The Mercantile System and its Historical Significance [17]
was grouping itself in certain neighbourhoods and around certain towns, there the linen manufacture; here the tanning trade, there the hardware trade. The old handicraft (Handwerk) began to convert itself into a domestic industry (Hausindustrie); the old staple trade, carried on in person by the travelling merchants, began to assume its modern shape with agents, commission dealers, and speculation. These forces all converging impelled society to some large economic reorganisation on a broader basis, and pointed to the creation of national states with a corresponding policy. Germany itself had made a brilliant start in many respects, - in the matter of traffic, of manufacturing processes and division of labour, and even in its foreign trade but neither its imperial or Hanseatic cities, nor, as a rule, its territorial states, were capable of making the most of it. Still less did the imperial power know how to set about the great task of the economic consolidation of the empire which was now so urgently called for: in the sixteenth century it was exclusively occupied in the maintenance of the religious peace; in the seventeenth century it was altogether subservient to the Austrian and Catholic policy of the Hapsburg dynasty. England's cloths were flooding the German market. Sweden and Denmark were organising themselves as maritime and commercial powers: Spain, Portugal, and Holland divided the colonial trade between themselves. Everywhere, save in Germany, economic bodies were stretching out and becoming political; everywhere new state systems of economy and finance were arising, able to meet the new needs of the time. Only in our Fatherland did the old economic institutions become so petrified as to lose all life; only in Germany were the foreign trade, the manufacturing skill, the supply of capital, the good economic usages, connections and traditions, which the country had possessed up to I62O, more and more completely lost. And it was not simply the external loss in men and capital which brought about this retrogression of Germany, during a period of more than one century, in comparison with the Powers of the West; it was not even the transference of the world's trading routes from the Mediterranean to the ocean that was of most consequence; it was the lack of politico-economic organisation, the lack of consolidation in its forces. What, to each in its time, gave riches and superiority first to Milan, Venice, Florence, and Genoa; then, later, to Spain and Portugal; and now to Holland, France, and England, and, to some extent, to Denmark and Sweden, was a state policy in economic matters, as superior to the territorial as that had been to the municipal. Those states began to weave the great economic improvements of the time into their political institutions and policy, and to bring about an intimate relation between the one and the other. States arose, forming united, and therefore strong and wealthy, economic bodies, quite different from earlier conditions; in these, quite unlike earlier times, the state organisation assisted the national economy and this the state policy; and, quite unlike earlier times too, public finance served as the bond of union between political and economic life. It was not only a question of state armies, fleets, and civil services; it was a question rather of unifying systems of finance and economy which should encompass the forces of millions and whole countries, and give unity to their social life. There had always been great states; but they had been bound together neither by traffic nor by the organisation of labour nor by any other like forces. The question now was, - with a great society divided into social classes widely different one from another and complicated by the division of labour, - to bring about, as far as possible, on the basis of common national and religious feelings, a union for external defence and for internal justice and administration, for currency and credit, for trade interests and the whole economic life, which should be comparable with the achievements, in