the profits in the ratio of their respective investments in the expedition, and the trade they carry on in the foreign markets is wholesale trade, and can only be that, for retail trade, as the life of Godric shows us, is left to the rural peddlers. It is in gross that they export and import wine, grain, wool, or cloth. To convince ourselves of this we need only examine the regulations which have been preserved to us. The statutes of the Flemish hanse of London, for example, formally exclude retail dealers and craftsmen from the company.

Moreover, the merchant associations of the eleventh and twelfth centuries have nothing exclusively local in their character. In them we find bourgeoisie of different towns, side by side. They have rather the appearance of regional than of urban organisms. They are still far from the exclusivism and the protectionism which are to be shown with so much emphasis in the municipal life of the fourteenth century. Commercial freedom is not troubled by any restrictive regulations. Public authority assigns no limits to the activity of the merchants, does not restrict them to this or that kind of business, exercises no supervision over their operations. Provided they pay the fiscal dues (teloneum, conductus, etc.) levied by the territorial prince and the seigneurs having jurisdiction at the passage of the bridges, along the roads and rivers, or at the markets, they are entirely free from all legal obstacles. The only restrictions which hinder the full expansion of commerce do not come from the official authority, but result from the practices of commerce itself. To wit, the various merchant associations, gilds, hanses, etc., which encounter each other at the places of buying and selling, oppose each other in brutal competition. Each of them excludes from all participation in its affairs the members of all the others. But this is merely a state of facts, resting on no legal title. Force holds here the place of law, and whatever may be the differences of time and of environment, one cannot do otherwise than to compare the commerce of the eleventh and twelfth centuries to that bloody competition in which, in the sixteenth and seventeenth centuries, the sailors of Holland, England, France, and Spain engaged in the markets of the New World. We shall conclude then that medieval commerce, at its origin, is essentially characterized by its regional quality and by its freedom. And it is not difficult to understand that it was so, if one bears in mind two facts to which attention should be drawn.

In the first place, down to the end of the twelfth century, the number of towns properly so-called was relatively small. Only those places that were favored by a privileged geographical situation attracted the merchants in sufficient number to enable them to maintain a commercial movement of real importance. After that the attraction which these centres of business exerted upon their environs was much greater than is ordinarily imagined. All the secondary localities were subject to their influence. The merchants dwelling in these last, too few to act by themselves, affiliated themselves to the hanse or gild of the principal town. The Flemish hanse, which we have already instanced, proves this fully, by showing us the merchants of Dixmude, Damme, Oudenbourg, Ardenbourg, etc., seeking admission into the hanse of Bruges.

In the second place, at the period we have now reached the towns devoted themselves far more to commerce than to industry. Few could be cited that appear thus early as manufacturing centres. The concentration of artisans within their walls is still incomplete. If their merchants export, along with the products of the soil, such as wine and grain, a quantity of manufactured products, such, for example, as cloth, it is more than probable that these were for the most part made in the country.

Admit these two statements, and the nature of early commerce is explained without difficulty. They account in fact both for the freedom of the merchants and for that character of wholesale exporters which they exhibit so clearly and which prevents our placing them in the category in which the theory of urban economy claims to confine them. Contrary to the general belief, it appears then that before the thirteenth century we find a period of free capitalistic expansion. No doubt the capitalism of that time is a collective capitalism: groups, not isolated individuals, are its instruments. No doubt too it contents itself with very simple operations. The commercial expeditions upon which its activity especially centres itself demand, for their successful conduct, an endurance, a physical strength, which the more advanced stages of economic evolution will not require. But they demand nothing more. Without the ability to plan and combine they would remain sterile. And so we can see that, from the beginning, what we find at the basis of capitalism is intelligence, that same intelligence which Georg Hansen has so well shown, long ago, to be the efficient cause of the emergence of the bourgeoisie.[15]

The fortunes acquired inn the wandering commerce by the parvenus of the eleventh and twelfth centuries soon transformed them into landed proprietors. They invest a good part of their gains in lands, and the land they thus acquire is naturally that of the towns in which they reside. From the beginning of the thirteenth century one sees this land held in large parcels by an aristocracy of patricians, viri hereditarii, divites, majores, in whom we cannot fail to recognize the descendants of the bold voyagers of the gilds and the hanses. The continuous increase of the burghal population enriches them more and more, for as new inhabitants establish themselves in the towns, and as the number of the houses increases, the rent of the ground increases in proportion. So, from the commencement of the thirteenth century, the grandsons of the primitive merchants abandon commerce and content themselves with living comfortably upon the revenue of their lands. They bid farewell to the agitations and the chances of the wandering life. They live henceforward in their stone houses, whose battlements and towers rise above the thatched roofs of the wooden houses of their tenants. They assume control of the municipal administration; they and their families monopolize the seats in the échevinage or the town council. Some even, by fortunate marriages, ally themselves with the lesser nobility and begin to model their manner of living upon that of the knights.

But while these first generations of capitalists are retiring from commerce and rooting themselves in the soil, important changes are going on in the economic organization. In the first place, in proportion as the wealth of the towns increases, and with it their attractive power, they take on more and more an industrial character, the rural artisans flocking into them en masse and deserting the country. At the same time, many of them, favored by the abundance of raw material furnished by the surrounding region, begin to devote themselves to certain specialties of manufacture—cloth-making or metallurgy. Finally, around the principal aggregations many secondary localities develop, so that all Western Europe, in the course of the thirteenth century, blossoms forth in an abundance of large and small towns. Some, and much the greater number of them, content themselves perforce with local commerce. Their production is determined by the needs of their population and that of the environs which extend two or three leagues around their walls and, in exchange for the manufactured articles which the city furnishes to them, attend to the food supply of the urban inhabitants. Other