centers of trade, of handicrafts, and of art. As towns developed, they dealt the final blow to an agricultural system based on feudalism: they became cities of refuge for the runaway serfs, and their charters, insuring political and economic freedom, gave them superior advantages for trading.

The guild system of manufacture was gradually replaced by the domestic system. The workman’s cottage, standing in its garden, housed the loom and the spinning wheel, and the entire family was engaged in labor at home. But the workman, thus apparently independent, was not the owner of either the raw material or the finished product. A middleman or agent brought him the wool, carried away the cloth, and paid him his hire. Daniel Defoe, who made a tour of Britain in 1724-6, left a picture of rural England in this period, often called the golden age of labor. The land, he says, “was divided into small inclosures from two acres to six or seven each, seldom more: every three or four pieces of land had an house belonging to them,… hardly an house standing out of a speaking distance from another.… We could see at every house a tenter, and on almost every tenter a piece of cloth or kersie or shalloon.… At every considerable house was a manufactory.… Every clothier keeps one horse, at least, to carry his manufactures to the market and every one generally keeps a cow or two or more for his family. By this means the small pieces of inclosed land about each house are occupied, for they scarce sow corn enough to feed their poultry.… The houses are full of lusty fellows, some at the dye vat, some at the looms, others dressing the clothes; the women or children carding or spinning, being all employed, from the youngest to the oldest.”

But more significant than these changes was the rise of the so-called mercantile system, in which the state took under its care industrial details that were formerly regulated by the town or guild. This system, beginning in the sixteenth century and lasting through the eighteenth, had for its prime object the upbuilding of national trade. The state, in order to insure the homogeneous development of trade and industry, dictated the prices of commodities. It prescribed the laws of apprenticeship and the rules of master and servant. It provided inspectors for passing on the quality of goods offered for sale. It weighed the loaves, measured the cloth, and tested the silverware. It prescribed wages, rural and urban, and bade the local justice act as a sort of guardian over the laborers in his district. To relieve poverty poor laws were passed; to prevent the decline of productivity corn laws were passed fixing arbitrary prices for grain. For a time monopolies creating artificial prosperity were granted to individuals and to corporations for the manufacture, sale, or exploitation of certain articles, such as matches, gunpowder, and playing-cards.

This highly artificial and paternalistic state was not content with regulating all these internal matters but spread its protection over foreign commerce. Navigation acts attempted to monopolize the trade of the colonies and especially the trade in the products needed by the mother country. England encouraged shipping and during this period achieved that dominance of the sea which has been the mainstay of her vast empire. She fostered plantations and colonies not for their own sake but that they might be tributaries to the wealth of the nation. An absurd importance was attached to the possession of gold and silver, and the ingenuity of statesmen was exhausted in designing lures to entice these metals to London. Banking and insurance began to assume prime importance. By 1750 England had sent ships into every sea and had planted colonies around the globe.

But while the mechanism of trade and of government made surprising progress during the mercantile period, the mechanism of production remained in the slow handicraft stage. This was now to change. In 1738 Kay invented the flying shuttle, multiplying the capacity of the loom. In 1767 Hargreaves completed the spinning-jenny, and in 1771 Arkwright perfected his roller spinning machine. A few years later Crompton combined the roller and the jenny, and after the application of steam to spinning in 1785 the power loom replaced the hand loom. The manufacture of woolen cloth being the principal industry of England, it was natural that machinery should first be invented for the spinning and weaving of wool. New processes in the manufacture of iron and steel and the development of steam transportation soon followed.

Within the course of a few decades the whole economic order was changed. Whereas many centuries had been required for the slow development of the medieval system of feudalism, the guild system, and the handicrafts, now, like a series of earthquake shocks, came changes so sudden and profound that even today society has not yet learned to adjust itself to the myriads of needs and possibilities which the union of man’s mind with nature’s forces has produced. The industrial revolution took the workman from the land and crowded him into the towns. It took the loom from his cottage and placed it in the factory. It took the tool from his hand and harnessed it to a shaft. It robbed him of his personal skill and joined his arm of flesh to an arm of iron. It reduced him from a craftsman to a specialist, from a maker of shoes to a mere stitcher of soles. It took from him, at a single blow, his interest in the workmanship of his task, his ownership of the tools, his garden, his wholesome environment, and even his family. All were swallowed by the black maw of the ugly new mill town. The hardships of the old days were soon forgotten in the horrors of the new. For the transition was rapid enough to make the contrast striking. Indeed it was so rapid that the new class of employers, the capitalists, found little time to think of anything but increasing their profits, and the new class of employees, now merely wage-earners, found that their long hours of monotonous toil gave them little leisure and no interest.

The transition from the age of handicrafts to the era of machines presents a picture of greed that tempts one to bitter invective. Its details are dispassionately catalogued by the Royal Commissions that finally towards the middle of the nineteenth century inquired into industrial conditions. From these reports Karl Marx drew inspiration for his social philosophy, and in them his friend Engles found the facts that he retold so vividly, for the purpose of arousing his fellow workmen. And Carlyle and Ruskin, reading this official record of selfishness, and knowing its truth, drew their powerful indictments against a society which would permit its eight-year-old daughters, its mothers, and its grandmothers, to be locked up for fourteen hours a day in dirty, ill-smelling factories, to release them at night only to find more misery in the hovels they pitifully called home.

The introduction of machinery into manufacturing wrought vast changes also in the organization of business. The unit of industry greatly increased in size. The economies of organized wholesale production were soon made apparent; and the tendency to increase the size of the factory and to amalgamate the various branches of industry under corporate control has continued to the present. The complexity of business operations also increased with the development of transportation and the expansion of the empire of trade. A world market took the place of the old town market, and the world market necessitated credit on a new and infinitely larger scale.

No less important than the revolution in industry was the revolution in economic theory which accompanied it. Unlimited competition replaced the