Bank of England and the London financial community, created a notion of a publicor “national debt” distinct from the monarch’s personal debts.C.This process meant that capital for financing larger armies and other governmentundertakings could be raised in ever-greater quantities.
These new financial institutions were not risk-free. In both Britain and France in the early18
c, speculators provided opportunities for people to invest in colonial tradingcompanies.
The French company under John Law was also tied to his attempt to create a national bank and paper currency for France. When people went overboard and drove the price of stock to high levels, the bubble burst.
Law’s company and bank went bankrupt, leading to a loss of confidence in paper money that prevented the formation of a French national bank. Consequently, French public finance developed slowly in the 18
c.IV.In Britain, public confidence in the new financial institutions enabled the Britishgovernment to borrow large sums of money at relatively low interest, giving it a distinctadvantage in the struggle w/France.
Despite Britain’s growing importance in finance, however, the Dutch Republicremained the leader of Europe’s financial life, and Amsterdam continued to be thecenter of international finance until London replaced it in the 19
c.B.The decline of Dutch trade, industry, and power meant that Dutch capitalists wereinclined to lend money aboard b/c they had fewer opportunities at home.European IndustryCottage Industry
Most textiles were still produced by traditional methods. By the 18
c, textile productionwas beginning to move to the countryside, where they were produced by the “putting-out” or “domestic” system, in which merchant-capitalist entrepreneur bought the rawmaterials, mostly wool and flax, and “put them out” to rural workers, who spun the rawmaterial into yarn and then wove it into cloth.A.Capitalist-entrepreneurs sold the finished product, made a profit, and used it tomanufacture more.
This system became known as cottage industry b/c spinners and weavers did their work in their cottage. It was a family enterprise. New Methods and New Machines
The cottage system employed traditional methods of manufacturing and spread to manyareas of rural Europe in the 18
c. But significant changes in industrial production also began to occur in the 2
½ of the century, pushed along by the introduction of cotton.A.The traditional methods of cottage industry proved incapable of keeping upw/growing demand, leading English cloth entrepreneurs to develop new methods andnew machines.
Richard Arkwright invented a “water frame” powered by horse or water, whichturned yarn must faster than cotton spinning wheels.
This abundance of yarn led to the development of mechanized looms.
The Social Order of the Eighteenth Century
The pattern of Europe’s social organization continued into the 18
c.A.Social status was determined by the division into the traditional “orders” or “estates”determined by heredity.
This divinely sanctioned division of society into orders was supported byChristianity, which emphasized the need to fulfill the responsibilities of one’s estate.C.Different social groups remained easily distinguished everywhere in Europe by thedistinctive clothes they wore.The PeasantsI.The peasantry constituted the largest social group.