(£2000) and more, wyche shalbe very beautyfull to the citti, and allsoo for the honor of our soverayngne lord the Kynge." Thus wrote Lord Mayor Sir Richard Gresham in 1538 to Cromwell, the lord privy seal. He had recently seen and admired the new Burse at Antwerp, and was anxious that London merchants whose custom it was to congregate twice a day in the open air at Lombard street, should be provided with a similar house, or covered walk, to shelter them from the inclemency of the weather. But powerfully as he advocated the scheme, it did not find favor. Owners of property were difficult to treat with; and, as the merchants themselves appear to have been completely indifferent, the plan was suffered to fall through. After the lapse of a quarter of a century, it was however again brought forward by his public-spirited son, Sir Thomas Gresham. On the death of his only child in 1564, Sir Thomas appears to have conceived the idea of making his country his principal heir: he munificently offered, provided the city would furnish a suitable site, to erect the building at his own expense. His fellow-citizens gratefully accepted the offer; they raised a sufficient sum by subscription, purchased the piece of land on which the Royal Exchange now stands, and conveyed it over to him. By the end of 1568,,merchants were able to hold their meetings within the building. It consisted of a quadrangular arcade, enclosing an open court, and bore a general resemblance to the Burse at Antwerp, which had suggested the plan. After completion, it was inspected and formally opened (January 23, 1571) by Queen Elizabeth, who "caused the same Burse by an herralde and a trompet to be proclaimed the Royal Exchange, and so to be called from thenceforth, and not otherwise." Gresham had ordained in his will that on the death of his wife, who was to enjoy the rents during her lifetime, the Royal Exchange should be vested in the hands of the Corporation of the City of London and of the Mercers' Company, conjointly, and to them it in due time reverted. Exactly 100 years after the laying of the foundation stone, the building was swept away in the great fire of 1666; and its successor, the second exchange, was also destroyed by fire in 1838. The present structure dates from 1844.

To the inquiring foreigner or stranger who nowadays visits the Royal Exchange, as many do, in the expectation of finding there the very heart and focus of the business of London, the silence and the deserted appearance of its interior are a constant source of wonderment, for, with the exception of a short interval in the afternoon, when

it is resorted to by dealers in some of the minor branches of commerce (paper, oil, drugs, etc.) and of an hour or so on Tuesdays and Thursdays, when foreign bills are dealt in, it appears to the observer to be entirely given over to loungers. As a matter of fact it has to a great extent outlived its object. In the time of Gresham, and for many years afterwards, the space afforded by the quadrangle and ambulatory was doubtless amply sufficient for all requirements, but today the building would hardly give standing room to a tithe of those who every day come together in the city to discuss and transact affairs; long ago it became apparent, as the throng grew more and more dense, either that the exchange must be greatly enlarged, or that some of those who frequented it must foregather elsewhere. One after another, accordingly, the larger and wealthier sections of traders forsook the parent assembly and built homes for themselves in more convenient localities. The dealers in stocks and shares, the produce merchants, shipowners, insurance underwriters, coal-, metal-, corn-, hop-, wool-traders, and others, now possess their own separate exchanges. There is, however, one small but important group which still transacts business in the old parent centre, and which the mind more particularly associates with the word "Change." On Tuesdays and Thursdays, immediately after luncheon time, the principals of the great merchant-banking houses, and of the foreign and Angloforeign joint-stock banks, collect at the eastern end of the courtyard to discuss matters of common interest and to deal in foreign bills. The attendance is never very large-not more, perhaps, including the brokers, than five or six score; but it comprises members of firms whose names are "household words" on every bourse throughout the world, and is eminently representative of the financial side of England's Weithandel. Hubbub and excitement, apparently necessary concomitants of the dealings in other commercial assemblies, are here entirely absent; the negotiations are conducted in a quiet undertone, and with an air of nonchalance which might almost lead the onlooker to believe that the chief object of the meeting is conversation and that business is quite a secondary consideration.

See also 97. Produce Exchanges.

98.

The Cotton Exchange of New Orleans. 99. Stock Exchanges.

E. The Industrial Revolution the Current Phase of Capitalism 82. THE CHANGES WROUGHT BY THE REVOLUTION1

At the close of the eighteenth, and the opening of the nineteenth, century a change, or rather a series of changes, passed over the agricultural and manufacturing industry of England, which has been aptly described by the name of the "Industrial Revolution." The changes which then took place were of considerable magnitude, and the conditions of industry, both in manufactures and in agriculture, may without any great extravagance be said to have been revolutionized. Until this time the general character of industry in England presented broadly the same features as those which it had exhibited during the greater part of the Middle Ages; and from that time the commencement of our modern system of industry dates. Agriculture in England and manufactures alike were then generally prose- [ cuted on what we should term primitive and unsystematic methods. Men were raising complaints that half of the land of the country was waste. The size of the farms was small and the method of cultivation unscientific. In many parts of the country there were still open uninclosed fields; in nearly all there was an absence of any proper system of rotation of crops and of turnips and artificial grasses. Quarrels were continually arising about the rights of pasture on the common meadows, and about the boundaries of the many scattered minute parcels of land of which an individual holding was made up.

Nor was the position or character of manufacturing industry different. It was carried on, with few exceptions, by craftsmen working with their own hands in their own homes, although even then there were exceptions, for some capitalistic employers existed, and some factories had been built by the middle of the eighteenth century. The mechanical appliances and tools which the craftsmen used were generally of a simple and rude description, and the number of persons working under their direction was small. The apprentices, limited in number and term of service, and the journeymen, with their wages fixed, in theory if not in practice, by the magistrates, lived in the house and ate at the table of the master-craftsman. Employment, such as it was, was regular; fashions varied slowly and slightly; and men produced in the main, though not exclusively, for a market which was close at hand. They were intimately acquainted with

'Taken by permission from L. L. Price, "The Industrial Revolution," in Palgrave's Dictionary of Political Economy, II, 399-401. (Macmillan & Co., Ltd.,

the conditions of that market, and the state of the roads was such that intercourse and trade with distant towns were rendered difficult. The workman who ventured to move from one town to another was not merely liable to be sent back to his original abode under the law of settlement, stigmatized by Adam Smith as an "evident violation of natural liberty and justice," for fear that he might eventually come upon the rates in his new dwelling-place, but he might also be excluded from employment by the restrictive privileges of some exclusive trade corporation, which were, in Adam Smith's words, a "plain violation" of that "most sacred and inviolable property which every man has in his own labor." The goods which the craftsmen made were often taken to the halls of the different corporations to be stamped as genuine. The woollen industry was now, as it had been for a long time previously, the staple industry of the country, and was carried on at Norwich, and in the west of England, and the West Riding of Yorkshire. The iron industry, which was prosecuted in Sussex, where the iron was still smelted by charcoal in small furnaces blown by leathern bellows worked by oxen, was said to be gradually dying out; and the cotton industry was so insignificant as to be mentioned but incidentally by Adam Smith, who lived on the very eve of the Industrial Revolution, and himself, perhaps, assisted in affording a shelter within the walls of Glasgow University to James Watt, the inventor of the steam engine, seeking protection from the exclusive tyranny of the local corporation of hammermen, who had refused to allow him to practice his trade. Adam Smith declared that there had been only three inventions of note in the cotton industry for the space of three centuries. Banking was as yet in its infancy, and the Bank of England did not issue notes of a lower denomination than £20. The external commerce of the country was hampered by a number of vexatious restrictions, and duties on imports and bounties on exports abounded, while the colonies were regarded as a field for the commercial monopoly of the mother country.

Such was the general condition of affairs before the changes which introduced the modern industrial system. These changes were bewildering in their magnitude, and, to some extent also, in the rapidity with which they were effected. D

Agriculture underwent a transformation, the chief part of which, however, seems to have been accomplished in the earlier half or twothirds of the eighteenth century. Large farms began to take the place of small farms. The inclosure of the open field was actively

prosecuted, and sometimes injustice was done to the rights of the smaller commoners. Scientific cultivation was substituted, in a more or less considerable degree, in different parts of the country, for primitive methods. Bakewell improved the breed of cattle. Townshend"Turnip Townshend" as he was nicknamed-introduced the cultivation of turnips. Coke at a later time devised an improved system of rotation of crops.

But in manufacturing industry the changes were more revolutionary, and they occurred in the latter part of the century. Four great inventions were made in the cotton industry-that of the spinning-jenny by Hargreaves; that of the water frame by Arkwright; that of the mule by Crompton; and, the most considerable and important, in its consequences to the old handicraft occupations, of all, that of the power-loom by Cartwright. This last invention dealt a fatal blow to the fortunes of the old hand-loom weavers, and their distress has furnished a stock illustration of the temporary misery which may be occasioned by the introduction of machinery, at any rate to those workmen the labor of whose hands it supersedes. But other industries besides that of the manufacture of cotton were affected by the changes of the times. The smelting of iron by coal was introduced by Roebuck and the decaying iron industry revived, and abandoned the charcoal forests of Sussex for the coal seams of the north and the middlelands. Canals, such as the Grand Trunk connecting the Trent with the Mersey, and the Grand Junction which afforded the means of communication between London and the chief towns of the Midlands, were constructed under the direction of the inventive genius of Brindley, and the roads of the country were improved under that of Telford. Mills were erected on the banks of rivers in order that use might be made of the water-power which was there available to drive the new machinery, and then came the most wonderful and important discovery of all-that of the steam engine, to be followed in its turn by the railway.

All these changes gave a great stimulus to the production of wealth I.K. and the growth of population. They kindled a spirit of eager and restless enterprise, which was sometimes inclined to be reckless of injury occasioned to human life and health, and to give little consideration to the wrench to human affections which was not infrequently the consequence, direct or indirect, of the changes. For trade passed from quiet villages to noisy towns; from the home of the handicraftsman to the factory of the employer; from the master who