spinning and weaving of wool, linen, and cotton, hardly one is connected with the establishments existing before the end of the eighteenth century. Once again, it is new men, enterprising spirits, and sturdy characters which profit by the circumstances. At most, they old capitalists, transformed into landed proprietors, play still an active rôle in the exploitation of the mines, because of the necessary dependence of that industry upon the possessors of the soil, but it can be safely affirmed that those who have presided over the gigantic progress of international economy, of the exuberant activity which now affects the whole world, were, as at the time of the Renaissance, parvenus, self-made men. As at the time of the Renaissance, again, their belief is in individualism and liberalism alone. Breaking with the traditions of the old régime, they take for their motto, "laissez faire, laissez passer." They carry the consequences of the principle to an extreme. Unrestrained competition sets them to struggling with each other and soon arouses resistance in the form of socialism, among the proletariat which they are exploiting. And at the same time that that resistance arises to confront capital, the latter, itself suffering from the abuses of that freedom which had enabled it to rise, compels itself to discipline its affairs. Cartels, trusts, syndicates of producers, are organized, while states, perceiving that it is impossible to leave employers and employees longer to contend in anarchy, elaborate a social legislation; and international regulations, transcending the frontiers of the various countries, begin to be applied to working men.

I am aware how incomplete is this rapid sketch of the evolution of capitalism through a thousand years of history. I present it merely as an hypothesis resting on the very imperfect knowledge which we yet possess of the different movements of economic development.

NOTE. Mr. Hobson in his Evolution of Modern Capitalism presents the evolution of capitalism in somewhat different terms but to much the same general purpose. As Hobson sees the matter the conditions of the intervention of capitalism may be summed up thus:

1. The existence of considerable masses of accumulated wealth.— There was little opportunity in the Middle Ages for the craftsman to make more than a living out of his work. The early accumulations of wealth must, therefore, have come from land rents or from treasure trove acquired through pillage or the discovery of mines. This was

a necessary forerunner even of the colonial trade, which later became one of the most fertile sources of profit.

2. The transfer of control of this wealth into the hands of a class of business men."-Originally surplus funds from whatever sources went to the church, the knightly orders, the nobles or to city funds. With the growth of the towns many of the nobles went there to live, bought city land, and often took up city occupations. To a greater extent the change came through the gradual transfer of control of both public, church and private property to the hired managers of various ranks such as rent-collectors and stewards, or to the public officials who were the agents of the city funds and estates. Another frequent source of change of control and even of ownership was the prosperous business of money-lending of the time.

3. The use of the accumulated wealth to exploit a large, nonlandowning labor class.-This possibility was found first in the colonial trade where the native labor on the natural resources was found to be an even greater source of profit than the discovery of the precious metals. Later the growth of population and the change of conditions of agriculture in Europe produced such a labor class there also.

4. The development of the industrial arts.-The conservatism of vested interests in the gild organizations of the mediaeval city did not conduce to any changes in industrial methods. Moreover, there was so small a market for any goods that labor-saving devices could not have seemed necessary. This may partly have accounted for the concentration of attention by the "science" of the time upon such problems as alchemy. At any rate there was no scientific foundation for the growth then of a technology such as developed later.

5. The growth of the capitalistic spirit.-Potential entrepreneurs of early days had little chance to develop their abilities or even to discover them. The class which could afford an education and could command capital, regarded all industrial occupations as degrading. The growth of a class of business men, mainly from the lower orders, the discovery and use of account-keeping, land surveying, and the adoption of modern forms of contract and use of weights and measures, brought about that change of spirit from interest in treasure hunting to interest in profit making which Sombart calls a change to "economic rationalism."

64. HINDRANCES TO THE DEVELOPMENT OF CAPITALISM1 So far as town life is concerned, we cannot go back to any period when money economy was not dominant, and we find signs of capitalism and its influence in the cities from very early times. Merchants who carried on active trade appear to have been provided with ready money for their transactions. Though a great part of the industrial population consisted of independent workmen organised in craft gilds, the principal companies of many towns in the fourteenth century were composed of capitalists; both in Strassburg and in Florence the manufacture of cloth was organised on capitalist lines by great captains of industry in the fourteenth century. Even in the most advanced towns, however, there were considerable hindrances which interfered with the free play of capitalist enterprise; each merchant was restricted to one special trade, and was prevented from encroaching on the callings of his fellow-townsmen; there was little opportunity for the transference of capital from one employment to another. Most of the industrial arts, too, were organised with regard to the requirements of the city market by small independent masters, who each hoped to get a fair share of existing trade rather than to extend it; the regulations of their craft gilds were not favourable to the formation or application of capital. Similar obstacles existed in the rural districts, though they were gradually breaking down on all sides, so that there were steadily increasing opportunities for the investment of capital during the fourteenth and fifteenth centuries.

Powerful as capital is, and great as are the advantages which it has to offer, the conditions of life in the fourteenth and fifteenth centuries were so unfavourable to it as to delay its introduction and to check its operations. The whole social system stood in its way; for the organisation of much of the labour of the towns was so rigid as to admit of little modification, while in the rural districts the survival of villenage presented still greater obstacles to the enterprise of moneyed men. Astriction to one place is perfectly congruent with natural economy; the mediaeval landowner was satisfied to employ, as best he could, the labour which he found available, and was able to retain it under his control. With the capitalist the case is different; he possesses wealth which he can direct to any profitable undertaking that opens up, and he has the means of

'Adapted by permission from W. Cunningham, Western Civilization, II, 164-66. (The Cambridge University Press, 1913.)

compelling or attracting labour to follow in the direction where his enterprise sees the probability of reward. So long as slavery was in vogue, the transference of labour could be effected in the most ruthless fashion by the purchase and export of slaves; but this was no longer possible at the epoch when capital began to take part in the industrial development of mediaeval Europe; slavery had ceased to exist; labour tended to follow capital because it was attracted, not because it was forced.

65. THE CAPITALISTIC SPIRIT

It would be childish to imagine that the greed of gold and the love of money had so direct and immediate an influence on economic life that the capitalist spirit and capitalist enterprise came into being almost at once. The genesis of modern capitalism cannot be traced so speedily. It took time.

In certain methods of acquiring riches we shall find the seeds of capitalist enterprise. For the sake of clearness we shall arrange them under four heads, according as (1) force was the dominant factor in them, or (2) magic, or (3) scheming and invention, or (4) money.

1. Acquisition by force.-I am not here thinking of all manner of unlawful pressure exercised by the authorities for the purpose of obtaining taxes and dues, but rather of highway robbery, a form of economic activity much beloved and practiced for centuries by knights and barons everywhere. This was no mere occasional adventure on the part of the gentry in the Middle Ages and beyond, but a social institution.

2. Acquisition by magic.-Very different was the utilization of magic for the attainment of riches. Belief in spirits and demons was necessary, and faith in the possibility of getting into touch with them, of making them subservient to the desires of man. A vivid imagination, which but too often was the child of a mind diseased, soon discovered propitious times and places for this superhuman intercourse. Men wanted gold, and two ways were possible for its attainment: they had either to find it or to make it. So we must deal in turn with searches for treasure-trove and with alchemy.

Gold-digging may be good, but gold-making is surely better. To this end men gave themselves up to the magic arts and practiced Adapted by permission from Werner Sombart, The Quintessence of Capitalism, pp. 34-66. (E. P. Dutton & Co., 1915.)

alchemy, not as a common everyday affair, but as a species of divine service, over which hung a cloud of mystery.

3. Acquisition by scheming and invention.-In a study of mine on the part played by technical knowledge in the early capitalist age I showed how the period of the Renaissance abounded in inventive geniuses, how, in consequence, there was a shower of technical inventions in those days, to which all classes contributed. But the sphere of technical science was not the only one affected by the flights of human imagination; pretty well all activities were influenced, and in some cases reforms were suggested, notably in public finance. Here, however, these things do not specially concern us. What we have to note is the fact that, for centuries, there were scores of people whose calling it was to live by their wits. Scheming, as we may term it, became a business; the man with ideas was ready to sell them to whomsoever chose to pay his price. These professional gentry set about winning the interest of princes and nobles and the wealthy generally in their schemes and projects.

What was the position of these schemers and projectors in the genesis of the capitalist spirit? It is not difficult to see. Were they not the ancestors of men like Law, Pereire, Lesseps, Strousberg, Saccard, and a host of lesser company-promoters who are so prominent in these days? What the projectors lacked was a definite sphere of activity. They were not yet undertakers; they stood without; they were not in business. But theirs were the ideas that were to generate capitalism, a consummation which came about so soon as the ideas were united with enterprise.

4. Acquisition by money.-The mere possession of money placed its owner in an advantageous position. No need of robbery for him, nor yet recourse to magic. With the aid of money he could get more, in various ways. If he were of a cold, calculating nature, there was money-lending; and if he were hot-blooded and careless, there were games of chance. In any event, he had no occasion to associate himself with others for common action; he could sit at home in cloistered ease, the sole pilot of his fortune.

The rôle of money-lending in moulding the capitalist spirit was a double one. In the first place, it produced in the minds. of those who engaged in it professionally certain special tendencies of great importance in the growth of the capitalist spirit; and, secondly, it was one of the starting-points of capitalist enterprise.