Early Modern Industrialization

Industrial output increased smartly across nearly all of Europe between 1450 and 1575. Although trade with the Americas had something to do with this, the main determinants of this industrial advance lay within Europe itself.

Population grew from 61 million in 1500 to 78 million a century later, and the proportion of Europeans living in cities of 10,000 or more--and thus dependent on the market for what they consumed--expanded from less than 6 percent to nearly 8 percent during the same period. More important than sheer numbers, many Europeans' incomes rose. This was especially true among more fully employed urban groups, farmers who benefited from higher prices and the intensifying commercialization and specialization in agriculture (which also led them to shed much non-agricultural production in favor of purchased goods), and landlords and other property owners who collected mounting rents. Government activities to build and strengthen the state were a stimulus to numerous industries, notably shipbuilding, textiles, and metallurgy. To cite just one example, France hastened to develop its own iron industry when the Hapsburgs--the family that governed much of Europe, and whom France fought repeatedly in the sixteenth century--came to dominate the manufacture of weapons in Germany and the cities of Liege and Milan, which boasted Europe's most advanced technology.

The supply of goods was also significantly modified. Migration had long been critical for the diffusion of knowledge that spawned new trades or revived others. Now thousands of workers, and sizeable amounts of capital, moved from one region to another. At the same time, new commodities appeared on the market, often broadening and deepening demand. Most were inexpensive items destined for individual consumers. Knitted stockings, ribbon and lace, buttons, starch, soap, vinegar brewed from beer, knives and tools, pots and ovens, and many more goods, formerly made only for local sale, now entered into channels of national or international trade. The best-known and most widely adopted new industry was printing with movable type, which spread swiftly throughout Europe after Johannes Gutenberg perfected his innovation in 1453. Despite isolated cases of resistance--the scribes' guild (an association of book copiers) delayed printing's introduction into Paris for twenty years, for example--more than 380 working presses had sprung up by 1480, and 1,000 (in nearly 250 towns) by 1500. Between 1453 and 1500, all the presses of Europe together turned out some 40,000 editions (known as incunabula), but from 1501 to 1600, that same quantity was produced in Lyon and Paris alone.

In metals and mining, technical improvements were available that saved substantially on raw materials and fuel, causing prices to drop. The construction of ever-larger furnaces capable of higher temperatures culminated in the blast furnace, which used cheaper ores and economized on scarce and expensive wood, cutting costs per ton by 20 percent while boosting output substantially. A new technique for separating silver from copper allowed formerly worthless ores to be exploited. Better drainage channels, pumps, and other devices made it possible to tunnel more deeply into the earth as surface deposits began to be exhausted. In most established industries, however, technological change played little role; as in the past, new customers were sought by developing novel products based on existing technologies, such as a new type of woolen cloth with the texture of silk.

Sharply declining transaction costs (the direct and indirect expenses associated with transporting, distributing, and marketing goods and services) were more influential. On a general level, the decrease was due to greater security thanks to the lessening of wartime disruptions and to the economies of scale achieved when selling to large, concentrated urban populations. More specifically, it can be traced to transport innovations such as the carrack, a large ship that reduced rates for ocean borne freight by up to 25 percent, and big four-wheeled Hesse carts for overland routes. The spread of efficient organizational forms further contributed to declining costs, as did falling interest rates, which dropped from 20 percent or 25 percent in the mid-fifteenth century to 10 percent 100 years later.