Great Wave

by Fischer, David Hackett;

  24. Hans Baron argues that the work of Gregorio Dati, Leonardo Bruni and Poggio Bracciolini all reveal “the attitude of mind from which sprang the ideas of equilibrium and balance-of-power—just so, the picture of the urbs florentina as the geometric center of the surrounding countryside is a striking anticipation of the ideal of the ‘perfect city,’ and of what has been called the ‘geometrical spirit’ of the Renaissance.” See Baron, The Crisis of Early Italian Renaissance (2d ed., New York, 1966), 202. His discussion of dates begins on xxv.

  Other scholars had introduced this interpretation long before Baron; see., e.g., William Shepherd, The Life of Poggio Bracciolini (Liverpool, 1837), 458–461. But Baron developed it in a rounded way.

  The Price Revolution of the Sixteenth Century

  1. Livy, History, 45.40.1ff.

  2. The Medici family spent 663,755 florins on buildings, charities and taxes in the period from 1434 to 1471, not counting household expenses. Rates of spending were also very high from 1471 to 1491, but Cosimo had been even more generous than Lorenzo. De Roover, Rise and Decline of the Medici Bank, 371n.

  3. Francesco Guicciardini, The History of Florence (New York, 1970), 68–69. This work was written in 1508–9 and first published in the nineteenth century.

  4. Ibid., 69.

  5. Richard C. Trexler, Public Life in Renaissance Florence (New York, 1980), 452; de Roover, Rise and Decline of the Medici Bank, 371.

  6. Trexler, Public Life in Renaissance Florence, 458.

  7. D. Weinstein, Savonarola and Florence: Prophecy and Patriotism in the Renaissance (Princeton, 1970)

  8. Roberto Ridolfi, The Life of Girolamo Savonarola (New York, 1959), 184.

  9. Ibid., 191.

  10. Girolamo Savonarola to Alberto Savonarola, 24 July 1497, in ibid., 207.

  11. Pasquali Villari, Life and Times of Girolamo Savonarola (London, 1888), 758.

  12. Ferdinand Schevill, Medieval and Renaissance Florence (1936, New York, 1965), 456.

  13. Ingrid Hammarström, “The ‘Price Revolution’ of the Sixteenth Century: Some Swedish Evidence,” Scandinavian Economic History Review 5 (1957) 118–54.

  14. Georg Wiebe, in Zur Geschichte der Preisrevolution des XVI und XVII Jahrhunderts (Leipzig, 1895). The historical literature on the “pricerevolution of the sixteenth century” is very large. That subject was given a strong monetarist cast by the American economist Earl Hamilton, who argued that the cause of the price-revolution was the influx of large amounts of American silver and gold into Europe. Hamilton’s research appears in American Treasure and the Price Revolution in Spain, 1501–1650 (Cambridge, Mass., 1934); and Money, Prices and Wages in Valencia, Aragon and Navarre, 1651–1800 (Cambridge, Mass., 1947).

  This monetarist model was at first widely accepted by economic and social historians. Fernand Braudel, in his grand thèse on The Mediterranean and the Mediterranean World in the Age of Philip II (1946), wrote enthusiastically (and erroneously, as we shall see) “There is no possible doubt about the influx of gold and silver from the New World. . . . The coincidence of the curve of influx of precious metals from America and the curve of prices throughout the sixteenth century is so clear that there seems to be a physical, mechanical link between the two.”

  After Braudel wrote those words, the preponderant weight of historical opinion shifted away from this position. One historian even questioned whether there was a price-revolution at all in the sixteenth century. Carlo Cipolla, in “The So-Called ‘Price Revolution’: Reflections on the ‘Italian Situation,’” (in Peter Burke, ed., Economy and Society in Early Modern Europe; Essays from Annales [New York, 1972], pp. 42–46) argued that the inflation of the sixteenth century was not much greater than that which occurred in what he called the “century of monetary stability” from 1791 to 1912. That erroneous conclusion rests upon an error of chronology. Cipolla defined his “century of monetary stability” to include not only the Victorian equilibrium but also the climax of the great wave of the eighteenth century and the beginning of the great wave of the twentieth. Further, he defined the price revolution of the sixteenth century in such a way as to rule out one of its most inflationary stages. When these errors are corrected, Cipolla’s thesis collapses, and the “so-called” price revolution of the sixteenth century survives his skepticism.

  Most recent historians of this subject have accepted the descriptive reality of the price-revolution, but have challenged Hamilton’s monetarist explanation in varying degrees. This revisionary literature has been collected in two anthologies by Peter Burke (cited above) and Peter Ramsay, The Price Revolution in Sixteenth-Century England (London, 1971). Specially useful are essays by C. Verlinden, J. Craeybeckx and E. Scholliers on the price revolution in Belgium; Stanislas Hoszowski on Austria, Yugoslavia and Poland; Z. P. Bach on Hungary, and Marian Laowist on economic movements throughout Europe. One of the most helpful contributions is Ingrid Hammarström’s excellent essay, “The ‘Price Revolution’ of the Sixteenth Century: Some Swedish Evidence,” Scandinavian Economic History Review 5 (1957) 118–54. Also of value are J. Nadal Oiler, “La revolución de los precios españoles en el siglo XVI,” Hispania 19 (1959) 503–29; J.H. Elliott, The Old World and the New, 1492–1650 (Cambridge, 1970), pp. 54–78, which is specially perceptive on the question of contemporary understandings of the price-revolution; and Perez Zagorin, Rebels and Rulers, 1500–1600 (2 vols., Cambridge, 1982), 1, 122–39.

  The best overview remains Fernand P. Braudel and Frank C. Spooner, “Prices in Europe from 1450 to 1750,” in E. E. Rich and C. H. Wilson, eds., The Cambridge Economic History of Europe, vol. 4, The Economy of Expanding Europe in the Sixteenth and Seventeenth Centuries, (Cambridge, 1967), 378–486, which revises Braudel’s earlier views. Another major study that qualifies the Hamilton thesis in important ways is Michel Morineau, Incroyables gazettes et fabuleux métaux; Les retours des trésors américains d’après les gazettes hollandaises (XVIe-XVIIIe siècles) (Paris and London, 1985); also idem, “Des métaux précieux américains et de leur influence au XVIIe et XVIII siècle,” Bulletin de la societé d’histoire moderne et contemporaine XV (1977) 2–95; and idem, “Histoire sans frontières: prix régionaux, prix nationaux, prix internationaux,” Annales E.S.C. 24 (1969).

  15. Deane, “Inflation in History,” 3; J. D. Gould calculates that silver prices in England trebled from 1540 to 1640—an annual geometric increase of 1.1 percent. Other estimates yield slightly higher results. See J. D. Gould, “The Price Revolution Reconsidered,” Economic History Review 2d ser. 17 (1964) 249–66.

  16. Readers will find in these data the “pennant pattern” that is often observed in stock prices. For a discussion of flag and pennant patterns, see John Downes and Jordan Elliot Goodman, Barron’s Finance and Investment Handbook (Woodbury, N.Y., 1986), 269, 387.

  17. Solid quantitative evidence is lacking in English demographic history before the development of the parish registration system in 1538. But there is general agreement on the general trends, with continuing dispute as to the inflection points. Postan’s estimate, many years ago, still appears to be correct. See E. A. Wrigley and R. S. Schofield, The Population History of England, 1541–1871 (Cambridge, 1981), 566; Cornwall, “English Population in the Early Sixteenth Century,” 32–44; M. M. Postan “Some Economic Evidence of Declining Population,” 11.

  18. Guy Bois estimates that median age at marriage in Normandy during the early and mid-sixteenth century was in the range of 21 to 22 years, well below levels in France during the seventeenth century, for both urban and rural populations; the Hajnal thesis requires qualification in this period; see Bois, Crise du Feodalisme, 330–31.

  19. Evidence of rapid population growth appears in Italian city states, where household size is estimated as follows from a variety of sources:

  Sources include David Herlihy, “The Population of Verona in the First Century of Venetian Rule,” in J.R. Hale, ed., Renaissance Florence (London, 1973), 91–120; for complaints of overcrowding see Abel, Agricultural Fluc
tuations, 99.

  20. Emmanuel Le Roy Ladurie, The Peasants of Languedoc (Urbana, 1974), 56.

  21. One of the first scholars to observe this pattern of price relatives in a systematic way was F. Simiand, in Recherches anciennes et nouvelles sur le mouvement général des prix du XVIe au XIXe siècle (Paris, 1932); this finding has been replicated many times, and is a key to the structure of the great wave. Some have argued that agricultural products rose swiftly because “they were coming most rapidly into markets.” But this is not the case by comparison with industrial products, which were equally subject to market forces. The difference was in the disparities of demand which developed from demographic trends, and in different supply elasticities.

  22. The only contrary finding that I have seen is in Steve Rappaport’s excellent study of prices paid by London Livery Companies, which finds that the price of firewood faggots in London rose slowly in the sixteenth century. He concludes that the cause may have been a shift from wood to coal in London; imports of coal increased 400 percent in the reign of Queen Elizabeth I. In other parts of England, wood prices rose three times faster than in London. See Steve Rappaport, Worlds within Worlds: Structures of Life in Sixteenth-Century London (Cambridge, 1989), 144–45.

  23. Hoszowski, “Central Europe and the Price Revolution,” 91.

  24. Hoszowski writes that in Poland, “prices rose without a break from between 1521 and 1530 until 1550, when they had already reached a high level. The reason is that Poland was the greatest cereal exporter; the rise took place there before the invasion of American ‘treasure’ and the great upheavals that followed it throughout Europe.” (Hoszowski, “Central Europe and the Sixteenth- and Seventeenth-Century Price Revolution,” p. 91).

  25. On the problem of relative prices, see especially F. Simiand, Recherches anciennes et nouvelles sur le mouvement general des prix du XVIe au XIXe siecle (Paris, 1932), pp. 114–138. See also essays by Hammarstrom, Brenner and Gould cited above.

  26. “An Act to Restrain the Carrying of Corn, Victuals and Wood over the Sea,” in R. H. Tawney and Eileen Power, eds., Tudor Economic Documents (3 vols., London, 1924) I, 150–52.

  27. In England, one study of prices and wages yields the following result (1550 = 100):

  These data are from Y. S. Brenner, “The Inflation of Prices in England, 1551–1650,” Economic History Review 15 (1962) 266–84; other enquiries have obtained similar results.

  28. The pathbreaking work on price-wage differentials was done by German scholars, particularly M. J. Elsas, Umriss einer Geschichte der Preise und Löhne in Deutschland vom ausgehenden Mittelalter bis zum Beginn des neunzehnten Jahrhunderts (Leiden, 1936–1949), a series of price studies centered on six German cities. Virtually every other study also reports a fall of real wages in the sixteenth century; see Ramsay, The Price Revolution in Sixteenth Century England, 14, 17; Abel, Agrarkrisen und Agrarkonjunktur, pp. 129–131; E. Scholliers, De Lebensstandaard in de XVe en XVe eeuw to te Anwerpen (Antwerp, 1960); D. Bartolini, “Prèzzi e salari nel Commune di Portugruaro durante il secolo XVI,” Annali di Statistica 2d ser., I (1878). A rare exception is Verlinden, Craeybeckx and Scholliers, “Price and Wage Movements in Belgium,” who argue (78) that wages hovered very near the level of subsistence throughout the period.

  Hoszowski also reports variations in eastern Europe on the timing of wage movements. In Austria wages rose slowly in the early 16th century, but faster thereafter. In Poland the pattern was the reverse: comparatively rapid increases before 1550; slower movements after that date. Hoszowski concludes that in general “workmen’s wages rose much more slowly than the prices of crops.” See Stanislas Hoszowski, “Central Europe and the Price Revolution,” 92–93.

  29. In Antwerp, the market rate for short term commercial loans in the period 1530–50 was 4–13 percent; in the latter part of the century low-interest loans tended to disappear, and rates were in the range of 7–12 percent. The same pattern also appeared in Lyons. Loans to penurious princes commonly carried prodigiously high charges. The house of Fugger, for example, charged the Hapsburgs as much as 52 percent for short term loans.

  At the other extreme, usury laws and strict municipal regulation held nominal interest rates on annuities to very low levels. But these securities traded far below par, much like deep-discount securities in today’s bond market. See Sidney Homer, History of Interest Rates (2d. ed., New Brunswick, 1977), 104–32.

  30. Eric Kerridge, “The Movement of Rent, 1540–1640,” Economic History Review, 2d ser., 6 (1953–54) 16–34.

  31. Ibid., 16.

  32. Ibid.

  33. Hoszowski, “Central Europe and the Price Revolution,” 97–98.

  34. H. G. Koenigsberger, “Property and the Price Revolution (Hainault, 1474–1573),” Economic History Review, 2d ser., 9 (1956) 1–15.

  35. Wiebe reckoned that silver stocks in Europe were 9,190,000 kilograms in 1544, 21,400,000 in 1600 and 31,270,000 in 1660. At the same dates, the supply of gold was 815,000 kilos, 1,192,000 and 1,580,000 respectively; see G. Wiebe, Zur Geschichte der Preisrevolution des XVI. und XVII. Jahrhunderts (Leipzig, 1895), 260. Braudel and Spooner estimated by three different methods that world stocks of precious metal in 1550 were 3,564.5 tons of gold, and 37,427.3 tons of silver (“Prices in Europe,” 444).

  36. Many European price series show that the price-revolution began at various dates between 1470 and 1510, but American treasure did not arrive in Europe until 1503, and did not begin to expand in a rapid or sustained manner until after 1526. See Hamilton, American Treasure, 34–35; Y. S. Brenner, “The Inflation of Prices in Early Sixteenth Century England,” Economic History Review 14 (1961) 225–39; idem, “The Inflation of Prices in England, 1551–1650,” ibid., 15 (1962) 266–84; C. E. Challis, “Spanish Bullion and Monetary Inflation in England in the Later Sixteenth Century,” Journal of European Economic History 4 (1975) 381–92; R. A. Doughty, “Industrial Prices and Inflation in Southern England, 1401–1640,” Explorations in Economic History 12 (1975) 177–92; J. Blum, “Prices in Russia in the Sixteenth Century,” Journal of Economic History 16 (1956) 182–99; Hammarström, “The ‘Price Revolution’ of the Sixteenth Century: Some Swedish Evidence,” 118–54.

  37. The bulk of American silver arrived in Spain after 1580. Of total imports from 1531 to 1660, only 15 percent (2.6 million kilograms) came in the fifty years from 1531 to 1580; approximately 67 percent (11.6 million kilos) came in the fifty years from 1581 to 1630; 17 percent (2.9 million kgs.) arrived in the thirty-one years from 1630 to 1660; Vicens Vives, An Economic History of Spain, 323; see also J. Nadal Oller, “La revolutión de los precios españoles en el siglo XVI,” Hispania 19 (1959) 503–29.

  38. The rhythm of change in price levels and in the money supply in England during the sixteenth century has been elaborately studied. In the period 1542–51, both gold and silver coins were debased several times under both Henry VIII and Edward VI; then, from 1551 to 1560, the silver coinage was several times reduced in quantity and raised in content of precious metal. See J. D. Gould, The Great Debasement (Oxford, 1970).

  These episodes have been closely examined in one of the most controlled historical tests of a monistic monetarist model. The results of that test are conceded to constitute a “contradiction of the basic hypothesis” even by a monetarist as convinced as Anna Schwartz. She acknowledges that in sixteenth-century England the movement of prices failed to reflect “the behavior of money stock per unit of output.” (“Secular Price Change in Historical Perspective,” Journal of Money, Credit and Banking 5 (1973) 243–69.

  Similar difficulties also appear in other attempts to correlate the movement of prices with the stock of money. See, for France and Belgium, J. Lejeune, La formation du capitalisme moderne dans la principauté de Liège au XVIe siècle (Liege, 1939), 196; for Austria, Poland and Bohemia, Stanislas Hoszowski, “Central Europe and the Sixteenth-Seventeenth Century Price Revolution,” in Burke, ed., Economy and Society in Early Modern Europe, 94–95. Even in Spain, Hamilt
on himself noted that the curves diverge at the beginning of the sixteenth century; see American Treasure, 511.

  An excellent study of high importance by Michel Morineau also finds that the flow of American treasure continued at high levels in the late seventeenth century, when prices were falling. See Morineau, Incroyables gazettes et fabuleux métaux, 563.

  All of these authors conclude that the rise of prices was linked in important ways to the quantity of money and specifically to American treasure. They also agree that the quantity of money was not the only cause. All but Hamilton think that it was not the first cause. Many believe it was not the most important cause.

  39. These tests were developed at the University of Michigan by Adon and Jeanne Gordus, and extended by a French team at the Centre Ernest Babelon in Orléans. The first tests were based on analysis of gold content in Potosí silver; later a method of neutron-activation analysis was used to detect trace elements of indium, which is present in Andean silver.

  See Adon A. Gordus, Jeanne P. Gordus, Emmanuel Le Roy Ladurie and D. Richet, “Le Potosí et la physique nucléaire,” Annales E. S. C. 27 (1972) 1235–56; Adon A. Gordus and Jeanne P. Gordus, “Identification of Potosí Silver Usage in Sixteenth-Seventeenth Century European Coinage through Gold-Impurity Content of Coins,” in W. L. Bischoff, ed., The Coinage of El Perú (New York, 1989) 21–22; idem, “Potosí Silver and Coinage of Early Modern Europe,” in Hermann Kellenbenz, ed., Precious Metals in the Age of Expansion; Papers of the XIVth International Congress of the Historical Sciences (Stuttgart, 1981) 225–242; Emmanuel Le Roy Ladurie et al., “Sur les traces de árgent du Potosí,” Annales E.S.C. 45 (1990) 483–505; Dennis O. Flynn, “A New Perspective on the Spanish Price Revolution: The Monetary Approach to the Balance of Payments,” Explorations in Economic History 15 (1978) 388–406.

  40. J. D. Gould, “The Price Revolution Reconsidered,” Economic History Review, 2d ser. 17 (1965) 249–266; Ingrid Hammarström, “The ‘Price Revolution’ of the Sixteenth Century,” Y. S. Brenner, “The Inflation of Prices in Early Sixteenth Century England,” 225–39; idem, “The Inflation of Prices in England, 1551–1650,” 266–84.