Harper Torchbook, NYC., 1953, 304 pgs., index, notes, bibliography,
Chapter 7 - Mammon: The Evolution of the Capitalist Economy
I The Social and Intellectual Advance of the Businessman;
"The later part of the seventeenth century was the decisive period in the
accumulation of bourgeois wealth. The reconstruction after the devastating
period of war gave scope to the application of economic energy".
Dr. McCloskey dates this to the following century. Dr. Nussbaum describes the
evolution in detail, especially the enlargement of the cities, which generated
more and more commerce just to feed the population. Investment in land
expanded. Raw materials in the earth were sought and developed.
"With the expansion of economic activity and its depersonalization in
capitalist forms, businessmen becaue magnates and magnates business men"
"As late as the end of the sixteenth century the commercial 'upper crust'
in France was largely foreign, consisting of Italians, Spanish and Portuguese
Jews, Swiss and Dutch". "Private banks were numerous but mostly in
the hands of Italians". "The newly rich soon learned to live like
lords. They built themselves great houses, They sent their sons to college with
the sons of nobles and princes. Impoverished nobles counted themselves
fortunate to marry into the family of a magistrate or a financier".
"Government increasingly required businessmen". "the passion for
profit did not fail to infect the nobility". "Business had even
become a proper subject for a learned treatise".
II Urbanization and the Economy;
"The pattern of urbanism in Europe was changing. Old towns were declining
and new towns were growing and producing new types of institutions".
Dr. Nussbaum describes in detail the expansion of Paris, Naples and London and
mentions many other cities that either declined or grew.
"The big towns were developing characteristic urban institutions. Public
transportation became available in Paris and London. Retail shops of a highly
specialized character appeared in both cities. The conveniences of city life
were developing. Free news sheets appeared in London in 1675 and 1679".
"Colbert and even the king himself recognized the bad effects of existing
restrictions on the grain market. In England the medieval tradition and form of
the grain market was broken down in the same way". "In similar
fashion the increasing demand of London for meat was surpassing the supply of
cattle in near-by Norfolk and drawing as reinforcement the Highland cattle of
Scotland. Expanding demand was also breaking down the old local markets in the
English cloth industry".
III The Transportation Net;
"The development of the towns was closely paralleled by a corresponding
development of transportation".
Dr. Nussbaum describes the many facets of commerce on the high seas as well as
inland transportation and the commercial freighting systems that used these.
IV Money and Credit;
"The institutions of money and credit were still in a formative stage. In
the last half of the seventeenth century the problem of money supply to carry
on the growing economic life was being relatively well solved, for the
expansion of the money supply was made possible by the continuing inflow of
silver from America".
While the expansion of silver from America was declining, silver continued to
flow in. And it was augmented by increased importation of gold from west Africa
by the Dutch and English. Sumggling and buccaneering provided additional gold
and silver. Much silver then continued to the Middle and Far East in exchange
for luxury goods. Meanwhile, the decline of Spanish industry forced the Spain
to exchange much silver for imported goods not only for Spain but to send to
its American empire.
"As a result of these activities, legitimate and illegitimate, Holland,
France and England were well supplied with cash".
Dr. Nussbaum describes this activity in detail. "The credit system of
Europe was, in general, still comparatively undeveloped, but the use of credit
instruments was expanding.
"Bills of exchange became flexible and were adequately legalized.
Increasingly protected by the municipal law of the several states, bills were
exchanged by simple endorsement instead of by separate documents and through
the eighteenth century they continued to serve as a principal means of payment
in interregional trade". Dr. Nussbaum discusses with specific names and
dates the founding of many banks in Italy and throughout north western Europe
well prior to the creation of the Bank of England.
"In France and England the involvement of powerful financial interests
wish the governments served to prevent or delay the organization of banking as
a public service". "Ways of getting other people's money for use in
enterprise did exist. 'Grubstaking' mining enterprises, which had been so
profitable for the Fuggers, persisted".
He mentions many more examples.
V The Stock Company;
"Even more indicitive of the future were the new companies that were
becoming a common form of association in business activity. The old notion of
the occasional, personal association was giving way to the concept of the stock
company, a permanent association of credits, in which the property of the
stockholder was merely a share in the company, not a claim against the company.
The new feature was what today is familiar. The company became a continuous
firm and the members became stock holders. From the balance sheet point of
view, the change enabled the company to use the rather cheap credit available
and thus by 'leverage' pile up some attractive dividends". "The stock
company remained for a long time the character of an arm of the state rather
than of a form of private business .It was chartered, regulated, favored with
monopolies, politically dependent". "Marine insurance was highly
developed. Amsterdam remained the unchallenged capital of the business. Its
insurance chamber maintained sixty warships to protect its customers from
pirates in the Baltic". "Fire and life insurance were becoming more
Today insurance companies hope for the assistance of national navies to protect
ships from pirates.
VI The Advance of Agricultural Techniques; "Although the towns were
growing rapidly, Europe remained through the seventeenth century overwhelmingly
an agriculture economy. From 80 to 90 per cent of the population was rural and
even that index is to be further weighted by the persistence to a degree now
unfamiliar of agricultural activity in the towns, even in the great
towns". "But manorial lordship had been generally commuted to money
The unexpected results of this we will learn on books on 19th century economy.
Dr. Nussbaum describes the developments in agriculture in detail.
VII The Transformation of Industry
"The handicraft system remained the dominant industrial form. It had been
radically altered in England by the Elizabethan 'Statue of Apprentices' and, in
the France of Louis XIV, by Colbert's subordination of the corporations to his
all-inclusive system". "In the latter part of the seventeenth century
the typical form of enterprise in industry was the vaguely and variously named
domestic system, otherwise putting-out or, in German, Verlag".
This was the system employed by merchants to secure the production of the goods
they increasingly were able to exchange in larger markets.
"The factory system which in this time was developing at a relatively
rapid rate, was as old as the smelters, the shipyards, the sugar refiners and
the other large-production processes requiring combinations of capital and
labor force, beyond the range of either the gilds or the putters-out. "The
textile industries enjoyed a dominance in size and geographical extension that
gave change in that area a greater social significance than more radical
novelties in other areas. The combination of various technical processes under
a single management was fairly frequent in the latter part of the seventeenth
century, although it is to be remembered that most of these concentrations
consisted of a group under one roof surrounded by an even larger group of
The chapter contains the history of events and concepts related to the changes
in money and business related in Felix Martin's book on
Money. ,, Frank Trentmann's
Empire of Things, and to David Hacket
Fischer's The Great Wave and Joel
Mokyr's Culture of Growth