The first phase was marked,on the one hand,by the spontaneous decomposition of the medieval system,and,on the other,by the rise of several important elements of the new order.The spiritual power became less apt as well as less able to fulfilits moral office,and the social movement was more and more left to the irregular impulses of individual energy,oftenenlisted in the service of ambition and cupidity.Strong Governments were formed,which served to maintain material orderamidst the growing intellectual and moral disorder.The universal admission of the commons as an element in the politicalsystem showed the growing strength of the industrial forces,as did also in another way the insurrections of the workingclasses.The decisive prevalence of peaceful activity was indicated by the rise of the institution of paid armies --at firsttemporary,afterwards permanent --which prevented the interruption or distraction of labour by devoting a determinateminority of the population to martial operations and exercises.Manufactures became increasingly important;and in thisbranch of industry the distinction between the entrepreneur and the workers was first firmly established,whilst fixedrelations between these were made possible by the restriction of military training and service to a special profession.
Navigation was facilitated by the use of the mariner's compass.The art of printing showed how the intellectual movementand the industrial development were destined to be brought into relation with each other and to work towards commonends.Public credit rose in Florence,Venice,and Genoa long before Holland and England attained any great financialimportance.Just at the close of the phase,the discovery of America and of the new route to the East,whilst revolutionisingthe course of trade,prepared the way for the establishment of colonies,which contributed powerfully to the growingpreponderance of industrial life,and pointed to its ultimate universality.
It is doubtless due to the equivocal nature of this stage,standing between the medieval and the fully characterised modernperiod,that on the theoretic side we find nothing corresponding to such marvellous practical ferment and expansion.Thegeneral political doctrine of Aquinas was retained,with merely subordinate modifications.The only special economicquestion which seems to have received particular attention was that of the nature and functions of money,the importance ofwhich began to be felt as payments in service or in kind were discontinued,and regular systems of taxation began to beintroduced.
Roscher (1)and after him Wolowski,have called attention,to Nicole Oresme,who was teacher of Charles V,King of France,and died Bishop of Lisieux in 1382.Roscher pronounces him a great economist.(2)His Tractatus de Origine,Natura,Jure,et Mutationibus Monetarum (reprinted by Wolowski,1864)contains a theory of money which is almost entirely correctaccording to the views of the nineteenth century,and is stated with such brevity,clearness,and simplicity of language asshow the work to be from the hand of a master.
SECOND MODERN PHASE:MERCANTILE SYSTEM
Throughout the first modern phase the rise of the new social forces had been essentially spontaneous;in the second theybecame the object of systematic encouragement on the part of Governments,which,now that the financial methods of theMiddle Ages no longer sufficed,could not further their military and political ends by any other means than increasedtaxation,implying augmented wealth of the community.Industry thus became a permanent interest of EuropeanGovernments,and even tended to become the principal object of their policy.In natural harmony with this state of facts,themercantile system arose and grew,attaining its highest development about the middle of the seventeenth century.
The Mercantile doctrine,stated in its most extreme form,makes wealth and money identical,and regards it therefore as thegreat object of a community so to conduct its dealings with other nations as to attract to itself the largest possible share ofthe precious metals.Each country must seek to export the utmost possible quantity of its own manufactures and to import aslittle as possible of those of other countries,receiving the difference of the two values in gold and silver.This difference iscalled the balance of trade,and the balance is favourable when more money is received than is paid.Governments mustresort to all available expedients --prohibition of,or high duties on,the importation of foreign wares,bounties on the exportof home manufactures,restrictions on the export of the precious metals --for the purpose of securing such a balance.
