Edgar Hardcastle

The Great Discoveries and their economic effects

Source: Socialist Standard, February 1926.
Transcription: Socialist Party of Great Britain.
HTML Markup: Adam Buick
Copyleft: Creative Commons (Attribute & No Derivatives) 2007 conference "Be it resolved that all material created and published by the Party shall be licensed under the Creative Commons Attribution-NoDerivs copyright licence".

When civilisation was concentrated round the Eastern end of the Mediterranean, Phoenician ships from Syria pushed further and further westward, trading; and colonising as they went, and preventing the too credulous Greeks from intruding by spreading tales of the quite mythical sea monsters they had met on the voyage. They eventually reached the Atlantic and coasted south-west round Africa, and tradition has it that their ships made call at Britain for supplies of Cornish tin. Of this we are not sure and we know still less about the Scandinavian voyager, Leif, son of Eric the Red, who it is said reached America in the year 1,000.

But in 1492 Christopher Columbus, fortified by nothing more definite than his inability to believe "that the sun shines upon nothing, and that the nightly watches of the stars are wasted on trackless seas and desert lands," sailed westward across the Atlantic to look for a route round the world to India and the East, and hit upon the West Indian Islands. This was the era of the Great Discoveries.

Five years later, after half a century of persistent Portuguese exploration of the West African coast, Vasco de Gama succeeded in passing the Cape of Good Hope and in opening direct sea communication with India. By 1500 the Portuguese were settled in Brazil and there followed innumerable explorations from end to end of the Atlantic shores of North and South America. In 1520 Magellan had rounded the southern tip of South America and found a sea route to Eastern Asia, although the voyage of over two years cost the lives of Magellan and half his crew. We read of repeated attempts during the succeeding centuries to find sea passages to the North of America and Asia.

To understand the effects of this era of expansion, we must consider the economic condition of Europe in the preceding centuries, and its relations with the East.

Over the greater part of Europe "natural economy" as distinct from "money economy" still prevailed. That is to say, food and clothing were in the main produced for use in the immediate neighbourhood ; trade, and the use of money, were comparatively rare, and limited to luxury goods. The exceptions were the great trading and manufacturing towns which had sprung up at convenient centres for the collection and distribution of commodities, and on the most important land or sea trade routes.

The sea trade was in the hands of merchants of Genoa and Venice and other Italian towns, and of the Hanse towns in the Baltic. The Hanse traders dealt chiefly with Russia, Scandinavia, and the Baltic lands, and were interested in raw materials such as wool, which they obtained from England, corn which they supplied to many Mediterranean nations, and fish.

The Genoese had a monopoly of the South Russian trade which came overland round the Black Sea bringing silks and spices from India and China. The spices were valued highly because it was only by their liberal use that the meat of those times could be made really palatable.

The Venetians, too, dealt in spices, drugs and other Eastern products transported by caravans which entered Egypt from the Red Sea and the Persian Gulf. These spices were grown in the East Indian Islands and reached the termini of the caravan routes in the ships of Arab traders who held undisputed sway over the Indian Ocean.

Both Genoa and Venice brought their luxury wares to depots such as Antwerp, where exchange took place with the Hanse merchants. Overland routes ran up the Rhone to Paris; over the Alps and down the Rhine ; and from Venice via Augsburg and Nurembourg to Hamburg and other Baltic centres.

Both groups of merchants made regular calls at English Ports, and the bulk of European trade was in their hands. It was this trade which gave political importance to the cities and was the cause of their rivalries. The chief source of the merchant's wealth and the goal of every adventurer's ambition was the East, which up to that time had not been directly and easily. accessible to Europe.

During the 15th century, owing to the advance of the Turks into Europe, the whole of this trade was endangered. In 1453 Constantinople fell to them and the Genoese routes were altogether barred; while the Turkish approach to Egypt threatened also the activities of the Venetians. It was the Turkish invasion which was the immediate cause of the desire to reach India by sea, and consequently of the great expansion during the 16th century.

The marked increase of exploration had the effect, which was of great importance afterwards, of giving rise to a new tradition of more daring and skilful seamanship in Portugal and Spain and later in Holland and England. The discoveries caused the shifting of the centres of commerce from the Mediterranean to those countries with an Atlantic coast; the drying up of the overland routes to the Baltic and the consequent decline of the Mid-European cities ; the abandoning of much of the caravan communication with Asia; and the sapping of the vitality of Venice and Genoa. Spain, Portugal and England were thus encouraged to build their own mercantile fleets.

The Portuguese established an Indian Empire and gained control of the East Indian spice islands and a monopoly of the traffic in the Indian Ocean. The amount of trade increased enormously, but the distribution of the wares in Europe was conducted and financed by the Dutch, who obtained the bulk of the profits and laid the foundations of their own later financial supremacy. It was the Portuguese monopoly of the Indian Ocean and the endorsement of their claim which they obtained from the Pope, that induced the Spaniards to finance Columbus in his attempt to reach India by sailing westwards. The discovery of America was, however, not used by Spain to develop commerce. The finding of gold and silver and the extensive mining of the latter which began in 1530 enabled Spain to prosper for a while on a different basis. She attempted to make the new world merely a source of bullion monopolised by her, and to keep this bullion inside the mother country. The result of the monopoly and exclusion of foreign traders was to incite Dutch and English freebooters to attack the bullion ships, and the bullionist policy at home was equally disastrous in the long run. There was a world rise in prices as a result of the inflow of gold and silver, but instead of allowing the food and other industries to profit and grow by satisfying the big demand from the new colonies, the sheep-owning families who were the ruling class deliberately hampered them.

Then, owing to an anti-foreign agitation, due to a mistaken notion that the presence of foreigners in the country had caused the rise in prices, the Government expelled those who had been their best artisans and merchants and without whom industry declined. Spain then became largely dependent on supplies of fish, corn, and manufactured goods from Holland and England, this again stimulating the economic development of the latter.

The rise in prices had a generally quickening effect on trade outside of Spain, and not only did this affect the trading nations and their industries, but it materially speeded up the introduction of money in place of "natural economy." This was the immediate cause of the peasant war in Germany in 1525, owing to bitter disputes about the money value of labour services. The war set Germany back economically, and the other advanced nations benefited by the removal of a rival. The working out and decline of her mining industries also affected Germany adversely. Accumulation of capital, which was rendered easier by the abundance of gold and silver, led to the opening of new commercial and industrial enterprises in the East and the New World as well as in Europe.

This growth of capital, the consequent greater power of the merchants, and the new contact with the non-Christian East were also the causes of a revival of slavery and had a depressing effect on the condition of the peasants and wage earners in Europe itself.

England rapidly changed from a wool exporting to a wool manufacturing nation and before the end of the 16th century her commerce was largely carried on in English ships; both the Venetian and Hanse fleets having ceased to call.

The high prices which ruled universally, and the particularly high price of wool due to the demand from Flanders and from home manufacturers were the chief causes of the great decrease of arable and increase of pasture farming in England, a process assisted by the suppression of the Monasteries and the dispersal of their lands in 1536. This agricultural revolution which was in progress up to 1600 had the effect of driving many thousands of tenants and labourers off the land into the towns, where for a long time there was no demand for their services. In the meantime vagrancy grew to be a serious problem and the Poor Law became a permanent national institution.

Great trading companies to East and West were formed and out of the strife of the early buccaneers an English merchant fleet was built which eventually surpassed that of the Dutch, and was to be the foundation of England's future commercial and naval power.

The development of shipping and the demand for timber from Russia opened up communications with that country and materially hastened its internal political and economic growth.

New East coast towns like Boston and Hull grew up for the Baltic trade, while Bristol flourished on the trade across the Atlantic. England now became the centre of the Christian world, owing to her admirable position as a depot. There was a corresponding decline in the commercial monopoly previously exercised by Jews in the Eastern Mediterranean.

With the rise of her commerce and banking, Holland also carefully developed her agriculture, and her success in the use of root crops and grasses which for the first time made it possible to keep stock alive during the winter, was of great importance to England and other countries which later learned from her example.

For Europe as a whole the results were important and lasting. The need for big accumulations of capital to join in the new commercial enterprises, which were of an unprecedented size and expense, and the need for adequate protection against attack in distant waters, gave an urge towards national instead of city organisation. This was the economic basis of the new nations and Empires, Portugal, Spain, Holland and England.

The great increase in sea voyages, the new experiences and the new knowledge of navigation obtained from the Arabs gave an added importance to overseas trade and, as has been seen, destroyed the old Mediterranean and overland trade routes.

In its turn commercial activity created bigger markets and a steadier demand for raw materials and industrial products, which reacted immediately on the hitherto small and unprogressive industries. Local isolation tended to be broken down as bigger areas were drawn into the sphere of commerce either as sources of supply or as consumers of Colonial and Eastern goods. The use of money became everywhere more general with its disintegrating effect on the old Manorial relationships, and banking began to be of new importance as a support of industry.

In short, the discoveries began the era of industrial and commercial activity which continued without essential change till the Industrial Revolution.