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COMMERCE AND MARKETS

COMMERCE AND MARKETS. "Commerce" refers primarily to the exchange of the products of nature or art, that is, of merchandise, through buying and selling. This activity of exchange takes place in "markets"—"not any particular market place in which things are bought and sold, but the whole of any region in which buyers and sellers are in such free intercourse with one another that the prices of the same goods tend to equality easily and quickly" (Marshall). If the defining characteristic of these more abstract markets—as opposed to marketplaces—is a tendency for the same price to be paid for the same good at the same time in all parts of the market, then some scholars would argue that markets have existed in Europe since at least the twelfth century C.E. Early modern Europe witnessed an extension and intensification of commerce and markets to the point that a worldwide system emerged from which fewer and fewer people were excluded.

The "exchange of the products of nature or art" is probably as old as human civilization, dating at least from the time of the first settled communities, when it became necessary somehow to link the production and consumption of a wide variety of goods. The ancient Greeks made use of an exchange of gifts between households or communities with dissimilar resources to expand consumption and promote specialization. Yet, gift-giving relied on a sense of reciprocity in which social honor resided in giving and a social burden attached to receiving. Herodotus (c. 484–between 430 and 420 B.C.E.) observed that the Persians had no marketplaces but rather a vast system of tribute payments, which imperial authorities collected and redistributed. The same may have applied to wide regions of early medieval Europe, where dues paid in kind to feudal or manorial lords fueled production and consumption. What separates commerce and markets from these other systems of exchange is that goods and services are traded not out of a sense of social prestige or political duty but rather in pursuit of economic profit.

The origins of markets are usually located in trade fairs. These temporary markets, held at regular intervals and fixed locations, brought buyers and sellers together to exchange goods, demonstrate crafts, and trade ideas. Fixtures of the Roman Empire, they survived its collapse to gain new prominence under the Carolingians (seventh to tenth centuries), and grew where trade routes crossed or people congregated, providing a crucible for the refinement of business practice and law. The fair at Saint-Denis, near Paris, had achieved international importance by the seventh century C.E., but it was joined and eventually surpassed over time by others: the Easter fairs at Cologne in the eleventh century, the great fairs of Champagne in the twelfth century, the fall fairs at Frankfurt am Main in the fifteenth century, and the fairs at Leipzig in the seventeenth century. In addition to these great international fairs, where products from all over Europe as well as Asia, Africa, and, eventually, America might be inspected and traded, there were regional markets of great importance, such as those of Lyon in France, Geneva in Switzerland, and Stourbridge in England. Every town and city in Europe held weekly or yearly fairs, where local producers brought surplus or cash crops to sell or barter for the needs they could not satisfy at home. As towns and cities grew to the point that the demands of their populations required daily markets, as transportation was organized and improved to the point that supplies became more regular and varied, and as commerce itself evolved toward increased standardization of goods, quality, and prices, fairs became less important. Ironically, specialty fairs, known as trade or industrial fairs, breasted this tide to become more important over time as a means of stimulating demand and consumption for new products and technologies.

TRADE CIRCUITS AND POLES

Fairs and markets tended to grow where goods flowed and people gathered—at the junctions of established trade routes or near the walls of great cities. When goods traveled, they increased in price the farther they went; the obstacles presented by the transportation system were always expensive and inflexible. Thus, all commodities moved the least distance possible between one point of sale and the next, and all commodities, but especially those of greater weight and less value, such as grain or lumber, traveled most expeditiously by water. It is not surprising that routes tended to be dictated by geography, given the relatively primitive means of transportation. Only luxury goods assured profits that could bear the relatively high cost of long-distance overland transport. Coasts and rivers were favored, therefore, and valleys, plains, and passes served as needed. In the Carolingian Empire, the most heavily used routes ran along the coasts of the Mediterranean, North, and Baltic Seas as well as the Atlantic Ocean and along the courses of the Rhone and Marne, Rhine and Danube, and Dnieper and Volga Rivers. Such overland routes as existed—the road from Pavia north over the Alps to the Rhine or the one from Mainz east through the central forests to Prague—were less heavily traveled. All this changed with the slow growth of cities and the intensification of commerce. By the sixteenth century a relatively dense network of interlocking local, regional, and international routes had arisen to supplement those in use for centuries.

Augsburg, for example, was certainly one of the premier industrial, commercial, and financial centers of the late fifteenth and sixteenth centuries. Like the other great market centers of Europe, it stood at a confluence of ways. Its advantage resided partially in the essential role its magistrates and merchants could play in the expedition of goods along north-south and east-west axes. Bulk commodities reached it via the Lech River—a relatively modest waterway but still sufficient to transport a great city's grain and lumber—which flowed north from the city until it joined the Danube. Past the city's walls and gates ran several important routes linking Prague and Vienna with Lyon, Paris, and Seville and, even more important, linking Venice with Antwerp. The ancient salt highway ran from Salzburg via Munich. Augsburg's merchants regularly traveled the roads south, to Innsbruck via the Brenner Pass to the mining fields around Merano, Bolzano, and Trent, to Verona, and finally east to the great entrepôt of Venice. Another route followed the Roman Via Claudia through Upper Swabia and its imperial cities of Memmingen, Kempten, and Lindau on Lake Constance, thence to St. Gall and Chur in the Swiss Confederation, and via the St. Bernhard Pass to Lugano and the great manufacturing metropolis of Milan. Trade with France and Spain took a western road via Ulm, Constance, Zurich, Bern, Lausanne, and Geneva to arrive at the great fairs of Lyon, a center for German merchants trading with colleagues in France. From Lausanne, a route ran north to Dijon and Troyes in Burgundy and onward to Paris. From Lyon, the Rhone River Valley provided a convenient highway south to Marseilles, the Mediterranean, and Spain.

To reach the other great entrepôt of the sixteenth century, Antwerp, merchants and merchandise started north or west from Augsburg, traveling to Donauwörth or Ulm and thence to Nuremberg and Würzburg or to the Rhenish cities of Speyer, Worms, and Mainz respectively. Both routes then headed to Frankfurt with its important fall fairs and onward via Cologne to Maastricht and Antwerp. From Nuremberg, via the northward route, two branches increased in importance over the course of the early modern period. A route from Prague across the Bohemian Plain to Nuremberg and south provided cattle for the butchers and tanners of Augsburg, and a route from Leipzig in Saxony, through the metallurgical centers of Freiberg, Schneeberg, and Zwickau, and south via Nuremberg kept the merchant financiers of Augsburg in close touch with their mining interests. This bewildering complex of highways and stopovers was typical of any major market, whether Augsburg, Lyon, or Milan. Yet, it was far from stable. As the economy evolved between the fifteenth and eighteenth centuries, the relative importance of these routes and the markets they served, measured in terms of the volume and value of commerce that flowed along and among them, shifted.

The relative weight of commerce and markets shifted away from those routes that had served the principal Mediterranean ports—Barcelona, Marseilles, Genoa and, above all, Venice—since the Middle Ages and toward those connected to the Atlantic Ocean and the growing volume of global trade—Seville, Amsterdam and, ultimately, London. Initially, overland routes from Venice across the Alps to Antwerp and to the Hanseatic cities of Bremen, Hamburg, and Lübeck connected the main commercial poles of Europe. Along these circuits, goods from Italy and the east flowed north: luxuries, such as silks, spices, and gems; essentials, such as cotton, alum, and dyestuffs; and manufactured goods, such as cotton cloth, glass wares, and metal goods. Merchants in Venice gathered these commodities from Italian markets but also from an overseas circuit that extended east into the Mediterranean, connecting the Levantine ports of Tripoli, Acre, and Jaffa with Famagusta in Cyprus, Candia on Crete, Istanbul and Caffa on the Black Sea, Bari and Ragusa on the Adriatic Coast, and, finally, Venice at its head. Against the northward stream bulk items flowed south from Scandinavia, Poland, and Russia—grain, timber, iron, and furs—carried by Hanseatic merchants from a connecting circuit that extended from the North Sea through the Jutland Straits to the Baltic ports of Copenhagen, Gdańsk (Danzig), and Riga. From Antwerp came textiles: the "new draperies," brought from England and the Low Countries. This admittedly over-simplified summation—it ignores, for example, the circuit that connected that commercial colossus Genoa to the North African ports of Tunis and Ceuta, across the Gulf of Lion to Marseilles and Barcelona or along the Ligurian and Tyrrhenian Coasts of Italy to Pisa, Naples, and Messina—must, finally, include the annual arrival in Antwerp of the Portuguese spice ships from South and Southeast Asia via Lisbon. From the late fifteenth until the late sixteenth century, the disembarkation of pepper in Lisbon and Antwerp marked the economic calendar for all of Europe. It stimulated the flow of capital and set the pace for the commodity exchange throughout the continent. It allowed debts to be paid and enterprises to be undertaken; in short, it set the financial, industrial, and commercial wheels of Europe in motion.

THE EMERGENCE AND EFFECTS OF OVERSEAS COMMERCE

The spice ships mark a development that altered the commercial activities of Europe. One must be careful not to overstate the rise of the Atlantic economies; Mediterranean commerce did not suddenly lose all value and significance. Yet, between the late fifteenth and the late eighteenth centuries, the balance of economic and political power moved west to those countries with immediate access to global commerce.

What drove Europeans to push beyond the boundaries of their known world? Historians traditionally emphasize three factors, to all of which the explorers and conquerors themselves attested: gold, glory, and the Gospel. All played a role, but one was paramount. The voyages were driven by the desire for profit, and "discoveries" were seen through the lens of commodities and exchange. They captured the European imagination, spreading an awareness of a wider world and a conviction in the possibility of limitless profit. They expressed as well the European circumstance, drawing on the resources of a burgeoning economy and utilizing the advantages of new transportation technology.

Seagoing merchant-explorers relied on a series of innovations in shipbuilding, without which the growth of worldwide commercial networks would probably have taken a much different course. The fifteenth century witnessed extraordinary developments in the hulls and rigging of ships. Throughout the Middle Ages, ocean-going trade had been dominated by two types of ships: the Mediterranean galley, powered by oars and triangular "lateen" sails, and the northern round ship or "cog," powered by a single square sail. Though swift and maneuverable, the galley was not seaworthy except in calm weather; the cog could carry large cargoes, though its single sail made it neither handy nor maneuverable. These two types began to merge in the late fifteenth and early sixteenth century, yielding a revolutionary moment in early modern shipbuilding. By 1450, three-masted ships, known as "carracks," were beginning to dominate the sea lanes of the world. These full-rigged ships had a number of advantages: their larger hulls could hold larger crews and cargoes for longer voyages; their higher sides made them more easily defensible; and their multiple masts and triangular sails made possible better, safer handling.

Seaworthy ships alone did not suffice; navigation was improved as well. Traditional methods, devised for the relatively sheltered waters of the Mediterranean Sea or the continental shelf, required the proximity of a coast and were, therefore, inappropriate for the blue-water sailing required for trade with markets on the far side of the world. The Portuguese Prince Henry the Navigator (1394–1460), patronized master cartographers, astronomers, and mathematicians in order to extend his state's shipping to the Azores and down the western coast of Africa. Master James of Majorca (probably the Jewish scholar, Jefuda Cresques), helped develop a new method of navigation, called "running down the latitude." With knowledge of the destination's latitude, a navigator merely had to find it by sailing north or south through the open sea and then to set course east or west until land was sighted. This required that early modern voyagers accurately determine latitudes, which they accomplished by determining the height of a celestial body, initially the pole star, from the horizon. During the late fifteenth and sixteenth centuries the quadrant was used for this purpose, followed and surpassed by the sea-astrolabe and the cross-staff. In addition to latitude, navigators had to measure the distance sailed. Early charts showed the north-south lines, today called longitudes, as parallel, thus misrepresenting east-west distance, as sailors learned from hard experience. A ship's easting or westing remained an insoluble problem until the second half of the eighteenth century, when John Harrison (1693–1776) invented a reliable navigational clock.

By the fifteenth century these developments in shipbuilding and navigation combined to encourage European merchants to seek direct trading connections with the Far East. Until the fifteenth century, the Mediterranean had served as Europe's primary commercial circuit to a wider world. Seeking greater profits, the Europeans wished to circumvent the Mediterranean middlemen. Moreover, the rise of the Ottoman Empire, sealed by its conquest of Constantinople in 1453 and its invasion of the Balkans shortly thereafter, made the established routes less secure and the search for direct routes to the East imperative. Such was the cost and risk, however, that only the largest merchant-bankers of the day, located in Italy and Germany, could afford to underwrite the efforts of those states that formally sponsored exploration. Two maritime routes suggested themselves. The more conservative involved coasting south along the continent of Africa, turning east around its tip, and sailing on to China. Portugal took up this challenge. It outfitted fleets of ships to explore the coast of Africa and establish points of supply. By 1498 the investment paid dividends. Vasco da Gama (c. 1460–1524) sailed around the southern tip of Africa, the Cape of Good Hope, and followed the coast north again via Sofala and Kenya before striking across the Indian Ocean to a landfall near Calicut in India. The Portuguese came neither to conquer nor to colonize but only to secure trading rights, especially for pepper. The profits were extraordinary. Yet, however great the profits, the costs for Portugal were too much over time. Lacking human and material resources, it could not maintain a far-flung trading empire and so was forced in the course of the seventeenth century to yield its foothold in Asia to more aggressive competitors, first the Dutch, then the English.

The other, far bolder route to the Indies involved sailing west. The Genoese merchant and sailor Christopher Columbus (1451–1506) offered this route to Ferdinand of Aragón and Isabella of Castile. Spanish advisors argued against the risk of a voyage into uncharted seas, the distance across which was totally unknown. Yet the potential profits were staggering, and the costs were minimal. Rather than a painstakingly gradual process of exploration and experimentation, in the Portuguese manner, Columbus projected a single voyage with three ships. In return, he asked only 10 percent of the profits and the governorship of any conquered territories. In 1492, he and his tiny fleet landed in the Bahamas.

That the Spanish crown was minimally involved in the early stages of exploration and conquest had to do with the risks inherent in the western route. It also had to do with the nature of the discoveries. Initially, they were less profitable. The Americas did not initially offer the Oriental luxuries that Europeans demanded: no pepper or silk. Great wealth came not through trade but rather through conquest, colonization, and development, winning for Spain a more durable empire, if not a more lasting fortune. Genoese bankers would see to it that the wealth of the Indies, as it became known, would flow through Spain into a quickening European economy, and Dutch and English merchants would eventually draw a great deal of the trade in commodities into their hands. In place of Antwerp and Seville, Amsterdam and London eventually arose as the great poles of world commerce.

Well into the seventeenth century, however, the landing of the American treasure fleet—galleons bearing cargoes of precious metals and exotic goods—made Seville the beating economic heart of Europe that Antwerp had been less than a century earlier. Pierre Chaunu attributes great importance to the so-called carrera de India, the circuit of commerce that ran from Seville out via the Canary Islands to the Americas and back again via the Azores to Seville. As he puts it, "Waiting for the European products bound for the Indies was one of the principal preoccupations of the merchants of Seville when the ships were due to sail" (p. 260, n. 2; p. 293, n. 1.). Trade with the world, in a sense, mobilized an ever greater proportion of the financial and industrial resources of Europe from the sixteenth century onward, the existence of political empires notwithstanding. To that exact proportion, it makes less and less sense to speak of a European economy.

The discoveries of overseas routes to a wider world had staggering consequences affecting both economic and cultural life. Contact, conquest, and colonization filled the markets of Europe with a vast array of precious metals and exotic goods. The influx of gold and silver swept away old economic relations and created new social tensions. Most of the silver was minted into coin, the increased circulation of which allowed commerce to function at a higher rate and volume—throughout the sixteenth century chronic inflation resulted. The expansion of commerce created opportunities that encouraged investment and indebtedness, favoring those with disposable incomes and oppressing those on fixed incomes.

A stunning array of hitherto unknown commodities likewise transformed patterns of production and consumption. Tastes changed under the influence of new consumer goods. Coffee and sugar are two striking examples. Industries evolved to absorb new materials and supply new markets. Particularly worthy of mention is industrial slave labor. The slave trade was not unknown in medieval Europe, with well-established markets in North Africa and the Levant. Apart from occasional appearances in European courts and households, however, African slaves had played a limited role in the European economy until the development of sugar plantations in the Canary Islands. The importance of slaves—and therewith the commerce in them—increased greatly with the discovery of the Americas and the growth there of industrial farming in sugar, coffee, cotton, and tobacco.

New sources of wealth altered as well the old balance of power. From the sixteenth century onward, political power was increasingly measured in terms of colonies and commerce. Portugal and Spain were but the first of a series of empires that drew their financial and therefore political power from the control of the new worlds.

THE GLOBAL COMMERCIAL NETWORK

The development of overseas trade encouraged further expansion and intensification in European commerce. As the traffic grew between markets in the Old World and the New, exotic goods eventually penetrated to even the most remote areas of the Continent, and the commercial circuits in Europe gradually merged into a single network. Cities and their economic catchment areas—those surrounding areas from which they acquired material, human, and financial resources and to which they sold their goods and commodities—formed the nodal points of this vast global network. Smaller and larger catchment areas, local and regional circuits, were linked together and connected to that emergent network of international commerce. These linkages extended well beyond the economic ties of purchase and sale that could exist between neighboring markets. Urban merchants established regular ties with rural producers and suppliers, ties that were often strengthened and made permanent through the purchase of landed estates and noble titles. Local governments competed and cooperated in matters of commercial and industrial regulation. Commercial enterprises developed networks of representatives or factors, connections often made more intimate and reliable through ties of blood or marriage.

Business practices and organizations. Unlike trade routes, which have an independent existence of their own, trade circuits and the larger commercial networks of which they are part express the activities of commercial agents. Without merchants at various points who exchange goods, communicate information, and compete or cooperate as circumstances dictate, they cease to exist. Early modern merchants moved daily, either in person or via correspondence, along these circuits and networks, buying and selling myriad goods. An ideal typical exchange might involve as many as four individual transactions: buying domestic goods for resale abroad; exchanging these goods for cash or other commodities; buying foreign goods for resale at home; exchanging them for cash. Profits could only be calculated at the close of the entire series. Obviously, such complex trading required a number of arrangements, which might be summarized as compensation, cooperation, and communication.

Merchants had to have secure means of moving specie or its equivalent value across large, often dangerous geographic spaces. They needed associates who would enter into transactions with them or facilitate their trading far from home. They also had to have a clear sense of prevailing market conditions at home as well as abroad; they needed to know what would sell and for how much. In an age that lacked the legal and political institutions to enforce business conduct efficiently, early modern merchants resorted to a number of different types of business practices and organizations to promote reliable, successful exchange.

Though merchants continued to move silver and occasionally gold coin from market to market—indeed, the commerce in precious metals has received less attention than other commodities, such as textiles—the favored mechanism for transferring money and paying debts was the bill of exchange. In its simplest form, the bill involved the payment of money in one market and an agreement to repay that money, often in different coinage and at a prearranged exchange rate, in another. Thus, a traveling merchant with business to transact in a distant market might turn to another merchant who had factors or associates in that distant market for a bill of exchange. The first merchant would pay a given amount to the second for which he would receive a document, the bill itself, redeemable by the second merchant's representative for the amount specified. Having to carry only the bill, the traveler was spared the inconvenience, expense, and risk of transporting coin. By the early modern period, the resort to bills of exchange had become commonplace. They often functioned not only as means of compensation but also as instruments of credit. The church forbade Christian merchants to charge interest on loans, except under restricted circumstances, but bills of exchange allowed the interest to be disguised as part of the exchange rate. They also became a commodity in themselves, a fungible instrument that could be discounted, bought, and sold. Although payment in coin constituted the initial act in the creation of any bill of exchange, their increasing tendency to circulate independently constituted a small step toward a fiduciary system of paper money.

The presence of representatives in distant markets—whether employees, partners, or colleagues—was a response to the necessity of cooperation in a commercial network that was characterized by slow transportation and imperfect information. Without the state, or some other uninvolved party, to enforce contracts, guarantee transactions, and provide information, merchants needed reliable associates to serve as go-betweens, mediators, facilitators, and informants. Only thus could bills of exchange be redeemed, market conditions assessed, or goods exchanged over greater and greater distances. The challenge, of course, was to assure reliability. The family firm, in which partners and associates at home and abroad were related by ties of blood and marriage, sought to reinforce economic interests through social connections. Common as it was in early modern Europe, the family firm was not the only possibility. Many firms resorted to a more authoritarian model that made use of factors who were simple employees, hired and fired as suited the principals. The Fugger family of Augsburg (midfifteenth to mid-sixteenth century) is thought to have been the pioneer in this business model, but other prominent companies made use of it as well. Lucas Rem, whose diary from the period 1494–1541 survives as one of the most important egodocuments of the age, served for nearly two decades (1499–1518) as the employed factor of the Welser Company, another enterprise with commercial and financial connections that spanned Europe and extended to the New World, before leaving it to begin a highly successful trading company of his own. In the fifteenth century the Medici developed a unique system in which their factors in foreign markets were organized as quasi-independent branches or subsidiaries that could be separated from the parent firm in case of emergency, an ingenious method of protecting assets in one place from debt or bankruptcy in another.

By the sixteenth century, other more flexible and less costly forms of business organization were becoming commonplace. Most merchants came to rely on commission agents rather than employed factors; these agents, themselves merchants, would take a small percentage of deals they negotiated or transacted on behalf of other parties. There was an element of reciprocity in all this, each side acting on commission for the other as circumstances dictated. Matheus Miller, one of the wealthiest merchants of Augsburg in the second half of the seventeenth century, relied almost entirely on commission agents in Venice, Leipzig, Frankfurt, and Amsterdam and thus spared himself the expense of maintaining a widespread network of employees and the inconvenience of traveling to distant markets. Another short-term, practical business arrangement that became more common was "participation," a partnership limited to a single enterprise, for example, a single overseas voyage. Once the enterprise was complete, accounts would be settled and the partnership dissolved.

What is remarkable about the use of representatives, whatever form that representation happened to take, is the ethos it required. Reciprocity was expected. Solidarity was essential. One had to be able to rely without question on one's agents abroad to provide accurate information and to act in good faith. Indeed, foreigners in any market were completely dependent on the good faith of their native agents and associates. Well-known examples are the Spanish metedores and cargadores, who ran or accompanied Dutch cargoes on board the Spanish fleets that traded between Cadiz and the New World at the height of the Dutch Revolt (1570s and 1580s) against the Spanish Empire. Merchants had to rely on agents; agents had to be reliable. This did not prevent cutthroat competition, even among merchants who occasionally cooperated, but it limited the practice of open duplicity or dishonesty. Reputation was, to a very large extent, fortune in commerce. A reputation for hard but honest dealing assured a merchant access to financial resources, essential in an age of money scarcity. A reputation for reliability assured the cooperation of others, encouraging them to act on commission or enter into partnership. A reputation for probity assured access to news of current events and market conditions that might affect business fortunes.

Communication. Like compensation and cooperation, communication was an essential component of early modern commerce and markets. News and ideas—the invisible but invaluable cargo of merchants, teamsters, and peddlers alike—always flowed along trade routes. For merchants, factors or agents were consistent and reliable sources of information, given their intimate familiarity with the markets in which they worked. They could provide up-to-date news about which goods were plentiful or rare, indicating which goods were to be bought, being in good supply and therefore cheap, and which goods were to be sold, being in short supply and therefore dear. Yet, the intensification and extension of commerce spurred developments in commercial communication as well. It seems probable, though finally indeterminable, that business correspondence intensified and expanded with the system in which it functioned. Businesses, especially those engaged in international or overseas commerce, likely invested more human and financial resources on correspondence with contacts and employees in distant markets. Likewise, the need for general information about distant places and peoples would have grown with the emergence of a global commercial network. The quickening literary interest in travel accounts of new worlds may have derived in part from a more than casual interest in their commercial potential.

Commerce might have had a hand in new forms of communication as well. The so-called Fuggerzeitung may be one of the first, if not the first, periodical news publications. It contained information—regarding politics, weather, transportation, and prices, among other things—gathered out of nearly forty thousand reports sent to Philipp Eduard and Octavian Fugger by their factors during the period 1568–1605 and disseminated to all their agents and associates with information of events or developments that could affect markets where they did business. Commerce demanded daily reading and writing. Accounts had to be kept; contracts had to be negotiated; correspondence had to be read. The increase in autobiographical writing, which seems to have begun in the fifteenth century, has been attributed to European merchants, both as readers and as writers. Thus, just as commerce helped to promote an increase in communication through an insatiable appetite for information, so it helped to spread literacy through the propagation and valuation of reading and writing.

The emergence of global commerce, a network of traffic and transactions that bound the world together with greater and greater immediacy, gradually changed the organization and practice of commerce itself. Nor were these refinements limited to commerce. The global network introduced new commodities, and the taste for material goods changed. It brought Europeans into contact with strange and unexpected peoples and places, and the sense of Europe's place in the world began to shift. Finally, commerce with a wider world fostered new skills and values, of which literacy was but one, that extended far beyond the business world.

SUPPLY AND DEMAND

Behind all of these developments operated the ubiquitous forces of supply and demand. Markets exist and commerce occurs to supply the goods and services that people demand. As abstractions, supply and demand are readily defined as the relationship between the quantity of any good or service that producers wish to sell at a certain price and the quantity that consumers wish to buy. The market functions to equate the two through the price mechanism: if buyers wish to purchase more of a given good than is available at a certain price, their demand will bid that price up; if buyers wish to purchase less, suppliers will bid the price down. As historical realities, however, these things are more difficult to isolate and examine. It has been noted by more than one economist or historian that there is no supply without demand and no demand without supply. Together, they produce exchange and are produced by it, simultaneously cause and effect. Nor do they exist in economic isolation. Supply and demand are subject to extramarket forces. Climate, politics, and culture can all work to alter the value attached to goods and services by affecting their supply or the demand for them.

The vagaries of supply and demand stand at the center of efforts to understand the early modern economy as a whole. What caused it to grow and to change? For centuries, economists and historians insisted that supply was, until the eighteenth century, an insignificant factor, marked by inelasticity, unresponsive to demand. Still, historians believed until recently that changes in supply led the economy of Europe into its modern phase, beginning in the eighteenth century in Britain, for example. Traditional explanations of early industrialization concentrate on changes in organization or technology that resulted in massive increases of supply and decreases of price. In the last decade, however, attention has shifted to demand. Jan de Vries has argued for an "industrious revolution" rather than an industrial revolution, whereby European consumers came to desire a better, more comfortable standard of living and were willing to work longer and harder to achieve it. The demand for more consumer goods prompted an increase in supply that, finally, could only be sustained by the development of new production technologies.

Whatever the outcome of this debate, it recalls a simple truth. Commerce and markets are products of the societies that create them. Supply and demand are, indeed, connected, and arise out of the perception of need. Changes in patterns of consumption are complex events that involve relationships to material goods, patterns of values as well as patterns of behavior. These reflections recall the truth of Fernand Braudel's observation that "the economy is only a 'sub-division' of social life" (p. 226).

See also Banking and Credit; Capitalism; Colonialism; Fugger Family; Hansa; Industrial Revolution; Industry; Liberalism, Economic; Mercantilism; Money and Coinage; Shipbuilding and Navigation; Shipping; Slavery and the Slave Trade; Smith, Adam; Trading Companies; Triangular Trade Pattern.

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THOMAS MAX SAFLEY