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Myron P. Gilmore


Harper Torchbook, My. 1952, 326 pgs., index, footnotes, bibliography, illustrations, paperback


Reviewer comment - The follow-on book to Edward Cheyney's The Dawn of a New Era 1250 - 1453 in the Rise of Modern Europe series. Chapter 2 is about economic development including commerce, industry and banking. An excellent analysis of Machiavelli's ideas is in Chapter 4. The content of the book indicates much development of the bourgeois took place earlier than Dr. McCloskey claims. I only describe the content of chapters relevant to economic and monetary issues.


Chapter 1 - The Frontiers of Latin Christendom


Chapter 2 - The Direction of Economic and Social Change

I The Commercial Revolution;
"Of all the economic changes which coincided with the age of the great discoveries the expansion of commercial activity claims attention first because it was the most revolutionary alteration, the one of which contemporaries were most aware and of which they could measure most directly the effects". "Ultimately, as everyone knows the new orientation of commerce involved nothing less than the transfer of initiative from the Mediterranean to the northwest countries of Europe".

Dr. Gilmore continues with description of the shift of the trade route from across Arab lands and through the Mediterranean to Venice to direct by sea from India to Portugal. And then also the shipment of gold and silver from America to Spain.

"Here the principal component, although at first available only in small amounts, consisted of the precious metals. Gold and silver had diminished in supply in western Europe over a long period before the renewal of mining activity and the successes of the voyages of discovery at the end of the fifteenth century. This decline had been due to a variety of causes, among which were the drain of precious metals to the east, where they had been used to buy the luxury products of the eastern trade; the manufacture of ecclesiastical monstrances and jewels; and finally, the exhaustion of some mines continuously worked in Europe since the time of the Romans. This short supply of the precious metals had created monetary problems for nearly every European country. Attempts to depreciate the coinage had been frequently direct or secretly approved by the governments themselves".

Note the connection with Fischer's The Great Wave.

Dr. Gilmore notes that the Spanish crown claimed only a 20% cut of the value, while the Portuguese crown took 60% or more. That was to cause great difficulty for the Spanish in later centuries. He also notes that neither Spain nor Portugal gained ultimate economic advantage from their control of the initial arrival. Rather Antwerp was the chief beneficiary and Gilmore states why. For one thing it suffered less from medieval restrictions. For another Spain and Portugal had to import grain and did not manufacture much so had an unfavorable balance of trade. Plus, of course, Spain served as the principal revenue source for the Hapsburg to finance their wars, especially in the Netherlands. so had to pay both public and private debts.

"The German bankers, many of whom had made their start by being on the receiving end of the eastern trade when it flowed through Venice, were able to adapt themselves to the changed circumstances and now took a leading part in the disposition of the products of the Spanish and Portuguese monopolies".
"Besides enriching the Spanish and Portuguese royal families and increasing the prosperity of Antwerp the influx of spices and precious metals at the begining of the sixteenth century had another far more fundamental effect. It was an important factor accounting for the enormous price rise which was so striking a characteristic of sixteenth century economic history". "The price rise began to be noticed in Castile as early as the first decade of the sixteenth century". "It became a depressing effect on Castilian industry, since it became cheaper to buy manufactured goods in regions where cost had not yet begun to rise".

He notes that the price rise first shifted also to the Netherlands but not to England or France until later.

"On the whole, in those areas that were most severely and earliest affected, prices appear to have gone up faster than wages and rents".
There were social as well as economic consequences. "The differential between wages and prices permitted certain entrepreneurs to accumulate large amounts of capital which in turn were an important factor in the expansion of industrial enterprise. The capital investments that lay behind printing plants, mining industries, and the expansion of textile industries were thus in part a creation of the changes in the scope of commercial activity".

More activity fulled more activity, more opportunities were seen and filled by more entrepreneurs. More results from innovation and technological improvement were noted and generated more innovation. More production generated searches for more markets. But all of this was a gradual development. At first the expansion was in luxury goods like pepper and the wealth increase was to the wealthy (royalty for instance). Meanwhile trade in basic products such as timber, wool, iron, and wine continued as before. And Venice did not decline for a long time.

"Large scale changes of this kind were, however, slow. The old forms of commercial activity persisted, although sometimes in new adaptations. For many years they were more important in the European economy than the changes precipitated by the discovery of a new world and the finding of a new sea route to the Indies".

II The Development of Industry;

"Enlargement of the scope of European commercial activity was accompanied by an expansion of industrial productivity. This expansion proceeded unevenly and its stages were marked by no dates as dramatic as those of the great voyages".

"Within the evolution few subjects have been more discussed than the origins of capitalism. The truumphs of capitalism in the nineteenth century as well as the subsequent attack upon it have stimulated analysis of the unique character of the economic development of the western world. The most comprehensive question turns on the determination of those factors in European civilization, absent or differently combined in other societies, which permitted and fostered the development of capitalistic organization".
The author points to the textile industry including silk as examples of developing capitalist enterprise. Somewhat surprising is his description of how much capital and organized labor was required for the new printing industry.
He includes the example of the Fugger family dynasty to show how capitalism could progress from a small cotton merchant to major mining interests to ever larger banking in the next section.

III Banks and Bankers;

"With the growth of commercial and industrial activity mechanisms of credit were established and improved so as to permit financial transactions on a large scale and over long distances". "The institutions that handled these credit transactions were the great banks that dominated the financial life of Europe. This was the age of the Medici, the Chigi, the Fugger, and the Welser.
Note that these were private organizations, with branches and offices in many countries. They were not government banks, but they dealt significantly with governments. Governments needed loans from these bankers and the bankers needed government protection.

"The financial undertakings of the Fugger were the most famous of the whole period. The fortunes of this family had been founded in the fourteenth century by a weaver who used his textile business as a basis for mercantile activity. Capital originally amassed from the cotton trade was invested in other ventures and gradually a vast network of undertakings in the world of industry, commerce, and banking was developed".

The author of a recent popular book has claimed that Jacob Fugger was the richest man ever. Maybe - the claim has also been made for an African king who controlled the gold output of Mali. But the point to be made about this example - one of many - is the method of reinvestment. This is the actual innovation (several centuries before Fugger) that constituted the origin of capitalism. For the first time producers began investing the 'retained earnings' of production - that is the amount not consumed - and had incentive to reenvest it into other productive enterprises. When they could no longer expand what they had been doing, they quickly branched and invested in other enterprises - from being merchants, to producers, to industrialists, to bankers. The incentives included opportunities to find new products, new markets and very importantly added protection of saved earnings.

Dr. Gilmore includes more examples and also much more analysis of the "interconnections between political and economic forms of power in the early modern period". He indicates that eventually the "city states" could not match the scale both political and economic of the growing monarchial states. This corresponds to Bobbitt's show of the shift from the 'princely state' (which, for him includes the republican cities) and the 'kingly state'.

IV The Working of the Land;

Throughout this era agriculture remained the economic basis of European society. It "underlay all other forms of economic activity".
But it required increasing forms of specialization and had expanded markets in the major cities - most often the residence of monarchs and nobles. See Spufford.
A major shift was that from producing food to wool. "We can readily understand that the incentive of the huge profits to be derived from the wool trade must have tempted many landlords to convert both open fields and commons into pasturage in the fashion described by Sir Thomas More". But this change demanded in Spain by the sheep-grower guild - the mesta - eventually lead to disaster.

V The Social Classes

"The sixteenth century inherited from the medieval period a hierarchic and organic coneption of society, firmly fixed in the European tradition in the centuries that followed the breakup of the Roman Empire".

I beleive most everyone now recognizes this shift from 'hierarchic' but do not understand the shift from 'organic'.

Dr. Gilmore notes some of this. "One key to understanding the process by which old forms of social prestige made new adaptations is to be found in the analysis of the pressures created by a money economy and a condition of rising prices. The most serious rise in prices did not take place until after the beginning of the sixteenth century but even in the fifteenth it was diffucult for those whose income was fixed, and especially for those whose income was derived from the land, to maintain the position to which they had been accumstomed".

What he is describing is this. Earlier, the first reintroduction of money - used first outside the manor enclosed economy had driven the landlords to convert as much as they could of their peasants' dues from in kind or labor to cash. And the peasants began selling part of their surplus to the town markets. But now, in the period he describes with external prices rising the landlords needed more and more cash but could no longer simply exapropriate the peasants' output by dues in kind to sell themselves. Monarchs, who in the earlier period had converted feudal military service to cash also found themselves in need of more and more cash to fund their warfare. The medieval 'hierarchic' structure of society included not only recognition of dues oweing to each lower rung of the Great Chain of Being to the higher level occupants but also the recognition that the higher level folks owed protection to the lower including many legal or traditional limitations on their power to exapproprate through taxation and fees. At the philosophical level the Great Chain was broken by religious changes. The result of all this was the new abstract concept of 'the state' as an entity above and OUTSIDE society - not only did it assume the supreme level surplanting the top of the Great Chain but also it was no longer 'organic' that is a component of society itself. This is the 'state' that Professor Bobbitt describes.
And this is the western European conception of political structure that Islamic Society never accepted and still does not accept.


Chapter 3 - Dynastic Consolidation


Chapter 4 - The Structure and Function of Government

This chapter includes an excellent discussion of Machiavelli's theories, but one based mostly on The Prince, with little consideration of Machiavelli's important discussion of military theory and affairs. And he was one of the first to recognize and describe this new 'state' as the legitimator of the political power of governments -


Chapter 5 - The Particular Interests of the Christian Princes


Chapter 6 - The Condition of the Christian Church


Chapter 7 - Scholarship and Philosophy


Chapter 8 - The Program of Christian Humanism


Chapter 9 - Art and Science


Chapter 10 - Conclusion


Return to Xenophon.