CHAPTER II ECONOMY AND SOCIETY 1715-1815 - ICKSHugoKim2016@21 Econom… · Chapter II. Economy and Society Book IV. The French Revolution and the Industrial Revolution, 1715-1815

Chapter II. Economy and Society

Book IV. The French Revolution and the Industrial Revolution, 1715-1815 111

Photo II-0-1. A Watt Steam Engine: From a reciprocating motion to a rotating motion suited to industrial application

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CHAPTER II ECONOMY AND SOCIETY 1715-1815

1. Population and Agriculture 115

Demographic Adjustment; Demographic Change; Agricultural Revolution; Agriculture in Continental Europe; Sea Fisheries

2. The Industrial Revolution and Technology 131

British Industrialization; Textile Industry; Iron and Steel; Steam Engine; Chemical Industry; the Spread of Industrialization

3. Commerce and Transportation 145

European Trade with Colonies; British Foreign Trade Policies; British Foreign Trade; Voyage to the Pacific and the Second New World; the Continental System

4. Finance and Banking 163

British Fiscal and Monetary Institutions; Taxation and Debt Finance in France; Finance in the Netherland, Spain, Portugal; Fiscal and Monetary Adaptation for the New World

5. The Change of Society in European States 181 Britain; France; Austria and Prussia; Poland and Russia;

Spain and Italy; the Netherlands and Scandinavia; the Ottoman Empire

(Please click each line to see the first page of contents)

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Photo II-0-2. British Agricultural Revolution: an Image of certain Inventions Source: http://flagro.fladby.com/pictures/threshing.jpg

Photo II-0-3. A Cotton Mill constructed by using the latest technology in 1800 http://www.saburchill.com/history/chapters/IR/images/190306111.jpg

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CHAPTER II. ECONOMY AND SOCIETY 1715-1815

The eighteenth century was revolutionary not only in politics but in economy: the demographic,

agricultural, industrial, commercial, transport, and financial revolutions were initially led by the

British. The continental states had experienced the impact of broader structural changes, taking

place in the international economies, with varying degrees of intensity, speed, and with different

timing; so that they had formed different patterns of economic growth by their needs to catch-up

with. During 1650-1750, the European economy suffered from a serious recession because of

war followed by disease and famine. Since then, the European population exploded from 140

million in 1750 to 266 million by 1850 due to the rising fertility and falling mortality rates. The

explosively rising population increased demand of basic necessities for eating, clothing, and

housing. The rising demand for food raised the prices of farm produce, which made agriculture

profitable so that landlords and tenants commercialized the primary sector by maximizing output

with minimized costs. This was the beginning of the agricultural revolution in Britain. The

enclosure movement was to develop open fields, common lands, meadows, and wastes for more

arable lands; and the fertility of soil was improved by marling, manuring, and drainage. The

Norfolk four-course system was introduced by rotating the wheat-turnips-barley-clover; and new

subsistence crops - potato and maize - were introduced and steadily diffused. As more efficient

and intensive cultivation promoted the farm productivity, the farmers grew industrial crops such

as timber, linen, hemp, and pitch. In the process of industrialization, farming tools were replaced

by cast iron and standardized by factory product for better cultivating, sowing, harvesting,

threshing, and transporting. The farm became larger in size, more efficient in production, and more

profitable in sales. Meantime, the pastoral farmers labored selective breeding of livestock, and

produced more dairy products with hides and wool. The agricultural revolution in Britain spread

widely to continental states with appropriate adjustments.

The British led the industrial revolution since they created demand for manufacturing goods

with the agricultural surplus; maintained favorable conditions for production in terms of labor,

capital, and technology; abandoned mercantilist protectionism and embraced the free trade

policies based on laissez faire; and improved transportation and communications by the infra-

structure investment. The first industrial revolution in British was developed in such sectors as

follows. First, the textile industry relied on spinning and weaving, which processes were

mechanized by John Kay and some others. Their inventions improved efficiency in production

and transformed the putting-out system into a factory system with standardization of products.

Second, Abraham Darby invented the process of smelting iron ore with coke for cast iron, which

freed the iron industry from reliance on charcoal. This was further improved by some others, as

the atmospheric steam engine replaced wind- or water-mills as sources of power in the iron and

steel industry. Third, James Watt obtained a patent for a steam engine: improving power trans-

missions to the wheel, he and his partner extended the use of engines to flour milling and cotton

spinning. The engine and the power transmission system were further improved by some others

later, which extended the use of engine to trains and ships. Fourth, the chemical industry became

more important in industrial life: furnace techniques transformed the metallurgical, glass, and

pottery industries; the process making artificial soda was used for manufacture of soap, glass,

paper, paint, pottery, and other products; and gas was used for light, heat, and cooking. The

industrialization in continental Europe was substantially slower than in Britain so that they

acquired new technology and established technical schools; their government subsidized the costs

of technical training and granted for the introduction of new technology; and their banks mobilized

capital resources to invest on a large scale in chemical and heavy industries.



The commerce made another revolutionary stride in the century. Portugal monopolized the

trade with the East Indies and Spain did the same with the West Indies in the sixteenth century;

and the Dutch dominated the world trade in Asia, Africa, and Americas in the seventeenth. The

British and the French entered competition in trade: the former dominated the world trade in the

eighteenth century. Colonizing the thirteen American states, Canada, India, and islands in the east

and the west; the British exported manufactured goods to their colonies and imported raw

materials from them. To the East Indies, since few European goods were saleable, some profits

from the intra-Asia trade could partially reverse the trade deficit. The European states thus had

constantly pursued to protect mercantile interests overseas and to ensure supplies of essential

commodities by expanding colonies. “The economic advantages of possessing oversea territory,

as distinct from merely having access to it, were less obvious in the early nineteenth century than

they had been in the eighteenth. American commercial success in China and the South Sea,

without benefit of colonies or naval bases, supplied an object lesson.” After Waterloo, British

public opinion displayed little imperial enthusiasm, as several colonies became profitless in

possessions. Meantime, the French colonies had almost disappeared; the Spanish Indies were

largely semi-independent; the Dutch ceded most of its holding in the East Indies to Britain; and

the Portuguese decayed but survived in Timor, Macao, and the settlements in India, Angola, and

Mozambique in addition to Brazil. In the post-Napoleonic age, no serious threat existed to British

power so that they assumed that they had a right to trade anywhere. For a time being, they “stood

benevolently aloof.” If France and Russia challenged her overseas interests, it might cause a naval

arms race to maintain freedom of action in the maritime and colonial fields. In fact, the failure of

the Continental System made Napoleon invade Russia in 1812, which was the beginning of the

fall of Napoleon, and of the rise of Britain as a super power.

The fiscal and monetary institutions in the European states had been problematic throughout

the century because of the rising war expenditures in limited resources of each nation state - the

Great Northern War, the War of Polish Succession, the War of Austrian Succession, the Seven

Years' War, the American War of Independence, and the Napoleonic Wars. The ratio of tax

revenue to GDP in France was 9.4 percent in 1715 and 6.8 percent in 1788, while that in Britain

remained at the level of around 12.5 percent. The French institutions were inferior to the British

one because of the diversity of tax regime, tax exemptions for the clergy and nobility, unsecured

property rights and lack of legitimacy of taxation, and the private tax collection by contractors of

the tax farms. Spending 1.3 billion livres each for the Seven Years' War and the American War

of Independence, the French government by 1785 was on the verge of bankruptcy, and very few

financiers wanted to lend them. The financial crisis became one of major causes of the French

Revolution. Due to continuous wars, most European states faced such serious financial problems

as France. Finally, economic and political changes transformed European society. The rising

population and urbanization intensified problems of feeding, housing, and sanitary conditions of

the working class; the rise of capitalism created a class war between the rich bourgeoisie and the

poor proletariat; in the process of industrialization, the Protestant ethic emphasized capitalistic

efficiency with profit motive, which was different from the agrarian regime; and the industrial

revolution spread the ideas of capitalistic efficiency as much as socialist equality. The French

Revolution and Napoleonic Wars destroyed the ancient regime, but the landed nobility and the

rich commoners led politics and economy in European states, so that their societies remained in

stable by putting one leg in the old regime (reality) and the other leg in the new regime (ideal).

As a result, the ruling class of Europe emphasized higher education for the elite class or at least

including bourgeoisie, but not for the working classes, because they wanted the status quo and

could not accept a society ruled by the proletariat majority.



1. Population and Agriculture

The population in Europe declined from 73 million in 1300 to 45 million in 1400 due to famines,

diseases, and wars; but revived from 1450 and recovered to 81 million in 1500 and 105 million in

1600; and the rising pace of growth was disturbed down to 115 million in 1700 because of the

recurrences of the same. In agriculture, the old feudal system rapidly declined in the sixteenth

century due to the impoverishment of the landed aristocracy and the massive loss of inhabitants.

Liberating the serfs by 1500, most countries in the west of the Elbe like Germany and France

developed a tenant farmer system; and rural society in countries like England was transformed

into a three tier structure: landlords, the tenant farmers, and the agricultural laborers. However,

countries in the east like Poland, Russia, or Rumania restored the feudal system benefiting from

the recurrence of wars by forcing serfs not to leave the land. During 1350-1450, the falling

population reduced the demand for food stuffs causing their prices to fall, and resulted in low rents

and high wages in production. The land owners adjusted the use of land by switching from labor-

intensive farming to land-intensive pasturing or planting of cash crops. During 1450-1600, the

rising population raised rents and reduced wages, which problems was resolved by two ways. First,

factors generally affecting agricultural output are weather conditions, available land and soil

fertility, a wide range of corps and rotation, plant or animal diseases, advanced tools and

equipment, proper knowledge and management skill. The ways increasing agricultural output are

in the more cultivated area, the more frequency of cropping, shifting to higher yielding crops,

technical advance in farming, the division of labor and regional specialization, and seasonal

migration. Second, the ways of demographic adjustments lie in fertility control, migration, and

mortality - falling fertility and rising mortality reduce the population growth.

In the seventeenth century, the population declined in countries like Germany, Poland, and

the Mediterranean states, and stagnated in northern Europe. However, the European population

increased to 190 million by the end of the eighteenth century. To avoid social unrest, European

rulers sent the surplus population to their colonies in America, Asia, and Africa – from and to

which they imported raw materials and exported manufacturing goods. Since material gains came

from additional lands, major powers competed with each other for more colonies, which caused

so-called imperial wars in the coming centuries. The overpopulation is defined by three ways.1

First, Malthus views that “overpopulation occurs when population growth causes output per head

to fall to the subsistence level and rising mortality causes population growth to cease.” He argues

that population rose geometrically but food supply increases arithmetically due to diminishing

marginal returns of production as technology remains constant. Second, assuming that other

factors influencing productivity are held constant when population changes, the optimum level of

output is derived from the ideas of increasing and decreasing returns of production:

“overpopulation occurs whenever population exceeds the optimum for a country with given

resources and technology.” The optimum level of population exists at the point where the

marginal output per head equals the average output per head on the population-output plane. Once

the optimum level is established, overpopulation can be measured by the difference with actual

population. Since it is based on a static assumption, the technological progress can change output

per head. Third, overpopulation is defined by rural underemployment, so that it occurs "when the

marginal productivity of labor is zero." It is difficult to measure rural under-employment, due to

various types of rural works and seasonal variations of labor demand. In general, overpopulation

is related to agricultural output and employment levels, so we can apply either the consumption

or the production approaches to measure the surplus population: that is either the lack of food

(food shortage) or the lack of jobs (underemployment).



Photo II-1-1. Population of England and Wales in 1780 Source: http://i1.wp.com/www.intriguing-history.com/wp-content/uploads/2011/12/19th-century-workers-Google-

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Photo II-1-2. Cotton Plantation Farming, 1800 Source: http://www.landofthebrave.info/images/cotton-plantation-southern-colonies.jpg

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Demographic Adjustments in Europe Pre-1750: General figures of population in Europe

are "only approximations" until the first national censuses were taken in 1801 in France and Britain,

although the parish registers in European archives show the number of baptisms, marriages, and

burials. The population grew, stagnated, or declined according to the degrees of fertility, mortality,

or migration. Without migration, the demographic change in a certain region depends on the

difference between rates of fertility and mortality. The factors changing the population are (1) the

crisis such as famine, disease, war, and unemployment that increased mortality, postponed

marriages, reduced marital fertility through birth control or abortion; (2) the social structure that

affected the population growth - higher fertility in industrial villages than in agricultural areas was

observed from 1730 onwards; and (3) group characteristics like religious minorities affecting the

population change - Jews were forced to reside in an unhealthy urban environment, but their

medical skill, hygienic regulations, and family structure were favorable for demographic growth.

The population growth affects politics, economy, and society. First in production, overpopulation

reduces labor prices and falling wages make producers use more labor and less capital, resulting

in labor-intensive production; and inversely, under-population results in capital-intensive

production by labor-saving technology. Second in consumption, population growth demands

more supply of food, that raises food prices, making agriculture profitable; but inversely, the

falling population reduces food prices, making the agrarian sector decline. Third in politics,

overpopulation induces migration from rural to towns, and urbanization forces political power to

shift to the bourgeoisie. As the surplus population migrated to the colonies, the major powers in

Europe exploited commercial gains and fought each other for more colonies, which caused

imperial wars. Fourth in society, overpopulation stimulated social changes: a different

composition of the people required new rules and created new customs of faiths, particularly after

the religious reformation and migration to foreign countries.

(a) Mortality: People died from the crises of famine, disease, and war before they reach the

ages of natural life. Until the mid-eighteenth century, the demographic changes of Europe were

“cyclical or wavelike” - inhabitants moved out their village altogether that disappeared, and they

might return as the crises were over - because of crop failures and famine, bubonic plague and

other epidemics, and religious wars for three generations. The supply of grain and flour was

crucial for the survival of the ordinary people. Successive poor harvests or crop failures caused

the shortage of food, which raised grain prices, resulting in hunger and famine. So malnutrition

weakens the physical resistance against diseases, causing the rising death rate; agricultural

slowdown reduces jobs in the countryside, and rising unemployment increases in the number of

beggars spreading contagious diseases that increases the death rate; and famines and pessimism

defer marriages and causes temporary loss of births, and the death of one spouse cuts off new

conceptions, which also reduces the birth rate. Thus, a bad harvest and famine resulted in rising

mortality and falling fertility. In the absence of the crises, normal mortality might carry off

"roughly 3 percent of a population each year" in the sixteenth and seventeenth century. In a crisis

year, "over a wide area this figure might rise to 6 percent or even 10 percent, and in more restricted

areas it was known on occasions to rise to 30 percent or 40 percent." Infant mortality for three

centuries of pre-1750 in Europe was running at around 150-250 per 1,000 live births, and their

survival rates at age 10 were 624 in England, 516 in France, and 533 in Switzerland, but there was

no clear pattern in the local or regional variations. Most epidemics were quite local but killed a

significant number of the people. The population loss from wars should be examined carefully:

the death in battles as well as the out-migration of the refugees at the time of war reduced the

population in the region until they returned after peace; and military activities contributed to the

spread of diseases by carrying bacteria in often and wide movements.



Bubonic plague dominated the mortality crises from the fourteenth to seventeenth centuries,

so that both quarantines and sanitary control continued. Major Italian cities had permanent health

boards by 1600, followed by France, Holland, and Switzerland. “The quarantine period for any

person, transport animal, or goods wishing to cross the frontier was twenty-one days in normal,

plague-free time; forty-two days when there were rumors of plague in the Turkish empire; and

eighty-four days when plague was known to be present in the Balkans.” The failure of control

caused the plague to enter parts of northern Europe in 1710-11 and Marseilles in 1720, but the

disappearance of plague in Europe accelerated the population growth in the second half of the

century (though Moscow suffered from it in 1771). Europeans suffered from epidemic diseases:

cholera, tuberculosis, typhoid as well as periodic epidemics of dysentery, smallpox, typhus, and

influenza. The unsanitary conditions of poverty and the habits of hygiene helped the spread of

disease. “The habits of private hygiene as well as the practices of public hygiene seemed

conspiratorially designed to propagate diseases. Bathing was infrequent; water supplies often

contaminated; housing extremely overcrowded and poorly ventilated; clothing rarely washed or

changed. Above all, the disposal of waste was entirely haphazard, not only creating a pervasive

stench in the cities, but posing a danger to health in city and countryside alike.” Generally speaking,

medical profession in the eighteenth century was “under-manned, ill-equipped with knowledge or

technique, and distrusted by the mass of people, who preferred folk remedies and home-brewed

concoctions to its dubious treatments. There were few practitioners to begin with, and they were

concentrated disproportionately in the cities. In any case even the most progressive practitioners

understood little about the etiology or prevention of contagious diseases.”2 In 1776, the French

Royal Society of Medicine was founded and began to investigate the symptomology of disease

and the conditions that seemed to promote it. Doctors began to understand smallpox, and a form

of inoculation was developed by Edward Jenner in the 1790s.

(b) Fertility: The role of nutrition and disease was essential for the rising or falling rates of

mortality and fertility, while crop failures caused critical problems of poverty-stricken peasants in

most European states. [Note that the demographic growth in the second half of the eighteenth

century is principally explained not by better health care and hygiene, but by more stable and

better food supplies due to milder climate, improvement in live-stock breeding, introduction of

new crops such as maize and potato, and marginally improved trade and transport.] The first

determinant of overall fertility was marriage since there was little fertility outside marriage in early

modern Europe. The proportion of women at age fifty who married was from 80 to 90 percent of

all female in common; some of not-married (10 to 20 percent) would bear illegitimate children,

and others might be incapable in the reproductive process, though illegitimate births seldom rose

to 5 percent of all births (France kept below 2 percent). Two or more times of marriages amounted

in some cases to 15 percent of all marriages. The preventive check - postponed marriages, birth

control, or abortions - reduced the active reproductive years to 15 years in average, which was

much less than 35 years of that by nature. The average age at which men married seems to have

been no less than thirty, and single men and women worked and saved for years to establish their

own household. The range of mean ages of women at first marriage fell within 2.1 years range

between 24.6 and 26.7 years old in Europe in the period of pre-1750; while that of women at birth

of last child fell within 2.4 years range between 38.5 and 40.9 years old.3 For all married 1,000

women who lived in each age group by country, the women group aged 20-24 produced 414-509

children a year; the group aged 30-34 produced 344-401 children a year; and the group aged 40-

44 produced 138-190 children a year. Each woman produced more than 5 children on average.

The birth rate was also affected by the length of effective marital union, and the prolonged

separation of husband and wife throughout their reproductive ages.



The most important demographic effect was in late marriage checking on the birth rate. “The

deferral of marriage until the late twenties was a widespread, natural form of birth control.

Moreover, this practice was evidently not offset by sexual relations outside of marriage, which

would likely have resulted in higher illegitimacy rates.” The Catholic religion emphasized that

married love was in moral rather than sexual passion: adultery was considered as a moral sin, and

sexual activity was permissible only for procreation. “Among certain priests in Catholic Europe

conjugal life became a matter for the confessional, and they did not hesitate to interrogate and

exhort their parishioners on this subject.” Contraception was the other element of preventive

check by curbing instinctual drives to promote rational economic ends. “It is also possible that

women were inducing their husbands to practice contraception simply to reduce the strain of

constant childbearing without requiring abstinence.” Malthus did not expect the practice of family

limitation: a married couple postponed its first child, spaced the children at wider intervals, or

ceased to have children at a certain point even though the wife was still fertile. The average

number of children of the French aristocracy, for example, declined from six during 1650-70 to

less than three during 1700-50, and about two during 1750-1800. “As a consequence, since

members of the aristocracy tended to marry very young (unlike the peasants and workers), the

mother’s age at the birth of her last child dropped from an average of thirty-one to twenty-five.”4

As employment and income was available from domestic industries, the need for land to feed a

family was reduced so that constraints on marriage became minimal. The industrial expansion in

the late eighteenth century increased the proportion of early marriage that brought more births

than the average of the previous period. Seeing that the population increased at high rates even in

some other non-industrial countries, we should consider political and social factors in its

determinants that disturbed fertility and expedited mortality.

(c) Migration: It was an important tool for demographic adjustments. In early modern Europe,

the population remained relatively static in predominantly agrarian society tied most people to

their land: a substantial proportion of the population "remained rooted to the parish of their birth

generation after generation." In the short run, a woman migrated at marriage to the place of her

spouse, a young man took up an apprenticeship, and an elderly person moved into an urban

hospital for the care of illness. In the long run, rural populations grew faster than urban

populations, so that the rising population caused fragmentation of land holdings by sons and

daughters. Since insufficient lands could not support their families, farmers even in the most static

society were forced to move out of their birth villages. So the surplus population of rural areas

naturally moved into towns, where the men seek apprenticeship to industrial occupations or

unskilled jobs available there, and the women search for jobs in textile industry or in domestic

service. Since the agricultural surplus of rural areas to feed towns people were limited to a certain

capacity, the share of urban population "could never have exceeded 25 percent of the whole" in

early modern Europe. However, the rapid expansion of cities needed significant labor forces for

their rising industry and commerce. The immigration to towns was vital, but problems of

sanitation, water supply, overcrowding, and poverty caused high mortality and created the

permanent urban shortage of labor. Meanwhile, new land or newly available land by drainage or

by new borders as a result of war required the resettlement by newcomers. Military activities

caused many large-scale and long-distance movements of population, and their service resulted in

a high proportion of death and hospitalization. Religious differences caused major migrations as

experienced in the Jews and the Moriscos from Spain, the Huguenots from France, and the

Dissenters from England. Thus, caused by overpopulation with its consequent threat of poverty

and the lack of food supply, migration in its root was an effective way of resource utilization in

order to resolve problems of food shortage in a region or a state.



Demographic Changes in Europe 1750-1850: In the eighteenth century, growth rates of

population in European countries were much higher than those of the previous two centuries. The

population of Europe rose by 35 percent from 85 million to 115 million during 1600-1700, and by

65 percent to 190 million during 1700-1800.5 "Between 1750 and 1850, it grew from an estimated

140 million to 266 million souls"6 which means that in a half century, around 50 million souls

were added during 1750-1800 and 76 million souls during 1800-50. [Note that the European

population increased to 401 million by 1900: 135 million souls were added in a half century during

1850-1900.] Europe in 1800 was probably "the most highly populated part of the whole world,

with a density of about 18.7 inhabitants per square kilometer." In fact, Europe's share of the world

population increased from about 21% in 1800 to 22.23% in 1850 and at least to 25 % in 1900.7

The major shares of European population in 1800 were in 26.9 million souls in France, 24.5

million in Germany, 23.3 million in Austro-Hungary, 18.1 million in Italy, 11.5 million in Spain,

and 10.9 million in Britain. As the industrialization pushed more workers into cities, the urban

populations increased rapidly: the population of London grew from 959,000 in 1801 to near 2.4

million by 1850; that of Paris rose from 547,000 in 1801 to over 1 million by 1850; and that of St.

Petersburg rose from 200,000 in 1800 to 485,000 by 1850.

The mortality rate declined somewhere between 1750-1800 because of the decline of the

death rate from famines, diseases, and wars. First, agricultural productivity was increased greatly

during 1750-1825 due to "improved farming methods, and quite particularly to the introduction of

artificial manures, of new methods of crop rotation, and improvements in live-stock resulting from

planned in-breeding and cross-fertilization." Improved nutrition provided more resistance to

disease and lowered the rate of mortality. Second, “significant improvements in public health

reduce mortality, particularly in childhood. These are not so much medical breakthroughs as they

are improvements in water supply, sewage, food handling, and general personal hygiene following

from growing scientific knowledge of the causes of disease and the improved education and social

status of mothers.”8 Though most Europeans still suffered from various epidemics, a medical

progress contributed to stopping the cause of disease: Edward Jenner used cowpox to treat

smallpox, Robert Koch found bacteria causing diseases, and Louis Pasteur created vaccines for

rabies and anthrax.9 From the mid-eighteenth century, the mortality rate began to fall in Europe,

and continued to fall while the economy was expanded. The decline in death rates and the rising

survival of children changed the age structure of population.

The fertility rate, as noted previously, is affected by the marriage rate - age of marriage,

average life expectancy of a married couple, temporary migrations, economic factors, the state of

health, and so on. The birth rate began to decline in the nineteenth century, while the marriage

rate remained more or less stable. “The general fall in the birth rate was due to a host of factors,

all, however, closely related to economic and social changes: the decrease in infant mortality due

to better sanitation; industrialization; the trend towards individualism; the wish to rise in the social

scale; the spread of education; the women’s franchise; the decline of religious beliefs and their

replacement by rationalist norms.” International migration was of two types - spontaneous or

government sponsored – in the eighteenth century. France sent 100,000 people to Canada by 1800;

the European population of the British colonies in America rose from 250,000 in 1715 to over 5

million by 1800; and 200,000 Germans were living in America by 1776, and 17,000 of their

mercenaries took up residence in 1784. Frederick the Great brought 300,000 immigrants as

settlers into Prussian villages, and Catherine II of Russia tried to settle the southern steppes with

Russians and Germans. Russians immigrated to Siberia counted 575,000 settlers; Germans settled

in the Baltic states, Poland, and Russia as administrators and traders, and new settlements. Some

300,000 of the Swiss served as mercenaries under neighboring rulers.



(a) England in 1750-1850: “By the 1550s, the population had nearly recovered to the pre-

Black Death level, and there were steady increases during the 1600s and 1700s. However, through

the 1800s the population virtually doubled every 50 years. The increase would have been even

greater, but many people emigrated in search of a better way of life, to the United States and then

in the British Dominions.” In England and Wales, the population increased by over 58 percent

for a century from 5.8 million to 9.2 million during 1701-1801; and total real output was doubled

during 1750-1800 and tripled during 1801-51. The rate of economic growth surpassed that of

population growth, average income per capita doubled in the first half of the nineteenth century.10

So the standard of living of ordinary Englishman improved, but personal income was unequally

distributed, and growth rates were different between the primary and the secondary sectors -

industrial output rose at three times the rate of agricultural output in the eighteenth century. Since

the agricultural and the industrial revolutions began in the second half of the eighteenth century,

we can assume that the revolutions could contribute to the population growth. In fact, the English

population almost doubled in eighty years from 6.5 to 13.9 million during 1751-1831, which was

paralleled elsewhere in Europe at this time because of rising fertility and falling mortality. The

falling mortality is explained by improvements in medicine, sanitation, and preventive treatment

in the late century; improved diet by the spread of potato and other new crops; the disappearance

of bubonic plague; and the end of the Napoleonic war. The rising fertility is explained by

industrialization encouraging early marriage that resulted in higher births since higher wages could

properly feed families. “The percentage of the children born in London who died before the age

of five decreased from 74.5 per thousand in 1730–1749 to 31.8 per thousand in 1810–1829.”11 A

survey shows that the life expectation at birth of British peers rose from 32.9 years in 1675-99 to

49.2 years in 1800-25. "The trends in mortality and fertility are still unknown for much of Europe

before the middle of the nineteenth century.”

The population of England and Wales nearly tripled in a century from 6.5 million to 17.9

million during 1751-1851, but historians view that 1840s were a critical turning-point. First, a

surplus population could not find full-time jobs in agriculture, so that part of them migrated from

the countryside to towns for many possible employments in manufacturing industries, commerce,

and other service sectors including household servants. All English towns gained over 742,000

people during 1841-51 and 620,000 during 1851-61 through migration from the rural areas. "In

London in 1851 only 46% of the adults were born there, in Norwich and Sheffield one half, and

in Manchester, Bradford and Glasgow little more than a quarter were natives." The proportion of

rural to total populations declined from 74.9 percent in 1751 to 65.9 percent in 1801, and to 46.0

percent in 1851 (urban is defined as places with a population over 2,500). Second, although the

urbanization absorbed the rising rural populations, the countryside was under pressure from

unemployment, which caused the Malthusian threat to be real and the migration to the American

colonies practical from the mid-eighteenth century. As the economy was more industrialized after

1861, the proportion of rural population rapidly declined in the second half of the century (to 22

percent by 1901). The emigrants from England and Wales to foreign countries increased from

23.7 thousand during 1825-29 to 677.7 thousand during 1850-59, and to 1.7 million during 1900-

09. Internal migration greatly exceeded emigration except a few decades in the nineteenth century,

so that "the main safety-valves for rural England and Wales were English cities rather than

overseas farmers."12 Third, "the repeal of the Corn Laws opened England to the cheaper grains

and meats of Russia, the New World and later Australia. English agriculture no longer had to

provide the 'means of substance'; indeed it is doubtful if it could have. Free trade was therefore

critical." In other words, the Industrial Revolution resolved unemployment problems and gains

from trade allowed England to purchase the food from foreign countries.



(b) France in 1750-1850: The population of France increased by almost 45 percent from 19.5

to 27.5 million during 1700-1801, mainly after 1750. The French population increased by 30

percent to 35.8 million during 1801-1851; and by only 8.7 percent (3.1 million) to 38.9 million

during 1851-1901; which were far below the English case. "The crude birth rate remained above

30 per thousand until 1830 and then fell away, until on the eve of the First World War it was below

20 per thousand. The crude death rate also fell slowly after 1801."13 The fall in the death rate can

be attributed to an increase in agricultural production and the improvement of transport, but "there

is no reliable evidence to show that agricultural output increased much faster than population in

the eighteenth century." During a century 1750-1850, the population growth in France was far

less than that in England, but the rural population in France increased nearly as fast as that of

England, particularly during 1760-80. "The slow rate of growth of the French population between

1800 and 1911 was primarily due to a fall in marital fertility." The gross reproduction rate in

1816-20 was 201 and had fallen to 165 by the 1880s, due to a rise in the age of first marriage of

women. The first census was taken in 1801, but the first reliable census of France was that of

1821. Liberal economists in the 1820s argued that "poverty was a result of excessive population

growth" and historians believe that the population pressure in the countryside was a contributory

factor in the rural uprisings. The overpopulation is evidenced in the rising land values and rents

with high food prices. "Cereal prices rose by 65% during 1769-1789 and continued to increase

during the Revolutionary and Napoleonic period, although they did not reach the extraordinary

heights found in England at that time." In the subdivision of farms, the number of families holding

farms less than 1 hectare in designated four French villages was 490 in 1720, and rose to 870 in

1782-1800. A significant proportion of landless people existed in the rural in the 1780s. France

remained overwhelmingly rural until the mid-nineteenth century as industrialization was delayed.

The demographic response to population growth can be explained by domestic migration and

emigration to foreign countries. As discussed, the rising rural population in England during 1750-

1850 was effectively reduced by migration from the rural to the urban areas and by a lesser degree

of emigration overseas. However, in France, migration from the rural to the urban areas had little

effect until after 1850s due to delayed industrialization. Statistics show that the share of rural to

total populations slowly declined from 85.6 percent in 1811 to 82.2 percent in 1851, and to 68.2

percent in 1901. The loss of population from rural areas to towns remained from 0.40 to 0.67 per

100 rural populations during 1856-86. Some historians believe that the 1830s mark the turning-

point of migration. First, in France the lagged industrialization could not create enough jobs in

towns to absorb surplus labor of the rural areas. But in the second half of the nineteenth century,

as industrial wages were double agricultural wages, wage differentials began to attract the rural

population to the towns. Agricultural workers remained in the farms, while non-agricultural

workers in the countryside moved to towns. Second, England had a large-scale enclosure

movement to loosen ties with the soil, but France had no this kind of movement, so that

landownership of the peasants was increased. Third, in the middle of the nineteenth century, "a

substantial proportion of French industry was still carried out in rural areas, not yet having

succumbed to the competition of factory products." Hence, the seasonal migration of labor in the

countryside gave supplementary incomes to the rural poor. Fourth, there had been emigration from

France to overseas before 1800. By the beginning of the nineteenth century, there were few outlets

overseas except Algeria due to the failure of French colonial policy. However, at least two million

French people left France in the century; and in each decade, immigration exceeded emigration

except during 1851-72. Without immigration, the population of France would have hardly

increased at all in the second half of the eighteenth century. “Unlike the rest of Europe, there was

no strong population growth in France in the 19th century and first half of the 20th century.”



The Agricultural Revolution in England 1750-1850: Agriculture provided subsistence for

peasants and a steady income for landlords. "It was a small-scale type of cultivation whether by

serfs, sharecroppers, tenants, or petty proprietors. Villages were organized communally in the

sense that similar routines were followed by all members of the rural community. Common lands

and open wastelands were generally used for grazing their livestock and for fuel" while the

techniques were traditional and inefficient. The agricultural revolution began in England when

the growing population reached unprecedented levels – from 5.7 million in 1750 to 16.6 million

by 1850 – and surprisingly demanded more food, that raised prices of farm produce, particularly

in London and its suburbs, which stimulated the agricultural production in the countryside. Both

landlords and tenants made profits by increasing the farm production owing to "the selective

breeding of livestock; the removal of common property rights to land; and new systems of

cropping, involving turnips and clover."14 There were three classes in farming of England: first,

the great landlords and gentry were an educated class of rulers and administrators who drew their

income from the rents of land and such estate profits as arose from sales of timber and mining

royalties; second, the owner-occupiers or yeomen were farming their own land in a small scale

and sometimes renting additional land from a landlord; third, the cottagers were landless rural

people who had cottages and rights to use common land, and laborers were hired year by year and

lived in with the farmer and his family as farm servants. According to Gregory King, the farmers

in England and Wales numbered about 330,000 at the end of the seventeenth century, among

which 150,000 were the great landlords and gentry, and the remaining 180,000 were owner-

occupiers. However, the proportion of owner-occupiers declined from 20 percent of the land in

1750 to 12 percent of it in 1850; and the proportion of farm cottagers and laborers to land occupiers

increased from 1.75 in the early eighteenth century to 2.75 in 1831 because the rich purchased

more land from the owner-occupiers for profits from commercialized farming.15

The growth of large estates in the hands of a class of landlords improved cultivation to exploit

farm profits and increased in the number of tenant farming, establishing the landlord-tenant system

in England. It is one of partnership sharing the costs and risks of farming: "The landlords provided

the basic necessities for good farming, ideally an enclosed, convenient farm, with the buildings

well maintained and the land in good heart, and the farmers provided the stock and working capital,

and the vital element of skill and enterprise." This partnership made the English landlord-tenant

system reasonably efficient and flexible. However, there was a numerous class of small cultivators

depending on their few acres for a living, having a small surplus to exchange for necessities, and

raising cow, some pigs and poultry. The specialization was made in particular crops as well as in

fattening, in dairying, fruit and hops in various parts of the country: "the bread grains, wheat,

barley, rye and oats were grown very widely, it is clear, but with considerable regional

concentration." Potato-growing developed on a large scale, and other vegetables were also

cultivated. The Scots and Irish cattle flew into England and fattened in the countryside for the

local markets. The influx of Scots cattle into England were at least 30,000 heads at the time of

the Act of Union, but the number increased to as many as 80,000 cattle and 150,000 sheep by

1750. Large quantities of cheese, bacon, and malt were traded for the delectation of the London

housewives and their families. "Norfolk and Suffolk were famous for their turkeys and geese,

which every August began the long journey to the capital, proceeding in carts or on foot in droves

a thousand or more strong, and feeding on the harvest stubbles as they marched." Milk could not

be transported more than ten miles so that dairies were located near or within the large towns,

though butter could come from the farther place. The rivers or coastal shipping were indispensable

to transport agricultural products, though limiting the shipment to less than 20 to 30 miles to a

port, and the main roads like turnpikes were developed for better land transportation.



The English thus experienced remarkable expansion and improvement in agriculture in the

eighteenth century as the growing population and increasing demand for farm produce raised its

prices and made agriculture profitable, so that landlords and tenants tried to maximize output by

reducing costs. An estimate indicates that output of agricultural produce increased by 43 percent

over the eighteenth century "due more to the increase in sown acreage than to an improvement in

yields." Enclosure was the vital element: "Where enclosure led to the abolition of fallows, the

effective acreage of newly-enclosed parishes was increased by up to a third or a half." Many

enclosures were not only concerned with open fields but were directed partly or entirely towards

the proper cultivation of overstocked or neglected commons, or the bringing into production of

waste land from moors, marshes, and forests. In addition, the more efficient and intensive

cultivation raised the farm productivity: "a better balance between arable land and pasture, the

creation of more convenient and larger farms, and the use of better rotations with roots and

legumes, improved breeds of sheep, cattle and horses, and more efficient implements."16 The

improvement in farming in the eighteenth century were in the spread of more flexible rotations of

crops, embracing roots (turnips, later swedes, and mangolds), legumes (clover and sainfoin), and

improved grasses (ryegrass); "which by providing more fodder enabled the land to carry more

stock, which in turn enriched the soil with their manure." Farmers became to know that legumes

added new nitrogen to the soil: legumes "have bacteria attached to their roots, which convert

atmospheric nitrogen into nitrates in the soil that can be used by whatever plants are grown there

in the following few years." The Norfolk four-course system (the wheat-turnips-barley-clover

rotation) was not only prevailed in England but also influential on continental farming: "wheat

was grown in the first year, turnips in the second, followed by barley, with clover and ryegrass

under-sown, in the third. The clover and ryegrass were grazed or cut for feed in the fourth year.

The turnips were used for feeding cattle and sheep in the winter."17

The natural fertility of the soil was improved by marling, manuring, and drainage. English

farmers manipulated the texture of their soils: "If the soil was light and sandy, they could resort to

marling, binding the soil with claylike substances so that it would retain water and fertilizer more

effectively. If, on the other hand, the soil was too heavy and claylike, they would introduce chalk

and lime mixtures to break it down into a finer texture, so that it would not clot in very wet or very

dry weather." Marl was dug in pits where it occurred near the surface and was carried in wagons

to the fields to be spread. Meantime, a variety of manures were in use as a fertilizer. "The folding

was systematic, acre by acre, and often the farmers pooled their flocks and hired a shepherd to

regulate the business. Sheep there were valued more for their dung than their wool." Livestock

manure is less rich in nitrogen, phosphorus, and potash that synthetic fertilizer. But "manure is

rich in organic matter, or humus, and thus improves the soil’s capacity to absorb and store water,

thus preventing erosion." Moreover, some land requires irrigation or drainage before its use for

any agricultural production. The method of surface drainage “by which the land was raised in

regularly spaced ridges and the rainwater led off in the furrows to the lower ground, was widely

used through the Midlands and other areas of heavy soil." On the other hand, selective breeding

of cattle developed the Shorthorn producing more and better milk and beef. Robert Blackwell

began his livestock experiments about 1745, and developed a new breed of sheep that "fattened

rapidly and had a high proportion of saleable flesh to bone" with a wool of reasonable quality. He

also produced the modern Shire horse, "a breed which sprang from the midland war horse modified

by crossing with continental mares." He also developed a method of watering meadows with

irrigation channels that received many noble visitors. Thus, “by 1800 the importance of quality

in livestock was becoming fully recognized by progressive farmers, and animal husbandry had

made a giant stride away from the haphazard breeding and indiscriminate standards.”



The farmer's tools were made of wood and wrought iron and generally crude and inefficient

in the eighteenth century. But in the process of industrialization, tools were substituted by cast

iron and standardized by factory product. (i) Cultivating Implements: The Rotherham plough was

based on Dutch designs and patented in England as early as 1730. It was "a swing plough with a

curved mould-board which performed its function of turning over the earth much better than did

the straight board formerly used; but its chief advantage lay in the design of its main frame, making

it smaller and lighter, and requiring fewer draught animals than traditional ploughs." (ii) Sowing

Implements: Jethro Tull invented seed-drills and horse-drawn hoes; drill-ing seeds in widely-

spaced rows, and regular hoeing of the soil between the rows, providing two advantages - saving

seeds and keeping down weeds. (iii) Harvesting Implements: Many reaping machines were

invented in England and America between 1780 and 1850. Joseph Voyce gained a patent for a

reaping machine in 1800, that used a series of scythes projecting from a circular disk; Patrick Bell

brought out the cutting apparatus in 1826 consisting of a series of scissors, and the grain was

brought on to the cutter by sails; and Cyrus McCormick invented the first reaper in America in

1831 to be generally adopted - cutting was done by a knife and cutter-bar, and the machine was

pulled, not pushed. Robert Salmon designed a simple haymaking machine about 1800; and the

mowing machine was developed as a by-product of corn harvesters. (iv) Threshing Machinery:

Andrew Meikle built the first successful threshing machine consisting of drum and concave in

1786. "Improving on earlier designs, it could be driven by steam, water, horses or hand, and

together with the later winnowing machines greatly shortened the time-honored process of

threshing the corn with flails and winnowing it by throwing the grain into the air by hand." (v)

Farm Transport: Although wheel-less sledges and barrows remained indispensable in the steep

hilly areas, "the two-wheel carts were supplemented or replaced by large four-wheel wagons

which could carry much heavier loads."18

The Enclosure was to develop open fields, common lands, meadows, and wastes in England

in the eighteenth and early nineteenth centuries. It was led by over 4,000 Acts of Parliament and

by private agreements between owners of land; and the great volume of enclosure was enforced

during 1764-80 and 1793-1815. The Acts made it possible “for the owners of the greater area of

land to force the hand of other proprietors in the village who might be opposed to the change.”

The main objectives of the enclosure were in more efficient farming, more profitable uses of land,

and the expanded area of land under regular cultivation in order to produce more food for the

growing population. The enclosure made farms more compact, larger and easier to work, made

possible a better balance between arable and pasture, encouraged the adoption of alternate or

convertible husbandry, and allowed better care of animals. Old arable land became profitable with

permanent grass or long leys; commons and rough hills were improved “by ploughing up and

putting under a suitable rotation” and waste was “cleared, ploughed up, and made valuable by a

judicious application of marl and manure.” The enclosure made well over 6 million acres arable,

a quarter of cultivated acreage, for English farming. Some enclosures were “to improve efficiency

by getting rid of tithes and by bringing order and greater convenience into a parish, where through

the years the gradual, piecemeal reduction of the open fields had resulted in an unwieldy complex

of tiny closes.”19 The enclosure was financed more by current estate income than by borrowing:

it is estimated that rents became doubled after enclosure, and landowner’s gross return on his

investment was “probably between 15 and 20 percent” on average. In the long run, larger farms

were more efficient and competitive, as farms over 300 acres were about one-third of the cultivated

land and farms less than 100 acres accounted only for 22 percent by 1851. The process of

enclosure created a landless working class that provided the labor required in the new industries

developed in the north of England, while the poverty was increasing in the countryside.



Since the demand for grain was relatively inelastic, its prices depended on the supply due to

good or bad harvests. As farms grew in size and communications improved in the eighteenth and

nineteenth centuries, the movements of prices influenced more closely the lives of a rising

proportion of farmers. Much of English farming was mixed: "the cultivation of arable crops was

associated with the fattening of cattle and sheep, so that the great majority of arable farmers were

concerned with the prices of a number of quite different products." The Corn Laws were to control

the grain market largely by encouraging export and restricting import, which kept home prices

rather higher than they would have been. Before 1750 prices of grain and animal products were

low "mainly because of lengthy runs of good seasons, but also because the growth of the cultivated

acreage and the gradual improvements in land-use, fodder supplies and rotations, raised output

beyond the increase in consumption." In 1750-90, the general trend of agricultural prices was

upwards after the rising consumption by an increasing proportion of non-agricultural population.

The improving standard of living with industrialization raised the demand for meat and dairy

produce more rapidly than that for bread corn, the mainstay of the poor. After 1850, the production

of meat and dairy produce were more profitable than that of grain so that there was already a

considerable margin between the rents of the grassland farmers and of the arable farmers.20 The

prosperity of farmers depended on the rising income: revenues minus production costs - rents,

wages, and taxes. In the later eighteenth century, taxes rose heavily due to the poor law and war

expenditure; and at the end of the war, the prices of farm produce fell more rapidly than the costs

of production, though conditions had improved by the later 1830s. For example, during the wars

of 1973-1815, grain prices rose rapidly: “In the early 1790s wheat hovered about the level of 48s.

to 58s. per quarter …. In 1810, 1812 and 1813 the annual average was over 100s.”21 Meat prices

rose by between 70 and 100 percent "from the pre-war level of about 3s. to 4s. per stone" until

1802, though the average prices fell to 5s. 3d. per stone during 1800-15.

The British experienced the three great food crises in 1795-96, 1800-01, and 1809-12; and

the labor unrest forced the government to intervene "with bounties of imports and restrictions on

consumption" by substituting potatoes and rice for bread to reduce wheat consumption of the poor;

while "landlords and farmers enjoyed highly profitable conditions." In 1832, the Royal

Commission on the Poor Law proposed the new law governed by two operating principles: one

was less eligibility that "the pauper should have to enter a workhouse with conditions worse than

that of the poorest free laborer outside of the workhouse" and the other was the workhouse test

that "relief should only be available in the workhouse."22 The Parliament passed the Poor Law

Amendment Act in 1834 that overhauled the existing system and established the commission to

oversee its national operations for the giving of poor relief. On the other hand, the Corn Laws in

the eighteenth century encouraged exports of grain by a bounty when home prices were low, and

allowed imports at low rates of duty when home prices were driven up by bad harvests. As far as

they encouraged exports and restricted imports, the Corn Laws must have kept home prices rather

higher than they helped to stabilize prices and operated with fairness as between the interests of

producers and those of consumers. Due to the rising power of landlords and gentry, the new Corn

Laws after 1790, particularly of 1815, imposed agricultural protection by securing profitable

prices for English grain producers with high levels of duties on imports, although a much lower

range of preferential duties applied to grain from British colonies. In 1838, the Anti-Corn Law

League appeared and pursued economic advantages of free trade by demanding imports of cheaper

grain and more exports for more employment. The League mobilized public opinions to increase

its pressure on Parliament, and was politically successful in the Repeal of the Corn Laws by 1846,

which was a strategic retreat of the rich landlords and gentry. This part will be further discussed

later in the chapter of Commerce and Transport.



Agriculture in Continental Europe 1750-1850: Agricultural prices rose or fell because of

changes of supply of and demand for food. During 1550-1650, the rising population and the

expansion of colonial markets increased the demand for food, which caused the agricultural prices

to rise. Moreover, the influx of gold and silver and speeding-up its circulation contributed to the

price revolution in this period. In a German town of Speyer in 1520-1621, for example, the price

of rye rose by 15 times as much, of wheat 13 times, of meat or salt 6 times, while wages rose by

2 to 3.5 times as much. Although there were some differences between towns or regions, real

wages fell significantly in this period.23 The high cereal prices stimulated farmers to produce more

output by expanding the cultivated area through reclamation, drainage, and polders. In the

reclamation, waterways were improved and dry areas were irrigated; for draining marshes,

financiers and technicians formed companies. The Netherlands largely developed polders. As

cereal prices rose, arable husbandry was so profitable that arable rents rose much higher than those

for meadow and pasture and pasture was converted to arable. In Maine of France, vineyards were

ousted by cornfields; and buckwheat was greatly demanded because it was one of the cheapest

foods suitable for the poor soil of that region. In Germany, cattle-farming and meat consumption

did not keep pace with the rise of population. A historian views following reasons: the growth of

population; the decrease in the import of beef from south-eastern Europe due to the Hungarian-

Turkish war; the urbanization prevented townsmen from keeping as many pigs as before; the

shrinking of the oak and beech forest reduced pigs; it was more profitable for the remaining

grassland to keep horse and pigs than cows; and the fall of real wages reduced the purchasing

power of consumers. The high cereal prices made it worth for farmers to buy manure and to use

marl, lime, clay, sea-sand, shells, or seaweed, as discussed previously, to make the soil richer,

particularly in England and some parts of France.

During 1650-1750, the European economy experienced a serious recession because of war

followed by disease and famine. The Thirty Years' War caused Germany to lose more than forty

percent of its pre-war population, and Spain lost a quarter of the population in the seventeenth

century. The plague, smallpox, and other epidemics hit European countries; and hunger from

famines expedited the depression. The symptoms of the depression were in "falling cereal prices,

relatively high real wages, little reclamation activity, conversion of arable to pasture, expansion

of animal husbandry, cultivation of fodder crops and various industrial crops, in some parts a

transition from agriculture to rural industry, few innovations in farming technique and little

interest in questions of an agrarian nature."24 Strong signs of land erosion appeared and remained

until the end of the eighteenth century when fodder crops were grown during the fallow years.

Falling prices of farm produce and rising wages of farm laborers caused farmhand to be better off

than his master. Statistics of some selective German towns show that the prices of rye fell to 65

percent of its value during the first fifty years in this period. Unlike the previous century, livestock

farming was more profitable than arable, so that plough-land was converted to grassland in major

European countries. "The transition from arable farming to animal husbandry reached a peak in

the seventeenth and the first half of the eighteenth century, above all, between 1719 and 1725, a

time especially low cereal prices." After 1764, cereal prices began to rise again, and the process

reversed itself in some places. When cereal prices were high, farm workers were more beneficial

than weavers in towns and larger villagers, but the situations became reversed when its prices fell.

In the period of depression, there were few inventions in the field of agricultural tools and

technique. In Germany after 1648, "No farmers could be found to repair the deserted farms or till

the neglected soil .... In other places it was the nobles who took possession of the abandoned land."

As a result, for a time being, the agricultural depression contributed to peasant rebellions in some

regions of France as well as of eastern and central Europe including Russia.



During 1750-1850, the rapid increase in population and in the quantity of money led to an

expansion of agricultural and industrial productions after the long recession. Since the additional

demand for food surpassed the supply of farm produce from the expansion of the arable land; the

cereal prices rose; and the rising number of labor forces reduced wages of farm workers. In

selected six German towns, the price of rye increased by 31 percent and wages fell by 8 percent

in average during 1750-99 based on the years 1721-45; and in France, the price of rye rose by 60

percent and wages of workers rose 17 percent during 1771-89 based on the years 1726-41.25

Moreover, “As industry expanded, it created a demand for more horses than ever before, for the

transport of all sorts of goods. The cultivation of fodder crops to feed these animals required extra

land, which would otherwise have been used to grow crops for human consumption. Thus the

increase in the number of horses contributed to the rise in the price of bread-making cereals.” As

both rents and land values rose with the rise of cereal prices, speculators purchased land and resold

it at a profit. “In the Swiss canton of Vaud, land prices doubled, sometimes trebled, in the course

of the eighteenth century.” As real wages fell down, the purchasing power of workers declined

rapidly. For example, cereal prices doubled in Spain during 1750-1800, while money wages

increased by only 20 percent. The cost of living for a family climbed higher, and many of poor

families substituted cheap buckwheat or potato. The higher prices stimulated agricultural

development - reclamation, drainage, and polders; the grassland was converted to the plough-land

for arable farming as discussed previously. In Sweden, the scattered plots of arable were united

through exchange of land; while Spain lost the monopoly of breeding merino sheep, and its

government had no further objections to the practice of arable farming. The high cereal price

spoiled the French wine industry due to more spending on bread. Farmers spent more money on

manuring, soil improvement, and agricultural tools to increase productivity.

(a) Arable Farming: The Netherlands was highly evolved in agriculture, and its provinces

were "the Mecca of foreign agricultural experts, who came from England, Scotland, Germany,

France, Italy and even the United States." They imported large quantities of corn from the Baltic

lands to feed its dense population. Their industry was chiefly textile requiring all sorts of raw

materials: "flax for the manufacture of linen; dyes such as madder, woad and dyer's weed for the

cloth industry; barley and hops for brewing, hemp for rope-making, tobacco plants for tobacco-

making, and so on." The density of population made farmers to grow many of these industrial

crops with market gardening; which was essential to have rich soil for intensive tillage needing

more capital and labor. The introduction of clover or fodder-crops in the fallow year of crop-

rotation made the soil richer by taking nitrogen from the air; animals were fed with more fodder

in the winter season; and farmers could keep more animals and collect more manure to increase

production. The Norfolk system that rotated wheat, turnips, barley, and clover in four years

became popular by enlightened landlords in European countries at the end of the eighteenth

century. The intensive farming needed very fertile soil that was filled by the rotation of clover or

fodder crops, and by collecting more manure from extra livestock fed by additional fodder. Beside

marl, the land in Norfolk was dressed "with loam, gypsum, oyster shells, seaweed, burnt earth,

mud, fish, rape-seed cakes, ash, buckwheat, compost, leaves and town refuse." In crops,

buckwheat has several advantages: "it grows on light, sandy soil and is often grown on burnt-off

fenland; no direct application of farmyard manure is necessary, and it stifles weeds." Maize was

suitable as food for man or as cattle-fodder, and the yield was two or three times higher than that

of wheat. The potato became the main staple food in Ireland because the poor could cultivate it on

a small patch of ground. Major industrial crops included flax, dry plants, coleseed, hops, tobacco,

and sugar-beet, in various regions. The Flemings grew fodder crops, followed by the English; and

the French began to grow turnips, clover, sainfoin, and lucerne after 1760.



(b) Animal Husbandry: The stocks are important for pastoral farmers to produce cheese,

butter, milk, meat, hides and wool for the market as well as the farmer's own household; and for

arable farmers to use the large animal - horses, oxen and cows - for draught, and to produce manure

as the dung falls on the fields as the animals graze. The long-distance trade in cattle was extensive:

"Western Europe was supplied with cattle from Scandinavia - the so-called Jute ox-trade - while

central Europe, especially the south German towns, got their supply from Hungary, Wallachia and

the Black Sea coast." As the Turks cut off the trade from Hungary and the Balkans, Poland

supplied cattle for the shortage. The cattle was transported by walking 330 Km losing 80 Kg if

sea transport was not available; which loss was recovered by fattening nearby destination towns.

The peasants began to make butter and cheese from milk and sold them in the market. The hides

of the slaughtered beasts were sent to the tanner or shoemaker. Horses were used for draught in

the northern part of Europe, but cows and oxen were used in the central and southern part. The

shift away from horses to oxen and cows often appeared according to the change of situations:

farmers took cows and oxen for draught rather than horses since the army wanted more horses

during the Napoleonic war; but the opposite trend was possible when the beef price rose. Small

farms in Palatinate often held two horses for draught and three cows to manure plough-land, but

the number of animals depended on the size of farms. "In regard to breed improvement, we must

remember that in the seventeenth and eighteenth centuries a great change took place in the qualities

considered desirable in the animals. Sheep, formerly kept for their wool and manure, were now

more valued for their meat. It many lands oxen, and sometimes cows, were used for draught,

which required strongly-developed shoulders; when they began to be bred chiefly for meat and

milk, the rump, loins and udders became the more important parts. Pigs used to have heavy heads

and strong, well-grown forelegs, but by breeding, the balance of weight was shifted to the

hindquarters, for the sake of the meat and fat."

(c) Farming Practice and Landownership: In farming practice, the farm was run on much

the same line as the Middle Ages from the sixteenth to eighteenth century, but the great change

was introduced in the first half of the nineteenth century through mechanization with new tools

and equipment, which will be further discussed in Book V. The landlord-tenant relations explain

the stratification of rural society. The landlord is a noble or a commoner who purchases lands

from nobles or governments; the owner-occupier is a land-holder who cultivates the land by

himself or hiring workers if necessary; the tenant-farmer holds no land but takes leases from

landlords by sharing profits according to contracts; and the cottager or day-laborer works at the

farm for wages and farm servants live in the farm. Although the proportion of each class varied

by towns or regions, in Saxony the proportion of cottagers and day-laborers rose from 6.9 in 1550

to 39.9 percent in 1750 of rural population, explaining that the proportion of landless class

increased by 33 percent of all agricultural population in two centuries. During the French

Revolution, "the property of the clergy and émigrés was confiscated. Some of the revolutionaries

wanted these estates to benefit the small peasants and landless proletariat, and urged that the land

should be distributed free." As a result, the French peasants owned about 30 percent of the land.

While England faced the redistribution of the open fields, the enclosure and partition of the

common lands, and France faced the confiscation of church property and the estates of the émigrés;

Germany handled the East German Gutsbesitz and the peasants' release from serfdom. In Prussia,

the liberation of the peasants granted in 1807 and it was possible for them to choose occupation

and to buy or sell land freely. It benefited the great land-owners: legal freedom brought social

injustice. Similarly, Russia abolished serfdom in 1861 and the United States removed Negro

slavery in 1862. However, history tells us that social mobility or upward transition of social status

of the landless class remained unchanged for many decades or a century.



The European Sea Fisheries 1500-1800: There have been enormous fluctuations in the

catch of Fisheries due to changing conditions of climate in the long rum or weather in the short

run; and moreover, the fishing fleet was vulnerable in attack in times of war. The fisherman was

usually a poor man, who advanced money for the fitting out the ships, and pay the high cost of

preserving the fish. Subsistence fishermen were often part-time farmers fishing first for their own

needs and selling any surplus to buy grain or other foodstuffs. Coastal fishermen left the shore by

using small boats to sell the catch rather than to consume the bulk of them. The third category of

fisheries was deep sea operations like herring, cod, or whaling fisheries. The herring fishery in

England attracted 500-600 small boats in 1600, and the quantity of herrings cured and packed was

3,000 lasts during 1598-1604 and 4,000 lasts during 1712-20. From 1600 onwards, herring caught

round the Scottish coast was 300 lasts in average, which passed through the Sound to the Baltic,

while the fish products were more than 20 percent of Scottish exports by value. The Dutch

established the herring fishery under the statues of 1580-2, and maintained its supremacy in trade

nearly until 1700. The total number of fishing boats in 1562 was 700, among which 400 belonged

to Holland, 200 to Zealand, and 100 to Flanders; and the total catch was around 18,000 lasts in

1599 on the basis of salt taxes, which number increased to 20,000 lasts in the 1640s.26 Due to the

Anglo-Dutch wars, the number steadily declined and Scottish exports to Baltic overtook the Dutch

after 1714. Meantime, the Dutch achieved a consistent quality in their products: the Dutch

herrings sold at over £24 per last at Rouen in 1575. The curing was done on board ship; and after

landing, "the fish were gutted, washed in sea-water, mixed with salt, and finally packed in barrels

made of wooden staves and hoops. When full, these stood closed for ten days, during which the

herring sank a little owing to osmotic shrinkage. The barrels were then reopened, filled, and closed

again." Herring could also be preserved by smoked or dried. The French involved in herrings but

were inferior in quantity and quality to the Dutch.

The cod fishery was available off Newfoundland and in the Icelandic and North Seas. The

Iberian Peninsula was one of the best markets for dried cod known as stockfish in the sixteenth

century, which was lightly salted and then wind dried for varying lengths of time. As the Iberian

commerce was prosperous, the Portuguese fishermen increased cod supply until 1550, and then

the Spanish fishery increased the market share. As the English and French fleet began to involve

in cod fishing, the total English fleet in Newfoundland was 200-300 ships during 1615-40, and the

French cod fishery in the region reached its peak with around 400 ships in 1688. In the North and

Icelandic Seas, England dominated the cod fishery. On the other hand, whales were valuable for

oil and certain other products rather than their meat as food - the oil was useful for illumination

and for lubrication up to the middle of the last century. A large fleet of French, Dutch, English,

and Scandinavian ships were regularly engaged in whaling voyages to the north. In the 1630s, the

Dutch expanded its whaling into the open sea, and began regular and intensive whaling in the

Davis Strait in 1719. In competition, the British government introduced a bounty of £1.00 per

ship-ton in 1733, increasing £2.00 per ship-ton in 1749 for losing whaling voyages. "However,

reduction in the bounty and wars with America and France saw London's Greenland fleet fall to

19 in 1796" and Northern whaling declined after the mid-nineteenth century. "The British would

continue to send out whalers to the Arctic fishery into the 20th century, sending her last on the eve

of the First World War."27 Fishing suffered from bad communications and distribution until the

railway system was available with the use of ice. Monasteries and convents of Catholic Europe

provided a rich and steady demand for processed fish, while the English lost this at their

dissolution. "The Dutch dominated the supply of sea fish to Hamburg, the Rhineland, and the

Spanish Netherlands" during the years 1560-1714, while fishing in France, Germany, Iberia, and

Italy was much less important in the economy as a whole.



2. The Industrial Revolution and Technology

Seeing the process of expansion and structural transformation of British industries, especially in

textiles, in the eighteenth century, French commentators used the term “Proto-industrialization.”

It was used with a reference to the linen industry of Flanders, where merchant-manufacturers

organized skilled workers, supplied raw materials for them to produce linen clothes, and sold the

output to distant, not local, markets. In the early stage of industrialization, the most important

developments were in the invention of spinning machine for the cotton industry, the substitution

of coal for wood and charcoal as fuel, and the introduction of the steam engine as a source of

power. The industrial revolution seems to imply a sudden increase in manufactured output by a

rapid change of production modes. However, the “revolution” must be a misnomer, considering

that the characteristics of economic processes were so slow and hesitant that industries could not

attain its full development until the mid-nineteenth century,28 though the term was applied to the

first industrialization in other countries. Peter Mathias defines the industrial revolution by the two

criteria: “sustained higher rates of growth and the onset of sustained structural change of the

economy” that are cumulative with the speed of change in a longer time-span. First, the growth

rate of an economy is measured by the expansion of aggregate output or that of output per head of

the population. Output is expanded by mobilizing more input factors into existing modes of

production with the same sort of economic organization and technology; and by productivity

growth coming from technological advance and other factors promoting efficiency. Second, the

structural transformation in the economy is measured by the shares of output in different sectors

– primary, secondary, or tertiary. During 1780-1800, the annual average growth rate of industrial

output in Britain was 2.11 percent which was much higher than that of agricultural output - 0.75

percent - in the same period,29 which was a beginning evidence of the industrial revolution.

The British was already rich in 1700 with income per capita of $1,405 (1990 prices) behind

the United Provinces but well ahead of France. The population in metropolitan London recorded

575,000 and the share of the agricultural population was between 30 percent and one-third in the

same year (that of Spain and Russia was two-thirds or more in 1900). The middle class began to

emerge, while the working-class constituted the bottom 20 percent of the income distribution. The

British extended their trade to Caribbean, North America, and Asia by exporting industrial goods

and importing raw materials. Since agriculture had been highly seasonal, off the season of farm

labor had engaged in the rural industry as cottage workers. The wool industry was one of pillars

of British foreign trade, which was replaced by the cotton industry, while labor saving machines

were invented and improved. Both stocks and bonds were traded in financial markets, and banks

and credit facilities supported business finance. The powerful groups sought specific economic

interests through lobbying activities for favorable regulations and restrictions. There were some

differences between Britain and continental states. First, the British had "a premium on

empiricism, pragmatism, and individual utilitarianism" for technical advances by applying useful

knowledge, which was different from the Cartesian approach. Even after importing the machinery,

the French could not compete with the British in the market because of lack of the immense details.

Second, in the Continent, the state absorbed a large share of engineering talent; but in Britain,

skilled artisans were hired mostly by the private sector, which generated more efficient output.

Unlike in France, "the state was not the enemy" of the people in Britain. Third, the French

Revolution and the Napoleonic war destroyed production capacities and distorted the allocation

of resources in continental economies; and the Continental System disturbed British trade with

continental countries. However, the British environment was safer and more peaceful than the

Continent to develop agriculture and to promote industry during the century.



Figure II-2-1. Newcomen’s Steam Powered Atmospheric Engine, 1712 https://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Newcomens_Dampfmaschine_aus_Meyers_1890.png/170

px-Newcomens_Dampfmaschine_aus_Meyers_1890.png

Photo II-2-1. Mount Savage Oron-Works http://www.mountsavagehistoricalsociety.org/Iron%20Works/Iron%20Works.GIF

https://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Newcomens_Dampfmaschine_aus_Meyers_1890.png/170px-Newcomens_Dampfmaschine_aus_Meyers_1890.png

https://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Newcomens_Dampfmaschine_aus_Meyers_1890.png/170px-Newcomens_Dampfmaschine_aus_Meyers_1890.png

http://www.mountsavagehistoricalsociety.org/Iron%20Works/Iron%20Works.GIF



British Leadership of Industrialization: The first industrial revolution is largely confined

to Britain in the period 1760 to 1830. Why was it led by the British? First, in the demand side,

the population of England and Wales tripled during 1751-1851, which generated a tremendous

demand for eating, clothing, housing, and other necessities. The agricultural revolution created the

surplus of farm production as previously discussed, and the rising profits allowed them to purchase

more manufactured goods. The emergence of the middle class, who lived above the level of

subsistence, generated demand for manufacturing goods: “More and more people drank tea and

chocolate, sweetened them with sugar, smoked pipes, ate spicier mutton and beef from ceramic

plates, and dressed in fancier clothes made from imported fabrics.” Thus, the so-called consumer

revolution clearly preceded the Industrial Revolution. In addition, overseas markets in America,

Africa, and the Far East were crucial for them to export manufactured goods for raw materials.

Second, in the supply side, industrial output is expanded by mobilizing more input and by

improving productivity with technological advances. A rapid growth of population in the second

half of the century provided a pool of unskilled labor for new factories; and a relatively large

number of skilled mechanics and technicians was available. Business investments were financed

by an effective central bank and well-developed and flexible credit facilities as well as security

markets buying and selling stocks and bonds – its formal building in London known as the Stock

Exchange was opened in 1773. The rich mineral resources, such as coal and iron ore, were largely

available for the manufacturing process. The adoption of new technologies through invention and

innovation was essential for industrialization: the rapid mechanization of the cotton industry, the

new process of smelting iron ore with coke, and the invention of steam engines with continuous

improvements; which made a breakthrough toward industrialization. No destruction from the

Napoleonic war and inflow of skilled foreign artisans due to religious causes or other reasons

positively contributed to industrial production.

Third, in the market side, the British government protected private property and provided a

favorable market environment through an effective intervention with fewer restrictions, lower

trade barriers, lower interest rates, or lower taxation to encourage business activities. The British

abandoned mercantilist protectionism and embraced free trade policies, which stimulated her trade

volume doubled during 1700-70. Foreign trade often made importers first copy and then improve:

"travelling overseas, reading foreign books in translation, hosting foreign visitors, all the while

learning how foreigners made things" which gave them technological or structural inspirations.

The British became to know that free trade was not a zero-sum but a positive-sum game that

benefited both sides of trade partners taking comparative advantages as David Ricardo theorized.

But the British could not entirely escape from mercantilist policies imposing heavy tariffs on

certain imports. Moreover, colonial markets were significant for some industries over the course

of the eighteenth century, so that protection measures were applied for her imperial interests.

Fourth, in transportation and communication, Britain improved roads and developed new turnpike

with better-designed and lighter carriers, which reduced transport cost by over one-half according

to the cost index from 100% in 1700 to 46.4 % in 1799. They utilized rivers and constructed

canals, and renovated harbors and constructed the dock system for coastal and cross-channel

shipping, though the ocean shipping sector was relatively late. Farm transport was upgraded by

replacing two-wheel carts with four-wheel wagons carrying much heavier loads. Better transport

saved time and labor, which made farm products flow rapidly into London and other cities in

Britain with lower costs. After the appearance of the railway, though it became practical decades

later, the cost of transportation rapidly declined. Thus, above factors led the industrial revolution

in Britain, among which numerous mechanics and technicians contributed to inventions and

innovations pulling industrialization as the main engine.



Patterns of Demand: The consumption demand is determined by the level of available

wealth "which is a function of climate, of geography, of the level of technology and the degree of

industrialization and of the kind of economy practiced." It is also essential how wealth was

distributed, "which depends on social structure, population pressures and other matters, and the

pattern of spending, which can be influenced by fashion and social custom, by the distribution

between private and public expenditure, and by other factors."30 Geography and climate affect

the demand for eating, clothing, housing, and even tools. People usually eat food available in their

home stations, to which their tastes are attached. Clothing and housing are also adjusted to the

regional environment, either cold or hot. "To a large extent, factor endowment imposed a control

upon what could be done, but the individual or collective skills of particular communities gave

their products" for them to overcome their distinctive constraints. Industrialization and

technology: The spread of industrialization with better technology brought a range of attractive

new products to the market, which transformed the patterns of demand. In the first phase, new

processes in textiles and in iron and steel increased output and reduced costs; and markets were

extended by improving roads, constructing canals, and developing shipping. The agricultural

revolution increased crop yields, the number of cattle, and their average weight, which supplied

more grain and meat. Since industrial products were capital-intensive, the share of investment

increased while that of consumption declined among the gross national product. Population and

urbanization: The European population grew from 140 to 266 million souls during 1750-1850,

which increased demand for food and other necessities and raised their prices, which not only

stimulated agriculture and industry but also changed the demand patterns. The rising population

pressured on resources, which expedited urbanization and migration to foreign countries; while

both central and local governments provided such services as piped water, sewage and garbage

disposal, public health facilities, urban transport and housing, and so on.

The articulation of the market: The transport improvements extended the size of markets,

increased the volume of commodities, and reduced their prices. The growth of towns expedited

the emergence of a considerable urban working class, increased the demand for food, clothes, and

other necessities, and established a new structure of retailing in the market. The retailing

revolution was expedited in the nineteenth century by wholesalers, regional chains, department

stores, and the bazaar-type chain stores, affecting the patterns of demand. Fashion and social

custom also affect demand patterns. The initial vogue for tea and coffee was a matter of fashion.

The purchase of luxury clothes, the style of housing and furniture are based on individual tastes.

Paris had been the center of upper class fashion, and "the high-born and well-to-do in other

countries did their best to emulate the French in style, color and fabric....Their purchasing power

formed the basis of their competitive emulation." The old landed aristocracy had a high leisure

preference like sports, hunting, shooting, and fishing. The Role of Government: The government

action affects consumption in a number of ways. Spread of free trade reduced prices of imports

and changed the demand patterns in Britain; and agricultural protection in France and Germany

was against the interests of consumers. Taxation affected income, so did patterns of demand. The

expansion of government spending reduced the share of private spending since the standing army

was established: the Napoleonic Wars mobilized the armies and navies, which created an

enormous demand for certain commodities with an expansion of military expenditures. Rising

income: the growth of wealth in Europe was slow during 1500-1750. The agricultural and

industrial revolutions created jobs and accelerated the growth of real income in Britain followed

by Belgium, France and Germany, although there was marked inequality in the distribution of

income by region. The increasing wealth with the new bankers, industrialists, and merchants

affected the patterns of demand and reshaped the social stratification.



A survey on budgets of 127 families of agricultural workers in Britain during 1787-1793 show

that "food accounted for about 70 percent of expenditure, clothes for about 10 percent, rent and

fuel for another 8 percent, leaving 10 percent or so for medical care and other needs."31 Food was

a major item in the expenditure of the population of Europe in this period. "In the poorest parts

of Europe, in Ireland, Spain, Italy and Sicily, Bulgaria and Russia, their basic food consisted of

maize porridge or rye bread and vegetables (potatoes, cabbage, turnips, beans and onions), water,

tea or coffee, some alcoholic liquor depending on the locality and meat was taken but rarely ....

Wine was drunk in southern Europe with beer in the north and cider in Brittany and parts of

England." Cheeses, eggs, milk, and butter were supplied to towns from the countryside: French

peasants supplied cheeses to the armies fighting in Italy and Germany in about 1698, and those

were vital foodstuffs throughout Islam as far as Indies. Europeans were largely carnivorous, but

fresh, smoked and salted fish were important for religious feast. Europe had had a very old passion

for spices - pepper, cinnamon, cloves, nutmeg, and ginger. The sugar consumption was very

limited in the eighteenth century, but gradually increased. The tobacco plant was cultivated in

Spain in 1558 and spread rapidly to France, England, Italy, the Balkans, and Russia; and its

industry was commercialized by monopoly of governments. The clothes touch such issues as "raw

materials, production process, manufacturing costs, cultural stability, fashion and social

hierarchy." The rich spent money for luxurious dress, but the poor peasants and town workers

were extremely plain and modest. It was observed that many French peasants were badly dressed

and their rags could not adequately protect them against harshness of the seasons, but some years

later a large number of peasants were wearing woolen clothes. The industrial revolution brought

cheaper fabrics: "cotton yarn is cheaper than linen yarn; and cotton goods are very much used in

place of cambrics, lawns and expensive fabrics of flax; and they have almost totally superseded

the silks." Cotton was more easily washable than wool, which was its great advantage.

In housing, many people in every part of Europe lived in primitive conditions in this century

often without windows and with floors of beaten earth. "In Russia the huts were of timber, in

Ireland of sod, in Portugal of stone, in England depending on the area of brick, of stone, of wood

or of dried mud." The housing of the rural poor underwent with little change in this century. The

rising population and urbanization required quickly built houses - the barracks, and the British

designed back-to-back houses. The growing urban middle class favored expanded spaces from

modest town houses, and the water supply and sanitation were better in conditions of country

dwellers than of the poor in towns. Cold weather was a public disaster: in Paris in 1709, "the

people died of cold like flies" in the absence of heating. In about 1720, the chimneys were built

and the roads were cluttered by thousands of carts carrying wood. In Germany, there was no

chimney, but one fireplace was available in the kitchen. The large cast-iron stove appeared by the

end of the eighteenth century. In labor and services, in London in about 1700, household servants

formed 17 percent of the population. "In 1801 there were 600,000 domestic servants in Britain

while in 1851, out of a total population of 21 million, 905,000 women and 134,000 men were

employed in domestic service, forming after agriculture the largest occupational group." There

was also a demand for leisure services like festivals, private entertainment, theatre, opera, ballet,

sports, gambling, and so on. In capital goods, industrialization involved in capital demand for the

power supply, equipment, and buildings for business operations. More than 1200 steam engines

were in operations in Britain by 1800; machine tools were developed for textile mills for speed,

flexibility, and precision; and buildings were needed for manufacturing and distribution. The

Europeans needed more capital investment for the social infrastructure - roads and bridges, hotels

and inns, public utilities like water, sewage and refuse disposal, gas and electricity; which were

absolutely and increasingly necessary in the process of industrialization.



The Textile Industry and Technology: Britain imported some 2.5 million pounds of raw

cotton in 1760 to feed the industry existing with the linen manufacture; and rose to 22 million

pounds a generation later in 1787. However, in a half century later, Britain imported 366 million

pounds of raw cotton, and the industry became more important in value of product, capital invested,

and numbers employed in the kingdom. The industrial transformation came from the introduction

of new machines and the factory system in production. The oldest pre-factory form was the craft

shop independently led by master often assisted by one or more journeymen and apprentices: the

artisans purchased raw materials, produced final products, and sold them to a small number of

local consumers. In the cottage system, "farmers might take in extra sewing or make cloth,

which was then sold to a larger retailer, in order to earn a few extra dollars during the slow

months of winter." Wishing to produce more and sell them in distant markets for more profits,

they needed the intermediary - merchants linking production to consumption in the market, which

introduced the domestic or putting-out system spreading widely in Western Europe, where

"merchant-employers 'put-out' materials to rural producers who usually worked in their homes but

sometimes labored in workshops or in turn put out work to others. Finished products were returned

to the employers for payment on a piecework or wage basis, while the workers neither bought

materials nor sold products; which increased efficiency due to lower wages and a more extensive

division of labor within the craft.32 The factory system replaced the domestic system in the second

half of the eighteenth century: the use of waterpower and then the steam engine mechanized the

processes of the textile industry, and standardization of products invited interchangeable parts in

the manufacture, through which a mass production was possible by relatively unskilled labor who

could complete finished products. For example, a part of any musket could be replaced by the

same part of any other musket of the same design.

Before cotton, the woolen and worsted industries were spread widely throughout Britain: the

input of raw material into the industry had increased by 14 percent per decade during 1741-72;

and the export proportion of wool textile to America rose from 25 to 40 percent during 1770-1800.

The industry was expanded rapidly owing to better quality - finer merino fabrics with silk

decorations, and a lower cost - 8 to 10 percent less than other west countries, while its weavers’

wages in 1760 were 40 percent lower.33 The woolen and worsted industries were complemented

by the manufacture of knitted yarn stockings for ordinary people: the number of yeoman knitters

in villages increased, but the industry was rapidly urbanized. Both industries were operated in the

water-powered mills, and the manufacturing processes were generally incorporated into the

putting-out system with existing artisans. Silk was a luxury industry produced by highly skilled

artisans; its ribbon weaving was important from the beginning of the nineteenth century; and the

industry was dominated by only a dozen families, and a small number of master manufacturers

controlled the business at least until 1812. The linen industry has a long history of a small-scale

production for localized markets, but a rapid increase appeared in the colonial demand for slaves'

clothing, coffee and indigo sacks, and mattress covers, as well as in the domestic demand such as

table cloths and napkins, towels, bedding, furnishings, and clothing. The linen flowered between

1740 and 1790 under trade protection, and grew together with the cotton industry due to its skilled

labor force. The increasing demand for calio-printing with popular fashion brought great pressure

on the cotton spinners to produce the finest possible fabrics. “The cotton industry developed

through a combination of dispersed and concentrated, factory and putting-out, forms of production

employing a complementarity of mechanized and hand technologies. But in spite of factories, a

substantial amount of spinning, both of high and low counts, was still carried out at home, or in

very small factories.” The textile industry was always the leader of the Industrial Revolution

towards the factory system with new technologies.



The textile industries relied on two basic crafts of spinning and weaving. John Kay (1704-79)

received a patent for the flying shuttle in 1733, which was an improvement to looms that enabled

weavers to weave faster. In previous looms, the shuttle passed through the threads by hand, wide

fabrics required two weavers seated side by side passing the shuttle between them. “Kay mounted

his shuttle on wheels in a track and used paddles to shoot the shuttle from side to side when the

weaver jerked a cord. Using the flying shuttle, one weaver could weave fabrics of any width more

quickly than two could before.”34 Being attacked by textile workers who worried about the loss

of their jobs by his invention, Kay left Britain for France where he died in poverty in 1780.

Richard Arkwright (1732-93) patented the water-frame spinning machine in 1769, which guided

the four threads coming from the roving bobbins onto the flyers through the rollers; that could

make cotton thread thin and strong enough for the warp, or long threads, of cloth.35 Forming a

partnership with local businessmen, he set up a mill powered by horses, but converted to water

power and built a new mill. “Because the water frame operated with water power was heavy and

expensive, it led directly to the factory system on the model of the silk industry. The factories,

however, were built most often near streams in the country or in small villages, so that they did

not result in concentrations of workers in the cities.” He worked at the mill until his death. James

Hargreaves (1720-78) invented a spinning jenny, a hand-powered multiple spinning machine in

1764, but he did not obtain its patent until 1770. The thread passes from the roving bobbins

through the clasp to the spindles. These are rotated by bands from the roller, which is turned by

the large wheel. The jenny received several improvements, soon after it came into use. “The

water-frame produced a strong, well twisted yarn suited for hosiery and the warp of cotton goods.

Jenny-spun yarn was at first used for warp and weft, but proved more suitable for the latter.”36

The machine replaced the handloom weavers in large numbers.

Samuel Crompton (1753-1827) invented the spinning mule during 1774-1779, combining

elements of the jenny and the frame. “He combined the rollers of the water-frame with the

movable carriage of the jenny by placing the spindles on the carriage and the rollers where the

spindles had stood in the jenny. The spinner drew back the carriage at the same rate as the rollers

gave out the sliver, until about five-sixths of the whole distance had been traversed. Then the

rollers were stopped and made to act like the clasp on the jenny, while the carriage continued to

recede at a much slower rate and the spindles continue to twist. At the end of the stretch the

spindles were turned a few times in the opposite direction to disengage the yarn.”37 The mule

could spin finer and stronger yarn than any other machine so that it became the most popular

instrument for cotton spinning. Adopting steam power in about 1790, it favored the construction

of huge factories in cities where coal was cheap and labor was plentiful. The new spinning

machines caused the pressure to balance spinning and weaving for mechanization. Edmund

Cartwright (1743-1823) was a clergyman who had watched the long agonizing death throes of the

hand-loom weaving industry in England, that made him patent the first power loom in 1785, which

was one of the key steps in the mechanization of textile manufacture.38 He set up a factory in

Doncaster, England which was mechanically operated by steam power for weaving, but his

ignorance of industry and commerce made him close the factory in 1793. Deeply in debt, he

moved to London in 1796, where he worked on other invention ideas, but none proved workable.

Despite many minor difficulties hindering the progress of mechanical weaving, a large number of

factory owners used a modified version of his power loom in the early part of the nineteenth

century, while machinery began to replace the handloom weavers in large numbers. The

Parliament voted for his compensation of £10,000 “in recognition of benefits conferred on the

nation through his power loom” in 1803. The innovation of spinning and weaving along with

power engine contributed to the rapid expansion of the cotton industry in Britain.



Iron and Steel and Technology: In addition to the mechanization of the textile industry, two

other innovations were essential for the first industrial revolution: the process for smelting iron

ore with coke that freed the iron industry from reliance on charcoal, and the atmospheric steam

engine that supplemented and eventually replaced wind- and water-mills as sources of power. The

mining of metallic ores and of coal have many commons but differ in two major respects: mineral

deposits tend to follow a near vertical course, but coal deposits are usually horizontally extended;

the coal miners concern about the possible existence of explosive and poisonous gases or dust, but

the metal miners do not encounter this kind of problems. During the late eighteenth and early

nineteenth centuries, there were metal-mining activities in Britain, Sweden, Bohemia, and Spain.

“Up to the time of the industrial revolution, the demand for the base metals had been limited to

the requirements of agricultural communities and the demands of war, but once new uses for such

metals became apparent, there was a rush to find new sources of raw materials.” Many of most

famous deposits were found by chance, and the limiting factor in mining below the surface was

water, which was the chief obstacle to further expansion of output. When water-power was

available, water-driven whims were used to draw water in barrels to the surface. Water-wheels

were also used where circumstances allowed. If water-power was not available, steam engines

were extensively used to pump out water from the mine. On the other hand, coal mining had been

well established in Britain and Western Europe by 1750. The invention of steam engine had little

effect on coal-mining, except for machinery on the surface, especially for pumping, hauling, and

hoisting. Around 1800, all coal was loaded on to wheeled trams except in a few isolated cases,

and the use of mechanical haulage became more common after 1820. The use of safety-lamp and

ventilation reduced the explosion of mine-gases. By making two roads into the mine - one for air-

in and the other for air-out, an air pump sucked gases out of the mine, which was the first

mechanical ventilator invented in 1807 desperately useful for coal mining.

Abraham Darby (1677-1717) heated coal in a closed oven of brick to get coke, almost a pure

form of carbon, by eliminating the sulfur content of raw coal; which was a similar method to

produce charcoal from timber.39 In 1709, he was successful in smelting iron ore in a coke-fired

blast furnace to produce pig iron. Since coke was available at a so much lower price and less

friable than charcoal, it was possible to use large furnaces with the stronger blast; which could

produce thin castings that competed with brass in such applications as the manufacture of pots and

other utensils. Iron casting was common in use of sand molds: a pattern of the required shape is

placed in a two-piece molding box and firmly packed in sand that is held together by a bonding

agent. After the sand has hardened, “the molding box is split open to allow the pattern to be

removed and used again, and then the box is reassembled and molten metal poured into the cavity

to create the casting.” Since the coke-smelting iron was superior to the iron produced from

charcoal-fired furnace, his products were competitive in the market. But “Pig iron made by

smelting with coke was defective on account of the brittleness caused by impurities; it could be

sold only because of its cheapness.” The coke-smelting iron from the blast-furnace was greatly

improved in terms of homogeneity and purity by adopting the foundry furnace (Cupola), which

was invented by William Wilkinson (1744-1808) who obtained a patent for a small blast furnace

in 1794.40 Since the coke-smelting required a stronger air-blast for which water-power was

insufficient, a steam engine was first used for the foundry furnace in 1776. The substitution of the

steam engine for the water-wheel raised the output of the blast furnace and developed the

capabilities of rolling- and slitting-mill. The next was the application of steam-power to forging:

the first forge-hammer driven by a steam-engine could strike 30 blows a minute in 1782. The

number of coke-fired furnaces was no more than 17 in operations in 1760, but increased to 81 out

of 106 blast-furnaces operated with coke in Britain by 1790.



Pig iron made by smelting with coke was not suitable for conversion into wrought iron

because of impurities, which problem was resolved by Abraham Darby II (1711-63), but nothing

is known about technique he applied. Henry Cort (1740-1800) developed the puddling and rolling

processes.41 First, he obtained a patent in 1784 for the conversion of pig iron into malleable

wrought iron by puddling, which process consisted of “stirring molten pig iron on the bed of a

reverberatory furnace.” The puddler stirred the molten mass through the decarburizing action of

air which circulated through the furnace until it became converted into malleable iron. Second,

he invented grooved rollers patented in 1783. “Previously, bars had to be made by hammering, or

by cutting hot strips from a rolled plate with a slitting-mill. With grooved rollers 15 tons of iron

could be dealt with in 12 hours, whereas it was difficult to produce one tone in the same time with

the forge-hammer.” Cort achieved the simplification by combining the two processes, which

resulted in the lower cost of production. By around 1800, his success made Britain expand the

production of wrought iron to more than 200,000 tons a year, virtually all coke-smelted, making

them a net exporter of iron and iron wares. On the other hand, Benjamin Huntsman (1704-76)

found a method by which steel could be produced in a molten state.42 “He melted bars of blister

steel, with the addition of fluxes, in closed clay crucibles; the intense heat necessary was generated

by coke. The two crucibles were placed in a chamber lined with fire-brick. The top of the furnace

was closed by a cover of fire-brick, which was level with the floor of the melting-house. A vaulted

cellar gave access to the ash-pit.” His process was less complex than the previous method, which

reduced the cost and increased output of cast steel; however, which could not be welded “since it

would not bear more than a red heat (c 900o C).” While cast iron remained superior to other

materials for the construction of ordnance, attempts were made to substitute cast steel (carbon

content lower than 2%) for cast iron (cc upper than 2%) in manufacturing artillery.

The Swedish metallurgist T. O. Bergmann (1735-84) and the French chemist Guyton de

Morveau (1737-1816) arrived at the same conclusion from experiments that “the conversion of

iron into steel was due to its combination with carbon.” The great inventions and improvements

brought a revolution in the iron industry by around 1800. The end of the Napoleonic wars in 1815,

however, affected the demand for war material to fall to the bottom, but after 1830 the

industrialization stimulated the production of iron. James Beaumont Neilson (1792-1865) was a

Scottish inventor who obtained a patent in 1828 on the hot-blast process.43 He realized that the

force of the blast could be increased by passing hot air, rather than cold air, through the red-hot

vessel; which reduced the amount of coal required to make iron, and greatly increased the

efficiency of smelting iron production to meet steel demand for the railway and shipbuilding

industries. The hot-blast process allowed that the same amount of fuel could produce three times

as much iron as before, and that the same amount of blast acted twice as powerfully as a cold blast.

The use of a hot blast had become general in Britain by 1835, and his invention expanded the

output of iron. “Application of hot blast not only made it possible to smelt a greater quantity of

ore with the same amount of fuel but also to build larger furnaces. A further advantage was that

with the higher temperature generated by a hot-blast not only coke but raw coal could be used as

a fuel.” It was an important source of fuel to use the anthracite coal to the blast furnace for smelting.

There had been continuous innovations of the blast furnace. The circular shape of the furnace was

introduced to save fuel and to increase output of metal, which was accepted and put into practice

by 1832. The mouth (aperture) of the blast furnace had been left open to make gases escape; but

attempts to utilize the waste gases were made, and the first practical success was achieved in 1832.

44 “The gases were taken off the top of the furnace and conveyed through pipes to the hot-blast

stoves.” Improvements extended to the forge and to the practice of making malleable or bar iron,

which technology will be further discussed in Book V.



The Steam Engine and Technology: In Western Europe, both watermill and windmill had

been the main sources of motive power for many countries. Roman engineers developed the

Vitruvian mill with a vertical wooden wheel on a horizontal axle, producing up to about 3 horse

power.45 It was constructed in two forms: the undershot wheel dips into a river so that water

flowed underneath and turned the paddles, and the overshot wheel regulated a stream of water

directed on to the top of the wheel. In the feudal times, the manorial watermill was a valuable

source of income for the lord, while numerous watermills were owned by monasteries and priories

or private individuals. In 1539, John Fitzherbert wisely confirmed “that more power can be

produced by breast and overshot wheels, if their buckets are well filled, than by undershot wheels.”

With the breast wheel, water flowed into the buckets just above or below the level of the horizontal

axle - it was a type intermediate between the undershot and overshot wheels. John Smeaton (1724-

92) contributed to the improvement of water wheels through many designs and experiments.46 In

1769 the cast iron axle was made to replace the wooden one. In the earlier phase of the industrial

revolution, water - not the steam engine - was the main source of power, while the windmill was

not a prime mover, though it played an important part in certain districts like on the coasts of the

North Sea and the Baltic. “In the eighteenth century no factory could be established far from a

stream powerful and swift enough to work its machines. Mill-owners therefore crowded in narrow

valleys, where an artificial fall could be secured by using dams. This continued as long as water

was the driving-power of machinery, but the introduction of steam gradually brought industrial

ruin to those districts where no coal was available locally.” In around 1750 the combined use of

steam engines and water-wheels was common everywhere. In Britain, energy output of water-

wheels was seldom better than10 hp, and on the average only 5 hp.47 Even when output of steam

engine rose above 10 hp in average, it did not quickly replace the water-wheel that continued to

play an important source of power until at least 1850.

The coal mines and iron industry promoted the development of steam engines. Scarcity of

charcoal and limitation of water-power were economic threats to the iron industry, so numerous

attempts were made to overcome the limit of wood and water. Steam power could resolve those

limits, but certain factors prevented the rapid displacement of the new machine. The machine-

builders needed skilled engineers, while their engines were built by a miscellaneous collection of

blacksmiths, wheel-wrights, and carpenters, who should be trained for necessary specialization

with precision works. The real development of the steam engine into a stronger prime mover

appeared during 1800-50. Thomas Savery (1650-1715)48 designed a piston-less steam pump in

1698 which brought two key contributions: “First, in order to allow the water supply to be placed

below the engine, he used condensed steam to produce a partial vacuum in the pumping reservoir,

and suing that to pull the water upward. Secondly, in order to rapidly cool the steam to produce

the vacuum, he ran cold water over the reservoir. Operation required several valves.” Though

expensive and inefficient, his engine helped to pump out water out of mines. Thomas Newcomen

(1663-1729) designed an atmospheric engine in 1712. “Newcomen used the vacuum to pull on a

piston instead of pulling on water directly. The upper end of the cylinder was open to the

atmospheric pressure, and when the vacuum formed, the atmospheric pressure above the piston

pushes it down into the cylinder. The piston was lubricated by a trickle of water from the same

cistern that supplied the cooling water….The piston was attached by a chain to a large pivoted

beam.”49 When the piston pulled the beam down, the other side of the beam was pulled upward.

By 1725, his engine pumped out water out of the mines, and raised water for operating water-

wheels to drive machinery.50 John Smeaton (1724-92) improved the Newcomen engine: to transfer

power off of the cylinder, he used wheels instead of beams, which made the machine more

compact. He built dozens of larger engines into the 100 horse power range.



James Watt (1736-1819) was a Scottish instrument maker and inventor, whose steam engine

substantially contributed to the industrial revolution.51 Learning enough to be a journeyman, he

opened a workshop in a college building of Glasgow in 1757. Repairing a model of Newcomen

steam engines, Watt realized that the loss of latent heat of steam was the worst defect of the

Newcomen engine, and that therefore “condensation must be effected in a chamber distinct from

the cylinder but connected to it.” In 1769, Watt obtained a patent for A New Invented Method of

Lessening the Consumption of Steam and Fuel in Fire Engines. The essential part of this patent

was the use of a separate condenser52 that could save 75 percent of fuel used for the similar

Newcomen one. The operation of the engine was as follows. “When the piston was at the top of

its stroke, the exhaust valve was opened to produce a vacuum beneath it, and the inlet valve was

simultaneously opened to admit steam above it. The piston was then forced downwards by the

atmospheric pressure and the pressure of the steam. When the piston reached the lower end of its

stroke the inlet and exhaust valves were closed and the equilibrium valve was opened. The piston,

having then an equal pressure on each side, was pulled up again to the top of the cylinder by the

weight of the pump-rod.” Watt and Matthew Boulton entered a partnership which lasted 25 years:

his financial support made rapid progress in commercial production of steam engines, which were

attractive due to greater fuel-efficiency of their engines. In later improvements, it was possible to

use the motion of the beam to turn a wheel by transforming the action of the beam into a rotating

motion to connect the beam to a wheel by a crank; which allowed the steam engine to replace the

water wheel and horses as the main sources of power in British industry.53 Most of their early

engines were used for pumping mines, where coal was expensive; but after improving power

transmission to the wheel, the use of engines was extended to flour milling and cotton spinning,

which greatly contributed to the industrial revolution in Britain.

The main problem of the Watt's engine, despite the enormous improvements, was in his

opposing "to seam-pressure higher than a few pounds above atmospheric, because of supposed

danger." The first progress was made almost simultaneously by Richard Trevithick (1771-1833)

in England and Oliver Evans (1755-1819) in the United States. Trevithick jointly with his cousin

obtained a patent for Improvement in the Construction and Application of Steam Engines in 1802

and built an experimental pomp engine of the beam type, which was resistant to the pressure of

145 lb per square inch.54 "The boiler was of cast iron with a diameter of 4 ft and a thickness of

1.5 in; the cylinder was 7 inches in diameter with a 3-ft stroke....The next year he built another

steam-carriage with a single cylinder and a pair of 8-ft wheels driven by gearing. It would carry

eight or ten passengers, and made several trips in London." Trevithick built another steam-

locomotive "to draw a load of 10 tons over the 9 3/4 miles of cast iron tramway" and its trial in

1804 was successful. The engine weighed about 5 tons without water and pulled much more load

than expected, which was the first self-moving machine "to travel on a road with 25 tons at four

miles per hour, and completely manageable by only one man." His engines were used for driving

sugar-mills, corn-grinding, pumping water, and rolling iron. Arthur Woolf (1776-1837) improved

engines "by adding a high-pressure cylinder to an existing Watt engine." William Symington

(1763-1831) developed "a horizontal double-acting cylinder 22 inches in diameter by 4-ft stroke,

driving the crankshaft of a paddle-wheel directly through a connecting-rod in 1801. Henry

Maudsly (1771-1831) developed the table engine patented in 1807 that came into extensive use:

"In this engine a vertical cylinder stood at the centre of a small cast-iron platform, its piston-rod

carrying a cross-head having wheels running between vertical iron guides. A pair of connecting-

rod from the ends of the cross-head drive a crank-shaft running on bearings beneath the platform"

which engine was widely used in small factories for at least 40 years. George Stephenson (1781-

1848) built a better engine used on the first railway line.55



The Chemical Industry: From the mid eighteenth century, the chemical industry became

more important in industrial life. Rising demands for such commodities as glass, soap, soda, dyes,

and textiles led to an intense experimentation; which greatly improved in “the methods of

manufacturing such fundamental substances as the mineral acids and the common alkalis.” In the

seventeenth and eighteenth centuries, scientists investigated physio-chemical characteristics of

gases like reacting in volumes at the same temperature and pressure. A French chemist, Antoine

Lavoisier (1743-94) stated the law of conservation of mass in 1789 that “the total mass in a

chemical reaction remains constant.”56 He framed the word oxygen, meaning acid-producer in

Greek, since the products of combustion of sulfur, phosphorous, and carbon in the moist gas

proved to be acid. Henry Cavendish (1731-1810)57 observed “that when oxygen and the gas we

now know as hydrogen were sparked together, water was formed.” John Dalton (1766-1844)58

shaped the chemical atomic theory assuming “that all matter is composed of a vast number of

extremely minute particles or atoms, and that chemical analysis and synthesis are nothing more

than the separation of particles from one another, and their reunion….each element has its own

distinctive kind of atom, and similarly each compound has its own distinctive kind of compound

atom, or molecule as we now say.” He knew of carbonic oxide (CO) and carbonic acid (CO2).

Alessandro Volta (1745-1827), an Italian physicist, announced his invention of the voltaic pile or

electric battery in 1801 which became an indispensable part of equipment in a chemical laboratory.

Humphry Davy (1778-1829) in 1807 advanced a hypothesis that chemical and electrical

attractions are essentially identical, and expressed his belief that many substances might possibly

be decomposed if a sufficiently powerful current were passed through them.59 In 1832-3 Michael

Faraday (1791-1867) proved that any individual product liberated in electrolysis is directly

proportional to the quantity of electricity passed through the electrolyte.60

The chemical industry interacted with the industrial revolution, largely in response to social

needs. Furnace techniques were important for transformations of the metallurgical, glass, and

pottery industries. The manufacture of glass and pottery was established form China to the Baltic,

while craftsmen learned how to take raw materials to transform in the furnace and select the other

materials such as “plant-ashes to supply alkali, sand to supply silica, and clays with the proper

rheological properties.” Their use of fire techniques was accumulated in “tanning, involving

knowledge of aluminum salts, and the production and use of mordants and dye-wares.” Among

substances, soda and potash, mild alkalis derived from plant-ashes or from natural deposits until

1787 when Nicolas Leblanc (1742-1806) decomposed common salt by sulfuric acid with the

production of sodium sulfate. “This in turn was mixed intimately with chalk and charcoal and

heated in a crucible. The resulting black ash was leached with water and the resulting soda

recovered from the solution by evaporation.” This process was commercially applied in Britain,

and this artificial soda was used in manufacture of soap, glass, paper, paint, pottery, and other

products.61 Sulfuric acid was made from 10 percent of the weight of green vitriol, and was used

either for pickling and cleaning metals, or for removing silver from copper. John Roebuck (1718-

94) and Samuel Garbett (1717-1805) created their enterprise to produce sulfuric acid:62 they

imported sulfur from Leghorn and bought saltpeter from the East India Company, and exported

sulfuric acid to Holland. While the textile industry needed bleaching, dyeing, and printing;

experiments on bleaching suggested the use of dilute sulfuric acid in place of the traditional sour

or butter-milk in 1754. The Swedish chemist C. W. Scheele (1742-86) in 1774 and the French

chemist C. L. Berthollet (1748-1822) in 1785 discovered chlorine, a powerful bleaching agent.63

Charles Tennant (1769-1838) took a patent in 1789 for the production of a liquid bleach made

from chlorine and a sludge of slaked lime.64 In addition to the introduction of new dye-wares,

chromium compounds65 increased the range of color-effects with the improved dyeing process.



Gas was used for light and heat. Ever since gas was discovered in the late sixteenth century,

natural inflammable airs had attracted the attention of chemists and many others. There was an

explosion of coal-gas that was too dangerous for common use. Discovering hydrogen in 1766,

Henry Cavendish generated it by the application of dilute sulfuric acid to chips of iron or zinc. In

1780 F. L. Ehrmann suggested lamps using hydrogen as an illuminant by squeezing from a bladder

through a narrow pipe and ignited by and electric spark. In 1821 Charles Green used coal-gas for

balloons burned with a beautiful flame. About this time, rudimentary experiments were made in

gas-lighting. Johann Georg Pickel (1751-1838) lighted his laboratory with gas in 1786, and

several others did the same. Philippe Lebon (1767-1804) conducted experiments on a large scale

in a house and took a patent in 1799 with a sketch of the gas-making plant.66 “Lebon states that

his gas was ready to extend everywhere the most sensible heat and the softest lights and could be

conducted through the smallest and most fragile pipes.” William Murdock (1754-1839)

“investigated systematically the comparative behavior of different classes of coal under conditions

of varying temperature and time of carbonizing” that contributed to commercial application of

gas-lighting.67 As the cost of lamp-oil and candles had risen steeply at the end of the eighteenth

century, any new source of light was attractive if economical and safe. Hence, the incentive to

overcome the difficulties was great in the way of generating, purifying, storing, and distributing

gas. Samuel Clegg (1781-1861) became Murdock’s successful rival in developing gas-lighting.68

“Gas was adopted almost immediately by factories, public buildings, and shops. By 1825,

churches, banks …. half a dozen London clubs were illuminated by gas.” However, gas could not

be applied efficiently “till the atmospheric burner in which a supply of air was introduced into the

gas stream just below the point of combustion was devised, surprisingly late, about 1840.” As the

gas ring was introduced in 1867, gas-cooking became common.

In ceramics, knowledge of porcelain may have reached Mediterranean Europe by the land

route through Persia and Egypt from China.69 Opening trade with Asia, the Portuguese brought

pottery-making knowledge to Europe from Macao. In the seventeenth century, both the Dutch

and the British East India Companies imported oriental wares from China and sold them to the

European markets, which had a profound influence on the technology and on the aesthetics of

European pottery.70 All the operations of pottery works were carried by hand under the primitive

conditions, but gradually power-operated machinery was used to mix the clay and artificial heat

was introduced to dry the molded. Abundant forest in northern Europe provided sufficient fuel to

enable the kilns for the stoneware to be heated to 1200-1400o C. The decoration and glazing

opened up new fields for aesthetic exploration. “In addition to the property of taking up traces of

iron, manganese, and cobalt to form colored glazes, lead glaze has also the useful property that it

can be rendered white and opaque by the addition of tin ash (stannic oxide).” Since the Dutch

greatly imported blue and white Chinese porcelain into Europe in the early years of seventeenth

century, its town Delft became a dominant center of European pottery production.71 Chinese

porcelain had a high quality and whiteness not previously known in Europe; to emulate such

excellence, “Dutch potters turned their attention to the more careful preparation of their clay and

to the quality of their glaze, and this new degree of refinement affords a technical distinction

between maiolica and delft.” However, a similar quality of wares was being produced in several

towns in Britain as well as on continent by the end of the seventeenth century. On the other hand,

John Dollond (1706-61) obtained a patent in 1758 for the invention of achromatic lenses;72 and in

1798 Pierre L. Guinand (1748-1824), a Swiss, made homogeneous glass which resolved the

problems associated with the making of optical glass. There had been significant improvements

in mirrors of glass, glass tubing and rod, sheet glass, and cast plate glass. Moreover, great

advances were made in the chemistry of glass coloration during 1750-1850.73



The Spread of Industrialization: The industrial revolution in continental Europe was

substantially slower than in Britain because of unfavorable internal and external conditions.74

Continental countries used resources less efficiently due to material difficulties: they imported the

bulk of wool from abroad and used traditional fuel rather than coal because of the relative

abundance of timber; moreover, they paid more for commercial and financial services such as

insurance, bank credit, and shipping. Their transportation costs were higher than the British since

the size of land was larger; terrain was difficult and roads were bad; waterways in France and

Germany were not developed; and political boundaries of kingdoms, duchies, bishoprics,

principalities, free cities, and other forms of sovereignty created trade barriers by different laws,

courts, coinage, tolls, and customs. Their income and wealth were more unequally distributed

than the British, so that the poor of Europe were far worse off than those of Britain, and their

poverty was far from generating mass consumption of industrial goods. Their custom and law

limited commercial activities of the nobility: European aristocrats heavily depended on the land

ownership, not on manufacture and commerce except mining and metallurgy. The entrepreneurs

tended to adhere to traditional business patterns: firms largely based on the family disliked

competition and avoided risks in investment particularly by borrowing. Old guild restrictions

were more prevalent, which disturbed the price system in the market by encouraging monopoly

and restraining competition. The French revolution and wars brought “capital destruction and

losses of manpower; political instability and a widespread social anxiety; the decimation of the

wealthier entrepreneurial groups; all manner of interruptions to trade; violent inflations and

alterations of currency.” The Continental System was a French embargo to Britain but limitedly

affected the economic life of Europe due to “the autarchy of the different countries.”75 Although

regular communications were recovered by 1815, the British prohibited the transfer of technology

to foreign countries until the mid-nineteenth century.

Jackson J. Spielvogel introduces three significant differences between British and continental

industrialization - borrowing new technology, government subsidies, and the use of joint-stock

companies. First, the initial obstacle to industrialization was lack of technical knowledge. The

British tried to prevent the transfer of technology to the Continent by prohibiting her artisans to

leave the country until 1825 and the export of important machinery and parts, especially for textile

production, until 1842. However, it was impossible for the British to control over this transfer by

legislation: continental countries possessed an advantage simply borrowing British techniques and

practices. “Already by 1825, there were at least 2,000 skilled British mechanics on the Continent,

and British equipment, whether legally or illegally, was also being sold abroad.” In the 1840s,

continental countries established technical schools to train engineers and mechanics. Second, the

role of government was important for continental countries to catch up the British industrialization.

Governments of the Continent “provided for the costs of technical education; awarded grants to

inventors and foreign entrepreneurs; exempted foreign industrial equipment from import duties;

and, in some places, even financed factories….government actively bore much of the cost of

building roads and canals, deepening and widening river channels, and constructing railroads.”

After 1815 when cheap British goods flooded continental markets, the French government

imposed high tariffs to protect their industries. Third, the role of the joint-stock investment bank

on the Continent was significant for industrialization. “Such banks mobilized the savings of

thousands of small and large investors, creating a supply of capital that could then be ploughed

back into industry. Previously, continental banks had been mostly merchant or private banks, but

in the 1830s two Belgian banks….took a new approach. By accepting savings from many

depositors, they developed large capital resources that they invested on a large scale in railroads,

mining, and heavy industry.”76 These were important to the Belgian coal industry.



3. Commerce and Transportation

Commercial activities are basically natural for the people to link producers to consumers in the

market for buying and selling necessary commodities at reasonable or acceptable prices. Adam

Smith introduced a concept of an invisible hand in trade or laissez faire with the division of labor,

and David Ricardo presented the balance of payments theory - trade is mutually beneficial for its

partners by taking comparative advantages.77 But European rulers have not hesitated to take

mercantilist policies to protect home industries or to increase tax revenues. Mercantilism forced

the positive balance of trade, which distorted the allocation of resources, and benefitted landlords,

manufacturers, merchants, or governments at the cost of general consumers. The government

intervention in the market discourages fair competition and encourages monopolies for a small

number of specific interest groups; which reduces the total welfare gain from trade, which must

be an opposite of the government role maximizing services for the people. The mercantilist

position had been the prevailing reality of political economy in Europe until the mid-eighteenth

century, though the degree of their intervention was different from each other. To understand the

coming century, it would be helpful to review the colonial and commercial policies of Spain,

Portugal, Holland, England, and France in the sixteenth and seventeenth centuries.

Mercantilism and mercantile trade laws and policies “provided a constant source of raw

materials and become markets for the manufactured goods to the country that owned them or their

Mother Country. For example, the colonists cut down trees, these trees were sent to England where

craftsmen made furniture, paper, barrels, and tools. These goods were then sent back to the

colonies and sold to the colonists. The money went back to England. This process also helped

England establish a favorable balance of trade. A nation had to sell more products to other

countries than it bought from other countries. Products were sold for gold and silver which helped

build up the treasury for England. To enforce mercantilism England passed the Navigation Acts

(Trade Acts) beginning in 1651. These acts were designed to control trade with its colonies. These

laws forced the colonies to trade only with England. Under these laws the colonies were not

allowed to make any products they could buy from England. In other words, if you needed a barrel

to pack your goods, a cooper in your town could not make or sell you that barrel. You had to buy

the barrel from England. Also, all goods had to be shipped on English ships or ships built in the

colonies. In other words no Dutch, French, or Spanish ships could sell or trade their goods to the

colonies. The colonies were not allowed to sell raw materials or products to them.”78

“England passed other Trade Acts that continued to control colonial trade. The colonists

became increasingly angry as each new Act was passed and began to find ways around these

restrictions. Smuggling and piracy became big business. During the French and Indian War,

England needed the cooperation of the colonies so they did not work hard to stop the law breakers.

After the war England cracked down on the colonies and passed new and more restrictive Acts.

Another way the colonies found to get around trade restrictions was through the triangle trade

routes. To trade with European merchants, the colonial merchants shipped their products to

European ports. There they were traded for goods that were not available in England, such as fruits

and wines. Next, the fruits and wine were traded in England for manufactured goods. Finally the

manufactured goods from England were sold in the colonies. Another triangle trade route brought

African slaves to America. First, colonists traded their products for sugar and molasses in the West

Indies. Ships carried sugar and molasses back to the colonies where they were made into rum. In

the next step, ships carried rum and guns to Africa. In Africa these were exchanged for slaves.

Then slaves were shipped to the West Indies or to the colonies. As this form of trade grew, great

fortunes were made by merchants, slave traders, ship captains, and England.”



Photo II-3-1. The Bridgewater Canal crossing the Manchester Ship Canal opened in 1761 https://upload.wikimedia.org/wikipedia/commons/thumb/6/6c/Barton-on-Irwell_11.05.02R.jpg/170px-Barton-on-

Irwell_11.05.02R.jpg

Photo II-3-2. The Steam Boat, becoming popular for recreation by the late 1800s. Source: http://e97527f0.se/?placement=401698&redirect=1459151298132

https://upload.wikimedia.org/wikipedia/commons/thumb/6/6c/Barton-on-Irwell_11.05.02R.jpg/170px-Barton-on-Irwell_11.05.02R.jpg

https://upload.wikimedia.org/wikipedia/commons/thumb/6/6c/Barton-on-Irwell_11.05.02R.jpg/170px-Barton-on-Irwell_11.05.02R.jpg

http://e97527f0.se/?placement=401698&redirect=1459151298132



The European Trade with Colonies in 1500-1700: Europeans had repeatedly fought over

colonial possessions and commercial monopolies ever since the time of Henry the Navigator.

Spain and Portugal competed for their monopolistic control over South America. The Treaty of

Tordesillas of 1494 specified the line of demarcation in leagues from the Cape Verde Islands;

accordingly, Spain moved to the west and Portugal to the east and lower Amazon.79 The former

conquered and exploited Peru, Mexico, Argentina, Paraguay, and Panama, as the latter entered

Brazil. The Caribbean area was generally ruled by Spain until the Dutch possessed Saba, St.

Martin, and other islands by the Treaty of Munster in 1648. Spanish Jamaica was captured by

Britain, which was recognized by the Treaty of Madrid in 1670; Spain also ceded St. Domingo to

France by the Treaty of Ryswyck in 1697; so that Caribbean navigation and trade was no longer

in an Iberian monopoly. Spain not only controlled the Pacific coast of South America but also

colonized the Philippines, the Spanish East Indies, being administered from Mexico during 1565-

1821.80 In North America, Spain founded St. Augustine in Florida in 1565, though was ceded to

Britain by the Treaty of Paris in 1763, constructed Santa Fe of New Mexico in 1609 and moved

up to the Pacific coast but was overthrown by Mexican nationalists in 1810.81

In Spanish America, the main sources of wealth were haciendas, ranches, and mines; owned

by the rich, many of whom were descendants of old conquerors and settlers. The fiscal relations

between crown and Spanish colonies were such simple and direct as not related to the theory of

mercantilism. “It simply assumed that, since the kingdoms of the Indies were subject directly to

the king of Castile, their duty was to render him tribute. The Spanish crown deliberately and

avowedly taxed its colonial subjects in order to defray its expenses in Europe. Revenue was

chiefly raised not by duties on trans-Atlantic commerce – though there were duties, and stiff ones

– but by taxes levied directly in the Indies.” They paid three types of taxes: alcabala or sales tax,

quinto or silver tax (one-fifth of silver output), and the Indian tributo or a poll tax; which were

collected and supposed to be remitted in silver to Spain, after deductions to meet the cost of

colonial government. The Spanish governments restricted all trade between Europe and the Indies

to officially organized and escorted fleets. The first priority of trans-Atlantic shipping lay in the

safe carriage of bullion to Spain, and all others including industrial and commercial affairs were

always subordinate. It is believed that “Much silver leaked away through the smaller harbors of

the Indies in payment for goods smuggled in by foreign ships.”82

The silver trade between the Americas and Europe and onward to China from 1500 to 1800

had a profound effect on the world economy. “Spaniards traveling west had only gold on their

minds, but they found silver instead. From 1500 to 1800 Mexico and Peru produced about 85% of

the world's silver with 30% of it eventually ending up in China. While this silver came from

Central and South America, it belonged to Europeans exclusively. The Spanish acquired the silver,

using it as a means of purchase which landed it mainly in the hands of the British, who then used

it to purchase the exotic commodities of China. The silver trade marked the era of commercial

capitalism and became the bridge between late medieval and modern times. Despite their best

efforts, by 1759, and because of the changing Atlantic trade seaway, Spain could no longer

compete successfully with England and France in the international economy. Between a medieval

management style and the expanding global economy, mostly through England's commercial and

industrializing economy that was in a phase of rapid expansion and competition on a global scale,

Spain found its empire in various stages of demise and most of the silver that came out of the

Americas went to Europe via trade. This was a time when China was considered novel and exotic

and everyone clambered for anything Chinese, be it porcelain or silks and spices. During this

period the Spanish-Mexican peso became the standard coin throughout much of the world. The

Chinese market for coins set the standard globally.”83



Meanwhile, the Portuguese exploited commercial gains from African coastlines and harbors,

which required professional sailors having seafaring skills and experiences. The monarchy, once

absorbed by Spain in 1580 but was restored by 1640, established trade factories in Guinea all of

which were taken by the Dutch in the 1630s. In Angola, the Portuguese founded Luanda and

Benguela, the principal slaving harbors, which were captured by the Dutch but were recovered in

1648. In Brazil, successfully defending colonial settlements from the Dutch, the Portuguese

secured the shore of South Atlantic in America just like that in Africa. In the late seventeenth

century, they concentrated in Brazil as Guinea was gone, Ceylon and Malacca lost, and Goa in

decline. Their sugar trade was the largest of all the volume of trans-Atlantic trades, and its

shipment to Lisbon was convoyed by organized armed fleets, while the crown imposed duties on

sugar entering and leaving Portugal for re-exports. Soon after, both English and French sugar

planters produced cheaper sugar than Brazilians, and began to compete in the open market in

Amsterdam. The Brazilians imported wine, olive oil, flour, and salted cod from and exported

tobacco, dyewood, and hardwood to Portugal; which were largely shipped by Dutch or English

carriers. In mining, gold was discovered and smelted in the Sao Paulo region, and shipped to

Lisbon; which volume increased from 725 Kg in 1699 to 14,500Kg in 1712.

The territorial division of the West Indies had reached a rough equilibrium by around 1700,

and fitted into the general pattern of foreign relations in Europe with a gradual reduction of

buccaneering. Any irritants to the Caribbean could lead to declaration of war because of serious

financial interests from their colonies: the English and French navies had secured the production

of sugar, tobacco, cotton, and cash crops such as cocoa, coffee, ginger, and indigo in the Indies

and their shipments to Europe. The colonies in North America were less attractive in making

investment profits than those in the West Indies. The English established eleven colonies along

the Atlantic coast of North America, where the Dutch, French, and Spanish joined the trade

competition. Though the Dutch failed in Manhattan, the Spaniards moved into New Mexico and

up to the Pacific coast, and the French connected their settlements in Louisiana with Canada.

Despite the war with the English, the French secured their settlements in North America. While

Spain was on the verge of collapse, Portugal was localized in Brazil, and the Netherlands began

to drop out of the power struggle in Europe; both England and France entered the second phase of

colonial confrontation for territorial expansion and commercial monopolies in North America in

the eighteenth century, particularly at the time of the American Revolution.

Another battleground of European commerce was in the Indian Ocean and the East Indies,

where piracy was common and trade was so dangerous that Europeans needed well-armed ships

with fortified trading posts to protect themselves. Unlike the West Indies, Asian countries had

their own jurisdiction based on a long history of civilization, and the foreigners needed to get an

approval from the ruler to open the trade with them. The Portuguese established the first trade

base at Goa in 1510, and connected a string of trading outposts from Lisbon to Africa, Middle

East, India, Indonesia, China, and Japan by 1571. They monopolized the spice trade of the

Malabar Coast of India and Ceylon, which was exceptionally profitable until the end of the

sixteenth century. The Portuguese government collected over one-half of the state revenue from

trading Indian spices and West African gold. Nevertheless, their monopoly on the spice trade was

disturbed by supply problems from pepper growers, market competition with the Venetian route,

and losses from unsafe-insecure maritime shipments. As the Portuguese trade system was unable

to meet growing demand for spices, the lagging supply of pepper caused its prices to rise sharply.

The Portuguese network of trading posts was so over-stretched that its naval forces could not

defend their interests in the region.84 As the Dutch and English East India Companies entered

completion, the Portuguese began to decline in the East Indies.



The Dutch East India Company (VOC) founded the first trading post in Indonesia at Banten

in 1603 and the second one at Batavia in 1610 as colonial capital, controlling all Asian affairs.

The Dutch Republic gave quasi-governmental powers to the VOC including “the ability to wage

war, imprison and execute convicts, negotiate treaties, coin money, and establish colonies.”

Governor General, Jan P. Coen, drove out the entire native population of the Banda Islands to

replace them with Dutch plantations growing cloves and nutmeg for exports, but very few Dutch

were willing to immigrate to Asia. Coen resolved the deficit problem of the European trade with

Asia through the intra-Asiatic trade system. Europeans sold few goods to Asia but purchased

more spices and tea, which caused a trade-deficit to them but a trade-surplus to the Asians, who

demanded gold or silver for payments. He used profits from the intra-Asiatic trade to finance the

trade-deficit of Europe with Asia. “The VOC traded throughout Asia. Ships coming into Batavia

from the Netherlands carried supplies for VOC settlements in Asia. Silver and copper from Japan

were used to trade with India and China for silk, cotton, porcelain, and textiles. These products

were either traded with Asia for the coveted spices or brought back to Europe.” The profits from

this triangular trade in Asia could be used to finance the trade-deficit of Europe. The VOC not

only supported Christian missionaries but transferred modern technology to China and Japan by

supplying advanced goods with new technology. While the Portuguese power declined, the Dutch

took control over their trading posts and factories such as in Cochin and Ceylon by naval blockades

in 1640, and expanded their trading network to Persia, Bengal, Malacca, Siam, Canton in China,

Formosa, Malabar Coast and Coromandel Coast in India, and Nagasaki in Japan. Throughout the

seventeenth century, the VOC enjoyed profits from the monopoly of the spice trade with Asia.

“Between 1602 and 1796 the VOC sent almost a million Europeans to work in the Asian trade on

4,785 ships (while the British Company sent only 2,690 ships), and netted for their efforts more

than 2.5 million tons of Asian trade goods.”85

The Dutch commercial power began to decline in the world market in the late seventeenth

century mainly due to the loss of wars with the English and the enforcement of the Navigation

Acts by them. As the Dutch naval capability rapidly declined, the English exercised her military

power and pursued commercial interests in Asia. The English East India Company established

trading posts and factories in Surat in 1612, Madras in 1639, Bombay 1668, and Calcutta in 1690;

where they fortified major factories. Their trade was extended to the Bengal region with

hospitality of the Mughal emperor in 1634, who completely waived customs duties on the trade

with the British in 1717; while the Company monopolized the India trade mainly of cotton, silk,

indigo dye, saltpeter, and tea. During 1650-56, the company took control over the Dutch

monopoly of the spice trade in the Malaccan straits being acquired by ousting the Portuguese in

1640-41.86 While England had a huge trade deficit with China, the Company created a English

monopoly on opium that was produced in Bengal and illegally sold to China. Despite the ban on

opium imports by the Chinese government, the huge amount of opium was smuggled into China,

which resulted in the opium wars in the future. The French founded the French East India

Company in 1664 which “was granted a 50-year monopoly on French trade in the Indian and

Pacific Oceans, a region stretching from the Cape of Good Hope to the Straits of Magellan.”87 The

company established trading posts in Surat and Pondicherry, but was financially difficult mainly

due to insufficient working capital, over-generous dividend policy, insatiable tea market in France,

and banning silk imports into France, so was abolished in 1769. China sold silk for Japanese

copper beginning in 1685, and Russia sold furs for Chinese silk through land that was authorized

by the Treaty of Nertchinsk in 1689; which reduced the supply of silk to Manila and affected the

Dutch trade for Japanese copper. The Dutch retreat from and the French failure in the Asian trade

made the British a dominant power in Asia in the eighteenth century.



British Foreign Trade Policies: Until Adam Smith introduced laissez faire in his Wealth of

Nation published in 1776, it was believed that government had a necessary role to reduce

economic problems by intervening in the natural market. The British government had regulated

foreign trade and shipping to promote employment, maintain a favorable balance of payments,

protect home industry, control colonial economies, and secure military potential; which were

closely related to the interests of the politically powerful and economically rich classes. The rising

population demanded more food, causing higher food prices that made the poor desperate for

survival. The poor with massive unemployment had nothing to lose but to cause uprising

particularly in the districts of the textile industry, where the local police always worried about

social instability, which was politically sensitive. The policy makers might consider available

options to deal with problems of the poor including the production of more food, creation of more

jobs, relief of the poor, and emigration to British colonies. However, history tells us that any

political system was unable to build full equality of society as experienced in the collapse of the

Soviet Union in 1991. Let’s focus here, among others, on the relief of the poor to which the

Parliament had paid attention. The old Poor Law of 1601 initiated by Elizabeth was a parish based

system, paying for food or clothes to those who were too ill or old to work, which was enforced

when the population was too small. In 1723, the Parliament passed the Workhouse Test Act “that

a person who wanted to receive poor relief had to enter a workhouse and undertake a set amount

of work” which could prevent irresponsible claims on parish’s poor rate. The Relief of the Poor

Act of 1782 established poor houses "solely for an aged and infirm" and introduced a system of

outdoor relief for the able-bodies, which made low-paid workers paid. Being criticized as

distorting the free market, the poor law system was altered due to increasing costs: the Parliament

passed the Poor Law Amendment Act of 1834 that was intended to reduce the burden of tax payers

by reducing the cost for relief of the poor.88

The mercantilist position was dominant in theory and practice for Europeans to maintain a

favorable balance of trade and payments in the eighteenth century. The precious metals were

essential for reserves, particularly at the time when the British fought wars not only in Europe but

in the West Indies, North America, and the East Indies. “War increased foreign spending sharply:

the naval supplies, loans to allies, purchasing by armies abroad, and for fleets on foreign stations.”

In addition, war hindered market activities, while “exports were unlikely to expand quickly enough

to absorb these strains in the balance of payments.” The trade with the East Indies, the Levant,

and the Baltic needed exports of bullion from Britain directly or indirectly. Although the inflow

of bullion was one of British trade policies, David Ricardo published the Principles of Political

Economy and Taxation in 1817 in which he views that trade is mutually profitable by taking

comparative advantages of trade partners. It is believed that the balance of trade, either surplus or

deficit, is adjusted by the terms of trade in the open economy.89 A trade surplus – more exports

than imports – brings more foreign currencies flowing into the domestic market, which causes an

inflation reducing the value of the domestic currency in the foreign exchange market. Hence, the

trade surplus weakens the competitiveness of exporting goods in the world market, so that the

export volume declines and the trade surplus is reversed even to a deficit level. The case of the

trade deficit – more imports than exports – is similarly reversed to the opposite direction in the

open economy. Moreover, a rising quantity of precious metals reduces the interest rate in the

financial market, which stimulates investment that generates employment and income leading to

economic booms; so that the prices would rise and exports would be discouraged. Nevertheless,

the direction can be converted by self-adjustment function: the lower interest may cause foreign

investors to move capital abroad to get higher returns from investments, which may partially

frustrate the original objectives if it is larger than the income effect.



The British government aimed at the protection of home industry. The Parliament passed the

Wool Act in 1699 to protect the woolen industry - one of the largest occupations outside

agriculture, and its employment depended largely on the foreign trade. The Act attempted to

heighten taxation and increase control over colonial trade and production. “It opened Britain's

wool industry by limiting wool production in Ireland and forbidding the export of wool from the

American colonies. The law prohibited American colonists from exporting wool, wool yarn, or

wool cloth to markets outside the individual colony in which it was produced, and also restricted

the import of woolens and linens created in other areas of the British Empire. In effect, it forced

all wool and wool products produced by colonies and dependent areas of the United Kingdom to

be sold to British markets, and then resold to British citizens in all areas of the empire. Each sale

generated taxes on these goods.” 90 Similarly, the import of silks and printed calicoes was

prohibited in 1700: “a blow struck against the East India Company ostensibly for the wool trade,

but with the effect of giving a stimulus to the infant English cotton and silk industries.” The Wool

Act was repealed by the Statute Law Revision Act of 1867. On the other hand, the Corn Laws, in

force between 1689 and 1846, were designed to protect agriculture for the interest of landholders

by encouraging the export and limiting the import of grains when prices fell below a fixed point.

In 1815, the Parliament passed a corn law that permitted the import of foreign wheat with free of

duty only when the domestic price reached 80 shillings per quarter (8 bushels), which increased

food prices and encouraged wheat farming. There was a bad harvest in 1816, causing bread prices

to increase rapidly, followed by industrial unrest when workers demanded higher wages to pay for

the increased food prices. Strikes and riots were exploded throughout the country, while the Anti-

Corn-Law-League criticized that the law increased industrial cost by the subsidy. The new

political power of the British middle class, who influenced radicals of the working class, won the

legal battle when the Parliament abolished the law in 1846.

The control of colonial economies was another aim of British trade policies, which was

associated with the protection of home industries. The British exported manufactured goods to

and imported raw materials from their colonies: the colony was a protected-market for British

exports, and a secured-source of British imports of raw materials. “There was an attempt to ban

the woolen industry in the colonies in 1699; to limit the export of Irish wool textiles only to Britain,

and to outlaw any inter-colony trade in woolens. Their currencies were also controlled. At another

time the colonists were forbidden to export the refining of iron and manufacture of finished articles

from iron was prohibited in the North American colonies.” The British imported sugar, tobacco,

rice, cotton, and pepper from their colonies, some of which like New England supplied timber,

naval stores, and pig-iron with duty free. The “production of pig-iron had been encouraged there,

though not very successfully, to end dependence on Swedish and Russian iron, which was not in

the British political control.” The British allowed American colonies to build ships freely, which

was profitable at the expense of British shipbuilding: one-third of the total ships under the colors

of British merchant marine were built in America. The regulatory system intended to secure

strategic materials in order to maintain military potential. The mother country and her satellite

colonies should maintain self-sufficiency in war with secured strategic materials such as saltpeter

and naval stores including hemp, pitch, turpentine, tar, and timber. The Baltic had long been a

dangerous spot where hostile coalitions could happen: “once the stocks in the mast-ponds at naval

dockyards had been used up, all British naval strategy might be threatened, in contrast to oak, no

native soft-woods could provide large enough trees for main-masts of ship-of-the-line.” To

maintain military potential, it is necessary to encourage shipping capacity and to maintain a

number of enough seamen with appropriate training. A British strategic failure was observed in

containing the Dutch from the European fish trade with Baltic grain.



The Navigation Acts had been a basis for British overseas trade policies for two centuries

from the original ordinance of 1651, with minor amendments in the early period, to its final repeal

in 1849. The laws had two objectives – to protect English shipping and to secure profits to the

home country from the colonies. The laws described that only British ships could transport

imported and exported goods from colonies; the only people who were allowed to trade with the

colonies had to be British citizens; and such commodities as sugar, tobacco, cotton, wool, dyeing,

and wood produced in the colonies could be exported only to British ports.91 Targeting the Dutch

controlling a large part of Europe’s foreign trade even much of England’s coastal shipping, the

Acts could stop the direct colonial trade with the Netherlands, France, and other European

countries. Moreover, the Molasses Act of 1733, the first Sugar Act, levied heavy duties on the

trade of sugar from the French West Indies to the American colonies, which forced the colonists

to buy the more expensive sugar from the British West Indies instead. Although the law was

widely flouted, British efforts to prevent smuggling created colonial hostility. The Acts caused

the four Anglo-Dutch Wars during 1652-84 as discussed in Book III. The impact of the laws on

Britain was significant: the laws gave advantages to English shippers by limiting the ability of

Dutch ships carrying English cargos; stimulated the growth of London “as a major entrepôt for

American colonial wares” at the expense of Dutch cities; and expanded the Royal Navy making

Britain a global superpower until the mid-twentieth century. The Acts could enrich Britain, but

caused resentment in the British colonies and contributed to the American Revolution, while their

economic impact on the colonies was minimal.92 In fact, shipping initiative carried so many related

businesses like re-exports, insurance, banking, warehousing, and port works. In addition, the

processing industries arising from the colonial trades were "sugar refining, rum distilling, tobacco-

chopping, snuff grinding, and packaging" all of which were located at the entrepôt. The Acts

forced English ships to distribute traded goods to the ultimate markets.

The slave trade took place across the Atlantic Ocean from the sixteenth century to the mid

nineteenth centuries.93 African tribal leaders or hunters sold Africans to European slave traders,

who transported them across the ocean to the European colonies in America. They were forced

“to labor on coffee, tobacco, cocoa, cotton and sugar plantations, toil in gold and silver mines, in

rice fields, the construction industry, timber for ships, or in houses to work as servants.” The

Portuguese had supplied African slaves to Spanish colonies in the West Indies by asiento that was

an exclusive contract supplying of slaves to the Spanish Indies. Later, merchants from Spain,

Holland, Britain, France, and others were involved in the Atlantic slave trade. With the rising

naval power, Britain took over Jamaica, Trinidad, the Leeward Islands, and Barbados in the West

Indies and British Guiana in South America, and settled in continental North America, where their

plantations demanded African slaves to cover the labor shortage. In 1713, the British government

obtained a contract from Spain of supplying African slaves to Spanish colonies in America for

thirty years, which monopoly rights were transferred to the South Sea Company. In America,

slave labor began to supplant indentured servitude during 1680-1700. The House of Burgesses

enacted a new slave code in 1705 that recognized the principles of white supremacy. According

to an estimate, 12 million Africans were shipped as slave to the Americas: 645, 000 of them were

shipped to the United States from the 16th to 19th centuries. The slave trade was profitable, but it

was always speculative and risky; losses in transit were often heavy; and war and piracy disturbed

the trade. Economically, profits from the slave trade and cheap slave labor helped to form British

capital, which contributed to the Industrial Revolution. The movement opposing the slave trade

became successful in1772 when slaves became free upon entering the British Isles. Accordingly,

the state of Virginia stopped the importation of slaves for sale in 1778, and U.S. President Lincoln

announced the formal emancipation of slaves in 1862.



British Foreign Trade and Transport: The century from the glorious revolution to the fall

of Napoleon was critical for the British to establish a dominant position among trade partners as

well as to be a global empire in Europe, while the English sent out commercial ships for trade to

North America, the West Indies, the East Indies, and Africa.94 Like other European conquerors,

the English “acquired territorial footholds where they could, by settlement, grant or conquest, and

used territorial dominion to support, protect and extend their trade.” In North America, they

settled at Jamestown of Virginia in 1607 and St. George's of Bermuda in 1612, established the

thirteen colonies mostly in the seventeenth century, and gained Quebec by the Treaty of Paris in

1763. In the West Indies, they settled in Barbados in 1625, Bahamas in 1647, the Virgin Islands

in 1666, and received Jamaica from Spain in 1655 and other islands later. In South America, they

entered Belize and the Mosquito Coast in the 1630s, and captured Guiana from the Dutch in 1796.

First, the British exported manufactured goods, mainly woolen textiles and secondly iron and

hardware, to their American colonies and imported sugar, tobacco, cotton, indigo, dyewood, and

other tropical groceries from them. The United States depended on trade with Britain even after

the independence, because “no other European country could supply, at competitive prices, the

manufactured goods which the Americans needed; nor purchase in adequate quantity the raw

materials which they produced. This dependence was to increase, as population increased and

moved west, and as pioneer settlement in the north, cotton planting in the south, absorbed energies

which might otherwise have been used in building up industries on the eastern seaboard.”95

Meantime, few European goods were saleable to the East Indies. The British had nothing to offer

to India but their administrative and commercial services; while neither goods nor services from

Europe were wanted by China. The trade deficits were paid by bullion though some profits from

the intra-Asian trade could partially reverse the gap.

Second, in the trans-Atlantic trade, the triangular slave trade had been greatly profitable by

connecting trade of Europe, Africa, and European colonies in Americas from the late sixteenth

century. "The first leg of the triangle was from a European port to Africa, in which ships carried

supplies for sale and trade, such as copper, cloth, trinkets, slave beads, guns, and ammunition.

When the ship arrived, its cargo would be sold or bartered for slaves. On the second leg, ships

made the journey of the Middle Passage from Africa to the New World. Many slaves died of

disease in the crowded holds of the slave ships. Once the ship reached the New World, enslaved

survivors were sold in the Caribbean or the American colonies. The ships were then prepared to

get them thoroughly cleaned, drained, and loaded with export goods for a return voyage, the third

leg, to their home port, from the West Indies the main export cargoes were sugar, rum, and

molasses; from Virginia, tobacco and hemp. The ship then returned to Europe to complete the

triangle." 96 Third, the cotton industry was one of three key engines of the first industrial

revolution, which was closely related to the British overseas trade linking producers and

consumers. The cotton was light in summer and easily washable with colorful prints, so that the

demand for cotton clothes increased in the European markets. As cotton spinning and weaving

were mechanized by new inventions and innovation, the prices of cotton fabric and clothes

declined rapidly, which pulled the consumer demand throughout the world. The main obstacles

to the British cotton industry lay “not in production, nor in marketing, nor in the availability of

labor or of capital, but in the supply of raw material.” In 1790, of a total import of about 33 million

lb., “some 70 percent came from the West Indies as a whole, including Guiana.” In 1800, the

United States supplied 16 million lb., out of total British consumption of about 55 million lb., as

the share of the West Indies declined to 35 percent. “After the end of the French War, “the United

States supplied nearly half of British requirements, India and the East Indies a little over a quarter,

the West Indies only 7 percent. The total import in 1820 was over 144 million lb.”



According to the tables of E. B. Schumpeter,97 the total value of British exports increased by

6.3 times in the century from £6.47 million in 1700 to £40.81 million in 1800; while that of English

imports rose by 4.75 times in the same period from £5.97 to £28.36 million respectively. The

rising international trade stimulated the British economy to lead the industrial revolution. (1) The

share of British exports to Europe were 78 percent of her total exports in 1700 but declined to 45

percent by 1800; and the share of British imports from Europe were 50 percent of her total imports

in 1700 but also declined to 31 percent by 1800. The falling share of British trade with Europe

among the total trade was caused by the rising trade with North America, the West Indies, and the

East Indies. However, the average annual value of British exports to North Europe rose from

£3.12 million in 1701-05 to £11.77 million in 1796-1800; while that of British imports to the same

rose from £1.35 to £2.68 million correspondingly. (2) British exports to the West Indies rose from

£0.31 to £4.38 million during 1700-1800, while British imports from it rose from £0.61 to £5.90

million correspondingly; and British exports to North America rose from £0.27 to £6.70 million

in the same period, while British imports from it rose from £0.29 to £1.96 million correspondingly;

which resulted in a surplus of £4.83 million in 1800 - the value of British exports to North America

rose by 25 times in the eighteenth century. The American war disturbed the British-American

trade during 1776-1782, but trading volumes were fully recovered the pre-war level by 1785, and

the United States became the main cotton supplier to Britain. (3) The shares of commodity imports

among British total imports were changed during 1700-1800: raw cotton rose from zero to 6.0

percent, linens fell from 15.6 to 5.6 percent, and textile materials fluctuated from 16.2 to 15.4

percent. The share of commodity exports among British total exports were changed in the same

period: woolens fell from 57.3 to 28.5 percent, cotton goods rose from 0.5 to 24.2 percent, other

textiles rose from 2.4 to 6.1 percent, grain fell from 3.7 to zero percent, and iron rose from 1.6 to

6.1 percent. While the cotton industry was expanded, British woolen exports declined.

(4) British exports to the East Indies increased from £0.11 million in 1700 to £2.21 million in

1800; while British imports from them also rose from £0.55 to £4.83 million correspondingly;

which resulted in a trade deficit of £2.62 million in 1800. Moreover, the total amount of British

re-exports increased from £2.13 to £18.40 million and the share of grocery imports among British

total imports doubled from 16.9 to 34.9 percent in the same period. It is evident that the British

trade deficit with the East Indies came from rising re-exporting items belonging to groceries. The

British imported sugar, tobacco, pepper, coffee, tea, and others from the East and the West Indies,

and re-exported them to northern Europe. (5) The British trade with the Baltic, the Mediterranean,

and Africa was lagging like with old northern Europe. The amount of British exports with the

Baltic increased from £0.30 million in 1700 to £1.34 million in 1800, while that of British imports

with them rose from £0.48 to £3.19 million correspondingly. The British trade with the

Mediterranean and African countries remained little changed during the eighteenth century.

British exports to Spain and Portugal, the Mediterranean, and Africa in 1800 were £0.92, £0.74,

£0.97 million, and British imports from them in 1800 were £3.19, £1.22, £0.07 million respectively.

The Methuen Treaty of 1703 opened Portugal for British clothes and allowed Portuguese wine to

be imported into Britain.98 (6) Since commercial shipping could create various industrial linkages,

the more use of shipping space was critical for the economy: the Navigation Acts protected British

shipping and provided great benefits to the British economy. Since Britain imported shipbuilding

and maintenance materials from the Baltic, the rising Baltic trade signaled the expansion of the

shipping space; which was considerably used by the new colonial trades and coastal shipping for

coal, grain, or fishing. Above statistics might be reevaluated, either positively or negatively by

such factors as inflation of commodity prices, undocumented trade or smuggling, and major

international wars, which heavily disturbed the foreign trade.



Transportation is essential part of the infrastructure and it is necessary for the economy to

reduce transport costs by developing the transport system through investment and innovation. An

inexpensive shipment of input factors and final goods reduces the production cost and lowers the

transfer-cost in the market. Better transportation weakens local monopolies and promotes

competition between producers and merchants, which stimulates the economy to grow owing to

efficient allocation of resources. Improving communications, easy transportation makes science

and technology be diffused with lower barriers. In Britain, road transport greatly improved with

better construction of roads, better-made carriages, and better institutions or organizations in this

century. Local authorities were responsible to build and maintain roads, but there were little

incentives to improve them unless they collected money from customers passing the tolls. The

Acts of Parliament set up turnpike trusts with powers to collect road tolls for maintaining the

principal highways in Britain: the first Turnpike Act was passed for the repair of the highway in

1696. "At the peak, in the 1830s, over 1,000 trusts administered around 30,000 miles of turnpike

road in England & Wales, taking tolls at almost 8,000 toll-gates and side-bars."99 It was observed

that "turnpike roads were used to transport cotton goods in the 1780s and 1790s because they were

faster and more reliable even if canals were less expensive." Meanwhile, the stagecoach was

pulled by four horses with a speed of less than 4 miles per hour in the 1760s, that was improved

to 8 miles per hour in the 1840s, when the number of public coaches was 5,805, of which 3,735

travelled less than 60 miles. As people communicated through personal letters, the post office

introduced mail coaches in 1784, which carried both passengers and mail by emphasizing on

"promptness, punctuality, and speed, traveling overnight and stopping only to change horses."

The Penny Post became the British postal system by 1840.

The British canals played a vital role in water transport. Canals were “designed for bulky,

slow-moving cargoes and served mostly local transport needs." It was so expensive to construct

aqueducts, embankments, bridges, locks, and tunnels that early canals were built by landowners

who put over 40 percent of all investment, but their share had declined to 22 percent by the years

1780-1815.100 The Bridgewater Canal is the first major canal built by the Duke of Bridgewater

who owned coal mines in northern England, and he opened the canal in 1761 to transport coal to

Manchester.101 The Grand Trunk Canal, completed by Josiah Wedgwood in 1777, connected the

east and west coasts of England. The Birmingham Canal completed in 1772 that connected to the

rest of the English canal system at several junctions. The Grand Junction Canal, completed in

1805, improved “the route from the Midlands to London, by-passing the upper reaches of the River

Thames near Oxford and by shortening the journey.” The capacity of the British inland waterways

“almost tripled from about 1,400 miles in 1760 to almost 3,900 miles in 1830." A contemporary

observed “that 90 out of the 165 passed between 1758 and 1802 had coal as their main prospective

traffic….Agriculturally-based rural traffic was less intensive and too seasonal to generate high

freight income.” The costs and benefits of British canals might be arguable in the process of the

Agricultural and the Industrial Revolutions,102 but canals and turnpikes largely absorbed financial

resources and entrepreneurial energies of local notables. Upon the arrival of railroad, the

construction of canals slowed down and then stopped altogether. On the other hand, coastal

shipping has been most attractive among the transport businesses. It is observed that “as late as

1910, coastal ships carried 59 percent of all ton-miles of internal freight, with the railroad picking

up 39 percent and canal only 2 percent.” The coastal shippers adopted steam power: there were

188 steamers in the coastal trade by 1821, which also carried passenger traffic. The renovation of

harbor and the construction of the dock system was one of significant transport improvements: the

Parliament passed the bills to improve the West India Docks in 1799, the East India Docks in 1803,

and London Docks were built during 1802-05.103



Voyages to the Pacific and a Second New World: It was essential for the Europeans to build

ships for their economic or strategic interests. The fluyt was designed by the Dutch around 1600

for the trans-Atlantic trade by minimizing its armaments to maximize cargo space with a few crew

(12-15 men was not uncommon). It was typically weighed 200-300 tons with around 80 feet in

length, and was square rigged with two or three masts allowing maximum speed of 8.5 miles per

hour. “Despite its large cargo capacity, the fluyt possesses a draft so shallow that it can enter rivers,

coves and small harbors inaccessible to larger craft.” Owing to lower shipment cost, the fluyt was

so competitive that the Dutch could dominate world commercial shipping in the seventeenth

century. As the Dutch declined from the early eighteenth century, the rising British exports and

shipments demanded more warships for overseas protection, and the continuous international wars

forced the British fleets to be expanded, although the ship of the line changed little in essentials.

Merchant ships were usually much smaller than warships, but the rising trade volume introduced

a tendency toward bigger ships, particularly in the East Indian, West Indian, and African trades to

carry bulks of coal, grain, and timber. The British East India Company employed bigger ships

since some of functions of warships were necessary. “In the two years 1790-1, 1,156 ships were

built in England; only a hundred and fifty were over 200 tons, and ten or dozen of these were

Indiamen of over 600 tons.” The most important innovations of ships lay in an improvement in

steering gear, rig refinements and extensions in the use of fore-and-aft sails, and developments in

the hull design.104 The wooden ships had a problem from weeds and barnacles attached to the

bottom of the ship, which reduced the speed and finally destroyed the ship if not removed; for

which copper sheathing was introduced. Twelve British warships had been coppered in 1776, and

the major European navies rushed to copper during 1779-80. In designing ships, Gabriel

Snodgrass, who was a surveyor of the East India Company, introduced an innovative system using

iron knees, riders, and braces to the new EIC ships in the 1780s.105

The development of maps and charts depended on national efforts: in the fifteenth century,

the best cartographers were Italians, in the sixteenth century the Portuguese, in the seventeenth the

Dutch with a hydrographical service by the East India Company, in the eighteenth the French, and

in the nineteenth the British.106 The construction of an accurate world map was the work of

geodesists and cartographers in the eighteenth century. In 1700-26, the collected observations

were incorporated in the maps by Guillaume Delisle (1675-1726). Rejecting traditional data, J. B.

Bourguignon d’Anville (1679-1782) published his map in 1759 with the critical method of

appraising, which became a starting-point for the exploration of inland Africa during the next

century. “The voyages of Louis de Vougainville, 1767-9, and James Cook, 1768-79, drew the

modern map of the South Pacific Ocean; and Matthew Flinders charted the coasts of Australia,

1798-1803. Cook, 1778-9, and La Perouse, 1785-7, surveyed the American and Asiatic shores of

the north Pacific; Malaspina, 1791-2, and Vancouver, 1792-4, its American coasts. Between 1770

and 1855 British, French, and German expeditions revealed the geography of northern Africa, and

the oceanic coast-line of the continent was surveyed in 1822-6.” For an accurate navigation, the

determination of longitude was important. “Cook, on his first voyage, relied for his longitudes on

the lunar distance method and took a prodigious number of lunar sights, which he worked with an

unexampled accuracy.” On his second and third voyages, he used a replica of the map made by

Larcum Kendall, but his chief use was to check the “longitude-by-chronometer” that was simpler

and more accurate.107 Several individuals introduced more precise methods of finding latitude, and

devised various ways using double altitudes as well as the ex-meridian method. However, “the

best navigating methods and most accurate maps and up-to-date charts were never the ones in

general use” while the weather remained always critical for safe returns from distant voyages,

though experiences gradually brought cheerful confidence.



In the late seventeenth and early eighteenth centuries, the world outside Europe was mainly

the coastlines: the interior of Asia or of Africa was little known to Europeans, and Spaniards were

the only Europeans who regularly crossed the Pacific between Acapulco and Manila. Of the

thousands of islands in the Pacific between Equator and the Tropic of Capricorn, very few were

known, although a number of exploring expeditions had crossed the ocean. The second age of

discovery began with some private adventurers who were interested in exploring those unknown

parts of the world. The buccaneer-explorers visited the Pacific coast of South America, the East

Indies, Australia, and the Western Pacific, not for the discovery, but “to see what the country

would afford us” and to prey on other people’s shipping. Based on their narratives and

descriptions, a series Voyages was published among which Harris’s Voyages was influential in its

second appearance in 1744-8. The Pacific expedition was followed by Roggeveen in 1721-2 and

Anson in 1740-4. However, the systemic exploration of the Pacific was launched by naval officers

and scientists in concert of some states: the French and the British might hope some compensation

through the Pacific for their losses in America, while the Spanish might worry about a possible

loss of the monopoly crossing the Pacific by the appearance of France or Britain. The great series

of Pacific voyages began with Byron, Wallis, Carteret, or Bougainville (who settled in the

Falkland Islands in 1776); who crossed the Pacific diagonally from the east to the west. Among

many explorers, James Cook (1728-79) was the central figure of the second age of discovery. He

was “a British explorer, navigator and cartographer who ultimately rose to the rank of captain in

the Royal Navy. Cook made detailed maps of Newfoundland prior to making three voyages to the

Pacific Ocean, during which he achieved the first European contact with the eastern coastline of

Australia and the Hawaiian Islands, as well as the first recorded circumnavigation of New

Zealand.”108 Unfortunately, he was killed in Hawaii in a fight with Hawaiians during his third

exploratory voyage in the Pacific in 1779.

Map II-3-1.The Routes of Captain James Cook’s Voyages The first voyage is shown in Red, second voyage in Green, and third voyage in Blue.

The route of Cook’s crew following his death is shown as a dashed blue line.

Source: https://upload.wikimedia.org/wikipedia/commons/4/4a/Cook_Three_Voyages_59.png

https://upload.wikimedia.org/wikipedia/commons/4/4a/Cook_Three_Voyages_59.png



James Cook led three voyages with Endeavour in 1768-71, Resolution in 1772-75, and the

same in 1776-80. The first voyage directed westward from the Cape Horn (S. America) to Tahiti

- New Zealand - the east coast of Australia - Batavia – Cape of Good Hope (Africa) - England.

He spent six months in a coastal survey of Australia and New Zealand. Among two alternatives

of returning routes, he chose the westward through the East Indies to the Cape of Good Hope. The

second voyage directed eastward: (i) in 1773 from the Cape of Good Hope (once losing his mean

track in the Atlantic and Indian Ocean away toward the Antarctic) to New Zealand - the Tuamotu

Islands - Tahiti - Tonga - New Zealand; (ii) in 1774 from New Zealand (twice losing his mean

track in the Pacific away toward the Antarctic) to Easter Island – Marquesas – Tahiti – Niue –

Tonga – the New Hebrides – New Caledonia – Norfolk Island – New Zealand – Cape Horn -

making a final sweep in the Atlantic-Antarctic – Cape of Good Hope – England. Cook’s

discoveries in the second voyage were significant and uncritically recorded. Being affected by a

strategic interest in arctic exploration and the “Northeast Passage to Asia” for a profitable trade

with Russia,109 the third voyage directed eastward from Cape of Good Hope to New Zealand –

Tonga – Tahiti – Hawaiian Islands – the Pacific coast of America – Nootka Sound – the NW coast

of America – Gulf of Alaska - Bering Sea – Bering Strait – the Arctic Ocean – NE coast of Asia

(Chukot) - Hawaii. Cook explored, described, and recorded what they saw during the voyages.

His twelve years sailing around the Pacific Ocean contributed much to European knowledge of

the area. “Several islands such as Sandwich Island (Hawaii) were encountered for the first time

by Europeans, and his more accurate navigational charting of large areas of the Pacific was a major

achievement.” After Cook’s death, the expedition was directed westward from Hawaii to

Kamchatka – Japan - China Sea – Batavia – India Ocean – Cape of Good Hope – England. His

new discoveries attracted the British to settle into the Pacific region.

Photo II-3-3. James Cook Witnessing Human Sacrifice in Tahiti, c. 1773 https://upload.wikimedia.org/wikipedia/commons/thumb/c/c3/James_Cook%2C_English_navigator%2C_witnessing_hu

man_sacrifice_in_Taihiti_%28Otaheite%29_c._1773.jpg

https://upload.wikimedia.org/wikipedia/commons/thumb/c/c3/James_Cook%2C_English_navigator%2C_witnessing_human_sacrifice_in_Taihiti_%28Otaheite%29_c._1773.jpg

https://upload.wikimedia.org/wikipedia/commons/thumb/c/c3/James_Cook%2C_English_navigator%2C_witnessing_human_sacrifice_in_Taihiti_%28Otaheite%29_c._1773.jpg



In 1786, the British Parliament passed an Act encouraging the “Southern Whale Fishery” in

the Pacific. The British whalers ranged the whole Pacific and regularly called at “Tahiti, Hawaii

and the Bay of Islands in New Zealand.” They cruised off the Pacific coast of the Americas for

whaling or sealing, followed by traders buying furs from the local Indians. In 1774-89, Spain sent

several expeditions up to Sitka Sound of the Pacific Northwest to reassert its long-held navigation

and territorial claims to the area. In 1789, the Spanish navy seized British vessels at Nootka Sound

to confirm their preoccupied monopoly in the Pacific navigation. When the news reached Europe,

the British government requested compensation and Spain refused. Both sides prepared for war

and sought assistance from allies, but the Nootka Sound crisis was peacefully resolved. “Spain

agreed to share some rights to settle along the Pacific coast but kept its main Pacific claims.”110

Spain recognized British whaling in the Pacific and agreed British right to access to the coast of

Spanish California. On the other hand, in 1787, the British government sent the fleet of 11 ships

to Australia under Admiral Arthur Phillip (1738-1814) to settle in Port Jackson-Sydney with about

1,530 people including 736 convicts, 211 marines, and about 300 officers – establishing the

Colony of New South Wales. The colony made commercial ties with Bengal for necessary

supplies; ships from Calcutta carried live cattle, textiles, tobacco, sugar, rice, and rum for sale to

the colonists, and returned with seal oil and skins to be sold to China or Britain. It was true that

time was needed “to clear heavy timber, to break rock-hard ground, to raise crops and breed cattle.”

Phillip’s governorship was extended to all the islands adjacent in the Pacific Ocean including

New Zealand that was more attractive than Australia due to pleasant climate, fertile soil, and useful

natural resources. The Polynesians of Hawaii wanted to buy firearms and iron tools from European

traders, and sell tortoise shell, mother-of-pearl, sandalwood, and sea-slugs. Bringing no silver,

spices, or silk like from the first age of discovery, the second age was in “more disappointment

than promise” to the Europeans, though the colony was taking shape with land-grants.111

The European colonies suffered from corruption and inefficiency demanding reformation.

Under Charles III of Spain, most officials of the West Indies obtained their posts “by purchase,

lease, inheritance, or personal patronage” so that the colonial office was a place making profit. In

the colonial government, there were no clear chain of command and no check-and-balance.

Numerous officials lived on fees collected from people who had public business to transact. The

Corregidores, the work forces of administration, received only token salaries, charged on the

Indian tributes; most of their income came from perquisites, in particular from the profits of the

repartimiento de comercio. They used it for their own profit “by compelling Indians to buy

miscellaneous imported goods which they did not want and could not afford to pay for.” As

minister of Indies, Galvez submitted a reform plan, which was implemented during 1972-88: the

office of Corregidor was replaced by intendancies – twelve in New Spain, six in Peru, eight in Rio

de lad Plata – each intendant, as a financial supervisor, governed an extensive province. The

collapse of Spain by war made the Indies fell to an administration at odds in itself. Meantime, the

British crown at least did not sell colonial offices officially, but patients were granted by ministers

to political supporters, election mangers, clients, friends, relatives, protégé or some others. The

principal patent officers in most colonies received no salaries or only token salaries, and the patent

system in colonial America made governors unable to hold his rule in obedience. The British

India separated from all the mixture with commercial interests and the abolition of patronage, by

recruiting the civil service through free competition and public examination. As the Europeans

tried to collect more revenues from their colonies, the police system became more effective against

the crime. Nevertheless, colonial governments generally used ruthless forces to control native

politics, economy, and society, which could not secure their collaboration but increased

resentment and induced resistance against the colonial rules.



The Continental System and Its Impact: Britain and France maintained mercantilist

policies in the eighteenth century by limiting foreign imports to give a virtual monopoly of the

home market to native manufacturers or farmers. Influenced by new trade theories of Adam Smith,

they signed the Anglo-French Commercial Treaty or the Eden Treaty in 1786 lowering customs

duties to 10 or 15 percent of the value of traded goods, and abolishing prohibitions on imports.

First, the French national debt was estimated at 3,500 million livres, so it was expected that a

commercial treaty with Britain might bring more revenues by collecting customs duties from the

expanded trade. The British national debt was £250 million; they also wanted to collect more

revenues from customs duties by expanding foreign trade. Second, the French lost Canada and

India, while the British lost her thirteen colonies in North America. Although Britain and France

had been traditional enemies, they thought that a commercial treaty might provide the first step

towards conciliation mitigating mutual antagonism.112 In real trade, British exports were more

competitive in the French market: British exports of calico, woolen, pottery, steel, and leather

were so popular in France that those industries in France declined rapidly. Hence, their

employment and income declined, and consumer demand fell significantly; which caused

economic recession and social instability in France. The treaty was beneficial to the British but

seriously hurt the French economy: “This treaty was considered to be one of the grievances of the

French people that sparked the French Revolution.” The commercial war between them renewed

in 1791, when the Constituent Assembly adopted new tariffs; and the treaty was finally collapsed

due to the outbreak of war in 1793. The Convention annulled all treaties previously entered into

with enemy countries, and prohibited the importation of a large number of textile, metal, and

earthenware goods; and soon after prohibited imports and sale of British goods. In time of war,

certain raw materials or enemy goods might be often imported by neutral vessels or through

smuggling, though illegal, to overcome the commercial blockades.

In the maritime blockade, applying the law of war at sea, the British government authorized

fleet commanders and privateers “to stop and detain all vessels loaded wholly or in part with corn,

flour, or meal, bound to any port in France or any port occupied by the armies of France.” The

French measures against maritime trade had been milder than those of Britain at first, but in 1796

the Directory declared that British methods were to be applied against the neutrals in every respect.

The law of 1798 enforced that “if any vessel was carrying goods of any kind coming from England

or its possessions, no matter who was the owner, this fact alone should justify the confiscation,

not only of these goods, but also of the vessel itself and its entire cargo. Moreover, any vessel that

had touched at a British port was forbidden to put in at any French port.” Thus, expelling neutral

shipping, France lost benefits of purchasing strategic materials and products from the neutral

vessels. In 1799, “the British blockade had been maintained so strictly that not a single vessel was

sailing the sea under the French flag.” On the other hand, in the continental blockade, France by

the Congress of Rastadt of 1797 occupied the west of the Rhine, to which the prohibition against

British goods was extended. They planned to bar the mouths of the Elbe and the Weser to the

British, and to transform Hanover and Hamburg into a republic allied with France; “which would

lead to increased sales for French goods and to an embargo on British industrial products.” The

French general policy was to exclude Britain from the European Continent in order to weaken the

British industrial and commercial power in favor of the French sales in the continental market.

The Directory intended not only to exclude British shipping from the ports of the Mediterranean,

the Atlantic, and the North Sea but also to close the Baltic Sea to the British in 1795 “by playing

Sweden and Denmark against Russia, which for the moment was on friendly terms with Great

Britain.” The maritime and continental blockades during 1793-99 provided experiences being a

foundation of the Berlin Decree to be enforced in 1806 under Napoleon.



Having been dominant in maritime and colonial affairs after the decline of the Netherlands,

Britain supported the wars of continental powers against France. The total amount of subsidies

for three years in 1794-6 was over £41 million; and the British national debt amounted to £230

million in 1789 that increased to £507million in 1802 (though remained at £587 million in

1914).113 Those subsidies were paid not by gold and silver, but by consumable goods, while the

British exports had usually increased during the war. The British exports were “a necessary pre-

condition for her capacity to carry on a war against France on the mainland." If it is not possible

to pay subsidies by exporting goods, she must pay by bullion with the partial circulation of paper

money within the country; or she loses sufficient balances to her credit on the Continent so that

the exchange rates will fluctuate against her. An attack on British exports reduces her balance of

payments and forces Britain to export bullion, which weakens her financial capability; that was a

reason why they took mercantilist policies during the Anglo-French war. Napoleon encouraged

smuggling with Britain in order to extract bullion from Britain by exporting French goods. As

Napoleon gained a temporary peace by suppressing internal and external enemies, France and

Britain signed the Treaty of Amiens in 1802. However, the French expansionary strategies caused

the outbreak of war in 1803: Britain seized all French and Dutch vessels lying in British ports;

blockaded the mouths of the Elbe and Weser and cut off the entire trade of Hamburg and Bremen;

restricted the colonial trade with the Americans; and controlled the trade with the North Sea coast.

France also excluded Britain from all connections with the mainland, especially with the North

Sea coast, to prohibit imports of British goods, and the high rates of customs duties were widely

applied. After the battle of Trafalgar, France lost the power of communication with her colonies

such as the French West Indies, so that the colonial trade fell more and more into the hands of the

British. Nevertheless, at least Napoleon was effectively able to close the French, Italian, and Swiss

markets to British industry and trade until 1812 when France revoked decrees.

Winning the war against Prussia, France established the Continental System by the Berlin

Decree of 1806 that forbid the import of British goods into European states. “First, the British Isles

are formally declared in a state of blockade, and all trade or communication with them is prohibited.

Secondly, the decree turns against all British subjects in territories occupied by the French; they

are declared to be prisoners of war, and all property belonging to them to be fair prize. Thirdly,

war is made on all British goods; all trade in them is prohibited and all goods belonging to England

or coming from her factories or her colonies are declared to be fair prize, half of their value to be

used to indemnify merchants for British captures. Fourthly and lastly, every vessel coming direct

from ports of Great Britain or her colonies, or calling at them after the proclamation of the decree,

is refused access to any port on the Continent.”114 Although its practical effect was to blockade

British exports to the German territories in the very beginning, Napoleon intended to transform

the system “from a mere visionary program into a political reality” embracing the whole European

mainland. The Milan Decree of 1807 authorized “French warships and privateers to capture

neutral ships sailing from any British port or from any country that was occupied by British forces.”

The Hanse towns like Hamburg were flourished by the trade with the French West Indies, but both

decrees hit those towns to decline, which was largely extended not only to France but also to

Holland occupied by France. Since the British maritime trade with the Hanse towns was vital to

her interest, the decrees seriously damaged the British trade with Germany. The decrees also hurt

the United States which sold more goods to Germany than to the entire British Empire around the

time. Similarly, it was difficult for the French industries to obtain colonial raw materials, but

Napoleon considered that “the injury to England was yet greater owing to her greater dependence

on industry and foreign trade,” though the United States was an enemy of Britain but a friend of

France by then. Napoleon intended to isolate Britain economically to be collapsed.



The British took three counter-measures: attempting to break through the blockade; placing

obstacles in the way of French imports to bring economic pressure to bear; and injuring the trade

of France and her allies in the same ways as Napoleon had sought to injure Britain, by cutting off

her exports, which was a policy of retaliation. The British government ordered to exclude certain

necessary commerce from the territory of the enemy; to blockade the importation of French and

Spanish colonial goods into France, and to enforce that no goods should be carried to France

except they first touched at a British port. Russia joined the Continental System by the Treaty of

Tilsit in 1807 after Alexander’s loss of war against Napoleon at Friedland; by then most of

European states stood at the French side against the British trade; and even Turkey bound herself

to exclude British goods. On the other hand, great fleets of American merchants sailed from the

various colonies in the West Indies to the United States where they neutralized the voyage and

then went on to Europe. A triangular trade brought them profits: they carried corn and timber

from America to the French and Spanish West Indies; took on colonial goods like sugar and coffee

there and conveyed to Europe; and returned with European goods like textiles and iron goods to

be sold to the United States or the rest of America. However, as the neutrality was disturbed by

the French decrees and the British orders, the United States enacted the Embargo Act of 1807 that

restricted American ships from engaging in foreign trade during 1807-1812,115 which had cut off

not only the supply of raw materials from but the possibility of their sales to the United States.

The Non-Intercourse Act of 1809 resumed all foreign trade except France and Britain, still

targeting on Britain due to her naval supremacy. In December 1810, Russia withdrew from the

Continental System, and allowed neutral ships to enter her ports. In March 1812 France revoked

the Berlin and Milan decrees, and in June Britain revoked the Orders for all blockade, when the

United States entered a war with Britain (June 1812-February 1815).

The Continental System was a self-blockade or self-embargo that stimulated the production

of domestic goods by prohibiting the import of all foreign goods; which was different from the

protectionist policy restricting the import of industrial and agricultural goods, not raw materials

for manufacturing. Declaring a war against France in 1793, the British issued the maritime

blockade, and the French responded with the continental blockade. The Berlin Decree of 1806

widened the restricted regions to Germany and other allies, and the Milan Decree of 1807 to

Americas; which were in reality an extension of the original blockade at the time of war in 1793-

1812. The Continental System had “little success in its mission of destroying the economic

organization of Great Britain” because of such reasons as follows. First, the economic life of

Europe was primarily the autarchy of the different countries so that their self-sufficiency was

consistent and vital to their survival. The Continental System could partially disturbed economic

activities, as experienced the lack of raw materials like cotton from the United States, but could

not change the fundamental of their economies. Second, the effective period of the Continental

System was too short to change “the self-healing power of nature” due to the Russian withdrawal

from the system by late 1810. As appeared in smuggling and corruption, economic lives are so

natural that any intervention could not easily turn down the trends of the natural flow of resources.

Third, international relations are so dynamic that a political treaty between nation states can easily

be revoked whenever it is necessary for the interests of member states. Russia was forced to join

the system after the loss of war against France, but Alexander could not hold the member status

because of political pressures from demanding free trade. The collapse of the system was a matter

of time from the beginning, since politics was too dynamic to control economic interests in the

long run. Finally, it was harmful to attack the neutral ships under the U.S. flag since they supplied

raw materials and provided strategic products not attainable through the normal channel in the

time of war, though Britain and France saw the dark side of effects.116



4. Finance and Banking

The rise of the modern system of nation states often refers to the Treaty of Westphalia of 1648

that recognizes each other's sovereignty and territory as a new world order. Unlike previous

dynasties, nation states use the state as an instrument of national unity in politics, economy, and

society. The five major nation states in Europe including France, Britain, Austria, Prussia, and

Russia wanted to expand their territories for more resources by maintaining the balance of power

through alliances in various wars in the eighteenth century. The wars became larger in scale and

longer in period, so that the costs of wars increased tremendously as experienced in such inter-

national wars as the War of the Austrian Succession, the Seven Years' War, and the Napoleonic

Wars. When the wars were small in scale and short in period, sovereigns could finance themselves

with resources derived from their own lands or from their feudal rights, but the rising expenditures

of the new nation states required many resources, which should be collected from their subjects.

The fundamental constraint lay in property rights since no part of private wealth could be invaded

by the state or any others without consent of the property holder. As the sovereign claimed the

right to collect taxes in case of fiscal needs of state, his subjects demanded the right to be consulted

concerning the existence of actual needs and the implementation of taxes. Hence, the sovereign

allowed his subjects to send their representatives to participate in the decision making process of

the state, which created institutions of political representation such as the House of Commons in

Britain or the Third Estate of France. Thus, property rights of the people made it possible for them

to participate in decision-making over taxes, while lack of consent resulted in tax evasion or the

fiscal uprising. The legitimacy of taxation required representation with proper negotiations and

agreements between sovereign and subjects in the political institutions.

The purpose of this subsection is to investigate the development of the fiscal and monetary

institutions in the nation states in Europe as well as in the new world. Generally, there were two

types of taxes: direct taxes were imposed on income, production, wealth, or person; and indirect

taxes on consumption such as excises (inland taxes - sales or value added) and customs duties

(border taxes). The amount of contribution or tax rates were different among states according to

the economic conditions, the degree of consensus, and the methods of assessment and collection.

Tax exemptions had survived from feudal times, but the rise of military professionalism made the

role of nobles for war useless so that traditional tax exemptions for them could not be justified.

As the old order was destroyed, the taxes were generalized to all citizens without privileges to

anyone. The European states centralized tax collection, while their colonies in the new world

established decentralized systems by allowing local authorities to collect certain taxes. As the

nation state demanded huge amounts of money for wars, the fiscal institutions collected taxes, and

the monetary institutions managed the rising public debts. Debasement was the practice of

lowering the value of currency by reducing the quantity of gold, silver, copper or nickel in coins;

and monarchies had engaged in the debasement of the coinage to reduce the debt. To avoid state

default, financial institutions introduced annuity as a long-term investment instrument to the

financial markets in the Netherlands, Britain, and France. On the other hand, the European

colonies in Americas adopted the fiscal and monetary institutions to their own resources and

environments. For example, the British colonial governments collected taxes on foreign trade and

some excise taxes; and the local administration collected direct taxes on property and wealth. The

thirteen colonies developed a monetary system based on bills of credit and land bank bills to

finance government expenditures. After the independence, the new nation quickly adapted the

advanced fiscal and monetary institutions from Britain. The Latin American colonies followed

the bimetallic standards, but used paper currencies after independence.



Photo II-4-1. The Bank of England, 1800 Source: http://projects.ecfs.org/bome/cities/HBand2004/London/mstern/PICTURES/WWW_INTA/BANKOFE_.JPG

Photo II-4-2. View of Paris from the Pont Neuf, 1763 https://upload.wikimedia.org/wikipedia/commons/thumb/a/a6/Nicolas-Jean-

Baptiste_Raguenet%2C_A_View_of_Paris_from_the_Pont_Neuf_-_Getty_Museum.jpg/400px-Nicolas-Jean-

Baptiste_Raguenet%2C_A_View_of_Paris_from_the_Pont_Neuf_-_Getty_Museum.jpg

http://projects.ecfs.org/bome/cities/HBand2004/London/mstern/PICTURES/WWW_INTA/BANKOFE_.JPG

https://upload.wikimedia.org/wikipedia/commons/thumb/a/a6/Nicolas-Jean-Baptiste_Raguenet%2C_A_View_of_Paris_from_the_Pont_Neuf_-_Getty_Museum.jpg/400px-Nicolas-Jean-Baptiste_Raguenet%2C_A_View_of_Paris_from_the_Pont_Neuf_-_Getty_Museum.jpg





Fiscal and Monetary Institutions in Britain: As the economy revived in England, the new

rich families purchased huge quantities of confiscated lands from Henry VIII at bargain prices.

Purchasing more lands from nobles who sold their holdings to keep their luxurious life style, the

new rich commoners formed the Gentry class, who sent their children to universities for higher

education, becoming professional leaders of society. When Charles I ascended the throne in 1625,

the three-fourths of the House of Commons were from the Puritans rooted in the gentry class, who

challenged the divine rights of the crown and demanded no taxes without consent. Charles sent

solders to arrest the opposition leaders, but the Parliament reorganized the armed forces and

crushed the royalist army. The captured king was beheaded in 1649 and Cromwell established his

government. The monarchy was restored in 1660 when Charles II ascended the throne, and James

II succeeded him in 1685. The Glorious Revolution of 1688 forced the Bill of Rights enacted,

confirming that England was a constitutional monarchy, so that the Parliament controlled all fiscal

and monetary affairs, and property rights of the people were secured by law, which was significant

in two ways. First, the legitimacy of taxation was established, which was the starting point of

modern finance, so that the fiscal and monetary institutions could maximize the efficiency of

resources and minimize transaction costs. Second, since property rights were legally secured, the

capital market in Britain became competitive and attractive to investors more than in other states;

which efficiently pulled and pushed the British economy. Traditionally, in normal times, indirect

taxes were used for the ordinary expenses; but in wartime, direct taxes were imposed. The

principle of taxation lay in equality and welfare: the lowest level of incomes was usually exempted

from taxation; the higher income receivers paid a rising scale of taxes; and the tax rate of non-

labor incomes was different from that of labor incomes.

During 1690-1815, fighting eight wars of varying length, Britain was at war with France for

65 years. The British nominal GNP increased from £46 million in 1690 to £57 in 1730, £130

million in 1790, and £320 million in 1815; while the national debt rose from £3.1 to £51.4, £244,

and £745 million in the corresponding years. Accordingly, the debt to GNP ratio increased from

6% in 1690 to 100% in 1730, 185% in 1790, and 220% in 1815.117 In the early days of the 1690s,

the total amount of national debt was less than £10 million. In the eighteenth century, the major

international wars demanded huge amounts of money due to larger scales in longer terms. Since

the rising cost of wars was far above the annual tax revenue, the annual budget deficit was

continuously accumulated. In 1815 when Napoleon lost his final war, the British debt rose to £745

million or 220% of GNP as noted above.118 Since then, peace and prosperity expedited economic

growth in the nineteenth century, so that the debt fell to a manageable level of 35% of GNP by the

beginning of the twentieth century. In fact, the tax revenue increased from £2.05 million in 1690

to £6 million in 1730, £16.5 million in 1790, and £63 million in 1815; and their tax proportions to

GNP rose from 7% to 10.7, 12.3, and 18.2% correspondingly. Meanwhile, the government

expenditure increased from £4 million to £5.5, £16.8, and £112.9 million in the corresponding

years; so that their proportions to GNP increased from 9% to 10, 13, 35% accordingly. The

revenue mainly came from excise, customs, and direct taxes, and their proportions in the total

revenue were 25, 20, and 45% in 1690; which moved to 45, 26 and 25% in 1730; 44, 23 and 18%

in 1790; and 36, 30, and 34% in 1815. It shows that the proportion of direct taxes declined from

45% in 1690 to 18% in 1790, while that of excise taxes rose from 25% to 44% correspondingly.

In the early years, the principal direct taxes were on land, but increasingly on income later. Post

office and stamp duties provided significant amounts of the revenue. In the expenditure, the

military used around 65% of the total revenue in the war year and around 35% in the peace year;

while the civil administration used around 15 to 20% consistently; and the remaining part went to

interest payments such as 44% in 1730, 56% in 1790, and 28% in 1815.



Monetary Institutions: A pawnbroker was an individual or business that offered secured loans

with personal properties as collateral. Goldsmiths had been financial intermediaries - bullion

merchants, money changers, and money lenders - in England since the sixteenth century, and

scriveners kept deposits and rerent them in the early seventeenth century. Rich merchants

accumulated wealth in gold and stored it to the Royal Mind. In 1640 Charles I seized the private

gold stored in mint as a forced loan, so that merchants preferred to store the gold with the

goldsmiths of London, who possessed private vaults and charged fees for the storage service.

Cromwell borrowed money from the goldsmiths for his army in the Civil War. The goldsmiths

bankers issued receipts certifying the quantity and the purity of the stored metal, which could not

be assigned. Taking over the function of deposit banking from scriveners, the goldsmith issued

the promissory notes payable on demand, and their advances or loans to its customers were

repayable in a long term period. The promissory noted developed into an assignable instrument,

circulated as a safe and convenient form of money backed by the goldsmith's promise to pay.

Hence "goldsmiths could advance loans in the form of gold money, or in the form of promissory

notes, or in the form of checking accounts." 119 Charles II borrowed £1.3 million from the

goldsmiths to build a sailing fleet, but the underfunded Royal Navy lost the war with the Dutch in

1667. Charles decided to defer the repayment of debts, which damaged the crown's credit and

destroyed profits of bankers. The problem was resolved by a financial innovation - the creation

of Annuities - the first long term investment instruments. Charles II created a Commission for

Treasury reforms: it was ordered that all expenditure must have specific Treasury approval even

if money has already been voted by Parliament. The Commission raised additional money by

selling marketable Treasury Orders with a guaranteed repayment date, which was the origin of

the government bonds. Taxes had been collected by private firms making huge profits from the

activity, but the collection was nationalized under Commissioners reporting the Treasury.

The Bank of England was founded under the Royal Charter in 1694, primarily to raise money

for the war with France - the needs of government finance with the distrust of the Crown. The

bank provided a loan of £1.2 million to the government not to be paid until 1706 with interest

payments of £100,000 per year. The bank had a monopolized right to issue own bank notes (paper

currency) and coins (metallic currency), and deposit banking was possible. The bank became the

government's bank and the banker's bank "due to the convenience of depositing their surplus

balances." A key element of the financial revolution lay in the system of bilateral settlement in

interbank debt, which could minimize transaction costs and monitor the discipline of member

banks. The goldsmith bankers and the Bank of England were confined to London, while the

progress of the Industrial Revolution created the need for monetary services outside the city. When

the Bank of England suspended cash payments because of the shortage of notes and coins in 1797;

Parliament authorized country banks to issue low-denomination notes. In 1784, there were 230

banks outside London, which was increased to 470 in 1804 and 800 in 1808.120 In England, the

first joint stock company was the Company of Merchant Adventures to New Lands with 250

shareholders, chartered in 1553. The East India Company was chartered by the Crown in 1600

with trade privileges in India, while the company virtually ruled India with auxiliary governmental

and military functions until its dissolution. The South Sea Bubble caused financial ruin to many

in 1720, which led to a new act allowing joint-stock banks in 1826 operating only outside of 65

miles from London. As a result, the private banks were absorbed by the joint-stock banks, which

established more branches in the provinces to support exports, and the branch banking system

made the financial institutions more efficient like present times. Thus, the creation of annuities,

government bonds, the Bank of England issuing notes and coins, country banks, and joint-stock

banks were the great achievement of the monetary institutions.



Investment Finance: The economic growth in theory comes from two ways: mobilization of

more input into existing modes of production with the same technology, and productivity growth

from technological advance and other factors promoting efficiency such as managerial skills. As

an input factor, capital formation and investment was essential in the process of industrialization.

In the pre-industrial revolution era, the methods of production employed in industries involved in

little capital equipment. Domestic industry carried on in the home needed few of machinery items

or equipment such as spinning wheels, looms, or knitting frames; costing more than a few shillings

or less than a few pounds. In early days, output expansion was achieved through the multi-

plication of low-capital units, requiring a very low level of net investment. Of course, there were

heavier industries such as shipbuilding, mining, metallurgical, or some other industries demanding

greater capital investment, but they tended to remain in labor-intensive production. However, the

industrial revolution was “the substitution of capital for labor” by replacing the old hand-driven

units with powered machinery in the textile industries, and taking over heavier tasks from men

and animals in the mining and metal industries. The industrialization required massive capital

investment, so that the shortage of capital could be a crucial blockade to development. 121

Generally, the initial size of capitals was remarkably small even in many large-plant industries,

while capital-saving techniques were widely employed. In case of adopting massive production,

in the beginning very modest capital outlays were used to get off the ground, and raw materials

could be gained on credit from merchants. Once the business was established, yielding profits

relaxed the capital constraint and allowed the owner to build a splendid new industrial plant. If a

country desires its economy to grow fast like from 5% to 10% of GNP in a certain period, a rising

degree of capital investments must be necessary. In the early stage of industrialization, the level

of investment was low, as the infrastructure costs were modest and production technology was

relatively simple, but it increased progressively in the nineteenth century.

An estimate suggests that “the rate of capital investment in Britain rose very slowly from

about 5 percent of national income in the mid-eighteenth century, to about 7 percent at its end and

subsequently reached 10 percent a little more only at the end of the 1850s under the great demands

of concentrated railway boom years.” 122 The cost of wars with France during 1793-1815

amounted to approximately £1,000 million that contained national savings and investment and

reduced the rate of growth. The demand for capital investment in Britain increased in the second

half of the eighteenth century, but the scale of industry was still sufficiently small for its capital

requirement. Annual investment in fixed capital in the entire British cotton industry was only £0.4

million in 1809-10, but the largest proportion of investment demand went to transport: “the total

accumulated capital in the canal system, from 1750 to 1820 was about £20 million.” Canal

companies and turnpike trusts attracted transport investment by “giving limited liability for

investors, the advantages of incorporations for the operators, and legal power” to overcome

problems through compulsory purchase of land or some other ways. In the process of the

Agricultural Revolution, an efficient mortgage market existed “to help investment in land

improvements, enclosure acts and drainage acts.” To reduce the risk of investments, the ownership

of ships was broken down into small fractions, while insurance companies were involved in

shipping. The loanable funds were generally available from falling in interest rates on government

bonds "where annual rates fell from 7 percent in 1700 to 3 ½ percent in the 1750s. Mortgage rates

followed gilts in this fall, staying between ½ and 1 percent higher. Between 1714 and 1832 the

usury laws imposed a 5 percent maximum on commercial interest rates.”123 The available funds

for investment came from domestic savings and foreign loans, and the allocation of resources were

affected by state policies mobilizing funds to specific sectors like the infrastructure or transport or

energy, although military spending and interest payments were dominant.



Taxation and Debt Finance in France: France was the larger state than Britain in terms of

the population and national income. In 1715, France held 19.25 million people with £116 million

of GNP (£6.0 per capita), and Britain held 7.13 million people with £46.2 million of GNP (£6.5

per capita), The numbers rose in 1788 to 26.60 million people with £280.8 million of GNP in

France (£10.56 per capita), and 9.37 million people with £134.8 million of GNP in Britain (£14.38

per capita). The ratio of tax revenue to GNP in France was 9.4% in 1715 and 6.8% in 1788, while

that in Britain remained at the level of around 12.5% in the corresponding years. The ratio of tax

revenue to GNP was much lower in France than in Britain in both peace and war years. If France

had maintained the same level of tax revenue as Britain in the pre-Revolutionary year, the total

amount of the tax revenue would have been 865 million livres instead of 472 million, which would

have reduced much of the outstanding sovereign debt. Nevertheless, the French institutions

collecting taxes were inferior to the British ones because of following reasons. First, France had

absorbed new regions in Europe from the Middle Ages until Louis XIV, who expanded the

frontiers of the kingdom towards the north and towards the Rhine, that retained separate tax

regimes that created the diversity of taxes and tax rates by regional or personal legal status. Second,

the clergy and the nobility plus privileged individuals or groups were exempted from taxes. The

inherited old order remained so persistent that their special interests obstructed reforms improving

efficiency of fiscal policies despite many reform efforts. Third, France had no national institution

representing taxpayers: unsecured property rights and lack of legitimacy in taxation caused

resistance against taxes - tax evasion or fiscal uprising - whenever new taxes were imposed.

Fourth, the tax collection system was operated by tax officials and contractors of the tax farms

having considerable autonomy in assessment and collection by providing short-term loans to the

sovereign based on anticipated taxes. They took advantages in getting contracts with the

government in the absence of free competition in the open market.

Taxation: The principal direct tax was taille imposed on landed income from the Middle Ages

until 1789, while both the clergy and the nobility were exempted from it. Most direct taxes were

managed by the tax officials. "Parishioners named four to eight tax collectors, who were paid a

commission of 2.5 to 5 percent to assess and collect taxes. They sent the money to the receveur

of the election who paid some local expenditures. About 90 percent of the revenue was forwarded

to the receveurs-generaux, who made payments assigned by the king, passing on a fraction of

collections to the central treasury." Meanwhile, tax officials used tax funds for their benefits as

short-term credits to the king until they were obliged to remit them. The taille was augmented by

additional levies of taxes in the sixteenth century. 124 There were three main forms of indirect

taxes in the ancient regime - gabelle or the salt tax, aides or the sales tax, and to traites or the

transit fees. Additional taxes were created by the crown: the tailion was a tax for military

expenditures, the douanes was taxes on exports and imports, and the octroi was local taxes. Most

indirect taxes were collected by the tax farms, with which the monarchy had three basic choices

of contract offering different incentives: tax collectors were paid a fixed wage for delivery of all

tax revenue to the crown; the crown creates a tax farm paying rent of a fixed sum to the government

for the right to collect a tax and keep the revenues; or create a tax farm with the lease to collect a

tax by sharing of the revenue. To maximize the tax revenue, the crown often used the combined

types of tax firms - paying rent and sharing the revenue. Moreover, the king sold the venal offices

to raise funds, which managed royal finances, justice, and other affairs. The venal offices were a

source of income, investment, and status; and they were either hereditary or transferable at the

price of one-sixtieth of the annual tax revenue. The central treasury was created in 1523 to reduce

the dominance of the receveurs-geneaux controlling tax collection. However, the central

administration of finance remained relatively modest in France.



Since the war expenditure surpassed the tax revenue, the sovereign debt was continuously

accumulated, so that it was impossible for the crowns to repay the debt in full in a short period of

time. The Key problem of sovereign debts lay in that no internal or external device existed to

enforce debt repayments, and frequent defaults of debts raised the risk premium of loans, so did

the costs of future financing. Under the old regime, France had the Estates General that was a

legislative assembly of the three classes - clergy, nobility, and commoners. In fact, having no true

power, they were an advisory body to the king who called or dismissed them. The Estate-General

met intermittently until 1614, but disappeared from the scene until 1789. The vacuum was filled

by the Parlement de Paris and regional parlements, which consisted of privileged noble judges

managing the judicial affairs of the king. Traditionally, the Parlement de Paris "legalized all royal

acts of taxation or loans by recording them in its registers in formal plenary sessions." If the edict

was illegal or harmful to the kingdom, it refused to record and made the edict unenforceable.

Sometimes, the king closed the Parlement or exiled its members. There was a bottom line limiting

its flexibility: no new permanent taxes could be decreed without an approval of the Estate-General.

From the sixteenth century, the crowns attempted to increase the tax revenue by the centralization

of tax collection, the reduction of tax avoidance and evasion, and the increase of tax rates, although

those efforts were often frustrated. Henry III (1574-89) endeavored to centralize and standardize

the tax system. The Wars of Religion, the sales of royal offices, and the growth of tax privileges

limited his efforts, but real tax revenues climbed over 50 percent. Louis XIII (1610-43) faced

internal wars with Protestants, peasant and urban revolts, and the entry of the Thirty Years War,

but gained more control of assessment and collection of taxes. In the minority period of Louis

XIV, France moved into internal chaos until 1661: the civil war and political instability forced

him to grant more privileges to the nobility, while the old privileges firmly entrenched into the

French tax system in favor of the nobility and the clergy.

After the death of Mazarin, Louis XIV (1643-1715) reorganized royal councils and began to

pursue a major fiscal reform. Punishing corrupt officials, he selected Jean-Baptiste Colbert as the

head of royal finance to design and oversee the reforms. Colbert consolidated the tax farms: "The

varied and scattered farms were organized into a single institution with a clear line of

accountability to the Crown." The leases on the tax farms in 1683 produced 65.3 million livres,

which was 1.77 times of the previous amount leased by his predecessor in 1661. Colbert tried to

raise more revenue from direct taxes by creating new taxes such as capitation levied on all lay

people. As the War of the Spanish Succession drained the treasury, he used a wartime tax - the

dixieme - imposing a 10 percent tax on all incomes. He gave greater authority to the intendants

monitoring venal officials, who assessed and collected direct taxes, to reduce self-enrichment.

Louis XV (1715-74) used the dixieme during the Wars of the Polish and Austrian Successions but

abolished in 1751. He introduced a new tax, the vingtieme, imposing 5 percent tax on income that

was extended to finance the Seven Years' War. Waging a long struggle with the Parlement de

Paris, he restructured its two chambers to be a single chamber to reduce their influence. Louis

XVI (1774-93) engaged in the American War of Independence, which drained many resources

and exacerbated the fiscal condition of France. During his reign, the character of taxation was not

substantially reformed, but he gradually raised the lease price of the tax farms to 144 million livres

by 1784, which was not sustainable. While the Parlement de Paris blocked any new taxation

without an approval of the Estate-General, the crown called its meeting for new taxes in 1789,

which ignited the French Revolution that finally removed all of tax exemptions allowed to the

privileged classes under the old regime. During the Napoleonic Wars, direct tax receipts fell to

20%, while those from indirect taxes increased: customs duties reached at 25%, and both excises

and stamp taxes increasingly contributed more to the total revenue of taxes.



Deficit Finance: The French adhered to the bimetallic standard at a bimetallic ratio of 14.5

(that means 14.5 ounce of silver equal 1 ounce of gold) until the French Revolution. Hence,

sovereign deficits had been financed by debt rather than printing money because of the inflation

fear. The debasement of the coinage, reducing the weight of gold or silver in coins or increasing

the face value of coins, lowers its value causing inflation. The crowns could collect an inflation

tax, which generated substantial revenues for the government. The French Crown had engaged in

five major debasements until the early fifteenth century, which created technical problems of

coinage. As the demand for coin certificates increased to 6.7 million livres, the crown created a

caisse d'emprunts or loan treasury in 1704, issuing notes bearing 6 to 10 percent of interest so that

the coin certificates began to carry interest. A new minister created the Caisse Legendre, by

pooling resources of the 12 receveurs-generaux who issued interest-bearing notes collateralized

by taxes, which created substantial short-term credit for the government. Louis XV appointed

John Law to Controller General of Finance. "In 1716 Law established the Banque Generale in

France, a private bank, but three-quarters of the capital consisted of government bills and

government-accepted notes, effectively making it the first central bank of the nation."125 Law

instituted many reform policies, which increased 60 percent of industrial output in two years.

However, the Mississippi Bubble - a sudden collapse of the inflated stock prices hurt investors

and created political and social problems - forced him dismissed from the court. In 1776 the crown

created the Caisse d'Escompete modeled on the Bank of England, having "a limited liability

partnership with the right to discount bills of exchange and other commercial paper at a maximum

interest of 4 percent and issue banknotes redeemable in coin." It was a bankers' bank offering

credit to the private bankers. As the crown forced 70 million livres of loans; despite increased

reserves, the redemption of bank notes was suspended by 1789.

The national debt of France was 2.4 billion livres after the death of Louis XIV in 1715

excluding royal promissory notes since the War of the Spanish Succession (1701-14) added 1

billion to the debt. The ratio of annual debt service to the tax revenue increased from 33 percent

in 1699 to 69 percent by then, which level was not sustainable, so that the debt default was

unavoidable. The regent created the chambres de justice that summoned many individuals, who

involved in the tasks of tax collection and lending to the state, to investigate possible wrong doing.

"Some accused persons fled the country, while others battled the court. In most cases the sentences

were never applied, and the accused 'redeemed' themselves by paying a fine to the king for

immunity or amnesty." From the sixteenth to the eighteenth century, the defaults on the debt and

the chambres de justice were "part of the financial housekeeping" in France when the debt burden

became explosive after the long and expensive wars. The cost of the War of the Austrian

Succession was 1 billion livres: the outstanding debt was 1.2 billion by 1753, while the debt

service was 85 million, which was 20 percent of the annual tax revenue. The Seven Years' War

required France to pay the cost of 1.3 billion livres, which raised the French debt to 2.3 billion,

and the annual debt service rose to 160 million - over 40 percent. During the American War of

Independence, France spent 1.3 billion livres: by 1785 France was on the verge of bankruptcy,

and few financiers wanted to lend them. "Like the tax system, the system of borrowing was never

fully reformed. The critical needs of war financing led successive kings and finance ministers to

continue their reliance on the system of privileged lenders that included the tax officials and the

venal office holders....the monarchy was unable to depend completely on the open market. The

inability to generate sufficient tax revenue and its frequent defaults made the government a risky

borrower."126 Thus, the high cost of wars continuously accumulated sovereign debts; the fiscal

institutions not-fully mobilized resources; and default risks and inefficient money markets resulted

in the high cost of public loans in the eighteenth century of France.



The Netherlands and Trade Finance: The Low Countries - current Netherlands, Belgium,

and Luxembourg - consisted of a number of duchies, counties, and bishoprics under the reign of

the Holy Roman Empire until Charles V who unified the seven provinces by the Pragmatic

Sanction issued in 1549. He was succeeded by his son Philip II in 1556. The Netherlands, led by

William I of Orange who converted to Calvinism, revolted against the Catholic Spain in 1568,

which was the beginning of the Eighty Years War. The Peace of Westphalia of 1648 recognized

the Republic of the United Provinces, while the southern provinces (Belgium) remained under

Habsburg rule, which caused massive migration from the south to the north. The rural society of

the Netherlands was modernized: "the autonomous rights asserted by farmers united in drainage

associations," and "the urban and proto-urban settlements of the region all served to endow the

maritime province with property rights and personal freedom long before the emergence of a full-

blown capital society." The rise of cities and the existence of fragmented sovereignty were the

potential sources of political leadership, causing to emerge constitutional rule. The increasing

maritime power and the emergence of free markets made the Dutch Republic prosperous, and

Amsterdam became the trading center in northern Europe in the seventeenth century.

The seven provinces of the Netherlands shared the financial burden according to a quota that

each province was required to support the central government's budget: Holland was the leading

province paying 58 percent of this budget. The central government had no authority to impose

taxes except the customs duty levied on imports and exports - on average 3-4 percent of the trade

value - in terms of defraying the cost of convoy services provided by admiralties to the merchant

marine. Holland levied taxes on real property; miscellaneous taxes such as inheritance taxes,

stamp taxes, and occasional wealth taxes; and the excise tax on sales. The excises were under 3

guilders per inhabitant of Holland in 1584, and steadily increased to 10 guilders by the 1630s, and

became 17 percent of the annual earnings of a fully employed unskilled laborer. The further

revenue was increased by new direct taxes on income and wealth. The revenue share of Holland

coming from the excise was 60 percent in the 1630s; and that from the indirect taxes was 40

percent in 1790. Urban governments charged additional taxes levied by drainage boards and a

wide range of fees such as tolls for the use of roads, canals, locks, bridges, and harbors. The

provincial government tried to minimize infrastructural investments and educational costs, so that

the Dutch Republic suffered from underinvestment in such things as paved roads and canal

dredging, while the central government had no taxing power for them.

The tax revenue of Holland in 1688 was 21.70 million guilders, its population was 860,000

persons, and the tax burden per capita was 25.3 guilders; and in 1788, 24.9 million guilders,

783,000 persons, and 31.8 guilders respectively. The public debt of Holland was no more than 5

million guilders in 1600, which increased to 23 million guilders in 1621. Holland borrowed 115

million guilders during 1621-47. "By 1640 the debt of some 95 million guilders required 6.5

million per year in debt service - itself about 60 percent of Holland's tax revenue." By 1713, "the

total debt probably exceeded 200 percent of gross domestic product, and service costs absorbed

nearly the entire ordinary tax revenue of the provinces." Provincial borrowers issued three types

of debt instrument: Obligatien were negotiable promissory notes for short-term debts; Losrenten

were redeemable long-term bonds; Lijfrenten were life annuities. Holland reduced its annual debt

service considerably by converting bonds to lower interest annuities.127 The financial sector was

developed in the eighteenth century: merchant bankers, commercial lenders, private account

holders (kassiers), and foreign exchange brokers, that facilitated financial markets with bank

deposit receipts, kassiers' promissory notes, bills of exchange, inland bills, and notarial credit

instruments. The Amsterdam Exchange Bank was a bank of deposit and transfer; while the Bank

of Amsterdam became insolvent by 1790 and the city took over in 1791.



Trade and Finance: The States-General of the Netherlands chartered the Dutch East India

Company (VOC) in 1602 by granting a 21-year monopoly to carry out colonial activities in Asia:

some 1800 people formed the largest joint-stock company by investing 6.4 million guilders.

"Between 1602 and 1796 the VOC sent almost a million Europeans to work in the Asia trade on

4,785 ships, and netted for their efforts more than 2.5 million tons of Asian trade goods."128 The

company supplemented its Europe-Asia trade in spices with an intra-Asian trade coordinated from

Batavia. The Dutch West India Company (WIC) was chartered by the States-General in 1621

granting a trade monopoly with Brazil, the Caribbean, and North America as well as the African

slave trade.129 Initially, the 7.1 million guilders were capitalized from chambers of all provinces

and some other cities. Jan de Vries observed the four phases of colonial development of the

Netherlands in the new world as follows.130 In the first phase, the Dutch settlements in the new

world were closely related to the trade through the WIC. In 1628 Admiral Piet Heyn of the WIC

captured the Spanish silver fleet on the Cuban coast, carrying a cargo of 12 million guilders worth

of gold, silver, and other expensive trade goods.131 The Dutch conquered Pernambuco in 1630

(that was originally inhabited by the Portuguese in the sixteenth century), and established a Dutch

colony of Vitoria da Conquista for the cultivation of sugar and cotton.132 The colony annually

exported 24,000 tons of sugar to Amsterdam alone in the 1640s; and the WIC annually sent over

30,000 African slaves to Brazil until they surrendered it to Portugal by 1654. In North America,

the WIC established a colony at New Amsterdam (New York), which population was only 270 in

1628.133 They intended to supplement the fur trade with an expanded production of foodstuffs by

developing plantations. The lack of leadership and the Anglo-Dutch War caused them to pass the

colony to England in 1664.134 Unlike the VOC in Asia, the WIC in the Atlantic lost its monopoly

privileges against foreign competitors or Dutch private traders - allowing its shareholders to trade

privately, which resulted in the decline of the company.

In the second phase, after the loss of Brazil and New York, the Dutch integrated the Atlantic

system focusing on the trading centers of Curacao, Saint Eustatius, and New Amsterdam in the

absence of a territorial base controlled by the Dutch, and the WIC restricted its trading monopoly

to African gold, ivory, and slave trade. Drifting away from Brazil, Dutch planters and merchants

directed their attention to Barbados and Martinique by transforming tobacco farms into sugar

plantations with extended credit. The Dutch supplied manufactures to the Caribbean islands

controlled by the British, French, Spanish, and tobacco plantations in the Chesapeake. They

preferred Dutch commercial services to their national monopolists, which was extended to the

slave trade. The size of Dutch slave trade was the second to the Portuguese until 1675: during

1650-75, the WIC shipped 57,000 African slaves to Curacao occupied by the WIC since 1634.135

The sugar shipments from the Caribbean to Amsterdam increased, and the Republic supplied a

half of the refined sugar consumed in all of Europe by 1660. The Navigation Acts excluded the

Dutch as suppliers of slaves and manufactures to and buyers from Barbados and other English

islands, but "Sint Estatius flourished as a center of sugar smuggling, while New Amsterdam swept

up Chesapeake tobacco"136 until the mid-1660s. The commercial losses and military Expenditure

limited the WIC to hold "the African trading outposts, six Caribbean islands, and its Wild Coast

possessions, most notably Surinam." When the WIC was bankrupt in 1674, the Republic

pressured the stock holders to add 1.2 million guilders for its survival. As the Dutch influence

declined in the Caribbean, Spain turned to the Netherlands by giving the rights to supply slaves

and commercial services to its colonies in the West Indies. Hence, the WIC and its Curacao

trading center prospered in the 1680s and 1690s by holding the Spanish asiento - a slave trade

contract. The Peace of Utrecht ended the War of the Spanish Succession in 1713, which forced

the profitable contract to shift to the British South Sea Company.



Unlike English law, the Dutch did not recognize the legality of indentures, so that the WIC

offered grants of lands to private investors, patroons, “in return for their commitment to furnish

the colony with a minimum number of adult settlers together with the necessary complement of

farm capital and infrastructure.” The patroonship was “designed to save the capital and reduce

the expenses of the WIC, encourage private investment and settlement, and expand trade,”

although its role was brief and limited in the early phase of colonization. In the third phase, the

plantation economies of the Netherlands had been developed on current Surinam and Guyana since

the 1680s. In Surinam of 1770, the total population was around 65,000 persons including 59,900

slaves in the 465 Dutch plantations, exporting 12 million guilders; while in Guyana, the total

population was 27,000 persons including 25,000 slaves in the 250 Dutch plantations. The

merchant bankers extended credit to the planters, accepted their bill of exchange, and received

their commodities, which the bankers transported, insured, and sold for a commission. In 1775

the average plantation debt stood at 32,000 guilders that was “between one-third and one-fourth

of the assessed value of the plantations.” Investors received usually 6 percent of an interest rate,

which was 1 percent more than most foreign government bonds.

In the fourth phase, the Netherlands remained a land of abundant capital, accumulated in the

seventeenth century, seeking profitable investments, but “neither the domestic economy nor the

New World colonies seemed to offer inviting prospects, and the Asian realm of the VOC was

closed to private investors.” Hence, the foreign government bonds became a better choice of the

investment for Dutch capitalists. The first Dutch loans to the American rebels, guaranteed by

France and the Netherlands, were 5 million guilders in 1781, and Dutch debtors held 22 percent

of U.S. domestic debt - US$ 13.1 million by 1803. The Holland Land Company organized by the

six Amsterdam banking houses in 1792 financed the First and Second Banks of the United States.

As the default wave swept Europe during and after the Napoleonic Wars, Dutch investors showed

a strong interest in foreign investing. Amsterdam supplied capital to the U.S. federal government

and to American railways. ”By 1895 Dutch foreign investment stood at a level 1.75 times its GNP,

a level not exceeded by the United Kingdom, then the world’s dominant exporter. Much of Dutch

capital then went to the East Indies, but the Dutch always remained important investors in the

United States, which was the recipient of 30 percent of all Dutch capital invested abroad in the

period 1875-1900.” The amount of Dutch investment to the United States rose to around 40

percent of their total foreign investment (US$2,000 million) by 1914.

Much of coinage was designed for exports and flowed into the east, and it was impossible to

keep Dutch coins in circulation in the colonies. The British American colonies experienced “(1)

the scarcity of small change, (2) the large role of Spanish and Portuguese coins, (3) the resort to

paper issued by the colonies, and (4) the importance of commodity money, where units of tobacco,

sugar, and so on, circulated at fixed values.” The debasement of colonial coins made the exchange

rate tend to be around 1.25 Surinam guilders per Dutch guilder, which could sink to 4:1 by 1811.

The major credit instrument was the bill of exchange “not only for trade between the colonies and

Patria, but also for payments within the colonies.” The introduction of paper money or bank notes

in the colonial economy reduced the domestic circulation of the bill of exchange: 5.6 million

Surinam guilders were circulated in 1800 and 6.5 in 1811. Meanwhile, the share of Dutch

production among the total Caribbean output declined from 8 percent in the 1680s to 6 percent in

the 1750s and to under 5 percent by 1775. Despite this falling share, Dutch imports from the

Caribbean rose as much as those from Asia by the 1770s. After the fourth Anglo-Dutch War

(1780-84), the WIC was unable to defend its colonies, so that its government nationalized the WIC

by 1791 and the VOC by 1796. Most of Dutch possessions in Asia were occupied by Britain

during the Napoleonic Wars and the Republic was dissolved by 1815.



Fiscal and Monetary Institutions in Spain and Portugal: (a) Spain: Charles V was

involved in wars against France over Italy in the 1520s, against the Turks in the Mediterranean in

the 1530s, and against the Protestants in Germany in the 1540s and 1550s. He had enormous

resources: "Italy and the Low Countries provided the largest part of imperial resources; in the long

run, however, Spain (mostly Castile) became the main financial supporter of the empire." Castile

flourished with sheepherding, wool exports, and woolen textiles with inflow of precious metal

from Spanish America. "Castile had a tradition of strong royal power, whereas Aragon-Catalonia

had a contractual constitutional system that substantially reduced the taxing power of the

monarch." However, numerous wars made his empire indebted, and his financial burden was

passed to Philip II, who also exhausted all resources for wars against the Ottoman Turks and

against the forces of the Protestant Reformation. The revenue sources of Spain were rich as of

1560 as follows. Ordinary revenues (around 38 percent of total) came from the tercias, alcabala,

and customs duties. The tercias was a direct tax imposed on agriculture by 2.22 percent of gross

output; and the alcabala was a sales tax that was 5 to 10 percent of sale price. The tax farmers

collected them until 1536, but a new system - encabezamiento - was adopted, that was based on

quota given to each territorial unit (city, town, or county). The customs duties were 12 percent to

the total revenue. Extraordinary revenues were 11.3 percent to the total: the servicio was an

emergency tax granted by the Cortes and typically intended to support a war effort; and was paid

by local quotas for which each commoner was assessed according to his wealth. American

remittances were 23.4 percent of total revenue: about one-third of precious metal from America

belonged to the Spanish Treasury in the sixteenth century. To finance debts, the Crown sold royal

estates, feudal rights, offices, patents of nobility; confiscated American silver remittances, and

forced donations and loans. The share of church donations was significant by reaching 13.2

percent to the total revenue in the same year. It was like throwing water on thirsty soil.

The war expenditure caused the continuous growth of public debt with asientos (literally,

settlements) for the short-term debt and juors (literally, I swear) for long-term debt. "The asientos

were contracts between the Crown and bankers entailing the bankers' obligation to deliver a certain

amount of money in a pre-determined location (typically silver in Flanders) against short-term

promissory notes or bills of exchange by the Crown." At the beginning, these notes and bills were

payable at fairs, but as the government asked for too much for too long, the asientos were made

"directly repayable from a specific source of revenue instead of in a future Fair." Since available

revenues for several years were assigned to creditors at a certain point of time, bankers refused to

extend more credit. So Philip II unilaterally converted asientos to juros (from short- to long-term

debt) with low interest. "Debt default and arbitrary confiscation made property rights patently

insecure, weakened the credit of the Spanish state, and gravely hurt the banking system." Spain

established a tri-metallic system through the monetary reform of 1497 - a gold, silver, and vellon

coins. Under Philip II, the monetary system was not greatly affected despite the three bankruptcies,

because he was firmly against the debasement of coinage. But Philip III (1598-1621) used the

debasement of coinage to finance the unmanageable huge deficit: he issued copper vellon with

lack of silver proportion, and the copper coins were re-stamped at "double their face value" which

induced monetary inflation. 137 The undervalued money (silver) left the country or disappeared

from circulation, while the devalued money (vellon) flooded into circulation, as Gresham

predicted that bad money drives out good.138 In the seventeenth century, the tax revenue faltered

continuously because over-taxation ruined the Castilian economy; the sale of nobility patents

reduced the number of tax payers; and the insecurity of markets and property rights affected the

economy negatively. Moreover, the ineptitude and corruption of bureaucrats and tax farmers

directly affected the tax revenue further to decline.



In the eighteenth century, state revenues came from five categories. (1) Provincial revenues

were mostly the consumer and excise taxes collected by territorial quotas, which proportion of

total revenue was about 20 percent in the second half of the eighteenth century. (2) General

revenues came from taxes on foreign trade - customs duty, which contributed about 15 percent to

total revenue in the same period. (3) Fiscal monopolies provided income from the monopoly of

state as well as from private concessionaries. The list of monopolies includes tobacco, salt, pepper,

soda, liquor, and many others; which category generated over 22 percent of total revenue in the

same period. (4) American remittances from the Mexico City, Lima, and Buenos Aires yielded 15

- 25 percent of total, but the share declined in the last third of the century. (5) Tithes and other

revenues were about 10 percent of total. Above sources delivered about 90 percent of total revenue,

and the rest came from extraordinary income such as "originating in the army treasuries, income

from the royal estate, fines, deposits, and so on." The expansion of colonial trade resulted in a

rapid growth of general revenue after 1778. The enlightened rulers of Spain pursued the

reformation of the fiscal system to increase revenue, to stimulate economic growth, and to share

the tax burden reasonably; though not successful. By imitating the French, Spain created the posts

of superintendent of finance and of provincial Intendentes, which system was transplanted to the

Spanish Americas. In 1721, the superintendent became minister of finance, who created a series

of central offices to oversee several areas of fiscal administration. It was a significant reform to

introduce the single tax levied not only on agricultural wealth but also on all sort of assets; that

was planned to be a direct tax replacing some provincial revenues. Philip V issued a slightly

debased gold coin for provincial circulation by keeping the old gold and silver coins for

international operations. The tow-tier system had advantages, but two sets of coins caused internal

confusion. Nevertheless, the repeated bankruptcies of Spain ruined several generations of bankers

and destroyed its financial and credit system, made itself the second class state.

(b) Portugal: The Portuguese dominated the trade with the East Indies in the sixteenth century,

but its wealth declined under the Spanish rule during 1580-1640. The Portuguese court received

domain revenues of seigniorial duties from trade in pepper, slaves, timber, or gold, but revenues

from those monopolies fell rapidly "due to difficulties in pepper trade and to the low cargoes of

gold coming from eastern Africa." The other main source of state revenues was indirect taxes

imposed "on internal circulation, transactions and consumption, and also custom taxes, which

were responsible for over two-thirds of revenue in 1588." The tax burden rose during the last

decades of the union with Spain due to the decline of the Atlantic trade and the rising Spanish

demand for Portuguese contribution. "Extraordinary taxes were imposed on the mercantile

community of Lisbon and the municipalities of the kingdom; a new duty on salt was introduced

in 1631; the encabecamentos of the excise were increased in 1635; and income tax on officers and

privileged people was introduced in 1631." After the independence, the cost of the army - 25,000

infantry men and 5,000 cavalry men - was 65 percent higher than total revenue of Spanish rule,

which forced Lisbon to create the direct tax (the decima) from rents, labor income, profits from

investment and commercial activities in 1641; and to impose property tax on land and houses,

except owned by the Catholic Church and welfare institutions in 1654. The revenue from the

direct tax became 20 percent of the total revenue during 1660-1681. The involvement in the War

of Spanish Succession forced them to raise the decima from 4.5 percent to 10 percent by a decree

of 1704. The Portuguese crown used the debasement of coinage to finance the rising expenditure,

while the nominal price of gold rose from 142 to 487 reis per gram, and that of silver from 16 to

31 from 1641 to 1688. The trade deficit of Portugal caused the outflow of coins, mainly silver,

but the devaluation of Portuguese coins as well as the trade balance in the 1680s and 1690s

prevented the drainage of precious metal from Lisbon.



The Brazilian gold rush began in the 1690s, and gold arrived at Lisbon not only in bullion or

dust, but also in coins minted in Brazil. The Brazilian mints provided the colony with monetary

circulation without total dependence on the Lisbon mint. After 1714, the Porto mint ceased its

activity and the Lisbon mint was the only center for coining money, which centralized monetary

issue of the land. During the period of 1699-1788, gold was minted in Lisbon was less than one

third of the total arrivals of gold from Brazil. Since Castilian silver currency was circulated in

Portugal, bimetallism practically prevailed in Portugal until 1785. The abundance of gold made

the currency debasement unnecessary, and gold revenues arrived from Brazil transformed into

currency, that was used to finance war expenditure. Individuals could go directly to the Lisbon

mint to coin precious metal they received. "Gold arrivals helped to increase the Portuguese money

supply at a rate six times greater than the domestic output in 1689-1759, yet with little effect on

prices, certainly compared to the 1555-1640 period." Gold applied to the redemption of public

debt; that lowered interest charge and the reimbursement to creditors. In the beginning of the 1660s,

the Portuguese Crown was challenged on several fronts. The 1755 earthquake resulted in serious

losses of private property and wealth, and it demolished the royal palace and public building. The

Atlantic trade declined particularly in staples such as sugar and tobacco, which were large sources

of state revenues through monopoly and customs duties. Gold mining began to show a downward

trend, which lowered the state revenues. The major powers forced Portugal to participate in the

Seven Years' War, which required the rise of state expenditure. Pombal, the king's Minister,

introduced fundamental administrative, educational, economic, and ecclesiastical reforms.139 He

strictly revised "the regulations over the monopoly of gold mining and the payment of duties

associated with it, custom taxation, and the prevention of smuggling" and raised the rate of the

decima to 10 percent. His economic and financial reforms increased tax revenues, which would

increase the pressure on taxpayers. In 1777 the new Queen Maria I dismissed Pombal.

During the Napoleonic Wars, the tax immunities having been enjoyed by both classes of the

clergy and nobility were removed in order to overcome the financial problems of the state. "In

1796 Church and nobility were required to pay the excise duties. The Church was also taxed in

1800 by an ecclesiastic decima and in 1809 was included in the exceptional defense contribution

by an increase of the decima. In 1800 the decima was extended to the comendas. These measures

widened the tax base and lessened existing tax inequities, but the results were very modest."140 As

a consequence of the French invasion, indirect taxes dropped by 36 percent at the end of 1810s,

which required other means to innovate monetary and debt policies to overcome the financial

deficit. In 1796, a long-term debt, requiring registration through a public deed, was offered, which

increased the capital and the rate of interest, lowered the face value of the bonds, which was useful

for some state payments. "The lasting difficulties of Treasury eventually led to the issuance of

bonds with an even smaller face value than before, which could circulate as money at their nominal

value and were to be accepted in any transaction. These small bonds created an inconvertible

fiduciary means of payment, paper money" which was circulated along with gold and silver coins.

Like Britain and France, it was necessary to create a bank capable of managing the public debt

and issuing convertible bank notes, but no such bank was created. Hence, the circulation of paper

money caused a loss to the state, since discount of paper money reached 60 percent during the

French invasions. As the state debt rose, the Crown sold some royal properties, and resorted to

external borrowing. After the French war, foreign loans were partially paid by the indemnities of

the Treaty of Vienna, and foreign loans during 1815-28 became Brazilian debt. Finally, the Banco

de Lisboa was created in 1821 by royal charter issued banknotes for acceptance and consideration

in Exchequer Departments on the same terms as metal coins, while remaining exempt from all

taxes in its transactions. Such privileges were confirmed by the Royal Charter in June 1824.141



Map II-4-1. Political Boundaries of the World in 1700 Source: https://upload.wikimedia.org/wikipedia/commons/thumb/7/71/1700_CE_world_map.PNG/1280px-

1700_CE_world_map.PNG

Map II-4-2. Political Boundaries of Europe in 1815 Source: http://www2.bc.edu/~heineman/maps/1815label.jpg

http://www2.bc.edu/~heineman/maps/1815label.jpg



The New World - Fiscal and Monetary Adaptation: (a) The United States had maintained

the annual growth rate of 3.3 to 4 percent for most sub-period of two or three decades during 1650-

1900 in line with the rising population. After the successful American Revolution of 1775-83,

local governments continued to finance their activities with property and poll taxes, while the new

federal government relied primarily on customs duties, supplemented by land-sale and excise taxes

for revenues. In the 1790s, the federal government spent about 60 percent of total revenues, the

state governments about 10 percent, and local governments 30 percent. Deficits of the federal

government arose mostly in wartime when the Treasury issued bonds to finance war expense.

Since the federal government could maintain budget surplus if not at war, the national debt was

totally redeemed in the 1830s. Alexander Hamilton (1757-1804) was appointed to the first

Secretary of the U.S. Treasury in 1789: he strengthened public finance by organizing the

department and its machinery to collect the customs duties and internal excise revenues; and

established a banking system based on its liabilities convertible into a capital market in which

governments and private entities could raise funds by issuing bonds and stocks that were tradable

in securities markets. Hamilton founded the Bank of the United States in 1791, funded primarily

by a tariff on imports and later by excise tax on whiskey.142 In the colonial period, the monetary

regime featured a variety of moneys and the use of coins. Because of chronic trade deficits, any

hard-money system proved difficult to maintain. The bills of credit quickly evolved into a fiat

paper currency, which were over issued during the 1730s and 1740s, followed by the worst

inflation. The Currency Act of 1751 limited on fiat paper issue in New England. In 1775, the

Continental Congress authorized an issue of $2 million in the Continental Currency, national bills

of credit; and states issued paper money and loan certificates. After the independence, the United

States adopted a bimetallic system, where the U.S. dollar was defined by an amount of gold and

silver, and banknotes and deposits should be convertible into specie.

(b) Canada was ruled by France until ceded to Britain by the Treaty of Paris in 1763, when

the population was increased to 50,000 from 23,000 in 1713. Under the French rule, Canada was

part of the Domaine d'Occident, a tax farm that controlled French West Indian territories, which

collected import and export duties and some seigniorial dues. The expenditures of the French

government, mostly arising from military activities, far outweighed taxed raised in Canada. The

Canadian money was coins minted in France, which caused a shortage of currency. The colony

used the playing card as a medium of exchange: the colonial intendant paid his bills by writing

IOUs on playing cards with promising to redeem. The colonial government issued ordonnances

in 1730 that filled the same function as the initial playing card currency. However, war-induced

fiscal problems led to a depreciation of bills down to 25 percent of their value. After the American

Revolution, an estimated 32,000 to 40,000 of Loyalists immigrated to Nova Scotia or settled in

Quebec ruled by Britain since 1763. In 1791 the Canada Act split the colony into Upper (Ontario)

and Lower (Quebec) Canada. The colonial governments collected revenues, "primarily from trade-

based taxes, land revenues, and fees, to pay for the expanding costs of government." Because of

war, Lower Canada faced the first financial crisis from two sources: militia spending in 1812-15

and the repayment of Army Bills. The population of Lower Canada was near three times that of

Upper Canada, and the revenue of the former was £110,000 and the expenditure was £80,351 in

1825. Upper Canada pursued an aggressive infrastructure projects largely financed by the issue

of debt. The Canadian monetary system applied the multi-coin standard "with the legal tender

ratings of the coins being altered intermittently by the colonial legislature." The first paper money

was issued to finance the War of 1812; and the authorities allowed to issue two types of bills

circulated freely - large bills (denominations of $25 or above) bore 6 percent interest per annum,

and small bills (denomination between $1 and $20) bore no interest.



(c) Mexico was the largest silver producer and exporter in the world in the late eighteenth

century, and its silver pesos circulated throughout the world including the Caribbean islands,

Europe, and even China and India. The colonial government of Bourbon Mexico collected taxes:

the annual average of the total revenue during 1795-9 was 20.45 million silver pesos, collection

costs were 5.13 million, and net income was 15.32 million (around 75 percent of gross income).

There were four major income sources: (1) mining taxes - 10 percent duty levied on all silver

produce, which was minted in Mexico city; (2) trade taxes most of which were duties on internal

commerce and on native alcoholic beverages; (3) the state monopoly of the tobacco industry; and

(4) the tribute tax levied on all heads of households in the Indian towns who lived and cultivated

their own land. The proportion of mining taxes in the same period was 22.06 percent, trade taxes

20.41, Indian tribute 6.10, state monopolies 43.28, and the remaining proportion was 8.15 percent

of the total revenue, in which the transfer of Catholic Church income to the state was 3.36 percent,

and forced loans were 3.19 percent. The tax revenues went to three ways. The first level of

spending went to the 24 different regional treasury offices of the colony, which are responsible

for the payment of a substantial part of military expenses of the region. The second level was the

transfer of surplus fiscal funds from New Spain to the Greater Caribbean. The third level of

spending went to the home country - the fiscal funds were transferred from Mexico to Spain, which

scale was much less than the second level of transfer in the eighteenth century. The annual amount

of fund transfer from Mexico to Spain was almost 5 million pesos in average in the 1790s. As

public debts were accumulated, more funds were extracted from the Mexicans by both voluntary

and forced loans, and so-called donations. After independence in 1821, the federal government

co-existed with state governments, while public debts increased rapidly. The National Bank of

Mexico was established in 1881; capital markets were stimulated by the railway construction; and

Mexico finally adopted the gold standard by 1905.

(d) Brazil was landed by the Portuguese in 1500, who set up fifteen hereditary captaincies in

1534-6, though only Pernambuco and Sao Vicente were prospered with sugarcane mills installed

after 1542, in addition to cutting and exporting of dyewood. The Crown sent Governor to Brazil

who established the capital city in Bahia in 1549, and founded the city of Rio de Janeiro in 1565

by expelling French Calvinists.143 In 1580-1680, Brazil became the largest sugar producer and

exporters in the world, while the governor established a customs house and collected taxes on

sugar crops - tithe (10 percent) in Brazil, and 10 percent for customs duties and 10 percent for

sales tax upon entry in Lisbon. Excises on certain imported or local consumer goods were levied

in some cities of Brazil. The Crown imposed tax on agriculture, monopolized certain products

such as salt and tobacco sales as well as whaling. The taxes imposed on Brazilian products upon

entry in Portugal was higher than 30 percent during the war time due to additional new taxes,

which increased the burden on the colony's inhabitants and consumer prices. "The generalized

system of credit granted by metropolitan and local merchants to the colonists, involving the use

of letters of exchange since late sixteenth century, with balances being only periodically settled in

currency instead of paid in kind, as was most frequently done, coincided with a limited circulation

of coins in the colony."144 The first mint was authorized in Bahia to issue coins for local use, and

6.66 percent of production costs were charged on the coinage of gold and silver. "Copper coins

were also issued in Oporto between 1694 and 1699 for exclusive circulation in Brazil." As Brazil

became the largest producer of gold in the world, Lisbon permit a significant increase in Brazilian

coinage of gold, silver, and copper, while the Treasury enjoyed revenues coming from gold mining.

As gold production faltered after mid-century, average revenues of quinto (fifth) declined from

over 100 arrobas in the 1750s to 68 arrobas during 1774-85. Coins were already scarce and the

Crown restricted economic freedom in the colony.



(e) Argentina was discovered in 1516 and the Spanish Crown established the Viceroyalty of

the Rio de la Plata in 1776, which colony consisted of today's Argentina, Uruguay, and Paraguay,

as well as much of present-day Bolivia.145 As ships from Spain became scarce after the battle of

Trafalgar, the British invaded Buenos Aires and Montevideo in 1806 and 1807 but was defeated,

and Argentina declared its independence in 1816, which was officially recognized by Britain in

1825 with the signing of a Treaty of Friendship, Commerce, and Navigation. The colonial life

centered on the plains of the northern pampas and its major city of Cordoba, where the ranches

were managed by Jesuit administrators. The Viceroyalty collected four types of taxes which were

the principal sources of income. First, the tithe: "This was originally a fifth that was paid to the

Crown for the silver mine concessions. In response to the labor shortage that began in the

seventeenth century and increased costs, the fifth was reduced to a tenth." The Crown received

additional revenue through seigniorage - gained from the coining of money. Second, tribute from

the indigenous population: "A head tax assigned to each member of a village or tribe and paid

either individually or communally." Third, alcabalas was a sales tax collected from transactions

of all properties including consumer good that was originally in force in Spain from the 12th

century until 1845. Fourth, almojarifazgo: This was a tax imposed on imports that Buenos Aires

collected along with the alcabala. The regional tax offices - intendances collected taxes, and

remitted them to the Crown after paying their collection expenses. In money, gold and silver coins

were circulated, while one gold peso was 16 to 17 silver pesos worth. Neither copper coins nor

the paper money circulated in Spain was popular in Argentina. As Spain was engaged in the war

with France, the May Revolution took place in Buenos Aires in 1810 and the revolutionary

government authorized free trade and maintained colonial privilege on the trade monopoly with

the right of taxation. The separation of upper Peru and Chile from Argentina impeded the inflow

of silver, which caused a general shortage of money in circulation.

(f) New Granada was the name given in 1717 to a group of Spanish colonies including modern

Colombia, Ecuador, Panama (by 1739), and Venezuela. The territory of the Viceroyalty of New

Granada additionally included Guyana, and parts of northwestern Brazil, northern Peru, Costa

Rica, and Nicaragua.146 The population of New Granada was 739,759 in 1778: the proportion of

mixed races and the free blacks was 49.0 percent, white 25.4, American Indians 19, and black

slaves 6.2. New Granada experienced two cycles of gold production: the first gold cycle (1550-

1620) was concentrated in central Colombia, Popayan, and Antioquia; and the second gold cycle

(1680-1820) was centered in Choco and Antioqueno. The gold production increased throughout

the century, and its annual growth rate was around 2.3 percent in average in the eighteenth century.

The net fiscal income of the Viceroyalty of New Granada amounted to $2.23 million silver pesos

in 1783, in which 29.3 percent were from Cartagena and 19.7 percent were from Santa Fe. The

revenue sources of New Granada were 59.4 percent from monopolies of state (mainly liquor,

tobacco, and salt), 14.7 from taxes on foreign trade, 9.8 from mining, 9.0 from taxes on commerce

and production, 2.8 from Indian tribute, 1.8 from taxes on royal bureaucratic salaries and sales of

offices, and 2.5 from miscellaneous income. The structure of tax revenues changed in two ways:

the proportion of state monopolies declined from 59.4 to 42.2 percent during 1783-1808, while

Indian tribute increased from 2.8 to 18.0 percent in the same period. The new Republic abolished

several taxes in 1821 including Indian tribute, sales tax on domestic production, liquor monopoly,

exports of various items, and others. In New Granada, gold and silver coins were minted with

different standards of purity; and low quality of coins (copper) were minted in 1811 to finance the

war expenditure. "The Constitutional Congress of 1821 decreed that all the coins of gold and

silver minted after that date had to conform to the same specification that had been used in the

Spanish Empire." However, it was impossible to follow it in the state of disarray.



5. The Change of Society in European States

Social changes mean an alteration of the social order in society: if the socio-economic structure

shifts from feudalism toward capitalism, it may refer to social revolution. Society is transformed

by the influence of various factors - philosophical or ideological changes, political and religious

movements, international wars, economic transformation, scientific development, and other

intellectual improvement. The age of Enlightenment that was sparked by John Locke and Isaac

Newton in England and led by Voltaire and Rousseau in France. It transformed human mind from

"faith, tradition, and authority" to "reason, liberty, and equality" which influenced society in two

ways. One was in the conflict between reason and faith or between religion and science-plus-

philosophy, which transformed society toward secularization - from religious values toward

nonreligious values through modernization and rationalization.147 The other was in the change of

the political system - liberal ideas spread to educated elites across Europe, reached at the British

colonies in America, and influenced politicians to lead the American Revolution. In France,

liberal ideas ignited to the resentment of the people oppressed and exploited by the privileged

classes, which led to the revolution. The French revolution destroyed the old regime - the clergy

and nobility classes lost their privileges which they had traditionally obtained and enjoyed. Many

of the old nobility were impoverished "by careless or absence management of domains, or by

unprogressive agricultural methods, or by exhaustion of the soil, or by depreciation of the currency

in which they received tenant rents or feudal dues." The Church was nationalized, and their

properties were confiscated by the state, paying salaries to bishops and priests. In the protestant

states, the Church was reorganized, while priests and nuns were dismissed from the Church and

dispersed by individual choices. The French Revolution restructured the society, so that no

privileged classes – the nobility and the clergy - were accepted by society.

Wars massively mobilized manpower and military logistics, and increased communications

between states, which contributed to social changes. The French conquest caused a movement of

resistance against Napoleon in the conquered lands such as Spain, Prussia, and Austria; which was

based on nationalism loving their country and culture. Just like political changes, economic

transformation caused social changes, so the social impact of the Industrial Revolution was deep

and wide. First, the population growth was explosive due to the decline of death rates throughout

Europe owing to an increase in food supply and a decrease in famines, epidemics, and wars. The

rapid urbanization by industrialization intensified problems of housing, sanitary conditions, and

adulteration of food for the working class. Second, the rise of capitalism created the industrial

middle class (bourgeoisie) and working class (proletariat). The working conditions for the

industrial workers were dirty, dusty, and unhealthy such as in the cotton factories; and dangerous,

cramped, and damp in the coal mines. Both children and women were employed in a large number

in factories and mines long hours under strict discipline. The inequality of income and wealth

became wider despite improvement of worker’s income. Third, the Industrial Revolution

transformed morality of the protestant ethics as a capitalistically-minded middle class became

thicker. It emphasized profit motive and capitalistic efficiency, which were different from the

agricultural regime where the family was the unit of economic production and social order. Finally,

the first Industrial Revolution spread the capitalism as much as the socialism. The former preached

the doctrine of economic liberalism - laissez faire in investment and trade, while the latter

propagated the idea of political and economic equality for the unprivileged class throughout

Europe. 148 This section deals with the changes of society, education, and culture in major

European countries in the eighteenth century, for which I want to see grand woods through

recognizing how individual trees are surviving during the cold winter.



Photo II-5-1. Women’s Involvement in the French Salons (early 18th century) http://upload.wikimedia.org/wikipedia/commons/a/a9/A_Reading_in_the_Salon_of_Mme_Geoffrin,_1755_Small.jpg

Photo II-5-2. The Height of Popularity of the Perspective Views (late 18th century) Source: http://www.philaprintshop.com/images/vuebrussels.jpg

http://upload.wikimedia.org/wikipedia/commons/a/a9/A_Reading_in_the_Salon_of_Mme_Geoffrin,_1755_Small.jpg

http://www.philaprintshop.com/images/vuebrussels.jpg



The Social Structure in Britain: In British society, the nobility consisted of two entitles -

the peerage and the landed gentry. The peerage included duke, marquess, earl, viscount, and baron;

who were the peers or lords - the Scottish (since 1707) and the Irish (since 1801) peerages elected

some of their members to sit in the Lords. The landed gentry included baronets, knights, esquire,

and gentleman: they were nobles but not members of the peerage. They were separated by law,

marriage, income, lifestyle, and proximity to the throne; and no one thought of breaking down the

barrier between the classes in the eighteenth century. Successful burghers tried to use it, and

"often were successful in capitalizing on their accumulated wealth to establish themselves as

landed gentry." 149 The nobility is sustained by the family system, marriage strategies, and

privileges. The family system is disturbed by that a high proportion of children never married;

that the lack of emotion exists in relations between husband and wife, and between parents and

children; and that the number of eligible partners is smaller for the marriage of heir. On the other

hand, the privileges given to the nobility became powerless: the noble conception of honor granted

dueling to them, which behavior was criticized by the enlightened thinkers; the authority

exercising over land and people was limited by absolute rulers, the liberal ideas of the people, and

the rising new riches; and the nobility showed little enthusiasm "for acquiring the necessary

specialist skills or for adapting its lifestyle to accommodate a bureaucratic career." Social mobility

is largely achieved by education, marriages, and wealth. Although Britain experienced relatively

high social mobility, "its peerage was normally recruited from the gentry....it remained exceptional

for personal achievement to join wealth as a means of crossing social barriers."150 The decline of

the landed nobility and the rise of industrialists and merchants influenced the privileges of the

nobility to be less significant in the century of industrialization. Unlike France, the clergy was

unable to protect their traditional interests in Britain.

The Church of England was founded by replacing papal authority with the supremacy of the

English crown: Henry VIII dissolute the monasteries, seized and sold their assets to the nobility

and rich commoners by 1540. The process of reformation began with the publication of the Book

of Common Prayer in 1549 and the enforcement of the Acts of Uniformity. Elizabeth brought the

religious settlement between the factions of Rome and Geneva with the 1559 Book of Common

Prayer, the Thirty-Nine Articles, the Ordinal, and the two Books of Homilies; which became the

basis of all of Anglican doctrine and identity. The Parliament passed the Act of Supremacy which

recognized Elizabeth as the Church's supreme governor. James I attempted to bring unity to the

Church of England by publishing the King James Version of Bible in 1611. The Puritans sought

more far-reaching reform, while the more conservatives kept traditional beliefs and practices;

which was developed to the Civil War - Anglicanism was disestablished and Presbyterian

ecclesiology was introduced. Charles II restored Anglicanism in a form not far from the

Elizabethan version. In 1689 after the Glorious Revolution, the Act of Toleration was enacted, and

allowed freedom of worship to Nonconformists - Protestants who dissented from the Church of

England. Anglicanism spread outside of the British Isles "by means of emigration as well as

missionary effort."151 The British monarch has the constitutional title of Supreme Governor of the

Church of England, which power is exercised through Parliament and the Prime Minister. The

church is structured as follows: Parish often consists of one church building and community;

Deanery is a district for which a rural dean is in charge of a number of Parishes; Archdeaconry is

the area consisting of a number of deaneries under archdeacon; Diocese is the area under the

jurisdiction of a diocesan bishop, with a number of archdeaconries; Province is the area of

archbishop controlling dioceses. Primacy is the Church of England, and Royal Peculiar is a small

number of churches for the Crown.152 The development of the British Church in the eighteenth

century is previously discussed in the section 4 of Chapter I (page 94-5).



The British commoners were the people who did not belong to the nobility - the peerage and

the landed gentry. Traditionally, members of the House of Commons were commoners, while

members of the House of Lords were peers. The commoners include peasants, bourgeoisie, and

proletariat. Peasant commoners consist of landed, cottage, and landless peasants. Landed peasants

are the yeoman class that includes small farmers who held a reasonable amount of land and are

able to protect themselves from neighboring lords. Cottage peasants own no land but have the

cottage right - an occupancy right of some cottages, inns, millhouses, farmhouses, and other

buildings or sites of former buildings; which brings pasture rights for cows, sheep, and horses.

Landless peasants are the people who own or rent no land at all, and have no cottage right: they

are the manual laborers in the farms, and sometimes immigrants and squatters are included in

some parishes. Bourgeoisie commoners are the middle class including doctors, professors,

administrators, manufacturers, merchants, financiers - who make its way to wealth and power.

Proletariat commoners are landless peasants, urban laborers, domestic servants, the artisans in

shops or factories, the craftsmen who build or repair, and the poor including beggars, vagabonds,

pickpockets, street singers, organ players, medicine mountebanks. "In the first half of the

eighteenth century, the laboring classes organized as journeymen and apprentices under the old

guild system were gradually reduced to ordinary laborers as the skill required to operate weaving

and spinning machinery lessened." After the French Revolution, the Napoleonic Wars and with

the progress of industrialization, the division in three estates like in France had become somewhat

outdated, although the habits of the old regime remained unchanged in the lagged areas. "The

term 'common people' continued to be used, but now in a more general sense to refer to regular

people as opposed to the privileged elite....In America, a famous 1942 speech by vice president

Henry A. Wallace proclaimed the arrival of the "century of the common man."153

In the eighteenth century Britain, "The aristocracy was not interested in education except for

its own sons. It seemed better for the status quo that the peasant and the proletariat, and probably

the bourgeois too, should be unable to read." Therefore, the educational reform was delayed not

to be compulsory. "The wealthy educated their children privately, i.e. at home, with a hired

governess, or possibly tutors once they were older; boys of that class were often sent away to

boarding school, hence these fee-based educational establishments were known, confusingly, as

public school. The town-based middle class may have sent their sons to grammar school; daughters

were left to learn what they could from their mothers or from their father's library." The children

from the poor families like factory workers received no formal education, working alongside their

parents for long hours. "There were charity schools, which offered elementary education to both

sexes and all classes without charge; but the total enrollment in 1759 was only 28,000, they

excluded Dissenters, and they reached only a small fraction of the peasantry and hardly any of the

urban poor." In the 1780s, Sunday schools were set up to provide education to working children

on their one day off from the factory: they taught the youngsters reading and writing, and a

knowledge of the bible. "By 1831, Sunday schools in Great Britain were attended weekly by 1.25

million children, approximately 25 percent of the population." For the artisan class, apprenticeship

was the best education. Higher education was provided for the affordable, by domestic tutors,

public schools, lecturers, and two universities. The public schools opened to the nobility and the

gentry including affluent bourgeois. The courses were primarily classical - the languages and

literature of ancient Greece and Rome. From the time of Isaac Newton, the Cambridge University

maintained a strong emphasis on applied mathematics and mathematical physics. Oxford was also

involved in "an era of scientific discovery and religious revival" - Edmund Halley and John and

Charles Wesley.154 The Elementary Education Act of 1870 required partially state-funded board

schools to provide primary education in areas where existing provision was inadequate.



French Society and Education: Under the reign of Louis V, French society was skeptic,

immoral, and poverty-stricken. "If irreligion shared in releasing moral laxity in the upper class,

poverty co-operated with the natural lawlessness of men in producing moral chaos among the

lower strata of Paris." Skepticism was prevailed in philosophers who were hostile to Christianity:

they attuned their speeches to the men and women of the salons in Paris; and wrote their liberal

ideas in books, pamphlets, and newspapers. The spread of skeptic ideas to the mass of Paris might

make atheism attractive, so that it was possible for social forces of reason to move into the decay

of faith in medievalism. An increase in wealth of the upper class accelerated the race for pleasure,

which weakened religious zeal of the people. Philosophers often inclined to deism, a theological

position concerning the relationship between the God and the natural world, by rejecting

supernatural like prophecy and miracles. The traditional theists called them atheists, though deists

denied themselves to be atheists. Immorality was criticized by the people. Since the national

religion forbade the divorce, adultery was accepted as a pleasant substitute in the high society.

"Marriage was accepted to preserve the family, its possessions, and its name; but beyond that no

fidelity was demanded, by the mores of the time and class, from either the husband or the wife."

The husband is not only bound to his wife but attached to his mistress. According to a

contemporary, three quarters of the noble lords about the court were living with women whom

they did not married. Poverty was predominant in French society, particularly to landless peasants

and urban laborers. "Historians have estimated that in lean years 90 percent of the peasants lived

at or below the subsistence level, earning only enough to feed their families....documents on life

in the countryside at this time reflect the omnipresence of poverty." Since the urban poor was

always hungry, "Crime of all shorts flourished, from pickpockets in Paris to brigands on the roads."

The moral of French society was sustained only by the landed peasantry and the urban middle

class, while the proletariat always challenged law and order.

Primary Education was monopolized by the Catholic church with facilities and teachers. The

church used the curricula for religious indoctrination, "strengthening its own position and

propagating faith rather than literacy," which was criticized by the enlightened philosophers and

bourgeoisie, who wanted the state to educate useful citizens rather than the church to indoctrinate

loyal Catholics. Most parishes had an elementary school, where the priest or his appointee taught

reading, writing, and catechism for a small fee paid by parents per pupil. In the middle upper

classes, "most education was carried on at home by governesses, then by tutors, finally by dancing

masters." The Revolution led by the bourgeoisie nationalized schools and secularized education,

when the religious orders were entirely dissolved. Although the state confiscated church

properties, that curtailed its monopoly of educational resources, it took time to replace the pool of

experienced school teachers because of limited manpower and financial constraints. It was

essential for the state to fill the people with new ideology to eradicate religious influence and to

replace it by a secular system of instruction, which could perpetuate the revolutionary alliance and

ensure popular allegiance to the new regime. The revolutionary plans for primary schools - the

main principles - lay in that "the right of children to be educated - equality of educational

opportunity - the duty of the state to organize primary instruction as a secular and gratuitous public

service - the duty of families to guarantee school attendance - the use of French as the teaching

language."155 Napoleon had relatively little interest in primary education by leaving it to the

church of the local municipalities and insisting that "it should not extend beyond the rudiments of

reading, writing, and arithmetic" since "any extension of training to the masses would be

economically wasteful and socially dangerous."156 The Revolution of 1830 required that primary

education must enable the lower classes of society "to increase their output, to improve their living

standards and thus to create new sources of wealth for the State."



Secondary and Higher Education under the ancient regime was monopolized by religious

orders like primary one. Secondary education for boys was almost wholly in the hands of Jesuits,

though the Oratorians and the Benedictines shared in the work" until the expulsion of the order

from France in 1762. Generally, secondary education of girls was carried at home, while their

higher education was carried on in convents. After the Revolution, the instrumental activities

declined due to financial constraints with reduced teaching staffs. "While the clergy could be

debarred from teaching, its replacement by secular staff required financial resources, admini-

strative provisions and training facilities which did not exist until Napoleon came to power."

Napoleon had greater interest in secondary education "as the base education for the future leaders

of the nation, as well as members of the bureaucracy and the military." He divided higher

education into two parts - under and over age twelve. "The first four classes (grades) would teach

general topics such as reading, writing, history, and the use of arms. The second class would be

divided into those boys who were destined for a civil career, and those destined for a career in the

military. Civil careers would stress languages, rhetoric and philosophy; military education would

stress mathematics, physics, chemistry, and military matters. Both civil and military graduates

could be guaranteed employment in their chosen career."157 His educational system improved the

social position of the bourgeoisie by giving them entry to the civil and military services and to the

professions based on their capacity of efficiency and utility. although the church continuously

challenged this domination by advocating traditional values at the expense of utility. Napoleon

established the Imperial University in 1808, by which the state intended to monopolize both

secondary and higher education, but "the monopoly never existed in the sense that the University

was never alone in giving instruction." The clerical influence in the university grew after 1815,

but the form of the state educational system remained unaltered.

As of around 1810, the characteristics of educational institutions were different between

Britain and France.158 (i) In Britain, educational establishments were owned, organized, and run

by private individuals - on purely voluntary basis; while in France, education was monopolized

by the state. Thereby, its administration was localized in Britain, but was centralized in France.

(ii) All funds devoted to educational purposes came from private sources in Britain, while all

revolutionary educational plans were financed by the state in France, and financial difficulties

were resolved by Napoleon. (iii) In Britain, the educational goal was in character formation to be

a social and political elite or to be a passive follower. In France, the goal of higher education was

to provide for the application of knowledge to the professions - career orientation, concentrating

on state efficiency and professional competence. (iv) The educational structure was hierarchical

and un-integrated in Britain - no ladder existed from one institution to the next, and the curricula

of the various levels were not interrelated. In France, the state pursued equality by providing a

minimal standard of elementary instruction for all citizens, and equal opportunity by creating an

educational ladder based on merit alone. (v) In Britain, the teaching professionals came from

untrained individuals, so that the pedagogical standards were unsatisfactory. In France, the law

required an official certificate of civic virtue for primary-school teachers, and later similar

requirements existed for appointments to secondary and higher education. (vi) In Britain, the

attendance at all educational levels was determined by self-selection based on fees, prestige, and

social orientation. In France, the merit-based selection secured equal opportunities, though the

existence of fees disturbed educational mobility. (vii) In Britain, curricula at both secondary and

higher level education varied widely between colleges and schools because of the absence of any

form of state control or central co-ordination by the university authorities. In France, the state

pursued egalitarianism and nationalism via the centralized organization, the integrated structure,

the meritocratic selection, and standardized curricula in education.



Social Changes in Austria and Prussia: Charles VI of the Holy Roman Empire intended to

develop the economy by abolishing trade barriers and improving the line of communications, but

the Austrian economy remained too weak to sustain the strength, and the public debt arising from

wars and court expenditures amounted to near bankruptcy. Maria Theresa engaged in two

international wars, which exacerbated the Austrian economy. She was not an enlightened despot:

she did not develop rational principles of government nor did she care about systemic thought. "A

great part of her success as a ruler was due to her able ministers. She accepted their lead and

earned their devotion." She rebuilt the Imperial army of 108,000 men "under unified training and

central control" but her military reforms were confined to Austria and Bohemia, while the

governing system of Hungary and the Netherland was untouched. In order to finance this force,

she introduces a property and an income taxed to the nobility and the clergy despite their protest.

Remaining in a devout Catholic, Theresa ordered religious reforms: "She reduced the number of

religious establishments, and ordered the taxation of all religious property. All of churches and

convents were no longer to afford asylum to criminals by right of sanctuary. No papal brief was

to be recognized in the Austrian realm until it had received Imperial consent. The Inquisition was

subjected to governmental supervision, and was in effect suppressed." The torture was abolished

in 1776. Education was reorganized under the direction of good leaders: "in many professorships,

Jesuits were replaced by laymen; the University of Vienna was brought under laic administration

and state control; the curriculum there and elsewhere was revised to widen instruction in science

and history." Theresa abolished serfdom on her lands, and "imposed upon the haughty magnates

of Hungary a decree empowering the peasant to move, marry, and bring up his children as he liked,

and to appeal from his lord to the county court." In Vienna, lower classes lived in traditional

poverty, and the peasantry of Hungary and Bohemia was as poor as in Russia.

Her son Joseph II kept supreme authority over internal affairs by 1765. (i) He unified the

empire by creating a single centralized office in Vienna and applying centralized policies. He

developed a state police system: "The various police departments in the provinces were

subordinated to the chiefs of the provincial administration, but they also sent secret reports to the

central govern-ment."159 (ii) He introduced a new civil code of judicial procedure: "Penalties were

lightened, and capital punishment was abolished. Magic, witchcraft, and apostasy were no longer

punish-able by law. Dueling was forbidden; to kill in a duel was classified a murder. Marriage

was made a civil contract; marriages between Christians and non-Christians became legal; divorce

could be obtained from the civil authority....Many ecclesiastical courts were abolished. All

persons were to be held equal before the law." (iii) He prohibited all connections with Rome.

"The monastic orders were placed under the supervision of the indigenous bishops, and on this

occasion all those monasteries that were exclusively devoted to contemplation rather than

education or the nursing of the sick were dissolved. Four hundred convents were closed in the

German lands of the monarchy and about eight hundred in the empire." (iv) Expelling the Jesuits

from Austria by confiscating their properties in 1773, he reformed education: "Grade schools

provided compulsory education for all children; they admitted Protestants and Jews as students

and teachers, gave religious instruction in each faith to its adherents, but placed control in the

hands of state officials....Normal schools were established to train teachers; Hauptschulen

specialized in science and technology, and Gymnasien taught Latin and the humanities." All

education was controlled by the state, and the University of Vienna was devoted to higher

education.160 (v) He abolished serfdom: "The right to change residence or occupation, to win

property, and to marry by mutual consent was guaranteed to all, and special attorneys were

provided to protect the peasants in their new liberties." The barons lost criminal jurisdiction over

their tenants, but could require some customary services from their former serfs.161



Frederick William I of Prussia established a new bureaucracy and created a standing army by

spending eighty percent of all revenues in contrast to about sixty percent in France, fifty in Austria,

and a little over thirty Bavaria (government consumption in 2014 GDP: China 13.6%, Japan 20.6%,

US 15%). The monarchy was divided into cantons, "districts of 5,000 hearts for infantry regiments

or 1,500 for cavalry regiments." The social groups such as all burghers, educated people, and the

workers in specialized manufactures were exempted from military service. In 1740, the army had

two foreigners to one Prussians, which ration declined to half and half later years. The king trained

and drilled the army relentlessly, focusing on the firing speed of their flintlock muskets - expecting

to fire six times in a minute, three times as fast as most armies - and formation maneuverability.

The officers came from the Junkers and the rank and file from the peasants, but the borderline was

not clear. "The middle class of the towns was required to quarter soldiers and enroll in the

bureaucracy." 162 The king had excluded the nobility to participate in the actual conduct of

government to avoid unnecessary conflict with them in power politics. The Prussian nobility was

predominantly so poor that many Junkers had gone to foreign countries and soldiering was fairly

common among them: the king founded a cadet school in Berlin for the sons of nobles to acquire

a suitable education, which policy was entirely successful. "The function of the burghers was to

produce the money for the maintenance and expansion of the state beyond the traditional income

from agriculture. In exchange for this, the townspeople received some privilege, but little honor,

by exemption from military service. And below the townspeople were the mass of the population,

the peasants, burdened....consisting of their endless toil for their landlord and state and military

service."163 The high positions in the civil service were reserved to noblemen, but in some measure,

"burghers were accepted and assimilated in higher posts." The upper rank of civil servants was

not yet exclusively university graduates, but appointments were already by examination.

Frederick the Great was an enlightened ruler who transformed Prussia "from a European

backwater to an economically strong and politically reformed state." (i) He acquired Silesia that

provided more human and natural resources, and expanded agriculture, industry, and commerce.

"Canals were built, including between the Vistula and the Oder, swamps were drained for

agricultural cultivation, and new crops, such as the potato and the turnip, were introduced." In

trade, he inclined to mercantilism by promoting exports and limiting imports; and controlled the

grain prices at the time of crisis. He reorganized the system of taxes, which provided the state

with more revenue than direct taxes. (ii) The religion in Protestant North was more subordinate

to the state than the Catholic south. He supported religious toleration as shown in the retention of

Jesuits as teachers in Silesia. He recognized the educational skills the Jesuits had as an asset for

the nation. "He was interested in attracting a diversity of skills to his country, whether from Jesuit

teachers, Huguenot citizens, or Jewish merchants and bankers, particularly from Spain." (iii)

Frederick emphasized elementary education: "Education was to provide the individual with a set

of moral rules and equip him with the practical knowledge necessary in his occupation." The

primary education was desired to be compulsory in 1717, which was legally enforced by 1763 for

all children for eight years from the age five to thirteen.164 All schools must use the German

language for education in Prussia. He thought justice that "There is no kingdom without soldiers,

no soldier without money, no money without population, no population without justice." (iv) The

Junkers became military officers and civilian officials, who deserved to protect the social and

political rights of the landed nobility. While the traditional classes remained stable, the marriage

outside one's class was almost unthinkable, but some merchants and financiers bought nobility.

The land was cultivated by serf, but the princes, prelates, and nobles of western Germany began

to free their peasants from serfdom by 1780. The German home had been the source of moral

discipline, social order, and activity, while the wife was subject to the husband.165



Social Changes in Poland and Russia: A Polish noble with an outstanding military career,

was elected to the king of the Polish-Lithuanian Commonwealth as John III Sobieski in1674, who

ruled a devastated land by almost half a century of constant war.166 He reorganized the army into

regiments and cavalry by increasing the number of guns with new tactics. Joining the Holy League,

he fought the Great Turkish War at the battle of Vienna with a decisive victory in 1683. Augustus

II succeeded his throne in 1697. The Great Northern War exposed the weakness of Poland as well

as the shortcomings of new king, and the dubious value of the Saxon alliance. 167 He possessed

"neither the stamina nor the subtlety, nor even the interest in Polish affairs." After the War of

Polish Succession, Augustus III succeeded his father's throne in 1734 by the support of the Russian

army.168 Speaking no Polish, he spent only two years in Poland during the entire period of his

reign except staying in the Seven Years' War. They brought the Commonwealth further

disintegration. Stanislaw Poniatowski became a king in 1764 by the support of Catherine II: his

rule was under control of Russia at the time of partitions. (i) The ethnic and religious diversity:

The majority Polish collided with German, Jewish, Lithuanian, and Russian minorities; the

Teutons and the Slaves were spontaneously hostile; and the majority Catholics oppressed the

dissidents who were divided by themselves between Protestants, Greek Orthodox, and Jews. No

cohesive force pulled Poland to transform the diversity into the unity to revive the country. (ii)

No political system functioned: The landed nobility (szlachta) held most of the executive offices

in the state, and dominated the Sejm or Diet from which sovereign power came. The Diet was

controlled by family factions such as the Czartoyskis and the Potockis, who opposed important

bills by using power of the liberum veto in order to make the king powerless or the government

inefficient. They called their homes courts, "with retainers, private armies, numerous servants,

and semi-royal displays." Foreign diplomats often bribed them to pass bills for their interests.

(iii) Foreign relations were unfavorably developed for national interests of Poland. The

neighboring countries were hostile to Poland: Prussia from the west, Russia from the east, Sweden

from the north, Austria and Turkey from the south intended to gain Polish lands, while Poland was

unable to hold a reliable security alliance with neighboring countries. It is not surprising that

"neighboring rulers should think that they could make better use of some parts of Poland than

could the Poles themselves." Particularly, Russia maintained westward strategies, resulted in an

immediate military intervention in Polish affairs whenever it was necessary. (iv) The elected kings

were not much interested in Polish affairs. Augustus II and III mostly stayed in the Saxony, and

their ministers might run the Polish affairs from Dresden. Since the key family factions dominated

the Diet and decided important national affairs in favor of their interests, the lack of political

leadership could disturb fair competition by allowing monopoly to powerful factions, which could

distort the allocation of resources. If the hard-working labor of Saxony, for example, was mixed

with rich raw materials of Poland, Polish products might be competitive in the world market;

which would have improved Polish exports to foreign countries. (v) The land owners favored

agriculture to industry or commerce, because they feared the rise of middle class in towns with

their costs. The Catholics excluded the dissidents from public offices and the Diet, and all suits

were tried before Catholic courts, so that the dissidents such as the Protestants left towns as

merchants or artisans. As a result, the cities decayed and the economy declined, while the peasants

suffered from poverty, hardship, or cold. (vi) Since the Polish education lagged behind the

standard of Europe, the Commonwealth created the Commission of National Education in 1773,

which supervised 2 universities, 74 secondary schools, and about 1600 parish schools; and

published 27 textbooks and manuals in Polish language, which saved the Polish language and

culture despite heavy Russification and Germanization under three partitions. Being operated

roughly 20 years, the Committee changed the shape of education in Poland.169



In Russia, Peter the Great was the engine of social changes. He visited the western countries

and directly learned modern technology by himself including working at the shipbuilding place.

He was anxious to westernize Russia: he intended to make St. Petersburg a capital as well as a

military and commercial port to the Baltic though it was too close to hostile Sweden. He also

intended to make the Dnieper and Volga the military and commercial exit to the Black Sea and

the Mediterranean. He built a navy that would secure the lane of commerce through the Baltic to

the West; and reorganized the old guards to be a new standing army "manned by conscription,

equipped with the latest weapons of the West, officered by men who had passed through the ranks,

and disciplined in the new ideal of proudly serving Russia rather than a narrow province or a

hatred lord." He commanded the all of male to shave their beard and to adopt western dress, except

only the Patriarch of the Orthodox Church - the beardlessness was a sign of modernity and of

willingness to enter Western civilization. Peter encouraged women "to remove their veils, to

dance, to make music, and to seek education, even if only through tutors." In religious reforms,

he had "three main concerns: to eliminate the possibility of political resistance, to use the church

as an instrument of education in the ideas of the west, and to secure a proportion of the income of

the church for the state." The clergy realized that his reforms would lessen their prestige and

power "They bemoaned his toleration of Western faiths in Russia, and they suspected that he

himself had no religious belief." When Patriarch Adrian died in 1700, Peter did not appoint his

successor, and became head of the church and led a Reformation in Russia. In 1721, "Peter

abolished the office altogether, and replaced it with a 'Holy Synod' of ecclesiastics appointed by

the Czar and subject to a lay procurator. In 1701 he transferred the administration of ecclesiastical

properties to a department of the government." The religious courts were curtailed and monks

were to be compelled to do useful work. Peter was really great for Russian modernization.

The landed nobility provided military leadership and economic organization, with the right to

own serfs in the eighteenth century. A serf could regain freedom by buying it from his owner or

by enlisting in the army, but this required his owner's consent. "Free peasants could buy and own

serfs; some of these freemen dominated village affairs, lent money at usurious rates, and exceeded

the lords in exploitation and severity." Peter allowed merchants to buy serfs for their factories:

the right to buy serfs sometimes created "a class struggle between the factory-owning bourgeoisie

and the serf-owning nobility."170 Religion was still strong in Russia, "for poverty was bitter, and

merchants of hope found many purchasers." The priests seldom mingled with the aristocracy or

the court, "but lived in modest simplicity, celibate in their monasteries or married in their

rectories." The nobles of the court "adopted the morals, manners, and language of the French

aristocracy; their marriages were transactions in reality, and were alleviated with lovers and

mistresses." Alexander I adopted new regulations, which "abolished secret police, forbade torture,

allowed free Russians to move about and go abroad, and allowed foreigners to enter Russia more

freely. Twelve thousand exiles were invited to return. Censorship of the press remained, but it

was placed under the Ministry of Education, with a polite request that it be lenient with authors.

The embargo on the import of foreign books was ended, but foreign magazines remained under

the ban. A statute of 1804 established academic freedom under university councils." The new

system of public education divided Russia into six regions, and called for at least one university

in each region, one secondary school in each province, one county school in each county seat, and

one primary school for every two parishes, while the nobles maintained tutors and private schools

for their children. The Russian government issued the Jewish Constitution in 1804 that allowed a

bill of rights and an edict of urban confinement. "The Jewish children were assured free access to

all public schools, Gymnasia, and universities in the Russian Empire." They might establish their

own schools.171 Nicholas I (1825-55) should manage the overall poverty of Russia.



Social Changes in Spain and Italy: The greater part of the Spanish countryside was

administered by the church or the nobility, who were virtually immune from royal control but

enjoyed senorio, which provided a range of feudal dues and monopolies. "Besides right of mill,

oven, wine press and slaughter house, with road and ferry tolls, there were sometimes tithe and

pasture rights and even the right to take the alcabala, the 10 percent sales tax." The nobility

remained dominant, politically and socially like in Poland, and was exempted from personal taxes

and the normal processes of law. The clergy had the real power in Spain: the total number of

clerics including priest, men in minor order and nuns was 200,000 with 3,000 religious houses in

1700; and a census of 1797 showed that there were 53,000 monks and 24,000 nuns. Catholicism

was not merely a creed and a liturgy but also a way of life, "offering something to everyone in a

society which had not as yet experienced the separation of two cultures, that of the educated elite

and that of the simple masses" where such extremes of riches and poverty existed. The religious

processions were "frequent, dramatic, and colorful," and two religious orders prospered in Spain.

"The Jesuits, through their learning and address, dominated education and became confessors to

royalty. The Dominicans controlled the Inquisition, and through this institution had long since

passed its heyday it was still strong enough to terrify the people and challenge the state." The

conservative forces of the Inquisition prevented from the spread of new learning, which isolated

Spain from new knowledge, resulting in the decay of universities like Italy. The expansion of the

privileged classes, concentration of wealth and lack of investment, and the lag of higher education

further impoverished Spain. The unemployed, beggars, and vagrants were waiting for food, while

weak administration was unable to identify the cause, although the Church was faithful in helping

them. Some anti-clericalism appeared in sacrilege and morality: "It was acceptable that priests

should have concubines; brothels catered for the laymen and perhaps preserved their marriages."

The long war to drive out the Moors had made Catholicism a part of patriotism, which

sanctified its faith by the cost of nation. Charles III intended to reform the Church under control

of the state: he expelled the Jesuits from Spain in 1767; the inquisition became milder after 1770,

Toleration was granted to Protestants, and in 1779 to Moslems, though not Jews. The waves of

the Enlightenment reached in Madrid and other centers, where nobles, priests, and commoners

without distinction of sex formed economic societies to study and promote education, science,

industry, commerce, and art. "They founded schools and libraries, translated foreign treatises,

offered prizes for essays and ideas, and raised money for progressive economic undertaking and

experiments." Charles III urged towns to lease their uncultivated common lands to peasants at the

lower practical rent; created pious funds from crown revenues for lending money to farmers at

low interest; facilitated the breakup of large estates into peasant properties; and reduced the

privileges of the Mesta sheep monopoly. He supported industry by removing old restrictions in

favor of the development of large-scale capitalistic production. He also terminated a protected

monopoly of commerce with the Spanish colonies, which tripled her exports. His reform policies

stimulated the economy and expanded the maritime centers - Barcelona, Valencia, Seville, and

Cadiz - to hold the population from 80,000 to 100,000 by 1800; and Madrid had 168,000 with

30,000 foreigners. The Spanish character could be intense religion, courage and sense of honor,

and family coherence and discipline. Social morality was relatively high, while political and

commercial corruption existed. In education, Charles III financed to establish free elementary

schools, and private individuals joined to found academies for the advanced education. After the

expulsion of the Jesuits, secondary schools were remodeled. He modernized higher education by

expanding science courses, modernizing textbooks, and admitting laymen to their faculties. The

University of Valencia was the first university in Spain authorized by Pope Innocent IV in 1246,

and grew to be the largest cultural center in Spain with 2,400 students in 1784.



Since the Middle Ages, the Italian cities had maintained an economic hegemony and cultural

superiority for centuries because of its central location in the Mediterranean and partially of the

importance of Rome in the Christian world. The feudal structure of society remained unchallenged

in independent and prosperous communal cities. The population growth commercialized agri-

culture; the rising industry and trade created the rich merchant-capitalists, who transformed the

communes into the signorie (Lordly Power) "to maintain law-and-order and suppress party strife

and civil discord." The diffusion of the signorie expedited the feudalization of society in Italy in

the fourteenth and fifteenth centuries. As the cities were politically divided and economically

declined, the Italian Wars (1494-1559) between France and Spain established an Spanish

hegemony in Italy, and the Spanish influence restructured Italian society by replacing wealth-

power-ideals of communal merchants with those of aristocrats. The urban ruling class with the

inflation of noble titles massively purchased land that "offered security, tax exemptions in many

cases, food supplies for the family, and the most legitimate base of claims to office titles. It could

also produce a satisfactory income through supplementary seigneurial rights and, above all,

through the exploitation of labor, facilitated by harsher tenurial contracts and the growing

indebtness of the peasants."172 The revival of the aristocratic class brought the structural crisis of

Italian economy. The output of woolen textiles "declined sharply in Florence and Milan from the

1560s and in Venice by the 1620s." The dominant form of landed tenure - share-cropping - limited

any increase in production, and the rising population threatened the self-sufficiency of peasants.173

Hence, the rural population became increasingly pauperized, and some 20 to 30 percent of them

depended on charity. While both the church and civic authorities displayed a hostile approach

towards beggars and vagrants, Italy became a country of ubiquitous poverty by around 1700.

In the eighteenth century, Italy became a battle ground of European powers that influenced

Italian society significantly. The War of Spanish Succession (1701-14) established an Austrian

hegemony in Italy; the War of Polish Succession (1733-38) allowed Spain to regain control over

Naples and Sicily; and the War of Austrian Succession (1740-48) forced Austria to cede Parma,

Piacenza, and Guastalla to Spain. The British advanced to the Mediterranean by conquering

Gibraltar and Minorca, established naval superiority of the British fleet in the Sea, and supported

Savoy to check the French advance to the south and to counterbalance the expansion of Austrian

power in Milan, and secured British economic interests in Italy.174 France had always been

interested in Italian affairs, but other matters forced her to use "more peaceful and personal

methods of marriage ties and family pacts" until Napoleon conquered Italy. Thus, Italian society

was dominated by Austria in the north, and Spain in the south: the ruling class of the duchy of

Milan firmly tied with Vienna, while that of the kingdoms of Naples and Sicily consolidated its

power with Madrid. The long period of Spanish rule transformed Italy into aristocratic society:

"Too many Spaniards owned lands in Naples and Sicily. Too many Italians still served as Spanish

diplomats, too many nobles, merchants, craftsmen, bureaucrats, and soldiers had emigrated to

Spain in the previous century." 175 Industry and commerce had declined and the population of

cities remained stationary or even fallen; the clergy and the nobility gained power with privileges;

manufacturers and merchants was weakened; and the regional states were centralized but

challenged by the privileged classes. As the cities declined, Italy became a greater agrarian society

than two centuries ago; which required the farmers to support the cities by sending farm products

to them without exports, and paying more taxes - direct taxes on land, consumption taxes, the

increasing number of exceptional taxes, customs duties, the salt excise, and poll tax. As the Italian

city states involved in the international wars because of Austria and Spain, the heavy financial

burden of the peasants made them more impoverished. Through the restoration period (1815-35),

a new Kingdom of Italy was founded in 1861 that moved toward Italian unification.



Meanwhile, the power of nobles and ecclesiastics was reinforced by their privileges. The land

possessed by the nobility and the clergy was exempted from taxes, which became the basis of their

wealth, that was augmented by the exaction of seigneurial and ecclesiastical rights like the feudal

past. They included tithes, hunting and fishing rights, tolls, monopolies of mills and ovens, civil

and criminal jurisdiction, and payment due for a multitude of reasons. Consequently, the structure

of landownership was changed - holdings had increased in size and concentration. "Ecclesiastical

possessions grew steadily with donations to the Church that varied from small plots to fairly large

estates." However, "many small holdings were sold, according to the testator's desires, in order to

raise the necessary capital to provide an annual income for masses." On the other hand, "Noble

landed estates grew more ostentatiously, as the decline of industry and the uncertainties of trade

led to an increasing investment of capital in the land, and as the social prestige of the aristocracy

induced successful bankers, fermiers and lawyers to buy the estates which were regarded as the

necessary accompaniment to their newly acquired titles." Particularly, in the south, "foreign

merchants and bankers - Genoese, Lombards and Venetians - established and expanded their

possession of the land, alongside the great papal families and Spanish officers or courtiers." In

terms of their shares of holdings, "In Lombardy, in the mid-eighteenth century, the nobility owned

42 percent of the plateau and 46 percent of the plain (alongside 49 percent of the hilly areas), while

the Church (including lay religious confraternities and hospitals) owned 21, 22 (and 23) percent

respectively." "In the kingdom of Naples the baronage owned at least 20 percent of landed income

and the Church a further 20 to 30 percent....The Sicilian barons and prelates did not lag behind

their Neapolitan relative and compeers." "In Naples, ecclesiastical income was as great or greater

than state revenues in the 1720s." The concentration of holdings was closely linked to the new

systems of land tenure and peasant pauperism – the problems of the old regime.

The rising cost of warfare forced the government to borrow money from private financiers by

mortgaging tax revenues. It was calculated in 1747 that "half of the Lombard revenues of 6 million

lire were pledged as interest on past debts." In this regard, "the governments of all the Italian states

were impelled towards reforms." The reform-minded princes and their leading ministers,

influenced by new ideas of the Enlightenment, were ready to secure the collaboration of

intellectuals demanding reforms. The reforms were intended "to eliminate the most evident

weaknesses in the administrative and legal structure of the state, to limit the encroachments of

privileges, to provide a firm basis for taxation, to stimulate industry and commerce, to assert the

sovereign's control over the Church, to break the ecclesiastical monopoly of education, to create a

broader administrative class of new men alongside the nobility, to forge a large and efficient

diplomatic service and army." The Enlightenment influenced Italian society to move, although

the reforms in the Church were less impressive in Rome. A Catholic priest Pietro Tamburini

published an essay On Ecclesiastical and Civil Toleration in 1783, in which he condemned the

Inquisition and advocated toleration of all theologies except atheism.176 The popes faced the

demand of Catholic monarchs for the dissolution of the Society of Jesus. It was part of power

game between the nationalism of modern states and the internationalism of papacy weakened by

the Enlightenment, while Jesuits had meddled in state affairs through their close ties with

influential members of the royal court in order to enhance special interests of their order or the

papacy. The Society was expelled from Portugal, France, Sicily, Parma, and Spain; and Clement

XIV suppressed the Jesuits in 1773, but Pius VII restored it in 1814. The French Revolution

moved Italian society towards the new order: Napoleon abolished feudalism and the Inquisition,

closed over five hundred religious houses, and gave "an uncomfortable freedom" to 5,852 monks

and nuns. He dismissed corrupt officials, introduced public accountancy, proclaimed religious

liberty, and allowed the Jews to move freely from their ghettos.



Social Changes in the Netherlands and Scandinavia: In the Eighty Years' War (1568-1468),

the first fifty years were the conflict between Spain and the Netherlands, and the other thirty years

became a European war - the Thirty Years' War. The seven rebellious provinces of the

Netherlands were united by the Union of Utrecht in 1579 and formed the Republic of the Seven

United Netherlands (known as the United Provinces), which was confirmed by the Peace of

Westphalia in 1648. Holland was the largest province, but foreigners often called it as the entire

Republic. Becoming de facto independent from the empire of Philip II of Spain in 1585, the

Netherlands experienced explosive economic growth down to around 1740. The main engine of

economic growth lay in foreign trade based on its naval power equipped with the advanced

shipbuilding, naval artillery, military tactics, and navigation skills.177 The Dutch fleet attacked the

Portuguese ships and its trading posts in the East Indies, and took over their monopoly of spice

trade, but their commercial operations in the West Indies declined. The Treaty of Munster between

the Dutch Republic and the Kingdom of Spain recognized "the right of the Dutch to conquer and

hold all the Portuguese colonial lands claimed by the Dutch India company." The Dutch provinces

became the important trading center of Northern Europe by replacing Antwerp in Flanders with

Amsterdam. As the Dutch took over much of England's maritime trade with North America, the

Parliament passed the Navigation Act in 1651, which ignited to the three Anglo-Dutch Wars

(1652-74). In the late seventeenth century, Dutch commercial power began to decline due to the

loss of wars. "Dutch trade and shipping remained at a fairly steady level through the eighteenth

century, but no longer had a near monopoly and also could not match growing English and French

competition." As the Netherlands lost its superiority in sea power and trade, the world trading and

financial center moved from Amsterdam to London. The fourth Anglo-Dutch War (1780-84)

started when the Netherlands entered the alliance with the United States and their allies. The war

exposed the weakness of its political and economic foundations.178

William III of Orange (1672-1702) was a stadtholder of the Republic, who invaded England

in 1688 to be the king, and William V (1751-95) was the last stadtholder.179 (1) The seventeenth

century was a golden age of the Netherlands. "The Dutch were probably the best-fed people in

Europe; they certainly took most care of their urban poor. Calvinists faith was influential as

ministers expounded the austere doctrines that gave their congregations a sense of being a chosen

people....Immigrant southerners brought their capital and skills to the cities of the north.

Dutchmen traded profitably in the East Indies, Africa and India." (2) The Dutch fishermen pursued

the herring shoals, "operating mainly from ports at the mouth of the Maas, under the regulation of

College of the Fishery....Salted herring and cod provided security against famine in winter months

and a valuable export to other countries. To acquire salt of sufficient quality the Dutch went to

the Bay of Biscay and to Setubal in Portugal. To build their ships they imported timber from

Norway and the Baltic." (3) In education, politically, a conflict arose between centralized power

of the stadtholder - supporters and independency of the Provinces and cities; economically,

mechanization in the textile industry differed from the guild system demanding monopoly;

educationally, the bourgeoisie resisted the structure and contents of education influenced by the

Church.180 Despite the lack of intellectual vitality in universities, "it is evident that the widespread

growth of new institutions, academies and learned societies was catering for a demand for learning

and the facilities for research." (4) "The Netherlands did not only include the seven relatively

independent Protestant provinces of the Dutch Republic but also a Roman Catholic

Generaliteitsland, which was governed by the State-General." Its religious toleration allowed

many immigrants - the first generation immigrants outside the Netherlands were nearly 50 percent

of the population of Amsterdam in the seventeenth and eighteenth centuries. They were the Jews

from Antwerp, Huguenots from France, Puritans from England.181



Denmark was one of the strongest states in Europe at the time of Frederick II (1559-88) whose

rule extended to Norway. Christian IV (1588-1648), a Lutheran king ruled one million subjects:

"His German estate of Holstein gave him a private income and a seat on the imperial diet; his

Sound due provided revenue and a measure of bargaining power." He intended "to strengthen his

authority over the nobles, to expand from his base in Germany, and to recover what he regarded

as Danish lands from the Swedes" though failed. His son Frederick III (1648-70) attacked Sweden

in 1657 but was defeated, so ceded Scania, Halland, and Blekinge, with the island of Bornholm as

well as Tronheim and Bohuslan in Norway to Sweden by the Treaty of Roskilde.182 Christian V

(1670-99) modernized administration: he standardized the Danish code and replaced the old

provincial laws; all weights and measures were standardized; and an agricultural survey allowed

the government to impose taxes directly and fairly. Frederick IV (1699-1730) joined an anti-

Swedish coalition during the Great Northern War, but made peace with Sweden in the very

beginning. After the loss of lands, the population of Denmark was only 700,000, and increased to

near one million by 1807. "Rural administration remained primarily the preserve of the large

landholders and of a few law-enforcement officials. In 1733, low crop prices caused the

introduction adscription,183 an effort by the landlords to obtain cheap labor. The effect of this was

to turn the previously free Danish peasantry into serfs....Peasant who refused to rent a farm were

subject to six years of military service."184 So Danish agriculture became very inefficient. Under

Christian VII (1766-1808), agricultural reforms took place with the abolition of the open-field

system, integration of small farms into larger ones, and abolition of the adscription system. The

serfdom was abolished from 1784 to 1815, and many peasants became landowners. Denmark

maintained a number of colonies outside Scandinavia - Greenland and Iceland with Norway;

Tranquebar on the Indian coast; and some small islands in the Caribbean.

Sweden became a strong power in the second half of the seventeenth century. Charles XI

(1660-97) ascended the throne at the age of five and his mother was his regent until 1672. In the

Scanian War, Sweden allied with France fought against Denmark-Norway, United Provinces,

Brandenburg, and Holy Roman Empire. The Danish army attacked the Swedish in the Scania in

1675 to recover the lands lost by the treaty of Roskilde. Defending the lands, he avoided further

warfare by gaining larger independence in foreign affairs, while he promoted the economy and

reorganized the military. Charles XII (1697-1718) was a young and inexperienced king, thus

initiating the Great Northern War as discussed in Chapter I. Despite his initial victory, he was

decisively defeated by Peter the Great at the battle of Poltova in 1709, and spent five years of exile

in the Ottoman Empire before returning to his native land. During his exile, he convinced the

Turks to surround the Russian army in Azov where Peter sued a peace with them to save his men

and equipment. At a battle in Norway, he was killed, which ended the Great Northern War. In

the War of Austrian Succession and the Seven Years' War, Sweden joined the Russian side against

Prussia to recover Pomerania. However, their roles in both wars were not comparable to that of

the army led by Charles XII. Gustav III (1771-92) worked for reforms: he allowed the liberty of

the press within certain limits, introduced new economic policies, and abolished a number of

oppressive export tolls. He amended the poor law, and proclaimed limited religious liberty for

Catholics and Jews. "Criminal justice became more lenient, the death penalty was restricted to a

relatively short list of crimes (including murder), and torture was finally abolished in order to gain

confessions, although strict death penalty was maintained." Gustav fought the war against Russia

during 1788-90: the Swedish navy decisively won the Battle of Svensksund in 1790, while the

Russians lost one-third of their fleet and 7,000 men. Nevertheless, signing a peace, Gustav formed

a defensive alliance with Russia against France in 1791 by receiving an annual subsidy of 300,000

roubles from Catherine the Great of Russia.185 In 1808, Russian army invaded Sweden.



The Ottoman Empire - Politics, Economy, and Society: In the sixteenth and seventeenth

century, the Islam world comprised two major regions. The first region was the Turco-Mongol

Empire, that had established four major states - the Ottoman, Safavid, Uzbeks, and Mughal states;

where ruling families spoke Turkic languages as their native tongues, and relied upon Turkic or

Turco-Mongol tribes or military units to gain power. The second region included North Africa,

Sudanic Africa, and Southeast Asia: "it was usually Arabic-speaking merchants, ulama, or sufis

who either founded dynasties or converted local elites to Islam. Despite their cultural and political

differences, the two regions were linked by a common body of Islamic scholarship and the

pilgrimage to Mecca, which Muslims undertook in greater numbers as security and transportation

improved."186 The Safavids holding the Shia faith over the Iranian plateau intensified conflict

with both Ottomans and the Uzbecks holding the Sunni faith. Suleiman the Magnificent (1520-

66) mobilized the Ottoman armies in order "to conquer the Christian strongholds of Belgrade,

Rhodes, and most of Hungary before his conquests were checked at the Siege of Vienna in 1529.

He annexed most of the Middle East in his conflict with the Safavids and large swathes of North

Africa as far west as Algeria. Under his rule, the Ottoman fleet dominated the seas from the

Mediterranean to the Red Sea and the Persian Gulf."187 In the Indian Ocean, the Ottoman navy

frequently confronted Portuguese fleets to defend its traditional monopoly over the maritime

routes between East Asia and Western Europe. The Great Turkish War (1683-98) - the Ottoman-

Habsburg Wars, Polish-Ottoman Wars, and Russo-Turkish Wars - ended with the victory of the

Holy League. The Treaty of Karlowitz forced the Ottomans to retreat to its northern front - the

line of the Danube and the northern coast of the Black Sea. However, conflicts continued between

the Ottomans and the Habsburg as well as Russia, since the desires to expand their territories

collided along this border. (See Ottoman Wars in the eighteenth century, page 39-40).

In the Great Northern War, the Ottoman took Azov from Russia in 1711; but in the War of

Polish Succession, the Russians defeated the Turks and regained Azov with the right of free trade

by the Treaty of Belgrade in 1739. The Ottomans enjoyed economic growth in peace until Russia

started a war against them for territorial expansion. Through the two Russo-Turkish Wars (1768-

74 and 1787-92), Russia obtained Crimea and Ochakov from the Ottoman by the Treaty of Jassy,

that allowed them to access to the Mediterranean through the Black Sea. After the war, Selim III

(1789-1807) attempted to modernize his army in line with European states. But these efforts were

hampered by "reactionary movement, partly from the religious leadership, but primarily from the

Janissary corps, consisting of infantry musketeer units forming household troops and bodyguards

of the Ottoman sultan.188 The janissary revolt of 1807 deposed Selim III, and elevated Mahmud

II (1808-39) to the throne, who captured and executed Mustafa - the head of the revolt. As the

sultan informed them his intention to create a new army in 1826, they mutinied again as predicted.

All of them were killed by fire, or captured and executed or exiled; and their properties were

confiscated - now called it the Auspicious Incident. In the eighteenth century, the Ottomans

declined continuously. Bill and Ariel Duran wrote that the major causes of the Ottoman's decline

lay in "the movement of Asia-bound West-European commerce around Africa by sea instead of

overland through Egypt or western Asia; the destruction or neglect of the irrigation canals; the

expansion of the empire to distances too great for effective central rule; the consequent

independence of the pashas and the separation of the provinces; the deterioration of the central

government through corruption, incompetence, and sloth; the repeated rebellions of Janissaries

repudiating the discipline that had made them strong; the domination of life and thought by a

fatalistic and unprogressive religion; and the lassitude of sultans who preferred the arms of women

to those of war."189 Moreover, "the Serbian revolution (1804-1815) marked the beginning of an

era of national awakening in the Balkans during the Eastern Question."190



The economic foundation of the Muslim world system, created by Umayyads and Abbasids

in the first century of the Muslims, rested on "settled agriculture, urbanization, and long-distance

trade." They controlled the maritime trade through the Persian Gulf, the Red Sea, and the eastern

Mediterranean owing to the skills of the seafaring people of Bahrain, Oman, and the shipbuilders

of Egypt. The growth of production and consumption in the enlarged market of the Muslim world

was made possible by following three parallel developments. "First, the Islamization of the

conquered people created a partially homogeneous religion, moral, and juridical system. Secondly,

the Arabization of the army and the administration helped to break down ethnic and national

barriers by recruiting local entrants or by the incorporation of the warlike steppe people. Finally,

the Semitization process was completed through the adoption of Arabic as the universal language

of communication, education, literary expression, and government." The products of Islam

civilization were mainly two kinds: the luxurious goods - "silk, porcelain, spices, incense, fine

horses, and precious objects of all kinds" and the necessities of daily life - "food grains, fuel,

timber, and cooking oils." The Mediterranean trade was largely shared between the Muslims and

Christians, the Arab and Persian shipmasters in the Indian Oceans established themselves over

oceanic routes to southeast Asian ports and even to the Far East.

By 1429, the sultan Mamluk of Egypt monopolized the entire pepper trade of his kingdom.

In 1433, a large Chinese fleet from Canton arrived in the Yemen, though later the Ming dynasty

discouraged overseas trade. Discovering the ocean route to India in 1498, the Portuguese began

to monopolize the spice trade with India by controlling Hormuz and blockading Bab-el-Mandeb.

The situation began to change: the Portuguese in India did not strictly follow the Lisbon's policy

if it interfered with their own trade; the Ottoman's naval power under Sulayman attempted to

challenge the Portuguese in the Red Sea and the Persian Gulf; and the Indian and Malay merchants

began to arm their ships with heavy artillery and fighting capacity. "By the end of the century,

not only were pepper and spices once flowing through the Middle East to reappear in Alexandria

and Beirut but the Portuguese empire in the Indian Ocean was about to be challenged by the rising

sea power of England and Holland." In 1622 a joint English and Persian force captured Hormuz

and destroyed the century-long Portuguese control of the Gulf. "As the Portuguese fleets were

relentlessly defeated by the Dutch throughout the Indian Ocean, the ruler of Oman besieged

Muscat in 1649-50 and forced the Portuguese garrison to surrender." As the Cape route was used

to bring large volumes of Asian goods to Europe, the Arabs finally lost a large proportion of their

transoceanic trade of the Red Sea and the Persian Gulf by 1700.

On the other hand, there were three factors demanding overland trade in the Muslim world:

land transportation was required to distribute goods from the ports to consuming areas; the widely

dispersed inland producing centers; and the declining use of wheeled transport due to bad road

conditions. The camel was an efficient land carriage by camel caravan, "combined with the

expense of maintaining roads suitable for wheeled transport," though their main danger came from

bandits hiding in the mountain passes. The Muslims built towns for the temporary military

garrisons "to separate the Arab tribal warriors from the sedentary populations of the conquered

land and to keep the military contingents in a state of alert in case of any sudden uprising."191

Agriculture was important since towns were still dependent on the rural surplus: irrigation and the

technology lifting water were developed with other crop-growing techniques. The large noria was

used "by swift-flowing streams and rivers." The nomadic pastoralism was necessary in the desert

areas by two reasons. "First, the grain production and irrigated agriculture needed the traction

power of domesticated animals besides their dairy products, wool, and hides. Secondly, the

climate's law rainfall could not support stock-rearing as well as the cultivated fields of settled

arable farming."192 Now the exploitation of oil transformed the entire region.



In the Ottoman society, religion was more powerful and pervasive than in Christendom: "the

Koran was the law as well as the gospel, and the theologians were the official interpreters of the

law. "The pilgrimage of Mecca annually led its moving drama over the desert and along the dusty

roads." But the rationalists heresies voiced in the upper class: the learned had no more faith in the

inspiration of Mohammed than in the infallibility of the pope; they made "a frank profession of

deism among themselves, or to those they can trust, and never speak of their law." Islam was

divided by the Sunni and Shia sectors just like Catholicism and Protestantism: "In all the sects

superstitions were popular; religious impostors and bogus miracles found ready credence; and by

most Moslems the realm of magic was considered as real as the world of sand and sun." The

clergy dominated education, and believed that "good citizens or loyal tribesmen could be more

surely made by disciplining character than by liberating intellect. "The clergy had won the battle

against the scientists, philosophers, and historians who had prospered in medieval Islam;

astronomy had relapsed into astrology, chemistry into alchemy, medicine into magic, history into

myth." Slavery was more wide spread in Islam, but "they saw no difference between slaves in

Turkey and serfs or servants in the Christian world." The Ottoman Empire was to accept a

relatively high degree of tolerance for ethnic differences, that was one of its strength in integrating

new regions, but "this non-assimilative policy became a weakness after the rise of nationalism."

The Ottoman lifestyle was a mixture of western and eastern life and fragmented. "The millet

concept193 generated this fragmentation and enabled many to coexist in a mosaic of cultures. The

capital of the Ottoman Empire, Constantinople also had a unique culture, mainly because before

Ottoman rule it had been the seat of both the Roman and Byzantine Empires. The lifestyle in the

Ottoman court in many aspects assembled ancient traditions of the Persian Shahs, but had many

Greek and European influences."194 We have seen the similar in present time.

Conquering Arabic Egypt in 1517, the Turks degraded its government pashas and viceroys.

In 1768, a Mamluk soldier - Ali Bey - deposed the Ottoman ruler and declared independence of

Egypt from Ottoman rule in 1769, but lost power in 1772. In Cairo, 300 mosques supported the

poor, among which El Azhar was the mother university of Islam, to which two or three thousand

students came from "as far east as Malaysia and as far west as Moroco, to learn Koranic grammar,

rhetoric, theology, ethics, and law." In Islamic theology, woman was subordinate to the man.

"Children grew up in the discipline of the harem; they learned to love their mother and to fear and

honor their father; nearly all of them developed self-restraint and courtesy." The Safavid dynasty

ruled Perisa from 1501 to 1722 (experiencing a brief restoration from 1729-36) and established

the Twelver school of Shia Islam as the official religion. On the other hand, in the eighteenth

century, Persia was "Conquered by Afghans from the southeast, harassed by slave-gathering raids

from the Uzbeks in the northeast, attacked by Russian depredations in the north, repeatedly

overrun by vast Turkish armies in the west, impoverished by the tax-gathering tyranny of its own

spectacular Nadir Shah, and dismembered by the brutal conflict of rival families for the Persian

throne - how could Iran continue, in this turbulence, the great traditions of Persian literature and

art?" Nadir Shah (1736-47), a brilliant military commander, rose to power from Khorasan during

a period of anarchy in Iran, and established the Afsharid dynasty. "Believing that the religious

differences between Turkey and Persia made for repeated wars, he declared that henceforth Persia

would abandon its Shi'a heresy and accept the orthodoxy of Sunni Islam....He confiscated the

religious endowments of Kazvin to meet the expenses of his army, saying that Persia owed more

to its army than to its religion." He conquered Afghanistan and India with 100,000 men. As the

religious leaders resented his religious policy offending its religious faith, he was killed by one of

his bodyguards. After his death, the country fell into disorder: Agha Muhammad Khan conquered

Afsharid and founded the Qajar Dynasty in 1796, that lasted until 1925.



Endnotes

1 D. B. Grigg, Population Growth and Agrarian Change (New York: Cambridge, 1980), 11-9. 2 Isser Woloch, Eighteenth-Century Europe Tradition and Progress (New York: W. W. Norton, 1982), 110. 3 Michael W. Flinn, The European Demographic System, 1500-1820 (Baltimore, MD: Johns Hopkins

University Press, 1981), 25-26. 4 Isser Woloch, Eighteenth-Century Europe Tradition and Progress, 117. 5Accessed to http://www.britannica.com/EBchecked/topic/387301/modernization/12022/Population-change

on June 4, 2011. 6 Accessed to http://www.jstor.org/pss/3786266 on July 1, 2011. 7 Andre Armenguad, "Population in Europe 1700-1914," in The Industrial Revolution 1700-1914, ed., Carlo

M. Cipolla (New York: Harvester Press/Barnes & Noble, 1976), 28-9. 8 Accessed to http://en.wikipedia.org/wiki/Demographic_transition on July 2, 2011. 9 Accessed to http://en.wikipedia.org/wiki/Louis_Pasteur, http://en.wikipedia.org/wiki/Robert_Koch, and

http://en.wikipedia.org/wiki/Robert_Koch on July 1, 2011. 10 D. B. Grigg, Population Growth and Agrarian Change, 163. 11 Accessed to http://en.wikipedia.org/wiki/Demography_of_the_United_Kingdom on July, 2011. 12 D. B. Grigg, Population Growth and Agrarian Change, 188. 13 Ibid., 193. 14 Accessed to http://www.bbc.co.uk/history/british/empire_seapower/agricultural_revolution_01.shtml on

July 16, 2011. Agricultural Revolution in England 1500-1850. 15 J. D. Chambers and G. E. Mingay, The Agricultural Revolution (New York: Schocken, 1966), 18. 16 Ibid., 35. 17 Accessed to http://www.britannica.com/EBchecked/topic/418152/Norfolk-four-course-system on July

18, 2011. 18 Charles Singer and et al, eds. A History of Technology, Volume IV (Oxford, UK: The Clarendon Press,

1967), 13-43. Agricultural Techniques of Farming. 19 J. D. Chambers and G. E. Mingay, The Agricultural Revolution 1750-1880, 80. 20 Ibid., 110. 21 Ibid., 113. 22 Accessed to http://en.wikipedia.org/wiki/English_Poor_Laws on July 28, 2011. 23 B. H. Slicher van Bath, The Agrarian History of Western Europe: A.D. 500-1850 (London, UK: Edward

Arnold Publisher, 1966), 193-4. 24 Ibid., 206. 25 Ibid., 222. 26 A. R. Michell, "The European Fisheries in Early Modern History," in The Cambridge Economic History

of Europe Volume V, ed. E. E. Rich (New York: Cambridge University Press, 1978), 147. 27 Accessed to http://en.wikipedia.org/wiki/History_of_whaling on August 21, 2011. 28 N. F. R. Crafts, “The New Economic History and the Industrial Revolution,” in The First Industrial

Revolution, ed. Peter Mathias and John A. Davis (Cambridge, MA: Blackwell Publishers, 1989), 25-43. 29 Peter Mathias, “The Industrial Revolution: Concept and Reality,” in The First Industrial Revolution, 8. 30 Walter Minchinton, "Patterns of Demand 1750-1914," in The Industrial Revolution 1700-1914, ed. Carlo

M. Cipolla (New York: Harpers & Row, 1976), 78 and 75-186. 31 Ibid., 116. 32 Accessed to http://www.britannica.com/EBchecked/topic/168578/domestic-system and

http://en.wikipedia.org/wiki/Putting-out_system on September 18, 2011. 33 Maxine Berg, The Age of Manufactures, 1700-1820 (London, UK: Fontana Press, 1985), 200. 34 Accessed to http://www.britannica.com/EBchecked/topic/211694/flying-shuttle on September 18, 2011. 35 Accessed to http://en.wikipedia.org/wiki/Richard_Arkwright on September 18, 2011. 36 Charles Singer and et al, eds., A History of Technology, Volume IV, 279. For further, accessed to

http://en.wikipedia.org/wiki/Spinning_jenny on September 18, 2011. 37 Ibid., 280-1. For further, accessed http://en.wikipedia.org/wiki/Samuel_Crompton on Sept., 18, 2011.

http://www.britannica.com/EBchecked/topic/387301/modernization/12022/Population-change

http://www.jstor.org/pss/3786266

http://en.wikipedia.org/wiki/Demographic_transition

http://en.wikipedia.org/wiki/Louis_Pasteur

http://en.wikipedia.org/wiki/Robert_Koch

http://en.wikipedia.org/wiki/Robert_Koch

http://en.wikipedia.org/wiki/Demography_of_the_United_Kingdom

http://www.bbc.co.uk/history/british/empire_seapower/agricultural_revolution_01.shtml

http://www.britannica.com/EBchecked/topic/418152/Norfolk-four-course-system

http://en.wikipedia.org/wiki/English_Poor_Laws

http://en.wikipedia.org/wiki/History_of_whaling

http://www.britannica.com/EBchecked/topic/168578/domestic-system

http://en.wikipedia.org/wiki/Putting-out_system%20on%20September%2018

http://www.britannica.com/EBchecked/topic/211694/flying-shuttle

http://en.wikipedia.org/wiki/Richard_Arkwright%20on%20September%2018

http://en.wikipedia.org/wiki/Spinning_jenny

http://en.wikipedia.org/wiki/Samuel_Crompton



38 Rondo Cameron, A Concise Economic History of the World: From Paleolithic Times to the Present, 3rd ed.

(New York: Oxford University Press, 1997), 180-2; and Maxine Berg, The Age of Manufactures: 1700-1820

(London: Fontana Press, 1985), 234-63. 39 Accessed to http://en.wikipedia.org/wiki/Abraham_Darby_I on November 4, 2011. 40 Rhys Jenkins, Links in the History of Engineering and Technology from Tudor Times (North Straford, NH:

Ayer Company Publishers, 1977), 122. 41 Accessed to http://en.wikipedia.org/wiki/Henry_Cort on November 6, 2011. 42 Accessed to http://en.wikisource.org/wiki/Huntsman,_Benjamin_(DNB00) on November 6, 2011. 43 Accessed to http://gdl.cdlr.strath.ac.uk/mlemen/mlemen070.htm on November 6, 2011. 44 Accessed to http://en.wikipedia.org/wiki/Blast_furnace on November 6, 2011. 45 Accessed to http://www.angelfire.com/journal/pondlilymill/graphics.html on November 6, 2011. 46 Accessed to http://en.wikipedia.org/wiki/John_Smeaton on November 6, 2011. 47 Charles Singer and et al, eds., A History of Technology, Volume IV, 155. The largest series of water-

wheels was the colossal ‘machine of Marly’ built for Louis XIV in 1682, which had a potential capacity of

124 hp and delivered at least 75 hp in actual work with proper maintenance. 48 Accessed to http://en.wikipedia.org/wiki/Thomas_Savery on November 6, 2011. 49 Accessed to http://en.wikipedia.org/wiki/History_of_the_steam_engine on October 16, 2011. 50 Accessed to http://en.wikipedia.org/wiki/Thomas_Newcomen on November 6, 2011. 51 Accessed to http://en.wikipedia.org/wiki/Watt_steam_engine on November 6, 2011. 52 Accessed to http://www.britannica.com/EBchecked/topic/637673/James-Watt on October 16, 2011. 53 Accessed to http://en.wikipedia.org/wiki/Watt_steam_engine on October 19, 2011. 54 Accessed to http://en.wikipedia.org/wiki/Richard_Trevithick on October 19, 2011. 55 Accessed to http://en.wikipedia.org/wiki/George_Stephenson on November 6, 2011. 56 Accessed to http://en.wikipedia.org/wiki/Atomic_theory on November 7, 2011. 57 Accessed to http://en.wikipedia.org/wiki/Henry_Cavendish on November 7, 2011. 58 Accessed to http://en.wikipedia.org/wiki/John_Dalton on November 7, 2011. 59 Accessed to http://en.wikipedia.org/wiki/Humphry_Davy on November 7, 2011. 60 Accessed to http://en.wikipedia.org/wiki/Michael_Faraday on November 7, 2011. 61 Accessed to http://www.answers.com/topic/nicolas-leblanc on November 7, 2011. 62 Accessed to http://en.wikipedia.org/wiki/Sulfuric_acid on November 7, 2011. 63 Accessed to http://en.wikipedia.org/wiki/Chlorine on November 8, 2011. 64 Accessed to http://en.wikipedia.org/wiki/Charles_Tennant on November 8, 2011. 65 Accessed to http://www.weitzlux.com/chromium/history_403673.html on November 8, 2011. 66 Accessed to http://en.wikipedia.org/wiki/History_of_manufactured_gas on November 8, 2011. 67 Accessed to http://en.wikipedia.org/wiki/William_Murdoch on November 8, 2011. 68 Accessed to http://en.wikipedia.org/wiki/Samuel_Clegg on November 8, 2011. 69 Accessed to Chinese Porcelain at http://archaeologydataservice.ac.uk/catalogue/adsdata/arch-769-

1/ahds/dissemination/pdf/vol16/16_063_078.pdf on November 9, 2011. 70 Accessed to http://en.wikipedia.org/wiki/Porcelain on November 9, 2011. 71 Accessed to http://en.wikipedia.org/wiki/Delftware on November 9, 2011. 72 Accessed to http://www.reference.com/browse/john+dollond on November 9, 2011. 73 Accessed to http://www.ehow.com/about_5384282_history-colored-glass.html on November 9, 2011. 74 David S. Landes, The Unbound Prometheus (New York: Cambridge University Press, 1999), 124-92. 75 Eli F. Heckscher, The Continental System (Glouchester, MA: Peter Smith, 1964), 365. 76 Spielvogel, Western Civilization, 714-9. 77 Accessed to http://en.wikipedia.org/wiki/David_Ricardo on November 19, 2011. 78 Accessed on March 28, 2016 to

http://score.rims.k12.ca.us/score_lessons/market_to_market/pages/mercantilism_imports_and_e.htm. 79 Accessed to http://en.wikipedia.org/wiki/Treaty_of_Tordesillas, on November 19, 2011. 80 Accessed to http://en.wikipedia.org/wiki/History_of_the_Philippines on November 19. 2011. 81 Accessed to http://en.wikipedia.org/wiki/Santa_Fe,_New_Mexico on November 19. 2011.

http://en.wikipedia.org/wiki/Abraham_Darby_I

http://en.wikipedia.org/wiki/Henry_Cort

http://en.wikisource.org/wiki/Huntsman,_Benjamin_(DNB00)

http://gdl.cdlr.strath.ac.uk/mlemen/mlemen070.htm

http://en.wikipedia.org/wiki/Blast_furnace

http://www.angelfire.com/journal/pondlilymill/graphics.html

http://en.wikipedia.org/wiki/John_Smeaton

http://en.wikipedia.org/wiki/Thomas_Savery

http://en.wikipedia.org/wiki/History_of_the_steam_engine

http://en.wikipedia.org/wiki/Thomas_Newcomen

http://en.wikipedia.org/wiki/Watt_steam_engine

http://www.britannica.com/EBchecked/topic/637673/James-Watt

http://en.wikipedia.org/wiki/Watt_steam_engine

http://en.wikipedia.org/wiki/Richard_Trevithick

http://en.wikipedia.org/wiki/George_Stephenson

http://en.wikipedia.org/wiki/Atomic_theory

http://en.wikipedia.org/wiki/Henry_Cavendish

http://en.wikipedia.org/wiki/John_Dalton

http://en.wikipedia.org/wiki/Humphry_Davy

http://en.wikipedia.org/wiki/Michael_Faraday

http://www.answers.com/topic/nicolas-leblanc

http://en.wikipedia.org/wiki/Sulfuric_acid

http://en.wikipedia.org/wiki/Chlorine

http://en.wikipedia.org/wiki/Charles_Tennant

http://www.weitzlux.com/chromium/history_403673.html

http://en.wikipedia.org/wiki/History_of_manufactured_gas

http://en.wikipedia.org/wiki/William_Murdoch

http://en.wikipedia.org/wiki/Samuel_Clegg

http://archaeologydataservice.ac.uk/catalogue/adsdata/arch-769-1/ahds/dissemination/pdf/vol16/16_063_078.pdf

http://archaeologydataservice.ac.uk/catalogue/adsdata/arch-769-1/ahds/dissemination/pdf/vol16/16_063_078.pdf

http://en.wikipedia.org/wiki/Porcelain

http://en.wikipedia.org/wiki/Delftware

http://www.reference.com/browse/john+dollond

http://www.ehow.com/about_5384282_history-colored-glass.html

http://en.wikipedia.org/wiki/David_Ricardo

http://score.rims.k12.ca.us/score_lessons/market_to_market/pages/mercantilism_imports_and_e.htm

http://en.wikipedia.org/wiki/Treaty_of_Tordesillas

http://en.wikipedia.org/wiki/History_of_the_Philippines

http://en.wikipedia.org/wiki/Santa_Fe,_New_Mexico



82 H. H. Parry, Trade Dominion: The European Oversea Empires in the Eighteenth Century (London, UK:

Phoenix Press, 2000), 26. The Spanish fleets never monopolized the market of the Indies. 83 Accessed on March 28, 2016 to

https://en.wikipedia.org/wiki/Global_silver_trade_from_the_16th_to_18th_centuries. 84 Accessed to http://en.wikipedia.org/wiki/Portuguese_India and

http://en.wikipedia.org/wiki/History_of_Goa on November 20, 2011. 85 Accessed to http://en.wikipedia.org/wiki/Dutch_East_India_Company on November 20, 2011. 86 Accessed to http://en.wikipedia.org/wiki/East_India_Company on November 20, 2011. 87 Accessed to http://en.wikipedia.org/wiki/French_East_India_Company on November 20, 2011. 88 Accessed to http://en.wikipedia.org/wiki/English_Poor_Laws on November 25, 2011. 89 Accessed to http://en.wikipedia.org/wiki/Comparative_advantage on November 25, 2011. 90 Accessed to http://en.wikipedia.org/wiki/Wool_Act_1699 on November 25, 2011. 91 Accessed to http://www.usahistory.info/colonial/Navigation-Acts.html on November 26, 2011. 92 Accessed to http://en.wikipedia.org/wiki/Navigation_Acts on November 26, 2011. 93 Accessed to http://en.wikipedia.org/wiki/Atlantic_slave_trade on November 27, 2011. 94 Accessed to http://en.wikipedia.org/wiki/British_colonization_of_the_Americas on December 2, 2011. 95 H. H. Parry, Trade Dominion, 277. 96 Accessed to http://en.wikipedia.org/wiki/Triangular_trade on December 3, 2011. 97 Peter Mathias, The First Industrial Nation (New York: Routledge, 2001), 87-8. 98 Accessed to http://people.ischool.berkeley.edu/~duguid/articles/M_of_M.pdf on December 3, 2011. 99 Accessed to http://en.wikipedia.org/wiki/Turnpike_trust on December 4, 2011. 100 Accessed to http://en.wikipedia.org/wiki/History_of_the_British_canal_system on December 4, 2011. 101 Accessed to http://en.wikipedia.org/wiki/Bridgewater_Canal on December 4, 2011. 102 Accessed to http://people.upei.ca/rneill/canechist/topic_8.html on December 4, 2011. 103 Accessed to http://en.wikipedia.org/wiki/West_India_Docks on December 4, 2011 and the same to

http://en.wikipedia.org/wiki/East_India_Docks and http://en.wikipedia.org/wiki/London_Docks. 104 Accessed to http://scienceray.com/technology/the-history-of-the-ship-steering-wheel/ on Dec. 7, 2011,

and the same to http://en.wikipedia.org/wiki/Hull_(watercraft) and http://en.wikipedia.org/wiki/Square_rig. 105 Accessed to http://www.maritime.org/conf/conf-goodwin.htm on December 7, 2011. 106 H. H. Parry, Trade Dominion, 230. 107 Accessed to http://en.wikipedia.org/wiki/Longitude_by_chronometer on December 7, 2011. 108 Accessed to http://en.wikipedia.org/wiki/James_Cook on December 8, 2011. 109 J. C. Beaglehole, The Life of Captain James Cook (Stanford, CA: Stanford Univ. Press, 1974), 482-3. 110 Accessed to http://en.wikipedia.org/wiki/Nootka_Crisis on December 11, 2011. 111 Accessed to https://en.wikipedia.org/wiki/Arthur_Phillip on March 28, 2016. 112 W. O. Henderson, The Genesis of Common Market (London UK: Frank Cass, 1962), 44-7. 113 Lei F. Heckscher, The Continental System (Gloucester, MA: Peter Smith, 1964), 61. 114 Ibid., 90. 115 Accessed to http://en.wikipedia.org/wiki/Embargo_Act_of_1807 on December 21, 2011. 116 The continental system paved the way for the downfall of Napoleon himself in three ways: It caused (1)

the peninsula war forcing France to fight two fronts; (2) Moscow expedition to punish its trade violation;

and (3) coalition of European power by nationalist feeling developed against Napoleon. 117 Brian Mitchell, Abstract of British Historical Statistics (Cambridge, UK: Cambridge Univ. Press, 1988). 118 The high debt ratio to GDP caused a financial crisis even in present days like in Greece 143% in 2010. 119 Accessed to http://en.wikipedia.org/wiki/History_of_money on February 23, 2012. 120 Accessed to http://www.banking-history.co.uk/history.html on February 23, 2012. 121 M. W. Flinn, Origins of the Industrial Revolution (London, UK: Longman, 1972), 37 122 Peter Mathias, “Financing the Industrial Revolution” in The First Industrial Revolution, 70. 123 Ibid., 73. 124 Accessed to http://en.wikipedia.org/wiki/Taille on February 16, 2012. 125 Accessed to http://en.wikipedia.org/wiki/John_Law_(economist) on February 28, 2012.

https://en.wikipedia.org/wiki/Global_silver_trade_from_the_16th_to_18th_centuries

http://en.wikipedia.org/wiki/Portuguese_India

http://en.wikipedia.org/wiki/History_of_Goa

http://en.wikipedia.org/wiki/Dutch_East_India_Company

http://en.wikipedia.org/wiki/East_India_Company

http://en.wikipedia.org/wiki/French_East_India_Company

http://en.wikipedia.org/wiki/English_Poor_Laws

http://en.wikipedia.org/wiki/Comparative_advantage

http://en.wikipedia.org/wiki/Wool_Act_1699

http://www.usahistory.info/colonial/Navigation-Acts.html

http://en.wikipedia.org/wiki/Navigation_Acts

http://en.wikipedia.org/wiki/Atlantic_slave_trade

http://en.wikipedia.org/wiki/British_colonization_of_the_Americas

http://en.wikipedia.org/wiki/Triangular_trade

http://people.ischool.berkeley.edu/~duguid/articles/M_of_M.pdf

http://en.wikipedia.org/wiki/Turnpike_trust

http://en.wikipedia.org/wiki/History_of_the_British_canal_system

http://en.wikipedia.org/wiki/Bridgewater_Canal

http://people.upei.ca/rneill/canechist/topic_8.html

http://en.wikipedia.org/wiki/West_India_Docks

http://en.wikipedia.org/wiki/East_India_Docks

http://en.wikipedia.org/wiki/London_Docks

http://scienceray.com/technology/the-history-of-the-ship-steering-wheel/

http://en.wikipedia.org/wiki/Hull_(watercraft)

http://en.wikipedia.org/wiki/Square_rig

http://www.maritime.org/conf/conf-goodwin.htm

http://en.wikipedia.org/wiki/Longitude_by_chronometer

http://en.wikipedia.org/wiki/James_Cook

http://en.wikipedia.org/wiki/Nootka_Crisis

https://en.wikipedia.org/wiki/Arthur_Phillip

http://en.wikipedia.org/wiki/Embargo_Act_of_1807

http://en.wikipedia.org/wiki/History_of_money

http://www.banking-history.co.uk/history.html

http://en.wikipedia.org/wiki/Taille

http://en.wikipedia.org/wiki/John_Law_(economist)



126 Eugine N. White, "France and the Failure to Modernize Macroeconomic Institutions," in Transferring

Wealth and Power, ed. Michael D. Bordo and Roberto Cortes-Conde (New York: Cambridge, 2011), 86. 127 William M. Goetzmann and K. Geert Rouwenhorst, eds., "Perpetuities in the Stream of History: A

Paying Instrument from the Golden Age of Dutch Finance," in The Origin of Value: The Financial

Innovations that Created Modern Capital Market (New York: Oxford, 2005), 177-88. 128 Accessed to http://en.wikipedia.org/wiki/Dutch_East_India_Company on March 9, 2012. 129 Accessed to http://en.wikipedia.org/wiki/Dutch_West_India_Company on March 9, 2012. 130 Jan de Vries, “The Netherlands in the New World” in Transferring Wealth and Power from the Old to

the New World, ed. Michael D. Bordo and Roberto Cortes-Conde (New York: Cambridge, 2001), 100-39. 131 Accessed to http://en.wikipedia.org/wiki/Piet_Pieterszoon_Hein on March 9, 2012. 132 Accessed to http://en.wikipedia.org/wiki/History_of_Pernambuco on March 9, 2012. 133 Accessed to www.coins.nd.edu/ColCoin/ColCoinIntros/Netherlands.html on March 9, 2012. The size of

the population was 2,000 to 3,500 in 1655, growing to about 9,000 by 1664. A significant number of the

inhabitants were Germans, Swedes and Finns who immigrated after 1639. 134 Accessed to http://en.wikipedia.org/wiki/New_Netherland and

http://en.wikipedia.org/wiki/New_Amsterdam on March 9, 2012. 135 Accessed to http://en.wikipedia.org/wiki/Cura%C3%A7ao on March 9, 2012. 136 Accessed to http://en.wikipedia.org/wiki/Sint_Eustatius on March 9, 2012. 137 Accessed to http://www.frenchcoins.net/links/vellon.pdf on March 30, 2012. 138 Accessed to http://en.wikipedia.org/wiki/Currency_of_Spanish_America#1578.E2.80.931621_Philip_III

and to http://en.wikipedia.org/wiki/Gresham's_law on March 30, 2012 139 Accessed to http://en.wikipedia.org/wiki/Sebasti%C3%A3o_Jos%C3%A9_de_Carvalho_e_Melo,_1st_

Marquess_of_Pombal on April 15, 2012. 140 Accessed to http://prof.fe.unl.pt/~jbmacedo/papers/war.htm on April 15, 2012. 141 http://www.bportugal.pt/en-US/ServicosaoPublico/ArquivoHistorico/Pages/BancodeLisboa.aspx

accessed on April 15, 2012. 142 Access to http://en.wikipedia.org/wiki/Alexander_Hamilton on April 15, 2012. 143 Accessed to http://en.wikipedia.org/wiki/Colonial_Brazil on April 16, 2012. 144 Accessed to http://www.econ.puc-rio.br/pdf/td370.pdf on April 16, 2012. 145 Accessed to http://en.wikipedia.org/wiki/History_of_Argentina on April 17, 2012. 146 Accessed to http://en.wikipedia.org/wiki/Viceroyalty_of_New_Granada on April 17, 2012. 147 Accessed to http://en.wikipedia.org/wiki/Secularization on April 24, 2012. 148 Charles Breunig, The Age of Revolution and Reaction, 1789-1859 (New York: Norton & Company, 1977),

155-79; Spielvogel, Western Civilization, 719-29; and Durant, Rousseau and Revolution, 676-82. 149 Accessed to http://en.wikipedia.org/wiki/Landed_gentry on May 7, 2012. 150 Christof Dipper, "Orders and Classes: Eighteenth-Century Society under Pressure," in The Eighteenth

Century Europe 1688-1815, ed. T. C. W. Blanning (New York: Oxford, 2000), 52-90. 151 Accessed to http://en.wikipedia.org/wiki/History_of_the_Church_of_England on May 8, 2012. 152 Accessed to http://en.wikipedia.org/wiki/Church_of_England on May 8, 2012. 153 Accessed to http://en.wikipedia.org/wiki/Commoner on May 8, 2012. 154 Bill and Ariel Durant, The Age of Napoleon, The Story of Civilization 11, 363. 155 Michalina Vaughan and Margaret Scotford Archer, Social Conflict and Educational Change in England

and France 1789-1848 (New York: Cambridge University Press, 1971), 121. 156 Ibid., 124. 157 Accessed to http://www.napoleon-series.org/research/society/c_education.html on May 12, 2012. 158 Michalina Vaughan and Margaret Scotford Archer, Social Conflict and Educational Change, 202-30. 159 Hajo Holborn, A History of Modern Germany 1648-1840 (Princeton, NJ: Princeton U. P., 1982), 280. 160 Bill Durant, Rousseau and Revolution, 341-66. 161 Hajo Holborn, A History of Modern Germany, 288-91 and Bill Durant, Rousseau and Revolution, 356-8. 162 Accessed to http://en.wikipedia.org/wiki/Prussian_Army on May 19, 2012. 163 Hajo Holborn, A History of Modern Germany, 203. 164 Accessed to http://en.wikipedia.org/wiki/Prussian_education_system on May 17, 2012.

http://en.wikipedia.org/wiki/Dutch_East_India_Company

http://en.wikipedia.org/wiki/Dutch_West_India_Company

http://en.wikipedia.org/wiki/Piet_Pieterszoon_Hein

http://en.wikipedia.org/wiki/History_of_Pernambuco

http://www.coins.nd.edu/ColCoin/ColCoinIntros/Netherlands.html%20on%20March%209

http://en.wikipedia.org/wiki/New_Netherland

http://en.wikipedia.org/wiki/New_Amsterdam

http://en.wikipedia.org/wiki/Cura%C3%A7ao

http://en.wikipedia.org/wiki/Sint_Eustatius

http://en.wikipedia.org/wiki/Currency_of_Spanish_America#1578.E2.80.931621_Philip_III

http://en.wikipedia.org/wiki/Gresham's_law

http://en.wikipedia.org/wiki/Sebasti%C3%A3o_Jos%C3%A9_de_Carvalho_e_Melo,_1st_

http://prof.fe.unl.pt/~jbmacedo/papers/war.htm

http://www.bportugal.pt/en-US/ServicosaoPublico/ArquivoHistorico/Pages/BancodeLisboa.aspx

http://en.wikipedia.org/wiki/Alexander_Hamilton

http://en.wikipedia.org/wiki/Colonial_Brazil

http://www.econ.puc-rio.br/pdf/td370.pdf

http://en.wikipedia.org/wiki/History_of_Argentina

http://en.wikipedia.org/wiki/Viceroyalty_of_New_Granada

http://en.wikipedia.org/wiki/Secularization

http://en.wikipedia.org/wiki/Landed_gentry

http://en.wikipedia.org/wiki/History_of_the_Church_of_England

http://en.wikipedia.org/wiki/Church_of_England

http://en.wikipedia.org/wiki/Commoner

http://www.napoleon-series.org/research/society/c_education.html

http://en.wikipedia.org/wiki/Prussian_Army

http://en.wikipedia.org/wiki/Prussian_education_system



165 For further, see Hajo Holborn, A History of Modern Germany, 262-77 for Frederick's Policies. 166 Accessed to http://en.wikipedia.org/wiki/John_III_Sobieski on May 20, 2012. 167 Accessed to http://en.wikipedia.org/wiki/Augustus_II_the_Strong on May 20, 2012. 168 Accessed to http://en.wikipedia.org/wiki/Augustus_III_of_Poland on May 20, 2012. 169 Accessed to http://en.wikipedia.org/wiki/Commission_of_National_Education on May 16, 2012. 170 Jerome Blum, Lord and Peasant in Russia from the Ninth to the Nineteenth Century (New York:

Atheneum, 1968), 361. "Decrees of 1084 and 1814 ordered that henceforth 'personal' nobles could no

longer own serfs. 171 Bill and Ariel Durant, The Age of Napoleon, The Story of Civilization 11, 680-1. 172 Stuart Woolf, A History of Italy 1700-1860: The Social Constraints of Political Change (London, UK:

Routledge, 1991), 23. 173 Share-cropping is a tenant-farming system called Mezzadria - in which a landowner allows a tenant to

use land in return for a share of the crop produced on the land such as 50 percent of the crop. Accessed to

http://en.wikipedia.org/wiki/Sharecropping on May 4, 2012. 174 British annual imports from Italy during 1717-40 reached at about £500,000 in average, which was

nearly 10 percent of all British imports. 175 Stuart Woolf, A History of Italy 1700-1860, 31. 176 Accessed to http://it.wikipedia.org/wiki/Pietro_Tamburini (in Italian) on May 5, 2012. For further, Mark

Goldie and Robert Wokler, eds, Eighteenth Century Political Thought (New York: Cambridge, 2006), 100. 177 Accessed to http://en.wikipedia.org/wiki/Fluyt on May 22, 2012. The fluyt was a sailing vessel that was

a significant factor in the seventeenth century rise of the Dutch seaborne empire. 178 Accessed to http://en.wikipedia.org/wiki/Anglo-Dutch_Wars on May 22, 2012. 179 Accessed to http://en.wikipedia.org/wiki/Stadtholder on May 22, 2012. The stadtholder is a medieval

function which during the eighteenth century "developed into a rare type of de facto hereditary

head of state of the thus crowned Dutch Republic." 180 Jan Wolthuis, Lower Technical Education in the Netherlands 1798-1993: The Rise and Fall of a

Subsystem (Apeldoorn, the Netherlands: Oomo/Garant, 1999), 52. 181 Accessed to http://en.wikipedia.org/wiki/History_of_religion_in_the_Netherlands on May 22, 2012. 182 Accessed to http://en.wikipedia.org/wiki/History_of_Denmark#Early_Modern_Denmark and

http://en.wikipedia.org/wiki/Treaty_of_Roskilde on May 23, 2012. 183 "The adscription system tied rural laborers to their place of birth and required them to rent farms on the

estates. As rent, they were required to work the landlords' plots and could not negotiate contracts or demand

payment for improvements made to the farm." 184 Accessed to http://en.wikipedia.org/wiki/History_of_Denmark#Absolutism on May 24, 2012. 185 Accessed to http://en.wikipedia.org/wiki/Gustav_III_of_Sweden on May 24, 2012. 186 Stephen F. Dale, "The Islamic World in the Age of European Expansion, 1500-1800," in The Cambridge

Illustrated History of the Islamic World, ed. Francis Robinson (New York: Cambridge U. P., 1998), 62. 187 Accessed to http://en.wikipedia.org/wiki/Suleiman_the_Magnificent on May 25, 2012. 188 Accessed to http://en.wikipedia.org/wiki/Janissary on May 25, 2012. 189 Will and Ariel Durant, Rousseau and Revolution, 414. 190 Accessed to http://en.wikipedia.org/wiki/Eastern_Question on May 24, 2012. The Eastern Question in

European history encompasses "the diplomatic and political problems posed by the decay of the Ottoman

Empire." It was believed that the dissolution of the Ottoman Empire was imminent when the first Russo-

Ottoman War ended in defeat for the Ottomans. 191 K. N. Chaudhuri, "The Economy in Muslim Societies," in The Cambridge Illustrated History of the

Islamic World, 143. 192 Ibid., 154. 193 Accessed to http://en.wikipedia.org/wiki/Millet_(Ottoman_Empire) on May 26, 2012. 194 Accessed to http://en.wikipedia.org/wiki/Ottoman_Empire#Society on May 26, 2012. "Millet is a term

for the confessional communities in the Ottoman Empire. If refers to the separate legal court pertaining to

'personal law' under which communities were allowed to rule themselves under their own system."

http://en.wikipedia.org/wiki/John_III_Sobieski

http://en.wikipedia.org/wiki/Augustus_II_the_Strong

http://en.wikipedia.org/wiki/Augustus_III_of_Poland

http://en.wikipedia.org/wiki/Commission_of_National_Education

http://en.wikipedia.org/wiki/Sharecropping

http://it.wikipedia.org/wiki/Pietro_Tamburini

http://en.wikipedia.org/wiki/Fluyt

http://en.wikipedia.org/wiki/Anglo-Dutch_Wars

http://en.wikipedia.org/wiki/Stadtholder

http://en.wikipedia.org/wiki/History_of_religion_in_the_Netherlands

http://en.wikipedia.org/wiki/History_of_Denmark#Early_Modern_Denmark

http://en.wikipedia.org/wiki/Treaty_of_Roskilde

http://en.wikipedia.org/wiki/History_of_Denmark#Absolutism

http://en.wikipedia.org/wiki/Gustav_III_of_Sweden

http://en.wikipedia.org/wiki/Suleiman_the_Magnificent

http://en.wikipedia.org/wiki/Janissary

http://en.wikipedia.org/wiki/Eastern_Question

http://en.wikipedia.org/wiki/Millet_(Ottoman_Empire)

http://en.wikipedia.org/wiki/Ottoman_Empire#Society

CHAPTER II ECONOMY AND SOCIETY 1715-1815 - ICKSHugoKim2016@21 Econom… · Chapter II. Economy and Society Book IV. The French Revolution and the Industrial Revolution, 1715-1815

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