Part 40 (2/2)
Though the Fuggers and other firms soon went into large business of all sorts, they remained primarily bankers. As such they enjoyed boundless credit with the public from whom they received deposits at regular interest. The proportion of these deposits to the capital continually rose. This general tendency, together with the habit of changing the amount of capital every few years, is evident from the following table of the liabilities of the Fuggers in gold gulden at several different periods:
Year Capital Deposits 1527 . . . . . . . 2,000,000 290,000 1536 . . . . . . . 1,500,000 900,000 1546 . . . . . . . 4,700,000 1,300,000 1563 . . . . . . . 2,000,000 3,100,000 1577 . . . . . . . 1,300,000 4,000,000
A smaller Augsburg firm, the Haugs, had in 1560, a capital of 140,000 florins and deposits of 648,000. As all these deposits were subject to be withdrawn at sight, and as the firms usually kept a very small reserve of specie, it would seem that banking was subject to great risks. The unsoundness of the method was counterbalanced by the fact that most of the deposits were made by members of the banker's family, or by friends, who harbored a strong sentiment against embarra.s.sing the bank by withdrawing at inconvenient seasons. Doubtless the almost uniformly profitable career of most firms for many years concealed many dangers.
The crash came finally as the result of the bankruptcy {522} of the Spanish and French governments. [Sidenote: Bankruptcy of France and Spain, 1557] Spain's repudiation of her debt was partial, taking the form of consolidation and conversion; France, however, simply stopped all payments of interest and amortization. Many banks throughout Europe failed, and drew down with them their creditors. The years 1557-64 saw the first of these characteristically modern phenomena, international financial crises. There were hard times everywhere.
Other states followed the example of the French and Spanish governments, England const.i.tuting the fortunate exception. Recovery followed at length, however, and speculation boomed; but a second Spanish state bankruptcy [Sidenote: 1575] brought on another crisis, and there was a third, following the defeat of the Armada. The failure of many of the great private companies was followed by the inst.i.tution of state banks. The first to be erected was the Banco di Rialto in Venice. [Sidenote: 1587]
The banks were the agencies for the spread of the capitalistic system to other fields. The great firms either bought up, or obtained as concessions from some government, the natural resources requisite for the production of wealth. One of the very first things seized by them were the mines. [Sidenote: Mining] Indeed, the profitable exploitation of the German mines especially dates from their acquisition by the Fuggers and other bankers late in the fifteenth century. Partly by the development of new methods of refining ore, but chiefly by driving large numbers of laborers to their maximum effort, the new mine-owners increased the production of metal almost at a bound, and thereby poured untold wealth into their own coffers. The total value of metals produced in Germany in 1525 amounted to $4,800,000 per annum, and employed over 100,000 men. Until 1545 the German production of silver was greater than the American, and copper was almost as valuable {523} a product. Notwithstanding its increased production, its value doubled between 1527 and 1557. The shares in these great companies were, like the ”Fugger letters,” or certificates of interest-bearing deposits in banks, a.s.signable and were actively traded in on various bourses. Each share was a certificate of partners.h.i.+p which then carried with it unlimited liability for the debts of the company. One of the favorite speculative issues was found in the shares of the Mansfeld Copper Co., established in 1524 with a capital of 70,000 gulden, which was increased to 120,000 gulden in 1528.
[Sidenote: Commerce]
Whereas, in banking and in mining, capital had almost created the opportunities for its employment, in commerce it partly supplanted the older system and partly entered into new paths. In the Middle Ages domestic, and to some extent international, commerce was carried on by fairs adapted to bring producer and consumer together and hence reduce the functions of middleman to the narrowest limits. Such was the annual fair at Stourbridge; such the famous bookmart at Frankfort-on-the-Main, and such were the fairs in Lyons, Antwerp, and many other cities. Only in the larger towns was a market perpetually open. Foreign commerce was also carried on by companies formed on the a.n.a.logy of the medieval gilds.
New conditions called for fresh means of meeting them. The great change in sea-borne trade effected by the discovery of the new routes to India and America, was not so much in the quant.i.ty of goods carried as in the paths by which they traveled. The commerce of the two inland seas, the Mediterranean and the Baltic, relatively declined, while that of the Atlantic seaboard grew by leaps and bounds. New and large companies came into existence, formed on the joint-stock principle.
Over them the various governments exercised a large control, giving them a semi-political character.
{524} [Sidenote: Portugal]
As Portugal was the first to tap the wealth of the gorgeous East, into her lap fell the stream of gold from that quarter. The secret of her windfall was the small bulk and enormous value of her cargoes. From Malabar she fetched pepper and ginger, from Ceylon cinnamon and pearls, from Bengal opium, the only known conqueror of pain, and with it frankincense and indigo. Borneo supplied camphor, Amboyna nutmegs and mace, and two small islands, Temote and Tidor, offered cloves. These products sold for forty times as much in London or in Antwerp as they cost in the Orient. No wonder that wealth came in a gale of perfume to Lisbon. The cost of the s.h.i.+p and of the voyage, averaging two years from departure to return, was $20,000, and any s.h.i.+p might bring back a cargo worth $750,000. But the risks were great. Of the 104 s.h.i.+ps that sailed from 1497-1506 only 72 returned. In the following century of about 800 Portuguese vessels engaged in the India trade nearly one-eighth were lost. Even the risk of loss in sailing from Lisbon to the ports of northern Europe was appreciable. The king of Portugal insured s.h.i.+ps on a voyage from Lisbon to Antwerp for a premium of six per cent.
[Sidenote: Spain]
Spain found the path towards the setting sun as golden as Portugal had found the reflection of his rising beams. At her height she had a thousand merchant galleons. The chief imports were the precious metals, but they were not the only ones. Cochineal, selling at $370 a hundredweight in London, surpa.s.sed in value any spice from Celebes.
Dye-wood, ebony, some drugs, nuts and a few other articles richly repaid importation. There was also a very considerable export trade.
Cadiz and Seville sent to the Indies annually 2,240,000 gallons of wine, with quant.i.ties of oil, clothes and other necessities. Many s.h.i.+ps, not {525} only Spanish but Portuguese and English, were weighted with human flesh from Africa as heavily as Christian with his black load of sin, and in the case of Portugal, at least, the load almost sent its bearer to the City of Destruction.
But Spanish keels made other wakes than westward. To Flanders oil and wool were sent to be exchanged for manufactured wares, tapestries and books. Italy asked hides and dyes in return for her brocades, pearls and linen. The undoubtedly great extent of Spanish commerce even in places where it had no monopoly, is all the more remarkable in that it was at the first burdened by what in the end choked it, government regulation. Cadiz had the best harbor, but Seville was favored by the king; even s.h.i.+ps allowed to unload at Cadiz could do so only on condition that their cargoes be transported directly to Seville. A particularly crus.h.i.+ng tax was the alcabala, or 10 per cent. impost on all sales. Other import duties, royalties on metals, excise on food, monopolies, and petty regulations finally handicapped Spain's merchants so effectually that they fell behind those of other countries in the race for supremacy.
[Sidenote: France]
As the mariners of the Iberian peninsula drooped under the shackles of unwise laws, hardy sailors sprang into their places. Neither of the other Latin nations, however, was able to do so. The once proud supremacy of Venice and of Genoa was gone; the former sank as Lisbon rose and the latter, who held her own at least as a money market until 1540, was about that time surpa.s.sed, though she was never wholly superseded, by Antwerp. Italy exported wheat, flax, woad and other products, but chiefly by land routes or in foreign keels. Nor was France able to take any great part in maritime trade. Content with the freight brought her by other nations, she sent out few {526} expeditions, and those few, like that of James Cartier, had no present result either in commerce or in colonies. Her greatest mart was Lyons, the fairs there being carefully fostered by the kings and being naturally favored by the growth of manufacture, while the maritime harbors either declined or at least gained nothing. For a few years La Roch.e.l.le battened on religious piracy, but that was all.
[Sidenote: Germany]
In no country is the struggle for existence between the medieval and the modern commercial methods plainer than in Germany. The trade of the Hanse towns failed to grow, partly for the reason that their merchants had not command of the fluid wealth that raised to pre-eminence the southern cities. There were, indeed, other causes for the decline of the Hanseatic Baltic trade. The discovery of new routes, especially the opening of Archangel on the White Sea, short-circuited the current that had previously flowed through the Kattegat and the Skager Rak. Moreover, the development of both wheat-growing and of commerce in the Netherlands and in England proved disastrous to the Hanse. The sh.o.r.es of the Baltic had at one time been the granary of Europe, but they suffered somewhat by the greater yield of the more intensive agriculture introduced at that time elsewhere.
Even then their export continued to be considerable, though diverted from the northern to the southern ports of Europe. In 1563, for example, 6630 loads of grain were exported from Konigsberg, and in 1573 7730 loads.
The Hanse towns lost their English trade in compet.i.tion with the new companies there formed. A bitter diplomatic struggle was carried on by Henry VIII. The privileges to the Germans of the Steelyard confirmed and extended by him were abridged by his son, partly restored by Mary and again taken {527} away by Elizabeth. The emperor, in agreement with the cities' senates, started retaliatory measures against English merchants, endeavoring to a.s.sure the Hanse towns that they should at least ”continue the ancient concord of their dear native country and the good Dutches that now presently inhabit it.” He therefore ordered English merchants banished, against which Elizabeth protested.
While the North of Germany was suffering from its failure to adapt itself to new conditions, a power was rising in the South capable of levying tribute not only from the whole Empire but from the habitable earth. Among the merchant princes who, in Augsburg, in Nuremberg, in Stra.s.sburg, placed on their own brows the golden crown of riches, the Fuggers were both typical and supreme. James Fugger ”the Rich,”
[Sidenote: James Fugger, 1459-1525] springing from a family already opulent, was one of those geniuses of finance that turn everything touched into gold. He carried on a large banking business, he loaned money to emperors and princes, he bought up mines and fitted out fleets, he re-organized great industries, he speculated in politics and religion. For the princes of the empire he farmed taxes; for the pope he sold indulgences at a 33 1/3 per cent. commission, and collected annates and other dues. In Hungary, in Spain, in Italy, in the New World, his agents were delving for money and skilfully diverting it into his coffers. He was also a pillar of the church and a philanthropist, founding a library at Augsburg and building model tenements for poor workers. He became the incarnation of a new Great Power, that of international finance. A contemporary chronicler says: ”emperors, kings, princes and governors have sent amba.s.sage unto him; the pope hath greeted him as his beloved son and hath embraced him; cardinals have risen before him. . . . He hath become the glory {528} of the whole German land.” His sons, Raymond, Anthony and Jerome, were raised by Charles V to the rank and privileges of counts, bannerets and barons.
Throughout the century corporations became less and less family partners.h.i.+ps and more and more impersonal or ”soulless.” They were semi-public, semi-private affairs, resting on special charters and actively promoted, not only in Germany but in England and other countries, by the emperor, king, or territorial prince. On the other hand the capital was largely subscribed by private business men and the direction of the companies' affairs was left in their hands. Liability was unlimited.
[Sidenote: Monopolies]
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