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 rather than international in character: though similar usages prevailed very widely and disputes could be settled according to Law Merchant, which was recognised as generally binding. Trade was carried on to the greatest advantage at the fairs, where the merchants of many cities could meet on equal terms. In the present day free-traders take account of the economic advantage of the world as a whole, and discuss industrial and commercial affairs from a cosmopolitan standpoint, while protectionists are inclined to limit their consideration to the interests of some one particular country. In the Middle Ages, very few merchants or politicians were in a position to take account of national prosperity; they limited their views to a narrower sphere, and were content to concentrate their attention on the welfare of a particular town. With regard both to the administration of industry and to the regulation of commerce, the city was the principal economic unit, in the medieval as it had been in the ancient world.

Such were the chief contrasts between the economic life of medieval and of modern times; were we to seek a phrase which should indicate the general character of the transition from one to the other, we might say that this revolution consisted in the rise of nationalities as the bases of industrial organisation and commercial policy. Economically considered, medieval Christendom consisted of a system of city States, while modern history describes the commercial and colonial rivalries of great nations. During the fourteenth, fifteenth, and sixteenth centuries we can trace the gradual subversion of the older institutions, and we can also see the rise of the newer forms of organisation. The corresponding changes were not of course exactly synchronous in every land; indeed, those places where the older and stereotyped system had the greatest vitality were at a positive disadvantage in accepting modifications and adopting new methods. To follow the course of so widespread and complicated a revolution would be wellnigh impossible, without a clue; but fortunately we can have little doubt as to the factor primarily concerned in producing these momentous changes. Even the fourteenth and fifteenth centuries were marked by the formation of capital, and the process went on with great rapidity in the sixteenth; the whole period furnishes abundant illustrations of the power of moneyed men; and by fixing attention on them and their action, we can most easily trace the influences which were at work in building up the economic system of modern Europe.

Modern economists maintain that there are three requisites of production,—labour, capital, and land; but in the early Middle Ages agricultural and industrial work were both carried on without the intervention of capital, as we now understand the term. A capitalist may be regarded as the owner of a mass of wealth which is constantly altering its form by means of exchange. He tries to get gain by