Qihui Zheng
01/28/2011
EH205
Essay 2

When and why did London grow so much faster than other early modern capitals?

By examine the key differences among Paris, Madrid, and London, I argue that from1650 to1750, the reason why London boosted in terms of demographic expansion and market integrations is that -- instead of creating market disorder by demanding cheap supply of goods from other places, emphasizing social privileges and over consumptions, London attracted spontaneous business exchange in market among different groups of people. In section I, by doing a brief literature review on E. A. Wrigley, D. R. Ringrose and other important authors, we may have a basic understanding of the demand and supply market mechanism and its relationship with population, internal market and functions of capitals. In section II, we will analyze how the functions of capital, such as exercising political power to satisfy a particular interest, can affect the demand and supply of market and demographic composition. In section III, we study further how the functions of capital such as price determination can change the economic development of the capital itself and its surrounding industrial and agricultural areas. At the end, we should see that London did a better job integrating the urban-rural market during 1650-1750.

Literature Review
From 1650 to 1750, London grew much faster than other continental capital cities. There is little debate on the time as shown in table 1 and 2 below. Although the figures may be controversial, they were different enough to compare with one another in different period. Firstly, as shown in table 1, there were only 10 cities with population over 100,000 on 1650. Out of the ten cities, there were six capital cities during that period. Three of them belong to Mediterranean trade and Paris, London and Madrid were the other three capital cities. In order to simplify the comparison, Mediterranean cities were out of the competition since they were unable to compete with the Northern Atlantic cities for various reasons such as high tariffs and outdated production process. (Rapp, R. T. P, 1975, pp.506-508) We choose Madrid because it had 60% of country’s total population by the 1750, which was more than London’s in terms of proportions. However, Madrid was an isolated capital city that relied on continental transportation. Therefore, in order to be fairer, we added Paris, who was a major competitor with London on North Atlantic trade. Comparing these three countries, the largest demographic increase occurred in London and it was the only capital city out of the three that grew in proportions to its country’s population from 1650 to 1750. Although during the last half 18th centuries the population of London grew largely, the sharp increase may be caused by the industrial revolution. As the data was collected from different authors, there should be little debate over the period of London’s rapid growth in early modern period.

Table 1. Table from De Long, J. B. & Shleifer, A., (1993, pp.678); the unit is 1000 people.

Table 2. Data collected from Ringrose,D.R., (1989, pp.67,pp.71,pp.73,pp.74,pp.75).; Ringrose,D.R., (1992, pp.28); Wrigley, E. A., (1967, pp.44)；De Long, J. B. & Shleifer, A., (1993, pp.678). +7 means the population is actually measured in 1757 instead of 1750 for Madrid.

Although Wrigley and Ringrose’s arguments were different, their opinions converge at some point. Firstly, Wrigley (1967, pp. 60) argues that high wages, immigrants, and shipping facilities were the reasons why London grew faster. However, as shown in table 2, London’s population was roughly the same as Madrid’s from 1675 to 1750. Wrigley did not present compelling evidence to support such argument. Although the wages for unskilled labor in Madrid were very low (Ringrose, 1989, pp. XX), the real wage for craftsmen was decreasing and the real wages for England was well below that of Madrid’s during the period (Schollier, P., 203, pp.208). Therefore, high wages may not be the reason attracting immigrants. On the other hand, Ringrose (1989, pp. 67) also argued that the slow continental transportation harmed Madrid’s economy. However, Paris did not grow any better with the marine facilities. He then argues that the state intervention was harmful for market integration because it created one-way trade. Again, Paris did not do one-way trade. All it did was attracting the rural nobilities to Paris and then kept him spending the profit. (Benedict, P., 1997, pp. 514) But both Madrid and Paris took the profit that can be used for future investment and production or for future consumption away from the production labors. Both Madrid and Paris lacked the middle class men. According to Wrigley’s argument, immigrations into London facilitated the urban-rural market integration. Therefore, the biggest difference among Madrid, Paris and London may be the political functions of the capitals. That is, the political functions of capital may artificially change the demographic patterns such as changing the social structure and intervening the market.

Section II: Absence of Middle Class men

Irrational political strategy may result in disruption in a particular group or social order by demanding the supply of goods or overspending. Success in agricultural and manufacturing industries were typical in early modern economic growth. Daily labors and merchants were essential to facilitate the market for both. In such way, the market meet demand from wage labor and supply from merchants. A disruption of such order and social structure will result in lost in productivity and market disorder. However, since the capital holds the seat of government, it then contains the wills of the government. In early modern period, most of the countries were under absolutism. That is, the capital functioned according to the interest of the emperor.

Comparing to Madrid and Paris, London, men could be rich without being the land overlord or aristocrats. Therefore, middle class men were encouraged to earn their fortunes (Wrigley, 1967, pp.54). They saw the opportunities, as demand must rise with population boost in London. In both Madrid and Paris, the middle class men were missing due to various reasons. As Sjoberg concluded that the “typical pre-industrial city surrender food and good to the urban community despite starvation and malnutrition.” (Referred by Wrigley, 1967, pp.52). Madrid demanded the goods’ supply at the expenses of market order. As the result of that, there was so called one-way trade and the areas started to decline and eventually the domestic industries stagnated due to its incompetence in the domestic and international market. As a result of losing market, the middle class men were gone. Paris, on the other hand, did similar mistakes. It concentrated all the rich men and aristocracy in Paris and let them spend their money and enjoy life. In such way, the throne was less threatened. As a result of that, bourgeois lived off his rent and agricultural nobility migrated to Paris. The second estate shrank by almost 1/3 from 1703 to 1757 (Benedict, 1997, pp.526). Since the first estate only consumed goods without producing them and the third estate were too poor to purchase manufacturing goods due to the high inflation. The annual Parisian gentlemen living expenses was 62000 liver per year, which is 153 times of the annual earning of a daily labor. (Benedict, 1997, pp.527) Therefore, the lack of middle class men made the economic growth even harder.

Section III: Absence of Market Optimal Price and Tax

Irrational intervening by changing the market price with force and raising the tax rate can result in market disorder too. In early modern period, the power of absolutist government was superior. Since capitals were mostly not commercial centers but political centers and urban economic developments relied on market integration, the development of surrounding industries was crucial to the growth of capitals. Nevertheless, since absolutist governments had so much power, they set the price in their interest and put heavy tax burdens on lower class people whom were seen as inferiors. As a result of that, the industries surrounding the capitals were unable to sustain and therefore stagnated one by one. The capital, which relied on the support of surrounding industries, therefore declined as the surrounding industries declined. As the wealth was concentrated in a few elites’ hands (Ringrose, 1989, pp.72), with the poor unable to purchase manufacturing goods, absence of middle class men, it was impossible to grow economically at that time.

Compare to Madrid and Paris, London actually had a higher price comparing to smaller towns in England. Merchants could sell goods not only to aristocrats but also to wealthy middle class men since they were concentrated in London to do businesses. (Wrigley, 1967, pp.61) As shown in figure 1 and 2, the surrounding industries grew in size and into hinterland. Madrid, as a capital with little production to export or import (it was dominated by service sectors), demanded goods to be supplied and sold at a much cheaper price in Madrid than other places in Spain. The price discrepancies then defeated the surrounding industries for their incompetence on profit, price and oversea competition. By 1757, only 5 hundreds active people were in manufacturing sectors. (Ringrose, 1992, pp.68) On the other hand, Paris put heavy tax burden on ordinary people despite the high inflation at that time. Without market integration and demand for goods, Madrid and Paris could not compete with London at the first place.

Conclusion:
After comparing the political differences and economic differences among three largest capitals from 1650 to 1750, we see how the irrational demanding and the irrational pricing and taxation can cause market disorder in the capital city and make the surrounding capitals decline due to pressure from market disorder. Therefore, Madrid and Paris were not able to grow as fast as London did from 1650 to 1750.

Figure 1. English industry in 1700 (Cameron, R. & Neal, L., 2003, pp.162).

Figure 2. English industry in 1800 (Cameron, R. & Neal, L., 2003, pp.182).

References:

Benedict, P., (1997). More than Market and Manufactory: The Cities of Early Modern France. French Historical Studies, Vol.20, No. 3, Summer, 511-538

Cameron, R. & Neal, L., (2003). A Concise Economic History of the World: From Paleolithic Times to the Present (4th ed.). Oxford: Oxford University Press

De Long, J. B. & Shleifer, A., (1993). Princes and Merchants: European City Growth Before the Industrial Revolution. Journal of Law and Economics, Vol. XXXXVI, October, 678

Epstein, S. R., (2001). Town and Country in Europe, 1300-1800 (1st ed.). Cambridge: Cambridge University Press. P.10

Harris, R. (1994). Government and the Economy, 1688-1850. In R, Floud & P, Johnson (Eds.), The Cambridge Economic History of Modern Britain, Vol.1 (pp.215-220). Cambridge: Cambridge University Press

Rapp, R. T., (1975). The Unmaking of the Mediterranean Trade Hegemony: International Trade Rivalry and the Commercial Revolution. The Journal of Economic History, Vol.35, No.3, Sept, 499-525

Ringrose,D.R., (1989). Towns Transport and Crown: Geography and the Decline of Spain. In E. Genoverse, & L. Hochberg (Eds.), Geographic perspective in history: Essays in Honor of Edward Whiting Fox (pp.57-80). Oxford: Blackwell Publishing Ltd.

Ringrose,D.R., (1992). Madrid and the Spanish economy 1560-1580 (1st ed.). Berkeley, Los Angeles, London: University of California Press Ltd.

Schollier, P., (2003)Wages. In J. Mokyr (Eds.), The Oxford Encyclopedia of Economic History, Vol. 5 (pp.208). Oxford: Oxford University Press

Wrigley, E. A., (1967). A Simple Model of London’s Importance in Changing English Society and Economy 1650-1750. Past & Present, No.37, 44-70