The Stages in the Social History of Capitalism

by Henri Pirenne

In the second place, at the period we have now reached the towns devoted themselves far more to commerce than to industry. Few could be cited that appear thus early as manufacturing centres. The concentration of artisans within their walls is still incomplete. If their merchants export, along with the products of the soil, such as wine and grain, a quantity of manufactured products, such, for example, as cloth, it is more than probable that these were for the most part made in the country.

Admit these two statements, and the nature of early commerce is explained without difficulty. They account in fact both for the freedom of the merchants and for that character of wholesale exporters which they exhibit so clearly and which prevents our placing them in the category in which the theory of urban economy claims to confine them. Contrary to the general belief, it appears then that before the thirteenth century we find a period of free capitalistic expansion. No doubt the capitalism of that time is a collective capitalism: groups, not isolated individuals, are its instruments. No doubt too it contents itself with very simple operations. The commercial expeditions upon which its activity especially centres itself demand, for their successful conduct, an endurance, a physical strength, which the more advanced stages of economic evolution will not require. But they demand nothing more. Without the ability to plan and combine they would remain sterile. And so we can see that, from the beginning, what we find at the basis of capitalism is intelligence, that same intelligence which Georg Hansen has so well shown, long ago, to be the efficient cause of the emergence of the bourgeoisie.[15]

The fortunes acquired inn the wandering commerce by the parvenus of the eleventh and twelfth centuries soon transformed them into landed proprietors. They invest a good part of their gains in lands, and the land they thus acquire is naturally that of the towns in which they reside. From the beginning of the thirteenth century one sees this land held in large parcels by an aristocracy of patricians, viri hereditarii, divites, majores, in whom we cannot fail to recognize the descendants of the bold voyagers of the gilds and the hanses. The continuous increase of the burghal population enriches them more and more, for as new inhabitants establish themselves in the towns, and as the number of the houses increases, the rent of the ground increases in proportion. So, from the commencement of the thirteenth century, the grandsons of the primitive merchants abandon commerce and content themselves with living comfortably upon the revenue of their lands. They bid farewell to the agitations and the chances of the wandering life. They live henceforward in their stone houses, whose battlements and towers rise above the thatched roofs of the wooden houses of their tenants. They assume control of the municipal administration; they and their families monopolize the seats in the échevinage or the town council. Some even, by fortunate marriages, ally themselves with the lesser nobility and begin to model their manner of living upon that of the knights.

But while these first generations of capitalists are retiring from commerce and rooting themselves in the soil, important changes are going on in the economic organization. In the first place, in proportion as the wealth of the towns increases, and with it their attractive power, they take on more and more an industrial character, the rural artisans flocking into them en masse and deserting the country. At the same time, many of them, favored by the abundance of raw material furnished by the surrounding region, begin to devote themselves to certain specialties of manufacture—cloth-making or metallurgy. Finally, around the principal aggregations many secondary localities develop, so that all Western Europe, in the course of the thirteenth century, blossoms forth in an abundance of large and small towns. Some, and much the greater number of them, content themselves perforce with local commerce. Their production is determined by the needs of their population and that of the environs which extend two or three leagues around their walls and, in exchange for the manufactured articles which the city furnishes to them, attend to the food supply of the urban inhabitants. Other towns, on the contrary, less closely set together but also more powerful, develop chiefly by means of an export industry, producing, as did the cloth industry of great Flemish or Italian cities, not for their local market,[16] but for the European market, constantly extensible. Others still, profiting by the advantages of nearness to the sea, give themselves up to navigation and to transportation, as did so many ports of Italy, of France, of England, and especially of North Germany.

Of these two types of towns, the one sufficient to themselves, the other living upon the outside world, it is unquestionably the first to which the theory of the urban economy applies. Direct trade between purchaser and consumer, strict protectionism excluding the foreigner from the local market and reserving it to the bourgeoisie alone, minute regulations confining within narrow limits the industry of the merchant and the artisan; in a word, all the traits of an organization evidently designed to preserve and safeguard the various members of the community by assigning to each his place and his rôle, are all found and all explained without difficulty in those towns which are confined to a clientage limited by the extent of their suburban dependencies. In these one can rightly speak of an anti-capitalistic economy. In these we find neither great entrepreneurs nor great merchants. It is true that the necessity of stocking the town with commodities which it does not produce or cannot find in its environs—groceries, fine cloths, wines in northern countries—brings into existence a group of exporters whose condition is superior to that of their fellow-citizens. But on inspection they cannot be regarded as a class of great professional merchants. If they buy at wholesale in foreign markets, it is to sell at retail to their fellow-citizens. They dispose of their goods piecemeal, and like the Gewandschneider of the German towns, they do not rise above the level of large shopkeepers.[17]

In the towns of the second category we find a quite different condition. Here capitalism not only exists but develops toward perfection. Instruments of credit, such as the lettre de foire, make their appearance; a traffic in money takes its place alongside the traffic in merchandise and, despite the prohibition of loans at interest, makes constantly more rapid progress. The coutumes of the fairs, especially those of the fairs of the Champagne, in which the merchants of the regions most advanced in an economic sense, Italy and the Low Countries, meet each other, give rise to a veritable commercial law. The circulation of money expands and becomes regulated; the coinage of gold, abandoned since the Merovingian period, is resumed in the middle of the thirteenth century. The security of travellers increases on the great highways. The old Roman bridges are rebuilt and here and there canals are built and dykes constructed. Finally, in the towns, the commercial buildings of the previous period, outgrown, are replaced by structures more vast and more luxurious, of which the halles of Ypres, with their façade one hundred and thirty-three metres long, is doubtless the most imposing specimen.

In the presence of these facts it is impossible to deny the existence of a considerable traffic. Moreover documents abound which attest the existence in the great cities of men of affairs who hold the most extended relations with the outside world, who export and import sacks of wool, bales of cloth, tuns of wine, by the hundred, who have under their orders a whole corps of factors or "sergents" (servientes, valets, etc.), whose letters of credit are negotiated in the fairs of Champagne, and who make loans amounting to several thousands of livres to princes, monasteries, and cities in need of money. To cite here merely a few figures, let us recall that in 1273 the company of the Scotti of Piacenza exports wool from England to the value of 21,400 pounds sterling, or 1,600,000 francs (metallic value);[18] in 1254 certain burgesses of Arras furnish 20,000 livres to the Count of Guines, prisoner of the Count of Flanders, to enable him to pay his ransom.[19] In 1339 three merchants of Mechlin advance 54,000 florins (700,000 francs) to King Edward III.[20]

Extensive however as capitalistic commerce has been since the first half of the thirteenth century, it no longer enjoys the freedom of development which it had before. As we advance toward the end of the Middle Ages, indeed, we see it subjected to limitations constantly more numerous and more confining. Henceforth, in fact, it has to reckon with municipal legislation. Every town now shelters itself behind the ramparts of protectionism. If the most powerful cities can no longer exclude the stranger, upon whom they live, they impose upon him a minute regulation, the purpose of which is to defend against him the position of their own citizens. They force him to have recourse in his purchases to the mediation of his "hosts" and his "courtiers"; they forbid him to bring in manufactured articles which may compete with those which the city produces; they exploit him by levying taxes of all sorts: duties upon weighing, upon measuring, upon egress, etc.

In those cities especially in which has occurred the popular revolution transferring power from the hands of the patriciate into those of the craft-gilds, distrust of capital is carried as far as it can go without entirely destroying urban industry. The craftsmen who produce for exportation—for example, the weavers and the fullers of the towns of Flanders—try to escape from their subjection, to the merchants who employ them. Not only do the municipal statutes fix wages and regulate the conditions of work, but they also limit the independence of the merchant, even in purely commercial matters. It will be sufficient to mention here, as one of their most characteristic provisions, the forbidding of the cloth merchant to be at the same time a wool merchant, a prohibition inspired by the desire to prevent operations that will unfavorably affect prices and the workman's wages.[21]

But it is not solely the municipal authority which attacks the speculations born of the capitalistic spirit. The Church steps forward, and under the name of usury forbids indiscriminately the lending of money at interest, sales on credit, monopolies, and in general all profits exceeding the justum pretium. No doubt these prohibitions themselves attest the existence of the abuses which they endeavor to oppose, and their frequency proves that they did not always succeed. It is none the less true that they were very burdensome and that the pursuit of business on a large scale found itself much embarrassed by them.