‘oikos-
economy.”’

This oikos-economy would again be the initial stage in
various lines of development. One of these is the Egyptian
system of grain banks. The Pharaoh possessed grain ware-
houses scattered over the land, to which the peasant de-
livered up not only his obligatory payments in kind but
his whole production; against these the king could draw
checks which he could put into use as money. Another
possibility was the development of royal taxation in money,
which however, presupposes a considerable permeation of
the use of money into private economic relations, as well
as a considerable development of production and a gen-
eral market within the country; all these conditions were
fulfilled in Ptolemaic Egypt. The system encountered dif-
ficulties, in view of the then state of development of ad-
ministrative technique, in the preparation of a budget.
Consequently, the ruler generally shifted the risk of the
computation on to other shoulders, by one of three methods.
Either he farmed out the collection of taxes to adventurers
or officials, or he delegated it directly to soldiers, who paid
themselves out of the receipts, or finally, he gave over the
task to landed proprietors. The placing of the tax col-
lection in private hands was a consequence of the lack ofSEIGNIORIAL PROPRIETORSHIP 59

a dependable administrative machine, which again goes
back to moral unreliability in the official personnel.

The practise of farming out taxes to adventurers also
developed on the largest scale in India.” Every such
zamindar has a tendeney to develop into a landed pro-
prietor. The recruiting of soldiers is also given over to
contractors ealled jagirdar, who have to provide a certain
quota irrespective of the elements of which it is composed ;
these also strive to become large landholders. Such pro-
prietors are akin to the feudal baron living in full in-
dependence upward and downward, in a position analogous
to that of Wallenstein, who also had to furnish reeruits.
When the ruler turns taxation over to officials, he fixes by
agreement a definite sum; any surplus belongs to the of-
ficial, who also has to pay the administrative staff. This
is the system of the earlier mandarin administration in
China, as well as of the satrap organization of the ancient
east. With the transition to modern taxation policies, the
Chinese statistics showed a sudden surprising increase In
the population, which the mandarins had purposely under-
stated. The third possibility under the head of a money
economy centered in the prince, is the delegation of taxa-
tion to soldiers. This is a recourse of state bankruptcy
and is done when the prince is unable to pay the soldiers.
Resort to this device accounts for the transformation in
the affairs of the Caliphate under the dominance of Turkish
soldiers from the tenth century on. The soldiers develop
into a military nobility because the central government no
longer has, in fact, control over taxation, and extricates it-
self by turning the function over to the army.

These three forms of individualization of the originally
political functions of securing money and recruits—center-
ing them in private contractors, officials, or soldiers—be-

came the basis of the oriental feudalism which developed

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60 GENERAL ECONOMIC HISTORY

upon the disintegration of the money economy in con-
sequence of the technical incompetence of the state to ad-
minister taxation through its own officials. The result is a
secondary, rationalized agrarian communism, with joint
responsibility of the peasant communities to the tax farmer,
official, or army, and with common tillage and attachment
to the soil. The contrast with the western system comes
out clearly in the fact that in the east no demesne economy
(Fronhofwirtschaft) arose, the exaction of forced pay-
ments dominating. A further feature is the liability
of collapse into a barter economy on the appearance of
the least difficulty in transforming the payments in kind
of the peasants into money. In such an event an oriental
political system falls back with extraordinary facility from
the condition of an apparently highly developed culture
into one of primitive barter economy.

As a fourth and last method of realizing a royal income,
we find the delegation of functions to chieftains or landed
proprietors. Thus the prince avoids the problem of an
administrative organization. He shifts the raising of the
taxes, and on occasion also that of recruits, upon already
existent agencies of a private character. This is what
happened in Rome when in the imperial period the civiliza-
tion extended inland from the sea-coast and the country
became transformed from a union of primarily maritime
towns into a territorial empire. The inland knew only
manorial economy without the use of money. The func-
tions of raising taxes and recruits were now imposed upon
it, whereupon the large landed proprietors, the posses-
sores, become the dominant class down to the time of
Justinian. The dependent population over which they
rule enables them to furnish the taxes, while the imperial
administrative system has not expanded in keeping with
the growth of the empire itself. On the side of administra-SEIGNIORIAL PROPRIETORSHIP 61

tive technique, this situation is distinguished by the fact
that alongside the municipia appear the territoria, at the
head of which stand the landed barons, responsible to the
state for taxes and recruits. Out of this condition de-
veloped the colonate in the west, while in the east the latter
is as old as the iSfa. Under Diocletian this fundamental
principle was extended to the empire as a whole. Every
person was included in a territorial taxation unit which he
was not permitted to leave. The head of such a district is
generally a territorial lord, as the center of gravity of the
economie and political life has shifted from the sea-coast
to the land.

A special case of this development is the appearance of
colonial proprietorship. Originally the interest in the
winning of colonies is purely fiscal in character,—colonial
capitalism. The objective, pecuniary exploitation, was
achieved through the conquerer making the subject natives
responsible for taxes in the form of money or the delivery
of products, especially food stuffs and spices. The state
generally transferred the exploitation of the colonies to a
commercial company,—for example, the British and Dutch
East India companies. Since the native chieftains are
made the intermediaries of the joint liability they are
transformed into territorial lords, and the originally free
peasantry into their serfs or dependents bound to the land.
Attachment to the soil with feudal obligations and com-
munal tillage, with the right and duty of redistributing the
land, all appear. Another form of the development of
colonial proprietorship is the individual allotment of land
by an overlord. The type of this is the encomienda* in
Spanish South America. The encomienda was a feudal
grant with the right of imposing on the Indians com-
pulsory services, payments, or labor dues, and in this form
it persisted to the beginning of the 19th century.

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62 GENERAL ECONOMIC HISTORY

In contrast with the oriental system of individualizing
political prerogatives on fiscal grounds and in relation to a
money economy, stands the product economy of the western
feudal system and that of Japan, with the development of
feudal proprietorship through enfeoffment.* The ordinary
purpose of the feudal system is the provision of a mounted
soldiery through the granting of land and seigniorial rights
to persons who are in a position to take over the services of
vassals. It is met with in two forms, according as the pro-
prietory power is granted as a fief or as a benefice.

For enfeoffment with benefice the organization of Turk-
ish feudalism is characteristic. There was no recognition
of a permanent individual proprietorship but only grants
for life and in consideration of service in war. The grant
was evaluated according to its yield, and proportioned to
the rank of the family and to the military service of the
recipient. As it was not hereditary, the son of the grantee
succeeded only in case he could show specific military
services. The Sublime Porte regulated all details as a
sort of supreme feudal bureau, after the manner of the
Frankish major: domo.

This system is akin to that which originally obtained in
Japan. After the 10th century Japan went over from the
ku-bun-den system to one based on the benefice principle.
The Shogun, a vassal and commander-in-chief of the em-
peror, with the aid of his bureau (ba-ku-fu) evaluated the
land according to its yield in rice and granted it in benefices
to his vassals the daimios, who in turn re-granted it to
their ministerials, the samurat. Later, the inheritance of
fiefs became established. However, the original dependence
upon the Shogun persisted in the form of the latter’s con-
trol over the administration of the daimios, who in turn
supervised the operations of their vassals.SEIGNIORIAL PROPRIETORSHIP 63

The Russian feudal system is nearer to the European. In
Russia, fiefs (pomjestje) were granted on consideration of
certain obligatory services to the ezar and the assumption
of tax obligations. The recipients of grants had to assume
the position of military officers and civil officials, a specifica-
tion which was first set aside by Catherine II. The
transformation of the tax administration from the land
to the poll basis under Peter the Great led to the result
that the land holder became answerable for taxes in pro-
portion to the number of souls on his holding, determined
through periodical surveys. The results of this system
for the agricultural organization as a whole have already
been described (pp. 17 ff.).

Next to Japan, the medieval occident® is the region
which developed feudalism in the highest purity. Condi-
tions in the later Roman empire operated as a preparation,
especially as to land tenure, which already had a half
feudal character. The land rights of the Germanie chief-
tains fused into the Roman situation. The extent and
significance of land holding was extraordinarily increased
through the clearing and conquest of land—the victorious
armies had to be fitted out with land—and finally through
‘‘eommendation”’ on a large scale. The peasant who found
himself without property, or who was no longer in a posi-
tion to equip himself for military service, was compelled
by the advance of military technique to place himself in the
obsequium of an economically more powerful person. A
further influence was the extensive transfers of land to the
church. The decisive condition, however, was the invasion
of the Arabs and the necessity of opposing an army of
Frankish horsemen to that of Islam. Charles Martel un-
dertook an extensive secularization of church property with
a view to establishing, with the benefices created out of

TR
Sate eee tae Se

PATEL TTA T ERD: PLE

See te ts ee bts

= a ei
Sede et pon ek eS ae he at sae A fae DS

aerate eee

Re A nom
ee SIIST.

Seenecret

oo Sa

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eww

A a deers ote

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: a

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i
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64 GENERAL ECONOMIC HISTORY

the seized tracts, a tremendous army of vassal knights,
the members of which had to equip themselves as heav-
ily armed horsemen. Finally, besides the land, it be-
came the custom to grant as fiefs political offices and priv-
ileges.CHAPTER IV
THE MANOR

The inner development of seignorial proprietorship, espe-
cially of the occidental manor,' was conditioned, in the first
place, by political and social class relations. The power
of the lord was composed of three elements, first, land hold-
ing (territorial power) second, possession of men (slavery)
and third, appropriation of political rights, through usurpa-
tion or through enfeoffment; the last applies especially to

judicial authority, which became far the most important,

single force in connection with the development in the
west.

Everywhere the lords strove to secure “‘immunity”’ (1m-
munitas) as against the political power above them. They
forbade the officials of the prince to come upon their ter-
ritory, or if they permitted it the official had to come di-
rectly to the lord himself for the performance of his mis-
sion on behalf of the political authority, such as collec-
tion of feudal dues or serving of military summons. With
this negative aspect of immunity is connected a positive
aspect. At least a part of the immediate exercise of rights
taken away from the officials of the state became the pre-
rogative of the holder of the immunity. In this form im-
munity exists not merely in the Frankish empire but be-
fore it in those of Babylonia, ancient Egypt and Rome.

Decisive is the question of appropriation of judicial au-
thority. The holder of land and of men everywhere strug-

gled for this prerogative. In the Moslem Caliphate he did
65

nD
rd

SE LEAD IRR LETS ae
See eS en meta St aa ete SEL

Se Ne
tet ne

ne Ra ee eae
ATES DRS SHRM SNE LE ES

~~:

a RAS

RE ee erectwa)

Sermon ne

owe

ee ewe ee ie

RN a SC SRO

\ Sai

er a ee

pe eer

RTARTA SR EER LEER ELLE TEEN DARIAN: Bie Bs nb

eee

66 GENERAL ECONOMIC HISTORY

not succeed; the judicial authority of the general govern-
ment was maintained unimpaired. In contrast, the land
holders of the west usually succeeded in their endeavors.
In this part of the world the lord originally had unlimited
judicial power over his slaves, while free persons were sub-
ject only to the jurisdiction of a popular court. For un-
free persons the criminal process of the official court was
final, though it was early true that participation by the
lord could not be avoided. This distinction between free
and unfree became effaced in the course of time, the
power of the lord over slaves being weakened and that over
free men being strengthened. From the 10th to the 13th
century, the public courts increasingly interfered in the
determination of cases affecting slaves; their criminal cases
were often tried before the popular court. Especially
from the 8th to the 12th century, the position of the slaves
steadily improved. With the cessation of the great move-
ments of conquest the slave trade declined and it became
difficult to supply the slave markets. At the same time
the need for slaves increased greatly, in consequence of
the clearing of forests. To secure and retain slaves, the
lord had progressively to improve their conditions of life.
In contrast with the Latin possessor, he was primarily a
warrior and not a farmer, and found himself hardly in a
position to supervise his unfree dependents, so that on that
ground also their situation improved. On the other hand
(cf. page 63) his power over the free population was
strengthened by changes in military technique, and re-
sulted in the extension of the household authority of the
lord, originally confined to the familia, over the whole ex-
tent of his territorial dominion.

There is a correspondence between free and unfree con-
ditions of tenure and free and unfree persons. In this con-
nection we must consider the. precaria and the beneficium.THE MANOR 67

The precaria is a lease relation based on a documentary ap-
plication, and entered into by free persons of every class.
Originally it was terminable at will, but soon evolved into
a contract renewable every five years but in fact for life and
usually hereditary. The beneficium is an enfeoffment in
exchange for services, originally of any form whatever, or
under some conditions in exchange for payments. Later
the beneficium differentiates into that of the free vassal,
who bound himself to feudal services, and that of the free
man who bound himself to service on the lord’s demesne.
In addition to these forms of lease there was a third, the
land settlement lease, by means of which the overlord
was in the habit of granting land for clearing against a
fixed tax and into the hereditary possession of the grantee.
This was the so-called quit-rent (Hrbzins), which later
made its way into the towns also.

Over against these three forms, all of which related to
land situated outside the village community ((Gutsver-
band), is the manorial estate (Fronhof) with the land de-
pendent upon it, of which the Capitulare de villis of
Charlemagne gives a clear picture.? Within the manor
was first the seigniorial land, or demesne, including the
terra salica, which was managed directly by the lord’s
officials and the terra indominicata, seigniorial holdings in
free peasant villages; and second the holdings or hide
land of the peasants. The latter fell into mansi serviles
with unlimited services and mansi ingenuiles with limited
services, according as hand labor or team work had to be
rendered throughout the year or only in connection with
tillage and harvest. The payments in kind and the whole
product of the demesne—(called fiscus in the case of royal
holdings) were laid up in a storehouse and used for the
needs of the army and the seigniorial household, any
surplus being sold.

x<soe

wes Rina

—

S aoe ae on enter!
ote Nid On DY i by oe ye as |

Sapa

AA EES

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—
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STOUR ONT te Ble ES a a a et Ot a er a — .

oe er

A
AD
f

eae ee

68 GENERAL ECONOMIC HISTORY

A decided shift in the relations between free and unfree
persons resulted from the establishment of territorially
bounded limits of jurisdiction of the landlord and judge
(socage districts or sokes—Bannbezirke). An obstacle to
this at first was the scattered condition of the holdings;
for example, the monastery of Fulda held some thousand
seattered farms. From the early middle ages on, the
holders of judicial and proprietory rights strove to con-
solidate their holdings. This was accomplished in part
through the development of ‘‘real-dependency,’’ the lord
refusing to grant a particular piece of land unless the
grantee submitted at the same time to personal suzerainty.
On the other hand, there developed the manorial law, in
consequence of the fact that within the jurisdiction and
seigniorial farm free and unfree persons were thrown to-
gether. Manorial law reached its highest development in
the 13th century. While originally the lord possessed
judicial authority only over the unfree members of his
familia and outside of this exercised authority over the
territory of his ‘‘immunity’”’ only on the basis of a royal
grant, on his own holdings he had to deal with persons of
various classes who were under obligation to render exactly
the same services. Under these circumstances the free per-
sons were able to compel the lord to join with all his de-
pendents in forming a manorial court in which the de-
pendent persons functioned as magistrates. Thus the lord
lost the power of arbitrary control over the obligations of
his dependents and these became traditionalized (similarly
to the way in which the soldier councils tried to set them-
selves up on behalf of soldiers against officers in the Ger-
man revolution). On the other hand, from the 10th to the
12th century was being evolved the principle that by the
mere fact of a land grant the recipient became ipso jure
subject to the judicial authority of the lord of the land.THE MANOR 69

The consequence of this development was the modifica-
tion of the freedom on the one hand and servility on the
other, of the dependent population. Modification of free
status was politically conditioned by the judicial author-
ity of the lord in connection with the unarmed state of the
free men, which was due to economic causes, while the
modification of unfree status resulted from the greatly in-
creased demand for peasants for clearing the forests and
in Germany for the colonization eastward. Both these cir-
cumstances enabled the unfree to escape the authority of
the lords and put the latter in competition among them-
selves in granting favorable conditions of life to their de-
pendents. In addition, the slave trade, and hence the new
supply of slaves, had ceased, and the available servile per-
sons had to be treated with consideration. In the same
direction of elevating the dependent classes worked the
political situation of the lords. The lord was not a farmer,
but rather a professional soldier, and was not in a position
to conduct agriculture effectively. He could not budget
his affairs on the basis of a fluctuating income and was dis-
posed toward a traditional fixation of the dues of his de-
pendents and hence toward meeting them on a contractual
footing.

Thus the medieval peasantry became strongly differ-
entiated within and held together through the power of the
lords and the manorial law. Alongside the dependent
classes, there were free peasants outside the community
circle of the lord’s estate, on freehold land subject only
to quit-rents, and hence essentially private owners. Over
such persons the lord had no judicial authority. These
free-holders never disappeared entirely, but were found in
considerable numbers in only a few places. One of these
is Norway, where feudalism never developed; they were
ealled ‘‘odal’’ peasants, in contrast with the landless, un-

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Bee ts bes oat abe oe a) ee a ae ee

See

EAS
PSE SEL

Oeeer

Ae One re ee Nee an nt te

eee
fe a eee rataBe at

ae Me dN

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ee ee ee

SS OS

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rms ey

Pee etarataes

a re pe a a kD Ee eis

70 GENERAL ECONOMIC HISTORY

free classes dependent upon them. Another such locality
is the marsh lands of the North Sea,—Frisia and Ditmarsh ;
similarly in parts of the Alps, Tyrol, and Switzerland, and
in England. Finally there are the ‘‘mailed peasantry’’
of many parts of Russia, who were individual proprietors ;
to them were added later the Cossacks as a plebeian soldier
class with the social position of small farmers.

As a consequence of the development of feudalism, when
the landed nobility began to collect the taxes, there arose
exemption from taxation of the nobility itself, with liabil-
ity to taxation on the part of the unarmed peasantry. To
increase the military power of the territory, the French
feudal law set up the principle of nulle terre sans seigneur,
intended originally to increase the number of benefices as
a guarantee of military strength; on the same principle
rested the compulsory reinfeudations imposed by the Ger-
man king in connection with every grant of land. This
differentiation as regards liability to taxation formed the
basis of the policy of the princes in maintaining the peasant
holdings. They could not consent to having the hide land
alienated from the peasant, as the area subject to taxa-
tion was thereby decreased. Thus the territorial princes
adopted the system of protecting the peasantry and for-
bade the nobility to confiscate the peasant holdings.

Several economic results also followed: 1. The large
household of the lord and small household of the peasant
subsisted side by side. The dues of the peasants originally
served only to satisfy the requirements of the lord and
were readily fixed by tradition. The peasants had no in-
terest in making the soil yield more than was necessary for
their own maintenance and for covering their obligatory
payments, and the lord had as little interest in increasing
the payments, as long as he did not produce for a market.
The mode of life of the lord was but little different fromTHE MANOR "1

that of the peasant. Thus ‘‘the walls of his stomach set
the limits to his exploitation of the peasant,’’ as Karl Marx
observed. The traditionally fixed dues of the peasant class
were protected by manorial law and by community of
interest. 2. Since on account of the taxes involved, the
state was interested in maintaining the peasantry, the jur-
ists took a hand, especially in France. The Roman law did
not generally, as commonly supposed, work toward the dis-
integration of the old Germanic peasant law, but on the
contrary was applied in favor of the peasantry, against the
nobility. 3. The attachment of the peasantry to the soil.
This followed, in so far as personal fealty arose, or in con-
sequence of the tax obligation, when the lord became an-
swerable for their taxes; to an increasing degree also the
nobility established it by usurpation. The peasant could
withdraw from the community only by forfeiting his land
and by securing another man to take his place.

4. The rights of the peasant in the land became extraor-
dinarily diversified. In the case of unfree tenants the lord
generally had the right to resume the holding at death. If
he renounced the exercise of this right, having no tenants to
spare, he at least assessed special dues, the heriot, ete.
Free tenants either held leases terminable at any time or
were copy-holders with permanent rights. In both cases
the legal position was clear, but the state often interfered
to forbid the termination of grants—the so-called tenant
right. Among the dependents, who as freemen had orig-
inally commended themselves to a lord, arose an attach-
ment to the lord and of the lord to them in return. The
lord could not simply dismiss the villein, but as early as the
time of the Sachsenspiegel was compelled to pay him a
small capital in money.

5. The lords regularly appropriated to themselves the
common mark and often the common pasture or almend as

ets
Shier noe

Sa te
CAS

See

G See I ae ee st mene at ee

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pane

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-
|

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De aCe Roe te a ae

ONS ee a On near areretae ane ercarea

72 GENERAL ECONOMIC HISTORY

well. Originally, the chieftain was head of the mark or-
ganization. Out of the lord’s right of supervision evolved
in the course of the Middle Ages a feudal proprietorship
over the mark and the common pasture of the village. The
peasant wars of the 16th century in Germany were waged
primarily against this usurpation, and not against excessive
payments and dues. The peasants demanded free pasture
and free woodland, which could not be granted as the land
had become too searce, and fatal deforestation would have
resulted, as in Sicily. 6. The lord had established in his
own favor numerous ‘‘socage rights’’ or banalités (Bann-
rechte) such as a compulsion on the part of the peasant to
grind grain at the lord’s mill, to use his bakery, his
oven, ete. These monopolies arose, to begin with, with-
out compulsion; for only the lord was in a position to
erect mills or other institutions. Later, oppressive force
was used to compel their utilization. Besides these the lord
possessed numerous banalités in connection with hunting
and the transportation of goods. They grew out of obliga-
tions to the chieftain, transferred to the later judicial over-
lord, and were exploited for economic ends.

The exploitation of the subjugated peasantry by the lords
was carried out, with two exceptions, not by means of
forced labor, but by making them into rent-payers. The
only two exceptions in the world will be treated later, in
connection with the development of capitalistic economy
within the manor (ef. Chapter VI). The grounds for this
method of exploitation were in the first place the tradition-
alism of the lords. They were too lacking in initiative to
build up a business enterprise on a large scale into which
the peasants would have fitted as labor force. In addition,
as long as the cavalry was the core of the army, the lords
were bound by their obligations as vassals and could not be
spared for agriculture, while the peasant could not beTHE MANOR 73

spared for war. Moreover, the lord possessed no movable
capital of his own, and preferred to transfer the risk of
active operations to the peasant. Finally, there was in
Europe the restriction of manorial law which bound the
lords, while in Asia the latter could not rely on sufficient
protection on going over to production for the market,
since there was nothing corresponding to the Roman law
at hand. Here there was no development at all of the
demesne (Fronhof) or in-land, farmed by the lord.

The lords secured rentals, in numerous ways:
1. Through feudal dues, which the free peasant paid in
goods, the servile one in labor. 2. Through fees on occasion
of a change in tenant, enforced by the lord as a condition
of the sale of the holding. 3. Fees in connection with in-
heritance and marriage, imposed as a condition of trans-
mitting the land to heirs or for the privilege of letting the
peasant’s daughter marry outside the lord’s jurisdiction.
4. Fees in connection with woodland and pasture, as for
mast in the forest. 5. Indirect rents secured by imposing
on the peasant transportation charges as well as the burden
of building roads and bridges. The collection of all these
fees and payments was carried out originally through the
‘‘villication’’ system which represents the type of manorial
administration for south and west Germany as well as for
France, and is everywhere the oldest form of feudal or-
ganization for the exploitation of land. This system pre-
supposes the scattering of holdings. The lord sets over
each of his widely separated holdings (Hufen) a villicus
or bailiff, whose duty it is to collect the payments from
his neighbors who are dependents of the lord, and to hold
them to the performance of their obligations.

BevErecoss
Tee ae

PAPA ePID LF Pes APD cae
Nive meme tbe as oe ate be SDs ey ba ae Dy a Se est

EP PINOLE

pa par aes ae

pag ae ee a as

ann See EES

eect

Le RSETSAI Speers

eae

SAT

SAY

See

a
er

i ea seals

ee ene

CHEAPER Vit

THE POSITION OF THE PEASANTS IN VARIOUS WESTERN
COUNTRIES BEFORE THE ENTRANCE OF CAPITALISM

France.—Originally there were slaves (serfs) and half-
free persons side by side. The slaves may be serfs de
corps, subject to unlimited services, and over whom the
lord has absolute authority short of life and death, or they
may be serfs de mainmorte with limited service and the
right of withdrawal; but the lord has the right of resum-
ing disposal over the land on the death or removal of the
tenant. The half-free peasants or villeins have the right
of transferring their lands, and render fixed services or
payments—the sign of an originally free status. These
relations underwent extensive transformations as a result
of two sets of circumstances. In the first place, the num-
bers of the servile population were notably reduced by
wholesale emancipations as early as the 12th and 13th
centuries. This took place contemporaneously and in con-
nection with the introduction of money economy. It was
in accord with the selfish interests of the lord, since free
peasants could be made to bear much heavier burdens of
dues.

A further cause was the origin of peasant unions. The
village community organized itself as a corporation which
assumed a joint obligation for the rents of the lord, in
return for full autonomy in administration, which auton-
omy was also protected by the king. Both sides obtained
an advantage from the arrangement: the lord because he
74THE POSITION OF THE PEASANTS 75

had only one debtor to deal with, and the peasants be-
cause their power was enormously increased. Temporarily,
the unions were even summoned to the Estates General.

The nobility found the change the more convenient the
more they evolved—in contrast with the Prussian Junkers
of the time—into a courtier nobility, a class of rentiers
living far from the land and no longer representing any
organization for work, so that they were easily eliminated
from the economic organization of the country in a single
revolutionary night.

Italy—tThe original agrarian organization was in this
ease changed at an early date through the buying up of
the land by the townsmen, or expropriation of the occupiers
in connection with political turmoil. The Italian towns
early did away with personal servitude, limited the services
and payments of the peasants and introduced cultivation
on the shares, not originally with capitalistic designs but
to cover the needs of the proprietors. The share tenants
had to furnish the table supplies of the patricians, each
being under obligation to supply a different sort of prod-
uct. The movable capital was regularly furnished by the
propertied townsman, who did not wish to employ his
wealth in capitalistic agriculture. This system of share
tenantry distinguished Italy and Southern France from
other countries of Europe.

Germany.—Northwestern and southwestern Germany
and the adjacent parts of northern France were the re-
gion especially characterized by the villication organiza-
tion, with scattered holdings, referred to at the close of
the preceding chapter. From this as a beginning the de-
velopment of agricultural organization proceeded by very
different courses in the southwest and the northwest. In
southwest Germany the villication system disintegrated.
The rights of the lord to the land, to personal fealty, and

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SELEMIN SM MMAR ESE SS

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ee ee EL ets

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Ways hes
+ eat

76 GENERAL ECONOMIC HISTORY

the justiciary right, became transformed into a simple right
to receive a rental, while only relatively few compulsory
services and dues in connection with the transfer of in-
heritance remained as relics. The Rhenish or southwest
German peasant thus became in fact his own master, able
to sell his holding or transmit it to heirs. This came about
primarily because manorial law developed its greatest
power here and because holdings were extremely scattered ;
several land holders often lived in one village. Land
holding, judicial authority, and liege-lordship were in dif-
ferent hands, and the peasant was able to play off one
against the other. The chief gain which the land holders
were able to secure in west and southwest Germany was
the appropriation of large portions of the common mark,
and to a much smaller extent, of the common pasture.

In northwest Germany the villication system was dis-
solved by the landholders. As soon as they saw a possibil-
ity of marketing their products they became interested
in an increase in the income from the land and in securing
holdings suited to production for the market. Conse-
quently, at the time of the Sachsenspiegel, and even a little
earlier, there were wholesale emancipations of the serfs.
The land thus liberated was leased for definite periods to
free renters called ‘‘Meier’’ whose property became heredi-
tary under strong pressure from the state, which protected
them against unexpected increases in rental. If the pro-
prietor wished to evict a tenant, the state compelled him
to secure another peasant, so that the tax revenue would
not be decreased. The interest of the lords in large hold-
ings led to a law of single inheritance, the lord forcing
the assumption of the holding by an heir. As a rule
the rent was paid in kind, while money payments took the
place of the compulsory feudal services. In certain parts
of Westphalia, serfdom had persisted, but only to theTHE POSITION OF THE PEASANTS ce

extent that the lord could resume a part of the inheritance
on the death of the tenant. In the southeast,—Bavaria,
the upper Palatinate and southern Wurtemberg—the prop-
erty rights of the peasant were often insecure. A dis-
tinction was made between hereditary tenure (Hrbstift)
and non-hereditary (Leibgeding) and also between pro-
tected leases and unrestricted leases (Schutzlehen and
Vollehen). The latter were only for life and permitted
the lord to increase the payments at the death of a holder
or to grant the holding to someone else. The lord himself
usually stood out for the law of compulsory inheritance.
The payments consisted of tithes, and fees on occasion of
change of tenant. Their amount depended on the heredi-
tary or non-hereditary character of the property. The
labor dues were very moderate. Personal bondage was the
rule down to the 18th century, but signified nothing beyond
a very small and modest and variously limited obligatory
payment to the personal overlord who was often separated
from the lord of the land.

Eastern Germany showed, down to the 16th century, the
most ideal legal position of the peasantry. The cultivators
usually held the land on terms of a quit-rent, rendered no
labor services, and were personally free. Relatively large
masses of land were in the hands of nobles who from the
beginning were endowed with large-hides, often three or
four or more in a single village. Judicial authority and
land holding were identified to a considerable extent.
This peculiarity made it easier later to subject the tenants
to compulsory services and to convert into large scale
farms the holdings which the nobles managed directly.

In England, there were villains im gross who were
serfs and villains regardant who were technically in
a higher position; they were strictly attached to the soil
but were members of a popular court. Manorial law

Pe prt ey

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pat

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—
sp

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78 GENERAL ECONOMIC HISTORY

became very strong, making it difficult for the lords to
oppress the peasants or increase their obligatory payments.
The title to the land and the juridical authority were iden-
tified, and at the time of the Norman conquest unified dis-
tricts were granted to vassals. But over the land holders
stood a strong state, and the English kings possessed in
their royal courts and trained jurists a power which put
them in a position to protect the peasantry against the
feudal landlords.CHAPTER VI
CAPITALISTIC DEVELOPMENT OF THE MANOR

The manorial system, which arose under the pressure of a
strong military interest in connection with the economic,
and was originally directed toward using dependent land
and dependent labor force to support an upper class life,
showed a strong tendency to develop in a capitalistic direc-
tion. This tendency manifested itself in the two forms of
the plantation and estate economy.

(A) THE PLANTATION

A plantation is an establishment with eompulsorytebor,
producing garden products especially for the market. The
plantation economy universally arose wherever the con-
duct of agriculture by a class of overlords as a result of
conquest coincided with the possibility of intensive cultiva-
tion, and was especially characteristic of colonies. In.
modern times the plantation products have been sugar cane,
tobaceo, coffee, and cotton; in antiquity they were wine
and oil. The course of development generally leads through
a preliminary semi-plantation system. Here only the mar-
ket is regulated and concentrated into one hand, while
production is turned over to a servile class as compulsory
labor, with joint liability of the community, attachment to
the land, and payments to the owner of the semi-plantation,
which is a colonizing corporation. This condition domi-

nates in South America down to the revolution at the be-
79

EPPA
SCALE

ea ee en tae

SAPIENS

ate Ee oad a

TDL LAL

Laren mr gn ym

ieee ere tee eos

ee en ced

— Stee ae

me N

ne nest

ame

Sn meme

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80 GENERAL ECONOMIC HISTORY

ginning of the 19th century, and in the New England
states down to the separation from the mother country.
Plantations proper are found scattered over the world
at large. Twice did the system reach a classical develop-
ment; first, in the ancient Carthago-Roman plantations,
and second in the negro plantations in the southern states
of the Union during the 19th century. The plantation
proper operates with disciplined servile labor. We do not
find, as in the case of the manorial economy, a large estate
and individual small holdings of the peasants side by side,
but the servile population are herded together in barracks.
The main difficulty of the enterprise lies in the recruiting
of laborers. The workers have no families and do not re-
produce themselves. The permanence of such plantations
is therefore dependent upon slave hunts, either through
war or through periodical raids on a large slave hunting
territory such as Africa was for the negro traffic. The
plantation of antiquity’ developed in Carthage, where
it was scientifically described by Mago, as well as in the
Latin literature by Cato, Varro, and Columella. A pre-
requisite for its existence is the possibility of obtaining
slaves at all times in the market. The products of the
Roman plantation are oil and wine. On the plantation
we find side by side the coloni who are free small tenants,
and the servi who are slaves. The coloni till the land in
grain crops with stock and tools furnished them by the lord
and hence constitute a labor force rather than a peasantry
in the modern sense. The slaves are without families and
without property and are herded together in barracks,
combining dormitory, pesthouse, and cell for confinement
against escape. Work goes forward under strict military
routine, beginning with the answer to reveille in the morn-
ing, with march in closed ranks to and from work, and issue
of clothing by a warehouse to which it must be returned.CAPITALISTIC DEVELOPMENT OF MANOR 81

The only exception is the villicus or inspector, who pos-
sesses a peculium and is contubernalis, meaning that he is
permitted to marry a slave woman and has the right to
keep a certain amount of livestock on the lord’s pasture.
The hardest problem was that of keeping up the working
population. As the natural increase through the promis-
cuous relations of the slaves was insufficient, an effort was
made to stimulate the production of children by promising
the slave women their freedom after the third birth. This
measure proved vain because no life except prostitution
awaited the freed women. The difficulties of the lord who
maintained his dwelling in the town increased in view of
the steady demand for slaves. Since the permanent supply
of the slave market ceased to be possible with the termina-
tion of the great wars after the beginning of the imperial
period, the slave barracks were doomed to disappear. The
shrinkage of the slave market could have no other effect
than that which the failure of coal mining would have on
modern industry. The Roman plantation changed in char-
acter for the further reason that the center of gravity of the
ancient culture shifted inland, while the slave barracks
were bound to the neighborhood of the coast and the possi-
bility of commerce. With this shifting of the center of
gravity to the land, where traditional manorial economy
dominated and corresponding conditions as to transporta-
tion obtained, and with the peace brought by the Empire, it
was necessary to go over to another system. In the period
of decline of the Empire, we therefore find the slaves, inso-
far as they are concerned with the agricultural work, pro-
vided with families and quartered in the mansus serviles,
while on the other hand the colons are subjected to labor
services and no longer merely to rent payments ; that is, the
two classes converge. The possessor class dominates the
economie and political policy of the empire. Money econ-

eee

Se Se ES SE

ree

ean nag i 9S ONS
AIS SIEM RMT EATS

-—

Rt at ene annea

i :

ATTA) oe a

ma Se

82 GENERAL ECONOMIC HISTORY

omy and town life decline; the conditions approach the
stage of barter economy.

Similar difficulties appeared in the southern states of the
North American union. The plantation system arose here

when the great inventions in the field of cotton utiliza-
tion were made. In the last third of the 18th century were
invented the cotton spinning machine (1768-69) and the
loom (1785) in England, and in the United States the ecot-
ton gin for separating the fiber from the seed (1793) ; the
latter first made possible effective utilization of the cotton
crop. Thereupon developed the wholesale marketing of
cotton which displaced linen and wool production. How-
ever, the mechanical utilization of the product led to en-
tirely opposite effects in Europe and America. In the
former, cotton gave the impulse to the organization of a
free labor force, the first factories developing in Lan-
eashire in England, while in America the result was slavery.

In the 16th and 17th centuries, efforts were made to use

I a as

Tal FULTS

i Pa ad

RN nN

the Indians for mass production, but they soon proved
themselves unserviceable, so recourse was had to the im-

portation of negro slaves. But these, without families, did
not reproduce themselves, and as the slave trade was for-
bidden by one after another of the New England states,
great scarcity of negroes ensued after a single generation—
by the end of the 18th century. The utilization of poor
emigrants, who sought to pay the still very considerable
costs of the ocean passage by plantaticn labor, proved in-
sufficient. The next expedient was that of breeding ne-
groes, which was carried on so systematically in many
southern states that negro-breeding and negro-consuming
states could be distinguished. At the same time there
broke out a struggle for land for the application of negro
labor. The system required cheap land and the possibility
of constantly bringing new land under tillage. If the

a en ee eran a onerersd

eee

pe ae ot es

Ne ears

ooCAPITALISTIC DEVELOPMENT OF MANOR 83

labor force was dear the land had to be cheap, and negro
culture was exploitative (Raubbaw) because the negroes
could not be trusted with modern implements and used
only the most primitive tools. Thus began the struggle
between the states with free and those with unfree labor.
The peculiar phenomenon was presented that the ecomple-
mentary productive factor ‘‘slave’’ alone yielded a rent,
while the land yielded rone at all. Politically, this situa-
tion meant a strurgle between the capitalistic classes of the
north and the plantation aristocracy of the south. On
the side of the former stood the free farmers, and on that of
the planters, the non-slave owning whites of the south, the
‘“noor white trash’’; the latter dreaded the freeing of the
negroes on grounds of class prestige and economic compe-
tition.”

Slavery is profitable only when it is handled with the
most rigid discipline associated with ruthless exploitation.
Further requisites are the possibility of cheap provision
and feeding of the slaves and extensive mining-out cultiva-
tion, which again presupposes an unlimited supply of land.
When slaves became costly and celibacy could no longer
be maintained for them, the ancient plantation system fell,
and with it slavery. Christianity did not exert in this
case the influence commonly ascribed to it; it was rather
the Stoic emperors who began to protect the family and
introduced marriage among the slaves. In North America,
the Quakers were especially active in the abolition of
slavery. Its doom was sealed, however, from the moment
when (1787) Congress [sic] prohibited the importation of
slaves beginning with the year 1808, and when the avail-
able land threatened to become inadequate. The trans-
formation of the slave economy into a share tenant system
which actually resulted, would apparently have come to
pass without the war of secession which was unleashed

RES ee

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84 GENERAL ECONOMIC HISTORY

through the withdrawal of the southern states from the
Union. The mismanagement of the northern victors, who
even gave the negroes a privileged position, resulted, after
the withdrawal of the troops, in a universal exclusion of
the negroes from the suffrage and the establishment of a
strong caste distinction between whites and blacks. The
negroes are share tenants bound by debt. Since the rail-
roads are dependent upon the white land owners, the ne-
groes can be excluded from commercial opportunities and
their freedom of movement exists only on paper. Thus
the emancipation brought about in a disorderly way the
condition which must have become established spontane-
ously and gradually as soon as the factor ‘‘land’’ was
exhausted.

(B) Estate Economy

By an_estate we understand a large-scale capitalistic
establishment directed to production for the market, which
may be either exclusively devoted to stock raising or ex-
clusively to tillage, or may combine the two. If the cen-
tral interest is extensive stock raising, the establishment
may operate without capital as in the Roman Campagna.
Here dominated the famous latifundia whose beginnings
apparently go back to the baronial feuds of the theocratic
state. The great Roman noble families were landed pro-
prietors of the Campagna; complementary to them are
renters who use their numerous herds primarily in the
furnishing of milk to Rome. The cultivators;-on-the other
hand were-expropriated and removed.

Large scale stock raising, with little use of capital, domi-
nates also in the Pampas of South America and in Scot-
land. In Scotland again the cultivators were expropriated.
After the destruction of Scottish independence at the battleCAPITALISTIC DEVELOPMENT OF MANOR 85

of Culloden in 1746, the English policy treated the old
clan chieftains as ‘‘landlords’’ and the clansmen as their
tenants. The result was that the landlords assumed the
prerogative of owners in the course of the 18th and 19th
centuries, drove off the tenants and converted the land
into hunting grounds or sheep pastures.

Intenstve capitatistit pastorat economy developed in-Ene-
land-with the vrowth of the Eneglish-weoelen-industryand
its-promotion-by the English kmgs- After+the—4th-—cen-
tury, the kings, led—by -the—possibility..of levying taxes,
granted favors first: to-exporters of raw wool and later to
wool-manufacturers producing for-home~- consumption.?
Thus began the transformation of the common pastures
into sheep walks—the enclosure’? mevement=by the
landlords, who regarded themselves as proprietors of the
common. The proprietors bought out the cultivators by
wholesale or came to an agreement with them, on the
strength of which they became large farmers and took up
pastoral economy. The result of this process, which went
on from the 15th to the 17th century and against which
in the 18th century there was an agitation among the peo-
ple as well as among the social writers, was the origin of a
capitalistic class of large renters-who leased-land with a
minimum of labor force and—ferthe-most part pursued the
raising of sheep for-the woolen industry.

Under another form of estate economy the interest cen-
ters in the production-of grain. An example is England
in the 150 years before the repeal of the corn laws under
Robert Peel. Down to that time small farmers were dis-
placed on an extensive scale to make way for a more ef-
fective cultivation by renters, under a system of protective
duties and export bounties. Thus sheep farming and
grain farming existed separately side by side, or were
combined. This condition lasted until the protective duties

Bet

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nm a

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See ony oo ot eae et ee ee

86 GENERAL ECONOMIC HISTORY

on grain were abolished in consequence of the agitations
of the Puritans and the English labor class. After this,
grain culture was no longer profitable, and the labor force
employed in it was released. The English low lands were
extensively depopulated while in Ireland the small tenant
agriculture persisted on the huge estates of the landlords
of that time.

The complete opposite of England is afforded by Russia.*
Here in the 16th century there were indeed slaves but the
great mass of the peasantry consisted of free share tenants
who gave half of their crop to the landlords. The latter
possessed the right of terminating the lease at the end of
any year, but seldom exercised it. Since, however, the
landlords preferred a fixed money rent to the fluctuating
payments in kind, they placed the peasantry on the basis
of a fixed money rental (obrok). At the same time they
attempted to extend the compulsory labor services, to which
originally the slaves alone were subject, to the free tenants
also; in this, the monastic holdings, which in general were
the most economically farmed, took the lead. The growth
of money economy resulted in throwing the peasants
heavily into debt. Only a single crop failure was neces-
sary for this result, and the freedom of movement of the
peasant was lost. From the end of the 16th century, the
Czars placed their power and that of the whole adminis-
trative organization of the empire at the service of the
nobility. The latter, however, was threatened in its very
existence because the great landlords were able to give the
cultivators more favorable terms of lease, so that the
lower nobility faced a scarcity of tenants. The czaristic
policy sought to protect them against the great nobles.
This purpose was served by the ukase of the Czar Boris
Godunov in the year 1597; the leases were declared non-
terminable, the peasants being in effect attached to theCAPITALISTIC DEVELOPMENT OF MANOR 87

soil; they were also registered in a tax roll, which again
led to a policy of protection of the peasantry on the part of
the lords. With the change to a poll tax system under
Peter the Great, the distinction between free peasantry and
serfs disappeared. Both were attached to the soil and
over both the landlord had unlimited power. The peasant
had no more rights than a Roman slave. In 1713, the
right of knouting was expressly granted to the lords; the
inspector of the estate joined the young persons in mar-
riage according to fiat, and the amount of the payments
was fixed at the will of the proprietors, as was the levying
of recruits. They had the authority to banish an ob-
streperous peasant to Siberia and could resume the holding
of any peasant at any time, although many of the latter
succeeded in concealing their possessions and achieving
great wealth. There was no court in which the peasant
could seek justice. He was exploited by the lord as a
source of rent or of labor power, the former in central
Russia and the latter in the west, where exportation was
possible. These were the conditions under which the Rus-
sian peasantry entered the 19th century.

In Germany, there is a sharp distinction between the
west, where leasing of land persisted, and the east and
Austria, where demesne economy predominated.’ Origi-
nally, the state of the peasants was much the same in the
two regions, or even more favorable in the east. In the
east there was originally no personal servitude and it had
the best land law of Germany. The peasants were settled
on large-hides (Grosshufen), of the extent of the old
royal hide; eviction was forbidden by the state from the
time of Frederick William I of Prussia and Maria Theresa,
because the peasant was a tax payer and a recruit. In
Hanover and Westphalia also, eviction was forbidden,
but on the Rhine and in Southwest Germany it was per-

ers

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\ Hence the landlord could use him as a source of rent,

88 GENERAL ECONOMIC HISTORY

mitted. None the less, the eviction of peasants took on
large proportions in the east and did not in the west and
south. The reasons are various. After the Thirty Years’
War, which fearfully decimated the peasant population,
the holdings were reassigned in the west, while in the east
they were consolidated into estates. In the west® and
south, intermingled holdings predominated, while in the
east were the unified large farms of the nobles. But in the
west and south, even where large, unified holdings of the
nobility were the rule, no large estates developed. For here
land-holding, personal suzerainty, and judicial authority
were separate and the peasant could play one against the
other, while in the east they were identified as an indivisible
fief. This circumstance made it easy to evict the tenant or
subject him to compulsory services, although originally only
the magistrate and not the landlord had a right to these.
Finally, there was less church land in the east than in the
west, and the church traditionally showed more considera-
tion to the peasant than did the lay proprietor. Even
where in the east large holdings were in the hands of the
church, as they were in Austria in the hands of the mon-
asteries, the ecclesiastics managed more economically than
the lay holders, but did not have the same interest in going
over to export agriculture.

Thus the market relations played a decisive part in this
contrast between the east and the west. lLarge~—estates
arose where the tocal market could not absorb the available
mass_of grain proeduction-and it was exported abroad. But
since a merchant in Hamburg was not in a position to
negotiate with the individual peasant in the Mark or in
Silesia, the transition to estate farming was inevitable.
The peasant in the south and west, on the contrary, had
a town in the vicinity, where he could market his products.CAPITALISTIC DEVELOPMENT OF MANOR 89

while in the east he could only be treated as labor power.
With the cecrease-in_the frequeney of towns-on-the-map,-
there-is_an_increase in the frequency-of. estates. Finally,
an additional force favoring the survival of the old time
cultivators in the south and west was the power of manorial
law, and the greater degree of traditionalism associated
with it. It is even asserted that the Peasant War in
west and south Germany had a part in this development.
The war ended with the defeat of the peasantry, but oper-
ated as a lost general strike and meant the handwriting
on the wall for the proprietors. But England had its
peasant war in the 14th century and in spite of it the ex-
propriation of the peasantry took place; and if Poland
and east Germany had no peasant insurrections the fact
is that these, like all revolutions, did not break out where
the condition of the oppressed class was worst, that is in
our case where the conditions of the peasant class were
worst, but rather where the revolutionaries have attained a
certain degree of self-consciousness.

The technical expression for the relation of the peasant
to the landlord is, in the east, not servility (Leibeigen-
schaft) but hereditary dependency (Erbuntertamgkeit).
The peasant is an appendage of the estate and is bought
and sold with the latter. In Germany east of the Elbe,
there existed alongside of the peasantry of the princely
domains (which were very extensive, amounting in Meck-
lenburg to half the total land area), the peasantry of the
private landlords. The proprietary rights varied widely.
The German peasant originally lived under very favorable
relations, holding his land subject to a quit-rent. In con-
trast, the rights of the Slavs were very insecure. This led
to the result that conditions became worse for the Germans
where the Slavs were in the majority. Thus it came about
that in the east in the 18th century the mass of the peas-

AIR ae Ra aa

Se ee en een

iene

Sa
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erent me a a
INCA SSS

ne ee ene etre

5 ee90 GENERAL ECONOMIC HISTORY

antry lived under the law of serfdom (lassitischem Recht).
The—peasant—had_hecome an appurtenance ofthe estate.
He -passessed no-secure-hereditary title, nor even always a
title for life,although he was already bound to the soil and
could. not leave the estate without the consent of the lord
or-without. securing someone in his place. He was subject
to Gesindeszwangdienst, similar to sergeanty in English
feudal law; that is, he-had »net-enty-to-perform- obligatory
services but -his children_also -had-to go into the-house of
the lord as servants, even when the lord himself was only
a renter of domain land. Any serf (Lassit) could be com-
pelled by the lord to take up a holding. Finally, the lords
assumed the right of increasing the labor dues and dis-
placing peasants at will. Here, however, they came into
sharp conflict with the princely power. —Phe—relers—of
east Germany beran-to protect_the peasantry ; they feared,
particularly in. Austria and Prussia, the destruction of the
existing_peasant class, not out of love for the peasant as
such, but_to maintain his class, -which was their source of
taxes and reeruits. It is true that the protection of the
peasant was instituted only where a strong state was pres-
ent; in Mecklenburg, in Swedish Hither-Pomerania and in
the county of Holstein the large unified estate economy was
able to develop.

About 1890* an estate in the east Elbe country was a
seasonal affair. The field work was unequally distributed
throughout the year and in the winter the field hands took
to auxiliary occupations, the disappearance of which later
was a main source of labor difficulties. The estate had
male and female servants for the regular farm labor
throughout the year. In addition there was a second eate-
gory of workers on the land, the ‘‘inst-folk.’’ These were
married persons living in their own homes, but in Silesia
assembled in barracks. They worked on the basis of an

Ande kgionmeweses os
er er

al atl persis

SNM

Sie re ae ee ae osCAPITALISTIC DEVELOPMENT OF MANOR 91

annual contract terminable by either party. Their pay
consisted either in a fixed allowance of products with the ad-
dition of some money, or in a variable share of the product,
including the proceeds of the harvest and of the mill.
Threshing was done by hand and lasted through the winter,
and in general the sixth or tenth sheaf was given to
the ‘‘igfstman.’”?* The instmen had a monopoly on this
work; the estate owner could not transfer it to other per-
sons. In addition, as long as the three-field rotation per-
sisted, they had one strip in each of the three fields, which
was tilled for them by the proprietor, and also had gardens
in which they raised potatoes. They received little or no
money wages, but fed swine for the market and also mar-
keted any surplus from their share in the crops. Thus
they—swere—interested_in high-prices for—hogs -and_grain,
which--gave-them-a common economic interest with the
lord, whereas an agricultural labor proletariat paid in
money would have desired low prices for these things. The
stock and heavy implements were furnished by the lord,
but the instmen had to provide flail and scythe.

The lord required additional laborers at harvest time and
employed wandering laborers—the so-called ‘‘ Landsberg
harvesters’’—or he hired men from the villages. In addi-
tion, the instman himself, unless he would see his wages
reduced, had to furnish at least one additional hand during
the summer and probably a second at harvest time, for
which he had recourse to his wife and children, so that the
family as a whole stood in a sort of labor partnership with
the lord. Contraciual freedom in the industrial sense ob-
tained only with the migratory workers and the instmen of
the dependent farmers, whose condition was found unamen-
able to ‘‘regulation’’ (cf. below). However, there had
been for them a fundamental change since the time of
hereditary serfdom, since at that period the estate pro-

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92 GENERAL ECONOMIC HISTORY

prietor had operated without capital of his own, with the
aid of the hand and team work of the peasants; hence no
separation of the worker from his tools had then taken
place.

The estate economy was similarly organized in Poland
and White Russia, export countries which brought their
grain to the world market through boat traffic on the
Vistula and the Memel. In interior Russia, the lords pre-
ferred to lease the land to the peasants, who thus retained
control of their own labor power.

The_-compHeated mutual -dependence—ofthe—proprietor
and the-peasantthe-exptoitation of -the-latter by the for-
mer _as—a-souree of-rent-or-as labor force, and finally the
tying up-of the land through both, was the cause which
brought about the disintegration of the manorial organ-
ization--ef-agrieulture. This change meant the personal
emancipation of the peasant and agricultural laborer, with
freedom of movement, the freeing of the soil from the
communal organization of the peasants and from the rights
of the overlord, and reciprocally the freeing of manorial
land from the encumbrance of peasant rights where they
existed, i.e., where the rulers followed a policy of pro-
tecting the peasantry. Liberation could take place in
different ways. First, through expropriation of the peas-
ants, who became free but landless, as in England, Mecklen-
burg, Hither-Pomerania, and parts of Silesia. Second,
through expropriation of the overlord, who lost his land
while the peasant became free with possession of the land.
This occurred in France and southwest Germany, and in
general in almost every region where the lords exploited
the land by leasing, and also in Poland, as a result of Rus-
sian interference. Finally, it might come about throughCAPITALISTIC DEVELOPMENT OF MANOR 93

a combination of the two methods, the peasant becoming
free with a part of the land. This was the course of
events where an estate form of organization existed, which
could not be easily displaced. Thus the Prussian state was
compelled to lean upon its landed proprietors because it
was too poor to replace them with salaried officials.

The breakdewn—of—+the—manorial _agrieultural system
made possible also the abolition of the hereditary judicial
authority of the proprietors, the various socage rights or
banalités, and finally all the political and religious re-
strictions upon the land in the-way-of obligatory infeuda-
tion or the so-ealled-mortmain. Abolition of these incum-
brances might take various forms: 1. Amortization laws
relating to church lands, as in Bavaria. 2. Abolition or
limitation of the fideicommissum, especially in England.
3. Finally, abolition of the fiseal privileges of the proprie-
tory estates, such as freedom from taxation and similar po-
litical privileges, as was accomplished in Prussia by the tax
legislation of the sixties of the 19th century. Such were
the different possibilities. The result depended on the
question who was to be expropriated, the landlord or the
peasant, and if the latter whether with or without the land.

The-motivating force in connection with the breakdown
of the manorial system operated in the first place from
within the manor and was- primarily economic in charac-
ter. The.immediate cause was the development of market
operations-and-market. interests on the part of both lords

and_peasants,and-the steady growth of the market for

agricultural_products in connection with money economy.
However, these considerations either failed to bring about
the dissolution of the manorial system, or if they did it
was done in accordance with the-interests-of the lords. who
expropriated-the tenants and used the land to establish
large farming enterprises.

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94 GENERAL ECONOMIC HISTORY

In general, it was necessary for other interests to come
in from without. One such was the con meretatinterest
of—the_newlyestablished—bourgeoisie of the towns, -who
promoted _the—weakening-or dissolution of the manor be-
cause—it—imited their own market opportunities. The
Gown and its economie policies_on the one side and the
Qnanor’ on the other were ee not so much in the
sense that one represented a barter economy and the other
a purely money economy, for the manors produced to a
large extent for the market, without the opportunities of
which it would have been impossible for the landlord to
raise large money payments from the peasants. Through
the mere fact of the compulsory services and payments
of the tenants, the manorial system set limits to the pur-
chasing power of the rural population because it- prevented
the -peasants_from—devoting their entire laber power to
production for the market and from developing their pur
chasingpower. Thus the interests of the bourgeoisie of
the towns were opposed to those of the landed proprietors.
In- addition, there was the interest on the part of the
developing capitalism in the creation of a-freetabor-market,
to which obstacles were opposed--by—the—manorial system
through the attachment-of the peasants to the soil. The
first capitalistic industries were thrown back upon the ex-
ploitation of the rural labor power in order to circumvent
the guilds. The desire of the new capitalists to acquire
land_gave them a further interest antagonistic to the ma-
norial system; the capitalistic classes wished to invest their
newly acquired wealth in land in order to rise into the
socially privileged landed class, and this required a libera-
tion of the land from feudal ties. Finally, the fiscal. in-
terest-of the-state.also took a hand, counting upon the dis-
solution of the manor to increase the taxpaying capacity of
the farming country.CAPITALISTIC DEVELOPMENT OF MANOR 95

These are the various possibilities in connection with the
dissolution of manorial economy. In» detail;-its—develop-
ment—was—extraordinarily -complieated. In China,® the
feudal system was abolished in the third century before
our era, and private property in the land established. Shi-
Huang-Ti, the first emperor of the Ching dynasty, rested
his power on a patrimonial in contrast with a feudal army,
relying for its support on taxation of the dependent classes.
The Chinese humanists, the precursors of the later Con-
fucians, took their stand on the side of the monarchy and
played the same rationalizing role as the corresponding
group in Europe. Since that time, fiscal policy in China
has changed times without number.® The two poles be-
tween which it vibrated were those of a taxation state and
a ‘‘managerial’’ (leiturgisch) state, 1.e., between one pay-
ing its army and officials out of taxation and treating its
subjects as a source of taxation and one utilizing them as a
source of servile labor, supplying its needs by holding
specified classes responsible for payments in kind. The lat-
ter policy is the one followed by the Roman Empire at the
time of Diocletian, when compulsory communes were orga-
nized for the purpose. One system made the masses for-
mally free, the other made them state slaves. The latter
were utilized in China in the same way as they were in EKu-
rope in those cases where the lords exploited the dependent
population as labor power and not through rent charges.
In the latter case private property disappeared, and obliga-
tions to the land and attachment to the land, with periodi-
cal redistribution, came in. The final result of this de-
velopment in China after the 18th century was the aban-
donment of the leiturgical principle in favor of the taxa-
tion principle; taxes were paid to the state, along with
which unimportant remains of public labor services sur-
vived. The taxes flowed into the hands of the mandarins,

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96 GENERAL ECONOMIC HISTORY

whose payments to the court were rigidly fixed, while they
pushed the taxes of the peasantry as high as possible. This,
however, was notably more difficult because the power of
the clans was so great that every official had to secure the
consent of the Chinese peasantry. The result has been
extensive liberation of the peasants. There are still a few
tenants, but they are personally free and pay only a
moderate rent.

In India, the manorial system still persists; indeed it
first arose in a secondary manner out of the practice of tax
farming by the fise. English legislation protects the peas-
antry, who formerly had no rights, in the same way that
Gladstone’s laws protected the Irish in the possession of
their holdings and against arbitrary increase in the tradi-
tional payments; but it has not in principle changed the
established order.

In the near east, also, the feudal tenure exists, but only
in a modified form, since the old feudal army has disap-
peared. Fundamental changes in Persia and other coun-
tries exist only on paper. In Turkey the institution of
the wakuf (ef. below) has hitherto prevented a moderniza-
tion of land holding relations.

In Japan, the medieval period comes down to 1861
when, with the downfall of the rule of the nobility, feudal
land holding also fell away through the dissolution of the
proprietary rights. The pillars of the feudal system, the
Samurai, were impoverished, and turned to industrial life;
out of this class the Japanese capitalists have developed.

—~ In the Mediterranean region in antiquity,’® feudal land
holding was displaced only within the region immediately
under the power of the great cities like Rome and Athens.
The town bourgeoisie was in opposition to the landed no-

bility, with the further conflict between the townsmen as
creditors and the country folk as debtors. This situation,CAPITALISTIC DEVELOPMENT OF MANOR 97

in connection with the necessity of securing the great mass
of peasants for military service, led in Greece to an en-
deavor to fit out the hoplites with land. This was the sig-
nificance of the legislation of the so-called tyrants, as for
example, the laws of Solon. The knightly families were
compelled to enter the peasant organizations. The legis-
lation of Cleisthenes of about 500 s.c. understood by de-
mocracy the condition that every Athenian, te-enjoy—the
privileges of-_citizenship, must belong-to-a ‘‘demos,”’ 1. e., a
village, just as in the Italian democracies of the middle
ages the nobility were compelled to join the guilds. It
was a blow against the land system with its scattered hold-
ings, and against the power of the nobility, who up to that
time had stood above and outside the villages. After this
time the knights possessed only the same voting power and
opportunity to hold office as any peasant. At the same
time, the system of intermingled holdings was everywhere
set aside.

The class struggles in Rome had similar results for the
agricultural organization. Here the field division was in
the form of squares of 200 acres and upward. Lach hold-
ing was set off by a balk of turf which must not be plowed
up ; the limites were public roads, removal of which was also
forbidden, in order to maintain accessibility. The land
was transferable with extraordinary facility. This system
of agrarian law must have been known in the time of the
twelve tables and must have been established at a single
stroke. It is a law in the interest of the town bourgeoisie,
which treats the land holdings of the nobility after the
fashion of territory used in towns for speculative building
and systematically removes the distinction between land
and movable property. Outside the immediate territory
belonging to the town, however, the ancient land system
was undisturbed. The civilization of antiquity—down to

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98 GENERAL ECONOMIC HISTORY

Alexander the Great in the East and Augustus in the West
—was riparian in character and the system of tenure re-
mained unchanged in the interior; from here it later
worked outward again, and finally conquered the entire Ro-
man Empire, to remain the dominant institution through
the first half of the middle ages. The merchant republics
of the Italian towns, under the leadership of Florence, first
took up the path toward liberation of the peasantry. To
be sure, they deprived the peasants of political rights, to
the advantage of the town rulers and councils, the crafts
and the merchant guilds, until the nobility itself turned to
the peasantry for support against the town population. In
any case, the towns liberated the peasantry, in order to buy
up the land and release themselves from the clutches of the
ruling families (Cp. above, p. 75).

In England,'* no legal emancipation of the peasants ever
took place. The medieval system is still formally in force,
except that underCharles II serfdom was abolished and
infeudated land-became private property, in “‘fee-simple.’’
The only explicit exception was the ‘‘copyhold’’ land,
which was originally in the possession of unfree peasants,
the occupier holding no formal grant, but only a copy of
one recorded in the rolls of the manor. In England, the
mere fact of the development of a market, as such and
alone, destroyed the-manorial system from within. In ac-
cordance with the principle fitting the situation, the peas-
ants were expropriated in favor of the proprietors. The
peasants-became free but without land.

In France '” the course of events is exactly the opposite.
Here the revolution put an end to the feudal system at
one blow in the night of August 4, 1789. However, the
measure adopted at that time still required interpretation.
This was given by the legislation of the Convention, which
declared that all burdens against peasants’ holdings inCAPITALISTIC DEVELOPMENT OF MANOR 99

favor of overlords were presumed to be of feudal character
and that they were abolished without compensation. In
addition, the state confiscated the enormous estates of the
émigrés and of the church, conferring them upon citizens
and peasants. However, since equality of inheritance and
distribution of holdings had arisen long before the aboli-
tion of the feudal burdens, the final result was that-Erance,
in -contrast with—Eneland,-became_a land of small and
medium--sized--farms. The process—was—one of ereating
property-in-the-hands.of the peasantry through the ex-
propriation of the landlords. This was possible because
the French landlord was a courtier-noble and not a
farmer, seeking his living in the army or in civil service
positions upon which he had in part a monopolistic claim.
Thus no productive organization was destroyed but only a
rent relation.

Similar in character but less revolutionary and rather by
gradual steps was the course of development in south and
west Germany. In Baden, the liberation of the peasants
was begun as early as 1783 by the Margrave Charles Freder-
ick, who was influenced by the Physiocrats. The crucial
fact is that after the wars of liberation, the German states
adopted the system of written constitutions, and no rela-
tionship in connection with which the name of bondage
(Leibeigenschaft) could be used is compatible with a con-
stitutional state. Hence the unlimited labor dues, taxes,
and services which had anything of the character of per-
sonal servitude were everywhere abolished. In Bavaria, it
was done under Montgelas and confirmed by the constitu-
tion of 1818; the peasants received freedom of movement
and finally, favorable property rights. This happened
in almost all of south and west Germany in the course of
the 20’s and 30’s; only in Bavaria the substance of it was
not achieved until 1848. In that year the last remains of

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100 GENERAL ECONOMIC HISTORY

the cultivators’ burdens were removed by conversion into
money obligations, in the handling of which state credit in-
stitutions lent aid. Specifically, in Bavaria personal dues
were abolished without compensation; other dues were con-
verted into money payments and made subject to extinc-
tion by purchase; at the same time, all feudal ties were un-
conditionally dissolved. Thus in south and west Ger-
many, the landlord was expropriated and the land given
to the peasant; the change was the same as in France ex-
cept that it took place slowly and according to a more legal
process.

Quite different was the course of events in the east—in
Austria, and the eastern provinces of Prussia, in Russia,
and in Poland. Here, if drastic measures had been taken
as in France, a functioning agricultural organization would
have been destroyed and only chaos would have resulted.
It might have been possible to promote a disintegration of
the manors into peasant holdings, as happened in Denmark,
but it would not have been possible simply to declare feudal
burdens abolished. The landed proprietors of the east
possessed neither implements nor work animals. There was
no rural labor force, but small holders subject to services
of man and team, by whose labor the proprietor tilled his
land ; that is, it was an organization for working the land,
which could not be summarily set aside. A further diffi-
culty existed in the fact that there was no official class for
the administration of the rural districts, and the govern-
ment was dependent on the estate holding nobility to per-
form public functions on an honorary basis. Summary
measures, such as the presence of an official staff of lawyers
made possible in France, were therefore excluded here, as
they were in England in view of the aristocratic justices of
the peace.

If the protection and maintenance of the peasantry is re-CAPITALISTIC DEVELOPMENT OF MANOR 101

garded as the proper objective of an agrarian system, then
the dissolution took place in an ideal manner in Austria.
In any case, it was better than the Prussian methods, be-
cause the Austrian rulers, especially Charles VI and Maria
Theresa, knew better what they were doing than did, for
example, Frederick the Great, of whom his father said that
he did not know how to terminate a lease and box the ears
of the tenant.

In Austria,!* with the exception of the Tyrol, where a
free peasantry predominated, hereditary bondage and a
landed nobility had existed side by side. The system of
estates using the peasants as labor force was most common
in Pomerania, Moravia, Silesia, Lower Austria, and Ga-
licia ; elsewhere, a renting system predominated. In Hun-
gary, leasing and exploitation by servile labor were inter-
mingled. The greatest degree of personal servitude ob-
tained in Galicia and Hungary. Here were distinguished
‘“rusticalists’? who were subject to contributions according
to a cadaster, and ‘‘dominicalists’’? who were settled on
demesne land (Salland) and were not subject to contri-
butions. The rusticalists were in part in the better posi-
tion. They were divided again, as were also the domini-
ealists, into commuted and non-commuted. The holdings
of the non-commuted were subject to retraction, while the
commuted possessed hereditary rights.

After the second half of the 17th century, capitalistic
tendencies began to intrude into this organization. Under
Leopold I the state interfered, at first in a purely fiscal
connection, under the form of a compulsory enrolment in
cadasters. The policy was to determine from exactly what
land the state could collect taxes. When this measure
proved without effect, the authorities tried the system of
‘labor patents’? (1680-1738). The object was legislative
protection of the laborers; the maximum of work which

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102 GENERAL ECONOMIC HISTORY

might be demanded from every peasant was determined.
The eviction of the peasants was not yet made impossible,
however, and Maria Theresa adopted the system of tax
‘‘rectification,’’ aiming to reduce the incentive to evict the
peasantry by making the proprietor responsible for the
taxes of any peasant displaced by him. But this measure
also proved insufficient, and in 1750 the Empress inter-
fered directly with peasant evictions, though again without
accomplishing anything conclusive. Finally, in 1771, she
promulgated the system of complete registration. The
landed proprietors were compelled to draw up registers
(Urbarien—a sort of Domesday Book) in which each peas-
ant holding, with its obligations, was definitely fixed. At
the same time, the peasants were given the right to com-
mute the obligations and so to acquire hereditary posses-
sion. This expedient broke down in Hungary at once,
while in Austria it met with notable success. It repre-
sented the attempt to maintain the existing number of
peasants and to protect them against the advance of agra-
rian capitalism. It did not constitute a dissolution of the
existing agricultural organization; the peasants were to be
protected, but the nobility were also to maintain their posi-
tion.

Under Joseph II the legislation first took on a revolu-
tionary character. He began by dissolving personal bond-
age and granting what he understood by this dissolution,
namely, freedom of movement, free choice of occupations,
freedom in marriage, and freedom from sergeanty or
obligatory domestic service. He gave the peasants, in prin-
ciple, property in their holdings, and in the tax and regis-
tration law of 1789 struck out on a really new path. The
former system of compulsory services and payments in
kind on the feudal holdings was terminated, the dues and
aids being converted into fixed money payments to the state.CAPITALISTIC DEVELOPMENT OF MANOR 103

This attempt to go over at one step to a taxation state
broke down. The peasants were not in a position to realize
from their products an income large enough to make the
money payments, and the economie program of the pro-
prietors was so violently disturbed that a great storm arose,
forcing the emperor on his death bed to retract a large
part of his reforms. Not until 1848, as a result of the
revolution, were all the burdens of the peasantry removed,
partly with and partly without compensation. Insofar
as compensation was required, the Austrian state fixed a
very moderate valuation of the services and set up credit
institutions as a means of extinguishing them. This legis-
lation represented the crowning of the efforts of Maria
Theresa and Joseph II.

In Prussia,* there has been a pronounced and persistent
distinction between the peasants on the crown lands and
those on private holdings. For the former, Frederick the
Great himself had been able to put through thoroughgoing
protective measures. In the first place, he abolished the
compulsory domestic service (Gesindeszwangdienst). Then,
in 1777, he made the peasants’ holdings hereditary. In
1779, Frederick William III proclaimed the abolition of
compulsory services in principle, requiring every recipient
of a lease on crown land to renounce them explicitly. Thus
on the crown domains a modern agricultural system was
gradually built up. In addition, the peasants were eranted
the right of purchasing full proprietory rights for a rela-
tively moderate sum; the officialdom of the state eoncurred
in these measures, not only on account of the income which
the commutation money would bring to the treasury, but
also because with acquisition of full proprietorship the
claims of the crown peasantry against the state were ex-
tinguished and the labor of administration reduced.

With regard to the peasantry on private holdings, the

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104 GENERAL ECONOMIC HISTORY

task was much more difficult. Frederick the Great wished
to do away with servitude but encountered the formally
effective objection that there was no servitude in Prussia,
but only hereditary dependency. The crown was not in a
position to effect anything against the nobility, and its own
officialdom made up of the nobles. The catastrophe of
Jena and Tilsit first brought about a change. In 1807,
hereditary personal dependency was abolished. The ques-
tion was what should become of the land which was held
by the peasantry in unfree tenure. Prussian official opin-
ion was divided. The alternative was whether to aim at
the largest quantity of produce from a given piece of land,
or to lay the emphasis on maintaining the maximum peas-
ant population. In the first case the English agricultural
system offered a model, as it then represented the highest
degree of intensive cultivation; but this system involved
sacrificing the population on the land. This course was
favored by Over-President von Schoen and his circle. The
other course meant turning away from the example of Eng-
land and from intensive cultivation. After long negotia-
tions appeared the Regulation Edict of 1816. It repre-
sented a compromise between administrative policy and
the protection of the peasantry.

First, the peasants who owned teams were declared sub-
ject to ‘‘regulation,’’ while the small cultivators were in ef-
fect excluded, since the state proprietors declared that they
could not do without the hand labor. Even those with
teams were only included if the occupied land was regis-
tered in the tax rolls and if they had occupied it since
1763. The selection of this year as the boundary point
meant that a minimum of the peasant holdings were in-
cluded in the scheme. The regulation became effective on
application. The peasant received his holding as property
and no longer furnished labor services or payments, butCAPITALISTIC DEVELOPMENT OF MANOR 105

at the same time he lost his rights against the estate. That
is, he renounced his right to receive from the proprietor
help in emergencies, assistance in repairing buildings, to
the use of the common pasture and woodland, and to ad-
vances from the estate to meet tax payments. Especially,
however, the peasant had to turn over to the proprietor
one-third of all hereditary possessions and half of non-
hereditary possessions. This manner of regulation was ex-
traordinarily favorable to the estate proprietor. He had
indeed to provide himself with implements and stock, but
he retained the hand labor of the Kossdten, while he was
freed from the rights of pasture of the peasantry and could
consolidate his holdings, since the prohibition of eviction
was suspended at once. The peasant liable only for hand
labor and not subject to the regulation could now be sum-
marily evicted. In Silesia, the nobility, who were especially
strong, secured still further exceptions in their own favor,
while in Posen, where Polish proprietors were affected, the
entire peasant class was made subject to the regulation.

Not until 1848 did the legislation take the final step in
Prussia. In 1850, the dissolution of all burdens on the
peasantry was proclaimed. Every peasant, with the ex-
ception of the day laborers, was now placed under the regu-
lation and every obligation against peasant holdings was
made subject to commutation, whether it resulted from the
regulation or was independent of it. This included heredi-
tary rents and other payments. It is true that in the
meantime the holdings of the smaller peasants had long
ago been appropriated by the estate proprietors.

The net result of the development in Prussia has been a
decrease both in the numbers of the peasantry and the ex-
tent of peasant holdings. Since 1850 a progressive prole-
tarizing of the working population has gone on. The de-
cisive cause was the increase in the value of land. The

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106 GENERAL ECONOMIC HISTORY

earlier custom of granting land to the ‘‘instmen’’ was no
longer profitable ; their shares in the fruits of the threshing
and grinding were also changed into money payments. Of
especial importance was the introduction of sugar beet
culture, which gave agriculture a highly seasonal character,
requiring migratory labor; this was provided by the so-
ealled ‘‘Sachsen-ganger,’’ coming first from the Polish
provinees of the east and later from Russian Poland and
Galicia. For these people it was not necessary either to
build dwellings or to allot land; they allowed themselves to
be herded together in barracks and were satisfied with a
style of living which any German laboring man would
have rejected. Thus to an increasing extent a nomadic
labor force took the place of the original land-bound peas-
antry and of the labor force of later times which was
loyally attached to the land by a community of economic
interest with the proprietor of the estate.

In Russia,*® even Alexander I had talked about the eman-
cipation of the peasants, but had done as little towards it as
Nicholas I. The defeat of Russia in the Crimean war was
required to set things in motion. Alexander II feared a
revolution, and for that reason promulgated, in 1861, after
endless consultations, the great manifesto liberating the
peasants. The problem of dividing the land was solved in
the following way. For each province of the empire was
set a minimum and maximum holding for each person
(nadyel) ; the amounts varied from three to seven hektares.
The proprietor, however, could avoid the regulation alto-
gether by giving the peasants outright a fourth part of
the minimum share. In this way he acquired in effect a
rural proletarian family completely dependent upon the
opportunity to work on his estate. Otherwise the peasant
received his share of land only for compensation. The
latter was higher in proportion as the share was smaller,CAPITALISTIC DEVELOPMENT OF MANOR 107

the law makers arguing from the better quality of the land
and its greater yield. Moreover, during a certain transi-
tion period the obligatory services of the peasants were kept
in force, and the commutation of dues by the peasant made
dependent on the consent of the proprietor. The system
resulted in the peasantry falling extensively in debt to the
proprietors. The commutation payments were fixed rela-
tively high, amounting to 6% for 48 years; they were still
running when the revolution of 1905-07 broke out. More
favorable terms were granted the peasants on the royal
estates and crown lands, who were liberated with complete
ownership of their land.

It is true that the Russian peasants were liberated only
in one direction; they were freed from the proprietors, but
not from the joint obligations of the commune. In regard
to these, personal servitude was maintained. The peasant
did not have freedom of movement, for the mir could re-
eall anyone, no matter whom, who had grown up in the
village. This right was kept intact because the Govern-
ment saw in the so-called agrarian communism a conserva-
tive force and a support of ezarism against the progress of
liberalism (cf. above, p. 19).

Led by political considerations, the Russian government
proceeded differently in the western provinces, especially
in Poland,’* where the Code Napoleon had abolished serf-
dom, although under the condition that on the removal of
the peasant the land reverted to the overlord. This specifi-
cation, which had led to wholesale expulsion of the peasants,
was in its turn abolished in 1846. Then in 1864 the Rus-
sions earried out the liberation of the Polish peasants, as
a measure directed against the Polish nobility, who had
supported the revolution of 1863, and with the object of
attaching the peasantry to Russian policy. In conse-
quence, the relation of the peasant to the soil was deter-

Tapers

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Py CE
ENT108 GENERAL ECONOMIC HISTORY

mined on the basis of his own declaration. Thus the libera-
tion took the form of an out-and-out dispossession of the
Polish nobility. In particular, this fact explains the ex-
tensive woodland and pasture privileges of the peasants.

The dissehitien-of the fendaHiand system resultedin the
agricultural system of today. In-part, the peasantry are
freed fromthe land and the land from the peasantry, as
in England-;in part-the peasantry are freed from the
proprieters;-as-in-Franee; in part the system is a mixture,
as in the rest of Europe, the east inclining more toward the
English conditions.

The form of the final adjustment has been largely in-
fluenced by the laws of inheritance, in which regard there
was the greatest contrast between England and France. ~n—
Englend,the ferdaHinheritanee with primogeniture became
universal for the land; the eldest son alone, whether of
peasant or overlord, inherits all the land. In-Franee; equal
division-efthetand-was the rule, even under the old re-
gime; the civil code only made it obligatory. Within
Germany we find the most extreme contrasts. Where in-
dividual inheritance persists it is not primogeniture in the
English sense, but rather sets up a principal heir, (anerbe)
who receives the land and is required to provide for
other heirs. This law obtains in some cases on purely
technical grounds, as for example in connection with large
estates, or a great farm in the Black Forest, where physical
division is impossible; or it may be historically grounded,
coming down from the period of feudal overlordship. The
manorial lord was interested in the capacity of the land to
support services, and hence in maintaining farms undi-
vided. In Russia, we find agrarian communism down to
the reforms of Stolypin in 1907; the peasant received his
allotment of land not from his parents but from the village
community.

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. StCAPITALISTIC DEVELOPMENT OF MANOR 109

Modern legislation has entirely abolished feudal ties. In
some regions these have been replaced by a system of trusts
or fideicommissa. These are first met with in the form of
certain peculiar foundations in the Byzantine Empire, be-
ginning with the 12th century. To protect the land against
the emperors, it was given to the church and thus received
a character of sanctity. The purpose for which the church
could use it, however, was rigidly prescribed, as for ex-
ample the maintenance of a number of monks. The re-
mainder of the rent, to the amount of nine-tenths of the
total, accrued permanently to the family establishing the
foundation. Thus arose in the Moslem world the wakuf, a
foundation apparently in favor of the monks or for some
other pious purpose, but in reality designed to secure to a
family a rent while preventing the Sultan from levying
taxes on the land. This device of the fideicommissum was
brought by the Arabs to Spain and then taken over by
England and Germany. In England it aroused resistance,
but the lawyers devised a substitute in the institution of
‘Centails.’” The nature of the institution is this: the in-
divisibility and inalienability of holdings of land is secured
by agreement on its transfer from one generation to the
next, so that no change is possible during the lifetime of
the holder. In this way the greater part of the land of
England has been concentrated into the hands of a small
number of families, while in Prussia a while ago one-
sixteenth of the land was tied up in trusts. The result
is that a latifundian ownership obtains in England, Scot-
land, and Ireland and also (before 1918) in parts of Silesia
and the former Austro-Hungarian monarchy, and to a
small extent in certain parts of. Germany.

The manner in which the agrarian system developed and
the feudal organization was displaced has had extraordi-
narily far-reaching consequences, not only for the progress

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of rural conditions but for political relations in general.
Especially has it influenced the question whether a coun-
try was to have a landed aristocracy, and what form it
would take. An aristocrat in the sociological sense is a
man whose economic position sets him free for political
activities and enables him to live for political functions
without living by them; hence, he is a receiver of fixed
income (Rentner, rentier). This requirement cannot be
met by those classes who are bound to some occupation by
the necessity of working to provide a living for themselves
and their families, that is, by business men and laborers.
In an agricultural nation, specifically, the complete aristo-
erat lives on ground rents. The only country which really
possesses such an aristocracy in Europe is England—to a
limited extent also the Austria of former times. In France,
on the contrary, the expropriation of the landed classes
led to an urbanization of political life, since only the
plutocracy of the towns, and no longer the landed aristoc-
racy, were economically free enough to make politics a pro-
fession. The economic development of Germany left only
a thin stratum of landlords free for political life, chiefly in
the eastern provinces of Prussia, where the expropriation
of the peasants went farthest. The majority of the Prus-
sian Junkers formed no such aristocratic stratum as the
English landlords. They are rather a rural middle class
with a feudal stamp, coming down from the past, whose
members are occupied as agricultural entrepreneurs in the
day-to-day economic struggle of business interests. With
the fall in grain prices since the seventies and the rise in
the demands of life, their fate was sealed, for the average
knightly holding of 400 to 500 acres can no longer support
a lordly aristocratic existence. This fact explains the ex-
traordinarily sharp conflict of interests in which this class

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a ns Pe pe a Te easCAPITALISTIC DEVELOPMENT OF MANOR 111

has stood, and still stands, and their position in political
life.

With the dissolution of the manors and of the remains
of the earlier agrarian communism through consolidation,
separation, etc., private-property-in land has been com-
pletely-established. In the meantime, in the course of the
centuries, the organization of society has changed in the
direction described above, the household community shrink-
ing, until now the father with his wife and children func-
tions as the unit in property relations. Formerly this was
simply impossible for physical reasons. The--househald
has_at the. same time undergone .an extensive internal trans-
formation, and this in twoe-ways; its function has become
restricted to the-field.of consumption, and its management
placed on an accounting basis. To an increasing extent the
development of inheritance law in place of the original
complete communism has led to a separation between the
property of the man and the woman, with a separate ac-
counting. This two-fold transformation was bound up
with the development of industry and trade.

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We understand by industry the transformation of raw
materials; thus the extractive operations and mining are
excluded from the concept. However, the latter will be
treated in connection with industry in what follows, so that
the designation ‘‘industpy—enrbraees--all those economic
activities-which are not-to be viewed as agricultural, trad-
ing, or-transportation-oeperations.

From the economic standpoint industry—in the sense of
transformation of raw materials—deveteoped—miversaly
in the form-of work to provide for the requirements of a
house community. In this connection it is an auxitary 0c-
cupatien; it first begins to be interesting to us when pro-
duction is carried beyond household needs. This work may
be carried on for an outside household, especially for a
seigniorial household by the lord’s dependents; here the
needs of the one household are covered by the products of
other (peasant) households. Auxiliary industrial work
may also be performed for a village, as in the ease of
India. Here the hand workers are small farmers who
are not able to live from the product of their allotments
alone. They are attached to the village, subject to the dis-
posal of anyone who has need of industrial service. They
are essentially village serfs, receiving a share in the prod-
ucts or money payments. This we call ‘*demiurgical”’

labor.
115

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116 GENERAL ECONOMIC HISTORY

The second mode of transforming raw materials, for
other than the needs of a household, is production for
sale—that is, craft work. By craft work we understand
the case in which skilled labor is carried on to any extent
in specialized form, either through differentiation of oc-
cupations or technical specialization, and whether by free
or unfree workers, and whether for a lord, or for a com-
munity, or on the worker’s own account.

It will be seen that industrial work for the needs of the
worker originally appears in the closed house community.
In general the oldest form of specialization is a strict
division of labor between the sexes. To the woman ex-
elusively falls the cultivation of the fields; she is the first
agriculturist. She is by no means given such a high posi-
tion as Tacitus, who here waxes fanciful, represents in the
ease of the Germans. In ancient England the seduction
of a wife was regarded as a mere property damage to be
compensated by money. The woman was a field slave;
upon her lay the entire work of tillage and all activity con-
nected with the utilization of the plants grown upon the
land, as well as the production of the vessels in which
cooking was done, and finally the broad category of tex-
tile work—braiding of mats, spinning, and weaving. As
to weaving there are indeed characteristic exceptions. In
Egypt, Herodotus was rightly impressed by the fact that
men (servile) worked at the looms, a development which
took place generally where the loom was very heavy to
manipulate or the men were demilitarized. To the man’s
share on the other hand fell everything connected with
war, hunting, and livestock keeping, as also work in
metals, dressing of leather, and preparation of meat. The
last ranked as a ritualistic act; originally meat was eaten
only in connection with orgies, to which in general the menPRINCIPAL FORMS OF INDUSTRY 117

alone were admitted, the women receiving what was left
over.

Industrial work in communal form is found in occasional
tasks, especially in house building. Here the work was so
heavy that the single household and certainly the single
man could not carry it out. Hence, it was performed
by the village as invitation work on a mutual basis, en-
livened by drinking, as is still done in Poland. Another ex-
ample in very early time is work for the chieftain, and an-
other is ship building, which was done by communal
groups voluntarily formed for the purpose and which had
a good chance of taking up piracy. Finally, it may hap-
pen that a number of free men join together for work in
the production of metals, though the production of iron
is a relatively late phenomenon. Originally houses were
built without metal nails; the Alpine house has a flat roof
in spite of the burden of snow, because there are no nails
for a sloping roof.

As will be seen from the spread of invitation work, the
earliest specialization by no means implies skilled trades.
The latter are related in primitive lands to magical con-
ceptions; the belief in things which can be achieved by the
individual only by magical processes had to develop first.
This was especially true of the medical calling; the “‘medi-
cine man’’ is the earliest profession. In general every
highly skilled occupation was originally regarded as in-
fluenced by magic. The smiths especially were every-
where viewed as characterized by supernatural qualities
because a part of their art appears mysterious and they
themselves make a mystery of it. The skilled occupa-
tions developed within the large household of a chieftain or
landed proprietor, who was in a position to train depend-
ent persons in a special direction, and who possessed the

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118 GENERAL ECONOMIC HISTORY

needs for which skilled work was requisite. The skilled
occupation may also have evolved in connection with the
opportunity for exchange. The decisive question in this
connection is, has the industry access to a market? and
also, who sells the final product after it has gone through
the hands of the various producers? These questions are
also vital for the struggles of the guilds and for their dis-
integration. A specialized skilled craftsman may produce
freely for stock and for the market, selling his product as
a small enterpriser. This extreme case we shall call ‘“price
work’’; it presupposes command over raw materials and
tools. One possibility is that the raw materials, and under
some circumstances the tools, are provided by an associa-
tion. Thus the medieval guild as a group bought and
distributed certain raw materials, such as iron and wool,
in order to safeguard the equality of the members.

The opposite extreme is that the craftsman is in the
service of another as a wage worker. This appears when
he is not in possession of raw material and tools but brings
to the market his labor only, not its product. Between the
two extremes stands the craftsman who works on order.
He may be the owner of the raw materials and tools, giving
rise to two possibilities. Hither he sells to the consumer—
who may be a merchant ordering from him; in which case
we speak of free production for a clientele, or, he produces
for an entrepreneur who possesses a monopoly of his labor
power. The latter relation often results from indebtedness
to the entrepreneur, or from the physical impossibility of
access to the market, as for example in the export indus-
tries in the middle ages. This is called the ‘‘domestic”’
system, or more descriptively, the putting-out system or
factor system; the craftsman is a price worker on another’s
account.

The second possibility is that raw material and tools—a

PRINCIPAL FORMS OF INDUSTRY 119

one or the other or both—are provided by the one who or-
ders the work, the consumer. Here we shall speak of wage
work for a clientele. A final case is that in which the per-
son ordering the work is an entrepreneur who has pro-
duction carried on for gain; this is the case of domestic
industry, the putting-out system. Here are associated on
the one hand a merchant entrepreneur (Verleger) who
commonly, though not always, purchases the raw materials,
and under some circumstances also provides the tools, and
on the other hand the wage worker on order in his home,
who cannot bring his own product to the market because
the requisite organization of craft work is absent.

With regard to the relation of the worker to the place
of work, the following distinctions may be made. 1. The
work is done in the worker’s dwelling. In this case the
craftsman may be a price worker who independently fixes
the price of his product; or he may be a home worker for
wages for a clientele, producing on the order of consumers ;
or finally, he may be a home worker for an entrepreneur.
2. On the other hand the work may take place outside the
worker’s dwelling. Here it may be itinerant work, work
done in the house of the consumer, as is still common with
seamstresses and dressmakers; such work was originally
done by ‘‘wandering’’ laborers. On the other hand the
work may be brought to the worker, but may be of such a
nature that it cannot be carried on in his own house, as in
the case of the whitewash industry. Finally, the work
place may be an ‘‘ergasterion’’ or work shop, and as such
separate from the dwelling of the worker. An ergasterion
is not necessarily a factory; it may be a bazaar-shop where
work place and place of sale are combined. Or, it may be
leased in common by a number of workers; or finally, it
may belong to a lord who puts his slaves to work in it,
either selling the product himself or permitting the slaves

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120 GENERAL ECONOMIC HISTORY

to sell it on condition of a specified payment. The char-
acter of the ergasterion is most clearly seen in the modern
shop enterprise where the conditions of work are prescribed
by an entrepreneur who pays wages to the worker.

The appropriation of the fixed investment, under which
the work place and means of work are included insofar
as the latter do not come under the head of tools, may also
be effected in various ways. There may be no need for a
fixed investment, in which case we have to do with pure
craft work, as in the medieval guild economy. The ab-
sence of fixed capital is characteristic of the latter to the
extent that as soon as such capital appears the guild econ-
omy is in danger of dissolution. If there is a fixed in-
vestment it may be provided and maintained by an asso-
ciation,—village, town, or workers’ organization. This
case is common, and especially is met with repeatedly in the
middle ages, the guild itself providing the capital. In
addition we find seigniorial establishments which the
workers are allowed to use for a payment; a monastery, for
example, establishes a fulling mill, and grants free workers
its use. Again it is possible that the seigniorial establish-
ment may be not only placed at the disposal of free workers
but used in production by workers under the dominium of
the owner and whose product he himself sells. This we
eall ‘‘oikos,’’ or villa, craft work. Originated by the
Pharaohs, it is found in the most varied forms in the
establishments of the princes, landed proprietors, and mon-
asteries of the middle ages. Under oikos craft work, how-
ever, there is no separation between the household and the
enterprise, and the latter ranks only as an auxiliary in-
terest of the entrepreneur.

All thisis-ehanged in the-capitalistic establishment of an
entrepreneur- Here -work_is carried on with means pro-
vided-by the entrepreneur, and discipline is necessary.PRINCIPAL FORMS OF INDUSTRY 121
The-entreprenetr work shop counts-as fixed capital, form-

ing—-an-item—in-the accounting of the entrepreneur; the
existence-of-such capital~in the hands of an individual is

the fact-whieh brought about the downfall of the guild
system.

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STAGES IN THE DEVELOPMENT OF INDUSTRY AND MINING

The starting point of the development is house industry,
producing for the requirements of a small or large house-
hold. From this point the development may lead to tribal
industry, which may arise in consequence of the possession
by a tribe of a monopoly, either of certain raw materials
or of certain products. Tribal industry is carried on origi-
nally as a weleome auxiliary source of income, but later to
an increasing extent as a regular occupation. It signifies
in the one as in the other of these stages that the products
of household activity, prepared with the tools and raw ma-
terials of the house community, are brought to the market,
so that a window is opened, as it were, in the self-contained
household economy, looking out on the market. The mo-
nopoly of raw material may be conditioned by the exclusive
occurrence of certain materials—stone, metals, or fibers,
most commonly salt, metal, or clay deposits—within the
territory of the tribe. The result of exploitation of a mo-
nopoly may be the appearance of wandering trade. It
may be carried on by those who conduct the industry, as
in the case of many Brazilian tribes or the Russian ‘‘kus-
tar,’’ who in one part of the year as a farmer produces
products and in the other part peddles them. Again, it
may be qualities of workmanship which are monopolized,
as frequently in the ease of wool products of artistie dis-
tinction, the worker being in the possession of a trade secret

or special skill not readily transferred. This case involves
122THE DEVELOPMENT OF INDUSTRY 123

a special form of price-work in which the craft is mo-
nopolized through the possession of land and is attached
to a tribe or clan by an hereditary charism. Specializa-
tion of production takes place between ethnical groups.
It may be confined to the exchange of products between
geographically adjacent regions, as in Africa, or there may
be a wider development.

The one possibility leads to the establishment of castes,
as in India.‘ Through the combination of individual tribal
groups under an overlordship, tribal industries which origi-
nally lay side by side horizontally have here become ar-
ranged vertically in a stratification, and the ethnic divi-
sion of labor is now found among persons subjected to a
common master. The original relationship of the tribes as
mutually foreign is expressed in a system of castes whose
members do not eat together or intermarry and receive only
specified services at each other’s hands. The caste system
has had tremendous consequences for the whole social or-
ganization of India, because it is anchored in ritualistic and
hence religious institutions. It has stereotyped all craft
work and thus made impossible the utilization of inventions
or the introduction of any industry based on capital. The
introduction of any technical improvement whatever at
any time would have presupposed the founding of a new
easte below all the old series previously existing. When
the Communist Manifesto says of the proletarian that he
has a world to win and nothing to lose but his chains, the
expression would apply to the Indian? except that he can
only get free of his chains in the after world, through the
fulfillment to the last detail of his caste obligations in
this. Every Indian caste had its production process tra-
ditionally fixed ; one who abandoned the traditional process
lost caste, and was not only expelled and made pariah but
also lost his chance in the future world, the prospect of

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124 GENERAL ECONOMIC HISTORY

reincarnation in a higher caste. Hence, the system became
the most conservative of possible social orders. Under the
English influence it has gradually broken down, and even
here capitalism is slowly making its way.

The second possibility which opens up in the stage of
exchange between ethnic groups is evolution in the direc-
tion of market specialization. Regional division of occu-
pations may be first ‘“demiurgic’’—that is, not yet related
to a market though no longer inter-tribal, the village
or a landed proprietor acquiring craft workers and com-
pelling them to work for the village or the estate (oikos).
Here is to be classified for example the village industry of
India, and in Germany as late as the 14th century the lord
of the land was considered under obligation to provide a
corps of village craftsmen. Here we find local specializa-
tion for self-sufficient production, with which an hereditary
proprietorship of work places is regularly associated.

Going beyond this is a sort of local specialization which
in its end results leads to specialization for the market.
Its prior stage is the specialization of village and manorial
industry. In the village are found, on the one hand, peas-
ants and, on the other, landed proprietors who bring about
the settlement of craft workers to produce for the require-
ments of the lord, for payment in the form of a share in
the harvest or otherwise. This contrasts with specializa-
tion for the market in that there is no exchange. Further-
more, it still carries the marks of specialization between
ethnic groups, in that the craftsmen are foreigners; how-
ever, they include some peasants who have lost their status,
because unable to maintain themselves, due to inadequacy
of their holdings of land.

A different course is taken by the seigniorial form of
exploitation of craft workers, that is, the large household
or estate type of specialization carried out by princes orTHE DEVELOPMENT OF INDUSTRY 125

lords of the land for private or political purposes. Here
also specialization takes place without exchange. The duty
of furnishing particular services for the disposal of the
lord is laid upon individual craftsmen or whole classes of
such. In antiquity this arrangement was widespread. In
addition to the officia—the officials of the great household,
such as the office of treasurer, which was usually filled by
a slave—appeared the aritificia. These consisted chiefly of
slaves and included certain categories of craft workers
within the familia rustica, who produced for the needs of
the large estates. Such were smiths, iron workers, building
craftsmen, wheelwrights, textile workers—especially female
in the gynecium or women’s house—millers, bakers, cooks,
etc. They are also found in the city households of the
higher nobility, who have at their disposal large numbers
of slaves. The list of the Empress Livia, the wife of
Augustus, is known; it includes craft workers for the
wardrobe and other personal requirements of the princess.
A similar situation is found in the princely households of
India and China, and again in the medieval manors, both
of the lay lords and of the monasteries.

In addition to the craft workers for the personal needs of
the lord, are those who serve his political requirements. An
example on a large scale is the administration of the
Pharoahs of the New Empire, after the expulsion of the
Hyksos. Here we find a warehouse system replenished
from the payments in kind of the dependent classes, and
along with it extensive industrial specialization of hand
work for the household and political needs of the king. The
officials are paid in goods out of the storehouse, recelving
a specified allotment, and the written claims to the goods
circulate in commerce in the fashion of government notes
today. The products are obtained in part from the work
of peasants and in part from specialized estate industry.

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126 GENERAL ECONOMIC HISTORY

In the large estates of the near east also, luxury crafts
were developed and encouraged. The Egyptian and Meso-
potamian kings caused the marvels of ancient oriental art
to be developed by workers trained in their workshops
and dependent upon them and thus gave the estate (oikos)
a mission to fulfill in the history of culture.

In order that a transition be effected from this condition
to production for a clientele and for the market, a circle
of consumers with purchasing power to absorb the output
was necessary; that is, an exchange economy of some ex-
tent had to develop. Here we have a situation similar to
that found in the development of the peasantry. The
prince, or lord, or slave holder, had his choice between
utilizing the skill of the workers as labor power, himself
producing for the market by means of them, and exploiting
them as a source of rent. In the first case the lord became
an entrepreneur utilizing the work of the unfree popula-
tion; such a system is found both in antiquity and in the
middle ages, the lord employing someone to look after the
marketing. This person is the negotiator, the dealer, who
is attached as an agent to the princely or other sort of
household.

The way in which the lord may utilize his people as
labor force in such a case may vary. He may employ them
as unfree home workers; they remain in their own dvwell-
ings and are compelled to deliver certain quantities of
goods, the raw materials for which may belong to them
or may be furnished by the lord. In antiquity, this rela-
tion was widespread. ‘Textiles and pottery products were
brought to the market in this way, being produced mainly
in the women’s house (yvvaeiov, gynecium). In the
middle ages, the linen industry in Silesia and Pomerania
arose in this manner; the lord is the merchant-capitalist-
employer or ‘‘factor’’ (Verleger) of the craft worker.THE DEVELOPMENT OF INDUSTRY 127

Or, the lord could go over to shop industry. In antiquity
we find among the auxiliary industries of the great landed
proprietors terra cotta works, sand pits and stone quarries.
We also find the large gynecium in which female slaves
were used in spinning and weaving. Similarly in Caro-
lingian times as to the gynecium. Shop industry developed
to an especial extent in the monastic economy of the middle
ages in the breweries, fulling mills, distilleries, and other
industries of the Benedictines, Carthusians, ete.

In addition to auxiliary industries on the land, we find
town industries with unfree labor. While in the rural
industries the lord disposes of the products through the
agency of his unfree labor force, in the towns it is generally
the merchant who by means of his trading capital sets up
establishments with unfree workers. This relation was
common in antiquity. For example, tradition tells us
that Demosthenes inherited from his father two ergasteria,
a smithy shop, making weapons, and a work shop for the
production of bedsteads—which at that time were objects
of luxury and not necessities. The combination is ex-
plained by the fact that the father was an importer of
ivory, which was used for inlaying both in the handles of
swords and in the bedsteads, and had taken the shops with
their slaves as a forfeit in consequence of the inability of
his debtors to pay. lLiysias also mentions a ‘‘factory’’ with
a hundred slaves. In both eases we find production for
a small upper class on the one hand and for war purposes
on the other. In neither case, however, are we concerned
with a ‘‘factory’’ in the modern sense, but only with an
ergasterion.

Whether an ergasterion operates with unfree or with
freely associated labor depends on the individual case. If
it was a large establishment producing for the market with
slave labor it was a case of labor accumulation, not of

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128 GENERAL ECONOMIC HISTORY

specialization and co-ordination. Many persons worked to-
gether, each turning out independently a single class of
products. Over them all was set a foreman who paid the
lord double head dues and whose single interest lay in a
certain uniformity in the product. Under such relations
there could be no question of large scale production in the
sense of the modern factory, for the ergasterion had no
fixed capital, and did not usually belong to the lord, though
it might in some eases.

Furthermore, the special features of slave holding made
for the impossibility of the development of such an estab-
lishment into a modern factory. The human capital con-
sumes more in the very moment when the market fails,
and its upkeep was a very different matter from that of
a fixed capital in machines. Slaves were especially subject
to vicissitudes and exposed to risk. When a slave died it
meant a loss, in contrast with present conditions where the
risks of existence are shifted on to the free workers.
Slaves could also run away, especially in time of war, and
did so with especial frequency at a time of military mis-
fortune. When Athens collapsed in the Peloponnesian
War, the whole slave capital utilized in industry became a
loss. Furthermore, the price of slaves fluctuated in the
most astonishing way in consequence of the wars which were
the normal condition of antiquity. The Greek city-state
carried on war continuously; to contract a durable peace
was regarded as a crime; peace was concluded for a re-
Spite, as commercial treaties are made today. In Rome
also, war was an every-day occurrence. Only in war time
were slaves cheap, in time of peace extraordinarily dear.
The lord had his choice in the treatment of this capital,
often obtained at high cost, either to keep the slave in a
barracks or to support his family along with him. In the
second case occupations of a different sort must be foundTHE DEVELOPMENT OF INDUSTRY 129

for the women; hence the lord could not specialize his
establishment, but had to earry on several branches in
combination in his oikos. If he did specialize, the death
of a slave was very disastrous. An additional factor was
the absence of all interest in the work on the part of the
slave; only by means of quite barbaric discipline could be
extracted from them the amount of work which free
laborers give today under a system of contract. The large-
scale establishments with slaves were therefore a rare ex-
ception ; in all history they appear to a considerable extent
only where there is an absolute monopoly of the branch of
production concerned. The example of Russia shows that
factories manned by servile workers were completely de-
pendent on the maintenance of such a monopoly; the mo-
ment it was broken they collapsed in the face of competi-
tion with free labor.

It is true that the organization of antiquity often pre-
sents a somewhat different aspect. The lord does not ap-
pear as an entrepreneur but as an income receiver, utilizing
the labor power of the slave as a source of rent. He had
the slave taught some craft; then if he did not hire him
out to a third party he allowed him to produce independ-
ently for the market, or himself to hire out for work, or
finally, left him free to conduct his own business, imposing
on him in each ease a tax. Here we have economically
free but personally unfree craftsmen. In this case the
slave himself possessed a certain capital, or the lord lent
him capital to carry on trade or small eraft work (the
peculium). The self-interest of the slave thus aroused had,
according to Pliny, the result that the lord granted him
even testamentary freedom. In this way the great mass
of the slaves were utilized. A like condition is found in
the middle ages, and also in Russia, and everywhere we
find some technical designation for the tax as a proof that

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we are concerned not with an extraordinary but with a
quite normal relation, adrogopa, Leibzinz, obrok.

Under this manner of utilizing the slaves, whether the
lord operated on his own account depended on the presence
of a local market, in contrast with a general one in which
the slaves could sell their products or labor power. If the
labor organization of antiquity and that of the middle ages
start from the same point and are similar in the early
stages and then later take quite different courses, the
reason is found in the completely different character of the
market in the two civilizations. In antiquity the slaves
remained in the power of the lord, while in the middle ages
they became free. In the latter there is a broad stratum
of free craftsmen unknown to antiquity. The reasons are,
several:

1. The difference in the consumptive requirements in the
occident as compared to all other countries of the world.
One must understand clearly what a Japanese or Greek
household required. The Japanese lives in a house which
is built of wood and paper; the mats and a wooden kettle-
stand, which together yield a bed, together with dishes and
crockery, form the whole establishment. We possess the
auctioneer’s list from the trial of a condemned Greek, pos-
sibly Alcibiades. The household exhibits an incredibly
restricted equipment, works of art playing the leading
role. In contrast, the household equipment of the medieval
patrician is much more extensive and materialistic. The
contrast rests on climatie differences. While in Italy heat
is not indispensable, even today, and in antiquity the bed
counted as a luxury—for sleeping one simply rolled up in
one’s mantle and lay down on the floor—in northern Eu-
rope stoves and beds were necessities. The oldest guild
document which we possess is that of the bed ticking
weavers of Cologne. It cannot be said that the Greeksa.

THE DEVELOPMENT OF INDUSTRY 131

went naked; part of the body was covered, but their cloth-
ing requirement was not to be compared with that of the
middle European. Finally, again in consequence of cli-
matic relations, the German appetite was greater than that
of the southerner. Dante somewhere speaks of the ‘‘Ger-
man land of gluttons.’’ As soon as it was possible to
satisfy these needs, a much more extensive industrial pro-
duction than that of antiquity necessarily developed among
the Germans, in accordance with the law of diminishing
utility. This development took place from the 10th to the
12th century.

2. The difference in the market as compared with an-
tiquity, as regards extension. In the northern Europe of
the 10th to the 12th centuries, purchasers in possession of
buying power and industrial products were at hand to a
much greater extent than in the countries of antiquity.
The civilization of antiquity was coastal; no city of note
lay more than a day’s journey from the sea. The hinter-
land back of this thin coastal strip was, to be sure, included
in the market area; but it possessed little purchasing power
since it was in the product-economy stage of development.
In addition, the culture of antiquity rested on slavery.
As this civilization moved back from the coast and began
to take on an inland character, the supply of slaves ceased.
Herce the territorial lords endeavored to make themselves
independent of the market by providing for their own
needs with their own labor force. This autonomy of the
oikos which Rodbertus * thought to be characteristic of the
whole ancient world, is in reality a phenomenon of later
antiquity and reaches its highest development in Carolin-
gian times. Its first effect is a narrowing of the market,
and later fiscal measures worked in the same direction.‘
The whole process signified an accelerated retrogression
toward product economy. In the middle ages, on the

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132 GENERAL ECONOMIC HISTORY

other hand, the market began in the 10th century to in-
erease in extent through the growing purchasing power of
the peasantry. Their dependency became less oppressive,
the control of the lords losing in effectiveness because the
intensivity of tillage was making progress, while the lord,
who was tied to his military duties, could not profit by this
progress but had to let the whole increase in rent go to the
peasant. This fact made possible the first great develop-
ment of the handicrafts. It began in the period of market
concessions and of the founding of the towns, which in the
12th and 13th centuries moved eastward also. Viewed
from the economic standpoint, the towns were speculative
ventures of the princes; the latter wished to acquire taxable
dependents and therefore founded towns and markets, as
settlements of persons who bought and sold. These specu-
lations did not always turn out happily. Those of the
Polish nobility mostly failed when the growth of anti-
semitism drove the Jews into the east and the nobles tried
to exploit the movement in the founding of towns.

3. The third reason is the unprofitableness of slavery as
a labor system. Slavery was profitable only when the
slave could be cheaply fed. This was not the case in the
north, where in consequence slaves were preferably ex-
ploited as rent payers.

4. The great fact of the instability of slave relations in
the north. Runaway slaves were found everywhere in
northern lands. There was no eriminal news service, the
lords were pitted against each other in regard to the slaves
and one who escaped did not risk much, as he could find
shelter with another lord or in a town.

5. The interference of the towns. The emperor es-
pecially granted privileges to the towns, giving rise to
the principle ‘‘town air makes free.’’ He decreed that
anyone, no matter whence or from what class he came, be-THE DEVELOPMENT OF INDUSTRY 1338

longed to the town if he settled there. The citizenship of
the towns came in part from such acquisitions; in part it
was noble, in part made up of merchants, and in part of
dependent skilled craftsmen.

This. development -was favored bythe increasing weak-
ness of the imperial power and by-the partieulartsm of the
towns, which was promoted by this weakness; the towns
possessed the power, and werein.a-position to laugh in the
faces of the territorial lords. The principle ‘‘town air
makes free’’ did not, however, go unopposed. -On-the one
side the emperors were forced to promise the prinees to op-
pose the seizing of new privileges by the towns; on the other
their poverty continually forced them to grant the~privr
leges. _It was a contest-of powerin-which finally the pohti-
eal power of the-princes, who took an inferest"in the
towns, proved stronger than the economic power of the
territorial lords, whose interest lay in-retainimg their de-
pendents.

The craftsmen. who settled on the basis of these privileges
were of various origins and of divers legal status. Only
exceptionally were they full citizens possessing land free
of obligations; in part they were persons subject to feudal
head dues, bound to make payments to some lord within or
without the town. A third category consisted of the
“<Muntmannen,”’ in a sort of wardship status, who were
personally free but were commended to some free citizen
who represented them in court and to whom they owed
specific services in return for his protection.

In addition there would be manors within a town, pos-
sessing their own craftsmen and special craft regulations.
However, one must guard against the belief that the craft
system of the towns developed out of regulation of craft
work by the lords. (See below, p. 144.) In general the
craftsmen belonged to different personal overlords, and in

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134 GENERAL ECONOMIC HISTORY

addition they were subject to the lord of the town terri-
tory. Hence only the town itself could originate a craft
ordinance, and it happened that the lord of the town ex-
eluded his own dependents from the legal rights which he
granted to the town, not wishing them to obtain the status
of the class of free craftsmen in the town itself. The
free_eraftsmen—were—without—fixed capital; they owned
their_own-tools,-but-did not work on a basis-of-eapital ac-
equnting. They were almost always wage workers who
carried to market their labor power and not their prod-
ucts. However, they produced for a clientele and origi-
nally on order; whether they remained wage workers or
became price workers depended on market conditions.
Wage work is always the rule where the work is done
for the wealthy classes, price work where it is done for
the mass of the people. The mass buys single, ready-made
articles; hence, the-growth—in-the purchasing power of
the-mass-is-the basis for the appearance of price work, as
later for that-ef-eapitalism. However, the distinction can-
not be sharply drawn; wage workers and price workers
exist side by side, but in general wage workers predominate,
in the early middle ages as in antiquity, in India and
China, as in Germany. As such they may be either itiner-
ant workers (workers in the house of the employer) or
home workers, depending largely on the costliness of the
material. Gold, silver, silk, and expensive fabrics were
not given the craftsman to work upon at his home but they
were made to come to the work, in order to guard against
theft and adulteration. On this account itinerant work
was especially common in the field of the consumption of
the upper social strata. On the contrary, those whose tools
were costly or heavy to transport were necessarily home
workers; such were the bakers,-weavers, wine pressers and
millers ; in these occupations we already find the beginningsTHE DEVELOPMENT OF INDUSTRY 135

of-a-fixed capital. Between the fields of wage work and
price work there are intermediate cases where chance or
tradition fixes the type. In general, however, the termi-
nology of wage work strongly predominates: éddrys, probes,
merces; all these expressions relate to wages, not to prices.
The provisions of the edict of Diocletian also point in the
direction of wage rather than price tariffs.

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CHAPTER IX
THE CRAFT GUILDS

A guild? is an organization of craft workers specialized
in accordance with the type of occupation. It functions
through undertaking two things, namely, internal regula-
tion of work and monopolization against outsiders. It
achieves its objective if everyone joins the guild who prac-
tices the craft in the location in question.

Guilds in the sense of unfree organizations were found
in late antiquity and in Egypt, India, and China. These
were organizations for taking care of compulsory contribu-
tions to the state. They arose in connection with the fact
that the function of supplying the political needs of a
prince or of a community was laid upon the various in-
dustrial groups and to this end production was organized
on occupational lines. It has been assumed that the castes
of India also arose out of such guilds, but in reality they
grew out of relations between ethnic groups. Already
existing castes were utilized by the state, which carried out
its financing in kind by requiring that the industry supply
products for its needs. In early antiquity the leiturgical
guild is found, especially in connection with products im-
portant for military use. In the army of the Roman Re-
publie a centuria fabrum or industrial craftsman existed
alongside the knightly centurion. The later Roman state
needed to bring in grain to keep the city population in
a good humor. For this purpose it instituted the organiza-
tion of the navicularit, upon whom was laid the task of
136THE CRAFT GUILDS 137

ship building. Fiscal considerations brought it about that
in the last centuries of the Empire almost the whole of
economice life was thus ‘‘leiturgically’’ organized.

Guilds are also met with as ritualistic associations.
Not all the Indian eastes are guilds, but very many are
ritualistic guilds. Where castes existed, there were no
guilds outside of them; and none were needed, for it is a
feature of the caste system that every type of labor service
is assigned to a special caste.

A third form of guild is the free association; this is
characteristic for the middle ages. Its beginnings are
possibly found in late antiquity; at least the Romanized
late-Hellenism shows such tendencies toward organizations
with guild characteristics. The wandering craftsman first
appears at the beginning of our era. Without him the
spread of Christianity would never have been possible; it
was in the beginning the religion of the wandering crafts-
men, to whom the Apostle Paul also belonged, and his
proverb ‘‘he who does not work shall not eat’’ expresses
their ethics. However, antiquity knew only the first im-
pulses toward free guilds. In general, the eraft work of
antiquity has the character, as far as we can tell, of clan
industry based on hereditary charism—when it was not
attached to an oikos, or estate. The guild idea is entirely
wanting in the classical democracy, which is the very op-
posite of euild democracy; on the eolumns of the erech-
theion worked side by side Athenian citizens, free metics,
and slaves. The reasons for its absence are of a partly
political, but chiefly economic sort. Slaves and free per-
sons could not participate in the same religious ritual.
Moreover, the guild is absent where caste organization
exists, because it is quite superfluous, and it has little sig-
nificance where clan economy dominates, as in China.
Here the individual craftsman of the town belongs to some

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138 GENERAL ECONOMIC HISTORY

village; there is no citizenship of Pekin, or any city what-
ever, and consequently no guild forming a part of the
town organization. In contrast, there are guilds in Islam.
Guild revolutions even took place, although rarely, as in
Bukhara.

The spirit of the medieval western guild is most simply
expressed in the proposition, guild policy is livelihood
policy. It signifies the maintenance of a substantial
burgherly prosperity for the members of the guild, in
spite of increased competition in consequence of the narrow-
ing of the opportunities of life; the individual guild mem-
ber must obtain the traditional standard of life and be
made secure in it. This conception of the traditional
standard of life is the analogue of the ‘‘living wage’’ of
the present day. The means which the guild adopted to
reach this goal are of interest.

As to internal policy, the guild endeavored by every
conceivable means to provide equality of opportunity for
all guild members, which was also the objective in the case
of the division of the fields into strips by the peasantry. To
realize this equality the development of capitalistic power
must be opposed, especially by preventing the unequal
growth of capital in the hands of individual masters and
consequent differentiation among them; one master must
not progress beyond another. To this end, the processes
of work were regulated; no master dared proceed in any
other than the traditional manner. The guild controlled
the quality of the products. It controlled and regulated
the number of apprentices and laborers. It regulated
as far as possible the provision of raw material,—com-
munally insofar as price work obtained at the time. In
addition the guild or the town did the purchasing of the
raw material and disposed of it to the separate masters.
As soon as the transition to price work had taken placeTHE CRAFT GUILDS 139

and the craftsman as a petty capitalist possessed sufficient
means to buy his own raw material, the guild demanded
proof of the member’s wealth. This practice has held from
the 14th century on. Men without property could be em-
ployed by others as wage workers. As soon as the field of
action became restricted the guild was closed and the num-
ber of masters fixed, though this result was only reached in
places.

Finally, the relation between the individual craftsmen
was regulated. The guild maintained the position that
the raw material must take the longest possible course
in the individual shop, that the individual workman must
keep the object worked upon in hand as long as possible.
Hence it was required that the division of labor should
be based on the final product and not on technical special-
ization of operations. In the clothing industry, for ex-
ample, the course of production from the flax to the
finished garment was not cut transversely into separate
individual processes of spinning, weaving, dying, finishing
ete., but as far as possible the guilds insisted that special-
ization relate to final products; one worker must produce
hose, another vests. Consequently, we find in the me-
dieval lists two hundred guilds where, according to our
way of thinking, counting on a technological basis, two
or three thousand would have been required. The guilds
felt a very justifiable anxiety lest a cross-wise division of
the process might place the worker nearest the market
in a position to dominate the others and to depress them
to the position of wage workers.

Thus far the guild follows a livelihood policy. How-
ever, it also endeavored to secure and to maintain equality
of opportunity for the members. To this end free compe-
tition had to be limited, and the guilds established various
regulations: 1. The technique of the industry. They

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140 GENERAL ECONOMIC HISTORY

fixed the number of workers, and especially of apprentices,
a member might employ; more especially, where appren-
ticeship threatened to pass into the employment of cheap
labor, the number of apprentices was limited to one or
two for each master. 2. The form of the raw material.
Especially in industries which had to mix metals, such as
bell casting, a fairly strict control was exercised in order
to maintain the quality of the result and also to exclude
unfair competition. 3. The technique of the industry and
the process of production, hence the manner of preparing
malt, of working leather, of finishing cloth, of dyeing, ete.
4, They controlled the form of tools employed. The in-
dividual guild commonly assumed a monopoly over certain
tools, which it alone was allowed to use; the type of the
tool was traditionally prescribed. 5. The quality which the
product must show before it could be offered on the market.

The guilds also regulated the economic relations of the
industry: 1. They set up limitations on the amount of
capital, so that no employing entrepreneur could develop
within the guild, overshadowing other masters and press-
ing them into his service. To this end, all association with
foreigners outside the guild was forbidden, although the
prohibition was rarely enforced. 2. Those admitted to the
guild were forbidden to work for other masters lest they
might be reduced to the position of journeymen; similarly
as to working for merchants, which was bound to lead
immediately to a putting-out system. The finished prod-
uct had to be delivered as wage work for a customer by
the guild craftsman who worked for wages; for price
workers, the free marketing of the product as price work
was the ideal. 3. The guilds controlled the buying op-
portunities. They forbade forestalling, i. e., no guild mem-
ber dared provide himself with raw materials ahead of
his fellows. Not infrequently they established a rightTHE CRAFT GUILDS 141

of equal sharing; if a shortage arose any guild member
might demand that his brothers in the guild provide him
with raw material at its cost to them. 4. The guilds also
opposed individual selling ahead of other members. To
achieve this they often proceeded to compulsory market-
ing and strengthened the regulation by forbidding price
cutting and enticement of customers; thus the way was
barred to price competition. 5. They forbade the sale
of the products of outsiders; if a member violated this
rule he was rated a merchant and expelled from the guild.
6. They regulated marketing, through price schedules, with
a view to guaranteeing the traditional standard of life.

Externally, the policy of the guild was purely monopo-
listic. 1. The guilds strove towards and reached the ob-
jective that in very many cases the policing of the industry
in matters affecting the craft was placed in their hands,
and in such eases they maintained an industrial court.
Otherwise they would not have been able to control the
technique and procedure or to maintain equality of op-
portunity among members. 2. They strove towards and
regularly achieved compulsory membership in the guild,
at least literally, though it was often evaded in fact. 3.
In many eases they succeeded in establishing a guild dis-
trict; they everywhere strove for this, but fully achieved
it only in Germany,—in England not at all, while in
France and Italy they achieved partial success. A guild
district means monopoly of a certain territory. Within
this district, in which the guild established complete
authority, no industry could be carried on except that of
the guild. This measure was directed against migratory
workers, who to a considerable extent were suppressed,
and against rural industry. As soon as the guilds ob-
tained power in the towns, their first thought was an en-
deavor to suppress competition from the country. 4. In

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142 GENERAL ECONOMIC HISTORY

ease of a transfer of the product of one guild into the
hands of another, the guilds set up price tariffs; internally,
the price was a minimum price, against outsiders a
monopoly price. 5. That the guild regulations might be
effectively carried out, the division of labor must be as
far as possible along occupational lines, not through trans-
verse division of the process; that is, as already explained,
a worker must produce a final product from beginning
to end and keep it in his own hands. By all these measures
the guilds opposed the development of large establish-
ments within the guild-controlled industry. What they
were not able to prevent was the development of putting
out of work (Verlag), with its implication of dependence of
the eraftsmen upon the merchant.

As late products of guild history must be added some
further regulations. These assumed that the guild had al-
ready arrived at the limit of its field of action, that only
inter-local division of labor and capitalistic operation with
extension of the market could create new industrial op-
portunities. In the first place, the guilds made the achieve-
ment of mastership increasingly difficult. This goal was
reached in the first instance through the institution of
the ‘‘masterpiece.’’ A relatively late product of the de-
velopment was that, from the 15th century on, strictly
economic specifications were attached to the masterpiece.
From the standpoint of value its production often had
no significance or it even had nonsensical conditions at-
tached; the requirement signified merely a compulsory
period of work without remuneration to exclude persons
without means. In addition to the requirement of the
masterpiece, the masters who had achieved the position
of price workers strove for a monopolistic position by pre-
scribing a certain minimum eapital for the prospective
master.THE CRAFT GUILDS 143

At this point the organization of apprentices and
journeymen appeared, being especially characteristic of
continental Europe. First, the period of apprenticeship
was fixed and progressively lengthened,—in England to
seven years, elsewhere to five, and in Germany to three.
After the apprentice finished his instruction he became a
journeyman. For the latter also, a period of unremu-
nerated work was prescribed. In Germany this condition
led to the institution of the wander years. The journey-
man must travel for a certain time before he was allowed
to settle anywhere as a master, an arrangement which was
never known in France, or in England. Finally, the guild
frequently went on to limit the number of masters to an
absolute maximum figure. This measure was not always
taken in the interest of the guild as a monopoly, but was
established by the city (its lord or its council), especially
when the latter feared an insufficient productive capacity
in products of military use or political importance as
means of life, as a result of too large a number of masters.

With the closing of the guild was associated a tendency
to hereditary appropriation of the position of master.
The resulting preference of the sons of masters, and even
their sons-in-law, for admission into the guild is a phe-
nomenon common to all countries in the middle ages,
although it never became a universal rule. With this
development the character of certain parts of medieval
eraft work as small capitalism is determined, and corre-
sponding to this character a permanent class of journey-
men originates. This development took place not only
where craft work was carried on as price work and a
certain capital was necessary for the purchase of raw
material and for carrying on the industry, but most com-
monly where the limitation of the number of masters was
established.

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CHAPTER X
THE ORIGIN OF THE EUROPEAN GUILDS

In the large household of the feudal lords and princes
as we have seen, the artificia existed alongside the officia,
providing for the economie and political needs. Did the
guilds develop out of these organizations on the landed
estates as the so-called manorial law theory? had affirmed?
This theory started from the assertion that as a demon-
strable fact the manor included workers for its own needs,
a seigniorial organization which was an integral part of
the system of manorial law. The era of money economy
begins in the granting of market concessions. The landed
proprietors find it to their advantage to have markets on
their land because they can collect duties from the mer-
chants. Thus arises a market opportunity for the erafts-
man, who previously provided only the compulsory con-
tribution to the needs of the lord. The next stage in the
development is the town. It was regularly founded on
the basis of an imperial grant to a prince or lord who
used it to employ as a source of rent the craftsmen bound
to him by the manorial law. On this account, the theory
contends, he forced the guild organization upon the erafts-
man in view of his political designs of a military character
or for his household purposes. Hence the guilds are orig-
inally official organizations of the lord of the town (magis-
teria). Now begins the third stage, the epoch of guild
fusion. The eraftsmen associated in this manorial law
organization combine and become economically independ-
144ORIGIN OF THE EUROPEAN GUILDS 145

ent after they have gotten money in their hands through
production for the market. Then begins the struggle for
the market and for autonomy, in which the guilds are in-
creasingly successful, and the lord is finally expropriated
as a result of the introduction of money economy.

On the whole this theory is untenable. It does not take
sufficient account of the fact that the lord of the town,
—that is, the judicial lord—is a different functionary from
the lord of the land and that the founding of the town is
regularly connected in some way with the transfer of the
judicial authority to the person to whom the town privilege
is granted. The judicial lord is in a position, by virtue
of his power as public judge, to lay upon those within his
jurisdiction burdens similar to those which the lord of
the land or personal lege lord laid upon his dependents.
The judicial lord is indeed subject to certain limitations,
in so far as he must strive to attract settlers by making
the burdens as light as possible. In consequence of the
judicial power we frequently find its holder in possession
of compulsory services of dependents, such as were
formerly met with only in connection with the personal
liege lord. Heriot and the share of the lord in inheritance
are thus not always a sure indication of personal bondage;
the town lords also took such acknowledgments from
persons free from bondage or compulsory land services.
Consequently the craftsmen who were subject to such bur-
dens do not necessarily have to trace their development
back to the personal suzerainty of the judicial lords in
question.

Still less positively valid is the assumption that the guild
regularly developed out of manorial law. As a matter
of fact we may find in one and the same town both separ-
ate manors and a tendency toward an exclusive unity which
later develops into a guild. There is no possibility of

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146 GENERAL ECONOMIC HISTORY

asserting that the customary law of one of the manors was
the basis of this unity. Often the territorial lords even
strove to prevent their dependent craftsmen belonging to
the artificia from joining the guilds. For it is not demon-
strable that the associations which we find previous to the
appearance of the guilds—the fratermitates, for example—
developed into guilds. The fraternitates were religious
societies, while the guilds were secular in origin. It is
true that we know numerous instances in which religious
associations later became the germs of those of a profane
character, but it can be shown that the guilds were origi-
nally non-religious and laid claims to religious functions
only in the later middle ages, especially after the appear-
ance of the Corpus-Christi Day processions. Finally, the
manorial law theory overestimates the power of the terri-
torial lords in general. Where their authority was not
combined with the judicial authority, it was relatively
small.

The actual contributions of territorial dominion in the
development of industry and the origin of the guilds le
in another field than that assumed by the manorial law
theory. In connection with the market concession and the
ancient tradition of skilled craftsmen separated from house-
hold and clan, it contributed to the production of the
individual skilled artisan outside of household and clan
groupings. Thus it is one of the elements which obstructed
in the west the development toward household, clan, and
tribal industry, such as took place in China and India.
The result was achieved through the fact that the culture
of antiquity moved inland from the coast. Inland towns
arose which became the seats of craft groups locally spec-
jalized and producing for a local market, exchange be-
tween ethnie groups being displaced. The oikos-economy
developed trained craftsmen; as a result of the fact thatORIGIN OF THE EUROPEAN GUILDS 147

these began to produce for the market, the workers subject
to head dues streamed into the towns and developed pro-
duction for the market as a type. The guilds promoted
this tendency and helped it to become dominant. Where
the guilds were not victorious or did not originate at all,
house industry and tribal industry persisted, as in the
ease of Russia.

The question whether the free or unfree craftsman is
prior in the west cannot be answered in general terms.
It is certain that the unfree are mentioned in the records
earlier than the free. Moreover, to begin with, only a
few sorts of craftsmen existed; in the Lex Salica only the
faber occurs, who may be a smith or a wood worker or any
other sort of artisan. In southern Europe free crafts-
men are mentioned as early as the sixth century, in the
north in the eighth, and from the Carolingian period they
became more common.

But in contrast, the guilds first appear in the towns.
To picture their origin clearly we must visualize the fact
that the population of the medieval town was of mixed
composition and that its privileges were not only for that
class which was of free extraction. The majority of the
inhabitants were unfree. On the other hand, compulsory
services rendered to the town lord showing similarity to
territorial or personal overlordship do not prove servility.
In any case it is certain that a considerable fraction of
the town craftsmen, perhaps a majority, did come from
the unfree classes, and that only those who produced pro-
ducts for the market, and as price workers marketed them,
were admitted to the status of mercator—a work techni-
cally equivalent to citizen (burgher). It is certain also
that the mass of the craftsmen stood originally in a rela-
tion of wardship (Muntmannentum), and finally that the
eraftsman in so far and for so long as he remained unfree

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148 GENERAL ECONOMIC HISTORY

was subject to the judicial power of the lord, although
only in matters requiring the consent of the baronial court.
Hence, he was thus subject only in so far and for so long
as he still possessed a land holding within a manor and
was obligated to feudal land services; affairs of the market
did not come before the baronial court but belonged to
the jurisdiction of the mayor or the municipal court, to
which the craftsman again was subject not because he was
free or unfree but insofar as he was mercator and as such
had a share in the affairs of the town.

In Italy, the guilds seem to have existed continuously
from late Roman times. In contrast, no guild is to be
thought of in the north whose laws did not rest on a grant
from a judicial lord, for only he was in a position to exer-
cise the compulsion necessary for maintaining guild life.
Apparently, private associations of various sorts preceded
the guilds; and in fact we know no more about the matter
of origins.

Originally, the town lords reserved certain rights as
against the guilds; especially, since they demanded certain
services of a military and economic character as taxes from
the guilds for the purposes of the town, they insisted on
naming the head of the guild, and on grounds of sub-
sistence policy and of police and military considerations
they often carried control deep into the guilds’ economic
affairs. All these prerogatives of the town lords were
later acquired by the guilds, either by way of revolution
or for compensation through buying out the possessor.
In general they were engaged in a struggle from the be-
ginning. They contended first for the right to choose
their own leaders and make their own laws; otherwise
they would not have been in a position to carry out their
monopolistic policies. In regard to compulsory member-
ship in the guild they usually secured their end withoutORIGIN OF THE EUROPEAN GUILDS 149

difficulty, because it was in the interest of the town lord
himself. They also struggled to free themselves from the
burdens laid upon them,—compulsory services, due to town
lord or town council, quit-rents both personal and con-
nected with land, general taxes, and rents demanded of
them. Often the contest ended in the guild converting
the burden into a fixed money payment, the obligation of
which it assumed asa group. As early as 1099 the struggle
of the weavers of Mayence for freedom from the feudal
dues were decided in their favor. Finally, the guilds strug-
gled against wardship (Muntmannentum), especially the
representation of the ward before the court by the patron,
and in general for political equality with the upper class
families.

After victory was won in these struggles the specific
subsistence policy of the guilds begins with the tendency
to establish the guild monopoly. Opposed to it were in
the first place the consumers. They were unorganized, as
today and always, but the town or the prince might be-
come their champion. Both of these set up a vigorous
resistance to the guild monopoly. In the interest of a
better provision for the consumers the town often re-
tained the right to name free masters without regard to
the decision of the guild. Furthermore, the towns sub-
jected the food industries to an extensive control through
the establishment of municipal slaughter houses, meat
markets, mills, and ovens, often imposing upon the crafts-
men themselves the obligation to make use of these in-
stitutions. This regulation was the more easily put
through since the guilds in their early days operated en-
tirely without fixed capital. Moreover, the town struggled
for power over the guild through the agency of price
fixing, setting maximum wages or prices in opposition to
the minimum wages and prices of the guilds.

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150 GENERAL ECONOMIC HISTORY

Furthermore, the guild had competition to contend
against. Under this head are included the craft workers
of the landed estates, especially those of the monasteries,
in the country and also in the towns themselves. In con-
trast with the lay lords, who were hindered by military
considerations, the monasteries, thanks to their rational
economic procedure, were in a position to set up the most
varied industrial establishments and to accumulate con-
siderable wealth. In so far as they produced for the mar-
ket, they furnished notable competition for the guilds and
were fought bitterly by the latter. Even in the Reforma-
tion period, the competition of monastie industrial work
was one of the considerations which drove the burgher
element to the side of Luther. In addition, the struggle
was directed against the craftsmen in the country at large,
both the free and the unfree, the settled and the itinerant
workers. In this struggle the merchants regularly stood
side by side with the rural craftsmen against the guilds.
None the less the result was an extensive destruction of
house industry and tribal industry.

A third struggle of the guilds was directed against the
laborers, against those who were not yet masters, which
set in as soon as the guild undertook limitation of numbers
in any form or the closing of the guild or the raising of
difficulties in the way of entry into mastership. In this
connection are mentioned the prohibition against working
on one’s own account instead of that of a master, the pro-
hibition against working in one’s own dwelling—because
the journeyman could not be controlled or subjected to
house discipline—and finally the prohibition against mar-
riage by the journeyman before he became a master; this
prohibition could not be enforced and a married journey-
man class became the rule.

The guilds struggled with the merchants, especially theORIGIN OF THE EUROPEAN GUILDS 151

retailers, who met the needs of the town market and would
draw their products from wherever they could obtain them
most cheaply. Retail trade involved little risk in com-
parison with trade with remote regions and allowed a more
secure profit. The retailers, of whom the merchant tailors
formed a typical stratum, were the friends of the rural
craftsmen and enemies of those of the town, and the
struggles between them and the guilds are among the most
intense known to the middle ages.

Parallel with the struggle against the retailers went
wars within individual guilds and between various guilds.
These arose first in cases where workers possessed of capital
and others without it were present in the same guild,
which presented an opportunity for the propertyless to
become home workers for the wealthy members. A similar
situation existed as between wealthy guilds and others
possessing little capital, within the same production pro-
cess. These struggles led in Germany, Flanders, and Italy
to sanguinary guild revolutions, while in France only one
guild outbreak occurred and in England the transition to
the capitalistic domestic system was completed practically
without revolutionary acts of violence. The field of such
struggles is to be sought in situations where the process
of production was divided transversely rather than on the
basis of products. This was especially the case in the
textile industry, where the weavers, walkers, dyers, tailors,
etc. existed side by side, and the question arose as to which
of these different units or stages in the single production
process would force the others to leave it in control of
the market, renounce to it the chance of large profits and
become home workers on account of its members. The
walkers were often victors, forcing the other divisions
of the industry to be content with allowing them to pur-
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152 GENERAL ECONOMIC HISTORY

finished product. In other cases it was the finishers, or
weavers, and in London the tailors, who forced the previous
stages of the process into their employ. In England the
result was that wealthy masters in the guilds came no
longer to have anything to do with craft work. The strug-
ele often ended in a compromise, to be resumed later and
go on to the winning of the market by one of the produc-
tion stages. The course of events in Solingen is typical.
The smiths, sword furbishers, and polishers, after a long
struggle, concluded a treaty in 1487, according to which
all three of the guilds were to retain free access to the
market. Finally, however, the guild of furbishers obtained
control. Most frequently the final stage of production
secured the market as a result of the conflict, because
knowledge of demand was most easily obtained from that
vantage point. This was regularly the case where a cer-
tain end product enjoyed an especially favorable market.
Thus in wartime the saddlers had an excellent opportunity
for bringing the leather dressers under their power. Or,
the stage which possessed the most capital might be victo-
rious, those who employed the most valuable productive
equipment succeeding in the effort to force the others into
their service.CHAPTER XI

DISINTEGRATION OF THE GUILDS AND DEVELOPMENT
OF THE DOMESTIC SYSTEM ?

The disintegration of the guilds, which took place after
the close of the Middle Ages, proceeded along several lines.
1. Certain craftsmen within the guilds rose to the
position of merchant and eapitalist-employer of home
workers, i.e. of ‘‘factor’’ (Verleger). Masters with a
considerable invested capital purchased the raw material,
turned over the work to their fellow guildsmen who carried
on the process of production for them, and sold the finished
product. The guild organization struggled against this
tendency, but none the less it is the typical course of the
English guild development, especially in London. In spite
of the desperate resistance of the guild democracies against
the ‘‘older men,’’ the guilds were transformed into “‘livery
companies,’’ guilds of dealers in which the only full mem-
bers were those who produced for the market, while those
who had sunk to the level of wage workers and home
workers for others lost the vote in the guild and hence
their share in its control. This revolution first made
possible progress in technique, whereas the dominance of
the guild democracies would have meant its stagnation.
In Germany we do not meet with this course of develop-
ment; here if a craftsman became an employer or factor
he changed his guild, joining that of the shopkeepers, or
merchant-tailors or constablers, a guild of upper class im-

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2. One guild might rise at the expense of another. Just
as we find trading masters in many guilds, others changed
entirely into mercantile guilds, forcing the members of
other guilds into their employ. This was possible where
the production process was transversely divided. Ex-
amples are found in England—the merchant tailors—and
elsewhere. The 14th century especially is filled with strug-
gles of the guilds for independence of other guilds. Fre-
quently both processes run along together; within the
individual guild, certain masters rise to the position of
traders and at the same time many guilds become organiza-
tions of traders. The symptom of this eventuality is
regularly the fusion of guilds, which took place in England
and France but not in Germany. Its opposite is repre-
sented by the splitting of the guilds and the union of
the traders, especially common in the 15th and 16th cen-
turies. The dealers within the guilds of walkers, weavers,
dyers, ete. form an organization and in common regulate
the whole industry. Production processes of diverse char-
acter are united on the level of small shop industry.

3. Where the raw material was very costly and its im-
portation demanded considerable capital, the guilds became
dependent upon the importers. In Italy, silk gave occasion
to this development, in Perugia, for example, and similarly
for amber in the north. New raw materials might also pro-
vide the impetus. Cotton worked in this way; as soon as it
became an article in general demand, putting-out enter-
prises arose alongside the guilds or through their trans-
formation as in Germany, where the Fuggers took a no-
table part in the development.

4. The guilds might become dependent upon the ex-
porters. Only in the beginnings of the industry could the
household or tribal unit peddle its own products. As soon,
on the other hand, as an industry became entirely orDISINTEGRATION OF THE GUILDS 155

strongly based on exportation, the factor-entrepreneur was
indispensable; the individual craftsman failed in the face
of the requirements of exportation. The merchant, how-
ever, possessed not only the necessary capital but also the
requisite knowledge of market operations—and treated
them as trade secrets.

The textile industry became the main seat of the domestic
system; here, its beginnings go back into the early middle
ages. From the 11th century on there was a struggle be-
tween wool and linen, and in the 17th and 18th centuries
between wool and cotton, with the victory of the second in
each case. Charlemagne wore nothing but linen, but later,
with increasing demilitarization, the demand for wool in-
creased and at the same time with the clearing of forests
the fur industry disappeared and furs became constantly
dearer. Woolen goods were the principal commodity in
the markets of the Middle Ages; they play the leading
role everywhere, in France, England and Italy. Wool
was always partly worked up in the country, but became
the foundation of the greatness and the economic pros-
perity of the medieval city; at the head of the revolution-
ary movements in the city of Florence, marched the guilds
of the wool workers. Here again we find early traces of
the putting-out system. As early as the 13th century in-
dependent wool factors worked in Paris for the permanent
market of the Champagne fairs. In general we find the
system earliest in Flanders, and later in England, where
the Flanders woolen industry called forth mass produc-
tion of wool.

In fact, wool determined the course of English industrial
history, in the form of raw wool, partial products and
finished goods. As early as the 13th and 14th centuries
England exported wool and partial manufactures of wool.
Under the initiative of the dyers and made-up clothing

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156 GENERAL ECONOMIC HISTORY

interests, the English woolen industry finally became trans-
formed to the basis of exportation of finished products.
The peculiar feature of this development is that it resulted
in the rise of domestic industry through the rural weavers
and the town merchants. The English guilds became pre-
dominantly trading guilds, and in the final period of the
middle ages attached to themselves rural craftsmen. At
this time the garment makers and the dyers were settled
in the towns, the weavers in the country. Within the city
trading guilds broke out finally the struggle between
the dyers and garment makers on the one hand and the
exporters on the other. Export capital and merchant-
employer capital became separated and fought out their
conflicts of interest within the woolen industry under
Elizabeth and in the 17th century, while on the other side
employer capital had also to contend with the craft guilds;
this was the first conflict between industrial and trading
capital. This situation, which became characteristic of
all the large industries of England, led to the complete
exclusion of the English guilds from influence on the de-
velopment of production.

The further course of events followed different lines in
England and France as compared with Germany, in con-
sequence of the difference in the relation between capital
and the craft guilds. In England, and especially in
France, the transition to the domestic system is the uni-
versal phenomenon. Resistance to it ceased automatically
without calling forth interference from above. As a re-
sult, in England after the 14th century, a small master
class took the place of the working class. Precisely the
opposite happened in Germany. In England, the develop-
ment just described signified the dissolution of the guild
spirit. Where we find amalgamation and fusion of various
guilds, the initiative proceeds from the trading class, whichDISINTEGRATION OF THE GUILDS 157

was not to be restrained by guild limitations. They united
within the guilds and excluded the masters without capital.
Thus formally the guilds maintained themselves for a
long time; the suffrage of the city of London, which was
nothing but an organization of wealthy dignitaries, was
a guild survival.

In Germany, the development proceeds in reverse order.
Here the guilds more and more became closed groups in
consequence of the narrowing of the field of subsistence
policy, and political considerations also played a part. In
England there was wanting the particularism of the towns,
which dominates the whole of German economic history.
The German town pursued an independent guild policy
as long as it could, even after it was included in the terri-
torial state of a prince. By contrast, the independent
economic policy of the towns ceased early in England and
France, as their autonomy was cut off. The English towns
found the path to progress open because they were repre-
sented in Parliament, and in the 14th and 15th centuries—
in contrast with later times—the overwhelming majority
of the representatives came from urban circles. In the
period of the Hundred Years War with France, the Parlia-
ment determined English policy and the interests brought
together there pursued a rational, unitary industrial policy.
In the 16th century a uniform wage was fixed, the adjust-
ment of wages being taken out of the hands of the justices
of the peace and given to the central authority; this
facilitated entry into the guilds, the symptom of the fact
that the capitalistic trading class, who predominated in
the guilds and sent their representatives to parliament,
were in control of the situation. In Germany, on the other
hand, the towns, incorporated in the territorial principali-
ties, controlled the guild policy. It is true that the princes
regulated the guilds in the interests of peace and order,

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158 GENERAL ECONOMIC HISTORY

but in the large their regulative measures were conserva-
tive and carried out in line with the older policy of the
guilds. In consequence the guilds maintained their exist-
ence in the critical period of the 16th and 17th centuries;
they were able to close their organization, and the stream
of the unchained forces of capitalism flowed through Eng-
land and the Netherlands, less strongly even through
France, while Germany remained in the background.
Germany was as far from the position of leadership in
the early capitalistic movement at the close of the middle
ages and the beginning of the modern era as it had been
centuries before in the development of feudalism.

A further characteristic divergence is the difference
in regard to social stresses. In Germany, from the close
of the middle ages on, we find unions, strikes and revolu-
tions among the journeymen. In England and France,
these became more and more rare since in those countries
the apparent independence of the home-working small
masters beckoned to them and they could work immediately
for the factor. In Germany, on the contrary, this ap-
parent independence was not available as there was no
domestic industry, and the closing of the guilds established
a relation of hostility between the masters and the journey-
men.

The pre-capitalistie domestic industry of the west did
not develop uniformly, or even as a rule, out of the craft
organization; this occurred to the smallest extent in
Germany and to a much greater extent in England.
Rather it quite commonly existed side by side with craft
work, in consequence of the substitution of rural craft
workers for urban, or of the fact that new branches of
industry arose through the introduction of new raw ma-
terials, especially cotton. The crafts struggled against theDISINTEGRATION OF THE GUILDS 159

putting-out system as long as they could, and longer in
Germany than in England and France.

Typically, the stages in the growth of the domestic
system are the following: 1. A purely factual buying
monopoly of the factor in relation to the craft worker.
This was regularly established through indebtedness; the
factor compels the worker to turn over his product to him
exclusively, on the ground of his knowledge of the market
as merchant. Thus the buying monopoly is connected with
a selling monopoly and taking possession of the market
by the factor; he alone knowing where the products were
finally to stop. 2. Delivery of the raw material to the
worker by the factor. This appears frequently, but is not
connected with the buying monopoly of the factor from
the beginning. The stage was general in Europe but was
seldom reached elsewhere. 3. Control of the production
process. The factor has an interest in the process because
he is responsible for uniformity in the quality of the prod-
uct. Consequently, the delivery of raw material to the
worker is often associated with a delivery of partial prod-
ucts, as in the 19th century the Westphalian linen weavers
had to work up a prescribed quantity of warp and yarn.
4. With this was connected not infrequently, but also
not quite commonly, the provision of the tools by the
factor; this practice obtained in England from the 16th
century on, while on the continent it spread more slowly.
In general the relation was confined to the textile industry ;
there were orders on a large scale for looms for the clothiers
who turned them over to the weavers for a rental. Thus
the worker was entirely separated from the means of pro-
duction, and at the same time the entrepreneur strove to
monopolize for himself the disposal of the product. 6.
Sometimes the factor took the step of combining several

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160 GENERAL ECONOMIC HISTORY

stages in the production process; this also was not very
common, and was most likely to occur in the textile in-
dustry. He bought the raw material and put it out to
the individual workman, in whose hands the product
remained until it was finished. When this stage was
reached the craft worker again had a master, in quite
the same sense as the craftsman on an estate, except that
in contrast with the latter he received a money wage and
an entrepreneur producing for the market took the place
of the aristocratic household.

The ability of the putting out system to maintain itself
so long rested on the unimportance of fixed capital. In
weaving, this consisted only of the loom; in spinning, prior
to the invention of mechanical spinning machines, it was
still more insignificant. The capital remained in the pos-
session of the independent worker, and its constituent parts
were decentralized, not concentrated as in a modern
factory, and hence without special importance. Although
the domestie system was spread widely over the earth,
yet this last stage, the provision of the tools and the de-
tailed direction of production in its various stages by
the factor, was reached comparatively seldom outside the
western world. As far as can be learned, no trace what-
ever of the system survived from antiquity, but in China
and India it was present. Where it dominated, craftsmen
might none the less in form continue to exist. Even the
guild with journeymen and apprentices might remain,
though divested of its original significance. It became
either a guild of home workers,—not a modern labor
organization but at most a forerunner of such,—or with-
in the guild there might be a differentiation between wage
workers and masters.

In the form of capitalistic control of unfree labor power,
ve find house industry spread over the world, as manorial,DISINTEGRATION OF THE GUILDS 161

monastic and temple industry. As a free system it is
found in connection with the industrial work of peasants;
the cultivator gradually becomes a home worker producing
for the market. In Russia especially, industrial develop-
ment took this course. The ‘‘kustar’’ originally brought
only the surplus production of the peasant household to
market, or peddled it through third parties. Here we
have a rural industry which does not take its course to-
ward tribal industry but goes over into the domestic sys-
tem. Quite the same thing is found in the east and in
Asia,—in the east, it is true, strongly modified by the
bazaar system, in which the work place of the craftsman
is separate from his dwelling and closely connected with
a general centralized market place in order, as far as
possible, to guard against dependence on the merchant;
to a certain extent this represents an intensification of
the medieval guild system.

Dependence of urban as well as rural craft workers upon
an employer (factor or ‘‘putter out’’) is met with. China
especially affords an example, though the clan retails the
products of its members and the connection with clan in
dustry obstructed the development of domestic industry.
In India the castes stood in the way of the complete
subjugation of the craftsman by the merchant. Down to
recent times the merchant was unable to obtain possession
of the means of production to the extent we find true
elsewhere, because these were hereditary in the caste.
None the less, the domestic system in a primitive form de
veloped here. The last and essential reason for its retarded
development in these countries as compared with Europe is
found in the presence of unfree workers and the magical

traditionalism of China and India.

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SHOP PRODUCTION. THE FACTORY AND ITS FORE-RUNNERS ?

Shop production, which implies separation between
household and industry, in contrast with home work, ap-
pears in the most varied forms in the course of history.
The forms are as follows: 1. Isolated small shops. These
are found everywhere and always; the bazaar system es-
pecially, with its grouping together of a number of work
shops to facilitate working together, rests on this sep-
aration. 2. The ergasterion. This also is universal; its
medieval designation was fabrica, a term which is very
ambiguous and may designate the cellar den leased by a
group of workers and used as a shop, or a manorial insti-
tution for wage work with a banalité requiring its utiliza-
tion by the workers. 3. Unfree shop industry on a large
seale. This is a frequent occurrence in economic history
generally, and seems to have been especially developed in
later Egypt. It undoubtedly sprang from the gigantic
estate of the Pharaoh; out of this seem to have developed
separate shops with wage labor. Certain cotton working
shops in upper Egypt in the late Hellenistic period were
perhaps the first establishments of the kind, but this can
not be finally asserted until the Byzantine and Islamic
sources are made available. Probably such shops existed
in India and China also, and they are typical for Russia,
though here they appear as imitations of the west European
factory.

Among earlier scholars, including Karl Marx, a distine-
162SHOP PRODUCTION 163

tion was current between factory and manufactory. The
manufactory was described as shop industry, with free
labor, without the use of any mechanical power but with
the workers grouped and disciplined. This distinction is
casuistical and of doubtful value. A factory is a shop
industry with free labor and fixed capital. The composi-
tion of the fixed capital is indifferent; it may consist of
a very expensive horse-power, or water-mill. The crucial
fact is that the entrepreneur operates with fixed capital, in
which connection capital accounting is indispensable.
Hence a factory in this sense signifies a capitalistic organ-
zation of the process of production, i.e., an organization
of specialized and co-ordinated work within a work shop,
with utilization of fixed capital and capitalistic account-
ing.

An economie prerequisite for the appearance and exist-
ence of a factory in this sense is mass demand, and also
steady demand,—that is, a certain organization of the
market. An irregular market is fatal to the entrepreneur
because the conjuncture risk rests on his shoulders. For
example, if the loom belongs to him he must take it into
account before he can discharge the weaver when condi-
tions are unfavorable. The market on which he reckons
must be both sufficiently large and also relatively constant ;
hence a certain mass of pecuniary purchasing power is nec-
essary, and the development of money economy must have
reached the corresponding stage, so that a certain demand
can be depended upon. A further requisite is a relatively
inexpensive technical production process. This require-
ment is implied in the fact of a fixed capital which requires
the entrepreneur to keep his establishment going even when
conditions are unfavorable; if he utilizes hired labor only,
the danger is shifted to the worker, if the loom, for ex-
ample, is left idle. In order to find a steady market,

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164 GENERAL ECONOMIC HISTORY

again, he must produce more cheaply than under the tradi-
tional technique of house industry and the putting-out
system.

Finally, the development of the factory is conditioned
by a special social prerequisite in the presence of a suffi-
cient supply of free laborers; it is impossible on a basis
of slave labor. The free labor force necessary for con-
ducting a modern factory is available only in the west in
the necessary quantity, so that here only could the factory
system develop. This mass of labor was created in Eng-
land, the classical land of the later factory capitalism, by
the eviction of the peasants. Thanks to its insular posi-
tion England was not dependent on a great national army,
but could rely upon a small highly trained professional
army and emergency forces. Hence the policy of peasant
protection was unknown in England and it became the
classical land of peasant eviction. The labor force thus
thrown on the market made possible the development first
of the domestic small master system and later of the in-
dustrial or factory system. As early as the 16th century
there was such an army of unemployed that England had
to deal with the problem of poor relief.

Thus, while in England shop industry arose, so to speak,
of itself, on the continent it had to be deliberately culti-
vated by the state,—a fact which partly explains the rela-
tive meagreness of information regarding the beginnings
of workshops in English records as compared with con-
tinental. With the end of the 15th century the monopo-
lization of industrial opportunities in Germany caused a
narrowing of the field of livelihood policy and the problem
of the poor became urgent. As a result the first factories
arose as institutions for poor relief and for providing work.
Thus the rise of shop industry was a function of the
capacity of the economic order of the time to supportSHOP PRODUCTION 165

population. When the guild was no longer able to provide
the people with the necessary opportunity to earn a living,
the possibility of transition to shop industry was at hand.

The fore-runners of factory system in the west.—The
industry of the craft guilds was carried on without fixed
capital and hence required no large initial cost. But
even in the middle ages there were branches of produc-
tion which required an investment; industries were or-
ganized either through the provision of capital by the guild
communally, or by the town, or feudally by an overlord.
Before the middle ages, and outside of Europe, they were
auxiliary to estate economy. Among establishments of the
work shop type which existed alongside craft work organ-
ized in the guilds, were included the following:

1. The various kinds of mills. Flour mills were origi-
nally built by the lords, either lords of the land or judicial
lords; this applies especially to water mills, control of
which fell to the lord by virtue of his right to the water.
They were typically a subject of banalités or legally com-
pulsory utilization (Mihlenbann), without which they
eould not have existed. The majority of them were in the
possession of territorial rulers; the Margraves of Branden-
burg possessed no less than 56 mills in Neumark in 1337.
The mills were small, but their construction was none the
less beyond the financial capacity of the individual miller.
In part they were acquired by the towns. Regularly they
were leased by the prince or town, the lease often being
hereditary; the operation was always on a retail basis.
All this applies to saw mills, oil presses, fulling mills, ete.,
as well as grain mills. It sometimes happened that the
territorial lord or the town leased the mill to urban
families, giving rise to a mill-patriciate. Toward the end
of the 13th century, the partician families of Cologne who
held 13 mills organized an association distributing the

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166 GENERAL ECONOMIC HISTORY

profit in fixed shares; the organization was distinguished
from a joint stock company by the fact that the mills
were hired out for use, that is, exploited as a source of
rent.

2. Ovens. In this connection again only those belong-
ing to feudal landlords, monasteries, towns or princes,
could produce revenue sufficient to perfect them techni-
eally. Originally they were built for the household re-
quirements of the owners, but later their use was let for
a fee and a banalité (Backofenbann) again arose.

3. Breweries. A great majority of breweries were orig-
inally built by feudal landlords and made subject to a
banalité (Braubann) though destined particularly to sup-
ply the needs of the estate itself. Later the princes
established breweries as fiefs and in general they made
the conduct of such establishments a subject for concession.
This development followed as soon as the sale of beer on
a large scale began and there came to be a danger that too
large a number of breweries in close proximity would fail
to yield tax revenue. In the towns arose a municipal
Braubann—aside from the preparation of the drink for a
household—contemplating from the beginning an heredi-
tary industry; thus the brewery was established on the
basis of production for the market. Compulsory utiliza-
tion of the brewery was an important right of the pa-
tricians. With the technical progress in the manufacture
of beer, the addition of hops and the preparation of ‘‘thick
beer’’ by stronger brewing, the brewery right became
specialized, different types falling to different individual
patrician burghers. Thus the right to brew attached only
to individual patrician houses which had developed the
most perfect technical methods. On the other hand there
existed a right of free brewing, every citizen who possessed
this right being entitled to brew at will in the establishedSHOP PRODUCTION 167

brewery. Thus in the brewing industry also we find enter-
prise possessing no fixed capital but operating on a com-
munal basis.

4. Iron foundries. These became of great importance

after the introduction of cannon. Italy preceded other
occidental countries with its bombardiert. To begin with
the foundries were municipal establishments, since the
towns were the first to use artillery, Florence, as we know
heading the procession. From them the armies of the ter-
ritorial princes took over the use of artillery, and state
foundries arose. However, neither municipal nor state
foundries were capitalistic establishments but produced
directly for the military-political requirements of the owner,
without fixed capital.
5. Hammer Mills. These arose with the rationalization
of the working of iron. But far the most important of
all such establishments worked in the field of mining,
smelting, and salt production.

All the industries thus far considered are communally
and not ecapitalistically operated. Establishments of a
private economic character corresponding to the first stage
of capitalism,—that is the possession of the work place,
tools, and raw materials by a single owner, so that for
the picture of a modern factory, only large machinery and
mechanical power are wanting,—are found occasionally in
the 16th century, perhaps even in the 15th century, but
apparently none existed in the 14th. First arose establish-
ments with the concentration of the workers in a single
room, either without specialization of work or with limited
specialization. Such industries, which are quite like the
ergasterion, have existed at all times. Those in question
here are distinguished from the ergasterion through work-
ing with ‘‘free’’ labor, although the compulsion of poverty
is never absent. The workers who bound themselves to

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168 GENERAL ECONOMIC HISTORY

such establishments had no other choice in view of the
absolute impossibility of finding for themselves work and
tools, and later, in connection with poor relief, the measure
was adopted of pressing people into them by force.

The organization of such a workshop, specifically one
in the textile industry, is described for us by an English
poem of the 16th century. Two hundred looms are col-
lected in the work room; they belong to the enterpriser
owning the establishment, who also furnishes the raw ma-
terial and to whom the product belongs. The weavers
work for wages, children being also employed as workers
and helpers. This is the first appearance of combined labor.
For feeding the workers, the entrepreneur maintained a
complete staff of provision workers, butchers, bakers, ete.
People marveled at the industry as a world wonder, and
even the king visited it. But im 1555 at the urgent behest
of the guilds, the king forbade such concentration. That
such a prohibition should issue was characteristic of the
economic conditions of the time. As early as the 18th
century the possibility of suppressing a large industrial
establishment was no longer to be thought of, on grounds
of industrial policy and fiscal conditions alone. But in
this earlier time it was still possible, for externally the
whole distinction between the industry described and the
domestic system was that the looms were brought together
in the house of the owner. This fact represented a con-
siderable advantage to the entrepreneur; for the first time
disciplined work appeared, making possible control over
the uniformity of the product and the quantity of output.
For the worker there was the disadvantage—which still
constitutes the odious feature of factory work—that he
worked under the compulsion of external conditions. To
the advantage for the entrepreneur of control of the work,
was opposed the increased risk. If he put the looms out,SHOP PRODUCTION 169

as a Clothier, the chance of their being all destroyed at
a single stroke through some natural catastrophe or human
violence was much less than with their concentration in
one room; moreover, sabotage and labor revolt could not
easily be employed against him. In sum, the arrangement
as a whole represented only an accumulation of small in-
dustrial units within a single shop; wherefore it was so
easy, In England in 1543, to issue a prohibition against
maintaining more than two looms; for at most ergasteria
were destroyed, not organizations of specialized and co-
shop and free worker.

New evolutionary tendencies first appeared with the
technical specialization and organization of work and the
simultaneous utilization of non-human sources of power.
Establishments which internally represented specialization
and co-ordination were still an exception in the 16th cen-
tury ; in the 17th and 18th, the effort toward founding such
establishments is already typical. As non-human sources
of power, the first to be considered is animal power, the
capstan horse-power ; natural forces came later, first water
and then air; the Dutch windmills were first used to pump
out the polders. Where labor discipline within the shop
is combined with technical specialization and co-ordina-
tion and the application of non-human sources of power,
we are face to face with the modern factory. The impetus
to this development came from mining, which first used
water as a source of power; it was mining which set the
process of capitalistic development in motion.

As we have already seen, a prerequisite for the transi-
tion from work shop industry to specialization and co-
ordination of labor with the application of fixed capital,
was, along with other conditions, the presence of a secure
market of minimum extent. Thus is explained the fact

that we first meet with such specialized industry, with

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170 GENERAL ECONOMIC HISTORY

internal division of labor and fixed capital, working for
political requirements. Its earliest forerunners were the
minting works of the medieval princes; in the interests
of control these had to be operated as closed establish-
ments. The coiners, called ‘‘house associates’? (Hausge-
nossen) worked with very simple implements but the ar-
rangement was one of workshop industry with intensive
internal specialization of labor. Thus we find here isolated
examples of the later factories. With the increase in
technical and organizational scope, such establishments
were set up to a large extent in the manufacture of
weapons, including the making of uniforms, as soon as it
became gradually established that the political ruler pro-
vided the clothing for the army. Introduction of the uni-
form presupposes a mass demand for military clothing, as
conversely, factory industry can only arise for this pur-
pose after war has created the market. In the same cate-
gory, finally, and in the first rank sometimes, belong still
other industries producing for war requirements, espe-
cially powder factories.

Alongside the requirements for the army in furnish-
ing a secure market, was the luxury demand. This re-
quired factories for gobelins and tapestries, which began
to be common in princely courts after the crusades, as
decorations for the originally bare walls and floors, in
imitation of oriental usage. There were also goldsmith
goods and porcelain,—the factories of western princes being
patterned after the ergasterion of the Chinese emperors;
window glass and mirrors, silk, and velvet and fine cloth
generally ; soap—which is of relatively recent origin, an-
tiquity using oils for the purpose—and sugar, all for the
use of the highest strata of society.

A second class of such industries works for the demo-
eratization of luxury and the satisfaction of the luxurySHOP PRODUCTION ee

requirements of broader masses through imitation of the
produce destined for the rich. Those who could not have
gobelins or buy works of art had a wall covering of paper,
and thus wall-paper factories arose in the early days.
Here belong also the manufacture of bluing, starch for
stiffening, and chicory. The masses obtain in substitutes
something to take the place of the luxuries of the upper
strata. For all these products, with the exception of the
last named, the market was at first very limited, being
restricted to the nobility who were in possession of castles
or castle-like establishments. Consequently none of these
industries was capable of survival on any other basis than
that of monopoly and governmental concession.

The legal position of the new industries in relation to
the guilds was very insecure. They were antagonistic to
the guild spirit and consequently suspect to the guilds.
Insofar as they were not maintained or subsidized by the
state, they at least sought to secure express privileges and
concessions from the latter. The state granted these on
various grounds—to guarantee provision for the require-
ments of noble households, to provide for the existence of
the population which could no longer find support within
the guilds, and finally for fiscal ends, to increase the tax
paying power of the country.

Thus in France, Francis I founded the arms factory of
St. Etienne and the tapestry works of Fontainebleau.
With these begins a series of privileged manufactures
royales for public requirements and for the luxury demand
of the upper strata. The industrial development of France
thus given a start takes on another form in the time of
Colbert. The procedure of the state was simplified here
as in England, through the granting of exemptions from
the guilds in view of the fact that the privilege of a guild
did not always extend over the whole town in which it

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172 GENERAL ECONOMIC HISTORY

was settled; for example, a considerable part of Paris lay
outside the guild jurisdiction, and the fore-runners of the
modern factories could be established in this ‘‘milieu
privilégié’’ without arousing opposition.

In England the guilds were purely municipal corpora-
tions; guild law had no validity outside a town. Hence
the factory industry could be established, in harmony with
the procedure under the domestic system and workshop
industry, in places which were not towns—with the result
that down to the reform bill of 1832 the new industry could
not send representatives to Parliament. In general, we
have almost no record of such factories down to the end
of the 17th century, but it is impossible that they were
entirely absent. The reason is rather that in England
manufacturing could get along without the support of the
state because the guild power had so far disintegrated that
it no longer held any privilege which was a bar to such
industry. In addition, it may undoubtedly be assumed
that the development in the direction of shop production
would have gone on more rapidly if conditions such as
those of Germany had existed and the possibility had not
been present of producing under a small master system.

In the Netherlands likewise we hear almost nothing of
governmental grants of privileges. None the less, many
factories were founded by Huguenots at a relatively early
date in Amsterdam, Haarlem, and Utrecht, for the making
of mirrors, silks, and velvet.

In Austria in the 17th century the state endeavored to
attract factories into the country by granting privileges
which would be a protection against the guilds. On the
other hand, we also meet with the founding of factories by
the great feudal lords; of these the first is perhaps the
sik weaving works of the Counts of Sinzendorff in
Bohemia,SHOP PRODUCTION 173

In Germany the first manufactories were founded on
municipal soil, and specifically in Ziirich in the 16th
century, when Huguenot exiles founded the silk and brocade
industry here. They then spread rapidly among the Ger-
man cities. In 1573 we find the manufacture of sugar and
in 1592 that of brocade in Augsburg, that of soap in Nurem-
burg in 1593; dye works in Annaberg in 1649, manufacture
of fine cloth in Saxony in 1676, cloth manufacture in Halle
and Magdeburg in 1686, the gold wire industry in Augs-
burg in 1698, and finally at the end of the 18th century,
widely seattered porcelain manufacture, partly conducted
and partly subsidized by the princes.

To sum up, it must be held at present, first, that the
factory did not develop out of hand work or at the
expense of the latter but to begin with alongside of and in
addition to it. It seized upon new forms of production
or new products, as for example cotton, porcelain, colored
brocade, substitute goods, or products which were not made
by the craft guilds, and with which the factories could
compete with the latter. The extensive inroads by the
factories in the sphere of guild work really belongs to the
19th century at the earliest, just as in the 18th century,
especially in the English textile industry, progress was
made at the expense of the domestic system. None the
less the guilds combated the factories and closed work-
shops growing out of them, especially on grounds of prin-
ciple; they felt themselves threatened by the new method
of production.

As little as out of craft work did the factories develop
out of the domestic system, rather they grew up along-
side the latter. As between the domestic system and the
factory the volume of fixed capital was decisive. Where

fixed capital was not necessary the domestic system has
endured down to the present; where it was necessary,

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174 GENERAL ECONOMIC HISTORY

factories arose, though not out of the domestic system;
an originally feudal or communal establishment would be
taken over by an entrepreneur and used for the produc-
tion of goods for the market under private initiative.

Finally, it is to be observed that the modern factory was
not in the first instance called into being by machines
but rather there is a correlation between the two. Machine
industry made use originally of animal power; even Ark-
wright’s first spinning machines in 1768 were driven by
horses. The specialization of work and labor discipline
within the workshop, however, formed a predisposing con-
dition, even an impetus toward the increased application
and improvement of machines. Premiums were offered for
the construction of the new engines. Their principle—
the lifting of water by fire—arose in the mining industry
and rested upon the application of steam as a motive force.
Economically, the significance of the machines lay in the
introduction of systematic calculation.

The consequences which accompanied the introduction of
the modern factory are extraordinarily far reaching, both
for the entrepreneur and for the worker. Even before the
application of machinery, workshop industry meant the
employment of the worker in a place which was separate
both from the dwelling of the consumer and from his own.
There has always been concentration of work in some
form or other. In antiquity it was the Pharaoh or the
territorial lord who had products made to supply his
political or large-household needs. Now, however, the pro-
prietor of the workshop became the master of the work-
man, an entrepreneur producing for the market. The con-
centration of workers within the shop was at the beginning
of the modern era partly compulsory; the poor and home-
less and criminals were pressed into factories, and in the
mines of Newcastle the laborers wore iron collars downSHOP PRODUCTION 175

into the 18th century. But in the 18th century itself the
labor contract everywhere took the place of unfree work.
It meant a saving in eapital, since the capital requirement
for purchasing the slaves disappeared ; also a shifting of the
capital risk onto the worker, since his death had previously
meant a capital loss for the master. Again, it removed
responsibility for the reproduction of the working class,
whereas slave manned industry was wrecked on the ques-
tion of the family life and reproduction of the slaves. It
made possible the rational division of labor on the basis
of technical efficiency alone, and although precedents ex-
isted, still freedom of contract first made concentration of
labor in the shop the general rule. Finally, it created
the possibility of exact calculation, which again could only
be carried out in connection with a combination of work-
shop and free worker.

In spite of all these conditions favoring its development,
the workshop industry was and remained in the early
period insecure; in various places it disappeared again,
as in Italy, and especially in Spain, where a famous paint-
ing of Velasquez portrays it to us although later it is
absent. Down into the first half of the 18th century it
did not form an unreplaceable, necessary, or indispen-
sable part of the provision for the general needs. One
thing is always certain; before the age of machinery, work-
shop industry with free labor was nowhere else developed
to the extent that it was in the western world at the be-
ginning of the modern era. The reasons for the fact that
elsewhere the development did not take the same course will
be explained in what follows.

India once possessed a highly developed industrial tech-
nique, but here the caste stood in the way of development
of the occidental workshop, the castes being ‘‘impure’’ to

one another. It is true that the caste ritual of India did

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176 GENERAL ECONOMIC HISTORY

not go to the extent of forbidding members of different
castes to work together in the same shop; there was a say-
ing—‘‘the workshop is pure.’” However, if the workshop
system could not here develop into the factory, the exclu-
siveness of the caste is certainly in part responsible. Such
a workshop must have appeared extraordinarily anomalous.
Down into the 19th century, all attempts to introduce fac-
tory organization even in the jute industry, encountered
great difficulties. Even after the rigor of caste law had
decayed, the lack of labor discipline in the people stood in
the way. Every caste had a different ritual and different
rest pauses, and demanded different holidays.

In China, the cohesion of the clans in villages was ex-
traordinarily strong. Workshop industry is there com-
munal clan economy. Beyond this, China developed only
the domestic system. Centralized establishments were
founded only by the emperor and great feudal lords, espe-
cially in the manufacture of porcelain by servile hand
workers for the requirements of the maker and only to a
limited extent for the market, and generally on an unvary-
ing scale of operation.

For antiquity, the political uncertainty of slave capital
is characteristic. The slave ergasterion was known, but
it was a difficult and risky enterprise. The lord preferred
to utilize the slave as a source of rent rather than as labor
power. On scrutinizing the slave property of antiquity,
one observes that slaves of the most diverse types were
intermingled to such a degree that a modern shop industry
could produce nothing by their use. However, this is not
so incomprehensible; today one invests his wealth in as-
sorted securities, and in antiquity the owner of men was
compelled to acquire the most diverse sorts of hand workers
in order to distribute his risk. The final result, however,SHOP PRODUCTION 177

was that the possession of slaves militated against the es-
tablishment of large scale industry.

In the early middle ages, unfree labor was lacking or
became notably more searce; new supplies did indeed come
on the market, but not in considerable volume. In addi-
tion there was an extraordinary dearth of capital, and
money wealth could not be converted into capital. Finally,
there were extensive independent opportunities for peas-
ants and industrially trained free workers, on grounds op-
posite to the condition of antiquity; that is, the free
worker had a chance, thanks to the continual colonization
in the east of Europe, of securing a position and finding
protection against his erstwhile master. Consequently, it
was hardly possible in the early middle ages to establish
large workshop industries. A further influence was the
increasing strength of social bonds due to industrial law,
especially guild law. But even if these obstacles had not
existed, a sufficiently extended market for the product
would not have been at hand. Even where large estab-
lishments had originally existed, we find them in a state of
retrogression, like the rural large industries in the Carolin-
gian period. There were also beginnings of industrial
shop labor within the royal fisct and the monasteries, but
these also decayed. Everywhere work shop industry re-
mained still more sporadic than at the beginning of the
modern era, when at best it could reach its full develop-
ment only as a royal establishment or on the basis of royal
privileges. In every case a specific workshop technique was
wanting; this first arose gradually in the 16th and 17th
centuries and first definitely with the mechanization of the
production process. The impulse to this mechanization
came, however, from mining.

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MINING?! PRIOR TO THE DEVELOPMENT OF MODERN
CAPITALISM

In the beginning mining was a matter of surface opera-
tions. Turf and bog iron ore, as in interior Africa, and
alluvial gold as in Egypt, are probably the most important
mining products of primitive times. As soon as under-
ground work was undertaken, and shafts and galleries had
to be driven, considerable expenditures of labor and ma-
terial goods were necessary. These were exposed to ex-
traordinary hazards, for one could never tell to what dis-
tance a vein would be productive or would return the
important operating expenses which the mine required. If
these were not kept up, the mine went to ruin and the
shaft was in danger of ‘‘drowning.’’ The result was that
underground mining was undertaken co-operatively.
Where this happened there developed an obligation to the
industry, as well as a right, on the part of the associates;
the individual could not withdraw from the establishment
without endangering the group. The unit of operation
was small to begin with. In the early middle ages, not
more than two to five men worked in the same shaft.

Among the legal problems which developed in connec-
tion with mining, the first in order is the question, who has
the right to carry on mining at a given place. This may
recelve an answer in various ways. First, it is possible
that the mark association may dispose of the right, though

positive examples of this are not found in the sources.
178MINING 179

Again, it is conceivable that, in contrast with tribal opera-
tion, the right to these exceptional finds may inhere in the
tribal chieftain; but this also is uncertain, in Europe at
least.

In the periods for which we possess more than mere
guesses the legal situation is covered by two possibilities.
Either the right to quarry is treated as pars fundi, the
owner of the surface being also owner of what lies beneath
it (though this relates to the overlord’s title to the
land and not that of the peasant) or, all hidden treasures
are ‘‘regalia’’; the political ruler, that is the judicial lord, a
royal vassal or the king himself, disposes of them and no
one, not even the holder of the land himself, can carry on
mining without a concession from the political authority.
This regale on the part of the political ruler was founded
in the first place on the interest in the possession of precious
metals in connection with coinage. Other possibilities
arose in ease the finder was taken into account either by
the landholder or the lord of the regale. Today the dom-
inant principle is freedom of mining; anyone has a right
to prospect for minerals under specific formal require-
ments, and the finder who has secured a license and dis-
covered a vein may exploit it even without consent of the
landhclder, on condition only of payment for damage
inflicted. 'The modern system of free mining could be built
up more easily on the basis of the regale than on that of
feudal land law. If the landholder possessed the right, he
excluded everyone from the possibility of seeking for
minerals. while the lord of the regale, under some condi-
tions might have an interest in attracting labor into the ex-
ploitation. In detail, the history of the development of
mining law and the mining industry took the following
course.

We have very little information regarding the earliest

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180 GENERAL ECONOMIC HISTORY

ata

industry outside the occident,—in India, and Egypt, for
example, as to the mining works on Mount Sinai operated
by the earliest Pharaohs. The mining organization of
Greco-Roman antiquity is better known. The silver mines
of Laurion belonged to the Athenian state, which leased the
operation and distributed the yield to its citizens. The
Athenian fleet which won the victory of Salamis was built
through the renunciation of the silver by the citizens for
a period of years. How the mines were operated we do
not know. Some indication might be drawn from the
fact that some very wealthy individuals owned mining
slaves; Nicias, the commander in the Peloponnesian War,
is supposed to have owned thousands, which he hired out to
the lessee of the mines.

The sources for Roman conditions are not unambiguous.
On the one hand the Pandects mention condemnation to
mine labor, from which it would seem that the use of con-
vict slaves or purchased slaves was normal. On the other
hand, a selection of some sort must have taken place; at
least the indications are that slaves who had committed
any offense in the mine were whipped and expelled from
mine work. In any ease it is certain that the ler metallr
Vipascensis, from Hadrian’s time, discovered in Portugal,
indicates that free labor was already employed. Mining
was an imperial prerogative, but the existence of a mining
regale is not to be inferred; the emperors had a free hand
in the provinces and seizing the mines was a favorite exer-
cise of their power. The technique which the lex metalli
Vipascensis indicates is in contradiction with information
from other ancient sources. In Pliny for example we find
a row of slaves set to work hoisting water from the bottom
of the mine to the surface by passing buckets. In Vipasca
on the contrary, galleries for the same purpose are estab-
lished beside the outer shaft. Medieval gallery building

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goes back traditionally to antiquity, but in other ways much
of the lex metalli Vipascensis seems to echo later medieval
relations. Mining is placed under an imperial Procurator,
to whom corresponds the mine master of the political over-
lord in the middle ages. There is also the obligation to
work. The individual receives the right of driving five
putet into the ground, as in the middle ages five was the
maximum number of shafts. We must assume that he was
obliged to keep all five in operation. If he did not utilize
his right during a specified short period—shorter than in

181

the middle ages—it was taken from him and the privilege
might be taken up by anyone who was in a position to carry
on the work. We find also that in the beginning there
were certain compulsory payments, and if these were not
forthcoming the right to the mine was again thrown open.
A part of the mining fields was reserved for the fisc,
exactly as later in the early middle ages, and to it also a
part of the raw product had to be delivered; this was first
set at half, while in the middle ages it gradually sank to a
seventh or even less. The operations were carried on by
associated workers with whom any participant might come
to his own agreement. The association imposed obligatory
payments for the socit, to raise the cost of driving galleries
and shafts; if these payments failed the mining right again
became free.

In the middle ages Germany took the lead over all other
countries in the precious metals, while tin was mined in
England. In the first instance royal mines are found
here, though not on the basis of the regale but because the
land belonged to the king; an example is the Rammelsberg
near Goslar in the 10th century. Placer gold mining was
also carried on in the royal streams, the right being granted
by the king for a fee, again not on the basis of the regale
but on that of control over navigable waters. Leasing of

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182 GENERAL ECONOMIC HISTORY

mining rights by the king is first met with under Henry
II; here also the basis was not the regale but the lease of
land to monasteries. In general, what was leased to the
monasteries was only that to which the king had a legal
right, by virtue of the control of the empire over the land.
Originally the king possessed a tithing right in all mining
products, which right was generally leased to private per-
sons; but in the case of the monasteries this right is leased
in the 11th century as imperial property.

Under the Hohenstaufens the relation of the political
authority to mining advances a step farther. The concep-
tion of the regale which underlies the measures even of
Conrad III was definitely formulated by Frederick Barba-
rossa; he declared that no one might obtain the licentia
fodiendi without a concession from the king, for which a
payment was to be made; even the feudal landlords had
to get such a concession. The arrangement soon became
an accepted fact, for the Sachenspiegel recognized the royal
mining regale as an institution. However, the theoretical
right of the king led at once to conflicts with the princes,
whose right to the regale was first recognized in the Golden
Bull.

The struggle over the mines between the crown and the
feudal landholders is also met with in other countries. In
Hungary, the king succumbed to the magnates, and if he
wished to operate a mine was forced to buy the tract in
question outright. In Sicily, where Roger I still recognized
underground treasure as the property of the landholder,
the kingdom established its claim to the regale in the second
half of the 12th century. In France, the barons claimed
the mining right as pars fundi down to about 1400. Then
the crown obtained the victory and remained in absolute
possession of the regale down to the revolution, which made
the mines national property. In England, King JohnMINING 183

claimed a universal regale, especially over the important
tin mines, but in 1305 the crown was forced to recognize
that the king did not have the right to make mining de-
pendent upon a concession from him. In the 16th century,
under Elizabeth, the regale was restricted in fact to the
precious metals, all other mines being treated as pars
fundi; thus the new industry of coal mining was free from
royal claims. Under Charles I, the situation again wav-
ered, but finally the crown surrendered completely and
all underground treasures became the property of the
owners of the land or ‘‘landlords.’’

In Germany freedom of mining, that is, freedom of pros-
pecting, derived not from the mark community, but from
the ‘‘freed mountains’’ (gefreiten Bergen). <A ‘‘freed
mountain’’ is a region containing minerals in which a
landed proprietor may grant to anyone the privilege of
operating. The Rammelsberg was still a royal establish-
ment in the 10th century, but in the 11th century the king
leased it to the city of Goslar and the monastery of Walken-
ried. The monastery in turn granted the mining right to
all comers on condition of payments on a free competitive
basis. In a similar way the Bishop of Trent in 1185
granted to every member of a mining community made up
of free workers the concession for exploiting his silver
mines. This step, which suggests both the granting of
markets and that of town privileges, is based on the posi-
tion of extraordinary power which was obtained by the
free laborers from the 11th to the 14th century. Skilled
mine workers were scarce and possessed a monopoly value,
and various particularistie political authorities competed
among themselves in promising them advantages. These
included even freedom of mining, the right to excavate to
a certain prescribed extent.

On the basis of this development, the following epochs

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184 GENERAL ECONOMIC HISTORY

may be distinguished in medieval Germany. First, the de-
velopment seems to have proceeded out of a condition of
concentrated exploitation by the strongest political au-
thority, although feudal dues paid by peasants in connec-
tion with mines are occasionally mentioned. The next and
most important epoch is that in which the mine workers
occupy a position of great power. This resulted in an
increasing transfer of mining works to the miners with ex-
propriation of the lords, who became reduced to the posi-
tion of mere tax receivers, utilizing underground treasures
as a source of rent only. The mine owner is now the co-
operative association of the workers. They divide the in-
come in the same way in which peasants divided their
holdings, that is, with the strictest maintenance of equality.
The ‘‘mining community”’ arises, including all the mining
interests, that is all those who work in the mine,—later
those who have work done in them—yet with exclusion of
the overlords. This association represents its members in
external matters and guarantees the payments to the over-
lord. The result was responsibility of the individual mem-
bers of the mining community (Gewerken) for the costs
of mineral production. Operations were strictly small
seale; seven shafts constituted the maximum which might
be acquired by a single miner and the shafts themselves
were nothing but primitive holes. As long as the miner
operated the shafts he remained possessor; if he stopped
operations for even the shortest period, he lost his holding.
Since the mining community jointly guaranteed the pay-
ments, the overlord entirely gave up operations on his own
account. His rental right, that is his share, steadily and
rapidly declined from originally half the product to a
seventh and finally to a ninth.

The next epoch is that of incipient differentiation among
the workers. There arises a stratum of miners who do notMINING 185

take part in the actual work, alongside another of those
who work but are dependent upon those who do not; hence,
a development similar to that of the domestic system in
industry. This condition was reached in many places as
early as the 13th century although not yet predominant.
Limitations on the shares were maintained however; large
scale capitalism could not develop, but only a small rentier
possession, although for short periods considerable profits
were possible.

The third epoch is one of increasing capital require-
ments, resulting especially from the ever greater extent of
the galleries. As it was necessary for ventilation and
pumping to dig constantly deeper tunnels, which would
pay for themselves only in the more remote future, con-
siderable advances were required. Hence the capitalist
enters the mining group.

The fourth stage was one of concentration in the mineral
trade. Originally, each miner received his share of the
product in kind, to do with as he pleased. In the face of
this arrangement the mineral dealer was in a position to
secure actual control over the output. His influence in-
creased, and the typical aspect of the development is the
appearance of wholesale dealers in minerals, especially in
the 16th century.

Under the pressure of this situation the handling of min-
erals passed increasingly into the hands of the miners’
general organization (Gewerkschaft) as a group, as in this
way the miners sought to secure protection from the power
of the dealers. This had the further consequence that the
general union became director of operations, while origi-
nally the individual miner operated independently. A
still further consequence was that the union became orga-
nized as a capitalistie association, with capital accounting,
and that the share of the miners in the product came to

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186 GENERAL ECONOMIC HISTORY

them only through the treasury of the union. There came
to be a periodical accounting, every individual worker re-
ceiving debits and credits according to his performance.

In detail, the development of the organization prior to
the appearance of modern capitalism proceeded in the fol-
lowing way. The lord was forced by the union of the
mine workers to renounce interference in operations; the
miners (Gewerken) forbade his officials to enter the shafts
and only the members of the association had rights of con-
trol over each other. The obligation to operate was main-
tained, though no longer in the interests of the lord, but
rather in that of the miners’ association (Genossenschaft),
which was responsible for the quit-rents. The parallelism
with the Russian village, where the individual remains at-
tached to the soil, in spite of the abolition of serfdom, is
apparent. A further step was definite appropriation in
shares by the miners. It is a matter of controversy how
the shares were arranged, whether they were originally
physical shares out of which later Kuse or abstract shares
developed. All the wage workers belonged to the mining
community, but the miners’ organization included only
owners of shares. How early the union (Gewerkschaft)
appeared is doubtful, but it is certain that the membership
of the mining community and of the miners’ organization
ceased to be identical.

After the mine workers had come into possession not
only of the means of production but also of the raw ma-
terial, there began a process of differentiation within the
working class in the mining industry, and the disintegra-
tion which ealled forth capitalism. The increasing demand
for mine workers resulted in increasing accessions to the
class. The older workers, however, refused to accept the
new arrivals into the community (Gewerkschaft). They
became ‘‘Ungenossen,’’ non-members, wage-earners in theMINING 187

position of apprentices in the service of an individual mas-
ter who paid them on his own account. Thus arose asso-
ciate or dependent miners, and an inner differentiation
began, corresponding to the external one. Out of the dis-
tinction in position among individual workers in the pro-
duction process arose a distinction in regard to the right
to work in the mines. The increased need for specializa-
tion led, for example, to an increasing demand for mining
smiths. These early became wage workers who in addition
to a money wage received also a fixed share in the prod-
uct. The difference in yield among different shafts also
worked in the direction of differentiation. Originally the
guild principle applied, in that the workers’ organization
possessed the right of sharing as a whole in any especially
productive shaft and of distributing the benefit of its
yield among all the mine workers. But this came to an
end and to an increasing extent distinctions arose in the
opportunities of individual mine workers with regard to
risks. Sometimes enormous profits were made, and some-
times the miners went hungry. Increase in the freedom
of transfer of shares likewise increasingly worked for dif-
ferentiation, since the members who did not participate in
the work took advantage of the marketability of their
shares.

Thus a purely capitalistic interest was able to make its
way into the human group of the mining community. The
whole process was brought to completion through the in-
creasing capital requirement resulting from increasing
depth of the works. The construction of shafts for water
supply, and various demands for expensive equipment, be-
came constantly more imperative. The increased eapital
requirement led to the result, first, that only the propertied
associates remained miners with full mining privileges, and
second, that new grants were made more and more ex-

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188 GENERAL ECONOMIC HISTORY

clusively to persons who could show command over capital.
In addition, the union on its part began to accumulate prop-
erty. Originally it had none: the individual mine worker
had to provide for his shaft and to advance the costs, and
the union intervened only when he did not fulfill his ob-
ligation to operate. Now, however, the union was com-
pelled to assist in relation to the capital requirement be-
cause to an increasing degree the building of shafts for
clearing of water in addition to those for the working of
the seams became the rule; at first the construction of gal-
leries and shafts was divided between different associa-
tions, each being assured a share in the yield of the mine.
These shares in the product were a thorn in the flesh of the
miners. Increasingly they sought to get the excavations
into their own hands. Now the union became a possessor of
capital, but the former condition remained, the individual
miner being responsible for the cost of his shaft. He had
to advance the costs and this was considered his most im-
portant function after he no longer shared in the actual
work. As before, again, he had to provide the individual
workers, to make contracts with them and pay them, a
condition which became progressively rationalized. The
costs which the various shafts involved varied widely. The
actual workers were in a position to maintain unity against
the individual ‘‘miner.’’ Thus finally the union itself
took in hand the hiring and paying of the workers as well
as meeting of the advances and costs for the shafts, and
set up an accounting for the group as a whole, to begin
with in small matters, on a weekly basis, and later year by
year. The individual miner had only to make his advance
and received the right to a share in the product, in kind to
begin with. Finally the development ended in a condition
in which the union as a whole sold the product and dis-MINING

bursed the proceeds to the individual members on a share
basis.

189

With this development fell into disuse the measures by
which in earlier times the miners had striven to limit
the development of inequality among themselves. One of
these was the prohibition against the accumulation of min-
ing shares, of which originally not more than three could
be united in the same hand. This and all similar restric-
tions had to disappear, the more certainly as the union
itself took in hand the entire conduct of the industry, to an
increasing extent as the fields were systematically extended,
and as more frequently the enlarged fields were leased to
individual shareholders. The new arrangements con-
trasted with previous conditions, under which the unselec-
tive admission of free workers into mining had led to an
irrational technique and to irrational sinking of shafts.
Furthermore the amalgamation of the unions (Gewerk-
schaften) progressed, to the end of systematizing opera-
tions and of suppressing unproductive shafts, a phe-
nomenon met with in the mining of Freiberg as early as
the end of the 15th century.

Such phenomena are suggestive in many ways of the
history of the guilds. The development having reached
this stage, the lords of the regale began to interfere, from
the 16th century on, joining hands for the purpose with
the mine laborers. The latter, who were dependent upon
the small-capitalist ‘‘miners,’’ suffered under the lack of
planning and the hazardous character of the industry, as
did the individual miners themselves, while at the same
time the income of the holder of the regale was decreased.
Through interference of the lords of the regale, in the in-
terest of the profitableness of the lease as well as in the
interest of the workers, unitary mining rights were es-

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190 GENERAL ECONOMIC HISTORY

tablished, out of which commerce in minerals developed.
These rights are the immediate forerunner of the great
capitalistic development; they rest on the basis of a ra-
tional technical and economic conduct of the industry in
general. As a rudiment of the early development there
remained the peculiar position of the mining community
in the guild-like organization of the workers. On the other
hand, the rational union was created by the lords of the
regale, as a capitalistic organ of operation, with abstract
shares, regulating the obligation of making advances and
the right of exploitation. (Originally the number of Kuze
was 128.) The union as a whole employed the workers
and dealt with the purchasers of the mineral.

Alongside the mines but independent of them were the
smelteries. In common with the mines they belonged to the
class of industries which took on relatively early the large
scale character. For their operation charcoal was neces-
sary ; hence the large forest owners, that is the feudal lords
and monasteries, were also typical smeltery owners of early
times. Occasionally, though not in the majority of cases,
the ownership of a smeltery was combined with mining.
Small scale operations dominated down into the 14th cen-
tury, so that for example a single English monastery might
own no less than forty small furnaces. But it was also
in connection with the monasteries that the first large fur-
naces were established. Where smelting and mining were
in different hands, the ore buyers came in between, forming
from the beginning a guild constantly at war with the
miners’ unions (Gewerkschaften). In their policies they
are distinguished by the most unscrupulous methods, but
in any case we must recognize in their combinations the
germ of the first gigantic monopolies which appear at the
end of the 15th and the beginning of the 16th century.
Finally, some notice must be given to the most valuableMINING 191

and most crucial of all products peculiar to the western
world, namely coal. Even in the middle ages it was in-
creasing slowly in significance. We find that the monas-
teries started the first coal mines; the mines of Limburg
are mentioned in the 12th century, those of Neweastle be-
gan production for the market as early as the 14th, while
in the 15th the production of coal was begun in the Saar
district. But all these enterprises produced for the re-
quirements of consumers, not those of producers. In Lon-
don, in the 14th century, the burning of coal was forbid-
den because it polluted the air, but the prohibition was
futile; the English exportation of coal increased so rapidly
that special offices had to be established for gauging the
shipping.

Smelting of iron with coal instead of charcoal first be-
gins to be typical in the 16th century, thus establishing the
fateful union of iron and coal. A necessary result was a
rapid deepening of the mine shafts, and the technology
was confronted with the new question, how can water be
lifted with fire? The idea of the modern steam engine
originated in the galleries of mines.

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COMMERCE AND EXCHANGE IN THE PRE-CAPITALISTIC AGE?7

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POINTS OF DEPARTURE IN THE DEVELOPMENT OF COMMERCE

In its beginnings commerce? is an affair between ethnic
groups; it does not take place between members of the
same tribe or of the same community but is in the oldest
social communities an external phenomenon, being directed
only toward foreign tribes. It may, however, begin as a
consequence of specialization in production between groups.
In this case there is either tribal trade of producers or
peddling trade in products of a foreign tribe. In any
ease the oldest commerce is an exchange relation between
alien tribes.

The trade of a tribe in its own products may appear in
various forms. It usually develops to begin with as an
auxiliary occupation of peasants and persons engaged in
house industry, and in general as a seasonal occupation.
Out of this stage grow peddling and huckstering as an in-
dependent occupation; tribal communities develop which
soon engage in commerce exclusively. But it may also
happen that the tribe engaged in some specialized industry
is sought out by others. Another possibility is the estab-
lishment of a commercial caste, the classical form being
found in India. ‘There trade is a monopoly in the hands
of certain castes, specifically the banya caste, with ritual-
istic exclusion of others. Alongside this trade conducted
on ethnically restricted lines is found also trade ritualis-
tically restricted to sects, the magical-ritualistie limita-
tions of the members of the sect excluding it from all

195

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196 GENERAL ECONOMIC HISTORY

other occupations. This is the case with the Indian sect
of the dschaina. The dschaina is forbidden to kill any
living thing, especially a weak animal. Consequently, he
cannot become a soldier, or pursue a multitude of occupa-
tions—for example, those in which fire is utilized, because
insects might be destroyed; he cannot make a journey in
the rain because he might trample upon earthworms, ete.
Thus no occupation is open to the dschaina except trade
at a fixed location, and the honorable character of the oc-
cupation is as well established as that of the banya caste.

Not essentially different is the development of the Jews
as an outcast commercial people. Down to the exile there
were all sorts of classes within the Jewish people, knights,
peasants, craftsmen, and to a limited extent traders as
well. Prophecy and the after effects of the exile trans-
formed the Jews from a people with a fixed territory to
an alien people and their ritual thenceforward prohibited
fixed settlement on the land. A strict adherent to the
Jewish ritual could not become an agriculturalist. Thus
the Jews became pariah people of the cities and the con-
trast between the pharisaical ‘‘saint’’ and the home popula-
tion outside the law is still discernible in the Gospels.* In
this turning to trade, dealing in money was preferred be-
cause it alone permitted complete devotion to the study of
the Law. ‘Thus there are ritualistic grounds which have
impelled the Jews to trade and especially to dealing in
money, and have made of their dealings a ritualistically
restricted tribal commerce or folk-commerce.

The second possibility open in the development of trade
was the establishment of seigniorial trade, a stratum of
lords appearing as its supporters. First the idea might
oceur to territorial lords—and did im fact everywhere oc-
cur—to market the surplus products of their estates. For
this purpose they attached professional merchants to them-POINTS OF DEPARTURE 197

selves as officials. To this category belongs the actor in
antiquity, who conducted his affairs in the name of the
lord, and similarly the negotiator in the middle ages;
the latter held as a fief, in consideration of a payment,
the marketing of the products of his monastic overlord ; his
existence is not clearly demonstrable in Germany but
his kind occur everywhere else. Actor and negotiator
are not traders in the present sense of the word, but agents
of others. Another sort of seigniorial trade originated
In consequence of the position outside the law of foreign
traders, who everywhere required protection; this was to
be secured only through the political power, the noble
granting his protection as a concession and for a consider-
ation. Even the medieval princes granted concessions to
traders and accepted payments from them in return. Out
of this protective arrangement trade on his own account by
the lord or prince frequently developed, as especially on all
the coasts of Africa, where the chieftains monopolized the
transit trade and themselves traded. On this trade monop-
oly rested their power; as soon as it was broken their posi-
tion was gone.

Another form of trade which was taken up by princes
is gift trade. In the ancient east the political authorities
maintained themselves, when they were not at war with
each other, by mutual voluntary gifts. The tables of Tell-
el-Amarna, especially, from the period after 1400 B.c.,
show a lively gift trade between the Pharaohs and the
Levantine rulers. The common objects of exchange were
gold and war chariots against horses and slaves. Here
originally the free gift was the custom. Numerous
breaches of faith and trust which occurred in this connec-
tion gradually led to the imposition of mutual consider-
ations so that a genuine trade on an accurate quantitative

basis grew out of the gift trade.

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Finally, in many places, economic history reveals trade
by princes on their own account.* Very old examples on
the most extensive seale are furnished by the Egyptian
Pharaohs, who as ship-owners carried on exportation and
importation. Later examples are the doges of Venice, in
the earliest period of their city, and finally, the princes of
numerous patrimonial states of Asia and Europe, includ-
ing the Hapsburgs to well along in the 18th century. This
trade could be carried on either under the direction of the
prince himself, or he could exploit his monopoly by grant-
ing a concession or leasing the privilege. In adopting the
latter measures he gave the impulse to the development of
an independent professional trading class.Ci ACE, Ee kav

TECHNICAL REQUISITES FOR THE TRANSPORTATION OF GOODS !

For the existence of commerce as an independent occupa-
tion, specific technological conditions are prerequisite. In
the first place there must be regular and reasonably re-
lable transport opportunities. One must, to be sure, think
of these in the most primitive possible terms through long
ages. Not only in the Assyrian and Babylonian times were
inflated goat skins used for the diagonal crossing of rivers,
but even in the Mohammedan period, skin-bag boats long
dominated the river traffic.

On land the trader had recourse far into the middle ages
to primitive transport media. The first was his own back,
on which he earried his goods down to the 13th century;
then pack animals or a two wheeled cart drawn by one or
at the most two horses, the merchant being restricted to
commercial routes as roads in our sense are not to be
thought of. Only in the east and in the interior of Africa
does caravan trade with slaves as porters appear to occur
fairly early. In general even there, the pack animal is the
rule. The typical animal of the south is the ass or the
mule: the camel does not appear until late, in the Egyptian
monuments, and the horse still later; it was originally used
for war and found application in the transport of goods
only in more recent times.

Traffic by sea had to make use of equally primitive means
of transportation. In antiquity, and likewise in the early
middle ages, the boat propelled by oars was the rule. The
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200 GENERAL ECONOMIC HISTORY

construction we must picture as very clumsy; we find men-
tion of the cords with which the plank boats had to be held
together or they would break apart. It is true that sail-
ing goes back so far that its invention cannot be determined,
but it was not sailing in the sense that the term now bears.
Originally it served only for supplementing the oars when
winds were favorable, while tacking against the wind seems
to have been still unknown in the early middle ages. The
Eddas contain only a doubtful reference to it and it is
doubtful whether the first use of tacking is to be ascribed
to Andrea Doria as medieval tradition had it. From
Homer and still later sources we learn that the ships were
not so large but that they could be pulled up on the beach
when a landing was made each evening. The anchor
evolved very slowly in antiquity, from a heavy stone to an
instrument in the form customary today. Shipping was
at first, of course, purely coastal traffic; deep-sea naviga-
tion is an innovation of the Alexandrian period and was
based on the observation of the monsoon. The Arabs first
ventured to try to reach India by allowing it to drive them
across over the open sea. Nautical instruments for deter-
mining location are among the Greeks the most primitive
imaginable. They consisted of the odometer, which in the
manner of a sand glass allowed balls to fall whose number
indicated the miles passed over, and the ‘‘bolis’’ for de-
termining the depth. The astrolabe is an invention of the
Alexandrian period and not until that time were the first
lighthouses established.

Shipping in the middle ages, like that of the Arabs, re-
mained technically far behind Chinese practice. The mag-
netic needle and mariner’s compass which were applied
as early as the third and fourth centuries in China, were not
known in Europe until a thousand years later. After the
introduction of the compass in the Mediterranean andTECHNICAL REQUISITES 201

Baltic seas it is true that a rapid development began.
However, a fixed steering rudder behind the ship was not
universal until the 13th century. Rules of navigation were
a trade secret. They were objects of bargaining down to
the days of the Hansards who in this connection became
champions of progress. The decisive forward steps were
the advances in nautical astronomy, made by the Arabs
and brought by the Jews to Spain, where in the 13th cen-
tury Alfonso X had the tables prepared which are known
by his name. Compass maps were first known from the
14th century. When at that time the western world took
up ocean navigation, it was confronted by problems which
for the time being it had to solve with very primitive means.
For astronomical observations the pole star offered in the
north a tolerably secure basing point while in the south the
Cross long served for orientation. Amerigo Vespucci deter-
mined longitude by the position of the moon. At the be-
ginning of the 16th century its determination by clocks was
introduced, these having been so far perfected that it was
possible to determine longitude approximately by measur-
ing the difference between their time and that shown by
the sun at midday. The quadrant by which latitude could
readily be determined seems to have been first used in 1594.
The speed of ships corresponded to all these conditions.
There was an extraordinary change on the introduction
of sailing in contrast with the row boat. Yet in antiquity
the stretch of sea from Gibraltar to Ostia required from
eight to ten days, and the stretch from Messina to Alex-
andria about as long. After the English developed effec-
tive sailing methods in the 16th and 17th centuries, there
were sailing ships which were not so far behind moderately
fast steamers, although their speed was always dependent
upon the wind.

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FORMS OF ORGANIZATION OF TRANSPORTATION AND
OF COMMERCE

(A) THe ALIN TRADER

Commerce by sea is everywhere originally conjoined with
piracy; the warship, pirate ship, and merchant ship are
to begin with not distinguished from each other. The dif-
ferentiation came about through the warship developing
away from the merchant ship and not conversely, the war-
ship being brought to such a technical development by the
inerease in the number of banks of oars and other innova-
tions, that, in view of the costs and limited usefulness of
the room left available for cargo, it was no longer avail-
able as a merchant ship. In antiquity the Pharaohs and
the Egyptian temples are the first ship owners, so that we
find in Egypt no privately owned shipping whatever. On
the other hand private shipping is characteristic of the
Greeks in Homeric times, and of the Phenicians. Among
the Greeks the city king originally held possession of the
ships both for trade and for piracy. But he could not pre-
vent the growth of great families which shared in ship
owning and finally tolerated him only as a primus inter
pares.

Among the Romans in the earliest times, overseas trade
was one of the main sources of the significance of the city.
We do not know certainly how great was the ownership of
tonnage, or the export trade; apparently, however, the
Romans did not come to equal the Carthaginians in this
202TRANSPORTATION AND COMMERCE 203

field. Later they went over to a purely import or debit
commerce. After the Punie Wars private shipping rose
from a zero level in Rome. But the Roman policy was so
strongly continental in character that the possession of
shipping was originally regarded as unbecoming for a
senator; under the Republic and even in the imperial
period he was forbidden to have more ships than were
necessary to market his own surplus products.

We do not know how the operation of shipping in
antiquity was organized from an economic point of view.
The only certainty is the increasing use of slaves as a means
of propulsion. The officers of the ships were skilled crafts-
men. We find on Roman and Greek ships, the captain,
helmsman, and a flutist who gives the rhythm to the
rowers. Again, we have no clear idea of the relation be-
tween ship owners and merchants. Originally the former
were merchants themselves, but a special class of traders by
sea in connection with foreign commerce is soon met with,
the guzopo of the Greek cities. This foreign trade must
have been very slight in extent, for as regards goods for
the masses, especially the grain requirements of the large
cities of antiquity, provision must have been on a basis of
communal self-sufficiency. In Athens the ship owners were
obliged to bring back grain to the city as return cargo,
while in Rome the state took in hand the provision of ships
and supply of grain and regulated both far down into the
imperial period. This arrangement did indeed assure
peace and security to the sea traffic and was very favorable
to the foreign commerce, but it was not permanent. The
financial needs of the emperors, arising out of the necessity
for a standing army on the frontier, forced upon them a
leiturgical or compulsory service organization of state
functions. To an increasing degree these were taken care
of not through taxation but leiturgically, the fise organ-

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204 GENERAL ECONOMIC HISTORY

izing the various occupations along guild lines and laying
upon them the labor burdens of the state. In consideration
of this duty they received a monopoly of their respective
branches of industry. This system led to a leiturgical
organization of shipping also and consequently to an early
retrograde development. In the third century the pri-
vate marine disappeared, as did the navy at the same
time, giving piracy a chance for a new and strong develop-
ment.

For knowledge of the arrangements brought about in
antiquity by the requirement of legal forms for trade, we
are restricted to very few remains. We possess for one
thing the lex Rhodia de iactu concerning shipping hazards.
It shows that a number of merchants were generally car-
ried on a ship. If goods had to be thrown overboard in a
time of distress, the loss was borne equally by the partic-
ipants. Another institution, the sea loan (foenus nau-
ticum), which was taken over by the middle ages from
antiquity, is a consequence of the fact that trade by sea
was affected by extraordinarily high risks. If a loan was
made on goods to go overseas, neither the lender nor the
borrower reckoned upon repayment in case of loss of the
ship. The danger which both incurred was shared in such
a way that the creditor received exceptionally high in-
terest,—probably 30%—in exchange for which he bore the
entire risk, and in the ease of a partial loss his payment
was also reduced. From the court pleas of the Attic
orators, Demosthenes and others, we know that sea loans
resulted in affording to the lenders the possibility of getting
sea commerce in their power to a large extent. They
prescribed to the ship owner the course and duration of
the voyage and where he should market the goods. The
extensive dependence of the sea merchants upon the capital-
ists which finds expression in this arrangement leads us toTRANSPORTATION AND COMMERCE) 205

infer that the former were weak in capital. In order to
distribute the risk a number of lenders usually participated
in the loan upon a single ship. Furthermore, it often hap-
pened that a slave of the creditor accompanied the cargo
overseas, another indication of the dependence in which his
trade stood in relation to the money power. The sea loan
dominated the whole period of antiquity until Justinian
forbade it as usurious. This prohibition had no permanent
effect, resulting mainly in a change in the form of shipping
credit.

Conditions in the middle ages are obscure. In harmony
with pre-capitalistie institutions the shipyards belonged to
the cities and were leased to the ship building guilds. Sea
trade bore a less capitalistic character than in antiquity.
The common form under which it was carried on was that
of the association of all those interested in the same trading
enterprise. During the whole medieval period a ship
almost never went out on the account of a single individual,
because of the risk, but was always built for a number of
share holders; that is, partnership possession dominated.
On the other hand, the various partners would be concerned
in the ownership of several vessels. Like ship building
and ownership, the individual venture was usually the oc-
easion for an association. This included the ship owner,
the officers, the crew, and finally the merchants. They were
all brought together in a company and took goods with
them, although the merchants often sent a representative
or factor, an employee, instead of going themselves. The
danger was borne in common and gain or loss distributed
according to a fixed rule.

Alongside this organized community of risk existed the
sea loan of the capitalists. The latter was preferred by the
traveling merchants of the middle ages because it was
advantageous for them to buy goods by means of loans and

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206 GENERAL ECONOMIC HISTORY

shift the risk to the ereditors. According to the constituum
usus of the maritime law of Pisa, the rate of interest was
35% ; it fluctuated around this level but varied according
to a tariff of grades of risk. Originally, all the merchants
included in the risk community themselves went on the
voyage and took the goods with them; those involved were
small merchants who peddled their wares. This custom
declined gradually and in its place appeared the com-
menda, and apparently the societas maris was of contem-
porary growth. The commenda is found in Babylonian and
Arabian as well as Italian law and in a modified form in
the Hanseatic. The essence of it is that in the same or-
ganization two types of associates are included, one of
which stays in the home port while the other takes the goods
overseas. The relation originally represented only per-
sonal convenience, certain ones out of a number of mer-
chants, chosen in rotation, marketing the goods of the
others. Later it beeame an arrangement for the investment
of capital. Those who furnished the money were in part
professional traders but in part, especially in the south,
money capitalists, such as nobles who wished to employ
their surplus wealth for gain in commerce. The organiza-
tion was carried out according to the plan that to the travel-
ing socius was given money or goods estimated in money ;
this investment formed the trading capital and was called
by the technical name commenda. The goods were sold
overseas and others bought with the proceeds, which again
on the return to the home port were appraised and sold.
The mode of dividing the gain was as follows: if the socius
who remained at home furnished all the capital he received
three-fourths; if, however, the investment was provided by
him and the traveling socius jointly—generally in the ratio
of two-thirds to one-third—the sharing was by halves. The
characteristic feature of this business was that capitalisticTRANSPORTATION AND COMMERCE 207

accounting was employed for the first time; the capital at
the end of the operation was compared with that at the
beginning, and the excess determined and distributed as
gain. As to form, however, there was no permanent
capitalistic enterprise but only an individual venture, the
accounts being closed after each expedition. This arrange-
ment dominated sea trade throughout the middle ages and
after the transition to permanent capitalistic business had
taken place it remained the accounting form for the in-
dividual venture.

The turnover of medieval commerce as measured by
modern standards was extremely small. It was carried on
by mere small dealers who worked with trifling quantities.
In 1277 the English exports of wool amounted to 30,000
double ecwt. In this quantity 250 merchants shared, so
that 120 double ewt. fell to each in a single year. The
average amount of a commenda in Genoa in the 12th cen-
tury was about 250 American dollars or 50 pounds ster-
ling in silver. In the 14th century in the domain of the
Hanseatic League, it was forbidden to take up more than
one commenda and the amount was not higher than that
given above. The total trade between England and the
Hanseatic League at the time of its highest development
came to less than 4,000 dollars or 800 pounds. For Reval
the conditions can be followed in the customs registers; in
1369 there were 178 merchants concerned in 12 ships leav-
ing the port, each of whom was involved for some 400 dol-
lars on the average. In Venice the typical cargo amounted
to $1,500, in the Hanseatic League in the 14th century to
$1250. The number of ships annually entering the port
of Reval in the 15th century was 32 and for Luebeck, the
most important Hanseatic port, in 1368, it is 430—against
which are 870 departures. It was a crew of petty capital-
‘stie traders who traveled themselves or got others to travel

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208 GENERAL ECONOMIC HISTORY

—

for them, and this fact explains the organization into com-
panies.

On account of the danger from pirates, a single ship was
not in a position to determine independently its time of
sailing. Ships formed themselves into caravans and were
either convoyed by armed vessels or were themselves armed.
The average duration of the voyage of a marine caravan in
the Mediterranean varied from a half year to a year. In
Genoa only one caravan a year went to the Orient, in Venice
two. The voyage in caravans resulted in an extremely
slow turnover of the capital.

In spite of these conditions the significance of the com-
merce as a source of income must not be underestimated.
In 1368 the turnover in all the Baltic ports together
amounted to nearly $4,000,000 measured in silver—three
times as much as the king of England received as the total
revenue of the state.

In land commerce the risk was less, as the only danger
came from robbers and not from natural catastrophes in
addition; but in compensation the expenses were incom-
parably higher. Corresponding to the limited risk the
company organization was absent; likewise any land loan
analogous to the sea loan. Attempts were made to estab-
lish such an institution, but the Curia interposed against it
as a notoriously usurious business.

In land commerce also it was the rule for the merchant
to accompany his goods. Not until the 13th century were
transport conditions secure enough that the merchant was
released from regularly accompanying his goods, making
instead the victwarius responsible for them, a condition
which presupposed established business relations between
consignor and consignee. Land commerce suffered under
technical difficulties as a result of the condition of theTRANSPORTATION AND COMMERCE 209

roads. The Roman roads have been a subject of much
talk but conditions were far from ideal on these also.
Cato and Varro warned against using them on account of
the low persons who frequented them and also the vermin,
and counseled against putting up in any tavern near the
road on account of the excessive charges imposed on
travelers. In the outer provinces the Roman roads may
have served for commerce also, but they were not pri-
marily intended for this purpose and their straight line
courses had no regard for its needs. In addition, in the
Roman period, protection was given only to those roads
which were important for the provisioning of the capital
or for military and political purposes. Their upkeep was
imposed on peasants as a governmental function, on con-
sideration of exemption from taxation.

In the middle ages the feudal lords were interested in
the maintenance of commercial routes from a fiscal stand-
point. They cared for the roads through their scarari
—peasants upon whom the maintenance of roads and
bridges was imposed as one of the most oppressive burdens
which the feudal organization knows at all—and tolls were
collected in return. There was no agreement among the
lords establishing a rational layout of the roads; each lo-
eated the road in a way to make sure of recouping its cost
in duties and toll. A systematic planning of roads is first
found in Lombardy in the days of the Lombard League.

In consequence of all these facts the volume of land trade
in the middle ages was much smaller even than that of
trade by sea. As late as the 16th century the factor of a
large commercial house traveled from Augsburg to Venice
to get 16 bags of cotton. It has been computed that the
goods which went over the St. Gothard pass in one year at
the end of the middle ages would have filled only from one

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210 GENERAL ECONOMIC HISTORY

to one and a half freight trains. Considering the smallness
of the volume the profit must have been correspondingly
high to cover the duties and the costs of subsistence during
the journey. In view of the condition of the roads the du-
ration of the journey was also long. Even on land the
merchant could not choose at will the time of the trip. The
insecurity of the roads made it necessary to secure an
escort, and the latter would wait until a considerable num-
ber of travelers came together.

Thus land trade, like that by sea, was bound to a caravan
system. This is a primitive phenomenon and is found in
3abylon as well as in the middle ages. In antiquity and in
the orient there were officially designated caravan leaders.
In the middle ages these were provided by the towns. © Not
until the peaceful conditions of the 14th and 15th centuries
had established tolerable security could one begin to travel
as an individual. On the technical side this was made pos-
sible through an organization of land transport in the form
of the so-called pack train (Rottfuhr). The train system
developed out of feudal arrangements, in which again the
monasteries took the lead. The lord of the land placed
horses, pack animals, carts, ete., at the disposal of the
public for hire. The carts were provided in rotation by
the possessors of certain peasant holdings upon which this
burden was imposed. The feudal organization gradually
gave place to a professional class, but a systematized in-
dustry only developed after the towns took the business
of the trains in hand. The train workers organized them-
selves into a guild within the town, placing themselves un-
der the strict discipline of the elected ‘‘forwarder’’
(Aufgeber) who dealt with the merchants and distributed
the vehicles among the various members of the guild. Re-
sponsibility of the train leader was a principle generally
recognized.TRANSPORTATION AND COMMERCE 211

For inland shipping various forms of organization came
into existence. The use of feudal or monastie ships and
rafts often rested on the compulsion of a banalité, so that
the lords actually had a monopoly over the movement of
goods. In general, however, they were not able to exploit
it themselves but transferred it to the union (Einwng)
of transport workers. Then this union of highly special-
ized workers secured possession of the monopoly and the
lord was expropriated. In addition there arose rather
early, though in general after the development of towns,
free shipping guilds who regularly practised a system of
rotation of the work. They transported goods in their own
small vessels, the opportunities for gain being distributed
according to rigorous rule by the guild. It also happened
that the urban community took in hand the organization of
shipping. On the Iser the burghers of Mittenwald had a
monopoly of the rafting, the right to transport cargoes
rotating among them in serial order. From the agri-
cultural establishments at higher elevations heavy goods
were rafted down stream, while goods of high value were
hauled back to the higher regions. Finally, closed as-
sociations arose which took the shipping in hand, develop-
ing out of the feudal or guild organization—out of the
former, for example, on the Salzach and the Inn. Origi-
nally the archbishop of Salzburg held the shipping monop-
oly as a fief; then arose a union of the ship operators who
constituted themselves an inland merchant marine. The or-
canization owned the ships, hired the transport workers,
and took over the monopoly from the archbishop. In the
15th century he repurchased the privilege and granted it
as a fief. On the Mure also, shipping rested on an in-
dustrial association of the forest shipping men, which grew
out of the monopoly of wood and hence pertained to the
owners of forest land. The large supply of wood in the

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212 GENERAL ECONOMIC HISTORY

Black Forest resulted in the Murg shipping organization
extending its field of operations to the Rhine, and it be-
eame divided into a Forest organization and a Rhine or-
ganization. Finally, the company took up the transporta-
tion of foreign goods with a view to the freight earnings.
The Danube shipping organization in Austria and the
Upper Rhine shipping organization developed out of guilds;
thus in a way analogous to the situation of the mining com-
munity, shipping came into the hands of associations of
workers.

The requirements to which these relations gave rise
among the merchants, looked first in the direction of per-
sonal protection. Occasionally this provision took on a
sacerdotal character, the foreign merchant being placed un-
der the protection of the gods or of the chieftain. An-
other form was the conclusion of safe conduct agreements
with the political powers of the region, as in upper Italy
during the middle ages. Here later the burghers, by cap-
turing their fortified places, forced the knights who threat-
ened the trade to move into the towns and in part them-
selves took over the protection of the merchants. The fees
for conduct were at one time the leading source of income
for those living along the roads, as for example in Switzer-
land.

The second great requirement of commerce was legal
protection. The merchant was an alien and would not
have the same legal opportunities as a member of the na-
tion or tribe, and therefore required special legal arrange-
ments. One institution which served the purpose is that of
reprisal. If a debtor of Genoa or Pisa, for example, could
not or would not pay a debt in Florence or in Frankfort,
pressure was brought to bear on his compatriots. This
was unfair and in the long run intolerable, and the oldest
commercial treaties aim at preventing such reprisals. Be-TRANSPORTATION AND COMMERCE 213

ginning with this primitive rule of retaliation the need of
the merchant for legal protection gave rise to various in-
stitutions. Since the merchant as a foreigner could not
appear before the court, he had to provide a patron who
represented him; hence arose in antiquity the phenomenon
of the proxenia, which manifests a combination of hospital-
ity and representation of an interest. To it corresponds
the law of hostage in the middle ages; the foreign mer-
chant was authorized and required to place himself under
the protection of a citizen, with whom he had to store his
goods, and the host in turn was obliged to guard them on
behalf of the community.

In contrast with these arrangements it constituted a
great step in progress when with the increase in number of
the merchants a hanse was organized. This was ordinarily
a guild of foreign merchants carrying on trade in a distant
city, who organized for mutual protection. It goes with-
out saying that the organization pre-supposed a permit
from the ruler of the city. With this organization of the
merchants in a foreign country was regularly associated
the establishment of special merchant settlements, which
relieved the merchants of the necessity of immediately sell-
ing their goods. This purpose was served the world over
by the caravansaries of the land trade and factories for sea
commerce of the middle ages—the fondachi, warehouses
and sales rooms. In this connection there were two alter-
natives. First, the sales rooms might be set up by the
foreign merchants in their own interests, as was possible
when their activity made them indispensable to the place
where they settled. In this case they became autonomous,
choosing their own governor, as for example the merchants
of the German hanse in London. On the other hand, the
home merchants might set up institutions for the foreigners,
to control their access to the market and hold them in leash.

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214 GENERAL ECONOMIC HISTORY

An example is the fondaco of the German merchants in
Venice.

Finally, it became necessary to establish fixed times for
trading; the buyer and seller must be able to find one an-
other. This requirement was met by the fixed markets and
gave rise to the market concessions. Markets were every-
where established for the foreign traders by concession from
the princes,—in Egypt, India, and European antiquity,
and in the middle ages. The object of such a concession
was on the one hand the provision for the needs of the au-
thority granting the concession, and on the other the pro-
motion of fiscal aims; the prince wished to profit by the
trade in the market. As a result the regulation of trans-
port, for a consideration, was regularly associated with
the market concession, as was also the establishment of a
market court, partly in the interest of the prince who drew
from it the court fees, and partly in the interest of the
foreign traders who could not come before the regular
domestic courts. There were also regulations affecting
measures, weights and coinage and the time and method of
trading. As compensation for these services the prince
collected the market dues.

Out of this original relation between the merchants visit-
ing the market and the authority granting the concession,
evolved still other institutions. The merchants needed
large quarters for having their goods tested, weighed and
stored. An early development was a banalité involving
compulsory use of the crane belonging to the prince, im-
posed as a method of taxation. Primarily, however, the
fiscal interest was promoted by compulsory brokerage.
The merchants also had to be checked in regard to the
amount of their dealings, as payments were to be made on
the basis of these. Accordingly brokers were established,
an institution taken over by the west from the orient (svm-TRANSPORTATION AND COMMERCE 215

sarius, sensarius, hence Italian sensal). In addition to
these requirements was that of compulsory routing. Since
the prince had to guarantee the safety of the merchant
the latter must utilize the roads belonging to the prince.
Finally, there was the compulsion of the market, requiring
that, with a view to control, the trade of the foreign mer-
chants must take place publicly, in the market or the ware-
house.

(B) Tur ResSmDENT TRADER

The conditions pictured in the preceding section apply
not only to the trade of the early middle ages but also to
Arabia and the world in general, so long as the foreign
trader predominates. Totally different conditions arose
when the class of resident merchants developed.

Typically, the phenomenon of the resident trader is a
product of the development of towns, although undoubt-
edly there were resident merchants previously, in the
market settlements in the neighborhood of fortresses. The
resident merchant was technically designated mercator.
3y this term the middle ages understood a trader who had
acquired the privilege of settlement in the town, and pri-
marily a retailer, whether he sold his own products or
those of foreigners. In certain legal sources the term is
used as equivalent to merchant in modern commercial law;
a mercator is one who buys and sells, lueri causa. But this
usage, which appears especially in Rhenish documents,
eannot be taken as the common one for the middle ages.
In the population structure of the medieval towns the
mercator was not a wholesaler but rather anyone who
brought something to market, the craftsman as well as the
professional trader.

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216 GENERAL ECONOMIC HISTORY

the following way. The resident merchant is to begin
with an itinerant trader. He travels periodically in or-
der to market products at a distance or to secure products
from a distance and is a peddler who has acquired a fixed
residence. The next stage is that in which he has the trav-
eling done for him, either by an employee or servant or by
a partner; the one arrangement goes over into the other.
The third stage is formed by the system of factories. The
trader has increased in capital power to a point where he
founds independent settlements at distant points, or at
least maintains employees there, and so establishes an
interlocal system of relations. Finally, the resident trader
becomes completely fixed in his location and deals with dis-
tant regions by correspondence only. This condition did
not become possible until the late middle ages because there
was not sufficient interterritorial legal security.

The center of gravity in medieval trade lies in retailing.
Even the merchant who brought in goods from a distance,
as from the orient, centered his interest in selling directly
to the consumers. The risk was less, the gain more steady
and secure, and in general higher than would have been the
case with wholesale trade, and the business possessed in a
degree a monopolistic character. Even the Hansards were
not merchants in the present sense, but emphasized chiefly
the control of retail trade in foreign lands, seeking to ex-
clude foreign competition in retailing in Russia, Sweden,
Norway, and England. Even in the 16th century the Mer-
chant Adventurers in England, to whom Elizabeth granted
privileges, pursued this policy. Wholesalers in the proper
sense perhaps did not exist at all in the early middle ages,
and toward the end of the period only in small and slowly
increasing numbers, in the large commercial centers of
southern Europe; in the north they were still exceptional.
The resident traders as a class had to contend againstTRANSPORTATION AND COMMERCE 217

other groups.? One series of such struggles were external,
such as the struggle to maintain the monopoly of the
urban market. This was contested by the non-resident
tribal and clan trade, especially in distant commerce con-
nected with tribal industry, and the trade of non-resident
foreign trading peoples. Out of the wish to suppress such
competition grew the conflict with the Jews. In the early
middle ages no hostility to them can be found in Germany.
Even in the 11th century the bishop of Speyer invited Jews
to the town in order, as he expressed it, to increase the
glory of his city. It was in the time of the crusades that
the first wave of anti-semitism broke over Europe, under
the two-fold influence of the war between the faiths and
the competition of the Jews, although we find anti-semitic
movements even in antiquity. Tacitus condemned the Jews

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on the ground of ‘‘superstition,’’ and as a Roman despised

all oriental ‘‘extasis’’? as contemptible. This struggle
against the Jews and other foreign peoples—Caursines,
Lombards, and Syrians—is a symptom of the development
of a national commercial class.

The resident trader also contended with the merchants
settled in the country, on the land. This struggle ended
in the 15th century with the complete victory of the urban
merchants: Duke Louis the Rich of Bavaria for example,
(1450-1479), prided himself especially on having in the
interest of control forced the rural merchants in his ter-
ritory into the towns. Again, there was a struggle against
retailing by other merchants, a struggle which took various
forms. In part, the urban merchants established the re-
quirement that foreign merchants could offer their wares
for sale only on certain days. Sale direct to consumers
was forbidden to them, and likewise, in the interest of
control, all trade with each other, and finally compulsory
disposal was imposed upon them; that is, the requirement

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218 GENERAL ECONOMIC HISTORY

of selling at a given time and place whatever goods they
had brought to that place at that time, whether to con-
sumers or to local merchants.

The resident merchants succeeded in still further in-
tensifying their control over the foreigners. They imposed
the compulsion of hosting, the obligation of taking up
residence with particular citizens who should watch over
their activities (see above, page 213). Since this gave rise
to the danger of forbidden dealings between guest and host,
they devised public warehouses with compulsory occupation
of these. Frequently, though not always, the two arrange-
ments were combined, as in the case of the fondaco dei
tedeschi in Venice. Every German merchant must live in
this fondaco and store all his goods there. The fondaco
had almost no power of self-government; its officers were
imposed on the German merchants by the city, which it-
self controlled them through brokers. Compulsory broker-
age, which was one of the most effective of all these meas-
ures, prevented trading between the foreigners and local
persons. The rise of the brokerage system was due to
the monopolistic tendencies of the resident trade and to the
wish of the city to control every single transaction of the
foreigners. The broker could not transact any business of
his own or enter into any partnership relation; he was
officially dependent upon the fees which came to him in
connection with the business under his supervision.

The second great object of contention in the merchant
class was in regard to internal equality of opportunity.
One of the members protected by the group must not
have better chances than another, and this applied espe-
cially to retailing. This purpose was served by the pro-
hibition of pre-sale or ‘‘forestalling,’’ and the right of
sharing. The first of these rules prohibited dealers from
selling goods before they had been brought into the town.TRANSPORTATION AND COMMERCE 219

On the other hand, if one merchant, due to superior capital
power, had bought more goods than another, the right of
sharing became operative; it specified that any member of
the association could demand that a part of the goods in
question be given up to him on payment of their actual
cost. This provision was endurable only in the case of re
tailers; wholesale trade, insofar as it affected goods from
a distance, could not be subjected to such stipulations with-
out being prevented from developing altogether. As a
result a bitter struggle set in as the wholesale trade suc-
ceeded in winning greater freedom.

A third conflict which had to be fought out by the resi-
dent trading elass was the conflict over the field of action
as such. This related to the endeavor to exploit the op-
portunities of the town to the greatest possible extent. It
gave rise to the struggle over the staple compulsion and
restriction as to streets, that is, the right to compel all mer-
chants to use a specified street at a specified place and to
market goods at a specified point or port. This require-
ment was to begin with rather favorable for the develop-
ment of the trade; without the monopoly which it created
with reference to specific places and streets it would have
been impossible in view of the small volume of the trade,
to provide the technical requirements and meet the costs of
the necessary port and street development. But this does
not alter the fact that for those who secured the monopoly,
especially the town lords and the princes, purely fiscal con-
siderations ruled. Every territorial lord attempted by war
to gain possession of staple and street rights. The con-
flicts which arose were very violent in Germany, especially
during the 14th and 15th centuries. The staple and street
rights formed both an objective and a resource in the
struggle. If the right was once attached to a certain place
the lord in control could inflict serious damage by obstruct-

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220 GENERAL ECONOMIC HISTORY

ing and barricading the streets, and also by political means.
The history of English-French relations in the later cen-
turies of the middle ages is full of examples.

Finally, the resident merchant class was in conflict with
the consumer’s interests, and was divided internally ac-
cording as it was interested in the local market or in dis-
tant trade. The consumers wished as far as possible to
buy at first hand from the foreign traders, while the in-
terest of the great majority of the local merchants was
opposed, looking toward regulating the market from the
point of view of the retailer, while keeping open the pos-
sibility of securing supplies. In the long run it proved
impossible to secure both interests. With the recognition
of this fact began the splitting off of a wholesale trading in-
terest and an opposition of interest within the mercantile
sroup, while the interests of the retailer and the consumer
began to draw together.

The regular activities of both the foreign and the
resident merchant looked toward the consumers. In con-
trast, the first form of trade between merchant and mer-
chant is met with at the fairs. Since in the middle ages
the retailer with purely local interest predominated, the
fair developed as the most important form of interlocal
trade organization. It is characterisic, in the first place,
that the fair is visited not by local men but by traveling
merchants who come for the purpose, and second, that the
trade is concerned with goods in hand. The latter point
distinguishes it from the exchange of the present day, on
which goods not present and often not yet produced are
dealt in.

The typical fair is exemplified by those of Champagne.TRANSPORTATION AND COMMERCE 221

In the four principal cities of Champagne six fairs were
held, each of which lasted for 50 days, including the busi-
ness of arranging and opening the fair, the payment of
exchange, ete., so that with exception of holidays the year
was filled by the six fairs. They were organized from
above; there was a court of the fair, the custodes nun-
dinarum, composed of a civis and, in view of the question of
safe conduct, a miles. The fairs are first mentioned in
1174 and reached their highest development in the 13th and
14th centuries. They had police and financial power over
those who attended them and as the extreme penalty could
impose exclusion. This measure was adopted by other
powers, notably the church; not infrequently was excom-
munication threatened on political or fiseal grounds in or-
der to exclude an offender from the fair, and entire com-
munes have met this fate. Champagne derived its com-
mercial significance from the fact that it lay between the
English wool producing region and the wool manufacturing
region of Flanders on the one side, and Italy, the great im-
porter of oriental goods, on the other. Consequently,
among the goods which were dealt in, the first place was
taken by wool and wool manufactures, especially cheap
cloth. In exchange for these the south brought articles of
high value, fine tanned sheepskins, spices, alum, fine wood
for the inlaying of furniture, dies for coloring cloth, wax,
saffron, camphor, gum, lace—a mixture of the products
of southern climes and of the east. The cloth fair was the
most important of all the fairs of Champagne and had the
largest turnover. All the coinages of the world met there.
In consequence Champagne was the first home of the
money changing business and the classi -al point for the
settlement of debts, especially for the repayment of the
debts of the Church. The man of power in the worldly
sense who did not pay his debts was in fact invulnerable

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to the merchant in his ‘‘Burg.’’ Quite different the prel-
ate who must expect to be excommunicated by his spiritual
superior if he broke his word. The special credit reliabil-
ity of the high spiritual orders thus established came to
expression in the fact that a considerable portion of the
bills of exchange were drawn upon prelates and were pay-
able, on pain of excommunication, at the latest four days
before the beginning of the general settlement. The pur-
pose of this rule was to secure to the merchant hard cash
for the business of the fair; it was mitigated by the fact
that the obligation of the prelate enforceable by church
action corresponded to an inereased security of remit-
tances to him, which were similarly guaranteed by ec-
clesiastical penalties.

No other fair of the period achieved so great significance.
In Germany there was an attempt to establish a fair at
Frankfort; it did develop gradually but never achieved
the rank of the Champagne fairs or even that of Lyons.
In Eastern Europe Novgorod, later Nijni-Novgorod, was a
point of exchange between the Hanseatic merchants and
the fur traders and peasant producers of Russia. In Eng-
land,* there were numerous fair towns* but none was the
equal of the fairs of Champagne.CHAP TER: XovVrg

FORMS OF COMMERCIAL ENTERPRISE

Rational commerce is the field in which quantitative
reckoning first appeared, to become dominant finally over
the whole extent of economic life. The necessity of exact
calculation first arose wherever business was done by com-
panies. In the beginning commerce was concerned with a
turnover so slow and a profit so large that exact computa-
tion was not necessary. Goods were bought at a price
which was fixed traditionally, and the trader could confine
his efforts to getting as much as he could in sale. When
trade was carried on by groups it was necessary to pro-
ceed to exact bookkeeping in order to render an account-
ing.

The technical means of computation were crude, down
almost to the beginning of the modern period. Our sys-
tem of characters, with values depending on their position,
was an invention of the Hindus, from whom the Arabs
took it over and was perhaps brought to Europe by the
Jews. But not until the time of the crusades was it really
known generally enough to serve as a method of computa-
tion; yet without this system, rational planning was im-
possible. All peoples who used a literal system of nota-
tion like that of antiquity and of the Chinese, had to have
in addition some mechanical aid to computation. In an-
tiquity and down to the late middle ages, the counting
frame or abacus served this purpose and was still employed

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224 GENERAL ECONOMIC HISTORY

after the Arabic position digits had long been known.
For as the column system made its way into Europe it was
at first viewed as a disreputable means of securing an im-
moral advantage in competition, since it worked in favor
of the competitors of the virtuous merchant who disdained
its use. Consequently it was first sought to exclude it by
prohibitions, and even the highly developed Florentine
cloth making guilds repudiated it for a time. But the
abacus made dividing difficult, and it was ranked as an
obscure mystery; the computations which have come down
to us from the Florence of that time, which were carried
through with literal notation, are wrong to the extent of
three-fourths or four-fifths. On the grounds of this antip-
athy, the Roman numerals were still written for making
the entries in the account books after the computations
were actually carried out with Arabic figures. Down to
the 15th or 16th century, the position system of notation
struggled for official recognition.

The first books on computation usable by merchants
come from the 15th century, the older literature, going back
to the 13th, not being popular enough. Occidental book-
keeping was built up on the basis of familiarity with the
position notation; the like of it had not been seen in
the world and only foreshadowings are found in classical
antiquity. The occidental world alone became the abode
of money computation, while in the orient computation in
kind has remained the rule; (the accounting in terms of
grain certificates in Egypt will be recalled—above p. 58).

It is true that there was bookkeeping in antiquity, in
the banking business—the Greek zpazefira: and the Roman
argentarw. The entries, however, were documentary in
character; they were not designed as an instrument
of control in connection with income. Genuine bookkeeping
first arose in medieval Italy, and as late as the 16th cen-COMMERCIAL ENTERPRISE 225

tury, a German clerk traveled to Venice to secure instruc-
tion in the art.

Bookkeeping grew up on the basis of the trading com-
pany." The family is everywhere the oldest unit support-
ing a continuous trading activity, in China and Babylonia,
in India, and in the early middle ages. The son of a trad-
ing family was the confidential clerk and later the partner
of the father. So through generations one and the same
family functioned as capitalists and lenders, as did the
house of Igibi in Babylonia in the 6th century B. c. It is
true that in this ease the transactions concerned were not
extensive and complicated like those of today, but were of
a simple sort. It is characteristic that we hear nothing
more of bookkeeping either from Babylonia or Indian
trading houses, although at least in India the position
numerals were known. The reason apparently is that
there, as in general in the orient and in China, the trading
association remained a closed family affair and accountabil-
ity was therefore unnecessary. The trading association ex-
tending beyond the members of a family first became gen-
eral in the west.

The first form of group organization was occasional in
character, the commenda, already referred to. The con-
tinual participation in such ventures might gradually lead
to a permanent enterprise. This evolution in fact took
place, although with characteristic differences between
southern and northern Europe. In the south the traveling
merchant was regularly the entrepreneur, to whom the
commenda was given, because in view of his year long
absence in the orient he could not be controlled. He be-
came the entrepreneur and received commendas from
various parties, up to ten or twenty, accounting to each
commendator separately. In the north, in contrast, the
socius who remained at home was just as regularly the

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226 GENERAL ECONOMIC HISTORY

entrepreneur; he was the one who entered into relations
with numerous traveling soci whom he provided with com-
mendas. The traveling factor was regularly forbidden to
undertake more than one commenda and this brought him
into dependence upon the settled partner who thus evolved
into a managerial functionary. The reason is found in
the difference between the commerce of the south and the
north. In the south the journeys involved notably greater
risk since they led into the orient.

With the spread of the commenda organization, de-
veloped permanent industrial enterprise. First, account-
ability penetrated into the family circle due to business
connections with tractators from outside the family, since
an accounting had to be made for each separate venture
even when the particular commenda pertained to a member
of the family. In Italy this development went forward
more rapidly than in Germany, the south again taking the
lead over the north. As late as the 16th century the
Fuggers would indeed admit foreign capital into their af-
fairs, but very reluctantly. (The Welsers were more broad-
minded in this regard.) In contrast, the association of out-
siders in family business spread in Italy with increasing
rapidity. Originally there was no separation between the
household and the business. Such a separation gradually
became established on the basis of the medieval money ac-
counting while, as we have seen, it remained unknown in
India and China. In the great Florentine commercial
families such as the Medici, household expenditures and
capital transactions were entered in the books indiscrim-
inately ; closing of the accounts was carried out first with
reference to the outside commenda business while in-
ternally everything remained in the ‘‘family kettle’’ of
the household community.

The prime mover in the separation of household andCOMMERCIAL ENTERPRISE 227

business accounting, and hence in the development of the
early capitalistic institutions, was the need for credit.
The separation remained in abeyance as long as dealings
were in cash only; but as soon as transactions were
suspended over a long interval, the question of guarantee-
ing credit intruded. To provide this guaranty, various
means were used. The first was the maintenance of the
wealth of the family in all its ramifications, through main-
taining the house-community even to remote degrees of
kinship, an objective to which for example the palaces of
the great commercial families in Florence owe their origin.
Associated with this was the institution of joint responsibil-
ity of those who lived together ; every member of the house-
community was answerable for a debt of any other member.

Apparently this joint responsibility grew out of a tradi-
tional criminal lability; in the ease of high treason the
house of the guilty person was razed and his family de-
stroyed as suspect. This idea of joint responsibility no
doubt passed over into the civil law. With the permeation
of outside capital and outside persons into the family busi-
ness for the purpose of trade, it was renewed at irregular
intervals. Out of it arose the necessity for an agreed allo-
cation of the resources at the disposal of the individual for
personal use and of the power to represent the house in ex-
ternal matters. In the nature of the case, the house-father
could everywhere bind the family, but this joint responsi-
bility nowhere developed to such lengths as in occidental
commercial law. In Italy its root was in the household
community and the stages in its development are the com-
mon dwelling, the common workshop, and finally the com-
mon firm. It was otherwise in the north, where the large
family community was unknown. Here the credit require-
ment was met by having all the participants in the trading
venture sign together the document establishing the re-

Pen eer

reeraa

Set shah eel Secvn bn tapers tarda ak et ate te ea

REE NN so

ot pee ar er ee

228 GENERAL ECONOMIC HISTORY

sponsibility. Then each participant was responsible for
the group, usually without limit, though in the reverse
direction the whole was not responsible for the parts. Fi-
nally, the principle became established that each participant
was responsible for every other, even if he had not signed
the document. In England the same result was achieved
by the common seal or the power of attorney. After the
13th century in Italy, and after the 14th in the north,
joint responsibility of all the members of a company for
the debts of the firm as such was fully established.

The final stage in the development established as the
most effective means for securing credit standing, and the
method which outlived all the rest, separation of the prop-
erty of the trading company as such from the private wealth
of the associates. This separation is found at the beginning
of the 14th century in Florence and toward the end of the
same century in the north also. The step was unavoidable
since to an increasing extent persons not members of the
family belonged to the trading units; in addition it could
not be avoided within the family itself when the latter
came repeatedly to employ outside capital. Expenses for
the family on one hand and personal expenses on the other
were separated from business disbursements, a specified
money capital being allocated to the business. Out of the
property of the firm, for which we find the designation
corpo della compagma, evolved the capital concept.

In detail the development took various courses. In the
south the field of its development was the great family
commercial houses, not only in Italy but in Germany as
well, as illustrated by the Fuggers and Welsers. In the
north the course of development was through small-fam-
ilies and associations of small traders. The crucial fact
was that the center of large money dealings and political
money power lay in the south, as did also the bulk of theCOMMERCIAL ENTERPRISE 229

mineral trade and oriental commerce, while the north re-
mained the abode of small capitalism. In consequence
the forms of organization which developed in the two
regions were quite different. The type of the southern
commercial company was the commandite, in which one
partner carried on the business and was personally respon-
sible, the other participating through his investment and
sharing in the gain. This development arose from the fact
that in the south the traveling merchant holding the
commenda was the typical entrepreneur, and when he took
up a fixed abode he became the center of the permanent
enterprise which took on the form of the commenda. In
the north the relation was reversed. The sources from the
Hanseatic region at first give the impression that there was
no permanent enterprise but that the trade was split
up into purely occasional ventures and into a number of
inextricably confused individual transactions. In reality
these individual ventures were permanent enterprises and
are accounted for individually because the Italian (double
entry) bookkeeping was not introduced until later.

The forms of organization are the Sendeve and the Wed-
derleginge. Under the first the traveling partner was
given goods on commission, receiving a share in the gain;
the latter was designed to enlist his interest in the business
by ascribing to him a share in the capital of the transac-
tions from which he was excluded.Hl
iB
i
)

Sars

aoe i

ae eee

oe awe

Se ae ee a ee

a a Dl ad a ee aed

ee ee ee

Coes fae

CHVAGE TE RY xovek Tek

MERCANTILE GUILDS '

The mercantile guild is not a specifically German insti-
tution ; it is found spread over the entire world, except that
there are no unquestionable records of it in antiquity
and in any ease it did not in antiquity play a political
role. In form the guild is either an organization of for-
eign traders for the purpose of legal protection against
those of the locality, or it is an organization of native
merchants. In the latter case it develops out of tribal
industry and trade, as in China. The two forms are also
found in combination.

In the occident, for example, we find to begin with only
guilds of foreigners in particular localities; for example,
the German trading guild in London of the 14th century,
which established a storehouse called the ‘‘Steel-yard.’’
Of an interlocal character were the hanses, a designation
met with in Germany, England, and France, whose de-
velopment varied much in detail. Closely related to them
technically is the institution of the Hansgraf or count of
the hanse, found in a number of towns. The hansgraf is
an official granted a concession by the political authority,
if not constituted by it, who is responsible for the legal
protection of the merchant population engaged in inter-
local trade represented by him; he never interferes in the
form of trade itself.

Of the second type of guild, made up of resident mer-

chants with the object of monopolizing the trade of a dis-
230MERCANTILE GUILDS 231

trict, there is an example in China, in the tea traders’
guild of Shanghai. Another is the kohong guild in Can-
ton, whose 13 firms dominated the whole of external com-
merce as a monopoly down to the Peace of Nanking in
1842. The Chinese guild practised price regulation and
guaranty of debts, and held the power of taxation over
its members. Its criminal power was draconic; a breach
of regulations led to lynch justice on the part of the guild
members and even in the 19th century there were execu-
tions for violation of the set maximum number of appren-
tices. In domestic commerce, bankers’ guilds, and trad-
ing guilds existed in China, as for example the bankers’
guild in Niu-Chwang. The Chinese guilds possessed great
significance for the development of the monetary institu-
tions of the country. Debasement of coinage by the Mon-
gol emperors resulted in the disintegration of the coinage
system. The ensuing paper money regime led to the use
of silver in bars in the wholesale trade, and the guilds took
in hand their preparation. Thus the guild became the
center of monetary policy, achieving control of the determi-
nation of weights and measures, and appropriating to itself
criminal jurisdiction.

In India, the guilds appear in the time of Buddhism,
from the sixth to the fourth century B. c., and reach their
greatest development from the third century on. They
were hereditary organizations of traders with hereditary
rulers. Their highest development was reached when they
became money lenders to the various princes who were in
competition with each other, and their decay was the result
of the revival of castes which had been partly pushed into
the background by Buddhism; after the Indian middle ages
the policies of the princes again became dominant. Thus
was formed the caste of the lamani or banjari which ap-
peared in the 16th century in the pursuit of the corn and

aes

a I meres ret mena

—

aeowe

eee ee Dt ee Oe en

hi
i
i
j
4

See esd sod

ane

Ree eed

ae ee oe See

Sd RR TR

232 GENERAL ECONOMIC HISTORY

salt trade and the provisioning of the army and was per-
haps one of the roots of the present day banya or trading
easte. In India we also meet with the differentiation of
forms of trade according to various confessional sects.
The dschaina seet is restricted by ritualistic considerations
to trading at fixed points; the wholesale and distant trade
based on credit is a monopoly in the hands of the Parsees,
who are not restricted by ritualistic considerations and are
distinguished by responsibility and truthfulness. Finally,
the bhaniya caste carries on retail trade and is to be found
in every connection where gain which is off-color from an
ethical standpoint is to be made. Thus its members en-
gage in tax farming, official money lending, etc.

In contrast with China, the regulation of the coinage,
weights, and measures has in the west remained in the pos-
session of the political authority, which either itself exer-
cised the power or turned it over to the political agencies,
but has never granted it to guilds. The great power of the
guilds in this part of the world rests entirely on political
privileges. The forms of guilds are various. First to be
noticed is the city guild. This is a group which dominates
the city and controls especially in the economic interests
of industrial and trading policy. It is met with in a two-
fold form. Hither it is a military union, such as the
compania communis in Venice and Genoa, or it may be a
separate union of the traders within the town (merca-
danza), growing up with the craft guild. The second main
type is the guild as a taxation unit, which is a specifically
English institution. The English guilds derive their power
from the fact that they took over from the king the func-
tion of collecting taxes (firma burgi). Only those who
paid taxes were members and one who paid none was
excluded and possessed no right to trade. The EnglishMERCANTILE GUILDS 233

guild owed to this fact its control over citizenship in the
clty.

In detail the evolution of the occidental guilds was
highly various. The English guild merchant reached the
peak of development of its power in the 13th century, after
which began a series of internal economic revolutions.
In the 14th century followed its separation from craft
work; one who wished to remain in the guild must renounce
craft activity. Immediately, however, the trading mem-
bers began to come to the fore in the craft guilds and sep-
arated out as “‘lvery companies,’’ that is as members in
full standing, being raised above the poorer craft workers
by the cost of the livery or regalia, which the latter were
unable to meet.

The separation of the wholesale traders from the retail
was not yet complete in the 16th century, although at
that time the first guild of foreign traders, the Merchant
Adventurers, was founded by a concession. It is true that
English legislation endeavored to restrict the guilds along
eraft lines, permitting their members to trade only in one
type of goods. On the other hand, the power of a strong
state always stood over the guilds in England, although
their interests were also represented in Parliament. In
consequence the cities never had the power over the coun-
try which they obtained in Germany, and rural traders and
land holders were always admitted to the guilds.

In Italy the development went forward within the in-
dividual city states. The guilds kept their purely local
character; after the separation-leagues (Sonderbund) ob-
tained the victory over the consular constitution, there
began a struggle within the guilds, between the craft guilds
and trading guilds. In Germany we find at first traces of a
development similar to that in Italy. A symptom is the

na mr i
ae epee
cease Pe re en ren

PSE.cen

rem

eS ee

Baas ee oo Le

ON SLATE PLT

a nD

On
SS SE AE RSE TAS mae ee a ARR

aR al ao EEANNCT UNDECLARED

234 GENERAL ECONOMIC HISTORY

appearance of the burgomaster, who to begin with was an
illegitimate guild master and whose position suggests that
of the Italian capitano del popolo. In addition we find
in many cities of north Germany a development resembling
the English, a guild merchant determining the economic
policy of the city. In a number of old rich cities of middle
Germany we find, on the other hand, a guild which manages
the city unofficially, as in Cologne the ‘‘ Richerzeche,’’ the
guild of the rich merchants which financed the revolution
against the archbishops, binding the citizens together un-
der oath against the town lords and thenceforward ruling
permanently in the city and controlling admission to citi-
zenship. The rule in Germany, however, is the presence of
trading guilds, among which the shop keepers and mer-
chant tailors stand out. The shop keepers correspond to
the retailers of today. The merchant tailors, who cut up
imported cloth and sold it to consumers, became dominant
in the smaller towns in the north; they always had to con-
test the market with the weavers, but generally obtained
the victory, while in the large towns the patrician families
stood over them in rank and dignity.

One cannot speak of a systematic trading policy on the
part of the towns dominated by guilds, and especially of the
town leagues, in the middle ages. The towns carried on
no trade on their own account; this did not begin until
the 16th century. The policy of the German Hanse may
stand as an exception. It alone consciously pursued a
consistent commercial policy, which shows the following
characteristics.

1. Only the citizens of the Hanse had a right to share
in the commercial privileges which the Hanse secured.
2. It aimed at direct retail trade in foreign countries
and abstained from the forwarding or commission business,
a policy on the basis of which it went to pieces as soon asMERCANTILE GUILDS 235

a local commercial class arose in England, Scandinavia,
and Russia. 3. The Hansards made use in trade of their
own ships only ; they could not lease those of outsiders nor
sell Hanse ships or shares in them to outsiders.2 4. The
Hansards carried on trade in merchandise only, entering
into neither money transmission nor the banking business
as did the Florentines. 5. The Hanse everywhere secured
concessions for settlements and warehouses in order to
keep its own members under control. All its business activ-
ities were subjected to strict regulation; weights and meas-
ures were prescribed; no credit business could be trans-
acted with outsiders, the object being to prevent outside
capital from becoming influential in the organization; even
marriage with non-members was prohibited. 6. The Hanse
made the first effort toward standardization, carrying on
trade in fixed types of goods—wax, salt, metals, fabrics.

7. On the negative side, the Hanse had no customs pol-
icy; at most it collected duties for war purposes. Its in-
ternal policy was directed toward the dominance of a mar-
ket aristocracy, and especially in the sense of suppressing
the craft guilds. In the aggregate these measures repre-
sent a policy organized in the interest of a resident foreign
trading class.

he
if
t

ST Aen
a ee

SeSer Len

eae

PNRM NA Rn ere ea a et od

Bea aisle teehee ck Sen ee ta eke et tere ae nen et ee ee eee _— me ae —

CHA PU ER xi
MONEY AND MONETARY HISTORY ?

From the evolutionary standpoint, money is the father
of private property; it possesses this character from the
beginning, and conversely, there is no object with the
character of money which does not have that of individual
ownership. The oldest private property consists in ob-
jects of individual handiwork, the tools and weapons of the
man, and articles of adornment of both men and women.
They are subject to a special law of inheritance from per-
son to person, and in the field of such objects the origin of
money is primarily to be sought.

Today, money has two special functions, serving as a
prescribed means of payment and a general medium of
exchange. Historically, the function of a prescribed means
of payment is the older of the two. Im this stage money
does not enter into exchange, a characteristic made possible
by the fact that many transfers of value take place from
one economic unit to another which do not involve ex-
change but yet require a means of payment. Such are
tribal gifts between chieftains, the bride price, dowries,
head money, damage payments, and fines—payments which
must be made in a standard medium. On a secondary level
there become included payments from the chieftain to his
followers, in contrast with those from subject to chieftain
—that is the wage which the lord gives to his vassals in the
form of a gift—and still later payments of generals to their
soldiers. Even in a city like Carthage, and exclusively in
236MONEY AND MONETARY HISTORY 237

the Persian Empire, the coinage of money appears only
for the purpose of providing a means for making military
payments, not as a medium of exchange.

In this stage of development, money in the unitary sense
of today is not to be thought of; rather in each economic
zone different sorts of services rendered correspond to speci-
fic sorts of goods which mediate the payment function, so
that different species of money exist side by side. For ex-
ample, never and nowhere could a man buy a wife for
shells, but only for cattle, while in small transactions the
shells were accepted because they were available in small
denominations. Money which develops in this way in con-
nection with intra-group payments we call internal money.

A further function, which is less characteristic of money
today but which it has performed through long periods
of history, is that of a medium for accumulating treasure.
The chieftain who wished to maintain himself in his posi-
tion must be prepared to support his followers and to com-
pensate them by gifts on special occasions. Hence the
extraordinary value which was placed on the thesaurus
such as was possessed by every Indian rajah and every
Merovingian king. The Nibelungen hoard is nothing else
than such a thesaurus. As means of accumulation, various
typical objects were employed, such things as the prince
was accustomed to give as presents to his followers and
which at the same time constituted objects valued for
the purpose of making payments. Here again money was
not a means of exchange but merely an object of class
possession; one who possessed it kept it only on grounds
of prestige and for nourishing his social self-esteem. In
this function money required one of the most important
characteristics which is demanded of it today, namely,
that of durability, in contrast with that of portability.
Elephant tusks and huge stones of a certain quality, and

a Fa te aL

EE ENE

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ia na al

A ts a Ns eee ey Ty eS

as)

oa =

~—

a ——
NS Se EE NATE CS a

Nrlowashenebatene he io alan k oa cae te ee ares

238 GENERAL ECONOMIC HISTORY

later gold, silver, copper, and metals of all kinds, serve as
money and as a medium for accumulation. This class
character money finds expression in two facts. The first
is that in the primitive stage of development it is differ-
entiated according to the sexes, the woman not daring to
possess the same type of money goods as the man; thus
the possession of certain aragonite stones was reserved to
men while pearl shells were women’s money only and were
used for the morning-gift of the husband to the bride.
In addition, class differentiation involved distinguishing
chieftain money from that of the subjects; shells of a
certain size could only be acquired and possessed by the
chieftain and were paid out by him only in case of war or
as presents.

The function of money as a general medium of exchange
originated in foreign trade. Its source is in some cases
a regular commerce by gifts outside the group, such as
that revealed for Egypt and the ancient east in the Tell-
el-Amarna tablets.

A state of peace between two peoples presupposed con-
tinual gifts between their rulers; this is really a quasi-
commercial exchange between the chieftains, out of which
chieftain trade as such develops. To omit the gifts means
war. A second source is a foreign product of wide spread
use. The typical clan and tribal trade imparts to certain
objects, not obtainable locally and therefore highly prized,
the function of a medium of exchange. This external
money took over the internal function where quasi-
commercial payments were to be made, such as duties or
road tolls. The chieftain provided the safe conduct but
had to permit the merchants to pay with the medium
which they carried with them. In this way the external
money made its way into the internal economy.

At this stage of development money appears in nu-MONEY AND MONETARY HISTORY 239

merous forms: 1. As objects of personal adornment. The
type is the cowry shell in Africa and the regions of the
Indian Ocean, extending into the interior of Asia. In
addition there has been a great quantity of objects serving
as means of payment or exchange in circles of vary-
ing extent—beads, amber, coral, elephant tusks, and cer-
tain kinds of sealps. Regularly and primarily decorative
money was internal money; it became a general me-
dium of exchange where the same means of payment was
used in different tribes. 2. Utility money. This was
primarily external money. As a means for carrying out
obligatory payments or evaluating other goods, various
objects of general use are met with; for example, grain,
aS in Java, also cattle and slaves. It is not generally,
however, such articles of common use but rather means of
enjoyment such as tobacco, brandy, salt, iron tools, and
weapons. 3. Clothing money. This primarily performed
the functions of internal as well as external money. As
clothing money we meet with furs, skins, and fabrics, which
are not produced in the locality. 4. Token money. Un-
der conditions which have not the least relation to modern
monetary conditions it happens that after people have
become accustomed to certain objects on social grounds
or accustomed to making certain payments in them, the
monetary function becomes attached to them as mere sym-
bols which have no value or significance in themselves.
Thus in interior British India Chinese game counters are
found as money. In Russia there has been fur money,
consisting of bits of fur with no use value, and similarly
in southern regions the use of quantities of cotton as money
developed into the preparation of strips in a form which
excluded real value but adapted them for service as
token money.

Since in this stage not one means of payment alone buteet
eo

Pree a oed

came

RR OR Be Pa ea kee ik ty TS hs a te os

hein ee re ee a ae en ee nee tonnes - ~—s

eng feo ts

i
i
Ht

_—

ims

soa
om

240 GENERAL ECONOMIC HISTORY

many circulate side by side, some scale of relative values
is necessary. They are generally brought together in a
scale, not in the sense that a unit of one is made equivalent
to so many units of another but that several objects to-
gether form a value unit. Thus in Java the value unit con-
sists of a certain very valuable stone and 20 pearl shells.
Of the Missouri River Indians it is reported that the pur-
chase price for a wife consisted of two knives, a pair of
trousers, a blanket, a flint-lock, a horse, and a leather tepee.
The meaning is that a woman is of equal value with a com-
plete equipment for an Indian warrior and is sold by
her tribe for this amount. It follows that the basis of
such value scales is not merely economic qualities but the
customary worth of the goods, their traditionally imposed
social significance, and also the requirement for round
numbers easily handled. In this connection again the deci-
mal figures play a special role. Thus there are tribes in
which ten cocoanuts equal in value a certain quantity
of tobacco, 300 dolphin teeth correspond to a woman, etc.
Head money and expiatory payments also, and other
considerations expressed in money, have no relation to
economic values but to social valuation exclusively. The
head money (wergeld) of a free Frank amounted to 200
solidi. This amount was fixed because it had to be brought
into a certain relation with the head money for a half-
free or servile person. Only traditionally imposed evalua-
tions find expression in these principles. As soon as eco-
nomic exchange relations make headway, as was already
the case in the early middle ages, head money is no longer
determined in terms of a claim for restitution of damage
but it becomes a typical phenomenon that a larger amount
is insisted upon. Evaluation in terms of a given monetary
good by no means always implies payment in the same
good, but may be only a standard in which the paymentMONEY AND MONETARY HISTORY 241

of the individual is measured. The latter may depend
upon the capacity to pay of the dispenser—‘‘in quo potu-
ertt’’—not according to a tariff but signifying rather a tra-
ditionally fixed consideration for restitution.

Out of the conditions just described evolved the distine-
tive position of the ‘“noble’’ metals as a nominal basis of
monetary organization. The determining conditions of
this evolution are purely technical. The precious metals
oxidize ‘with difficulty and hence are not easily destroyed,
while in consequence of their relative scarcity they have a
high value for the specific use of objects of adornment;
finally, they are relatively easy to shape and to subdivide.
The decisive fact was that the scales could be applied to
them, and were applied at a very early date. The grain of

6 &

wheat seems to have served as the earliest comparative
weight. It goes without saying that the precious metals
have also been employed in the form of objects of utility,
but were specialized as a means of payment even long be-
fore they became media of exchange. In the former case
they appear first in the chieftain trade; the tablets of Tell-
el-Amarna show that the western Asiatic rulers expected
from the Pharaohs more than anything else shipments of
decorative gold. A preferred form for the gift of the
prince to his followers was the gold ring; in the skaldic
language the king is specifically called the ring spender.

In the form of coinage, money first appears in the 7th
century before Christ. The oldest mints were located in
Lydia, probably on the coast, and arose out of the co-
operation of the Lydian king and the Greek colonists. A
forerunner of coined money was precious metal in bars
privately stamped by merchants, which appear in Indian
commerce and later in Babylonia and in China. The
shekel is nothing but a piece of silver with the stamp of
a certain mercantile family, which was recognized for

Li ~4

7
—

ETT

See eR erectaares

Se et a een

a a

et A et

ee ne

FSA eT ~ oe

Se ret oe aed

en)

242 GENERAL ECONOMIC HISTORY

econscientiousness in weighing. The Chinese tael is sim-
ilarly a piece of bar silver stamped by the mercantile
guilds. Not until later did the political power take over
the coinage, and shortly afterwards assume a monopoly of
the activity. The last seems however to have been the case
in Lydia. The Great King of Persia stamped the daries
as a means for paying his Greek mercenaries.

The Greeks introduced coins into commerce as a medium
of exchange. On the other hand, Carthage did not attempt
coinage until three centuries after its invention, and even
then the purpose was not to secure a medium of exchange
but merely a means for paying its mercenary armies. In
general the Phenician commerce was carried on entirely
without money, and it was especially the technical advan-
tage of coins which helped to establish the superiority of
Greek trading activity. Even Rome, which earried on an
export trade in primitive times, went over to coinage very
late and to begin with only to the coinage of copper. It
tolerated the stamping of precious metal in Capua, while
in Rome itself the most diverse sorts of coins circulated
until 269 B. c. when the coinage of silver was taken up. In
India coinage is first met with between 500 and 400 B.c.
and was in fact taken over from the west; really usable coins
in the technical sense are first found after the Alexandrian
period. In eastern Asia the conditions are obscure; per-
haps an independent origin of coinage is to be assumed.
Today, it is limited to the coinage of copper, in consequence
of the persistent debasement by the mandarins.

The technology of manufacturing coins had little in com-
mon with that of today before the 17th century. In an-
tiquity the coins were cast, in the middle ages ‘‘struck,”’
that is stamped, but until the 13th century it was purely
a handicraft operation. The coin had to pass through the
hands of not less than ten to twelve different craftsmen whoMONEY AND MONETARY HISTORY 243

worked with hand tools only. The costs of the process
were extremely high, amounting to a fourth of the value
for the small coins and was still as much as 10 per cent
in the 14th and 15th centuries, while today it may be
placed at 10 per thousand. In consequence of the primi-
tive technique the accuracy even of the best coins varied;
even with the English gold crown, in spite of relative per-
fection of the process, the variation was still 10%. Com-
merce reacted to these errors by accepting the coins where
possible only by weight. For fineness the stamp was a
fairly secure guaranty. The first relatively exact coins
which were also maintained constant were the famous Flor-
entine gold gulden, after 1252. A really reliable coinage
in the technical sense dates, however, only from the end of
the 17th century, although the use of machinery in coining
occurs somewhat earlier.

3y a metallic standard we today understand in the first
place the enforcement of certain coinage as a means of
payments, either in all amounts (standard money) or up
to a certain maximum amount (subsidiary coins) ; in the
second place, connected with this is the principle of free
coinage of the standard money which with the deduction
of minimal costs of manufacture anyone at any time has
the right to have made and with it to make payments to
an unlimited extent. The standard may be mono-metallic
or bi-metallic. In the latter case the only conception which
seems possible to us is the so-called double standard, that
is the several metals are set by law in a fixed relation to
each other, as for example in the Latin Monetary Union
gold stands to silver in the ratio of 1 to 154%. The second
possibility, which was much more prevalent earlier, is that
of parallel standards. Under this rule there was either
actual unrestricted coinage of the metals, with in general
no scheduled value relation or only a periodical adjust-pete

Sao

—

Oe ee ee

eee eee

Sn na ee ee

Sern

ey
b
ui
A
ae
i

rae

ae ee

0 ota ope ea ae oe DT Sek eee

244 GENERAL ECONOMIC HISTORY

ment of a varying value relation. In the choice of the
metal for coinage the matter of the needs of trade were de-
cisive. Internal and local trade could use only a metal
with a value not too high, and here we find silver or cop-
per or both. Distant commerce could and from necessity
did for a time get along with silver, but after the commerce
grew in importance it preferred gold. For the actual cir-
culation of gold, however, the legal relation to silver was
decisive; whenever one of the metals was given an un-
favorable valuation in comparison with the available sup-
ply, the consequence was that the coins stamped from that
metal would be melted up and used in commerce in this
condition.

The history of the value relation between the different
metals shows a sharp contrast as between eastern Asia on
the one hand and the western Asiatic and European con-
ditions on the other. Because the eastern Asiatic coun-
tries were cut off from the outer world an abnormal rela-
tion arose and it was possible to maintain a relative valu-
ation which never existed in the west. Thus in Japan for
a time gold was valued only 5 times as high as silver. In
contrast, the continuity was never completely broken in
the west. In Babylon values were reckoned in terms of
silver, which however was not coined by state agencies,
but circulated in the form of privately stamped silver bars
or shekels. The value of silver in comparison with gold
was set at 1314 to 1 and this relation remained the standard
for antiquity. The Egyptians took over the Babylonian
silver bars in the form of deben but reckoned in terms of
copper, silver, and finally gold, side by side, large amounts
being paid in gold.

For later antiquity and the time down to the Merovin-
gians, the monetary policy of Rome was definitive. Here
originally parallel standards of copper and silver prevailedMONEY AND MONETARY HISTORY 245

and the effort was made to fix the ratio at 112 to 1. The
important measure was the manufacture of the silver
sestertium equal to a pound of metal. Gold was coined
merely as a commercial coin while copper progressively de-
clined to the level of credit money for small transactions
and came finally to have the character of token money.
Coinage was in fact predominantly in the hands of military
generals whose names the gold and silver coins almost al-
ways bore, even in the republican period; they were
preferred as payment for spoils of war, and served the
purposes not of commerce but of paying the army.

When Cesar took over the imperial power the first real
regulation of standards was instituted, Cesar going over to
the gold standard. His aureus was intended to be equal
to a hundred silver sestercis on the basis of a ratio of 11.9
to 1. Hence silver had somewhat increased in value, a
sign of the fact that trade experienced an increasing need
for it. The aureus maintained itself down to the time
of Constantine, while silver was variously experimented
with. Nero decreed the denarws, increasing the prestige
of the aureus. Caracalla pursued the debasement of coin-
age systematically as a business, and his successors, the
barrack emperors, followed in his path. This coinage pol-
icy, and not the alleged outflow of the precious metals to
India or a failure of mining, ruined the Roman monetary
organization. It was restored by Constantine the Great.
He replaced the aureus with the gold solidus of which he
coined 72 from a pound (327.45g.) of metal. In commerce
the solidus probably passed by weight.

The gold solidus outlived the Roman empire. In the
Merovingian period, it possessed the highest prestige in
Germany within the area of the former Roman economic
penetration, while to the east of the Rhine the older Roman

silver coins circulated in a way somewhat similar to the

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246 GENERAL ECONOMIC HISTORY

Maria Theresa dollar later in Africa. The change to the
Carolingian rulers meant politically a shifting of the
eenter of gravity from the western to the eastern portion
of the Frankish empire; but in coinage policy, although
much gold was imported into the empire from the east,
it meant a change from a gold to a silver standard. Char-
lemagne after many measures not clear as to their import,
established a unit pound of 409 grams—though this as-
sumption is not undisputed,—and out of this pound coined
20 silver solidi of 12 denarii each. Officially, the Carolin-
gian coinage system, the last survival of which is the
English units of pounds sterling, shillings, and pence, re-
mained in force to the end of the middle ages and with it,
over by far the greater part of the continent, the silver
standard.

The central problem for the coinage policy of the middle
ages, however, was not that of the standard, but was raised
by questions of an economic and social character which
affected the production of coins. Antiquity took seriously
the coinage monopoly of the state. In the middle ages on
the contrary, the rule was appropriation of the coinage
function by numerous territorial coinage jurisdictions and
their proprietors. As a result, after around the middle
of the 11th century, the Carolingian coinage system every-
where had only a common-law significance. The coinage
right, it is true, remained officially reserved to the king, or
emperor; but the manufacture of coins was carried out by
an association of handicraft producers and the revenue
from the coinage business fell to the individual coinage
lord. Infeudation of the coinage right to individual coin-
age lords involved an incentive to debasement which was
practised on a wide scale throughout the middle ages. In
Germany the solidus sank from the 13th to the 16th cen-
tury to a sixth of its original content ; likewise in EnglandMONEY AND MONETARY HISTORY 247

the denarius from the 12th to the 14th century; in France,
was originated the solidus grossus, a thick coin stamped on
both sides, which competed intensively with the thin de-
narius coined in Germany in the 12th and 13th centuries
and stamped on only one side (Brakteaten) ; but the new
coin sank from the 14th to the 16th century to a seventh of
its value.

The coinage debasement which affected silver led to the
result that in commerce, which has to compute in stable
units, the prestige of gold was increased. In consequence
it was an epoch-making event when in 1252 the city of
Florence minted a gold solidus of 314 grams weight (flor-
enus, florin) and maintained it at a weight as nearly uni-
form as was technically possible. Everywhere the new
colnage was accepted, and it became the general monetary
unit of commerce. Nevertheless we observe a pronounced
increase in the price of silver, which can only have been
caused by the urgent demand of the growing money econ-
omy for silver for use in trade. Toward 1500 the ratio
between silver and gold increased from 121% to 1 to 101%
to 1. At the same time there was an irrational fluctua-
tion of the currencies in relation to each other and a differ-
‘pagament’’ or metal in the

‘

ence between bullion and
form of coin. While in wholesale trade men computed in
terms of bars or Florentine gold gulden, in retail transac-
tions the various coins were evaluated by agreement.

It was not only the greed of the coinage lords which
was responsible for the debasement; it was due largely to
the automatic working of the variation between specimens
of the same coinage, which amounted to as much as 10%.
Only the worst of the coins struck would remain in cir-
enlation, while the best made would be melted up at once,
or in any case sorted out. It is true that the greed of the
monetary lords contributed; they employed their monopoly

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248 GENERAL ECONOMIC HISTORY

to put out new coins, cancelling and calling in the old.
But the latter were to a large extent in circulation outside
their home district. The monopoly which a coinage lord
officially claimed, he never could fully put into effect in his
territory ; a change could only be brought about through an
agreement between several princes. Thus, aside from the
coinage and good faith of the Florentines, the middle ages
remained a period of coinage irrationality. Precisely be-
eause of this irrational condition in the production of
coins, unrestricted coinage went without saying; since the
coinage lord by increasing the mintage could secure an
advantage from his business he strove to secure all the
precious metal for his own mint. The possessors of
precious metal were subjected to pressure in this connec-
tion; prohibitions on export were of common occurrence,
especially in districts containing mines, and miners and
shareholders in the mines of precious metals seemingly
had no choice as to whether they should bring the metal
to the mint of the coinage lord or not. Yet all these meas-
ures remained without effect. Not only was an enormous
amount of smuggling carried on, but the coinage lord had
to arrange by agreement to concede a supply of metal to
the mints of other lords who possessed no mines, and this
metal constantly returned to his district in the form of
foreign coins. An irrational trade in coins persisted
throughout the middle ages; the demand for the various
sorts of coins could not be determined and the extreme
fluctuations in the seigniorage operated to prevent adjust-
ment of supply to demand; only the competition among
the coinage lords caused them to renounce seigniorage.
After the 16th century the increased inflow of precious
metal to Europe provided the economic basis for the estab-
lishment of more stable relations in the field of coinage, andMONEY AND MONETARY HISTORY 249

at least in western Europe the absolute states had already
cleared out the multiplicity of coinage lords with their
competition among themselves. Down to the date men-
tioned Europe had been a region of permanent exporta-
tion of the precious metals; only the period of the crusades,
lasting for about 150 years, with their spoils in gold, and
also the produce of the plantations, had formed an inter-
ruption to this condition. At this time the discovery of
the sea route to the East Indies by Vasco de Gama and
Albuquerque broke the monopoly of the Arabs over the
transit trade. The exploitation of the Mexican and Peru-
vian silver mines brought great quantities of American
metal to Europe, while the discovery of an effective process
for extracting silver, by amalgamation with mercury, con-
tributed to the result. The quantity of precious metal ob-
tained from Mexico and South America has been estimated
for the period from 1493 to 1800 at nearly 214 million
kilograms of gold and 90 to 100 million kilograms of
silver.”

The increase in the production of the metal meant im-
mediately a sharp increase in the supply of coined silver.
The silver standard permeated to the farthest confines of
trade in Europe and reached its expression in the money of
account. In Germany, the Florentine gold gulden was
even brought out in silver (the Joachimstaler). This con-
dition obtained until the Brazilian deposits of gold were
opened up. Although exploitation of these lasted only for
a short time—from the beginning to the middle of the
18th century—it dominated the market and resulted in
the change of England to the gold standard, against the
will of the English law makers and the advice especially
of Isaac Newton. After the middle of the 18th century,
silver production again came to the fore and influenced

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250 GENERAL ECONOMIC HISTORY

the French legislature at the time of the revolution, calling
into being the French double standard.

But the rationalization of coinage could not at once be
earried out. The condition which obtained before it was
completed may be described by saying that innumerable
kinds of coins were in eirculation, yet no money, in the
present day sense of the word. Even the imperial coinage
edict of Ferdinand I in 1859 was forced to recognize
thirty types of foreign coin. The extraordinary range of
variation in the content of the same type of coin, due to
the imperfection of the technique of manufacturing, espe-
cially in the case of the smaller coins, in connection with
the great volume of the mintage, led to a restriction in
Germany in the 16th century of the legal tender power of
the silver coins, but without the transformation of these
into subsidiary coins; the definite rational establishment of
subsidiary coinage was reserved for English monetary pol-
iey to introduce. The official monetary unit was the gold
gulden coined in silver, the Joachimstaler, but in fact
the following development took place in the commercial
field.

After the 13th and 14th centuries, commerce emanci-
pated itself from coinage and reckoned in bullion, accept-
ing coins only by weight, specifying payment in a certain
type of coin, which had to be recognized as customary by
the empire. Finally, it went over to deposit banking. The
prototype of the latter was provided by China. Here the
debasement of the coins had led to the establishment of
metallic deposit banks for the commerce of the merchants.
With the fixation of a weight unit the silver payments were
made either by checks or instruments similar to checks,
drawn on a bank in which the individual merchant kept
his deposit of bar silver, or else by means of silver in
stamped bars—taels—which, however, played no consider-MONEY AND MONETARY HISTORY 251

able role in comparison with the payment by checks. Thus
was created a bank money based on the possession of bul-
lion by the merchants concerned and which was the ex-
clusive means of payment for the persons connected with

the deposit system.

[mitations of this prototype are found in the west as
early as the 16th century: in Venice the Rialto bank; in
Amsterdam, the Wisselbank, 1609; in Nuremburg in 1621;

in Hamburg in 1629.

These banks reckoned by weight and
only coined pieces were accepted in payment. The indi-
vidual aecount was usually subject to a minimum, as were

the payments; thus in Amsterdam the minimum size of the
draft or order were 300 gulden. On the other hand, no
payment above 600 gulden could be made in any other way
than through the medium of the bank. In Hamburg this
bank standard persisted down to 1873.

Modern monetary policy is distinguished from that of

the past by the absence of the fiscal motif; only general

economie interests resting on the need of commerce for

a stable basis of capital computation determine its char

acter. In this connection England took the lead of all

other countries.

Originally, silver was in England the effective means of

payment for all internal
trade was based on a gold money of account. After the

commerce while international

Brazilian discoveries, increasing amounts of gold flowed to

England and the English government was subject to in-

ereasint embarrassment

by the parallel system. After

gold became cheap it flowed to the mints and at the same

time the silver circulation was endangered by the melting

up of the silver coins.

As all loans had to be repaid in

silver, capitalistic enterprise was interested in preventing

the outflow of the

silver.

tempted to maintain the parallel coinage by arbitrary

At first the government at-

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252 GENERAL ECONOMIC HISTORY

measures, until in 1717 it decided to carry out a new de-
finitive valuation.

Under the guidance of Isaac Newton the typical English
gold coin, the guinea, was fixed in value at 21 shillings
even though gold was still over-valued. When in the
course of the 18th century gold continued to flow in, silver
flowed out and the government proceeded to radical pre-
ventive measures. Gold was made the standard metal and
all silver degraded to the position of subsidiary coin. It
lost its unlimited legal tender and was alloyed and coined
at more than its bullion value so that the danger of its
leaving the country was removed.

After much experimenting, the French government
finally adopted during the revolution a double standard,
the basis of which was silver; 1000 franes were coined from
9 pounds of silver (222% to the kilogram) and the ratio
of silver to gold was fixed at the current relative value of
15144 to 1. The extraordinary domestic demand for coin
in France, which was stronger than that of England, led
in fact to a stabilization in the value relation between gold
and silver over a long period.

In Germany, the silver system had to be left intact dur-
ing the 19th century, the first part of which shows a period
of decreasing metal production. There was no central au-
thority in a position to effect a transition of gold. Gold
was however minted as a commercial coin with a legalized
value, especially in Prussia; but the attempt to give gold a
different position in the monetary standard was unsuccess-
ful. The war indemnity of 1871 first enabled Germany to
go over to the gold standard, a step which was facilitated
by the sharp increase in the world’s stock of gold which
followed the Californian discoveries, while on the other
hand the value ratio of 1514 to 1 was gradually destroyed.MONEY AND MONETARY HISTORY 253

These conditions determined the creation of the Ger-
man Reichsmark equal to one-third Taler; since 30 Taler
equalled a pound of silver, the ratio of 1514 to 1 made the
pound of gold equal to 1395 marks.

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CHAPTER xox

BANKING AND DEALINGS IN MONEY
IN THE PRE-CAPITALISTIC AGE

Prior to the period of capitalism the activity of a bank
consisted primarily, wherever a plurality of kinds of money
were in circulation, in the business of exchanging money.
To this was added the necessity of a money disbursing
business, especially that of making payments at a distance.
In antiquity as a whole, and especially in Greece, we find
as the typical banking transaction the assumption of ob-
ligations to make payments and the issue of letters of
credit to travelers as a means of making payments at a
distance, and in addition, not indeed exchange operations
in the modern sense, but the creation of means of payment
which suggest the check of the present day. Furthermore,
the function of providing for the safekeeping of money, or
deposit business, belongs to the very oldest of banking
operations. It was so in Egypt, where the bankers were to
a large extent administrators of property, and also in Rome.
Where there was no coinage of any kind, as in Babylonia,
and also in China and India, the business of money chang-
ing was absent. In its place the bankers were the agencies
which stamped the silver bars which circulated as money,
as in the case of the tael, and hence carried on the business
of providing money.

Thus in the pre-capitalistic age the banks transacted a
deposit business with transfer or assignment of credits for
254BANKING IN PRE-CAPITALISTIC AGE 255

the elimination of cash payments. The arrangement pre-
supposed that the depositor-customer permanently main-
tained a deposit in the bank in question; correspondingly
we find bank ‘‘notes’’ even in Babylon. Yet one must not
think in this connection of bank notes in our sense, for the
modern bank note circulates independently of any deposit
by a particular individual. In contrast, the Babylonian
bank notes or tickets were merely a means for the more
rapid and secure transmission of payments between
depositor-customers. The extent of this more ancient de-
posit business is unknown; in any case one must guard
against thinking of conditions in terms too modern. The
relations were generally restricted to strictly local transac-
tions and to those taking place between merchants; conse-
quently the bank tickets were not a medium for general
circulation.

Peculiar to Babylon was the development out of the de-
posit business of the role of the banker as a lender of
eredit. The professional banker made loans on a small
scale against pledges or personal security. The credit
function of the Babylonian banker was based on the ab-
sence of coinage. Payments were reckoned in silver
shekels, but these were not used for payment, so that the
banker was necessary as an intermediary; and in this con-
nection he arranged for postponement, since he was also
often in a position to provide the means for payment in
eash, and afforded certainty to the seller by substituting
himself for the future payer. Another peculiarity in
Babylonia was that the banker regularly furnished com-
menda credit, that is, capital for enterprise ; a large number
of commenda contracts have come down to us in cuneiform
writing, while we have no other example of such credit
business in the ancient world. The reason is that where
coined money was in use the banking business developed

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256 GENERAL ECONOMIC HISTORY

out of coinage, but in Babylon it developed out of money,
that is to say, credit, dealings.

In Rome, the occupation of the banker exhibits two
special features. The first, which is of no particular con-
cern to economic history, is that the banker was the pro-
fessional auctioneer. In the second place, we find here for
the first time the transaction of an account-current deposit
business in the modern sense, and its recognition as a spe-
cifie means for the liquidation of debts with the aid of the
banker. In Rome the purpose of this business was origi-
nally to provide a uniform and secure means of payment,
in view of the fact that the coinage of silver was not in-
troduced until late and that the amount of the coinage
depended upon the booty secured by the generals. This
backwardness of coinage relations in Rome affords the
simplest explanation for the fact that the deposit (recep-
tum), and the order or draft (actio receptitia) drawn
only against the balance of the account current, possessed
so much significance, and that the bookkeeping of the
banker was there subject to a unified legal regulation.
The books of the Roman argentarii speak of receipts and
expenditures, though not in the sense of the modern book-
keeping. A special book was kept for each individual cus-
tomer, in which he was credited and debited (acceptum
ferre, expensum ferre). These entries served to prove that
payment had been made. Beyond this too little has sur-
vived of the bookkeeping of the argentarii to permit of
more exact statements.

In general, however, the banks of antiquity were only
exceptionally private undertakings, and these were subject
to an extensive competition by temple banks and state
banks. The temple of antiquity first served as a de-
pository. Insofar as they served as banks this was their
primary function, and in this connection they were muchBANKING IN PRE-CAPITALISTIC AGE 257

more famous than the depositories of the private bankers.
The deposits in the temple were sacred and could not be
stolen without committing sacrilege. The temple at Delphi
was a storehouse for numerous private persons, and espe-
cially for the savings of slaves. Numerous inscriptions tell
how the liberty of slaves has been purchased by the god;
in reality the purchase was made out of the savings of the
slaves which were given over to the temple for safekeeping
in order to protect them from the master. The same func-
tion as depositories was performed by numerous temples in
Babylon, Egypt, and Greece, while in Rome they lost this
character in early times. In consequence, the temples in
antiquity also became important lending agencies, especially
for the princes, who secured more favorable terms from
them than from private money lenders. It is true that we
find the large money lender, even in the code of Ham-
murabi, but in general the treasury of the state and its
money lender was the temple. This function was fulfilled
in Babylon by the temple of the sun god Sippar, and in
Egypt by the temple of Ammon; the treasury of the
Attic maritime league was the temple of Athena.

A second source of competition for the private banker
grew up in the state banks. The making of banking into
a public function resulted, where it happened, not in con-
sequence of mismanagement and bankruptcy of the bankers
as in the middle ages, but from fiscal considerations. Not
only had the money changing business developed into a
fruitful source of profit, but for political reasons also it
seemed advantageous to be in possession of the largest pos-
sible quantity of private deposits. In almost all the
Hellenistic states, especially in Ptolemaic Egypt, the result
was a royal banking monopoly. It is true that these estab-
lishments had nothing to do with the tasks of the modern
state bank, such as note issue, regulation of standards, and

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258 GENERAL ECONOMIC HISTORY

coinage policy; they were purely fiscal institutions. The
extraordinary power of the capitalistic knights as a class
in Rome rested essentially on the fact that they succeeded
in preventing such a monopolization of the banking fune-
tion by the state.

The beginnings of medieval banking are diverse in char-
acter. Inthe 11th century we meet with campsores, money
changers, who secured a considerable profit from their
work. At the end of the 12th century the business of
making payments at a distance was in their hands; it was
carried out by means of the cambium or exchange letter, a
device taken over from the Arabs. In contrast with an-
tiquity, the business of lending money was only assumed
by the resident banker relatively late or not at all; as a
rule they loaned only large sums and only to the political
powers. The small scale business in money was in the
hands of an alien class, the Jews, Lombards, the Caursines,
the two latter designations being used to include southern-
ers of every sort. This consumptive credit in the hands of
aliens was originally emergency credit at a very high rate
of interest, and based on a pledge or other security.
Alongside it appears at an early date the business of
commenda credit. In the granting of such credit the bank-
ers also took part, but were subject—in contrast with
Babylonian conditions—to the competition of merchants
dealing in goods of the most various sorts, and also that of
private money lenders. The deposit business was called
into existence by the continual monetary debasement.
Communal banks arose among the merchant class with
deposits in metal or in various coins at their bullion
value, on the basis of which payments were made by
deposit transfers or checks, limited to a certain mini-
mum. For a time, deposit banking business was in the
hands of the money changers, but in the long run theyBANKING IN PRE-CAPITALISTIC AGE 259

did not enjoy sufficient confidence, and large company
banks arose.

In the field of medieval banking is further included the
collection of taxes, corresponding roughly to the tax farm-
ing of antiquity. From the beginning of the 13th to the
end of the 14th century this was the main source of the
large fortunes, especially those of the Florentine banking
families, the Acciajuoli, the Peruzzi, and the Medici. As
these maintained their factors in all large commercial
places, they were the natural agency for gathering from
all quarters the taxes of the Curia, which was the greatest
taxing power of the age; also they kept the most accurate
accounts and accepted only full value money in the sense
of the Florentine gold gulden. This function brought the
collectors, as in the ease of the mandarins in China, very
large opportunities for profit, as it lay in their hands to
evaluate the money of the various regions in terms of the
eoin demanded by the Curia.

Finally, the business of financing is to be named among
the functions of medieval banking. By this, however, is
not to be understood the financing of large enterprises in
the present sense. The need for financing operations ex-
isted only exceptionally, and generally in connection with
military ventures. In this field it was undertaken in
Genoa as early as the 12th century. In this way, for ex-
ample, the great sea expeditions of the Genoese against
Cyprus were financed through the formation of a ‘‘ma-
ona.’’ a share eommenda enterprise for the conquest and
exploitation of the island. Im the same way to a large
extent the wars of the cities among themselves were financed
by organizations of creditors. For roughly a hundred
years together the total tax and harbor customs receipts of
Genoa were administered exclusively in the interests of
such a consortium. Far beyond these limits went the

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260 GENERAL ECONOMIC HISTORY

financing operations of the great Florentine bankers in the
Franco-English wars of the 14th century.

To the extent to which these transactions remained in
private hands arose the questions out of what source the
funds came, where the money went, and by what means the
banks were at all able to meet an effective obligation to pay,
which in fact tended to collapse. That is, we are con-
fronted by the problem of the ‘‘liquidity’’ of the medieval
bank. The liquidity of the institutions we have described
was very poor. The money which the Peruzzi or other
great Florentine bankers advanced to the citizens of
Florence for their wars did not come out of their own
capital, which would not have been at all sufficient, but out
of deposits which they received on the grounds of their
prestige, out of every circle of the population down to the
lowest strata, and for a low rate of interest. But these
deposits were payable on short notice while the war loans
ran for long periods. Consequently the financial opera-
tions ended in bankruptcy as soon as the military ventures
in which they were employed resulted unfavorably. This
applies even to the Fuggers, for the way in which they
finally settled with the Spanish crown meant that not only
did they suffer enormous losses but also that the remainder
of their wealth was tied up in forms on which they could
not realize.

The private means of the large banking houses being in-
sufficient for the financing of large enterprises of the state,
and their liquidity being easily lost, the pressure of events
was in the direction of monopolistic banking. The political
authority which required money for its purposes received
it only in return for a grant of various monopolies, of
trade, of the customs, and of the banking business also.
The prince, or the city, made banking a public enterprise
and granted the privilege as a monopoly, or farmed it outBANKING IN PRE-CAPITALISTIC AGE 261

to private persons in return for a loan of money. The
oldest example of such a banking monopoly is the Banca
di San Giorgio in Genoa, and the latest the Bank of Eng-
land. Even this latter did not arise out of a voluntary
organization of merchants but was a purely political under-
taking which financed the War of the Spanish Succession.
The distinction between it and the medieval banks lies only
in the manner in which it was able to establish its business,
namely on the basis of bills of exchange.

The present day bill of exchange is a means of payment
characterized by the fact that three persons are involved in
it ; besides the receiver there are the drawer and the drawee.
Of these the drawer is always responsible, as is also the
drawee or acceptor, from the moment of acceptance. In
addition, when the bill is transferred to third parties by
endorsement, every individual endorser becomes respon-
sible, with no question raised regarding the transaction in
connection with which the bill was drawn. In ease of non-
payment a special process of execution is available which
in the middle ages involved imprisonment for debt. The
significance of the bill of exchange for the bank of today
lies in these characteristics ; they impart to it the certainty
that specific sums can be drawn at a specified time and
hence give it liquidity. In the middle ages there was no
such possibility. It is true that the bill of exchange was
known, but it then signified only an instrument similar to
our checks. It was a mere means of payment, ordinarily
of payment at a distance, by means of which one paid debts
with money to which one had a claim at some other place;
difference in place between the one who promised payment
and the point where payment was made was essential to
the instrument, especially as the canon law condemned with
all its power the use of local bills as a usurious business.
The typical medieval bill originally consisted of two

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262 GENERAL ECONOMIC HISTORY

separate documents. One of these, the ‘‘open letter,’’
(litera aperta), was what we should call a domiciled bill.
The merchant A in Genoa promised to pay to B in Bar-
celona on a certain day a certain sum, through C, the debtor
of A. If the bill was issued by a prince it was drawn upon
his treasury which had to pay to the court a certain sum.
The second document, the ‘‘closed letter’’ (litera clausa)
or ‘‘draft’’ evolved into the present bill. It informed
the debtor of the drawer that he was to pay the sum on
account of his ereditor the drawer. The literae apertae
had to be drawn up and witnessed officially while the literae
clausae were ordinary letters. Both documents were placed
in the hands of the person in favor of whom the bill was
drawn. The further development consisted in the gradual
dropping of the literae apertae on account of the expense.
The binding promise which they originally contained
became included in the draft and recognized as a part
of the latter, which thus increased in significance; but
it was still distinguished from the modern bill in that it
was not negotiable by endorsement, which character it did
not achieve until the 17th century.

It is true that it contained the formula promitto tibi vel
tuo certo nuntio, which made it possible to place it in the
possession of a third party and to legalize his receipt of the
payment in place of the named receiver; but this order
clause disappeared later because a regular machinery for
making payments developed in the large fairs. These af-
forded the possibility of liquidating bills without incurring
the risk of transporting money, by turning it over to a
clearing house for entry, with payment only of net balances.
Actually the bills were only discount instruments in connec-
tion with which it was tacitly assumed that they would be
liquidated through a deposit bank or a local merchants’
association. This condition worked to the advantage of theBANKING IN PRE-CAPITALISTIC AGE 263

merchants engaged in the exchange business, giving them
an interest in securing a monopoly of the fees for effecting
exchange transfers, and they opposed endorsement. Thus
even in the 16th century when any exchange was trans-
ferred a new bill had to be drawn instead of endorsing the
old one. It is true again that in the 16th century the law
of exchange had reached its present development, and
equivocation on legal grounds was excluded by the maxim
“chi aecetta paghi’’ (the acceptor must pay). This un-
conditional assurance of payment made it possible for the
bill of exchange to become the bank paper of today.

The part of the medieval banker in payments consisted
in accepting the bill; the banker of today discounts it, that
is, he pays it, with the deduction of the discount with the
view of cashing it later and thus invests his operating
eapital in bills. The institution which first consistently
carried on such an exchange business is the Bank of
England.

English banking history before the founding of the
Bank of England shows that the goldsmiths, as dealers in
the precious metals and owners of stocks of metal, were in
a position to carry on a banking business and often had a
monopoly of the testing of coins as to weight and fineness,
but that they never played the role of bankers in the sense
described above. They received deposits in the manner of
the medieval banker, and financed political enterprises,
those of the Stuarts as well as of Cromwell. They also
transacted a deposit business and in connection therewith
issued paper means of payment, to their customers first,
but the circulation of these ‘‘goldsmith notes’’ did not
remain confined to this circle. The state bankruptcy of
1672 put an end to all this. When, at that time, the Eng-
lish government declared that it eould not repay its debts
but would pay interest on them only, while the depositor-

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264 GENERAL ECONOMIC HISTORY

customers of the goldsmiths were entitled to withdraw their
capital at any time, the result was inability of the gold-
smiths to meet the demand for payment of deposits. The
result was that in England at this time, as earlier in the
Italian cities, there was a clamor among the depositors for
a public monopoly bank.

The political authorities took advantage of this demand
to monopolize the banking business and secure a share in its
profits for the state. The merchants hoped for loans at a
low interest through the fact that a state bank, in view of
the security which it offered, would be in a position to
attract to itself deposits in large volume, and also hoped for
release from their coinage difficulties—although we cannot
be sure how they argued. On the other hand, we must not
assume as applicable to that time the modern view accord-
ing to which a large bank of issue undertakes the task of
using its credit through a suitable discount policy to draw
gold into the country or to force an accumulated stock into
circulation. Rather it was hoped that the bank would
function as a deposit bank, that is, circulate its notes on the
basis of a definite quantity of metal and so assist in re-
ducing the fluctuations in the ratio between gold and silver.

The final establishment of the Bank of England in 1694
was based on purely political motives with a view of financ-
ing the war of William of Orange with Louis XIV. In its
establishment the procedure customary to the country
was employed; certain payments, especially the salt tax,
were pledged to the money lenders, and the participating
creditors were organized as governors into a company with,
legal privileges.

The new establishment was combated by many interests.
Opposed to the project were, in the first place, the Tories,
as opponents of William of Orange, and, on the other hand,
the Whigs who on general principles feared the strengthen-BANKING IN PRE-CAPITALISTIC AGE 265

ing of the position of the king. Hence the bank could only
be organized as an independent private corporation, not as
a state bank, and it was necessary to include in the act the
specification that money could be advanced to the state
only on the basis of a special authorization by Parliament.
Hence in the view of the Tories the bank was consistent
only with a republic, not a monarchy; they contended that
a bank with such an organization presupposed a kingdom
under the control of the capitalist groups interested in the
bank. Finally the goldsmiths also opposed the bank be-
cause they were excluded from the business, and also be-
cause, in common with the nobility, they feared the political
and economic power of the merchant class.

The bank came into existence with a share capital of
£1,200,000, all of which disappeared into the pockets of the
state. In exchange it received the right to deal in bills of
exchange. The last named right was by far the most im-
portant, since it was connected with the issue of notes.
The use which the bank would later make of this right
through its discount policy was in fact foreseen by no one.
In any case, however, it was the first institution to begin
systematically to purchase exchange, thereby shortening for
producers as well as merchants the interval before the
product reached the final consumer, by discounting the
bills before maturity. With the Bank of England the ac-
celeration of capital turnover is the clearly conceived pur-
pose of exchange dealings; it pursued this business in a
systematic way as no bank had done before.

Only in part does the development of banking outside of
Europe offer a parallel to that in Europe itself. In India
and China, banking retained down to the last few decades
the character which it had in antiquity and in the middle
ages. It is distinguished from occidental banking by
its extraordinary power in connection with the regulation

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266 GENERAL ECONOMIC HISTORY

of monetary standards. In China the banker conducts the
stamping of the taels; he determines the conditions of
credit, fixes the rate of interest, and designates all the con-
ditions of making payments, so that the standardization of
commercial settlements lies entirely in his hands. But this
mechanism of settlement is a credit business insofar as
foreign trade is concerned, which in Canton for example,
is in the hands of a few large Chinese houses. As long as
the independent Chinese states existed the banks also car-
ried on war financing, as in Europe; with the establishment
of the unitary Chinese empire this opportunity was lost.

In India the banking business in its entirety is strictly
regulated by sects or castes. Here also in the period of
the great independent states political credit was financed
by the banks, and here also the unitary state of the Grand
Mogul put an end to this; subsequently political monetary
dealings were involved only in connection with govern-
mental budgeting and the anticipation of income through
loans. The functions of the banks in India and China to-
day still consist essentially of the business of making pay-
ments and small or oceasional credit operations. There is
no business eredit in any way systematized, no business or-
ganization which could make any use of our discount pol-
icy; the native Asiatic commerce knows only checks and
payment assignments of the most various sorts, but not the
bill of exchange. That in addition the Chinese bankers still
possess a monopolistic control over the regulation of stand-
ards is explained by the enormous misuse of paper money
in China.CHAPTER XXI
INTERESTS IN THE PRE-CAPITALISTIC PERIOD

In its beginnings interest is a phenomenon either of in-
ternational or feudal law. Within a tribal village, or clan
community, there is neither interest nor lending, since
transfers of value in consideration for a payment are un-
known. Where outside resources are used in economic life
it is done under the form of neighborly help, such as invi-
tation work in connection with house building or assistance
in case of emergency, which rests on the duty of helping
the clan brother without compensation. Even the Roman
mutuum, a loan without interest, is a survival of these
primitive conditions. The obligation to help in case of
need receives an extension when it is taken over by re-
ligious communities and imposed upon brothers in the
faith; the best known example is that of the Israelites. It
is not the fact that they took interest which is peculiar to
the Jews, for interest has been received everywhere in the
world, including the medieval monasteries themselves;
rather it was exceptional and repugnant to the western
peoples that the Jews took interest from Christians but not
from each other.

The prohibition in the Torah against taking interest or
usury from the brother rests partly on military and partly
on religious grounds. In the first place, the clan brother
must not be imprisoned for debt and thus lost to the army.
For this reason the ancient Egyptian religious code ascribed
to the curse of the poor, a special force with the divine
267

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268 GENERAL ECONOMIC HISTORY

powers and this idea passed over into the book of Deu-
teronomy. The distinction thus set up between internal
and external ethics survived the exile; and after the
Israelites became the Jews, interest was still forbidden be-
tween compatriots while it might be taken from foreigners
(‘‘Gojim’’). Thus Maimonides could ask the question
whether the Jew was under obligation to take interest from
them.”

The prohibition of interest taking from a brother is also
characteristic of early Islam and of Brahminism. Interest
everywhere arises in the field of lending to foreigners out-
side the tribe or that of loans between classes. In this con-
nection the contrast between creditor and debtor was origi-
nally always a contrast between a town-dwelling patritiate
and rural peasants; it was so in China, India, and Rome,
and the same conception also dominates in the Old Testa-
ment. The possibility that a prohibition against interest
should arise rested on the fact that all credit was originally
emergency credit and purely for consumptive purposes, so
that the idea of a brotherly obligation could arise in op-
position to the demand for interest by the master class; a
further consideration is that behind the warning against
interest there was a strong military interest since the cred-
itor ran the risk of being reduced to the condition of a
landless proletarian who would not be in a position to
equip himself for war.

The occasion for breaking through the prohibition
against interest was provided by the loan of concrete prop-
erty. The first case is the cattle loan. Among nomads,
the contrast between propertied and non-propertied per-
sons is fearfully sharp. The man who owns no cattle is
forthwith outlawed and can only hope to rise again to full
citizenship through a Joan of stock and stock breeding. OfINTEREST 269

similar import is the seed loan, which in Babylonia espe-
cially, confronts us as a customary usage. In the one case
as in the other the object of the loan replaces itself mani-
fold and it did not appear an unjust conception if the
creditor reserved for himself a part of the fruits of his
eattle or grain. In addition, the prohibition against in-
terest was broken wherever town life developed.

In the Christian occident the need for credit for indus-
trial purposes originally found expression rarely in the
form of a loan with a definite interest but rather in that
of an association. It was not the prohibition of usury by
the church which was behind this arrangement, so much
as the risk connected with oversea business ventures. In
view of this risk a definite interest rate was not so much at
issue in such transactions; instead, the creditor participated
in the gain as compensation for the risk to which the capital
he provided was subject. Hence the Italian commenda, the
dare ad proficwum de mari, with an interest rate depend-
ing in accordance with a scale, on the port of destination.
These primitive trading credit transactions were not af-
fected by the ecclesiastical prohibitions of usury. On the
contrary, a fixed loan against fixed interest became custom-
ary in connection with land transportation because the risk
here was less than in overseas trade. The formula saluuwm
in terra signified that the capital loan must be without
reference to the result of the enterprise.

At the same time, however, the opposition to usury on
the part of the church increased in energy. Hence the pro-
hibition of interest is not a product of an age of purely
natural economy, but the movement reached its full de-
velopment only as it was allowed to lapse in the face of a
growing money economy. Pope Gregory IX even con-

demned sea loans as usury. Equally false is the assertion

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70 GENERAL ECONOMIC HISTORY

that the church pursued an opportunistic policy in con-
nection with interest and favored the development of cap-
italism. In fact it pursued the war against interest with
increased determination and forced many a man to restore
interest on his death bed just as today the confessional en-
forces restitution of goods stolen from a master. But the
more money economy developed, the oftener was the prohi-
bition evaded, and the church had to meet the situation by
general indulgences. Finally, in the face of the power of
the great Florentine bankers in the 15th century it was
confronted by facts which made all opposition fruitless.
Theology then attempted to interpret the prohibition as
leniently as possible, but the tragedy was that the church
itself as a temporal power was forced to have recourse to
loans at interest.

At first, before the church itself undertook the establish-
ment of lending institutions (the montes pietatis) a way
out was found in the money lending of the Jews. This was
characterized by the fact that it afforded the political au-
thorities the possibility of adopting a ‘‘sponge policy”’;
that is, the population was exploited through their pay-
ments of interest to the Jews and at irregular intervals
the state confiscated the profit and the outstanding loans
and simultaneously banished the Jewish creditors. In this
way the Jews were hounded from city to city and from
country to country; formal pools for robbing them were
established between the princes, as for example between the
Bishop of Bamberg and the Hohenzollern Burgrave of
Nuremberg to the effect that they shared in the booty when
the Jews fled from the jurisdiction of one to that of the
other. Meanwhile the attitude of the church to the taking
of interest became increasingly cautious. It is true that a
formal suspension of the prohibition was never decreed, but
in the course of the 19th century ecclesiastic depositions re-INTEREST 271

peatedly recognized as legal the taking of interest under
specified conditions.

In northern Europe the prohibition against usury was
broken up by Protestantism, although not immediately.
In the Calvinistic synods we repeatedly meet with the con-
ception that a lender and his wife must not be admitted to
the Lord’s Supper, but Calvin himself declared in the
Constitutio Christiana that the purpose of the prohibi-
tion of interest was only the protection of the poor against
destitution and not the protection of the rich who carried
on business with borrowed money. Finally, it was the Cal-
vinistic leader in the field of classical philology, Claudius
Salmasius, who in his book De Usuris in 1638, and in a
number of later tracts, undermined the theoretical founda-
tions of the prohibition against interest.dal

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THE ORIGIN OF MODERN CAPITALISM *

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THE MEANING AND PRESUPPOSITIONS OF MODERN
CAPITALISM

Capitalism is present wherever the industrial provision
for the needs of a human group is carried out by the
method of enterprise, irrespective of what need is involved.
More specifically, a rational capitalistic establishment is
one with capital accounting, that is, an establishment which
determines its income yielding power by calculation accord-
ing to the methods of modern bookkeeping and the striking
of a balance. The device of the balance was first insisted
upon by the Dutch theorist Simon Stevin in the year 1698.

It goes without saying that an individual economy may
be conducted along capitalistic lines to the most widely
varying extent; parts of the economic provision may be
organized capitalistically and other parts on the handicraft
or the manorial pattern. Thus at a very early time the
city of Genoa had a part of its political needs, namely those
for the prosecution of war, provided in capitalistic fashion,
through stock companies. In the Roman empire, the sup-
ply of the population of the capital city with grain was
carried out by officials, who however for this purpose, be-
sides control over their subalterns, had the right to com-
mand the services of transport organizations; thus the
leiturgical or forced contribution type of organization
was combined with administration of public resources.
Today, in contrast with the greater part of the past, our
everyday needs are supplied eapitalistically, our political

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276 GENERAL ECONOMIC HISTORY

needs however through compulsory contributions, that is,
by the performance of political duties of citizenship such
as the obligation to military service, jury duty, ete. A
whole epoch can be designated as typically capitalistic only
as the provision for wants is capitalistically organized to
such a predominant degree that if we imagine this form
of organization taken away the whole economic system

must collapse.

While capitalism of various forms is met with in all
periods of history, the provision of the everyday wants by
capitalistic methods is characteristic of the oecident alone
and even here has been the inevitable method only since

~the middle of the 19th century. Such capitalistic begin-
nings as are found in earlier centuries were merely antici-
patory, and even the somewhat capitalistic establishments
of the 16th century may be removed in thought from the
economic life of the time without introducing any over-
whelming change.

The most general presupposition for the existence of
this present-day capitalism is that of rational capital ac-
counting as the norm for all large industrial undertakings
which are concerned with provision for everyday wants.
Such accounting involves, again, first, the appropriation of
all physical means of production—land, apparatus, ma-
chinery, tools, ete. as disposable property of autonomous
private industrial enterprises. This is a phenomenon
known only to our time, when the army alone forms a uni-
versal exception to it. In the second place, it involves free-
dom of the market, that is, the absence of irrational limita-
tions on trading in the market. Such limitations might be
of a class character, if a certain mode of life were prescribed
for a certain class or consumption were standardized along

class lines, or if class monopoly existed, as for example if
the townsman were not allowed to own an estate or the

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SSA ee

]MEANING OF MODERN CAPITALISM 277

knight or peasant to carry on industry; in such cases
neither a free labor market nor a commodity market exists.
Third, capitalistic accounting presupposes rational tech-
nology, that is, one reduced to calculation to the largest
possible degree, which implies mechanization. This applies
to both production and commerce, the outlays for prepar-
ing as well as moving goods.

The fourth characteristic is that of calculable law. The
capitalistic form of industrial organization, if it is to oper-
ate rationally, must be able to depend upon calculable adju-
dication and administration. Neither in the age of the
Greek city-state (polis) nor in the patrimonial state of Asia
nor in western countries down to the Stuarts was this condi-
tion fulfilled. The royal ‘‘cheap justice’’ with its remis-
sions by royal grace introduced continual disturbances into
the calculations of economic life. The proposition that the
Bank of England was suited only to a republic, not to a
monarchy, referred to above (page 265) was related in this
way to the conditions of the time. The fifth feature is free
labor. Persons must be present who are not only legally
in the position, but are also economically compelled, to sell
their labor on the market without restriction. It is in
contradiction to the essence of capitalism, and the develop-
ment of capitalism is impossible, if such a propertyless
stratum is absent, a class compelled to sell its labor services
to live: and it is likewise impossible if only unfree labor
is at hand. Rational capitalistic calculation is possible
only on the basis of free labor; only where in consequence
of the existence of workers who in the formal sense volun-
tarily, but actually under the compulsion of the whip of
hunger, offer themselves, the costs of products may be
unambiguously determined by agreement in advance. The
sixth and final condition is the commercialization of eco-
nomic life. By this we mean the general use of commercial

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278 GENERAL ECONOMIC HISTORY

instruments to represent share rights in enterprise, and also
in property ownership.

To sum up, it must be possible to conduct the provision
for needs exclusively on the basis of market opportunities
and the caleulation of net income. The addition of this
commercialization to the other characteristics of capitalism
involves intensification of the significance of another fac-
tor not yet mentioned, namely speculation. Speculation
reaches its full significance only from the moment when
property takes on the form of negotiable paper.CHAP Ri OXOxelni
THE EXTERNAL FACTS IN THE EVOLUTION OF CAPITALISM ?

Commercialization involves, in the first place, the ap-
pearance of paper representing shares in enterprise, and, in
the second place, paper representing rights to income, espe-
cially in the form of state bonds and mortgage indebted-
ness. This development has taken place only in the modern
western world. Forerunners are indeed found in an-
tiquity in the share-commandite companies of the Roman
publicant, who divided the gains with the public through
such share paper. But this is an isolated phenomenon and
without importance for the provision for needs in Roman
life; if it had been wanting entirely, the picture presented
by the economic life of Rome would not have been changed.

In modern economic life the issue of credit instruments
is a means for the rational assembly of capital. Under this
head belongs especially the stock company. This repre-
sents a culmination of two different lines of development.
In the first place, share capital may be brought together for
the purpose of anticipating revenues. The political au-
thority wishes to secure command over a definite capital
sum or to know upon what income it may reckon; hence it
sells or leases its revenues to a stock company. The Bank
of St. George in Genoa is the most outstanding example of
such financial operations, and along the same line are the
income certificates of the German cities and treasury notes
(Rentenmeisterbriefe) especially in Flanders. The sig-
nificance of this system is that in place of the original con-

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280 GENERAL ECONOMIC HISTORY

dition under which unusual state requirements were cov-
ered by compulsory law, usually without interest and fre-
quently never repaid, loans come to be floated which appeal
to the voluntary economic interests of the participants.
The conduct of war by the state becomes a business opera-
tion of the possessing classes. War loans bearing a high
interest rate were unknown in antiquity; if the subjects
were not in a position to supply the necessary means the
state must turn to a foreign financier whose advances were
secured by a claim against the spoils of war. If the war
terminated unfortunately his money was lost. The secur-
ing of money for state purposes, and especially for war
purposes, by appeal to the universal economic interest, is a
creation of the middle ages, especially of the cities.
Another and economically more important form of asso-
ciation is that for the purpose of financing commercial en-
terprise—although the evolution toward the form of asso-
ciation most familiar today in the industrial field, the stock
company, went forward very gradually from this begin-
ning. Two types of such organizations are to be distin-
guished; first, large enterprises of an inter-regional char-
acter which exceeded the resources of a single commercial
house, and second, inter-regional colonial undertakings.
For inter-regional enterprises which could not be
financed by individual entrepreneurs, finance by groups
was typical, especially in the operations of the cities in the
15th and 16th centuries. In part the cities themselves car-
ried on inter-regional trade, but for economic history the
other case is more important, in which the city went before
the public and invited share participation in the commer-
cial enterprise which it organized. This was done on a
considerable scale. When the city appealed to the public,
compulsion was exercised on the company thus formed to
admit any citizen; hence the amount of share capital wasFACTS IN EVOLUTION OF CAPITALISM 281

unlimited. Frequently the capital first collected was in-
sufficient and an additional contribution was demanded,
where today the liability of the share holder is limited to
his share. The city frequently set a maximum limit to
the individual contribution so that the entire citizenship
might participate. This was often done by arranging the
citizens in groups according to the taxes paid or their
wealth and reserving a definite fraction of the capital for
each class. In contrast with the modern stock company
the investment was often rescindable, while the share of
the individual was not freely transferable. Hence the
whole enterprise represented a stock company only in an
embryonic sense. Official supervision was exercised over
the conduct of operations.

In this form the so-called

‘

‘regulated’’ company was
common, especially in the iron trade as in Steier, and it
was occasionally used in the cloth trade, as in Iglau. A
consequence of the structure of the organizations just de-
scribed was the absence of fixed capital and, as in the case
of the workers’ association, the absence of capital account-
ing in the modern sense. Share holders included not only
merchants, but princes, professors, courtiers, and in gen-
eral the public in the strict sense, which participated gladly
and to great profit. The distribution of the dividends was
carried out in a completely irrational way, according to the
gross income alone, without reserves of any kind. All that
was necessary was the removal of the official control and
the modern stock company was at hand.

The great colonization companies formed another pre-
liminary stage in the development of the modern stock com-
pany. The most significant of these were the Dutch and
English East India companies, which were not stock com-
panies in the modern sense. On account of the jealousy of
the citizens of te provinces of the country the Dutch East

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282 GENERAL ECONOMIC HISTORY

India Company raised its capital by distributing the shares
among them, not permitting all the stock to be bought up
by any single city. The government, that is the federa-
tion, participated in the administration, especially because
it reserved the right to use the ships and cannon of the
company for its own needs. Modern capital accounting
was absent as was free transferability of shares, although
relatively extensive dealings in the latter soon took place.
It was these great successful companies which made the
device of share capital generally known and popular; from
them it was taken over by all the continental states of
Europe. Stock companies created by the state, and
eranted privileges for the purpose, came to regulate the
conditions of participation in business enterprise in gen-
eral, while the state itself in a supervisory capacity was
involved in the most remote details of business activity.
Not until the 18th century did the annual balance and
inventory become established customs, and it required many
terrible bankruptcies to force their acceptance.

Alongside the financing of state needs through stock
companies stands direct financing by measures of the state
itself. This begins with compulsory loans against a pledge
of resources and the issue of certificates of indebtedness
against anticipated revenues. The cities of the middle ages
secured extraordinary income by bonds, pledging their
fixed property and taxing power. These annuities may be
regarded as the forerunners of the modern consols, yet
only within limitations; for to a large extent the income
ran for the life of the purchaser, and they were tied up
with other considerations. In addition to these devices the
necessity of raising money gave rise to various expedients
down to the 17th century. The emperor Leopold I at-
tempted to raise a “‘cavalier loan,’’ sending mounted mes-
sengers around to the nobility to solicit suyscriptions; butFACTS IN EVOLUTION OF CAPITALISM 283

in general he received for answer the injunction to turn to
those who had the money,

[f one desires to understand the financial operations of
a German city as late as the close of the middle ages, one
must bear in mind that there was at that time no such
thing as an orderly budget. The city, like the territorial
lord, lived from week to week as is done today in a small
household. Expenditures were readjusted momentarily as
income fluctuated. The device of tax farming was of as-
sistance in overcoming the difficulty of management with-
out a budget. It gave the administration some security as
to the sums which it might expect each year, and assisted
it in planning its expenditures. Hence the tax farm oper-

ated as an outstanding instrument of financial rationaliza-
tion, and was called into use by the European states occa-
sionally at first and then permanently. It also made pos-
sible the discounting of public revenues for war purposes,
and in this connection achieved especial significance. Ra-
tional administration of taxation was an accomplishment
of the Italian cities in the period after the loss of their
freedom. The It
to order its finances in accordance with the principle of

alian nobility is the first political power

mereantile bookkeeping obtaining at the time, although
this did not then include double entry. From the Italian
cities the system spread abroad and came into German ter-
ritory through Burgundy, France, and the Hapsburg states.
It was especially the tax payers who clamored to have the
finances put in order.

A second point of departure for rational forms of ad-
ministration was the English exchequer system, of which
the word ‘‘check’”’ is a last survival and reminder. This
was a sort of checker board device by means of which the
payments due the state were computed, in the absence of
the necessary facility in operating with figures. Regu<

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284 GENERAL ECONOMIC HISTORY

larly, however, the finances were not conducted through
setting up a budget in which all receipts and disbursements
were included, but a special-fund system was used. That
is, certain receipts were designated and raised for the
purpose of specified expenditures only. The reason for this
procedure is found in the conflicts between the princely
power and the citizens. The latter mistrusted the princes
and thought this the only way to protect themselves against
having the taxes squandered for the personal ends of the
ruler.

In the 16th and 17th centuries an additional force work-
ing for the rationalization of the financial operations of
rulers appeared in the monopoly policy of the princes. In
part they assumed commercial monopolies themselves and
in part they granted monopolistic concessions, involving of
course the payment of notable sums to the political au-
thority. An example is the exploitation of the quicksilver
mines of Idria, in the Austrian province of Carniola, which
were of great importance on account of the process of
amalgamating silver. These mines were the subject of
protracted bargaining between the two lines of the Haps-
burgs and yielded notable revenues to both the German
and the Spanish houses. The first example of this policy
of monopoly concession was the attempt of the Emperor
Frederick II to establish a grain monopoly for Sicily. The
policy was most extensively employed in England and was
developed in an especially systematic manner by the
Stuarts, and there also it first broke down, under the pro-
tests of Parliament. Each new industry and establishment
of the Stuart period was for this purpose bound up with a
royal concession and granted a monopoly. The king se-
eured important revenues from the privileges, which pro-
vided Lim with the resources for his struggle against
Parliament. But these industrial monopolies establishedFACTS IN EVOLUTION OF CAPITALISM 285

for fiscal purposes broke down almost without exception
after the triumph of Parliament. This in itself proves how
incorrect it is to regard, as some writers have done, modern
western capitalism as an outgrowth of the monopolistic
policies of princes.”oF
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CHAPTER
THE FIRST GREAT SPECULATIVE CRISES ?

We have recognized as characteristics and pre-requisites
of capitalistic enterprise the following: appropriation of
the physical means of production by the entrepreneur, free-
dom of the market, rational technology, rational law, free
labor, and finally the commercialization of economic life.
A further motif is speculation, which becomes important
from the moment when property can be represented by
freely negotiable paper. Its early development is marked
by the great economie crises which it called forth.

The great tulip craze of Holland in the 1630’s is often
numbered among the great speculative crises, but it should
not be so included. Tulips had become an article of luxury
among the patricians who had grown rich in colonial trade,
and suddenly commanded fantastic prices. The public was
misled by the wish to make easy profits until with equal
suddenness the whole craze collapsed and many individuals
were ruined. But all of that had no significance for the
economic development of Holland; in all periods it has
happened that objects connected with gaming have be-
come subject to speculation and led to crises. It is quite
otherwise with John Law and the great speculation in
France and the contemporary South Sea speculation in Eng-
land, in the second decade of the 18th century.

In the financial practice of the large states it had long
been customary to anticipate revenues by the issue of cer-
tificates, to be redeemed later. In consequence of the War

of the Spanish Succession, the financial requirements of
286FIRST GREAT SPECULATIVE CRISES 287

the government rose to an extraordinary height in England
as well as in France. The founding of the Bank of Eng-
land supplied the financial needs of that country, but in
France the state was already hopelessly in debt, and on the
death of Louis XIV no one knew how the excessive debt
was to be taken care of. Under the regency came forward
the Seotechman, John Law, who thought he had learned
something from the founding of the Bank of England,
and had a theory of his own regarding financial affairs, al-
though he had had no luck with it in England. He saw in
inflation, that is the utmost possible increase in the medium
of circulation, a stimulus to production.

In 1716, Law received a concession for a private bank
which at first presented no exceptional character. It was
merely specified that the credit obligations of the state must
be received in payment for the capital, while the notes of
the bank were to be accepted in the payment of taxes. In
contrast with the Bank of England there was no clear plan
as to the manner in which the bank was to have a regular
and secure income so as to maintain the liquid character of
its issues. In connection with this bank Law founded the
Mississippi Company. The Louisiana territory was to be
financed to the extent of a hundred million livres; the com-
pany accepted the same amount of obligations of the state
as payment for stock and received in exchange the monop-
oly of the trade in a territory to be determined. If one
examines the Louisiana plan it will be observed that a cen-
tury would have been required before Louisiana would
have yielded sufficient revenue to make possible the re-
payment of the capital. To begin with, Law intended to
carry out an undertaking similar to the East India Com-
pany, entirely overlooking the fact that Louisiana was not,
like India, an ancient civilized country, but a forest waste

inhabited by Indians.er a al

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288 GENERAL ECONOMIC HISTORY

When, in 1718, he saw himself threatened by the compe-
tition of a stock company which wished to lease the indi-
rect taxes, he combined the Mississippi Company with the
Compagnie des Indes. The new company was to carry on
the trade with India and China, but the political power
was not available to secure for France the share in the
Asiatic trade which England already possessed. However,
the regency was induced to give to Law the right of coin-
age and the lease on all the taxes, involving power of life
and death over the state, in exchange for a loan at 3% by
means of which the gigantic floating debt was to be taken
eare of. At this point the public embarked on an insane
course of speculation. The first year a 200 % dividend
was declared and the price of shares rose from 500 to 9,000.
This phase of the development can be explained only by
the fact that short selling was impracticable since there
was as yet no systematic exchange mechanism.

In 1720 Law succeeded in getting himself appointed
Comptroller General of Finances. But the whole enter-
prise quickly disintegrated. In vain the state decreed that
only John-Law-notes should be legal money; in vain it
sought to sustain them by drastic restriction on the trade in
precious metals. Law’s fall was inevitable simply because
neither Louisiana nor the Chinese or East India trade had
yielded sufficient profit to pay interest on even a fraction of
his capital. It is true that the bank had received depos-
its, but it possessed no liquid external resources for repay-
ment. The end was a complete bankruptcy and the declar-
ation that the notes were of no value. A result was an
enduring discouragement on the part of the French pub-
lic, but at the same time freely transferable share certifi-
cates, made to bearer, had been popularized.

In the same years a parallel phenomenon was exhibited
by England, except that the course of development was notFIRST GREAT SPECULATIVE CRISES 289

so wild as that in France. Soon after founding of the
Bank of England, the idea of a competing institution be-
came current (1696). This was the land bank project
resting on the same ideas later presented in the proposals
of the German agrarians, namely, of using land credit in-
stead of bills of exchange as a cover for bank notes. But
this project was not carried out because in England it was
well understood that the necessary liquidity would be ab-
sent. This, however, did not prevent the occurrence that
in 1711, after the fall of the Whig government, the Tories
adopted a course similar to that followed a few years later
by John Law.

The English nobility wished to create a centralized power
in opposition to the specifically Puritan basis of the Bank
of England, and at the same time the gigantic public debt
was to be paid off. For this purpose was founded the
South Sea Company, which made considerable advances
to the state and in return received a monopoly of the South
Pacific trade. The Bank of England was not shrewd
enough to keep aloof from the project; it even outbid the
founders and it was due only to the Tories, who on the
ground of political repugnance refused it participation,
that its offer was not accepted.

The course of events was similar to that of John Law’s
institution. Here also bankruptcy was unavoidable be-
eause the South Sea trade was not sufficient to pay inter-
est on the sums advanced. Yet prior to this eventuality,
just as in France, speculation gave rise to transferable
certificates. The result was that enormous property was
dissipated while many adventurers came out of it smiling,
and the state—in a way none too honorable—achieved a
substantial lightening of its burden of interest. The Bank
of England remained standing in all its former prestige,
being the only financial institution based on the rational

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290 GENERAL ECONOMIC HISTORY

discounting of exchange and hence possessing the requisite
current liquidity. The explanation is that exchange repre-
sents nothing but goods already sold, and such a regular
and sufficient turnover of goods no place in the world ex-
cept London at that time could provide.

Speculative erises of a similar sort have taken place
from that time forward, but never since on the same scale.
The first crises in rational speculation began a full hun-
dred years later, after the conclusion of the Wars of Libera-
tion, and since that time they have recurred almost regu-
larly at intervals of about 10 years—1815, 1825, 1835, 1847
ete. It was these which Karl Marx had in view when in
the Communist Manifesto he prophesied the downfall of
capitalism. The first of these erises and their periodic
recurrence were based on the possibility of speculation and
the resultant participation of outside interests in large
business undertakings.

The collapse has resulted from the fact that in conse-
quence of over-speculation, means of production, though
not production itself, grew faster than the need for con-
sumption of goods. In 1815 the prospect of the lifting of
the continental blockade had led to a regular rage for
founding factories; but the war had destroyed the buying
power of the continent and it could no longer take the Eng-
lish products. This crisis was barely overcome, and the
continent had begun to develop buying power, when in 1825
a new crisis set in because means of production, though not
goods, had been speculatively produced on a scale never
known before and out of correspondence with the needs.

That it was possible to create means of production to such
an extent is due to the fact that with the 19th century the
age of iron had begun. The discovery of the coking proc-
ess, the blast furnace, and the carrying of mining opera-
tions to unprecedented depths, introduced iron as the basisFIRST GREAT SPECULATIVE CRISES 291

of creating means of production, where the machines of the
18th century were built only of wood. Thus production
was freed from the organic limitations in which nature had
held it confined. At the same time, however, crises became
an imminent factor of the economic order. Crises in the
broader sense of chronic unemployment, destitution, glut-
ting of the market and political disturbances which destroy
all industrial life, have existed always and everywhere.
But there is great difference between the fact that a Chi-
nese or Japanese peasant is hungry and knows the while
that the Deity is unfavorable to him or the spirits are dis-
turbed and consequently nature does not give rain or sun-
shine at the right time, and the fact that the social order
itself may be held responsible for the crisis, even to the
poorest laborer. In the first case, men turn to religion;
in the second, the work of men is held at fault and the la-
boring man draws the conclusion that it must be changed.
Rational socialism would never have originated in the ab-
sence of crises.

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FREE WHOLESALE TRADE?

In the course of the 18th century the wholesaler becomes
finally separated from the retailer and comes to constitute
a definite branch of the merchant class, whereas the Han-
sards, for example, were not yet typically wholesalers.
Wholesale trade is significant, first, beeause it evolved new
commercial forms. One of these is the auction, which is
the means by which the importing wholesaler turns over
his goods as quickly as possible and secures the means for
making his payment abroad. The typical form of export
trade, which takes the place of the fair as an institution, is
consignment trading. It consists in the sending of goods
to be sold to a third party, the consignee, who must market
them according to the directions of the consignor. Thus
consignor and consignee do not meet as the earlier traders
did, at the fair, but the goods are sent abroad on a specu-
lation. A positive prerequisite for trading on consign-
ment is the establishment of regular exchange quotations
on the point of destination, since otherwise the risk in con-
signment would be unbearably high. A negative require-
ment is that trading on the basis of samples is not yet es-
tablished and hence the goods must be seen by the pur-
chaser himself. Consignment trading is ordinarily over-
seas trade; it prevails where the merchant has no connec-
tion with the retailer.

Further development consists in the appearance of a

buying commission man alongside the one who sells, the
292FREE WHOLESALE TRADE 293

former buying abroad without sight of the goods. The
oldest form of such trade was based on samples. It is
true that selling at a distance existed before this develop-
ment, ““merchantable goods”’ being bought and sold which
must come up to the traditionally established quality;
whether they did so was decided by mercantile courts of
arbitration. Sale by sample, however, is a specifically
modern form of trading at a distance. It played a funda-
mental role in commerce in the latter part of the 18th and
the 19th centuries, being displaced by standardization and
the specification of grades, which makes it possible to do
away with the sending of samples. The new practice re-
quires that grades be definitely established. It was on the
basis of trading by grades that speculation and exchange
dealings in connection with commodities became possible in
the 18th century.

The fair is a prior stage of the exchange. The two have
this in common, that trading takes place between merchants
only ; the difference consists in the physical presence of the
goods in the case of the fair, and also in the periodical repe-
tition of the fair itself. An intermediate type between the
exchange and the fair is the so-called ‘‘permanent fair.”’
In all the great commercial centers there arose in the 16th
to the 18th centuries establishments which bore the name
of exchange or ‘‘bourse.’’ However, exchange dealings in
the strict sense did not yet take place in them since the
majority of those who frequented them were not local per-
sons but non-resident merchants who resorted to the “‘ex-
change’’ because of its connection with the fair and be-
cause the goods were typically on the spot or represented
by samples and were dealt in on this basis and not accord-
ing to standard grades. Exchange dealing in the modern
sense first developed in the field of negotiable paper and
money, not in that of goods, the former being standardizeddd od

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294 GENERAL ECONOMIC HISTORY

by nature. Only in the course of the 19th century were
those commodities added which could be graded with suffi-
cient accuracy.

The innovation in developed exchange dealings is the sys-
tem of rational dealing in futures or speculation for a rise,
i.e., selling with a view to buying the goods at a lower fig-
ure before the date of delivery. The absence of such trad-
ing involved the possibility of such crises as those of the
Tulip Craze and the Mississippi Company. It is true that
agreements to deliver goods not in possession of the sales-
man were earlier met with, but they were generally pro-
hibited because it was feared that they would facilitate the
buying up of goods to the disadvantage of consumers. It
could nowhere be systematically carried out as in a mod-
ern exchange, where speculation for a rise is always pres-
ent in opposition to speculation for a fall. The first ob-
jects subject to futures trading were money, especially
paper money and bank notes, state annuities, and colonial
paper. Here there could be difference of opinion as to the
effect of political occurrences or the yield of enterprise and
hence these instruments were an appropriate object for the
practice of speculation. In contrast, industrial paper is
entirely absent from the earliest price current bulletins.
Such speculation underwent an enormous expansion with
the building of railroads; these provided the paper which
first unchained the speculative urge. Under the head of
goods, grains, and a few colonial products available in large
volume, and then other goods, were drawn into the circle of
exchange speculation during the 19th century.

For the development of a wholesale trade carried out
in such fashion, and specifically for speculative trade, the
indispensable prerequisite was the presence of an adequate
news service and an adequate commercial organization.
A public news service, such as forms the basis of exchangeFREE WHOLESALE TRADE 295

dealings today, developed quite late. In the 18th century,
not only did the English Parliament keep its proceedings
secret, but the exchanges, which regarded themselves as
merchants’ clubs, followed the same policy in regard to their
news information. They feared that the publication of gen-
eral prices would lead to ill feeling and might destroy their
business. The newspaper as an institution came into the
service of commerce at an astonishingly late date.

The newspaper, as an institution, is not a product of
capitalism. It brought together in the first place political
news and then mainly all sorts of curiosities from the world
at large. The advertisement, however, made its way into
the newspaper very late. It was never entirely absent but
originally it related to family announcements, while the ad-
vertisement as a notice by the merchant, directed toward
finding a market, first becomes an established phenomenon
at the end of the 18th century—in the journal which for a
century was the first in the world, the ‘‘Times.’’ Official
price bulletins did not become general until the 19th cen-
tury; originally all the exchanges were closed clubs, as they
have remained in America virtually down to the present.
Hence in the 18th century, business depended on the or-
ganized exchange of letters. Rational trading between
regions was impossible without secure transmission of let-
ters. This was accomplished partly by the merchant guilds
and in part by butchers, wheelwrights, etc. The final stage
in the rationalization of transmission of letters was brought
about by the post, which collected letters and in connec-
tion therewith made tariff agreements with commercial
houses. In Germany, the family of Thurn and Taxis, who
held the postal concession, made notable advances in the
rationalization of communication by letter. Yet the vol-
ume of correspondence is in the beginning surprisingly

small. In 1633, a million letters were posted in all Eng-

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296 GENERAL ECONOMIC HISTORY

land while today a place of 4,000 population will equal
the number.

In the field of commercial organization nothing was
changed, at least in principle, in the period before the intro-
duction of the railroads. In the 18th century, ocean ships
had reached very little greater displacement than those of
Venice at the close of the middle ages. It is true that
their number was greater, and the size of warships had in-
ereased. This provided a stimulus for the multiplication
and enlargement of merchant ships also, but the impulse
could not be followed out in the epoch of wood construc-
tion. Inland shipping had been facilitated by the con-
struction of locks, but it retained its guild organization
down into the 19th century and in consequence experienced
no startling innovations. Land transport also remained
as before. The post produced no change; it merely for-
warded letters and small packages, but did not concern it-
self with large scale production, which was decisive for
economic life.

Only the roads underwent an extraordinary improve-
ment, through the construction of turnpikes. In this the
French government under Sully took the lead, while Eng-
land leased the roads to private enterprisers who collected
tolls for their use. The building of the turnpikes wrought
a revolution in commercial life comparable to no other
before the appearance of the railways. There is no com-
parison between the present density of road traffic and that
of this period. In 1793, 70,000 horses went through the Lit-
tle town of Liineburg while as late as 1846 only 40,000 were
used in freight transport in all Germany. The costs of
land carriage amounted to ten or twenty times the freight
on the railways at a later time, and were three to four times
as high as the charges for inland shipping at the same
period. A half billion ton-kilometers was the highest fig-FREE WHOLESALE TRADE 297

ure for transportation for the movement on land in Ger-

many, while in 1918, 67 billions were carried on the rail-
roads.

The railway is the most revolutionary instrumentality
known to history, for economic life in general and not
merely for commerce, but the railway was dependent on
the age of iron; and it also like so many other things, was
the plaything of princely and courtier interests.

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CHAPTER

COLONIAL POLICY FROM THE SIXTEENTH TO THE
EIGHTEENTH CENTURY ?

At this point it is pertinent to inquire into the significance
which the acquisition and exploitation of the great non-
European regions had for the development of modern cap-
italism, although only the most characteristic features of
the older colonial policy can be mentioned here. The acqui-
sition of colonies by the European states led to a gigantic
acquisition of wealth in Europe for all of them. The means
of this accumulation was the monopolizing of colonial prod-
ucts, and also of the markets of the colonies, that is the
right to take goods into them, and, finally, the profits of
transportation between mother land and colony; the last
were ensured especially by the English Navigation Act of
1651. This accumulation was secured by force, without ex-
ception and by all countries. The operations might take
various forms. Hither the state drew a profit from the
colonies directly, administering them by its own agencies,
or it leased them, in return for a payment, to companies.
Two main types of exploitation are met with: the feudal
type in the Spanish and Portuguese colonies, the capital-
istic in the Dutch and English.

Forerunners of the feudal colonization form are espe-
cially the Venetian and Genoese colonies in the Levant, and
those of the Templars. In both cases the opportunity for
securing a money income was afforded by the subdivision of
298COLONIAL POLICY 299

the region to be exploited into fiefs, ‘‘encomiendas”’ in the
ease of Spain.

The capitalistic colonies regularly developed into planta-
tions. Labor power was furnished by the natives. The
opportunities for application of this labor system, from
which favorable results had been secured in Asia and
Africa, seemed about to expand enormously when it was
transferred to trans-oceanic lands. It was found however
that the American Indians were entirely unsuitable for
plantation labor,” and importation of black slaves to the
West Indies took the place of their use and gradually grew
into a regular commerce of enormous extent. It was ear-
ried on on the basis of slave trading privileges (‘‘assiento’’)
the first of which was granted by the emperor Charles V in
1517 to the Flemings. These slave trading privileges
played a large role in international relations well into the
18th century. In the treaty of Utrecht, England secured
the right to import slaves into the Spanish possessions in
South America, to the exclusion of all other powers, and
at the same time assumed the obligation of delivering a
certain minimum number. The results of the slave trade
were considerable. It may be estimated that at the begin-
ning of the 19th century some seven million slaves were
living in the territory of the European colonies. Their
mortality was extraordinarily high, running in the 19th
eentury to 25% and to a multiple of that figure earlier.
From 1807 to 1848. a further five million slaves were im-
ported from Africa, and the aggregate of slaves transported
thence overseas can be set equal to the population of a first
class European power in the 18th century.

In addition to the black slaves there were white half-
slaves, the ‘‘indentured servants”’; they were especially
numerous in the English North American colonies where in
the 17th century their number surpassed that of the

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300 GENERAL ECONOMIC HISTORY

negroes. In part they were deported criminals, in part
poor wretches who attempted in this way to earn their pas-
sage money, a small fortune.

The profits of the slave labor were by no means small.
In England in the 18th century they were estimated at
fifteen to twenty pounds sterling per slave per year. The
profitableness of slave labor depended upon strict planta-
tion discipline, ruthless driving of the slave, and perpetual
importation—since the slaves did not perpetuate them-
selves—and finally exploitative agriculture.

This accumulation of wealth brought about through
colonial trade has been of little significance for the devel-
opment of modern ecapitalism—a fact which must be em-
phasized in opposition to Werner Sombart. It is true that
the colonial trade made possible the accumulation of
wealth to an enormous extent, but this did not further the
specifically occidental form of the organization of labor,
since colonial trade itself rested on the principle of ex-
ploitation and not that of securing an income through mar-
ket operations. Furthermore, we know that in Bengal for
example, the English garrison cost five times as much as
the money value of all the goods carried thither. It fol-
lows that the markets for domestic industry furnished by
the colonies under the conditions of the time were rela-
tively unimportant, and that the main profit was derived
from the transport business. |

The end of the capitalistic method of exploiting colonies
coincides with the abolition of slavery. Only in part did
this come about through ethical motives. The only Chris-
tian sect which persistently and uniformly combated slav-
ery was the Quakers; neither the Calvinists nor the Catho-
lics nor any other denomination consistently and con-
stantly advocated its abolition. A decisive event was
the loss of the North American colonies. Even during theCOLONIAL POLICY 301

War for Independence, the northern colonies prohibited
slavery, and in fact from purely democratic political prin-
ciples, because the people wished to avoid the development
of a plantation system and a planter aristocracy. A re-
ligious motive also played a part in the shape of the tra-
ditional repugnance of the Puritans to feudalism of any
sort. In 1794 the French Convention declared for the abol-
ition of slavery on political equalitarian grounds, which
were dressed up in an appropriate ideology. In the mean-
time, in 1815, the Congress of Vienna prohibited the slave
trade. The interest of England in slavery was much re-
duced through the loss of the principal slave consuming
region, its North American colonies. The decrees of the
Congress made it possible for the English to suppress the
foreign slave trade and at the same time themselves to carry
on a buoyant smuggling business. From 1807 to 1847, five
million human beings were carried from Africa to the
English colonial territories in this way, with the actual
sufferance of the government. Only after the parliamen-
tary reform in 1833, was slavery really prohibited in Eng-
land and by England for all its colonies, and the prohibi-
tion was at once treated seriously.

In the period from the 16th to the 18th century, slavery
signified as little for the economic organization of Europe
as it did much for the accumulation of wealth in Europe.
It produced a large number of annuitants, but contributed
in very small degree toward bringing about the develop-
ment of the capitalistic organization of industry and of
economic life.

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THE DEVELOPMENT OF INDUSTRIAL TECHNIQUE *

It is not easy to define accurately the concept of the fac-
tory. We think at once of the steam engine and the mech-
anization of work, but the machine had its forerunner in
what we call ‘‘apparatus’’—labor appliances which had to
be utilized in the same way as the machine but which as a
rule were driven by water power. The distinction is that
the apparatus works as the servant of the man while in
modern machines the inverse relation holds. The real dis-
tinguishing characteristic of the modern factory is in gen-
eral, however, not the implements of work applied, but the
concentration of ownership of workplace, means of work,
source of power and raw material in one and the same hand,
that of the entrepreneur. This combination was only ex-
ceptionally met with before the 18th century.

Tracing the English development, which determined the
character of the evolution of capitalism—although Eng-
land followed the example of other countries such as Italy—
we find the following stages. 1. The oldest real factory
which ean be identified (though it was still driven by
water power) was a silk factory at Derwent, near Derby, in
1719. It was conducted on the basis of a patent, the
owner of which had stolen the invention in Italy. In Italy
there had long been silk manufacture with various prop-
erty relations, but the product was destined for luxury

requirements and belonged to an epoch which is not yet
302INDUSTRIAL TECHNIQUE 303

characteristic for modern capitalism, although it must be
named here because the implements of work and all mate-
rial and product belonged to an entrepreneur. 2. The es-
tablishment of wool manufacture (1738) on the basis of a
patent after the invention of an apparatus for running

1 bobbins at once by the aid of water power. 3.
The development of half-linen production. 4. The sys-
tematic development of the pottery industry through ex-
periments in Staffordshire. Earthen vessels were produced
under a modern division of labor and the application of

a hundrec

water power and with the ownership of work place and
implements by an entrepreneur. 5. The manufacture of
paper, beginning with the 18th century, its permanent basis
being the development of the modern use of documents and
of the newspaper.

The decisive factor, however, in the triumph of the mech-
anization and rationalization of work was the fate of cotton
manufacture. This industry was transplanted from the
continent to England in the 17th century and there im-
mediately began a struggle against the old national in-
dustry established since the 15th century, namely, wool, a
struggle as intense as that in which wool had previously
been involved against linen. The power of the wool pro-
ducers was so great that they secured restrictions and pro-
hibitions on the production of half-linen, which was not
restored until the Manchester Act of 1736. The factory
production of cotton stuff was originally limited by the
fact that, while the loom had been improved and enlarged,
the spindle remained on the medieval level, so that the
necessary quantity of spun material was not available. A
succession of technical improvements in the spindle after
1769 reversed this relation and with the help of water power
and mechanical aids great quantities of usable yarn eould
be provided while it was impossible to weave the same

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304 GENERAL ECONOMIC HISTORY

quantity with corresponding speed. The discrepancy was
removed in 1785 through the construction of the power
loom by Cartwright, one of the first inventors who com-
bined technology with science and handled the problems of
the former in terms of theoretical considerations.

But for all this revolution in the means of work the de-
velopment might have stopped and modern capitalism in
its most characteristic form never have appeared. Its vic-
tory was decided by coal and iron. We know that coal had
been used in consumption, even in the middle ages, as in
London, in Luttich and Zwickau (above p. 191). But
until the 18th century the technique was determined by the
fact that smelting and all preparation of iron was done
with charcoal. The deforestation of England resulted,
while Germany was saved from this fate by the circum-
stance that in the 17th and 18th centuries it was untouched
by the capitalistic development. Everywhere the destruc-
tion of the forests brought the industrial development to a
standstill at a certain point. Smelting was only released
from its attachment to organic materials of the plant world
by the application of coal. It must be noted that the first
blast furnaces appear as early as the 15th century, but
they were fed with wood and were used not for private con-
sumption but for war purposes, and in part also in con-
nection with ocean shipping. In the 15th century, further-
more, was invented the iron drill for the preparation of
cannon barrels. At the same time appeared the large
heavy trip hammer, up to a thousand pounds weight, driven
by water power, so that in addition to the handling of cast
iron with the drill, mechanical forging was also possible.
Finally, in the 17th century the rolling process was also
applied in the modern sense of the word.

In the face of the further development arose two diffi-
cult problems. These were set, on the one hand, by the dan-INDUSTRIAL TECHNIQUE 305

ger of deforestation and, on the other, by the perpetual
inroads of water in the mines. The first question was
the more pressing because in contrast with the expansion of
the textile industry the English iron industry had shrunk
step by step until at the beginning of the 18th century it
gave the impression of having reached its end. The solu-
tion of the problem was reached through the coking of
eoal, which was discovered in 1785, and the use of coke in
blast furnace operation, which was undertaken in 1740.
Another step in advance was made in 1784 when the pud-
dling process was introduced as an innovation. The threat
to mining was removed by the invention of the steam en-
gine. Crude attempts first showed the possibility of lift-
ing water with fire and between 1670 and 1770, and fur-
ther toward the end of the 18th century, the steam engine
arrived at the stage of serviceability which made it pos-
sible to produce the amount of coal necessary for modern
industry.

The significance of the development just portrayed is to
be found in three consequences. In the first place, coal and
iron released technology and productive possibilities from
the limitations of the qualities inherent in organic mate-
rials: from this time forward industry was no longer de-
pendent upon animal power or plant growth. Through a
process of exhaustive exploitation, fossil fuel, and by its
aid iron ore, were brought up to the light of day, and by
means of both men achieved the possibility of extending
production to a degree which would have previously been
beyond bounds of the conceivable. Thus iron became the
most important factor in the development of capitalism ;
what would have happened to this system or to Europe in
the absence of this development we do not know.’

The second point is that the mechanization of the pro-
duction process through the steam engine liberated pro-

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306 GENERAL ECONOMIC HISTORY

duction from the organic limitations of human labor. Not
altogether, it is true, for it goes without saying that labor
was indispensable for the tending of machines. But the
mechanizing process has always and everywhere been intro-
duced to the definite end of releasing labor; every new in-
vention signifies the extensive displacement of hand work-
ers by a relatively small man power for machine super-
vision.

Finally, through the union with science, the production
of goods was emancipated from all the bonds of inherited
tradition, and came under the dominance of the freely rov-
ing intelligence. It is true that most of the inventions of
the 18th century were not made in a scientific manner;
when the coking process was discovered no one suspected
what its chemical significance might be. The connection of
industry with modern science, especially the systematic
work of the laboratories, beginning with Justus von Liebig,
enabled industry to become what it is today and so brought
capitalism to its full development.

The recruiting of the labor force for the new form of
production, as it developed in England in the 18th cen-
tury, resting upon the concentration of all the means of
production in the hands of the entrepreneur, was carried
out by means of compulsion, though of an indirect sort.
Under this head belong especially the Poor Law, and the
Statute of Apprentices of Queen Elizabeth. These meas-
ures had become necessary in consequence of the large num-
ber of people wandering about the country who had been
rendered destitute by the revolution in the agricultural
system. Its displacement of the small dependent peasant
by large renters and the transformation of arable land into
sheep pastures—although the latter has occasionally been
overestimated—worked together constantly to reduce the
amount of labor force required on the land and to bringINDUSTRIAL TECHNIQUE 307

into being a surplus population, which was subjected to
compulsory labor. Anyone who did not take a job vol-
untarily was thrust into the workhouse with its strict disci-
pline; and anyone who left a position without a certificate
from the master or entrepreneur was treated as a vagabond.
No unemployed person was supported except under the
compulsion of entering the workhouse.

In this way the first labor force for the factories was re-
cruited. With difficulty the people adapted themselves to
the discipline of the work. But the power of the possess-
ing classes was too great; they secured the support of the
political authority through the justices of the peace, who in
the absence of binding law operated on the basis of a maze
of instructions and largely according to their own dictates.
Down into the second half of the 19th century they exer-
eised an arbitrary control over the labor force and fed the
workers into the newly arising industries. From the be-
ginning of the 18th century, on the other hand, begins the
regulation of relations between entrepreneur and laborer,
presaging the modern control of labor conditions. The
first anti-trucking laws were passed under Queen Anne and
George I. While during the whole middle ages the worker
had struggled for the right to bring the product of his own
labor to market, from now on legislation had to protect him
against being paid for his work in the products of others
and to secure for him remuneration in money. Another
source of labor power was in England the small master
class, the great majority of whom were transformed into
a proletariat of factory laborers.

In the market for the products of these newly estab-
lished industries, two great sources of demand appeared,
namely war and luxury, the military administration and
court requirements. The military administration became a
consumer of the products of industry to the extent that the

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308 GENERAL ECONOMIC HISTORY

great mercenary armies developed and the more so as army
discipline and the rationalization of arms and all military
technique progressed. In the textile industry the produc-
tion of uniforms was fundamental, as these could by no
means be the product of the army itself but were a means
of discipline in the interest of unitary regimentation, and
in order to keep the soldiers under control. The produc-
tion of cannon and fire arms occupied the iron industry, and
the provision of supplies did the same for trade. In addi-
tion to the land army there was the navy; the increasing
size of the war ships was one of the factors which created
a market for industry. While the size of merchant ships
had changed little before the end of the 18th century and
as late as 1750 the ships entering London were typically
of about 140 tons burden, war ships had grown to a size
of a thousand tons in the 16th century and in the 18th
this became the normal burden. The demand of the navy,
like that of the army, increased further with the growth
in the number and extent of the voyages (and this also
applies to merchant ships) especially after the 16th cen-
tury. Down to that time the Levant cruise had normally
occupied a year; at this time ships began to remain much
longer at sea and at the same time the increasing magni-
tude of campaigns on land necessitated a more extensive
provision with supplies, munitions, ete. Finally, the speed
of ship building and of the construction of cannon in-
creased with extraordinary rapidity after the 17th century.

Sombart has assumed that the standardized mass pro-
vision for war is among the decisive conditions affecting the
development of modern capitalism. This theory must be
reduced to its proper proportions. It is correct that an-
nually enormous sums were spent for army and navy pur-
poses; in Spain 70 % of the revenues of the state went for
this purpose and in other countries two-thirds or more.INDUSTRIAL TECHNIQUE 309

But we also find outside the western world, as in the Mogul
Empire and in China, enormous armies equipped with
artillery (although not yet with uniforms), yet no impulse
toward a capitalistic development followed from the fact.
Moreover, even in the west the army needs were met to an
increasing extent, developing in parallelism with capital-
ism itself, by the military administration on its own
account, in its own workshops and arms and munition fae-
tories; that is, it proceeded along non-capitalistie lines.
Hence, it is a false conclusion to ascribe to war as such,
through the army demands, the role of prime mover.in the
creation of modern capitalism. It is true that it was in-
volved in capitalism, and not only in Europe; but this
motive was not decisive for the development. Otherwise
the increasing provision of army requirements by direct
action of the state would again have forced capitalism into
the background, a development which did not take place.
For the luxury demand of the court and the nobility,
France became the typical country. For a time in the
16th century, the king spent 10 million livres a year di-
rectly or indirectly for luxury goods. This expenditure
by the royal family and the highest social classes consti-
tuted a strong stimulus to quite a number of industries.
The most important articles, aside from such means of en-
joyment as chocolate and coffee, are embroidery (16th cen-
tury), linen goods, for the treatment of which ironing de-
velops (17th century), stockings (16th century), umbrel-
las (17th century), indigo dyeing (16th century), tapestry
(17th century), and carpets (18th century). With regard
to the volume of the demand the two last named were the
most important of the luxury industries; they signified a
democratization of luxury which is the crucial direction of
capitalistic production.
Court luxury existed in China and India, on a seale un-

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310 GENERAL ECONOMIC HISTORY

known in Europe; and yet no significant stimulus to eapi-
talism or capitalistic industry proceeded from the fact.
The reason is that the provision for this demand was
arranged leiturgically through compulsory contributions.
This system maintained itself so tenaciously that down to
our own time the peasants in the region of Peking have been
obliged to furnish to the imperial court the same objects
as 3000 years ago, although they did not know how to pro-
duce them and were compelled to buy them from producers.
In India and China the army requirements were also met
by forced labor and contributions in kind. In Europe it-
self the leiturgical contributions of the east are not un-
known, although they appear in a different form. Here the
princes transformed the workers in luxury industry into
compulsory laborers by indirect means, binding them to
their places of work by grants of land, long period con-
tracts, and various privileges—although in France, the
country which took the lead in luxury industries, this
was not the case; here the handicraft form of establish-
ment maintained itself, partly under a putting-out organi-
zation and partly under a workshop system, and neither
the technology nor the economic organization of the in-
dustries was transformed in any revolutionary way.

The decisive impetus toward capitalism could come only
from one source, namely a mass market demand, which
again could arise only in a small proportion of the luxury
industries through the democratization of the demand,
especially along the line of production of substitutes for
the luxury goods of the upper classes. This phenomenon
is characterized by price competition, while the luxury in-
dustries working for the court follow the handicraft prin-
ciple of competition in quality. The first example of the
policy of a state organization entering upon price compe-
tition is afforded in England at the close of the 15th cen-INDUSTRIAL TECHNIQUE 311

tury, when the effort was made to undersell Flemish wool,
an object which was promoted by numerous export pro-
hibitions.

The great price revolution of the 16th and 17th centuries
provided a powerful lever for the specifically capitalistic
tendencies of seeking profit through cheapening produc-
tion and lowering the price. This revolution is rightly as-
cribed to the continuous inflow of precious metals, in conse-
quence of the great overseas discoveries. It lasted from the
thirties of the 16th century down to the time of the Thirty
Years’ War, but affected different branches of economic
life in quite different ways. In the case of agricultural
products an almost universal rise in price set in, making it
possible for them to go over to production for the market.
It was quite otherwise with the course of prices for indus-
trial products. By and large these remained stable or rose
in price relatively little, thus really falling, in comparison
with the agricultural products. This relative decline was
made possible only through a shift in technology and eco-
nomics, and exerted a pressure in the direction of increas-
ing profit by repeated cheapening of production. Thus the
development did not follow the order that capitalism set
in first and the decline in prices followed, but the reverse;
first the prices fell relatively and then came capitalism.

The tendency toward rationalizing technology and eco-
nomic relations with a view to reducing prices in relation
to costs, generated in the 17th century a feverish pursuit
of invention. All the inventors of the period are dom-
inated by the object of cheapening production; the notion
of perpetual motion as a source of energy is only one of
many objectives of this quite universal movement. The
inventor as a type goes back much farther. But if one
serutinizes the devices of the greatest inventor of pre-
capitalistic times, Leonardo da Vinci—(for experimenta-

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312 GENERAL ECONOMIC HISTORY

tion originated in the field of art and not that of science )—
one observes that his urge was not that of cheapening pro-
duction but the rational mastery of technical problems as
such. The inventors of the pre-capitalistic age worked
empirically ; their inventions had more or less the charac-
ter of accidents. An exception is mining, and in conse-
quence it is the problems of mining in connection with
which deliberate technical progress took place.

A positive innovation in connection with invention is
the first rational patent law, the English law of 1623, which
contains all the essential provisions of a modern statute.
Down to that time the exploitation of inventions had been
arranged through a special grant in consideration of a pay-
ment; in contrast the law of 1623 limits the protection of
the invention to 14 years and makes its subsequent utiliza-
tion by an entrepreneur conditional upon an adequate roy-
alty for the original inventor. Without the stimulus of this
patent law the inventions crucial for the development of
capitalism in the field of textile industry in the 18th
century would not have been possible.

Drawing together once more the distinguishing charac-
teristics of western capitalism and its causes, we find the
following factors. First, this institution alone produced
a rational organization of labor, which nowhere previously
existed. Everywhere and always there has been trade;
it can be traced back into the stone age. Likewise we
find in the most varied epochs and cultures war finance,
state contributions, tax farming, farming of offices, etc.,
but not a rational organization of labor. Furthermore we
find everywhere else a primitive, strictly integrated in-
ternal economy such that there is no question of any free-
dom of economic action between members of the same
tribe or clan, associated with absolute freedom of trade ex-
ternally. Internal and external ethics are distinguished,INDUSTRIAL TECHNIQUE 313

and in connection with the latter there is complete ruthless-
ness in financial procedure; nothing can be more rigidly
prescribed than the clan economy of China or the caste
economy of India, and on the other hand nothing so un-
scrupulous as the conduct of the Hindu foreign trader.
In contrast with this, the second characteristic of western
capitalism is a lifting of the barrier between the internal
economy and external economy, between internal and ex-
ternal ethics, and the entry of the commercial principle into
the internal economy, with the organization of labor on this
basis. Finally, the disintegration of primitive economic
fixity is also met with elsewhere, as for example in Baby-
lon; but nowhere else do we find the entrepreneur organi-
zation of labor as it is known in the western world.

If this development took place only in the occident the
reason is to be found in the special features of its general
cultural evolution which are peculiar to it. Only the occi-
dent knows the state in the modern sense, with a profes-
sional administration, specialized officialdom, and law based
on the concept of citizenship. Beginnings of this institu-
tion in antiquity and in the orient were never able to de-
velop. Only the occident knows rational law, made by ju-
rists and rationally interpreted and applied, and only in the
occident is found the concept of citizen (cwis Romanus,
citoyen, bourgeois) because only in the occident again are
there cities in the specific sense. Furthermore, only the oc-
cident possesses science in the present-day sense of the
word. Theology, philosophy, reflection on the ultimate
problems of life, were known to the Chinese and the Hindu,
perhaps even of a depth unreached by the European; but
a rational science and in connection with it a rational tech-
nology remained unknown to those civilizations. Finally,
western civilization is further distinguished from every
other by the presence of men with a rational ethic for the

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314 GENERAL ECONOMIC HISTORY

conduct of life. Magic and religion are found everywhere;
but a religious basis for the ordering of life which con-
sistently followed out must lead to explicit rationalism is
again peculiar to western civilization alone.@HVA Pt ER sexevelaier
CITIZENSHIP *

In the concept of citizenship (Birgertwm) as it is used in
social history are bound up three distinct significations.
First, citizenship may include certain social categories
or classes which have some specific communal or economic
interest. As thus defined the class citizen is not unitary;
there are greater citizens and lesser citizens; entrepreneurs
and hand workers belong to the class. Second, in the politi-
eal sense, citizenship signifies membership in the state, with
its connotation as the holder of certain political rights.
Finally, by citizens in the class sense, we understand those
strata which are drawn together, in contrast with the bu-
reaucracy or the proletariat and others outside their circle,
as ‘‘persons of property and culture,’’ entrepreneurs,
recipients of funded incomes, and in general all persons of
academic culture, a certain class standard of living, and a
certain social prestige.

The first of these concepts is economic in character and
is peculiar to western civilization. There are and have
been everywhere hand laborers and entrepreneurs, but
never and nowhere were they included in a unitary social
class. The notion of the citizen of the state has its fore-
runners in antiquity and in the medieval city. Here there
were citizens as holders of political rights, while outside of
the oecident only traces of this relation are met with, as in
the Babylonian patriciate and the Josherim, the inhabi-
tants of a city with full legal rights, in the Old Testament.
315

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316 GENERAL ECONOMIC HISTORY

The farther east we go the fewer are these traces; the no-
tion of citizens of the state is unknown to the world of
Islam, and to India and China. Finally, the social class
signification of citizen as the man of property and culture,
or of one or the other, in contrast with the nobility, on the
one hand, and the proletariat, on the other, is likewise a
specifically modern and western concept, like that of the
bourgeoisie. It is true that in antiquity and in the middle
ages, citizen was a class concept; membership in specifie
class groups made the person a citizen. The difference is
that in this case the citizen was privileged in a negative
as well as a positive sense. In the positive sense in that he
only—ain the medieval city for example—might pursue cer-
tain occupations; negatively in that certain legal require-
ments were waived, such as the qualification for holding a
fief, the qualification for the tourney, and that for member-
ship in the religious community. The citizen in the quality
of membership in a class is always a citizen of a particular
city, and the city in this sense, has existed only in the west-
ern world, or elsewhere, as in the early period in Mesopo-
tamia, only in an incipient stage.

The contributions of the city in the whole field of cul-
ture are extensive. The city created the party and the
demagogue. It is true that we find all through history
struggles between cliques, factions of nobles, and office-
seekers, but nowhere outside the occidental cities are
there parties in the present-day sense of the word, and as
little are there demagogues in the sense of party leaders
and seekers for ministerial posts. The city and it alone
has brought forth the phenomena of the history of art.
Hellenic and Gothie art, in contrast with Myecenean and
Roman, are city art. So also the city produced science in
the modern sense. In the city civilization of the Greeks
the discipline out of which scientific thinking developed,CITIZENSHIP 317

namely mathematics, was given the form under which it
continuously developed down to modern times. The city
culture of the Babylonians stands in an analogous relation
to the foundation of astronomy. Furthermore, the city is
the basis of specific religious institutions. Not only was
Judaism, in contrast with the religion of Israel, a thor-
oughly urban construction—a peasant could not conform
with the ritual of the law—but early Christianity is also
a city phenomenon; the larger the city the greater was the
percentage of Christians, and the case of Puritanism and
Pietism was also the same. That a peasant could function
as a member of a religious group is a strictly modern
phenomenon. In Christian antiquity the word paganus
signified at the same time heathen and village dweller, just
as in the post-exilic period the town-dwelling Pharisee
looked with contempt on the Am-ha-aretz who was ignorant
of the law. Even Thomas Aquinas, in discussing the dif-
ferent social classes and their relative worth, speaks with
extreme contempt of the peasant. Finally, the city alone
produced theological thought, and on the other hand again,
it alone harbored thought untrammeled by priestcraft.
The phenomenon of Plato, with his question of how to make
men useful citizens as the dominant problem of his thought,
is unthinkable outside the environment of a city.

The question whether a place is to be regarded as a city
is not answered on the basis of its spatial extent.2 From
the economic standpoint, rather, both in the occident and
elsewhere, the city is in the first place the seat of commerce
and industry, and requires a continuous provision of the
means of subsistence from without. From an economic
standpoint, the various categories of large places are dis-
tinguished by the source from which supplies come and the
means by which they are paid for. A large place which
does not live on its own agricultural production may pay

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318 GENERAL ECONOMIC HISTORY

for its imports by its own products, that is industrial
products, or through trade or rents, or finally by means of
pensions. The ‘‘rents’’ represent salaries of officials or
land rents; subsistence on pensions is illustrated by Wies-
baden, where the cost of imports is met by the pensions of
political officials and army officers. Large places may be
classified according to the dominance of these sources of in-
come to pay for the imports of subsistence goods, -but this
is a condition common to the world at large; it belongs to
large places and does not distinguish a city.

A further general characteristic of a city is the fact that
in the past it was generally a fortress; throughout long
periods a place was recognized as a city only if and so long
as it was a fortified point. In this connection the city
was regularly the seat of government, both political and
ecclesiastical. In some eases in the occident a cwitas was
understood to mean a place which was the seat of a bishop.
In China it is a decisive characteristie that the city is the
seat of a mandarin,® and cities are classified on the basis
of the rank of their mandarins. Even in the Italian Re-
maissance the cities were distinguished by the grade of
their officials and upper class residents, and the rank of the
resident nobility.

It is true that outside the western world there were cities
in the sense of a fortified point and the seat of political and
hierarchical administration. But outside the occident there
have not been cities in the sense of a unitary community.
In the middle ages, the distinguishing characteristic was
the possession of its own law and court and an autonomous
administration of whatever extent. The citizen of the
middle ages was a citizen because and insofar as he came
under this law and participated in the choice of adminis-
trative officials. That cities have not existed outside the
occident in the sense of a political community is a factCITIZENSHIP 319

calling for explanation. That the reason was economic in
character is very doubtful. As little is it the specific
‘“Germanie spirit’? which produced the unity, for in China
and India there were unitary groups much more cohesive
than those of the oecident, and yet the particular union in
cities 1s not found there.

The inquiry must be earried back to certain ultimate
fundamental facts. We cannot explain the phenomena on
the basis of the feudal or political grants of the middle ages
or in terms of the founding of cities by Alexander the Great
on his march to India. The earliest references to cities as
political units designate rather their revolutionary char-
acter. ‘The occidental city arose through the establishment
of a fraternity, the cvvoxiwpos in antiquity, the coniwratio
in the middle ages. The juristie forms, always relating to
externals, in which the resulting struggles and conflicts of
the middle ages are clothed, and the facts which lie behind
them, cannot be distinguished. The pronouncements of the
Staufers against cities prohibit none of the specific pre-
sumptions of citizenship, but rather the contwratio, the
brotherhood in arms for mutual aid and protection, involv-
ing the usurpation of political power.

The first example in the middle ages is the revolutionary
movement in 726 which led to the secession of Italy from
the Byzantine rule and which centered in Venice. It was
ealled forth especially by opposition to the attack on images
carried out by the emperors under military pressure, and
hence the religious element, although not the only factor,
vas the motive which precipitated the revolution. Previ-
ous to that time the dux (later doge) of Venice had been
appointed by the emperor, although, on the other hand,
there were certain families whose members were constantly
to a predominant extent appointed military tribunes or
district commandants. From then on the choice of the

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320 GENERAL ECONOMIC HISTORY

tribunes and of the dux was in the hands of persons liable
to military service, that is, those who were in a position to
serve as knights. Thus the movement was started. It re-
quires 400 years longer before in 1143 the name Commune
Venetiarum turns up. Quite similar was the ‘‘synecism”’
of antiquity, as for example the procedure of Nehemiah in
Jerusalem. This leader caused the leading families and a
selected portion of the people on the land to band theme
selves together under oath for the purpose of administra-
tion and defense of the city. We must assume the same
background for the origin of every ancient city. The polis
is always the product of such a confraternity or synecism,
not always an actual settlement in proximity but a definite
oath of brotherhood which signified that a common ritu-
alistie meal is established and a ritualistic union formed
and that only those had a part in this ritualistic group who
buried their dead on the acropolis and had their dwellings
in the city.

For the fact that this development took place only in
the oecident there are two reasons. The first is the peculiar
character of the organization for defense. The occidental
city is in its beginnings first of all a defense group, an
organization of those economically competent to bear arms,
to equip and train themselves. Whether the military or-
ganization is based on the principle of self-equipment or on
that of equipment by a military overlord who furnishes
horses, arms and provisions, is a distinction quite as funda-
mental for social history as is the question whether the
means of economic production are the property of the
worker or of a capitalistic entrepreneur. Everywhere out-
side the west the development of the city was prevented by
the fact that the army of the prince is older than the city.
The earliest Chinese epics do not, like the Homeric, speak
of the hero who fares forth to battle in his own chariot, butCITIZENSHIP 321

—

only of the officer as a leader of the men. Likewise in
India an army led by officers marched out against Alexan-
der the Great. In the west the army equipped by the war
lord, and the separation of soldier from the paraphernalia
of war, in a way analogous to the separation of the worker
from the means of production, is a product of the mod-
ern era, while in Asia it stands at the apex of the histori-
cal development. There was no Egyptian or Babylonian-
Assyrian army which would have presented a picture
similar to that of the Homeric mass army, the feudal army
of the west, the city army of the ancient polis, or the
medieval guild army.

The distinction is based on the fact that in the cultural
evolution of Egypt, western Asia, India, and China the
question of irrigation was crucial. The water question
conditioned the existence of the bureaucracy, the compul-
sory service of the dependent classes, and the dependence
of the subject classes upon the functioning of the bureau-
eracy of the king. That the king also expressed his power
in the form of a military monopoly is the basis of the dis-
tinction between the military organization of Asia and
that of the west. In the first case the royal official and
army officer is from the beginning the central figure of the
process, while in the west both were originally absent. The
forms of religious brotherhood and self equipment for war
made possible the origin and existence of the city. It is
true that the beginnings of an analogous development are
found in the east. In India we meet with relations which
verge upon the establishment of a city in the western sense,
namely, the combination of self equipment and legal citi-
zenship ; one who could furnish an elephant for the army is
in the free city of Vaicali a full citizen. In ancient Meso-
potamia, too, the knights carried on war with each other

and established cities with autonomous administration.Fe eee ES

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aed cS

322 GENERAL ECONOMIC HISTORY

But in the one case as in the other these beginnings later
disappear as the great kingdom arises on the basis of water
regulation. Hence only in the west did the development
come to complete maturity

The second obstacle which prevented the development of
the city in the orient was formed by ideas and institutions
connected with magic. In India the castes were not in a
position to form ritualistic communities and hence a city,
because they were ceremonially alien to one another. The
same facts explained the peculiar position of the Jews in
the middle ages. The cathedral and the eucharist were the
symbols of the unity of the city, but the Jews were not per-
mitted to pray in the cathedral or take part in the commun-
ion and hence were doomed to form diaspora-communes.
On the contrary, the consideration which made it natural
for cities to develop in the west was in antiquity the ex-
tensive freedom of the priesthood, the absence of any
monopoly in the hands of the priests over communion with
the gods, such as obtained in Asia. In western antiquity
the officials of the city performed the rites, and the result-
ant proprietorship of the polis over the things belonging to
the gods and the priestly treasures was carried to the point
of filling the priestly offices by auction, since no magical
limitations stood in the way asin India. For the later pe-
riod in the west three great facts were crucial. The first was
prophecy among the Jews, which destroyed magic within
the confines of Judaism; magical procedure remained real
but was devilish instead of divine. The second fact was
the pentecostal miracle, the ceremonial adoption into the
spirit of Christ which was a decisive factor in the extraor-
dinary spread of the early Christian enthusiasm. The final
factor was the day in Antioch (Gal. 2; 11 ff.) when Paul,
in opposition to Peter, espoused fellowship with the un-
circumcised. The magical barriers between clans, tribes,CITIZENSHIP 323

and peoples, which were still known in the ancient polis to
a considerable degree, were thus set aside and the estab-
lishment of the occidental city was made possible.
Although the city in the strict sense is specifically a
western institution, there are within the class two funda-
mental distinctions, first between antiquity and the middle
ages and second between southern and northern Europe.
In the first period of development of the city communities,
the similarity between the ancient and medieval city is
very great. In both cases it is those of knightly birth, the
families leading an aristocratic existence, who alone are ac-
tive members in the group, while all the remaining popula-
tion is merely bound to obedience. That these knightly
families became residents of the city is entirely the conse-
quence of the possibility of sharing in trade opportunities.
After the success of the Italian revolution against Byzan-
tium, a portion of the Venetian upper class families col-
lected in the Rialto because from that point commerce with
the orient was earried on. It is to be remembered that in
the sea trade and naval warfare Venice still formed a part
of the Byzantine system although it was politically inde-
pendent. Similarly in antiquity, the wealthy families did
not carry on trade on their own account but in the capacity
of ship owners or money lenders. It is characteristic that
in antiquity there was no city of importance which lay
more than a day’s journey distant from the sea; only those
places flourished which for political or geographical rea-
sons possessed exceptional opportunities for trade. Con-
sequently Sombart is essentially incorrect in asserting that
ground rent is the mother of the city and of commerce.
The facts stand in the reverse order; settlement in the
city is occasioned by the possibility and the intention of
employing the rents in trade, and the decisive influence of
trade on the founding of cities stands out.

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324 GENERAL ECONOMIC HISTORY

In the early middle ages the course of events in the rise
of a new individual in Venice was somewhat as follows.
He began as a trader, that is a retailer; then he proceeded
to travel overseas, securing from the upper class families
a eredit of money or goods which he turned over in the
Levant, sharing his profit on his return with those who
provided the loan. If he was successful he got himself
into the Venetian circle either by way of land or ships.
As a ship owner or land owner the way was open for his
ascent into the nobility, down to the clasing of the Grand
Council in 1297. The ordinary designation of the members
of the aristocracy living on the rent of land and of capital
—both resting on trading profit—is in Italy scioperato,
in Germany ehr'sumer Miissigginger—‘‘honorable idler.’’
It is true that among the nobility in Venice there were al-
ways families which continued to earry on trade as a pro-
fession, just as in the period of the Reformation noble fam-
ilies who had lost their wealth turned to the quest of a
livelihood by way of industry. But normally the full citi-
zen and member of an urban noble class is a man who pos-
sesses land as well as capital, and lives on an income but
does not himself take part in trade or industry.

Thus far the medieval development coincides with that
of antiquity; but their ways part with the establishment of
democracy. At the outset, to be sure, there are similarities
to be noted in this connection also: Ajpos, plebs, popolo
and Buiirgerschaft are indifferent words which refer in the
same way to the breaking in of democracy; they designate
the mass of citizens who do not pursue the knightly life.
The noble, the man of knightly station and feudal qualifica-
tions, is watched, deprived of the suffrage and outlawed, as
the Russian bourgeoisie were by Lenin.

The basis of democratization is everywhere purely mil-
itary in character; it lies in the rise of disciplined infantry,CITIZENSHIP 325

the hoplites of antiquity, the guild army in the middle ages.
The decisive fact was that military discipline proved its
superiority over the battle between heroes.4 Military
discipline meant the triumph of democracy because the
community wished and was compelled to secure the co-
operation of the non-aristocratic masses and hence put
arms, and along with arms political power, into their hands.
In addition, the money power plays its role, both in antiq-
uity and in the middle ages.

Parallelism is also manifest in the mode in which democ-
racy establishes itself. Like the state in the beginning, the
popolo carries on its struggle as a separate group with its
own officials. Examples are the Spartan ephors as repre-
sentatives of the democracy against the kings, and the
Roman tribunes of the people, while in the Italian cities of
the middle ages the cagitano del popolo, or della mercu-
danzao, are such officials. It is characteristic of them that
they are the first concededly ‘‘illegitimate’’ officials. The
consuls of the Italian cities still prefix the dei gratia to
their titles but the capitano del popolo no longer does so.
The source of the power of the tribune is illegitimate; he
is sacrocanctus precisely because he is not a legitimate
official and hence is protected only by divine interference,
or popular vengeance.

The two courses of development are also equivalent in
regard to their purpose. Social and not economic class in-
terests are decisive; it is a question primarily of protection
against the aristocratic families. The popolani know that
they are rich and have fought and won the great wars of
the city along with the nobility; they are armed, and hence
feel themselves discriminated against and are no longer con-
tent with the subordinate class position which they have
previously accepted. Similarity exists also, and finally, in
the means available to the officials of the separate organl-Ne eT a:

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BEI SS NT

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See ren aes

326 GENERAL ECONOMIC HISTORY

zation (Sonderbund). Everywhere they secure the right
of intervention in legal processes in which the plebeians are
opposed to the aristocrats. This purpose is served by the
right of intercession of the Roman tribune as well as the
Florentine capitano del popolo, a right which is carried out
through appeal or through lynch justice.© The Sonder-
bund sets up the claim that the statutes of the city shall be
valid only after they have been ratified by the plebeians,
and finally establishes the principle that only that is law
which they have determined. The Roman legal principle:
ut quod tributim plebs iussisset populum tenerit has its
counterpart in the Florentine ordinamenti della giustizva,
and in the exclusion of all non-workers from Lenin’s labor
dictatorship.

The further instrumentality of democracy in establishing
its domination is compulsory entry into the plebs. In an-
tiquity the nobles were forced to enroll in the tribus and in
the middle ages in the guilds, although the final significance
was not, in many eases, perceived. Finally, there is every-
where a sudden and quite enormous multiplication of of-
fices, a plethora of officialdom called forth by the need of
the victorious party for remunerating its members with the
spoils of the contest.

Thus far there is coincidence between the democracy of
antiquity and that of the middle ages. But alongside the
points of agreement there are categorical differences. At
the outset there is an ultimate distinction as regards the di-
visions into which the city falls. In the middle ages these
consist of the guilds, while in antiquity they never possessed
the guild character. Scrutinizing the medieval guilds from
this point of view we notice that different guild strata suc-
cessively rise to power. In Florence, the classical guild
city, the earliest of these strata, became distinguished as
the aggregate of the arti maggiori from the artt minori.CITIZENSHIP. 327

The first group includes on the one hand merchants, dealers
in exchange, jewelers, and in general entrepreneurs who
require a considerable industrial capital; on the other hand
it includes jurists, physicians, apothecaries, and in general
the "persons of property and culture’’ in the sense of the
modern bourgeoisie. In regard to the guilds made up of
entrepreneurs one may assume that at least 50% of the
members lived on income or soon came to do so. This eate-
gory of persons of property and culture was known as the
popolo grasso, the ‘‘fat’’ people. Exactly the same expres-
sion is found in the Psalms, which are specifically the po-
etry of resentment of the virtuous and pious against the
superior class of annuitants and nobility, against the ‘‘fat,”’
as they are repeatedly called in the psalms themselves.

In the arti maggiort are included the small capitalists,
while to the artt minorz belong the butchers, bakers, weav-
ers, ete., who in Italy at least, were situated at the border
of the working class although in Germany to some ex-
tent they became large entrepreneurs. The mere laborers,
on the other hand, the ciompt, only very exceptionally
achieved power, aS a rule only when the nobility allied
itself with the lowest strata against the middle class.

Under the domination of the guilds, the medieval city
pursued a special type of policy, called town-economy. Its
objective was in the first place to maintain the traditional
access to occupation and livelihood, and, in the second place,
to make the surrounding country subservient to the town
interest to the utmost extent through banalités and com-
pulsory use of the town market. It sought further to re-
strict competition and prevent the development toward
large-scale industry. In spite of all, an opposition de-
veloped between trading capital and craft work organized
in guilds, with a growth of domestic industry and of a
permanent journeyman class as a forerunner of the modern

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328 GENERAL ECONOMIC HISTORY

proletariat. Nothing of all this is to be found in antiquity
under the rule of democracy. It is true that in the early
period there are vestiges of such conditions. Thus in
Rome, the fabri of the military organization of Severus,
hand-workers, army smiths ete., are perhaps such a survival.
But in the period of fully developed democracy, there is
no mention of anything of the sort, and not until the late
Roman period are traces again found. Thus in antiquity
the guild, as the ruling power in the town, is absent, and with
it guild policy, and also the opposition between labor
and capital which is present even at the close of the middle
ages.

In place of this conflict we find in antiquity the opposi-
tion between the land owner and the landless. Proletarwus
is not, as Mommsen avers, a man who can only serve the
state by providing children, but rather the disinherited
descendant of a land owner and full citizen, that is of an
assiduus. The entire policy of antiquity was directed to-
ward the prevention of such proletaru; to this end servi-
tude for debt was restricted and debtor law alleviated.
The ordinary contrast in antiquity was that between urban
creditor and peasant debtor. In the city dwelt the money
lending patriciate; in the country, the small people to
whom it lent its money; and under the ancient law of debt
such a condition led readily to the loss of the land and
proletarization.

For all these reasons, the ancient city had no subsistence
policy like that of the middle ages, but only a policy di-
rected to maintaining the xAzpos, the fundus, on which a
man could live and fully equip himself as a soldier. The
aim was to guard against weakening the military power
of the community. Hence the great reforms of the Gracchi
must absolutely not be understood in the modern sense
as measures pertaining to a class struggle; their ob-CITIZENSHIP 329

jective is purely military; they represent the last attempt
to maintain the citizen army and avoid the substitution of
mercenaries. The opponents of the aristocracy in the mid-
dle ages were, on the one hand, the entrepreneurs and, on
the other, the craft workers, while in antiquity they were al-
ways the peasantry. Corresponding to the distinction be-
ween these conflicts, the city of antiquity is divided along
different lines than the medieval. In the latter the noble
families are compelled to join the guilds while in the an-
cient city they were forced into villages, (demoz, tribus),
districts made up of rural landholders, in which they came
under the same law as the peasant holder. In the middle
ages they were made into craftsmen, in antiquity into
peasants.

The development of ancient democracies is further char-
acterized by the fact that different strata differentiate
within the democracy itself. First, the classis rose to power,
the stratum of the ézAa zapexouevr, who were able to equip
themselves fully with the coat of mail and shield and who
consequently could be employed in the front rank. Next,
in consequence of the naval policy in a portion of antiquity,
especially Athens, the non-possessing class rose to domina-
tion because the fleet could only be manned by including
all strata of the population. The Athenian militarism led
to the result that in the popular assembly the sailors finally
secured the whip hand. In Rome the analogous course
of events first took place with the invasion of the Cimbri
and Teutones. However, it did not lead to the grant-
ing of citizenship to the soldiers, but to the develop-
ment of a professional army with its Imperator at the
head.

In addition to these distinctions between the ancient and
the medieval development, there is a further distinction in
class relations. The typical citizen of the medieval guild

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330 GENERAL ECONOMIC HISTORY

city is a merchant or craftsman; he is a full citizen if he
is also a householder. In antiquity on the contrary, the
full citizen is the landholder. In the guild city, accord-
ingly, class inequality obtains. The non-landholder re-
quires the landholder as his Salmann (‘‘truehander’’)
in order to acquire land; he is at a legal disadvantage and
this subordinate legal position is only gradually equalized
and not everywhere completely. In his personal relations,
however, the citizen of the medieval city is free. The prin-
ciple ‘‘town air makes free’’ asserted that after a year and
a day the lord no longer had a right to recall his runaway
serf. Although the principle was not everywhere recog-
nized and was subjected to limitations, especially by the
legislation of the Hohenstauffens, it corresponded to the
legal consciousness of the city citizenship which on the
basis of it pressed its military and taxation interests.
Hence the equalization of classes and removal of unfreedom
became a dominant tendency in the development of the
medieval city.

In contrast, antiquity in the early period emphasized
class distinctions similar to those of the middle ages; it
recognized the distinction between the patrician and the
client, who followed the knightly warrior as a squire; it
recognized relations of dependency and slavery as well.
But with the growth of the power of the city and its de-
velopment toward democracy, the sharpness of class dis-
tinctions increases; slaves are purchased or shipped in in
large numbers and form a lower stratum constantly grow-
ing in numbers, while to them are added the freedmen.
Hence the city of antiquity, in contrast with that of the
middle ages, shows increasing class inequality. Finally,
no trace of the medieval guild monopoly is to be found in
antiquity. Under the dominance of the Athenian democ-
racy we find in the sources relating to the placing of theHaast

CITIZENSHIP 331

columns of the Erechtheion that free Athenians and slaves
worked together in the same voluntary group and slaves

nes

are placed over free Athenian workers as foremen, a rela-
tion which would have been unthinkable in the middle
ages, In view of the existence of a powerful free industrial
class.

pny
retirees

TSA ELE ePEeraesaes

Taken in its entirety the foregoing argument leads to the
conclusion that the city democracy of antiquity is a politi-
eal guild. It is true that it had distinctive industrial in-
terests and also that these were monopolized; but they were
subordinate to military interests. Tribute, booty, the pay-
ments of confederate cities, were merely distributed among
the citizens. Thus like the craft guild of the closing period
of the middle ages, the democratic citizens’ guild of an-
tiquity was also interested in not admitting too many par-
ticipants. The resulting limitation on the number of citi-
zens was one of the causes of the downfall of the Greek city
states. The monopoly of the political guild included
eleruchy, the distributing of conquered land among the
citizens, and the distribution of the spoils of war; and at
the last the city paid out of the proceeds of its political
activity theater admissions, allotments of grain, and pay-
ments for jury service and for participation in religious
rites.

Chronic war was therefore the normal condition of the
Greek full citizen, and a demagogue like Cleon was conscious
of his reasons for inciting to war; war made the city rich,
while a long period of peace meant ruin for the citizenship.
Those who engaged in the pursuit of profit by peaceful
means were excluded from these opportunities. These in-
cluded the freedmen and meties; among them we first find
something similar to the modern bourgeoisie, excluded from
the ownership of land but still well-to-do.

Military reasons explain the fact that the city state of

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ee ee ee eS

Re gt ne Pat nae a eed

W
id
AY
i
re
i
Hi
HS)
i]

332 GENERAL ECONOMIC HISTORY

antiquity, so long as it maintained its characteristic form,
developed no craft guilds and nothing similar to them, that
instead it erected a political military monopoly for the
citizenship and evolved into a soldiers’ guild. The ancient
city represented the highest development of military tech-
nique in its time; no equivalent force could be sent against
a hoplite army or a Roman legion. This explains the form
and direction of industry in antiquity with relation to
profit through war, and other advantages to be attained
by purely political means. Over against the citizen stands
the ‘‘low-bred’’; anyone is low-bred who follows the peace-
able quest of profit in the sense of today. In contrast with
this the center of gravity of military technique in the early
middle ages lay outside the cities, in the knighthood.
Nothing else was equal to an armed feudal host. The re-
sult was that the guild army of burghers—with the single
exception of the battle of Courtray in 1302—never ven-
tured offensive operations but was only defensively em-
ployed. The burgher army of the middle ages could there-
fore never fulfill the acquisitive guild function of the
ancient hoplite or legion army.

Within the western world we find during the middle ages
a sharp contrast between the cities of the south and those
of the north. In the south, the knighthood was generally
settled in the city, while in the north the opposite is the
ease; from the beginning they had their dwellings outside
or were even excluded. In the north the grant of priv-
ileges for a city included the specification that it might
prohibit the residence of high political officials or knights;
on the other hand the knighthood of the north closed its
ranks against the urban patriciate and treated the latter
as inferior by birth. The cause is found in the fact that
the founding of the cities took place in different epochs in
the two regions, In the time when the Italian communesCITIZENSHIP 333

began their rise the knightly military technique was at its
height ; hence the town was forced to take the knights into
its pay or to ally itself with them. In their essence the
Guelph-Ghibelline wars between the cities are struggles be-
tween different knightly groups. Hence the city insisted
upon the knights taking up their residence or forced upon
them the inurbamento; it did not wish them to operate
from their castles to make the roads unsafe and it wished
to secure for its citizens the task of providing for their
needs.

The most extreme contrast with these conditions is found
in the English city which, as distinguished from the Ger-
man and Italian, never formed a city state and with rare
exceptions never was able or never sought to dominate the
surrounding country or extend its jurisdiction over it.
For this achievement it had neither the military power nor
the desire. The independence of the English city rested
on the fact that it leased the taxing power from the king,
and only those were citizens who shared in this lease, ac-
cording to which the designated sum was furnished by the
city as a unit. The special position of the English city is
explained in the first place by the extraordinary concen-
tration of political power in England after William the
Conqueror, and further by the fact that after the 13th
century the English communes were united in Parliament.
If the barons wished to undertake anything against the
crown, they were compelled to resort to the pecuniary aid
of the towns, as on the other hand the latter were depend-
ent upon them for military support. From the time of
their representation in Parliament the impulse and the
possibility of a political policy of isolation on the part of
the towns were removed. The opposition between city and
country disappeared early and the cities accepted numerous
landed gentlemen into their citizenship. The town burgh-copra 1a ial

nen
wees

Ey ae

5 Se

pe oO et Se Os en oe ere!

POLI

SOFT

Se en te ean

GENERAL ECONOMIC HISTORY

334

ers finally secured the upper hand, although down to the
most recent times the nobility retained formal leadership
in affairs.

Turning to the question as to the consequences of these
relations in connection with the evolution of capitalism, we
must emphasize the heterogeneity of industry in antiquity
and in the middle ages, and the different species of cap-
italism itself. In the first place, we are met in the most
widely separated periods with a multiplicity of non-rational
forms of capitalism. These include first capitalistic en-
terprises for the purpose of tax farming—in the oeccident
as well as in China and western Asia—and for the purpose
of financing war, in China and India, in the period of small
separate states; second, capitalism in connection with trade
speculation, the trader being entirely absent in almost no
epoch of history; third, money-lending capitalism, exploit-
ing the necessities of outsiders. All these forms of cap-
italism relate to spoils, taxes, the pickings of office or official
usury, and finally to tribute and actual need. It is note-
worthy that in former times officials were financed as Cesar
was by Crassus and endeavored to recoup the sums ad-
vanced through misuse of their official position. All this,
however, relates to occasional economic activity of an ir-
rational character, while no rational system of labor
organization developed out of these arrangements.

Rational capitalism, on the contrary, is organized with a
view to market opportunities, hence to economic objectives
in the real sense of the word, and the more rational it is
the more closely it relates to mass demand and the provision
for mass needs. It was reserved to the modern western
development after the close of the middle ages to elevate
this capitalism into a system, while in all of antiquity there
was but one capitalistic class whose rationalism might be
compared with that of modern capitalism, namely, theCITIZENSHIP 335

Roman knighthood. When a Greek city required credit or
leased public land or let a contract for supplies, it was
forced to incite competition among different interlocal cap-
italists. Rome, in contrast, was in possession of a rational
capitalistic class which from the time of the Gracchi played
a determining role in the state. The capitalism of this class
was entirely relative to state and governmental opportu-
nities, to the leasing of the ager publicus or conquered land,
and of domain land, or to tax farming and the financing of
political adventures and of wars. It influenced the pub-
lic policy of Rome in a decisive way at times, although it
had to reckon with the constant antagonism of the official
nobility.

The capitalism of the late middle ages began to be di-
rected toward market opportunities, and the contrast be-
tween it and the capitalism of antiquity appears in the de-
velopment after the cities have lost their freedom. Here
again we find a fundamental distinction in the lines of

development as between antiquity and medieval and mod-

ern times. In antiquity the freedom of the cities was swept
away by a bureaucratically organized world empire within
which there was no longer a place for political capitalism.
In the beginning the emperors were forced to resort to the
financial power of the knighthood but we see them progres-
sively emancipate themselves and exclude the knightly class
from the farming of the taxes and hence from the most
luerative source of wealth—just as the Egyptian kings were
able to make the provisions for political and military re-
quirements in their realms independent of the capitalist
powers and reduce the tax farmers to the position of tax
officials. In the imperial period of Rome the leasing of
domain land everywhere decreased in extent in favor of
permanent hereditary appropriation. The provision for
the economic needs of the state was taken care of through

SEE ee es.

SIL eh er ee a

aesnd td

—

wr cm

eee

Spricteettatonaeitete denen ae ee ee

iced ed

saz riers ar

Rae eee ied

336 GENERAL ECONOMIC HISTORY

compulsory contributions and compulsory labor of servile
persons instead of competitive contracts. The various
classes of the population became stratified along occupa-
tional lines and the burden of state requirements was im-
posed on the newly created groups on the principle of
joint liability.

This development means the throttling of ancient cap-
italism. A conscript army takes the place of the mer-
cenaries and ships are provided by compulsory service.
The entire harvest of grain, insofar as regions of surplus
production are concerned, is distributed among the cities
in accordance with their needs, with the exclusion of
private trade. The building of roads and every other serv-
ice which has to be provided for is laid on the shoulders
of specific personal groups who become attached by in-
heritance to the soil and to their occupations. At the end
the Roman urban communities, acting through their may-
ors in a way not very different from the village community
through its common meeting, demand the return of the rich
city councilmen on property grounds, because the popula-

tion is jointly responsible for the payments and services due
to the state. These services are subject to the principle of
the origo which is erected on the pattern of the (dia of
Ptolemaic Egypt; the compulsory dues of servile persons
ean only be rendered in their home commune. After this
system became established the political opportunities for
securing gain were closed to capitalism; in the late Roman
state, based on compulsory contributions (Leiturgiestaat)
there was as little place for capitalism as in the Egyptian
state organized on the basis of compulsory labor service
(F'ronstaat).

Quite different was the fate of the city in the modern era.
Here again its autonomy was progressively taken away.
The English city of the 17th and 18th centuries had ceasedCITIZENSHIP 337

to be anything but a clique of guilds which could lay claim
only to financial and social class significance. The German
cities of the same period, with the exception of the imperial
cities, were merely geographical entities (Landstadt) in
which everything was ordered from above. In the French
cities this development appeared even earlier, while the
Spanish cities were deprived of their power by Charles V,
in the insurrection of the communeros. The Italian cities
found themselves in the power of the ‘‘signory’’ and those
of Russia never arrived at freedom in the western sense.
Everywhere the military, judicial, and industrial authority
was taken away from the cities. In form the old rights
were as a rule unchanged, but in fact the modern city was
deprived of its freedom as effectively as had happened in
antiquity with the establishment of the Roman dominion,
though in contrast with antiquity they came under the
power of competing national states in a condition of per-
petual struggle for power in peace or war. This com-
petitive struggle created the largest opportunities for
modern western capitalism. The separate states had to
compete for mobile capital, which dictated to them the
conditions under which it would assist them to power.
Out of this alliance of the state with capital, dictated by
necessity, arose the national citizen class, the bourgeoisie in
the modern sense of the word. Hence it is the closed na-
tional state which afforded to capitalism its chance for

development—and as long as the national state does not

give place to a world empire capitalism also will endure.

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A RIN A Ee

ane

et eee

XX IX

CHAPTER
THE RATIONAL STATE

(A) Tue Strats IrsetF; Law anp OFFICIALDOM

The state in the sense of the rational state has existed
only in the western world. Under the old regime in
China? a thin stratum of so-called officials, the mandarins,
existed above the unbroken power of the clans and com-
mercial and industrial guilds. The mandarin is primarily
a humanistically educated literatus in the possession of a
benefice but not in the least degree trained for administra-
tion; he knows no jurisprudence but is a fine writer, ean
make verses, knows the age-old literature of the Chinese
and can interpret it. In the way of political service no im-
portance is attached to him. Such an official performs no
administrative work himself; administration lies rather in
the hands of the chancery officials. The mandarin is con-
tinually transferred from one place to another to prevent
his obtaining a foothold in his administrative district, and
he could never be assigned to his home province. As he
does not understand the dialect of his province he cannot
communicate with the public. A state with such officials
is something different from the occidental state.

In reality everything is based on the magical theory that
the virtue of the empress and the merits of the officials,
meaning their perfection in literary culture, keep things in
order in normal times. If a drought sets in or any un-
toward event takes place an edict is promulgated intensi-
338THE RATIONAL STATE 339

fying the examinations in verse-making, or speeding up
legal trials in order to quiet the spirits. The empire is an
agrarian state; hence the power of the peasant clans who
represent nine-tenths of the economic life—the other one-
tenth belonging to commercial and trading guild organiza-
tions—is entirely unbroken. In essence things are left to
take care of themselves. The officials do not rule but only
interfere in the event of disturbances or untoward hap-
penings.

Very different is the rational state in which alone modern
capitalism can flourish. Its basis is an expert officialdom
and rational law. The Chinese state changed over to ad-
ministration through trained officials in the place of hu-
manistically cultured persons as early as the 7th and 11th
centuries but the change could be only temporarily main-
tained; then the usual eclipse of the moon arrived and
arrangements were transformed in reverse order. It can-
not be seriously asserted, however, that the spirit of the
Chinese people could not tolerate an administration of
specialists. Its development, and that of the rational state,
was rather prevented by the persistence of reliance upon
magic. In consequence of this fact the power of the clans
could not be broken, as happened in the oecident through
the development of the cities and of Christianity.

The rational law of the modern occidental state, on the
basis of which the trained official renders his decisions,
arose on its formal side, though not as to its content, out of
Roman law. The latter was to begin with a product of
the Roman city state, which never witnessed the dominion
of democracy and its justice in the same form as the Greek
city. A Greek heliast court administered a petty justice;
the contestants worked upon the judges through pathos,
tears. and abusing their opponents. This procedure was
also known in Rome in political trials, as the orations ofBos bn oprahesnetiiee i Seen detente tea he ee at ee

Fee eet ca

7a AD

areape sr cragtenrentareaprererer aerate teeter eee

ee ee ee

if
fi
j

SO eae oa <a

—

340 GENERAL ECONOMIC HISTORY

Cicero show, but not in civil trials where the pretor ap-
pointed an iwdex to whom he gave strict instructions as to
the conditions requiring a judgment against the accused
or the throwing out of the case. Under Justinian the By-
zantine bureaucracy brought order and system into this
rational law, in consequence of the natural interest of the
official in a law which would be systematic and fixed and
hence easier to learn.

With the fall of the Roman empire in the west, law came
into the hands of the Italian notaries. These, and sec-
ondarily the universities, have on their conscience the re-
vival of Roman law. The notaries adhered to the old con-
tractual forms of the Roman empire and re-interpreted
them according to the needs of the time. At the same time
a systematic legal doctrine was developed in the univer-
sities. The essential feature in the development, however,
was the rationalization of procedure. As among all prim-
itive peoples the ancient German legal trial was a rigidly
formal affair. The party which pronounced wrongly a
single word in the formula lost the case, because the
formula possessed magical significance and supernatural
evils were feared. This magical formalism of the German
trial fitted in with the formalism of Roman law. At the
same time the French kingdom played a part through the
creation of the institution of the representative or advocate
whose task it was especially to pronounce the legal formulas
correctly, particularly in connection with the canon law.
The magnificent administrative organization of the church
required fixed forms for its disciplinary ends in relation to
the laity and for its own internal discipline. No more
than the bourgeoisie could it take up with the Germanic
ordeal or judgment of God. The business man could not
permit commercial claims to be decided by a competition in
reciting formulas, and everywhere secured exemptions fromTHE RATIONAL STATE 341

this legalistic contest and from the ordeal. The church
also, after hesitating at first, ended by adopting the view
that such procedure was heathenish and not to be tolerated,
and established the canonical procedure on lines as ra-
tional as possible. This two-fold rationalization of pro-
cedure from the profane and spiritual sides spread over
the western world.

In the revival of the Roman law has been seen the basis
for the downfall of the peasant class, as well as for the
development of capitalism. It is true that there were cases
in which the application of Roman law principles was dis-
advantageous to the peasant. An example is the transfor-
mation of the old mark community rights into feudal ob-
ligations, the individual who stood at the head of the mark
community (Obermdarker) being recognized as a proprietor
in the Roman sense and the holdings of the associates bur-
dened with feudal dues. On the other hand, however, it
was especially through the jurists trained in the Roman
law that in France the kingdom was able to obstruct the
eviction of peasants by the lords.

As little is the Roman law the basis without qualification
for the development of capitalism. England, the home of
capitalism, never accepted the Roman law, for the reason
that in connection with the royal courts existed a class of
advocates who guarded the national legal institutions
against corruption. This class controlled the development
of legal doctrine, for from its ranks were chosen, as they
still are, the judges. It prevented Roman law from being
taught in English universities, in order that persons from
outside the class might not reach the judicial bench.

In fact all the characteristic institutions of modern cap-
italism have other origins than Roman law. The annuity
bond, whether arising out of a personal debt or a war loan,
came from medieval law, in which Germanic legal ideaseet hb a tt eee ok a See a ee

BA Rm Pn

ome

rea ree saree eh nee ee ee oe ee ee

ee eee

Sep oe hier tenir Seen datetaeeb the deere aloe ene tee ee

[

—-

342 GENERAL ECONOMIC HISTORY

played their part. Similarly the stock certificate arose
out of medieval and modern law and was unknown to the
law of antiquity. Likewise the bill of exchange, to the
development of which Arabie, Italian, German, and English
law contributed. The commercial company is also a medie-
val product; only the commenda enterprise was current in
antiquity. So also the mortgage, with the security of
registration, and the deed of trust, as well as the power of
attorney, are medieval in origin and do not go back to
antiquity.

The reception of the Roman law was crucial only in the
sense that it created formal juristic thinking. In its
structure every legal system is based either on formal-
legalistic or on material principles. By material principles
are to be understood utilitarian and economic considera-
tions, such for example as those according to which the
Islamie cadi conducts his administration. In every the-
ocracy and every absolutism justice is materially directed
as by contrast in every bureaucracy it is formal-legalistic.
Frederick the Great hated the jurists because they con-
stantly applied in a formalistic sense his decrees which were
based on material principles, and so turned them to ends
with which he would have nothing to do. In this econnec-
tion, as in general, the Roman law was the means of crush-
ing the material legal system in favor of the formal.

This formalistie law, is however, caleulable. In China it
may happen that a man who has sold a house to another
may later come to him and ask to be taken in because in the
meantime he has been impoverished. If the purchaser re-
fuses to heed the ancient Chinese command to help a
brother, the spirits will be disturbed; hence the impover-
ished seller comes into the house as a renter who pays no
rent. Capitalism cannot operate on the basis of a law so
constituted. What it requires is law which can be countedTHE RATIONAL STATE 343

upon, like a machine; ritualistic-religious and magical con-
siderations must be excluded.

The creation of such a body of law was achieved through
the alliance between the modern state and the jurists for
the purpose of making good its claims to power. For a
time in the 16th century it attempted to work with the
humanists, and the first Greek gymnasia were established
with the idea that men educated in them would be suitable
for state officials; for political contests were carried out to
a large extent through the exchange of state papers and
only one schooled in Latin and Greek had the necessary
equipment. This illusion was shortlived. It was soon
found that the products of the gymnasia were not on that
account alone equipped for political life, and the jurists
were the final resort. In China, where the humanistically
cultured mandarin ruled the field, the monarch had no
jurists at his disposal, and the struggle among the different
philosophical schools as to which of them formed the best
statesmen waged to and fro until finally orthodox Con-
fucianism was victorious. India also had writers but no
trained jurists. In contrast the western world had at its
disposal a formally organized legal system, the product of
the Roman genius, and officials trained in this law were
superior to all others as technical administrators. From
the standpoint of economic history this fact is significant
in that the alliance between the state and formal juris-
prudence was indirectly favorable to capitalism.

(B) THe Economic Pouicy oF THE RATIONAL STATE

For the state to have an economic policy worthy of the
name, that is one which is continuous and consistent, is an
institution of exclusively modern origin. The first system
which it brought forth is mercantilism, so-called. Before

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eer hnPOST RCO ln OR Ol A ot toe

coer

bY
Hy
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i

yf a

ee ee een

Fa ar a eS

344 GENERAL ECONOMIC HISTORY

the development of mercantilism there were two wide-
spread commercial policies, namely, the dominance of fiscal
interests and of welfare interests, the last in the sense of
the customary standard of living.

In the east it was essentially ritualistic considerations,
including caste and clan organizations, which prevented the
development of a deliberate economic policy. In China,
the political system had undergone extraordinary changes.
The country had an epoch of highly developed foreign
trade, extending as far as India. Later, however, the
Chinese economic policy turned to external exclusiveness
to the extent that the entire import and export business
was in the hands of only 13 firms and was concentrated
in the single port of Canton. Internally, the policy was
dominated by religious considerations; only on occasion
of natural catastrophes were abuses inquired into. At all
times the question of co-operation of the provinces de-
termined the viewpoint, and a leading problem was set by
the question whether the needs of the state should be pro-
vided by taxation or through compulsory services.

In Japan, the feudal organization led to the same con-
sequences and resulted in complete exclusiveness as regards
the outer world. The object was here the stabilization of
class relations; it was feared that foreign trade would dis-
turb conditions as to the distribution of property. In
Korea, ritualistic grounds determined the exclusive policy.
If foreigners, that is profane persons, were to come into
the country the wrath of the spirits was to be feared. In
the Indian middle ages we find Greek and Roman mer-
chants, as well as Roman soldiers, and also the immigration
of Jews with grants of privileges to them; but these germs
were unable to develop, for later everything was again
stereotyped by the caste system, which made a plannedTHE RATIONAL STATE 345

economic policy impossible. An additional consideration
was that Hinduism strongly condemned traveling abroad;
one who went abroad had on his return to be re-admitted
to his easte.

In the oecident down to the 14th century a planned eco-
nomic policy had a chance to develop only in connection
with the towns. It is true that there were beginnings of
an economic policy on the part of the princes; in the Caro-
lingian period we find price fixing and publie concern for
welfare expressed in various directions. But most of
this remained on paper only, and with the exception of the
coinage reform and the system of weights and measures
of Charlemagne, everything disappeared without leaving
a trace in the succeeding period. A commercial policy
which would have been gladly adopted in relation to the
orient was rendered impossible by the absence of shipping.

When the state under its prince gave up the fight, the
church interested itself in economic life, endeavoring to im-
pose upon economic dealings a minimum of legal honesty
and churechly ethics. One of its most important measures
was the support of the publie peace, which it attempted to
enforce first on certain days and finally as a general prin-
ciple. In addition, the great ecclesiastical property com-
munities, especially the monasteries, supported a very ra-
tional economic life, which cannot be called capitalistic
economy but which was the most rational in existence.
Later these endeavors more and more fell into discredit
as the church revived its old ascetic ideals and adapted
them to the times. Among the emperors again are found
a few beginnings of commercial policy under Frederick
Barbarossa, including price fixing and a customs treaty
with England designed to favor German merchants. Fred-
erick II established the public peace but in general pursuedee ee

Se ee eS

Se on ne sian Seseibasenaeehier iets ees

‘a

346 GENERAL ECONOMIC HISTORY

a purely fiscal policy favoring merely the rich merchants;
to them he granted privileges, especially customs exemp-
tions.

The single measure of economic policy on the part of the
German kings was the conflict over the Rhine tolls, which
however was futile in the main, in view of the great number
of petty lords along the river. Aside from this there was
no planned economic policy. Measures which give the im-
pression of sych a policy, such as the embargo of the em-
peror Sigmund against Venice, or the occasional closing
of the Rhine in the struggle with Cologne, are purely polit-
ical in character. The customs policy was in the hands of
the territorial princes, and even here with few exceptions
a consistent effort to encourage industry is wanting. Their
dominant objectives were, first, to favor local as against dis-
tant trade, especially to promote interchange of goods
between the towns and the surrounding country; export
duties were always to be maintained higher than import
duties. Second, to favor local merchants in the customs.
Road tolls were differentiated, the prince endeavoring to
favor his own roads in order the more conveniently to ex-
ploit them as a source of revenue; to this end they even
went to the length of requiring the use of certain roads,
and systematized the law of the staple. Finally, the city
merchants were given privileges; Louis the Rich of Bavaria
prided himself on suppressing the rural merchants (above,
p. 193).

Protective duties are unknown, with few exceptions, of
which the Tirolese duties on wine, directed against the com-
petition of imports from Italy, are an example. The cus-
toms policy as a whole is dominated by the fiscal point of
view and that of maintaining the traditional standard of
living. The same applies to the customs treaties, which go
back to the 13th century. The technique of the customsTHE RATIONAL STATE 347

fluctuated. The original custom was an ad-valorem duty
of one-sixtieth the value; in the 14th century this was in-
creased to a one-twelfth, in view of the fact that the duty
was made to function also as an excise. The place of
our modern measures of economic policy, such as protective
tariffs, was taken by direct prohibitions against trade,
which were very frequently suspended when the standard
of living of domestic craftsmen, or later of employing fac-
tors, was to be protected. Sometimes wholesale trade was
allowed and retail trade was prohibited. The first trace of
a rational economic policy on the part of the prince appears
in the 14th century in England. This was mercantilism,
so-called since Adam Smith.

The essence of mercantilism? consists in carrying the
point of view of capitalistic industry into polities; the
state is handled as if it consisted exclusively of capitalistic
entrepreneurs. External economic policy rests on the prin-
ciple of taking every advantage of the opponent, importing
at the lowest price and selling much higher. The purpose
is to strengthen the hand of the government in its external
relations. Hence mercantilism signifies the development of
the state as a political power, which is to be done directly by
increasing the tax paying power of the population.

A presupposition of the mercantilistic policy was the
inclusion of as many sources of money income as possible
within the country in question. It is, to be sure, an error
to hold that the mercantilistic thinkers and statesmen con-
fused ownership of the precious metals with national
wealth. They knew well enough that the source of this
wealth is the tax paying power, and all that they did in the
way of retaining in the country the money which threat-

Se tne Set ete faaopi be

wears

348 GENERAL ECONOMIC HISTORY

ened to disappear through the commerce was done exclu-
sively with a view to increasing this taxable capacity. A
second point in the program of mercantilism, in obvious
immediate connection with the power-seeking policy char-
acteristic of the system, was to promote the largest possible
increase in the population ; in order to sustain the increased
numbers, the endeavor was to secure to the greatest extent
external markets; this applied especially to those products
in which a maximum quantity of domestic labor was em-
bodied, hence finished manufactures rather than raw mate-
rials. Finally, trade was to be carried on as far as possible
by the merchants of the country, in order that its earnings
should all accrue to the taxable capacity. On the side of
theory, the system was supported by the doctrine of the
balance of trade, which taught that the country would
be impoverished if the value of imports exceeded that of
exports; this theory was first developed in England in the
16th century.

England is distinctively the original home of Mercantil-
ism. The first traces of the application of mercantilistic

rma

TRADE TUR B REED AE: bake edn ey ee Se

NI IS RE OE Tas

principles are found there in the year 1381. Under the
weak king Richard II, a money stringency arose and Par-
liament appointed an investigating commission which for
the first time dealt with the balance of trade concept in all
its essential features. For the time being it produced only
emergency measures, including prohibitions of importa-
tion and stimulation of exportation, but without giving to
English policy a truly mercantilistie character. The real
turning point is generally dated from 1440. At that time,
in one of the numerous Statutes of Employment, which
were passed for the correction of alleged abuses, two prop-
ositions were laid down which indeed had been applied
before, but only in an incidental way. The first was that
foreign merchants who brought goods to England must

_~_-

nasser earache ee oe

20D inte oe

Sener fa Saeeh tare ote eeTHE RATIONAL STATE 349

convert all the money which ‘they received into English
goods; the second that English n.erchants who had dealings
abroad must bring back to England at least a part of their
proceeds in cash. On the basis of these two propositions
developed gradually the whole system of merecantilism down
to the Navigation Act of 1651, with its elimination of the
foreign shipping.

Mercantilism in the sense of a league between the state
and the capitalistic interest had appeared under two as-
pects. One was that of class monopoly, which appears in
its typical form in the policy of the Stuarts and the An-
glican church,—especially that of Bishop Laud who was
later beheaded. This system looked toward a class organ-
ization of the whole population in the Christian socialist
sense, a stabilization of the classes with a view to establish-
ing social relations based on Christian love. In the sharp-
est contrast with Puritanism, which saw every poor person
as work-shy or as a criminal, its attitude toward the poor
was friendly. In practice, the mercantilism of the Stuarts
was primarily oriented along fiscal lines; new industries
were allowed to import only on the basis of a royal monop-
oly concession and were to be kept under the permanent
control of the king with a view to fiscal exploitation. Sim-
ilar, although not so consistent, was the policy of Colbert
in France. He aimed at an artificial promotion of in-
dustries, supported by monopolies; this view he shared
with the Huguenots, on whose persecution he looked with
disfavor. In England the royal and Anglican policy was
broken down by the Puritans under the Long Parliament.
Their struggle with the king was pursued for decades under
the war ery ‘‘down with the monopolies’? which were
granted in part to foreigners and in part to courtiers,
while the colonies were placed in the hands of royal favor-
ites. The small entrepreneur class which in the meantime

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350 GENERAL ECONOMIC HISTORY

had grown up, especially within the guilds though in part
outside of them, enlisted against the royal monopoly pol-
icy, and the Long Parliament deprived monopolists of the
suffrage. The extraordinary obstinacy with which the eco-
nomie spirit of the En¢lish people has striven against trusts
and monopolies is expressed in these Puritan struggles.®

The second fo-m of mercantilism may be ealled na-
tional ; it limited itself to the protection of industries actu-
ally in existence, in contrast with the attempt to establish
industries through monopolies. Hardly one of the indus-
tries created by mercantilism survived the mercantilistic
period ; the economic creations of the Stuarts disappeared
along with those of the western continental states and those
of Russia later. It follows that the capitalistic develop-
ment was not an outgrowth of national mercantilism;
rather capitalism developed at first in England alongside
the fiscal monopoly policy. The course of events was that
a stratum of entrepreneurs which had developed in inde-
pendence of the political administration secured the sys-
tematic support of Parliament in the 18th century, after the
collapse of the fiscal monopoly policy of the Stuarts. Here
for the last time irrational and rational capitalism faced
each other in conflict, that is, capitalism in the field of
fiseal and colonial privileges and public monopolies, and
capitalism oriented in relation to market opportunities
which were developed from within by business interests
themselves on the basis of saleable services.

The point of collision of the two types was at the Bank
of England. The bank was founded by Paterson, a Seotch-
man, a capitalist adventurer of the type called forth by
the Stuarts’ policy of granting monopolies. But Puritan
business men also belonged to the bank. The last time
the bank turned aside in the direction of speculative cap-
italism was in connection with the South Sea Company.THE RATIONAL STATE 351

Aside from this venture we can trace step by step the proe-
ess by which the influence of Paterson and his kind lost
ground in favor of the rationalistie type of bank members
who were all directly or indirectly of Puritan origin or in-
fluenced by Puritanism.

Mercantilism also played the role familiar in economic
history. In England it finally disappeared when free trade
was established, an achievement of the Puritan dissenters
Cobden and Bright and their league with the industrial
interests, which were now in a position to dispense with
mercantilistic support.CHAPTER XX X
THE EVOLUTION OF THE CAPITALISTIC SPIRIT

It is a widespread error that the increase of population
is to be included as a really crucial agent in the evolution of
western capitalism. In opposition to this view, Karl Marx
made the assertion that every economic epoch has its own
law of population, and although this proposition is unten-
able in so general a form, it is Justified in the present case.
The growth of population in the west made most rapid
progress from the beginning of the 18th century to the
end of the 19th. In the same period China experienced a
population growth of at least equal extent—from 60 or 70
to 400 millions, allowing for the inevitable exaggerations;
this corresponds approximately with the increase in the
west. In spite of this fact, capitalism went backward in
China and not forward. The increase in the population
took place there in different strata than with us. It made
China the seat of a swarming mass of small peasants; the
increase of a class corresponding to our proletariat was
involved only to the extent that a foreign market made
possible the employment of coolies (‘‘coolie’’ is originally
an Indian expression, and signifies neighbor or fellow mem-
ber of a clan). The growth of population in Europe did
indeed favor the development of capitalism, to the extent
that in a small population the system would have been
unable to secure the necessary labor force, but in itself it

~ never called forth that development.

} Nor can the inflow of precious metals be regarded, as
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A}EVOLUTION OF CAPITALISTIC SPIRIT 353

Sombart suggests, as the primary cause of the appearance
of capitalism. It is certainly true that in a given situa-
tion an increase in the supply of precious metals may give
rise to price revolutions, such as that which took place after
1530 in Europe, and when other favorable conditions are
present, as when a certain form of labor organization is in
process of development, the progress may be stimulated by
the fact that large stocks of cash come into the hands of
certain groups. But the case of India proves that such an
importation of precious metal will not alone bring about
capitalism. In India in the period of the Roman power,
an enormous mass of precious metal—some twenty-five
million sestertit annually—came in in exchange for domes-
tie goods, but this inflow gave rise to commercial capitalism
to only a slight extent. The greater part of the precious
metal disappeared in the hoards of the rajahs instead of
being converted into cash and applied in the establishment
of enterprises of a rational capitalistic character. This
fact proves that it depends entirely upon the nature of the
labor system what tendency will result from an inflow of
precious metal. The gold and silver from America, after
the discovery, flowed in the first place to Spain; but in that
country a recession of capitalistic development took place
parallel with the importation. There followed, on the one
hand, the suppression of the communeros and the destruc-
tion of the commercial interests of the Spanish grandees,
and, on the other hand, the employment of the money for
military ends. Consequently, the stream of precious metal
flowed through Spain, seareely touching it, and fertilized
other countries, which in the 15th century were already un-

dergoing a process of (transformation in labor relations \

which was favorable to capitalism.
Hence neither the growth of population nor the importa-
tion of precious metal called forth western capitalism. The

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354 GENERAL ECONOMIC HISTORY

external conditions for the development of capitalism are
rather, first, geographical in character. In China and
India the enormous costs of transportation, connected with
the decisively inland commerce of the regions, necessarily
formed serious obstructions for the classes who were in a
position to make profits through trade and to use trading
capital in the construction of a capitalistic system, while
in the west the position of the Mediterranean as an inland
sea, and the abundant interconnections through the rivers,
favored the opposite development of international com-
merce. But this factor in its turn must not be over-
estimated. The civilization of antiquity was distinctively
coastal. Here the opportunities for commerce were very
favorable, (thanks to the character of the Mediterranean
Sea,) in contrast with the Chinese waters with their ty-
phoons, and yet no capitalism arose in antiquity. Even in
the modern period the capitalistic development was much
more intense in Florence than in Genoa or in Venice. Cap-
italism in the west was born in the industrial cities of the
interior, not in the cities which were centers of sea trade.

Military requirements were also favorable, though not
as such but because of the special nature of the particular
needs of the western armies. Favorable also was the luxury
demand, though again not in itself. In many cases rather
it led to the development of irrational forms, such as small
work shops in France and compulsory settlements of
workers in connection with the courts of many German
princes. In the last resort the factor which produced
capitalism is the rational permanent enterprise, rational
accounting, rational technology and rational law, but again
not these alone. Necessary complementary factors were
the rational spirit, the rationalization of the conduct of life
in general, and a rationalistic economic ethic.

At the beginning of all ethics and the economic relationsEVOLUTION OF CAPITALISTIC SPIRIT 355

which result, is traditionalism, the sanctity of tradition,
the exclusive reliance upon such trade and industry as have
come down from the fathers. This traditionalism survives
far down into the present; only a human lifetime in the
past it was futile to double the wages of an agricultural
laborer in Silesia who mowed a certain tract of land on a
contract, in the hope of inducing him to increase his exer-
tions. He would simply have reduced by half the work
expended because with this half he would have been able
to earn twice as much as before (sic). This general in-
capacity and indisposition to depart from the beaten paths
is the motive for the maintenance of tradition.

Primitive traditionalism may, however, undergo essential
intensification through two circumstances. In the first
place, material interests may be tied up with the main-
tenance of the tradition. When for example in China, the
attempt was made to change certain roads or to introduce
more rational means or routes of transportation, the per-
quisites of certain officials were threatened; and the same
was the case in the middle ages in the west, and in modern
times when railroads were introduced. Such special in-
terests of officials, landholders and merchants assisted de-
cisively in restricting a tendency toward rationalization.
Stronger still is the effect of the stereotyping of trade on
magical grounds, the deep repugnance to undertaking any
change in the established conduct of life because super-
natural evils are feared. Generally some injury to eco-
nomie privilege is concealed in this opposition, but its ef-
fectiveness depends on a general belief in the potency of
the magical processes which are feared.

Traditional obstructions are not overcome by the eco-
nomic impulse alone. The notion that our rationalistic and
capitalistic age 1s characterized by a stronger economic in-
terest than other periods is childish; the moving spirits of

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356 GENERAL ECONOMIC HISTORY

modern capitalism are not possessed of a stronger economic
impulse than, for example, an oriental trader. The un-
chaining of the economic interest merely as such has pro-
duced only irrational results; such men as Cortez and
Pizarro, who were perhaps its strongest embodiment, were
far from having an idea of a rationalistic economic life.
If the economic impulse in itself is universal, it is an in-
teresting question as to the relations under which it be-
comes rationalized and rationally tempered in such fashion
as to produce rational institutions of the character of
capitalistic enterprise.

Originally, two opposite attitudes toward the pursuit of
gain exist in combination. Internally, there is attachment
to tradition and to the pietistie relations of fellow members
of tribe, clan, and house-community, with the exclusion of
the unrestricted quest of gain within the circle of those
bound together by religious ties; externally, there is ab-
solutely unrestricted play of the gain spirit in economic
relations, every foreigner being originally an enemy in rela-
tion to whom no ethical restrictions apply; that is, the
ethics of internal and external relations are categorically
distinct. The course of development involves on the one
hand the bringing in of calculation into the traditional
brotherhood, displacing the old religious relationship. As
soon as accountability is established within the family com-
munity, and economic relations are no longer strictly
communistic, there is an end of the naive piety and its re-
pression of the economic impulse. This side of the devel-
opment is especially characteristic in the west. At the
same time there is a tempering of the unrestricted quest of
gain with the adoption of the economic principle into the
internal economy. The result is a regulated economic life
with the economic impulse functioning within bounds.

In detail, the course of development has been varied. InEVOLUTION OF CAPITALISTIC SPIRIT

India, the restrictions upon gain-seeking apply only to the
two uppermost strata, the Brahmins and the Rajputs. A
member of these castes is forbidden to practice certain call-
ings. A Brahmin may conduct an eating house, as he
alone has clean hands; but he, like the Rajput, would be un-
classed if he were to lend money for interest. The latter,
however, is permitted to the mercantile castes, and within
it we find a degree of unscrupulousness in trade which
is unmatched anywhere in the world. Finally, antiquity
had only legal limitations on interest, and the proposi-
tion caveat emptor characterizes Roman economic ethics.
Nevertheless no modern capitalism developed there.

The final result is the peculiar fact that the germs of
modern capitalism must be sought in a region where of-
ficially a theory was dominant which was distinct from that
of the east and of classical antiquity and in principle
strongly hostile to capitalism. The ethos of the classical
economic morality is summed up in the old judgment
passed on the merchant, which was probably taken from
primitive Arianism: homo mercator vix aut numquam
potest Deo placere; he may conduct himself without sin
but cannot be pleasing to God. This proposition was valid
down to the 15th century, and the first attempt to modify
it slowly matured in Florence under pressure of the shift
in economic relations.

The typical antipathy of Catholic ethics, and following
that the Lutheran, to every capitalistic tendency, rests es-
sentially on the repugnance of the impersonality of rela-
tions within a capitalist economy. It is this fact of im-
personal relations which places certain human affairs out-
side the church and its influence, and prevents the latter
from penetrating them and transforming them along
ethical lines. The relations between master and slave
could be subjected to immediate ethical regulation; but

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NE358 GENERAL ECONOMIC HISTORY

the relations between the mortgage creditor and the prop-
erty which was pledged for the debt, or between an en-
dorser and the bill of exchange, would at least be exceed-
ingly difficult if not impossible to moralize.2 The final
consequence of the resulting position assumed by the
church was that medieval economic ethics excluded hig-
gling, overpricing and free competition, and were based on
the principle of just price and the assurance to everyone
of a chance to live.

For the breaking up of this circle of ideas the Jews can-
not be made responsible as Sombart does.* The position
of the Jews during the middle ages may be compared
sociologically with that of an Indian caste in a world other-
wise free from castes; they were an outcast people. How-
ever, there is the distinction that according to the promise
of the Indian religion the caste system is valid for eternity.
The individual may in the course of time reach heaven
through a course of reincarnations, the time depending
upon his deserts; but this is possible only within the caste
system. The caste organization is eternal, and one who at-
tempted to leave it would be accursed and condemned to
pass in hell into the bowels of a dog. The Jewish promise,
on the contrary, points toward a reversal of caste relations

a lee at oe area Seay ce

in the future world as compared with this. In the present
world the Jews are stamped as an outcast people, either as
punishment for the sins of their fathers, as Deutero-Isaiah
holds, or for the salvation of the world, which is the pre-
supposition of the mission of Jesus of Nazareth; from this
position they are to be released by a social revolution. In
the middle ages the Jews were a guest-people standing out-
side of political society ; they could not be received into any
town citizenship group because they could not participate
in the communion of the Lord’s Supper, amd hence could
not belong to the comuratio.

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The Jews were not the only guest people (see pages 196,
217) ; besides them the Caursines, for example, occupied a
similar position. These were Christian merchants who
dealt in money and in consequence were, like the Jews, un-
der the protection of the princes and on consideration of a
payment enjoyed the privilege of carrying on monetary
dealings. What distinguished the Jews in a striking way
from the Christian guest-peoples was the impossibility in
their case of entering into commerciwm and conubium with
the Christians. Originally the Christians did not hesitate
to accept Jewish hospitality, in contrast with the Jews
themselves who feared that their ritualistic prescriptions
as to food would not be observed by their hosts. On the
occasion of the first outbreak of medieval anti-semitism the
faithful were warned by the synods not to conduct them-
selves unworthily and hence not to accept entertainment
from the Jews who on their side despised the hospitality of
the Christians. Marriage with Christians was strictly im-
possible, going back to Ezra and Nehemiah.

A further ground for the outcast position of the Jews
arose from the fact that Jewish craftsmen existed; in Syria
there had even been a Jewish knightly class, though only
exceptionally Jewish peasants, for the conduct of agricul-
ture was not to be reconciled with the requirements of the
ritual. Ritualistic considerations were responsible for the
concentration of Jewish economic life in monetary dealings
(cf. above page 196). Jewish piety set a premium on the
knowledge of the law and continuous study was very much
easier to combine with exchange dealings than with other
occupations. In addition, the prohibition against usury
on the part of the church condemned exchange dealings,
yet the trade was indispensable and the Jews were not sub-
ject to the ecclesiastical law.
Finally, Judaism had maintained the originally universal

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360 GENERAL ECONOMIC HISTORY

dualism of internal and external moral attitudes, under
which it was permissible to accept interest from foreigners
who did not belong to the brotherhood or established as-
sociation. Out of this dualism followed the sanctioning of
other irrational economic affairs, especially tax farming
and political financing of all sorts. In the course of the
centuries the Jews acquired a special skill in these matters
which made them useful and in demand. But all this was
pariah capitalism, not rational capitalism such as originated
in the west. Im consequence, hardly a Jew is found among
the creators of the modern economic situation, the large en-
trepreneurs; this type was Christian and only conceivable
in the field of Christianity. The Jewish manufacturer, on
the contrary, is a modern phenomenon. If for no other
reason, it was impossible for the Jews to have a part in
the establishment of rational capitalism because they were
outside the craft organizations. But even alongside the
guilds they could hardly maintain themselves, even where,
as in Poland, they had command over a numerous prole-
tariat which they might have organized in the capacity of
entrepreneurs in domestic industry or as manufacturers.
After all, the genuine Jewish ethic is specifically tradition-
alism, as the Talmud shows. The horror of the pious Jew
in the face of any innovation is quite as great as that of
an individual among any primitive people with institutions
fixed by the belief in magic.

However, Judaism was none the less of notable signifi-
cance for modern rational capitalism, insofar as it trans-
mitted to Christianity the latter’s hostility to magic.
Apart from Judaism and Christianity, and two or three
oriental sects (one of which is in Japan), there is no re-
ligion with the character of outspoken hostility to magic.
Probably this hostility arose through the circumstance that
what the Israelites found in Canaan was the magic ofEVOLUTION OF CAPITALISTIC SPIRIT 361

the agricultural god Baal, while Jahveh was a god of
voleanoes, earthquakes, and pestilences. The hostility be-
tween the two priesthoods and the victory of the priests of
Jahveh discredited the fertility magic of the priests of
Baal and stigmatized it with a character of decadence and
godlessness. Since Judaism made Christianity possible and
gave it the character of a religion essentially free from
magic, it rendered an important service from the point of
view of economic history. For the dominance of magic
outside the sphere in which Christianity has prevailed is
one of the most serious obstructions to the rationalization
of economie life. Magie involves a stereotyping of tech-
nology and economic relations. When attempts were made
in China to inaugurate the building of railroads and fac-
tories a conflict with geomaney ensued. The latter de-
manded that in the location of structures on certain moun-
tains, forests, rivers, and cemetery hills, foresight should
be exercised in order not to disturb the rest of the spirits.*

Similar is the relation to capitalism of the castes in
India. Every new technical process which an Indian em-
ploys signifies for him first of all that he leaves his caste
and falls into another, necessarily lower. Since he believes
in the transmigration of souls, the immediate significance
of this is that his chance of purification is put off until an-
other re-birth. He will hardly consent to such a change.
An additional fact is that every caste makes every other
impure. In consequence, workmen who dare not accept
a vessel filled with water from each other’s hands, cannot
be employed together in the same factory room. Not until
the present time, after the possession of the country by
the English for almost a century, could this obstacle be
overcome. Obviously, capitalism could not develop in an
economie group thus bound hand and foot by magical
beliefs.ye

BR pe ee

362 GENERAL ECONOMIC HISTORY

In all times there has been but one means of breaking
down the power of magic and establishing a rational con-
duct of life; this means is great rational prophecy. Not
every prophecy by any means destroys the power of magic;
but it is possible for a prophet who furnishes creden-
tials in the shape of miracles and otherwise, to break down
the traditional sacred rules. Prophecies have released the
world from magic and in doing so have created the basis
for our modern science and technology, and for capitalism.
In China such prophecy has been wanting. What proph-
ecy there was has come from the outside as in the case of
Lao-Tse and Taoism. India, however, produced a religion
of salvation; in contrast with China it has known great
prophetic missions. But they were prophecies by example;
that is, the typical Hindu prophet, such as Buddha, lives
before the world the life which leads to salvation, but does
not regard himself as one sent from God to insist upon the
obligation to lead it; he takes the position that whoever
wishes salvation, as an end freely chosen, should lead the
life. However, one may reject salvation, as it is not the
destiny of everyone to enter at death into Nirvana, and
only philosophers in the strictest sense are prepared by
hatred of this world to adopt the stoical resolution and
withdraw from life.

The result was that Hindu prophecy was of immediate
significance for the intellectual classes. These became for-
est dwellers and poor monks. For the masses, however,
the significance of the founding of a Buddhistie sect was
quite different, namely the opportunity of praying to the
saints. There came to be holy men who were believed to
work miracles, who must be well fed so that they would
repay this good deed by guaranteeing a better reincarna-
tion or through granting wealth, long life, and the like, that
is, this world’s goods. Hence Buddhism in its pure formEVOLUTION OF CAPITALISTIC SPIRIT 363

was restricted to a thin stratum of monks. The laity found
no ethical precepts according to which life should be
molded; Buddhism indeed had its decalogue, but in dis-
tinction from that of the Jews it gave no binding com-
mands but only recommendations. The most important
act of service was and remained the physical maintenance
of the monks. Such a religious spirit could never be in
a position to displace magie but at best could only put
another magic in its place.

In contrast with the ascetic religion of salvation of India
and its defective action upon the masses, are Judaism
and Christianity, which from the beginning have been ple-
beian religions and have deliberately remained such. The
struggle of the ancient church against the Gnosties was
nothing else than a struggle against the aristocracy of the
intellectuals, such as is common to ascetic religions, with
the object of preventing their seizing the leadership in the
church. This struggle was crucial for the success of
Christianity among the masses, and hence for the fact that
magie was suppressed among the general population to the
greatest possible extent. True, it has not been possible even
down to today to overcome it entirely, but it was reduced
to the character of something unholy, something diabolic.

The germ of this development as regards magic is found
far back in ancient Jewish ethics, which is much concerned
with views such as we also meet with in the proverbs and
the so-called prophetic texts of the Egyptians. But the
most important prescriptions of Egyptian ethics were futile
when by laying a scarab on the region of the heart one
eould prepare the dead man to successfully conceal the sins
committed, deceive the judge of the dead, and thus
get into paradise. The Jewish ethics knows no such
sophisticated subterfuges and as little does Christianity.
In the Eucharist the latter has indeed sublimated magic

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364 GENERAL ECONOMIC HISTORY

into the form of a sacrament, but it gave its adherents no
such means for evading the final judgment as were con-
tained in Egyptian religion. If one wishes to study at all
the influence of a religion on life one must distinguish
between its official teachings and this sort of actual pro-
cedure upon which in reality, perhaps against its own will,
it places a premium, in this world or the next.

It is also necessary to distinguish between the virtuoso
religion of adepts and the religion of the masses. Virtuoso
religion is significant for everyday life only as a pattern;
its claims are of the highest, but they fail to determine
everyday ethics. The relation between the two is different
in different religions. In Catholicism, they are brought
into harmonious union insofar as the claims of the re-
ligious virtuoso are held up alongside the duties of the
laymen as consilia evangelica. The really complete Chris-
tian is the monk; but his mode of life is not required of
everyone, although some of his virtues in a qualified
form are held up as ideals. The advantage of this com-
bination was that ethics was not split asunder as in Bud-
dhism. After all the distinction between monk ethies and
mass ethics meant that the most worthy individuals in
the religious sense withdrew from the world and established
a Separate community.

Christianity was not alone in this phenomenon, which
rather recurs frequently in the history of religions, as is
shown by the powerful influence of asceticism, which sig-
nifies the carrying out of a definite, methodical conduct
of life. Asceticism has always worked in this sense. The
enormous achievements possible to such an ascetically de-
termined methodical conduct of life are demonstrated by
the example of Tibet. The country seems condemned by
nature to be an eternal desert ; but a community of celibate
ascetics has carried out colossal construction works inEVOLUTION OF CAPITALISTIC SPIRIT 365

Lhassa and saturated the country with the religious doc-
trines of Buddhism. An analogous phenomenon is present
in the middle ages in the west. In that epoch the monk is
the first human being who lives rationally, who works
methodically and by rational means toward a goal, namely
the future life. Only for him did the clock strike, only
for him were the hours of the day divided—for prayer.
The economic life of the monastic communities was also
rational. The monks in part furnished the officialdom for
the early middle ages; the power of the doges of Venice
collapsed when the investiture struggle deprived them
of the possibility of employing churchmen for oversea
enterprises.

But the rational mode of life remained restricted to the
monastie circles. The Franciscan movement indeed at-
tempted through the institution of the tertiaries to extend
it to the laity, but the institution of the confessional was
a barrier to such an extension. The church domesticated
medieval Europe by means of its system of confession and
penance, but for the men of the middle ages the possibility
of unburdening themselves through the channel of the con-
fessional, when they had rendered themselves liable to
punishment, meant a release from the consciousness of
sin which the teachings of the church had called into
being. The unity and strength of the methodical conduct
of life were thus in fact broken up. Im its knowledge of
human nature the church did not reckon with the fact
that the individual is a closed unitary ethical personality,
but steadfastly held to the view that in spite of the warn-
ings of the confessional and of penances, however strong,
he would again fall away morally ; that is, it shed its grace
on the just and the unjust.

The Reformation made a decisive break with this system.
The dropping of the concilia evangelica by the Lutheran

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366 GENERAL ECONOMIC HISTORY

Reformation meant the disappearance of the dualistic
ethics, of the distinction between a universally binding
morality and a specifically advantageous code for virtuosi.
The other-worldly asceticism came to an end. The stern
religious characters who had previously gone into monas-
teries had now to practice their religion in the life of the
world. For such an asceticism within the world the ascetic
dogmas of protestantism created an adequate ethics. Celi-
bacy was not required, marriage being viewed simply as
an institution for the rational bringing up of children.
Poverty was not required, but the pursuit of riches must
not lead one astray into reckless enjoyment. Thus Se-
bastian Franck was correct in summing up the spirit of the
Reformation in the words, ‘‘you think you have escaped
from the monastery, but everyone must now be a monk
throughout his life.’’

The wide significance of this transformation of the ascetic
ideal can be followed down to the present in the classical
lands of protestant ascetic religiosity. It is especially dis-
cernible in the import of the religious denominations in
America. Although state and church are separated, still,
as late as fifteen or twenty years ago no banker or physician
took up a residence or established connections without being
asked to what religious community he belonged, and his
prospects were good or bad according to the character of his
answer. Acceptance into a sect was conditioned upon a
strict inquiry into one’s ethical conduct. Membership in a
sect which did not recognize the Jewish distinction between
internal and external moral codes guaranteed one’s busi-
ness honor and reliability and this in turn guaranteed
success. Hence the principle ‘‘honesty is the best policy’”’
and hence among Quakers, Baptists, and Methodists the
ceaseless repetition of the proposition based on experience
that God would take care of hisown. ‘‘The Godless cannotati Gla sea

EVOLUTION OF CAPITALISTIC SPIRIT 367

trust each other across the road; they turn to us when
they want to do business; piety is the surest road to
wealth.’’ This is by no means ‘‘cant,’’ but a combination
of religiosity with consequences which were originally un-
known to it and which were never intended.

It is true that the acquisition of wealth, attributed to
piety, led to a dilemma, in all respects similar to that into
which the medieval monasteries constantly fell; the re-
ligious guild led to wealth, wealth to fall from grace, and

Sedation niet ee

TS TAR RAS SNe EA

this again to the necessity of re-constitution. Calvinism
sought to avoid this difficulty through the idea that man
was only an administrator of what God had given him;
it condemned enjoyment, yet permitted no flight from the
world but rather regarded working together, with its ra-
tional discipline, as the religious task of the individual.
Out of this system of thought came our word ‘‘calling,’’
which is known only to the languages influenced by the
Protestant translations of the Bible.® It expresses the
* value placed upon rational activity carried on according to
the rational capitalistic principle, as the fulfillment of a
God-given task. Here lay also in the last analysis the basis
of the contrast between the Puritans and the Stuarts. The
ideas of both were capitalistically directed; but in a char-
acteristie way the Jew was for the Puritan the embodiment
of everything repugnant because he devoted himself to
irrational and illegal occupations such as war loans, tax
farming, and leasing of offices, in the fashion of the court
favorite.®
This development of the concept of the calling quickly
gave to the modern entrepreneur a fabulously clear con-
science,—and also industrious workers; he gave to his em-
ployees as the wages of their ascetic devotion to the calling
and of co-operation in his ruthless exploitation of them
through capitalism the prospect of eternal salvation, which

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368 GENERAL ECONOMIC HISTORY

in an age when ecclesiastical discipline took control of the
whole of life to an extent inconceivable to us now, repre-
sented a reality quite different from any it has today. The
Catholic and Lutheran churches also recognized and prac-
ticed ecclesiastical discipline. But in the Protestant as-
cetic communities admission to the Lord’s Supper was con-
ditioned on ethical fitness, which again was identified with
business honor, while into the content of one’s faith no one
inquired. Such a powerful, unconsciously refined organi-
zation for the production of capitalistic individuals has
never existed in any other church or religion, and in com-
parison with it what the Renaissance did for capitalism
shrinks into insignificance. Its practitioners occupied
themselves with technical problems and were experimenters
of the first rank. From art and mining experimentation
was taken over into science.

The world-view of the Renaissance, however, determined
the policy of rulers in a large measure, though it did not
transform the soul of man as did the innovations of the
Reformation. Almost all the great scientific discoveries of
the 16th and even the beginning of the 17th century were
made against the background of Catholicism. Copernicus
was a Catholic; while Luther and Melanchthon repudiated
his discoveries. Scientific progress and Protestantism must
not at all be unquestioningly identified. The Catholic
church has indeed occasionally obstructed scientifie prog-
ress; but the ascetie sects of Protestantism have also been
disposed to have nothing to do with science, except in a
situation where material requirements of everyday life
were involved. On the other hand it is its specifie contri-
bution to have placed science in the service of technology
and economics.’

The religious root of modern economic humanity is dead ;
today the concept of the calling is a caput mortuum in theEVOLUTION OF CAPITALISTIC SPIRIT 369

world. Ascetic religiosity has been displaced by a pessi-
mistic though by no means ascetic view of the world, such
as that portrayed in Mandeville’s Fable of the Bees, which
teaches that private vices may under certain conditions be
for the good of the public. With the complete disappear-
ance of all the remains of the original enormous religious
pathos of the sects, the optimism of the Enlightenment

which believed in the harmony of interests, appeared as the
heir of Protestant asceticism in the field of economic ideas;
it guided the hands of the princes, statesmen, and writers
of the later 18th and early 19th century. Economic ethics
arose against the background of the ascetic ideal; now it
has been stripped of its religious import. It was possible
for the working class to accept its lot as long as the promise
of eternal happiness could be held out to it. When this
consolation fell away it was inevitable that those strains
and stresses should appear in economic society which since
then have grown so rapidly. This point had been reached
at the end of the early period of capitalism, at the begin-
ning of the age of iron, in the 19th century.

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Part ONE
CHAPTER I

1. General References—A. Meitzen, Siedelung und Agrarwesen
der West- und Ostgermanen, der Kelten, Romer, Finnen und Slawen.
4 vols. Berlin, 1896; G. F. Knapp, “Siedelung und Agrarwesen nach
A. Meitzen,” in his Grundherrschaft und Rittergut, 101 ff. (Criticism
of Meitzen); Max Weber, Article, “Agrargeschichte, Altertum,” in
the Handwérterbuch der Staatswissenschaften, 3d ed., I, 52 ff. Jena,
1909.

2. See G. Hanssen, “Ansichten iiber das Agrarwesen der Vorzeit’”
in Neues staatsbirgerliches Magazin, vol. III (1835) and vol. Vi

1837 ) reprinted in his Agrarhtstorischen Abhandlungen, 2 vols.,
Leipsic, 1880-1884; also, G. von Maurer, Hinleitung zur Mark- Hof-
Dorf- und Stadtverfassung, Munich, 1854; E. de Laveleye, De la
propriété et de ses formes primitives, Paris, 1874 (English trans-
lation, Primitive Property, London, 1878).

For orientation as to the origin and course of the controversy,
see G. von Below, “Das kurze Leben einer vielgenannten Theorie,”
in the volume, Probleme der Wirtschaftsgeschichte, Tuebingen, 1920;
also, Max Weber, “Der Streit um den Character der altgermanischen
Sozialverfassung,” in Jahrbb. f. National-dkonomie und Statistik,
vol. LXXXIII (1904).

3. The hide organization has recently been the subject of a con-
troversy closely connected with that regarding the theory of prim-
itive communism. The older view saw in it a result and expression
of the communal field system, but later writers contend for a mano-
rial origin. Riibel, again, maintains that it was an institution
originally peculiar to the Salian Franks and was spread over all
Germany by the Frankish kingdom.

4, Cp. in general, Max Weber, Gesammelte Aufsdtze zur Religtons-
soziologie, Tuebingen, 1920, I, 350, and references there cited.

5. But it is not these arrangements which explain the stability
371372 GENERAL ECONOMIC HISTORY

of Indian conditions, as Karl Marx affirmed, but rather the caste
system, just as in China it is the clan economy.

6. The principal contrast in agrarian economy between Europe and
specifically Asiatic regions goes back to the fact that neither the
Chinese nor Javanese peoples knew the use of milk from animals,

while on European soil milking is met with as far back as Homer.
On the other hand, in India since the middle ages, cattle cannot be
slaughtered, and even today the upper castes condemn the eating
of meat. Hence milk animals and meat animals are both absent
in Asia over wide areas.

CHAPTER II

a re ee eke a ce

1. Cp. the right to bear arms, which existed to the time of
the Peasants’ War. It will be seen that there is a right corresponding
to the duty of the freeman to participate in the juridical commu-
nity.

oO om

2. This investigation goes back to J. J. Bachofen, Das Mutter-

recht, Stuttgart, 1861. The “matriarchal” (mutterrechtliche) or-
igin of the family asserted by Bachofen was taken over into the
works of L. H. Morgan (especially Ancient Society, New York,
1871), and of H. S. Maine (Ancient Law, London, 1861), and
became the foundation of the socialistic theory. Cp. the works of

Na A en

Bebel, Engels, and Cunow. E. Grosse (Die Formen der Familie und
die Formen der Wirtschaft, Freiburg and Leipsic, 1896) represents
the reaction against a one-sided mother-right theory. Indicating
the present state of knowledge, and in general free from bias, is
Marianne Weber, Ehefrau und Mutter in der Rechtsentwicklung,
Tuebingen, 1907.

3. Cp. J. G. Frazer, Totemism and Ezogamy, London, 1910.
4. Cp. Genesis, 34, 8 ff.

CHAPTER III

1. The fate of the Israelites in Egypt is thus explained.

2. Cp. Max Weber, Gesammelte Aufsdtze zur Religionssoziologie,
II, 69 ff.

3. Cp. A. Helps, The Spanish Conquest in America. 4 vols. Lon-
don, 1855-1861. The encomienda presupposes the system of repartimi-
entos, or distribution of the Indians among the lords on a basis of
number of individuals.

4. Cp. Max Weber, Wirtschaft und Gesellschaft (Grundriss der
Sozialokonomik III Abt.), Tuebingen, 1922, 724 ff.

ee a Sar reer et

FRO a Sonera Secor Sainte ateNOTES 373

o. Cp. the summarizing sketches of P. Vinogradoff, “Origins of
Feudalism,” in the Cambridge Medieval History, Il, 631 ff.
“Feudalism,” Ibid., III, 458 ff.

and.

CHAPTER IV

1. Cp. A. Dopsch, Die Wirtschaftsentwicklumg der Karolinger-
gett, 2d ed., 2 vols., Weimar, 1921-22: also P. Vinogradoff, refer-
ence in Note 5 of Chap. III; H. Sée, Les classes rurales et le
régime domaniale en France, Paris, 1901; F. Seebohm, The English
Village Community, 4th ed., London, 1890; P. Vinogradoff, Vil-
lainage in England, Oxford, 1892, and The Growth of the Manor,
2d ed., London, 1911; F. W. Maitland, Domesday Book and Beyond,
Cambridge, 1897; F. Pollock and F. W. Maitland, The History of
English Law before the Time of Edward I, 2d ed., 2 vols., Cambridge,
1898; R. Koétschke, Wirtschaftsgeschichte, 80 ff.

2. Against the attempt of Dopsch to interpret the Capitulare
de Villis as a special dispensation for Aquitania, see G. Baist,
Vierteljahrschrift f. Sozial- und Wirtschaftsgeschichte VII (1914),
22 ff. and J. Jud and L. Spitzer, Woérter und Sachen, VI (1914/15),
116 ff.

CHAPTER V

1. General References.—E. Bonnemére, Histoire des paysans depuis
la fin du moyen dge jusqwa nos jours, 4th ed., 3 vols., Paris 1886;
G. Vicomte d’Avenel, Histoire économique de la propriété, des sal-
aires, des denrées et de tous les prix en générale 1200-1800, 6 vols.,

Paris, 1886-1920; References below, on Chapter VI.
CHAPTER VI

1. Cp. M. Weber, Die romische Agrargeschichte in ihrer Bedeut-
ung fiir das Staats- und Privatrecht, Stuttgart, 1891; articles,
“A prargeschichte” (by M. Weber) and “Kolonat” (by M. Ros-
towzew) in the Handwérterbuch, 3d ed. (with extensive references) .

2. Cp. J. E. Cairnes, The Slave Power, its character, career and
probable designs, New York, 1862: H. J. Nieboer, Slavery as an
industrial system, The Hague, 1900; B. DuBois, The suppression
of the Afmcan slave trade, New York, 1904; G. Knapp, Die Land-
arbetter an Knechtschaft und Frethett, 2d ed., Leipsic, 1909, 1 ff.

3 See references in Note 5 of Chap. III and Note 1 of Chap
IV; also the histories by Ashley, Rogers, and Cunningham.a a ee

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374 GENERAL ECONOMIC HISTORY

4. Cp. E. v. Stern, Die russische Agrarfrage und die russische
Revolution, Halle, 1918.

5. Cp. G. von Below, Territoriwm und Stadt, Munich and Leipsic,
1900, 1-94; Th. Knapp, Gesammelte Beitrige zur Rechts- und
Wirtschaftsgeschichte, etc., Tuebingen, 1902; W. Wittich, in Grund-
riss der Sozialokonomik, VII (1914) 1ff., and in the Handwérter-
buch, V-3 (1911) 208 ff. (Article, “Gutsherrschaft’’).

6. Cp. L. Brentano, Erbrechtspolitik. Alte und neue Feodalitét,
Stuttgart, 1899.

7. Cp. M. Weber, Die Verhdltnisse der Landarbeiter im ost-
elbischen Deutschland, Leipsic, 1892.

8. Cp. articles, “Bauernbefreiung” (by G. Knapp et al.) in the
Handwéorterbuch II-3, 541 ff, and (by J. C. Fuchs) in the W6rter-
buch der Volkswirtschaft, I-2, 365 ff.

9. Cp. survey in M. Weber, Gesammelte Aufsitze zur Religions-
soziologie, I, 350 ff.

10. For references see M. Weber’s article in the Handworter-
buch, 3d ed., I, 182 ff.

11. See references in Note 5 of Chap. II and Note 1 of Chap. IV.

12. Cp. M. Kowalewsky, La France économique et sociale @ la
veille de la révolution, vol. I, Paris, 1909; E. Bonnemére, Histoire
des paysans depuis la fin du moyen dge jusqu’d nos jours, 4th ed.,
Paris, 1886; H. Sée, Les classes rurales et le régime domaniale
en France, Paris, 1901.

13. Cp. K. Griinberg, Die Bauernbefreiung und die Auflésung
des gutsherrlich-bduerlichen Verhdltnisses in Béhmen, Mahren und
Schlesien, 2 Pts., Leipsic, 1894; Ibid., Studien zur ésterr. A grar-
geschichte, Leipsic, 1901; Emil Kun, Sozialhistorische Bertrige zur
Landarbeiterfrage in Ungarn, Jena, 1903.

14. Cp. G. F. Knapp, Die Bawernbefreiung und der Ursprung der
Landarbeiter in den Glteren Teilen Preussens, 2 Pts., Leipsic, 1897;
and Ibid., Die Landarbeiter in Knechtschaft und Freiheit, 2d ed.,
Leipsic, 1909.

15. Cp. W. G. Simkhovitsch, “Bauernbefreiung (Russland),” in
the Handwérterbuch der Staatswissenschaften, 3d ed., II, 604 ff.,
and references there cited.

16. Cp. Count Rostworowski, Die Entwicklung der béduerlichen
Verhaltnisse im Kénigreich Polen, Jena, 1896; K. v. Gaszezynski,
Die Entwickelung der bduerlichen Selbstindigkeit im Kénigreich
Polen, Munich, 1905.NOTES
Part Two
CHAPTER VII

1. By way of introduction to industrial history, see the works of
W. J. Ashley, H. Boos, H. deB. Gibbins, G. Schmoller (Volkswirt-
schaftslehre, Vol. I), Karl Biicher, N. S. B. Gras, A. P. Usher.

CHAPTER VIII

1. Cp. B. H. Baden-Powell, The Land Systems of British India,
3 vols., Oxford, 1892, and The Indian Empire, 4 vols., Oxford,
1908-09; also Max Weber, Ges. Aufsatze zur Religionssoziologie,
II, 1 ff., 91 ff., and passim.

2. Max Weber, Ges. Aufsdtze zur Religionssoziologie, II, 121.

3. Max Weber, Die rémische Agrargeschichte in threr Bedeutung
fiir das Staats- und Privatrecht, Stuttgart, 1891.

CHAPTER IX

1. On guild history see M. Chwostoff, Sketches on the Organiza-
tion of Industry and Trade in Greek and Roman Egypt, Kazan,
1914; I. P. Waltzing, Etudes historiques sur les corporations pro-
fessionelles chez les Romains, Brussels, 1895-1900; G. von Schén-
berg, “Zur wirtschaftlichen Bedeutung des deutschen Zunftgewerbes
im Mittelalter,” in Jahrbiicher fiir Nationalékonomie und Statistik,
IX (1868); K. Th. von Inama-Sternegg, Deutsche Wirtschaftsge-
schichte, 3. Teil, Leipsic, 1901; also works on English industrial

history.
CHAPTER X

1. Schmoller was one of the leading advocates of this theory;
see his Die Strassburger Tiicher- und Weberzunft, Strassburg,
1879-81.

CHAPTER XI

1. General References.—Schmoller, reference in Note on Chap.
X: A. Abram, Social England in the 15th Century, London, 1909,
1-21. 117-130; G. Unwin, Industrial Organization in the 16th and
17th Centuries, London, 1904; E. Martin-Saint-Léon, Histoire des
corporations de métters, 2d ed., Paris, 1909; H. Hauser, Ouvriers

du temps passé, 2d ed., Paris, 1906.fore a pasos:

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= feet btsantnah taahe-tesemehekociieaten ote aoe ee

GENERAL ECONOMIC HISTORY
CHAPTER XII

1. General References——E. Levasseur, Histoire des classes ou-
wriéres en France, 2d ed., 2 vols., Paris, 1900-1901 (Summary in
English, Agnes Bergeland, History of the Working Class in France,
Chicago, 1918.); R. W. C. Taylor, Introduction to a History of
the Factory System, London, 1886; J. E. Thorold Rogers, Sia
Centuries of Work and Wages, 2d ed., London, 1912; W. Sombart,
Der moderne Kapitalismus, 4th ed., 2. Bd., 2 Hlbbd., Munich and
Leipsic, 1921.

CHAPTER XIII

1. General References.—I. B. Mispoulet, Le régime des mines a
Vépoque romaine et au moyen-dge, Paris, 1908; O. Hué, Die Berg-
arbeiter, Stuttgart, 1910.

Part THREE

CHAPTER XIV

1. General References.—Ch. Letourneau, L’évolution du commerce
dans les diverses races hwmaines, Paris, 1897: E. Levasseur, His-
tore du commerce de la France, 2 parts, Paris, 1911-12; H. Pirenne,
“Villes, marchés et marchands au moyen-ige,” in Revue historique
LXVII (1898); History of Domestic and Foreign Commerce of
the United States, 2 vols., Washington, 1915 (with an exhaustive
bibliography of American economic history).

CHAPTER XV

1. General References.—Articles “Verkehrsmittle und -wege,” and
“Verkehrswesen im deutschen Mittelalter,” in Handwérterbuch der
Staatswissenschaften; O. T. Mason, Primitive Travel and Trans-
portation, New York, 1897; W. L. Lindsay, History of Merchant
Shipping and of Ancient Commerce, 4 vols., London, 1874-1876.

2. M. Weber, Ges. Aufsdtze zur Religionssoziologie, III, 351 ff., 403.

CHAPTER XVI

1. See the papers of G. von Below: “Grosshiindler und Klein-
hindler im deutschen Mittelalter”; tber Theorien der wirtschaft-
lichen Entwieklung der Vélker”; and, “Der Untergang der mittel-NOTES vd 6

alterlichen Stadtwirtschaft,’—all in the volume, Probleme der
Wirtschaftsgeschichte, Tuebingen, 1917.

2. Concerning the organization of commerce in medieval Eng-
land, see E. Lipson, An Introduction to the Economic History of
England, vol. I, London, 1915; also, N. S. B. Gras, Evolution of
the English Corn Market from the 12th to the 18th Century, Cam-
bridge, (Mass.), 1915; and references in these works.

CHAPTER XVII

1. Max Weber, Zur Geschichte der Handelsgesellschaften im Mit-
telalter, Stuttgart, 1889.

CHAPTER XVIII

1. General References.—Chas. Gross, The Gild Merchant, 2 vols.,
Oxford, 1890; Lipson, see Note 2 of Chap. XVI; H. B. Morse, The
Guilds of China, London, 1909.—On India, see M. Weber, Gesam-
melte Aufsatze zur Religionssoziologie, II, 84ff., and the works of
W. Hopkins there referred to—W. E. Lingelbach, The Merchant
Adwenturers of England, Philadelphia, 1902.

2. Through this requirement the Hanse aroused the persistent
antagonism of Danzig, which did not wish to have its shipbuilding

industry placed at a disadvantage,

CHAPTER XIX

1. General References —W. Ridgeway, The Origin of Metallic
Currency and Weight Standards, Cambridge, (Eng.), 1892; W. A.
Shaw, The History of Currency, 1252-1894, London, 1895; Articles
by W. Lexis, in the Handwérterbuch, on “Gold,” “Wihrungsfrage,”
“Silberwihrung, etc.; (Cp. Report of Director of the U. S. Mint,
1896, pp. 266-80 and ff.—Tr.) J. L. Laughlin, Principles of Money,
New York and London, 1903; W. W. Carlile, Evolution of Modern

”

Money, London, 1901.

2 See the estimates, which are in fair agreement, by Soetbeer
(in Petermann’s Geographischen Mitteilungen, Erganzungsband,
1879, p. 54) and W. Lexis (in Jahrbiicher fiir Nationalokonomve
und Statistik XXXIV (1880), pp. 361 ff.). The estimates of F. De
Laiglesias, however (in Los caudales de India en la PTET, metad
del siglo XVII, Madrid, 1904), lead to a result almost fifty-fold

different, in the downward direction.

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GENERAL ECONOMIC HISTORY
CHAPTER XX

1. General References.—History of the Banking of All Nations,
London, 1896; R. Ehrenberg, Das Zeitalter der Fugger, 2 vols., Jena,
1896; A. Andreades, History of the Bank of England (Trans. H.
S. Foxwell, London, 1909); References in the Handwérterbuch der
Staatswissenschaften, 3d ed., II, 359f., 368 f.

CHAPTER XXI

1. Moreover, this view is not unknown to the unworldly love
doctrine of the earliest Christians. The later prohibition of in-
terest by the Church rested on Luke 6, 35; but according to A.
Merx there was a misreading of the text. (Die vier kanonischen
Evangelien nach ihrem dltesten bekannten Texte, II 2, I, 223 ff.)
This misreading, he says, passed into the Vulgate on the authority
of Clement of Alexandria, and became the basis of the Church’s
later position.

Part Four

1. General References on Part Four.—J. A. Hobson, Evolution of
Modern Capitalism, 2d ed., London, 1906; L. Brentano, Die Anfainge
des modernen Kapitalismus, 4th ed., 2 vols., Munich and Leipsic,
1922; G. Schmoller, “Die geschichtliche Entwicklung der Unterneh-
mung,” Jahrbuch fiir Gesetzgebung, Verwaltung und Volkswirtschaft,
XIV-XVII (1890-1893); A. Toynbee, Lectures on the Industrial
Revolution of the 18th Century in England, London, 1884; W. Som-
bart, Die deutsche Volkswirtschaft im 19. Jahrhumdert, 3d ed., Berlin,
1913.

CHAPTER XXIII

1. General References—W. Sombart, Der Moderne Kapitalis-
mus, Munich and Leipsic, 1916; J. Strieder, Studien zur kapitalis-
tischen Organisationsform, Kartelle, Monopole und Aktiengesellschaf-
ten im Mittelalter und zu Beginn der Neuzeit, Munich and Leipsic,
1914; Julius Klein, The Mesta. A Study in Spanish Economic His-
tory, 1273-1836, Cambridge (Mass.), 1920; J. and S. Davis, Essays
in the earlier history of American corporations, 2 vols., Cambridge
(Mass.), 1917; G. Cawston and A. H. Keane, Early Chartered Com-
pantes, London, 1896; R. Muir, The Making of British India, 1756NOTES 379

to 1858, Manchester, 1915; P. Bonnassieux, Les grandes compagnies
de commerce, Paris, 1892.

9 ¥ = Vn aa . . +
2. Cp. H. Levy, Economic Liberalism (Eng. Trans., London, 1913.)
CHAPTER XXIV

1. General References.—W. R. Scott, The Constitution and Finance
of English, Scottish and Irish Joint Stock Companies to 1720, 3
vols., Cambridge (Eng.) 1910-1912; A. Aftalion, Les crises péri-
odiques de surproduction et leur retour périodique en France, en
Angleterre et aux Etats-Unis, Paris, 1913; M. Bouniatian, Ge-
schichte der Handelskrisen in England, Munich, 1908; N. A. Brisco,
The Economic Policy of Robert Walpole, New York, 1907.

CHAPTER XXV

1. General References—Sombart, Der moderne Kapitalismus, II,
429 ff.; Articles “Boérsenwesen” (by R. Ehrenberg) and ‘“Miarkte
und Messen” (by K. Rathgen) in the Handworterbuch, 3d ed., vols.
III and IV; Article “Post,” (by P. D. Fischer and M. Aschenborn),
Ibid., VI-3; J. C. Hemmeon, History of the British Post Office,
Cambridge (Mass.), 1912; Article “Zeitungen,’ by L. Salomon,
Handwérterbuch, 3d ed., vol. VIII.

CHAPTER XXVI

1. General References.—H. Merivale, Lectures on Colonisation
and Colonies, 2d ed., London, 1861; H. E. Morris, History of Colont-
sation from Earliest Times to the Present Day, 2 vols., London,
1904: G. L. Beer, The Old Colonial System, 1600-1754, 2 vols.,
New York, 1912; A.Sartorius von Waltershausen, Die Arbettsver-
fassung der englischen Kolonien in Nordamerika, Strassburg, 1894;
St. B. Weeks, The Southern Quakers and Slavery, Baltimore, 1898.

2. A parallel is found in the fact that the negroes long ago
showed themselves unsuitable for factory work and the operation of
machines; they have not seldom sunk into a cataleptic sleep. Here
is one case in economic history where tangible racial distinctions
are present.

3. The principal supporters of the slave trade were originally
the Arabs, who have maintained their position to the present in
Africa. In the middle ages the Jews and the Genoese divided the
business; they were followed by the Portuguese, the French, and

finally the English.

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380 GENERAL ECONOMIC HISTORY
CHAPTER XXVII

1. General References—A. Riedler, Uber die geschichtliche und
Zukiinftige Bedeutung der Technik, Berlin, 1900; L. Beck, Ge-
schichte des Hisens, 5 vols., Brunswick, 1884-1903; Chas. Babbage,
On the Economy of Machinery and Manufactures, London, 1832; G.
von Schulze-Gaevernitz, Der Grossbetrieb, ein Wirtschaftlicher und
sozialer Fortschritt, Leipsic, 1892; Survey in Sombart, Der moderne
Kapitalismus, I, 481 ff. and II, 609 ff.; L. Darmstaedter, Handbuch
zur Geschichte der Naturwissenschaften und Technik, Berlin, 1908.

2. On the other hand the exploitative mining out of the under-
ground wealth must have a limit in time; the age of iron cannot
last over a thousand years at most.

CHAPTER XXVIII

1. General References——M. Weber, Wirtschaft und Gesellschaft,
Tuebingen, 1922, pp. 513 ff.; N. D. Fustel de Coulanges, La cité
antique, Paris, 1864.

2. Otherwise Peking would have to be regarded as a “city”
from the beginning, and at a time when nothing of the nature of a
city existed in Europe. Officially, however, it is called “the five
and is administratively handled in parts as five large
villages; hence there are no “citizens” of Peking.

3. In contrast, the officials and princes in Japan resided in castles
down to the modernization; places were distinguished according to
size.

4. The Indian armies, even in the oldest Greek reports from the
time of Alexander the Great, had tactical divisions and organiza-
tion, but also exemplified the combat between heroes. In the
armies of the Grand Mogul, the knights who equipped themselves
retained their place alongside the warriors enlisted and equipped
by the war-lord, and enjoyed a higher social esteem.

5. The parallelism with the German revolution of 1918 stands
out; the soldiers’ councils demanded power to nullify judicial de-
cisions,

places,’

CHAPTER XXIX

1. Cp. M. Weber, Gesammelte Aufsdtze zur Religionssoziologie,
Tuebingen, 1920, I, 276 ff., and works there referred to.

2. On Mercantilism, see Article, “Merkantilsystem” in the Hand-
worterbuch, 3d ed., VI, 650 ff., and the illuminating article, “Bal-NOTES 381
ance of Trade” etc. in Palgrave, Dictionary of Political Economy, 3
vols., London, 1895; also, Adam Smith, Wealth of Nations, Book
LV;;2G: Schmoller, The Mercantile System (Eng. Trans. in Ashley’s
Economic Classics); W. Sombart, Der Bourgeois, Munich and Leip-
sic, 1913; P. Clément, Histoire du systéme protectewr en France,
Paris, 1854; A. P. Usher, History of the Grain Trade in France,
1400-1710, Cambridge (Mass.), 1913.

CHAPTER XXX

1. Cp. M. Weber, Gesammelte Aufsdtze zur Religionssoziologie,
L SO:

2 LDIGe. le O44:

3. W. Sombart, The Jews and Modern Capitalism (Trans. by M.
Epstein) London, 1913.

4. As soon as the Mandarins realized the chances for gain open
to them, these difficulties suddenly ceased to be insuperable; to-
day they are the leading stockholders in the railways. In the long
run, no religious-ethical conviction is capable of barring the way
to the entry of capitalism, when it stands in full armor before the
gate; but the fact that it is able to leap over magical barriers does
not prove that genuine capitalism could have originated in cir-
cumstances where magic played such a role.

5. M. Weber, Gesammelte Aufsdtze zur Religionssoziologie, I,
63 ff., 163 ff., 207 ff.

6. In a general way, thou h with necessary reservations, the

o
g
contrast may be formulated by saying that Jewish capitalism was
speculative pariah-capitalism, while Puritan capitalism consisted
in the organization of citizen labor. Cp. M. Weber, Gesammelte
Aufsaitze zur Religionssoziologie, I, 181 ff., Note 2.

7. Cp. also E. Troeltsch, Die Soziallehren der Christlichen Ktr-
chen und Gruppen, 2 vols., Tuebingen, 1913 (reprinted 1919).
Among the opponents of the above conceptions of Max Weber re-
garding the significance of Calvinism should be mentioned L.
3rentano (Die Anfinge des modernen Kapitalismus, Munich, 1916,
117 ff.) and G. Brodnitz (Englische Wirtschaftsgeschichte, 1, 282 ff.)
(Another exposition in English of Weber’s theories in this field
be found in two articles by P. T. Forsyth, Calvinism and
Contemporary Review, 1910. Cp. also R. H. Tawney,
Capitalism, London and New York,

may
Capitalism,”
Religion and the Rise of
1926.—Tr.

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stitches S-hntal eie-teeesehetediceatae eee ee

aAcciajuoli, Florentine banker
family, 259.

Albuquerque, 249.

Alexander the Great, 97, 319,
321.

Alexander I, of Russia, 106.

Alexander II, of Russia, 106.

Alfonso X, 201.

Alcibiades, 130.

Amerigo Vespucci, 201.

Andrea Doria, 200.

Anne, Queen of England, 307.

Arkwright, 174.

Joris Gudonow (Czar), 86.
Bright, John, 351.
Buddha, 362.

Cesar, 16 f., 245, 333.

Calvin, 271.

Caracalla, 245.

Cartwright, 304.

Catherine II, of Russia, 63.

Cato, 80, 209.

Charlemagne, 155, 246, 345.

Charles Martel, 63.

Charles I, of England, 183.

Charles II, of England, 98.

Charles V, Emperor, 299, 336.

Charles VI, of Austria, 101.

Charles Frederick, of Baden, 99.

Cleisthenes, 97.

Clement of Alexandria, Chap.
XXI, note 1.

Cobden, 351.

Colbert, 171, 349.

Columella, 890.

Conrad II, Emperor, 182.

Constantine the Great, 245.

Copernicus, 368.

Cortez, 356.

Crassus, 333.

INDEX OF

383

NAMES

Dante, 131.
Demosthenes, 127, 204.
Deutero Isaiah, 358.
Diocletian, 135,

Elizabeth, Queen of England, 183,
216, 306 f.
Ezra, 359.

Ferdinand I, Emperor, 250.
Francis I, of France, 171.
Franck, Sebastian, 366.
Frederick Barbarossa, 182, 345.
Frederick II, Emperor, 284, 345.
Frederick the Great, 103, 342.
Frederick William I, of Prussia,
87, 101.
Frederick III, of Prussia, 103.
Fuggers, German bankers, 154,
206, 208, 260.

George I, of England, 307.
Gracchi, 282, 287.

Gregory IX, 269.

Hadrian, 180.

Hammurabi, 257.

Hanssen, G, 3.

Hapsburgs, 198, 283, 284.
Henry 11, Emperor, 182.
Herodotus, 116.
Hohenstaufens, 182, 319, 329.
Homer, 200.

Igibi (Babylonian banker fam-
ily), 225.

Jesus, 358.

John, King of England, 182.
Joseph II, of Austria, 102, 103.
Justinian, 205, 340.

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384

Lao-tse, 362.

Laud, Bishop, 349.

Laveleye, E. de, 3, 24.

Law, John, 286 ff.

Leonardo da Vinci, 311.

Leopold I, Emperor, 101, 282

Liebig, Justus von, 306.

Livia, Roman empress, 125.

Louis XIV, of France, 264.

Louis the Rich, of Bavaria, 217,
346 f.

Luther, 150, 368.

Lysias, 127

Mago, 80.

Maimonides, 268.

Mandeville, 369.

Maria Theresa, 87, 101. 103.

Marx, Karl, 162, 270, 352.

Maurer, G. von, 3.

Medici, 226, 259.

Meitzen, A., 12.

Melanchthon, 368.

Mommsen, Th., 328.

Montgelas, Bavarian statesman,
99.

Nehemiah, 320 f., 359

Nero, 245.

Newton, Sir Isaac, 249, 252
Nicias, 180.

Nicholas I, of Russia, 106.

Paterson, Will, 350.

Paul, Apostle, 137, 322.

Peel, Robert, 85.

Peruzzi, Florentine banker fam-
ily, 259.

Peter the Great, 63, 87.

Peter, Apostle, 322.

Pizarro, 356.

INDEX

Plato, 317.

Pliny, 129, 180.

Ptolemies, see Subject Index,
Egypt.

Richard a of ends 348,
Rietschel,

her rnae Rae
Roger I, of Sicily, 182.

Salmasius, 271.

Shi-Huang-Ti, Chinese Emperor,
95.

von Schoen, 104.

Sigismund, Emperor, 346.

Sinzendorff, Counts of, 172.

Smith, Adam, 347.

Solon, 97.

Sombart, W., 300, 308, 323, 353,
358.

Stevin, Simon, 275.

Stolypin, Russian statesman, 19.

Stuarts, Eng. royal house, 284,
349, 350, 367.

Sully, French statesman, 296.

Tacitus, 17, 116, 217.

Thomas Aquinas, 317.

Thurn und Taxis, German fam-
ily, 295.

Varro, 80, 209.
Vasco da Gama, 249.

Wallenstein, 59.

Welsers, banker family, 226,
998.

William the Conqueror, 332.

William of Orange, 264.

Witte, Count, Russian statesman,Accounting (Bookkeeping) 224 f.;
prerequisite of capitalism, 275.

Actor, trader of antiquity, 197.

Administration (see State, Law),
338 ff.

Agrarian organization, primitive,
3 ff. See Contents, Part I, also
under various countries. Agr.
Communism, theory, 3ff., 24,
secondary, in orient, 60.

Almende, Chapter I.
mon pasture.

Alpine hubandry, 11.

Ancestor worship (China), 48.

avdpeioy, 40.

Animals, use of, 24, 38. See Horse.

Antiquity (Europe) Coastal
character of civilization, 55 f.,
81, 97 f., 146, 354; feudal rela-
tions disappear near large
cities, 96f.; easy collapse of
money economy, 60, 131: oikos
or estate craft work, 126-30;
living standards, 130 f.; guilds,
136 f.; slavery obstacle to fac-
tory industry, 1/6 f.; shipping
organization, 203-5; money,

See Com-

944 ff.; banking, 254f., 256;
growth of cities comp. w. mid-
dle ages, 323f.; war the nor-

nal condition, 331. See Greece,
come.

Anti-semitism, 217.

Apparatus, and machine, 302.

Apprenticeship, regulation by
guilds, 143; apprentices or-
ganize, 143; Statute of Appren-
tices, 306.

Appropriation, forms,
Property.

Arabic notation, 223 f.

Argentarit (Roman

256.

26 ff. See

bankers),

SUBJECT

385

INDEX

Art, a city product, 316.
Artt maggiort and minori, 327.
Asceticism and ife
364 ff. =
Association, forms of in develop-
ment of capitalism, 280 ff.
Assyria, irrigation culture, 57.
Astronomy and navigatio j
late middle ages, SOT eat
Austria, dissolution of feudalism
with protection of peasantry,
100-03; early factories, relation
to guilds and state, 172.
Avunculate, 29, 40.

economic

sacerdotal
irrigation cul-

history,
traces of

3abylon, Babylonia,
prostitution, 32;
ture, 57; monetary
244; banking,
citizenship idea, 315.
3alance, in capitalistic account-
ing, 275, 282.
Janalité (Bannrecht,
right), 68, 72; shipping, 211;

Banat, see South Slavs.

Banjari, Indian trading
231 f.
3ank of England,

289 ff., 350 f.
3ank money, 250 f.

Banking, in the pre-capitalistic
age, 254-66 (Chap. XX). Orig-
inal functions, exchange and
safe deposit, 254 f.; banker as

251:

socage

caste,

261,

264 ff.,

287,

lender peculiar to Babylon,
955: in Rome, account-current

business, 256; temple and state
banks typical of antiquity,
256 ff.; medieval banking, 258
ff.; state finance operations,
259 ff.; liquidity, 260 f.; bill of
exchange, evolution of, 261 ff.;ER Rt Bea eee ee elma teegal

A al Bono

Seo Si-as pervesarcereeerbeerar eee Fraser

seth Seeienhiet hte eet red

banking in England, 263 ff.;
outside of Europe, 265 f.

Banya, Indian trading caste, 196,
197.

Bayaderes, 32. See prostitution,
sacerdotal.

Bazaar-shop, 119.

Benefice, beneficium, 62, 67.

Bifang, primitive landholding, 9.

Bill of exchange, evolution of,
261 ff.

Blast furnace, 304.

300kkeeping, 224f.; of Roman
bankers, 256; balance, 275, 282.

Breweries, brewing-compulsion
(forerunner of factory), 166 f.

3roker, brokerage, medieval, 214,
218.

Buddhism, relation to guilds and
castes, 231; type of Hindu
prophecy, monk vs. mass ethics,
363 ff.; in Tibet, 365.

Communism, agrarian, 3ff., 24.
See Agrarian organization, and
various countries.

Cadets, Russian, land policy, 19.

Campagna, Roman, land division,
6; latifundia of, 84.

Campsores, medieval money
changers, 258.

Capital, conflict of export and
mercantile, 156; see Invest-
ment, Capitalism. C. account-
ing, in the commenda, 206 f.

Capitalism, aspects, presupposi-
tions and history, Part IV pas-
sim (see Table of Contents).
Germs in pre-capitalistic age,
see Commenda, Domestic Sys-
tem, Factory, Guilds, Mining,
Shop industry. Stages in devel-
opment of, C., 302-3; summary
and analysis of character and
pauses, 312-14; diverse forms
in ancient vs. modern times,
334 ff.; spirit of and its devel-
opment, 352-69 (Chap. XXX) ;
causes, summary, 352-4; prim-
itive traditionalism, 354 f., can-

386 INDEX

not be overcome by economic
interest alone, 355 f.; internal
and external ethics, 356; de-
velopment in India, 356 aR
antipathy of older Christian
ethic to C., 357 f.; position of
Jews in Christendom, 358 ff. ;
Judaism, hostility to magic,
360 f.; Hindu vs. Jewish-Chris-
tian prophecy, 362 ff.; asceti-
cism and rationality, 364 f.;
class vs. mass ethics, in India,
362, in~Catholicism, 364,365 ;
significance of the Reformation,
disappearance of ethical dual-
ism, 365 ff.; American sects,
366 f.; Puritanism and the call-
ing, 367, effectiveness in pro-
ducing capitalistic individuals,
368; Renaissance vs. Reforma-
tion attitude toward science,
368; world-outlook left by de-
cay of religiosity, 368f. See
also Accounting, Computation,
Rationality, Labor, Technology.

Capitano del popolo, 234.

Capitulare de villis, 67.

Captives, originally slaughtered,
later enslaved, 52.

Caravans, Caravan trade, 199,
208, 210.

Caravansary, 213.

Carthage, money in, 326 f., 242.

Caste, and marriage (India),
35; C. relations of whites and
blacks in U.S. A., 83 f.; devel-
opment from ethnical relations
(India), 123f.; relation to
guilds, 136 f.; prevents domes-
tic system, 161; prevents fac-
tory development, 175 f. See In-
ia.

Catholicism. See Asceticism. Cap-
italism, Christianity, Church.

Caursines, 217; in medieval
banking, 258, 359.

Cattle loan, 268.

Cavalier loan, of Leopold I, 282 f.

Celts, primitive economic system
of, 16.

Centuria fabrum, 136.Champagne, fairs of, 220 ff. See
Commerce.

Chieftain, role in genesis of
feudalism, 51.

Chieftain trade, regulation and

monopolization, 55; gives rise
to town nobility, 55; disinte-
gration of in ancient states,
58 ff.

China, early agrarian organiza-
tion, 22; clan economy, 22, 45;
abolition of feudali 95;
oikos craft work, 125;

136 f., 161; clans an obstacle
to growth of factories, 176;
prevalence of shop industry,
176; development of mercantile
guild out of tribal trade, 230,
231: weights and measures and
money, 231, 242, 250; banking,
254, "259, 265 f.: citizenship
idea absent, 316; cities in west-
ern sense absent, 318; army
administra-

sm
nl,

guilds,

or-

ganization, 320f

tion contrasted with rational
state, 338f., 343; economic
policy of state, 344; geo rraph-

ical obstacles to economic de-

velopment, 354; rational proph-

ecy absent, 362.
Christianity, and slavery, 83,

300 f.; growth of C. in cities,

317: Pentecostal miracle, fel-
lowship with non-Jews, rela-
tion to citizenship and city

growth, 322 f.; role in economic
history, a plebeian religion,
363 ff., reduces sway of magic,
largely by ethical not ceremo-
nial means, 363 f.; partial dis-
solution of primitive ethical
dualism under Catholicism,
365; dropping of consilia
evangelica by Protestantism,
decay of asceticism, 365 ff.;
Protestantism, Puritanism and

the concept of the calling,
366 ff. :
Church, role in trade of fairs,

221 f.; policy regarding inter-
est taking, 269 ff.
Ciompi, 3

327.

INDEX

387

in development of ra-
administration, 279,

City, role
tional
282 f.

City and citizenship, analysis and
evolution of, 316-337 (Chap.
XXVIII); peculiar to the oc-
cident, 313; meaning of city,
315; contributions to culture,
316 ff.; reasons for absence in
the orient, defense, 320 t=
magic 322 f.; geographical dis-
tinctions in the oecident, 323
ff., in antiquity vs. middle
ages, 323-31; south vs. north
Europe, 331-3; relation to cap-
italism, 333-7; submergence of
the city in the state, 336 f. See
also Town.

Civis, in Champagne fairs, 221.

Clan, composition and property
relations, 27; evolution, 43 ff.;
meaning of word, 43; forms,
43 ff.; in Athens, 44; relation
to land holding, 44; position
of elder, 44; later history, west
vs. east, 44 f.; disintegration in
west, religious and political
forces, 45f.; agnatic clan and
patriarchate, 47 ff.; female clan
and free marriage, 49.

3e
ae

>
>-

Clan economy in China, 22, 45
(see also China).

Class relations in ancient vs.
medieval cities, 328 ff.

Coal, in middle ages, 190f.,

304 ff.; use for smelting iron,
304 ff.
Coinage, technique, 242, 247, 250

(see also Money); C. and
banking, 254, 258, 265 f.
Colonial policy, 298-301 (Chap.
XXVI).
Colonial proprietorship, 61.
Colonies, slavery in, 299 ff.
Colonizing companies, role in

evolution of capitalism, 281 f.
Colons, colonate, 54.
Commandite, 229.

Commenda, 206; and capital ac-
counting, 225 ff.; in S. vs. N.
Europe, 229; C. and interest on
money, 269.

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Commendation, 53, 63.

Commerce, beginnings and early
development, 195-8 (Chap.
XIV); originally between
ethnic groups, 195; forms,
195 ff.; caste and, 195 f.; out-
cast peoples (Jews), 196;
seigniorial trade, 196 f.; gift
trade, 197; trade of princes,
198; transportation, 199-201
(Chap. XV); forms of organi-
zation, 202-222 (Chap. XVI) ;
the alien trader, 202-15; earli-
est times, 202; antiquity,
203 ff.; volume of C. in middle
ages, 203, finance, 205f.: vol-
ume of land trade, 209 f.: legal
arrangements, 212 ff.; resident
merchant, 215 ff., struggles,
216 ff.; the fairs, 220 ff.; forms
of enterprise, 223 ff. (Chap.
XVII); computation and ac-
counting, 223 ff.; the commen-
da, 225 1.; separation of house-
hold and business, 226 ff.; S.
vs. N. Europe, 228 f. See also
Guilds, mercantile, Money.

Commercialization of life, rela-
tion to capitalism, 277 f.

Commission trading, 292 f.

Common pasture, in early agri-
culture, Sff. (Chap. I pas-
sim) ; appropriation by lords,
(alot:

Communism, agrarian, theory of,
3, 24; of fiscal origin, see
China, India, Russia.

Communalization of work, two
types, 39.

Compania communis (Venice),
232.

Compass, nautical, 200 f.

Compulsion, see Mills, Breweries
(Factory forerunners), Bana-
lités.

Computation, 223 ff.

Concubinage, 34.

Consignment trading, succeeds
the fair, 293.

Constitutum usus, 206.

Corpo della compagnia, 228.

388 INDEX

Cottager in primitive Agr. vil-
lage, 9,

Cotton, divergent effects of in-
dustry in Eng. and U. S..A.,
82; decisive role in develop-
ment of capitalism in Eng.,
303 ff.

Cowry shell money, 239.

Craftsmen, wandering, and Chris-
tianity, 137.

Craft work, defined, 116. (See
Guilds). Developed by oikos
system in ancient east, 126;
organization in antiquity, 126-
30; in medieval turope, 130-
34.

Crises, speculative, 286-91 (Chap.
XXIV); Mississippi Company,
287 ff.; South Sea Company,
288 ff.; later history of C.,
290f.; and socialism, 290 f.:
speculation and C., 294.

Croatia, see South Slavs.

Curia, 208. See Church.

Custodes nundinarum, in Cham-
pagne fairs, 22).

Cyrenaica, chieftain trade, 55,

Cyvvar, in Scotch husbandry, 15.

Dare ad proficuum de mari, 269.

Debt, public, relation to com-
mercialization and capitalism,
279 ff., 286 f.

Demesne farming, absent in
orient, 60, 73.

Demiurgical labor, in India, 22.

Democracy in ancient, vs. medi-
eval cities, 324 ff.; of ancient
city a political guild, 33).

Demos (duos), 97, 324, 328.

Dependence, personal, result of
conquest, exploited communally
in Sparta, 52; result of com-
mendation, 53, of land settle-
ment, 53; servility to prince
under irrigation culture, 57.

Domestie system (putting-out
system), 118; displaces guilds,
153-161 (Chap. XI); appear-
ance of in guilds, 142; course
of development, 153 ff.; in tex-tile industry, 155ff.; growth
alongside guild industry, 158
f.; stages, 159 f.; basis of per-
manence the unimportance of
fixed capital, 160; later stages
confined to west, 160; limited
development with free workers
outside Europe, 160 f.; not dis-
placed by early factories, 173.

Dschaina, Indian trading sect,
196. 232,

Duc-duc, 40.

Dues and fees, feudal, 73

Dutch East India Company,
agrarian system, 21f.; organ-
ization, 281 f.

Egypt, disintegration of clan by
political forces, 46; chieftain
trade, 55; irrigation culture,
56 f.: officialdom of state, 57
ldia, 57; grain banks, 58; craft
work for the state, 125; early
shipping, 202; monetary his
tory. 244: banking, 254, 257;
law prohibiting interest, 267 f.

exooTns, 135.

eutropot, 203.

Enclosure of land, in Germany,
14: in England, see Estate
Economy.

Encomienda, 61.

Endogamy, 29, 35; a phenomenon
of retrogression, 36

England, Germanic land settle-
ment form, 10; condition of
peasantry prior to capitalism,

tate or

O% pas-

es, Sul

77 {.- effect of strong
Normans on feudalism,
toral and cereal estat
no formal abolition of feudal-
ism, 98; guild masters separate
from craft work, 152, 153;
guild development, contrast w.
Germany, 153 f., 156-8; signit-
icance of representation ¢
towns in Parliament, 157;
guilds and early factories, |

‘

f
yk

struggle over mining rights,
182 f.; mercantile guilds
(Guild Merchant), 232f.;

INDEX 389

separation of wholesale and
retail trade, 233; monetary
history, 249, 251f.; banking
history, 263-5 (see Bank of
England) ; policy towar’s slav-
ery, 300f.; type of N. KEu-
ropean city, 333f.; mercantil-
ism in, 348f.; Church of E.
economic policy, 349.
Enterprise, and capitalism, 275;
forms of commercial, 223
(Chap. XVIII). See Commerce.

Erbex (free-holding farmer) in
Westphalia, 11; in India, 23.
Ergasterion, 119f.; (fabrica),

162.

Estate economy, 84-92; definition,
forms, 84; for stock raising,
84 f.; in England, 85 f.; in Rus-
sia, 86f.; in Germany, 87-92;
Poland and White Russia, 92.
See Oikos-Economy.

Estates General (France), 75.

Ethies, internal and external,
312; rational E. peculiar to
west, 312f.: attitude of clas-
sical E. antagonistic to capital
ism, 357, based on impersonal-
ity of relations, 357 f.; Roman
E. characterized by caveat emp

internal vs. external
E., 356: breakdown of dualism,
313, 356 ff.; dualism main-
tained by Jews, 359 f.

Exchange, the, as an _ institu-
tion, 293f.; exch. quotations
requisite for consignment trad-

Q-*
204

tor.

ing, 293.
Exchequer, Eneglish,
Exogamy, basis of, 36.

283.

Faber (fabri), 147, 328.

Fabrica (ergasterion) , workshop,
universally found, 162.

Factor (Verleger) and _ factor
system. See Domestic System,
Putting-Out System. F. under
slavery, 126; rise of, 153 ff.

Factory, meaning, prerequisites
and development, 162-77 (Chap.
XII). See also technology

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(Chap. XXVII, pp. 302ff.)
Definition, factory and shop,
162 f.; prerequisites, large and
steady market, 163; free labor,
164; forerunners, communal
mills, ovens, breweries, found-
ries, iron works, 165-7: early
factory, ergasterion with free
labor, in England, 168 f.: sup-
pression by the state, 169; new
development through labor
specialization and power,
169f.; coiners, weapon and
uniform factories, 170; market,
luxury demand, 170f.; legal
relations of early factories,
Ol fi development alongside,
not out of, craft work and
domestic system, 173; not
called forth by machines, 174;
social effects of, 174f.: why
undeveloped outside W. Europe,
175 ff.; stages in England,
302f.; recruiting of labor,
306 f.; market, 307 ff.; ration-
alism in labor organization,
science and the state, 312 ff.
Fairs and fair trade, 220 ff. (see
Commerce) ; other than Cham-
pagne, 222; F. displaced by
consignment trading, 292; rela-
tion to the exchange, 293 f,
Family, small-family, 28; and
property relations, 37 ff.; mod-
ern, of restricted scope, 111,
(See Mother-right, Matriar-
chate, Patriarchate, Mar-
riage.) F. as business unit,
evolution into the company,
225-29.
Father-right, patriarchate, 30.
Feudalism. Chapters III, IV, V
and VI, passim; see Table of
Contents; also under various
countries; also topics, Manor,
Peasantry, Seigniorial pro-
prietorship. Military signifi-
cance of F., 52, 63 f.
Fideicomissum (trust) in Byzan-
tium and Moslem world, Eng-
Jand and Germany, 109.

390 INDEX

Fiefs, money and grain, 54; land,
62.

Firma burgi, 232.

Fiscus, 67.

Flanders, putting-out system,
155; woolen industry, 155,
221. See Netherlands.

Florence, banking, 259f.:; clas-
sical guild city, 326 ff. See City
and Citizenship.

Fondaco, 213f., F. dei Tedeschi
(Venice) 218.

Forest culture (vs. irrigation
type), 56. Deforestation in
England, and modern techno-
logical development, 304 f.

Forestalling, 140, 218.

Forging, mechanical, 304.
Foundries, relation to artillery,
forerunner of factory, 167.
Freedom and unfreedom of per-
sons under feudalism, 66 ff.;
effacement of distinction, 66.
See Dependence, Peasantry,

Slavery.

France, condition of peasantry
prior to capitalism, 74f.;
emancipation of serfs, 12th and
13th centuries, 74; peasant
unions, 74; evolution of nobil-
ity into courtiers, 74; sweep-
ing away of feudalism at the
Revolution with expropriation
of lords, 99f.; early factories
(manufaetures royales) 171 f.,
309 ff.; struggle over mining
rights, 182; monetary history,
250, 252; John Law specula-
tion, 286 ff. ; economic policy of
the state (Colbert), 349.

Fraternitates, and guilds, 146.

“Freed mountain” (Germany,
mining), 183.

Genoa, trading nobility, 55;
Banea di San Giorgio, 259,
261.

Geographical factors in Mediter-
ranean economic development,
contrast with China and India,
354.German settlement form, charac-
ter and area, 3 ff.; spread and
modification, 10 f.; origin, 12;
disintegration, 13 f.

Germany, land enclosures, 14;
condition of peasantry prior to
capitalism, 75-77; in south-
west, 75 f.; in northwest, 75 f.;
in east, 77; development of
estates in post-medieval period,
east vs. west, 87 ff.; position of
peasantry in the east, 89 ff.;
Peasants’ War, 89; gradual
abolition of feudalism after
Wars of Liberation, in the
west, 99f.;: in the east, 100-
106; guild development, con-
trast w. England and France,

153, 156-8: G. out of main
stream of capitalistic develop-
ment, 158; early factories on
municipal soil, 173; mining, in
the middle ages, 181 ff., 184 ff.;
mercantile guilds, 233 f.; mone-
tary history, 249, 250, 252; de-
lay in developing capitalism,
304.

Gift trade, 197

Gold. See Money, Coinage, Min-

ing.
Goldsmith bankers (England),
263 f.

Grain banks (Egypt), 58.

Greece, marriage by exchange of
wives, 42; abolition of feudal
tenure (Athens), 96f.; primi-
tive shipping, 202; early his-
tory of money, 241 f.; banking,

254, 257. See Antiquity.

Guilds, craft. Forms and policies,
36-143 (Chap. IX); Origin
and development, struggles,
144-152 (Chap. X) ; disintegra-

tion, displacement by domestic
system, 153-161 (Chap. XI);
definition, 136; unfree G. in
antiquity, 136; ritualistic,
137: free association the type
in the west, 137 ff.; beginnings
in antiquity, 137; G. in Islam,
138; internal policy, liveli-

INDEX 391

hood policy, 138 ff.; regulations
in interest of equal opportu-
nity, 139 ff.; external policy
monopoly policy, 142f.; later
developments, 142f.; master-
piece, 142; limitation of master-
ship, 143; manorial law theory
of origin, 144f.; criticized,
145f.; G. and fraternitates,
146; relation to territorial do-
minion, 146 f., to towns, 147 f.:
continuity in Italy, 148; acqui-
sition of lords’ prerogatives,
148 f.; struggle to estab-ish
monopoly, 149f.; struggle vs.
competitors, 150, vs. laborers,
150f., vs. merchants, 150f.,
between guilds, 151 f.; lines of
disintegration, England vs.
Germany, 153 f.; developments
in the textile industry, 155f.;
later history, England, France
and Germany, 156-8; displace-
ment by domestic system,
158 ff.; legal relation to early
factories, 171; not displaced
by factories until 19th century,
173; role of G. in growth of
medieval cities, 326 ff.
Guilds, Mercantile, 230 ff. (Chap.
XVIII). See Commerce.
Gynicium (women’s house, ‘yu-

vaixetov), 125, 126, 127.

Hamlet system of land settle-
ment, 12.

Hand-workers, in primitive agri-
cultural village, 8. See Craft
work, Leiturgical labor.

Hansards, Hanseatic League, 207,
Genoese. policies, 234 f.

Hansgraf, 230.

Hide (Hufe), Hide-man (Hiif-
mer), 5, 7 ff.; military theory
of origin of the hide, 12.

Hieroduli (Sacerdotal prostitu-
tion), 29.

Horse, 38; and other pack ani-
mals, 199.

Hostage in medieval trade, 213,
218,

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Hoe-culture, 24 f.; 37 f.

Household, House-community,
structure and property rela-
tions, 26, 28 ff.; evolution of,
46 ff.; property relations in,
46 f.; development into oikos,
47, into Zadruga, 47; modern
changes, 111; industry in, 122.
See also Family.

Hungary, dissolution of feudal-
ism, 101, 102; struggle over
mining rights, 182.

Hypergamy (India), 35f.

lia (Egypt), 57, 61, 335.

Immunity (immunitas), 65f.;
failure of lords to achieve in
Moslem lands, success in the
west, 65f.

India, early agrarian organiza-
tion, 22 f.; sacerdotal prostitu-
tion, 32: position of clan, 45:
later history of manorial Sys-
tem, 96; oikos craft work, 125-
trading caste and caste trade,
195 f.; “Arabic” notation,
223 f.; mercantile guilds, 231:
coinage, weights and measures,
232; banking, 254, 265 f.: citi-
zenship idea absent, 316; no
cities in western sense, 320 ff.-
military organization, 320 f.:
caste an obstacle to growth of
cities, 322; economic policy of
the state, beginnings killed by
caste system, 344f.:; obstacles
to capitalism, restrictions on
gain seeking, 357; peculiarity
of caste as eternal, 308 ff. ;
caste and capitalism, 361;
character of Hindu prophecy,
362 f. See Caste, Buddhism.

Indians, American, efforts to en-
Slave, 82.

Industry, defined, 115; forms of
organization, 115 ff. (Chap.
VII; see Organization) ; stages
in development, 122 ff. (Chap.
TIT; see Stages.) See also
Guilds, Shop Production, Fac-
tory, Capitalism, Technology,

392 INDEX

Labor, Investment. Tribal in-
dustry, 122; I. in house com-
munity, 122.

Inheritance, collateral, a sur-
vival of clan organization, 28;
I. law, England vs, France,
108; Germany, 108; fideicom-
missum and primogeniture re-
sults in large estates in British
Isles, parts of E. Germany and
former Austria-Hungary, 109.

Inst-people, 90.

Interest, 204, 206. History of
prior to capitalism, 267-70

(Chap. XXI); early law of,

intra-group vs. external, 267;
military and religious basis
of suppression within groups,
267; among Jews, in Islam,
Brahminism, China, India,
Rome, 268; process of break-
down of prohibition, 268 f.-
evasion in Christian middle
ages, 269; attitude of the
Church, 269ff.; role of the
Jews, 270f.; Protestantism
andl. 27.

Inurbamento, 333.

Inventions and modern technol-
ogy, 302ff.; three lines of
Significance, 305f., 311 ff.-
new character in 18th century,
311; spread from art and
mining to industry, 312; first
rational patent law (Eng.),

12,

Investment, fixed, in industry,
ownership, 120.

Iron, charcoal and coal, in rela-
tion to the modern technolog-
ical development, 304 ff.

Irrigation culture, characteristic
of the east, 56 ff., relation to
military organization and
growth of cities, 321.

Islam, guilds in, 138; citizenship
idea absent, 315.

Italy, condition of peasantry
prior to capitalism, 75; early
abolition of servitude, estab-
lishment of share tenantry,75; abolition of feudal tenure
by city republics, 98; mercan-
tile guilds, 233; banking,
259 ff.; beginnings of occi-
dental city (Venice), 319;
growth, 324 (Florence), 326 ff.

Japan, prostitution, 33; feudal-
ism, 62; abolition of feudalism
in 19th century, 96; state eco-
nomic policy, 344.

Jerusalem, sacerdotal prostitu-
tion, 32

Jews, disintegration of clan or-
ganization by religious forces,
46; an outcast trading people,
196; anti-semitism in middle
ages, 217; in medieval bank-
ing, 258; and interest-taking,
267 f., 270 f.; traces of citizen-
ship idea in Josherim, 315;
granted trading privileges in
India, 344; role in western eco-
nomic development, 358-61;
significance of Judaism, 359 ff.

Joint liability, of peasants in the
Russian mir, 20; in the guild,
149; in early modern company
development, 227f.; in late

tome, 335.

Josherim, germ of idea of citizen-
ship among Jews, 316.

Journeymen, in the guild system,
organize, 143; forbidden to
marry, 150.

Judaism, relation of prophecy to
decay of magic and growth of
cities, 322f.; maintained eth-
ical dualism, 359f.; role in
development of capitalism, sup-
pression of magic, 360, 362,
363 f.

Judicial authority, of lords in
western feudalism important,
65 ff.

Kamerun, regulated chieftain
trade, 55. ;

Kinship, in modern family, 28;
among Indian peoples, 29.

KnXépos, 328.

INDEX 393

Kulak, Russian village bourgeois,
18.

Kustar (Russia), 122, 161.

Kuae, German mining share, 186,
190.

Labor, division of between sexes,
38 ff., 116 f., in guilds, insist-
ence on finished product basis,
139, 154; skill absent in first
specialization, 117; skill and
magic, 117; demiurgical labor,
115, 124; communal, 39f.,
117; itinerant or wandering,
119; oikos craft work, 120,
124f.; supply of free labor
prerequisite to factory, 164,
167 f., 306f., source in Eng-
land, 164, 306; position of
labor in early factories, 168,
175f.; in medieval German
mining, 183 ff.; free market
for free labor essential to
capitalism, 277; limitations of
labor removed by steam engine,
305f.; labor relations and
regulation in I8th century
England, 307; rational organ-
ization of labor a_ crucial
achievement of capitalism, 312.
See also Craft work, Industry,
Peasantry, Slavery.

Lagemorgen, land division ante-
cedent to open field system,
PATE

Lamani, Indian trading caste,
Ste

Land. See Agrarian organization,
Manor, Property.

Land settlement lease, 67.

Landed aristocracy, England and
other countries, 110.

Law. Manorial law, 68. Roman
Law and the position of the
peasantry, 76, 341; English
law and the peasant, 77 .; cal-
culable law a requisite ior
capitalism, 277: Rational law,
peculiar to the occident, 313;
origin on the formal side in
Roman law, 339; law after

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the fall of the Roman Em-
pire, rationalization of pro-
cedure, 340 ff.; formalistie vs.
material law, 342; develop-
ment of law and administra-
tion, 343.

Leiturgical vs. taxation principle
of state organization, China,
95, Rome, 95, 130f.; L. guilds
(Rome), 136f., 203 f., 336.

Letters, postal service, 295 f.

Levirate, 29, 42.

Lex Rhodia de iactu, 204.

Lex Salica, 147.

Licentia fodiendi, 182.

Litera aperta, and litera clausa,
262.

Livery companies, 153.

Living standards, ancient vs.
modern, 130f.

Lombards, in medieval finance
and banking, 217, 258.

Lords, See Seigniorial proprietor-
ship, Manor, ete. Powers in
medieval towns, 147-8.

Luxury demand, relation to early
capitalism, 170f., 309 ff.

Machines, not the cause of early
factories, 174; character and
role, 302 ff. See Factory, In-
ventions, Technology.

Magic, as basis of totemic clan,
27; copulation a form of, 31;
as source of seigniorial prop-
erty, 54; in relation to early
skilled work, 117; traditional-
ism, obstacle to growth of
domestic system in India,
China, 161; in relation to
growth of cities in east vs.
west, 322 ff.; intensifies primi-
tive traditionalism, 355: role
of rational prophecy in de-
stroying, preparation of capi-
talism, significance of Judaism
and Christianity, 360 ff.

Manor, the, 65 ff. (Chap. IV);
three elements in the lord’s
power, 65; “immunity,” 65;

394 INDEX

free and unfree persons, efface-

ment of differences, 66; status

and tenure, 66f.; effects of

consolidation of holdings, 68;

policy of princes, 70, its eco-

nomic effects, 70 ff. dominance
of rent method of exploitation
in the west, 72f.: capitalistic
development, 79 ff. (Chap.

VI); two forms of develop-

ment, 79; plantation, 79-84

(see Plantation) ; estate, 84-

92 (see Estate): dissolution

of manorial system, 92-111;

possible processes of libera-

tion, 92f.; motives operating,
internal, 93. external, town in-
terests, 93 f.; course of events,

China, 95f., India, 96, Near

East, 96, Japan, 96, Mediter-

ranean region, Greece, 95f.,

Rome, 97 f., England, 98,

France, 98f., Germany, west,

98 f., east, 99 ff., Austria, 101-

3, Prussia, 103-6, Russia,

106f., Poland, 107; influence
of inheritance laws, 108;
modern land tenure, in Mos-
lem world, 108 f., in England,
109; results, landed aristoc-
racy, England, E. Germany,
110 f.

Manorial law, manorial] court,
68; M. L. theory of guild
origin, 144 f., criticized, 145 ff.

Mansi ingenuiles, 67, mansi serv-
tiles, 67.

Mark, common, 8; mark associa-
tion, 8, 27; appropriation of
mark by lords, 71.

Market, concessions, 55, 132,
214; production for, 122 ff., de-
velopment of, 126-34; exten-
sion of in antiquity vs. middle
ages, 131; regular mass de-
mand prerequisite to factory,
163 f., 169 ff., 307 ff.: freedom
of, aspect of capitalism, 276;
character of precapitalistic
limitations, 276f.; war de-
mand, 307 f.; luxury demand,308 f.; these two demands out-
side Europe, 308 ff.

Marriage, socialistic theory of
evolution of M. and family,
28 ff.; group M. 29; by cap-
ture, 30, 36, 39; contractual,
30; M. and property, 30; tem-
porary, 33; legitimate, 36 ff.,

39; polyandry and polygamy,
42: M. by exchange of sisters,
42: with dowry and without,

50. See also Clan, Endogamy,
Exogamy, Family.

Masterpiece, guild, 142.

Matriarchate, 30, 37, 39.

Meat, use of, 38.

Medicine man, first profession,
117. See Magic.

Mediterranean Sea, in economic
development, 354.

Men’s house, 39 ff.

Mercator (equivalent to citizen),
147: as resident merchant, 215.

Mercantilism, 347-51; first ra-
tional economic policy of the
state, 343; nature of policy,
347 f.. M. in England, 348 f.;

{

two aspects class monopo

; y>
349 f.. nationalistic, 350 f.; dis-
appearance in England, 351.

Ve rces, 135.

Merchant, dominance of produc-
tion by, . 156-1 export
trade, "155. See Commerce,

Guilds, mercantile.

Merchant Adventurers, the, 216,
233.

Metals, as money, 241 ff.; pre-
cious, not primary cause of
capitalism, 352f. See Mining,
Money.

Middle Ages, oikos craft work,
125; obstacles to development
of factory industry, 177; min-
ing, 181 ff.; shipping, 204 ff.;
roads, 209; monetary problems
and policies, 246 ff.; banking,
958 ff.- interest on money and
ideas regarding, 269-71; com-
pared with antiquity as to

INDEX 395

growth of cities, 323 ff. See
topics and countries.

Miles, in Champagne fairs, 221.

Military demand, and capital-
ism, 354. See Factory.

Military organization, relation
to growth of cities, east vs.
west, 320 f., 324 f., 328 f., 331 f.
See also Interest, Agrarian or-
ganization, Peasant protection,
Seigniorial proprietorship.

Milking, 24 (Chap. I, note 6),
38.

Mills, mill-compulsion, 165 f.

Mining, source of impulse to
mechanization, 177, 312. His-
tory of prior to capitalism,
162-191 (Chap. XIII) ; meth-
ods, primitive and early, 178;
legal relations, 178f.; pars
fundi vs. regale, 179; Greco-
Roman conditions, 179 f.; mid-
dle ages, 180 ff.; struggle of
crown and lords, Germany,
Hungary, France, England,
181 ff.; organization, epochs,
183 ff.: differentiation in per-
sonnel, 187 ff.; role of capital,
187 ff.; analogy to guild his
tory, 189f.; smelteries and
ore dealers, 190; coal in the
middle ages, 190f.; union of
coal and iron, 191.

Mir (Russia), 17 ff.; origin, 19;
destruction, 18.

pices, 135.

Mississippi Company, 287 ff.

Mohammedanism, and prostitu-
tion, 30; and sexual freedom,
Bos

Money, and Chinese guilds, 231;
nature and _ history, 236-53
(Chap. XIX) ; father of pri-
vate property, 236; origin,
236: functions and order of

their appearance, 236 ff.; early
forms, 238f.; relation and
value of forms, 239 ff.; metals
and coinage, 241 f.; technique
of coinage 242 f.; standards

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396 INDEX

243 ff.; value of gold and sil-
ver, 244; M. in middle ages,
246 ff.; effects of influx of
metals in 16th century, 248 ff.,
352f.; coinage defects cause
use of bank money, 250f.;
policy of modern nations,
251 ff.

Money economy, princely, 58 f.

Monopoly policy of princes, role
in evolution of rational admin-
istration, 284 f.

Montes pietatis, 270.

Morgen (Acre), 6.

Mother-law, Mother-right, 29 f.
See Matriarchate.

Nadyel, in Russian land system,
17 ff.

Nautical instruments, 200 f.

Navicularii, 136.

Navigation, 200 f.

Near east, feudalism in, 96.

Negotiable paper and capitalism,
278, 279f. See Bill of Ex-
change, Speculation.

Negotiator, medieval] trader, 126,
197.

Netherlands, early factories, 172.
See Flanders,

News service, newspapers, 294 ff.

Next (peons), 54.

Norway, spread of Germanic set-
tlement system to, 10: failure
of feudalism to develop, 69.

Obsequium, 63.

Occident, capitalistie develop-
ment peculiar to, 312; city and
citizenship peculiar to, 318,
reasons, 320 ff.; development
of city and citizenship, 319-2:
economic policy in town,
Church and state, 345 ff.

“Odal” peasantry (Norway), 69.

Oikos-economy, 48, 58, 124 fe Sie
146, 162, 165. See Estate econ-
omy.

“Older men” in English guilds,
153.

Open field (Gewann) in Agr.
Village, 5.

Organization, forms: of in in-
dustry, 115-2] (Chap. VII);
house-community and village,
115; production for sale, 116;
communal and invitation work,
118; domestic or putting-out
System, I118f.; relation to
place of work, 119: ownership
of fixed investment, 120f. See
also Agrarian system, Com-
merce, Military organization.

Orgy, 28 ff.

Orient, army organization in re-
lation to political constitution
321; basis in irrigation, 321 f.:;
role of magic, 322 f. See Irriga-
tion-culture, Babylon, China,
Egypt, India, Japan.

Origo (Rome), 336.

Ovens, oven-compulsion, 166.

Overlordship, of land and person,
27. See Guild, Manor, Mar-
ket, Seigniorial proprietorship,
Town.

Pars fundi (mining), 179.

Parsees, in Indian trade, 232.

Pasture, common, 5, 11, 16; ap-
propriation of by lords, 71, 76;
enclosures, 85. See Manor.

Patriarchate, 30, 37, 41 ff., 45 ff.;
disintegration of, 48 ff.

Peasantry, origin of dependent
position, 13 ff.; protection by
princes, 70, 76, 90: absent in
Eng., 164; relation of Roman
law to position of, 71; attach-
ment to soil, 71; rights of in
Jand, 71; position of before
entrance of capitalism, 74 ff.
(Chap. V); in France (un-
ions), 74f., Italy, 75, Ger-
many, 75-77, England, 77 f. See
Agrarian system, and various
countries.

Peasant Wars, in Germany, 72,
89.

Peddling trade, 195, 216,Peons (nei), 54.
Persia, persistence of feudalism,
96.

Persian Empire, money in, 237,
942 =
Phenicians, primitive shipping,

202; commerce non-monetary,
242.

Piracy, 199, 208.

Plantation economy, 79-84; def-
inition, 79; semi-plantation,
79, in S. Am. and New Eng.,
79 f.: two classical dev elop-

ments of P. E.,
and Wes. Ac

Carthage-Rome
80; problem of

slave labor, 80, of slave sup
ply, 81 f., of land supply, 82 f.;
abolition of slavery, 83f.

Plow, primitive, in general ys.
in Germany, 5f.

Plow association (Scotland),
Wayat

Poland, estate economy, 92; dis-
solution of feudalism, 107 Te

Polyandry, and polygamy, 42.

Popolo grasso, 327.

Population growth in west and
in China, not the cause of

capitalism, 352.

Poor law, English, 306. Poor as
source of labor for factory
industry, 167, England, 306,

Germany, 164.

Postal service, 295 f
Power, relation to early fac-
tories, 169. See Technology.

Precaria, 67.
Price revolution of 16th and 17th
centuries, 311. See also Money.
Price work, 118, 134 f
Proletarius, proletariate, 328.
Promiscuity, in socialistic theory
of marriage history, 291
Property systems and social
croups, 26-50 (Chap.
forms of appropriation, 26 ff. ;
forms of groupings, Zone:
house community and clan, so-
cialistic theory of marriage
and property, 98-37: evolution
of the family, survey of primi-

INDEX

397
tive economic life and institu-
tions, forms of family and of
property, 37-43; the clan and
its property relationships, 43-
46; the house-community and
its property relationships, 46-
50; property in land, estab-
lished by dissolution of feudal-
ism, 111; in position of guild
master, 143; money the father
of P., 263; P. in means of pro-
duction, aspect of capitalism,
276. See Communism, Invest-
ment.

Prophecy, and disruption of the
clan, 45; relation to capital-
ism, 362 ff.

Prostitution, 30ff.; sacerdotal,
31 ff.; status of contractual,
31; struggle of religious
against, 32f.; P. in middle
ages, 33.

Protestantism, and interest tak-
ing, 271; relation to growth of
capitalism, 365 ff.

Proxenia, in medieval trade, 213.

Prussia, dissolution of feudalism
with compromise of peasant in-
terests, 103-6.

Puritans, and corn-law repeal,
86: attitude toward labor and
economic policy, 349, 351. See
also Bank of England, Protes-
tantism.

Putting out system

system), 118, 153 ff.

(domestic

Quadrant, nautical, 201.
Quakers, and slavery, 83, 300.

Railways, 295 ff.
Rationality and capitalism,
R. organization of labor pecul-
capitalism, 312; ra-
tional state, 338 ff. (see Law,
State): rational ethic, 312f.;
commerce first field of R., 223;
R. in technology and science,
8313 ff.: in ethics and conduct
of life, 354 ff.; process of devel-
opment, 356 ff. See Capitalism.

—
275:

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“Real dependency,” 68.
Reformation. See Protestantism.
Regale, mining, 179 ff.

Regulated company, 281.

Xeligion, and prostitution, 32 ff.;
a product of the city, 317;
role in development of cities,
322; R. and capitalism. See
Capitalism. See also Buddhism,
Christianity, Islam, Judaism,
Magic.

Reprisal, in medieval trade, 212.

Resident trader, 215 ff. See Com-
merce,

Richerzeche (Cologne), 234.

Risk, in early factories, 168;
shipping R., in antiquity, 204,
in middle ages, 205, 206.

Roads, in primitive Germanic
agrarian organization, 4, 14,
Roman, medieval, 209; modern
development, 296 f.

Rolling of iron, 304. sa

Rolling holdings (walzende Ack-
er), 9.

Rome, types of seigniorial rela-
tions, 53; disintegration of
national economy by delega-
tion, 60f.; preparation for
feudalism, 63; abolition of
feudal tenure, 97; re-establish-
ment under Empire, 98; primi-
tive shipping, 203 f.; monetary
history, 242, 244-46; banking,
254, 256, 258; rational capital-
ism in, 335, displaced by leitur-
gical organization, 336. See
also Campagna.

Roman law, relation to peasant
rights, 71; role in develop-
ment of rational law and
capitalism, 339 ff., 341 ff.

Runridge system, in Scotch hus-
bandry, 15.

Russia, agrarian system, 17 ff.;
stratification of peasantry, 19;
harshness of serfdom, its ori-
gin, 20; feudal system of, 63:
late establishment of serfdom,
86 f.; liberation of peasants
after Crimean War, 106 f.; es-

398 INDEX

tablishment of serfdom to the
mir, 20, 107; failure of fac-
tories with unfree workers,
129; failure of free guilds to
develop, 147.

Sachsenspiegel, 71.

Salvum in terra, 269.

Sample trading, 292 f.

Science, its displacement of tra-
dition a factor in capitalistic
development, 306; vs. philos-
ophy, an occidental achieve-
ment, 313; a product of the
city, 316 f.; attitude of Cathol-
icism and Protestantism to-
ward, 368. See Rationality,
Technology.

Scotland, agrarian system, 15 f.;
stock-raising estates, 84 f.

Sea loan, 205.

Seigniorial proprietorship and
feudalism, 51 ff. (Ch. III);
chieftainship as source of dif-
ferentiation in wealth, 51;
bearings of military specializa-
tion, 52; conquest and subju-
gation, 52f.; voluntary sub-
mission, commendation, 53;
feudal land settlement, 53; ex-
ploitation of seigniorial land,
53f.; magic, 54; trade, 54;
fiseal sources, 56 ff.; colonial
proprietorship, 61; enfeoffment
and feudalism, fief and bene-
fice, 62. Seigniorial power,
three elements, 65. Seigniorial
trade, 196 f.

Sendeve, 229.

Serfdom. See Peasant, and va-
rious countries.

Serfs de corps, serfs de main-
morte (France), 74.

Servia, see South Slavs.

Sex, freedom, 33, division of
labor between the sexes, 38 ff.;
differentiation of money be-
tween sexes, 238.

Sharing, right of, in guilds, 140;
among merchants, 218 f.

Shekel, 241.x
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TENGEants, 199; Californian gold
discoveries, 252; religious de-
nominations and economic life,
366.

Vassal vs. freeman, 67.

Vengeance, duty of clan, 27.

Venice, trading nobility, 55;
form of guild, 232; Rialto
bank, 251; prototype of occi-
dental city, 319 ff.

Victuarius, 208.

Village, primitive agricultural,
sketch of Germanic, 4; descrip
tion, 5 ff. See Agrarian organi-
zation, India, Russia.

Villains, See England, Peasants.

Villicus, villication system, 73,
io.

Wage work vs. price work, 118,
119, 134 f.

Wander years, in guild system,

peculiar to Germany, 143.

INDEX

401

Wandering trade, 122.

War, demand for military goods,
relation to early capitalism,
170, 307 ff.

War loans, a modern phenome-
non, 280.

Wardship, status of early medie-

val craftsmen, 147 f.; guild
struggles against, 149.
Wedderleginge, 229.
settlement form,

Wesphalia,
ll

White Russia, land system, 17
estate economy, 92.

Wild field grass husbandry, 16.

Woman, position of, in primitive
soeiety, 38ff.; in antiquity,
116 f. See Sexes, Family, Mar-
riage, Matriarchate.

Woolen industry in development
of capitalism, 303.

Zadruga, of South Slavs, 12, 47.2

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