289. Political survey of Germany about 1500.—After considering a country in which the central government was, so to speak, too strong for the interests of commercial development, it will be instructive to take up countries in which it was certainly too weak, Germany and Italy.

Germany presented a striking contrast in its political and in its economic development at the beginning of the period, about 1500. In political organization, the central government had almost no power; it was the mere shadow of a reality. The real power rested in hundreds of petty states, of which some were but a few square miles in extent. There was no authority which could keep in order these little states and the different classes of people which composed them. The history of Germany in this period is a sad story of conflicts between classes,—peasants, burghers, knights, and princes; conflicts between Catholics and Protestants; conflicts between the states themselves. In these struggles the best energies of the Germans were absorbed; they were marking time or even going backward while the more fortunate peoples of Europe were advancing. The Germans learned at last to despair of realizing their dream of a national government. Not all parts of the country, however, were equally unfortunate; some came under the rule of princes who managed to build up a strong power at home and abroad. Two of these local states are of especial importance, for between them they have divided the fragments of the old Germany, and made great states in modern Europe. One of them, Prussia, is the nucleus of what we now call Germany. The other, Austria, which included the Germans of the South, added to them fragments of territory peopled by other races, and made the state of Austria-Hungary.

290. Development of the economic organization.—There was a contrast, it was said, between the political and the economic development. The very lack of a central power had enabled some of the sections and classes to advance rapidly by freeing them from control. In the fifteenth century the agricultural classes, who had been serfs in the Middle Ages and who were to be reduced again to serfdom later by the political oppression to which constant wars gave rise, were free and prosperous. The cities were more rich and populous than those of any other country north of Italy. Not only had manufacturing and mining made rapid progress, but banking and commerce too. The Fuggers and the Welsers of southern Germany were great promoters and financiers, with interests extending over all Europe, from which they drew enormous wealth. German merchants showed the most enterprise and energy of any north of the Alps; they distributed among other countries of the Continent the Levant wares which they secured from Venice, and they controlled the commerce of the West of Europe with the North and East. We shall begin our sketch of the decline of German commerce by returning now to the history of the Hanseatic League, which we left in full control of this last branch of trade.

291. Condition of the Baltic trade.—The Baltic trade suffered in the period about 1500 from influences over which merchants had no control. The Protestant Reformation caused a decline in the demand for some of its staple wares: wax, which had been largely used for candles in church services, and fish, of which the consumption had been greatly furthered by the Catholic periods of fasting. The most valuable fish, moreover, the herring, ceased to enter the Baltic Sea, and by limiting their feeding ground to the North Sea enabled the Dutch to become leaders in the fishing industry. Imitation of Italian fashions in dress, with which the French became acquainted about 1500, caused less demand for furs. All these changes hurt the Baltic trade, but they were far from destroying it. This trade grew, in fact, throughout the period; it could afford to dispense with the luxuries of commerce for it controlled the necessaries, grain and meat, lumber and naval stores. The reasons for the decline of the Hanseatic League are to be sought not in the character of the trade but in the character of the League itself.

292. Decline of the Hanseatic League.—The League lacked organization. The many towns of which it was composed were so separated by physical distance and by divergence of interests that they could not cooperate efficiently. They were strong enough to crush other towns which sought to enter their field, but they were unequal to the contest with national states; and the political consolidation of the countries of northern and western Europe raised up enemies with whom they could not compete. In nearly twenty years (1476-1494) only one common meeting of delegates was held. Dissensions broke out inside the towns, and they began to quarrel among themselves. Lübeck, in the center, put forth claims opposed to the interests of towns on the edge of the League, on the lower Rhine and in Prussia. Rising commercial towns in the western part of the Netherlands, like Rotterdam and Amsterdam, grew up outside the League and in opposition to it. The turning-point in the decline may be put at 1535, when Denmark and Sweden were strong enough to break the Hansa’s monopoly by opening the passage into the Baltic to the ships of all peoples. Soon other states were carrying the war into the enemy’s country. Sweden threw the larger part of the Russian trade to the Dutch. The English built up a prosperous trade in the Baltic Sea and on the Arctic Ocean at Archangel. They flooded the German market with English cloths, and when the Hansa resisted, Elizabeth expelled the members of the League from England. In 1601 an Englishman could say of the Hansa towns: “Most of their teeth have fallen out, the rest sit but loosely in their head.” Of the great League soon only three towns remained as Hanseatic members, Lübeck, Bremen, and Hamburg.

293. Decline of the commerce of south Germany.—While the cities of north Germany were losing their hold on a growing commerce, the cities of the South found a large share of their trade taken from them by the discovery of the ocean route to India. The German cities (Nuremberg, Augsburg, Ulm, etc.) fought with desperation to maintain their commerce, and proof exists that they carried on an active commerce with Italy after they ceased to obtain there the Oriental wares, and had to content themselves with Italian products. Even this trade, however, fell to a large extent into the hands of the Italians, who flooded southern Germany and drove native Germans out of business.

The Germans were not entirely unprepared for the changes following the discoveries, for they had long gone in considerable numbers to the Spanish peninsula, by land through southern France or from a French or Italian harbor to Barcelona. Many Germans had settled in Portugal, and for a time the great merchants of south Germany shared in the Indian trade at its source, in Lisbon. The great German financiers shared also for a brief period in the commerce of the New World. The Ellingers and Welsers leased the copper mines of San Domingo; the Crombergers had silver mines at Sultepeque; the Tetzels exploited the copper mines of Cuba. The Welsers founded Venezuela by a military expedition which they financed, and held the country for a few years.

294. The chief cause of decline of German commerce in this period was political.—The most obvious explanation of the failure of Germany to take a place with the other states in the commercial expansion following the discoveries is the disadvantage of her position. It has been said that the diversion of commerce to the oceanic routes exposed the countries of central Europe (Italy, Germany, etc.) to a condition of commercial glaciation, such as Norway would experience physically if it lost the warm current of the Gulf Stream. The difference in distance of a few hundred miles in voyages of thousands does not explain the matter. No physical differences suffice to explain why Amsterdam rose and why Hamburg fell so rapidly. The weakness of Germany was not physical. Nor was it economic; German merchants of this period had more free capital, more business ability and greater energy than the merchants of any other country. Germany’s weakness was political. The payments which merchants and other Germans made in the form of taxes and loans to political authority did not form a single fund which could be used for furthering German interests at home and abroad. The money went to a great number of rival governments, and was consumed in their particular quarrels, not helping but actually hurting German business interests.

295. The natural outlets of commerce stopped by hostile states.—The political weakness of Germany enabled other states, now rising to power, to crumble off fragments of the country, in which they established a commercial policy hostile to German interests. Before long the mouth of every one of the large rivers which were the natural commercial outlets of the country had passed under foreign control. The Rhine was Dutch; the Weser Swedish; the Elbe Danish; the Oder Swedish; the Vistula Polish. Tolls hampered the passage of wares as effectually as though Germany were surrounded by a physical barrier on the sea side; and German ships almost disappeared from the ocean.

German commerce suffered especially by the rise of the Dutch to an independent position. So long as Antwerp was the great market of the Continent Germans traded freely with it, and through it to Lisbon. The substitution of Amsterdam for Antwerp was a most serious blow to German interests. The Dutch had very different ideas from those of the Flemish; they wanted to do all the trade themselves and to force other people to a position of commercial dependence on them. They made the lower Rhine practically useless for their rivals, raising the tolls sixfold and more, and thereby coming into a control of the trade as far as Frankfort on the Main.

296. The damage done by internal dissensions and by the Thirty Years’ War.—Germany was not only cut off from the outside world by tariff barriers, but cut up inside by the tolls of cities and territories. Every city on a trade route wanted to make itself a “staple,” i.e., have all goods passing the vicinity brought there for taxation and for sale. Frankfort on the Oder, for instance, demanded that all boats passing down the river Warthe should come up to Frankfort before they could continue their journey down the Oder to Stettin. The cities of Stettin, Frankfort, and Breslau, all situated on the Oder, instead of using that river for peaceable exchange, made bitter commercial war on each other with tolls and prohibitions. Conditions grew still worse after the Thirty Years’ War (1618-1648), a terrible conflict which, without exaggeration, cost Germany one hundred, perhaps two hundred, years of development. The physical means of transportation declined. On the Elbe, for instance, the dikes ceased to be repaired, the tow-path disappeared, the banks crumbled; and sand bars and snags became so common that navigation was difficult and costly. Tolls not merely doubled; they increased fivefold and more. Space is lacking for a description of all the evils; they were practically a reproduction of the conditions which happier states had left behind them five hundred years before.

297. Restriction of manufactures by the gilds.—German manufactures followed about the same course as that of the French which we have traced above. The gilds merited the term given them by an economist of the seventeenth century who said they were the “curse of Germany”; they seem to have been in some respects even more narrow than the French gilds. The same old evils reappear, but the reader must be asked to take these for granted and to direct his attention to some new aspects of the gild organization. Specially noteworthy are the obstacles put in the way of any man who desired to become a full member of a gild. Many gilds succeeded in making the exercise of the trade a family monopoly by the regulation that no man could become a master who did not marry the daughter or the widow of a master. One gild expelled a man because he had married a wife whose grandmother was alleged to have come from a shepherd’s family; other gilds expelled members because they had ridden an executioner’s horse or drunk with an executioner. A man had at best to pay very high fees to become a master, and this artificial restriction on the number of full members not only kept the ordinary workmen in a wretched position, but also raised the price of goods to the consumer.

The monopoly of the gilds became more oppressive all the time. Most of their money, except the considerable part they spent in carousing, they used in lawsuits and in quarrels with rivals. For miles around a German town the gilds permitted no competitors, and they made it a regular part of their business to hunt down and exterminate independent producers.

298. The eighteenth century marked by general depression, with some signs of improvement.—In Germany, in general, there was little improvement in conditions in the eighteenth century. The country was still intersected with tariff barriers. The Rhine was cut into four sharply defined parts, and the Elbe, by reason of tolls, had lost its trade in some wares of the first importance: steel, iron, copper, olive oil, wine, fish, etc. To the conflicts between cities there was still no end. The cities of southern Germany, weighted with taxes and surrounded by closed markets, declined still more in commercial importance. There were, however, some hopeful signs of progress. Two cities of the interior, Frankfort on the Main and Leipzig, were building up a business which rested not only on trade in wares but on dealings in bills of exchange, currency, commercial loans, etc. Beside the rise of these banking centers special importance attaches to the revival of commerce on the coast of the North Sea. Hamburg and Bremen seized the opportunity offered by the American Revolution and the European wars to which it gave rise to extend their trade as neutral carriers, and had soon passed their old rivals, the Dutch.

299. The rise of Prussia important mainly from the political standpoint.—Taking German commerce as a whole, we leave it in 1800 still depressed and sluggish. The picture would be incomplete, however, if nothing more were said. In one part of Germany there had been great activity for centuries; in the North and East, namely, where the ancestors of the present Emperor William II were building up the state of Prussia. This activity, however, was mainly political, and the history of it does not belong here; we can refer to it only as a most remarkable example of state-making, in which commercial and industrial interests were made subordinate to the establishment of a strong government over a united people. The Hohenzollern rulers did not succeed in making a rich state out of a group of scattered territories of which some were, in natural resources, among the poorest in Germany. They did make a strong state, which won for itself a place among the great powers, and later took the lead in unifying Germany.

There was a moment in the history of the Hohenzollerns when it seemed possible that they might anticipate the idea of William II: “Our future lies upon the water.” If the Great Elector (1640-1688) had secured the Pomeranian coast of the Baltic or kept even Stettin, he might have realized the plans he held to turn Prussia into a sea power, with fleet, colonies, and transmarine commerce. Fortune fixed the interests of the state on land, however, and when a good Baltic harbor was secured later it was too late to change. Frederick the Great was urged, a century afterward, to direct his policy to the sea, and actually founded some companies for trade with the East, but the time had passed, or had not yet come, for the success of Prussia in oceanic trade.

300. Reforms in Prussia favoring economic development.—In regard to their internal conditions, however, the territories of the Prussian state enjoyed a great advantage over others in Germany. The obstacles to trade in the form of tolls and staples were removed when political interests did not require their maintenance. The tariff systems, enormously complicated and cumbrous, were revised. The growth of manufactures was furthered by attracting skilled artisans from other countries; and the city of Berlin received a great stimulus from the Huguenots who found a refuge there. Some of the worst abuses of the gilds were reformed, and manufactures were protected, as in France, by customs duties and by royal privileges. New methods were applied in agriculture, and new land was opened to settlement and cultivation; a large number of the laborers, however, still remained unfree. It would be easy to add many details, but in closing this section on Germany the reader is again advised that the important side of Prussian history in this period was political, not economic. Prussia was preparing herself for the work of unifying Germany, and to accomplish that work a strong government was needed rather than a rich people. The riches have come to Germany in our own time.

301. Contrast of Prussia and Austria.—Prussia was a state which started in the heart of Germany (near Berlin), and remained almost entirely German as it spread. Austria, on the other hand, was originally a territory on the southern border of the German people, the rulers of which managed by skill and luck to extend their power over fragments of adjoining peoples of a different stock, over Bohemians and other Slavs (relatives of the Russians), and over the Magyars or Hungarians (relatives of the Turks). These other peoples were behind the Germans in their industrial development; they had come into Europe later, had been less subject to civilizing influences and more exposed to internal quarrels and wars. Furthermore, the Austrian Germans were behind the other Germans, on whom they were industrially dependent in the sixteenth century. Germans from the North took their manufactures into Austria for sale, carried on the trade of Austria and controlled the mines of Austria.

302. Political factors hindering development of the lands subject to Austria.—The territories subject to the ruling family of Austria, the Hapsburgs, began the period, therefore, in a backward condition, and they had no opportunity throughout the period to catch up. Internal trade was hindered not only by the national diversity of German, Slav, and Magyar, but also by the persistence of provincial tariffs, which underwent no important reform until nearly 1800, and which were not abolished even then. Austria did not suffer so much as Germany from civil war, but like Germany went through the crisis of the religious wars, which nearly ruined Bohemia; and had a plague of its own in resisting the advance of the Turks from the Balkan Peninsula. Austria suffered like France, moreover, from an absolute government which too often used the national resources in the interests of the royal family and not in the interests of the people as a whole.

303. Slow progress of industry and commerce.—It is, therefore, not surprising that in 1700 Austria stood commercially in about the same position it had occupied two centuries before. The country exported the raw products of industry, wool, flax, linen, hides, copper, etc., and received them again after they had been manufactured by other peoples. An economist of the time said that the total manufactures of Austria were not equal to those of a single Dutch city like Leyden. Even this small amount of manufacture was controlled by gilds, and suffered from the characteristic faults of the gild system.

In the eighteenth century, however, the government began to appreciate the importance of national commercial development. It fought the claims to monopoly put forward by the gilds, and encouraged manufacturers to extend their business, by premiums and privileges, as in France and Prussia. Austrian iron and steel wares made a place for themselves in commerce; the cloth industry of Bohemia, once ruined by war, revived again under the factory system; stockings, glass, porcelain, etc., were produced in increasing quantities.

304. Attempts of the government to stimulate development.—The government stimulated the development of manufacture by its customs tariffs as well as by its internal policy. The duties on articles which the government thought could be made at home were raised rapidly, especially after 1700, and became in many cases prohibitory. Undoubtedly the growth of manufactures was furthered by this policy, though many industries betrayed the weakness of their origin by failing after a short period of apparent prosperity. The tariff gave rise, however, to much smuggling and corruption, and injured greatly some parts of the country: the Tyrol, which lies between Italy and Germany and had prospered on the transit trade; and sections like Hungary which produced only raw materials.

To atone in some measure for these necessary results of a protective system, the government attempted also to extend aid to foreign commerce. Triest and Fiume were made free-ports, i.e., they were put on the outside of the tariff frontier to attract trade. Venice was forced to renounce her claim to the exclusive right to navigate the Adriatic, and commercial treaties were made with Turkey, Russia, and states in northern Africa. Consuls were sent out to represent Austrian interests in foreign countries, and attempts were made to secure a share even in the trade with India.

305. Austrian commerce still backward in 1800.—Still Austrian trade attained no great development. The government which gave with one hand took with the other. Special privileges did not make up for the general weakness of the productive organization. Rulers complained that in spite of all their efforts commerce languished. Most of the foreign trade was absorbed by five companies, which divided the field. Two of them were limited locally, trading with Turkey and with Asia Minor respectively; while the other three traded in special wares with various countries. One imported colonial wares like sugar; another exported linens; while the third exported various raw materials to Italy, France, and Spain. During the wars beginning in 1776 Austrian merchants attempted to build up a trade with North America, and an agent of the government was installed at Philadelphia in 1783, but during the following years of peace Austria had no chance of success in competition with trade rivals.

QUESTIONS AND TOPICS

BIBLIOGRAPHY