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Capitalism

In

Theory and Practice

By

The Rev. Thomas A. Meehan



^‘_<y



The Rise of Capitalism

Reverend Thomas A. Meehan

No. 72

Published in U.S.A.

December 20, 1940

By
OUE SUNDAY VISITOR PRESS

Huntington, Indiana



Nihil Obstat:

REV. T. E. DILLON

Censor Librorum

Imprimatur:

JOHN FRANCIS NOLL
Bishop of Fort Wayne

OeadliniBcf



The Rise of Capitalism In

Theory and Practice

We are living in an age predominated
by capitalistic thought and procedure.

The entire frame of our economic order

rests upon capitalistic initiative and de-

sign. Modern society is so thoroughly

imbued with its ideas and ideals that one

seldom finds among the great generality

of mankind its procedure or thought

questioned. One does hear, it is true,

the voices of a few intellectuals, social

economists, and others, crying out

against some of the evils of the capital-

ist system, for example unjust wages,

concentration of wealth into the hands

of a few, or fixed prices
;
or again, on the

other hand, one may hear the not too

distant rumble that indicates great un-

rest among the exploited millions of the

laboring class. But even among many of

these much of their thought is capitalis-

tic and most of their desires fall in the

same category.

Today among the larger proportion of

urban workers, one might almost say

amongst all those whose weekly wage is

over thirty-five dollars, capitalist ideals

are consecrated, and capitalist thought

predominates. Individualism, equal op-



4 THE RISE OF CAPITALISM

portunities for all, is its keynote
;
laissez-

faire, freedom from all restraint, wheth-

er religious, social, or political, its catch-

word
;
and thrift, frugality, and industry,

its virtues. So great a hold has this

philosophy (for it is the philosophy that

determines the technical system of pro-

duction, distribution, and consumption)

on the modern mind that most men look

upon America as a land of equal oppor-

tunity, where hard work and thrift in

true Alger fashion is ever rewarded, des-

pite the fact that of the 27.5 million

families in America in 1928, six million

had incomes of less than one thousand

dollars per year; 12 million less than

fifteen hundred dollars; and 20 million

less than twenty-five hundred dollars.

Twelve million families received the same

per cent of the total national income as

thirty-six thousand families receiving

over seventy-five thousand dollars did.

The lack of desire for any external

check on business enterprise is adequate-

ly demonstrated by the fact that it would

be a gross exaggeration to say that more

than three million Catholics, in the

United States, without even trying to

estimate the number of non-Catholics,

had read the great social pronouncements

of Leo XIII and Pius XL A further
proof, if one be needed, can be found in

the voluminous amount of contemporary

newspaper and periodical criticisms on



IN THEORY AND PRACTICE 5

any government interference with busi-

ness.

Anyone having the courage to criticize

this system, whether they be among the

great Catholic leaders, like Father Char-

les Coughlin, Father John Cronin, S.S.,

or Monsignors Haas and Ryan, or other

social-minded individuals like President

Roosevelt, Mr. Hutchins of University of

Chicago, or United States' Justice Frank-

furter, is generally labelled as a radical.

All the organs of capitalism, the

newspaper, radio, large industrialists, or

commencement speakers, go on blowing

the horn of success. So true is this an-

alysis, that success, material success, has

become the sole end of the greater pro-

portion of our vast educational system.^

Each succeeding generation through this

means, is impregnated with capitalist

philosophy, and nurtured in its surround-

ings.

The origins of such philosophy exert-

ing such influence on so many people

should be of interest to all. The purpose

then of this pamphlet will be to examine

as thoroughly as possible the beginnings

of the capitalist spirit or philosophy of

life, attempt to define this rather elusive

term and likewise to trace nascent capi-

talist practice. No attempt will be made
to condemn capitalism as a technical sys-

1. Harold G. Moulton, Income and Economic Progr-
gress, (Brookings Institute Study) Washington,
1936, p. 37.



6 THE RISE OF CAPITALISM

tern, for the fault is not in the system as

such but in the motivating principles be-

hind the system.

There are as many (if not more) defi-

nitions of capitalism as there are hues

in the spectrum. It has been called the

organization of business upon a large

scale by an employer or company of em-

ployers possessing an accumulated stock

of wealth wherewith to acquire raw ma-

terials and tools, and hire labor, so as to

produce an increased quantity of wealth

which shall constitute profit.^ Again

saved income used by industry to com-

mand labor and raw materials, for mak-

ing instruments of further production,

such as factories or machines.^ Also as

an institution for facilitating the produc-

tion, circulation, and distribution of

wealth.^ Many more such definitions, all

more or less correct in as far as they go,

could be cited, but to little or no avail.

All of these are clearly technical defini-

tions which pruned of verbiage could

read wealth, invested in industry, agri-

culture, or commerce.

If the whole of our problem was simp-

ly concerned with the technical side of

capitalism our inquiry might well stop

right here. But one can know every

2. Raymond J. Corrigan, S.J. “The Church” and
the Nineteenth Century. Milwaukee, 1936, p. 302.

3. John F. Cronin, S.S. Economics and Society,
Baltimore, 1938 (3rd Ed.) p. 2.

4. Bernard E. Bums, “The Roots of Disorder,”
Columbia, XVLII, 1938, (March), p. 8.



IN THEORY AND PRACTICE 7

definition of capitalism from every tech-

nical point of view and still fail to know

what capitalism is.

Capitalism

To understand capitalism in all of its

various ramifications we must go back

to the beginnings of capitalism and find

the motivating force behind it, in other

words its philosophy of life, then only,

and even then not perfectly, will we be

able to grasp the spirit of capitalism.

To find the spirit we have to go back

to an age when admittedly it did not

exist. We have to find out just what
predominated then and is lacking or sub-

stituted by something else in the modern

economic world. In order to do this his-

tory cannot be treated in two broad div-

isions, namely medieval and modern.

One must consider first the medieval

period as ending possibly with Dante

Alighieri and his great epitome of the

knowledge, attainments and Catholicity

of the preceding centuries.^ Then a

transitional period embracing roughly

about two hundred and seventy-five years,

which was characterized by the decline of

Catholicism and the Holy Roman Empire,

the rise of national states, and the growth

of individualism in political thought, in

the arts and sciences, in religious

thought, and finally industry, commerce.

6. Conde B. Fallen and John J. Wynne, S.J. The
Catholic Dictionary, New York, 1929, p. 280.



8 THE RISE OF CAPITALISM

and finance. This period is commonly

called the Renaissance.®

Modern history would then commence

about the seventeenth century, when this

new individualism so manifest in the

transitional period flowered forth into

the breakup of the Churches into numer-

ous sects in the religious world, into the

rise of the secular democratic state in

the political world, and the rise of cap-

italism in the economic world.'^

To take then each period in succession

and trace the growth of capitalism will

be our endeavor. The late Middle Ages

were ‘‘Ages of Faith.’’ Society was look-

ed upon as an organism, closely knit and

united with each group having its own

function in promoting the common good.

Man’s ultimate destiny was foremost and

the social and economic order was mere-

ly to minister to this end under the law

of God. The King ruled by virtue of his

oath of coronation and was expected to

be just and promote the common good or

6. Ibid, p. 821-822.

7. This opinion which is purely personal, is at least

substantiated in point of time and fact by the

following

:

“But even in the earlier period the influence (of

religion) on economics was not at all times of
equal strength. The great development of econ-
omics as an independent science, which culmin-
ated in the work of Adam Smith had begun in
the previous century, and the breaking down of
the unity and authority of Christian dogma had
been progressively increasing since the first half

of the sixteenth century.’*

George O’Brien, An Essay on the Economic
Effects of the Reformation, London, 1923, p. 4.



IN THEORY AND PRACTICE

be deposed. Under the king, the lords

of the manor had sovereignty over their

subjects. With their rights went definite

responsibilities, they could not cast off

the serfs or underlings as modern indus-

trialists can. Under these lords were the

serfs, whose liberty was to some extent

curtailed, yet whose fundamental right

to personality was respected. The vari-

ous groups were not independent one of

the other, but rather interdependent with

corresponding rights and obligations to-

wards those above and below them. ^

Religion dominated and enervated

every phase of life, the cultural, political

and economic, as well as the purely social.

In his period economics was viewed pure-

ly from the viewpoint of ethics. Wealth

was looked upon as being a social, not an

individual instrument. Each one was to

acquire merely that amount which would

maintain his station in life. The ques-

tion in the medieval mind was not how

much I get, but how much do I need.

One had not only to discriminate between

what was lawful and unlawful, but had

to limit his intensity in the use of law-

ful means. Under such a system unre-

stricted enrichment was impossible, in-

deed the true medievalist would consider

it senseless.^

8. John S. Cronin S. S. Op. Cit., p. 12.

9. Amintore Fanfani, Catholicism, Protestantism,
and Capitalism, New York, 1939, p. 24.



10 THE RISE OF CAPITALISM

The Church in the “Ages of Faith’’ in-

sisted, just as she does today, on the

superior importance of spiritual riches,

with this difference that her authority

was far more reaching. This had the

effect of subordinating material and pe-

cuniary desires, and the placing of eco-

nomic functions in their proper place, as

merely one of the many means to the

attainment of the all important end

—

eternal happiness.

In line with this thought man was con-

sidered by medieval moralists and theo-

logians as having a natural right to

property flowing from man’s dominion

over nature. But he was to acquire no

more than his station in life demanded,

and superfluous goods were at the dis-

posal of all. The end of all production

was use and not profit. Hence trade was

legitimate, but considered morally dan-

gerous for there was always the tempta-

tion to trade for a profit, rather than at

a profit.

To trade for a profit is avarice which

is soundly denounced by St. Thomas, who

considers it as generally being a mortal

sin, without however excluding the pos-

sibility of its being a venial sin under

certain circumstances.^^ Nor was the

same author less severe on usury, which

is the same as our “pure interest” today.

10. George O’Brien, Op. Cit. p. 6.

11. St. Thomas Aquinas, Summa Theologica, Taurini,
1929, II, Ilq.



IN THEORY AND PRACTICE 11

He considers this to be a mortal sin and

holds the offender to strict restitution.^^

St. Thomas, however, never prohibited

‘‘natural interest.’’ Payment for simple

lending he forbade as taking advantage

of another’s need, but he allowed the per-

son advancing money to share in any

surplus which the loan created.^^ Labor

—the common lot of mankind—is neces-
sary and honorable; trade is necessary,

but perilous to the soul; finance, if not

immoral, is at best sordid, and at worst

disreputable, sums up fairly well the

medieval attitude to trade and finance.

But though trade was dangerous and

“pure interest” denounced, the medieval-

ist realized that trade was necessary.

Hence Duns Scotus argued if there were

no private traders the State would have

to engage them, and their profits are

therefore legitimate, and they may in-

clude, not only the livelihood appropriate

to the trader’s status, but payment for

labor, skill, and risk.^^

Hence the predominant note of medie-

val economics is that the selfishness and

avariciousness of man was always held in

check. Over all his actions including his

economic ones there was a salutary mor-

al restraint which might well be summed

12. Ibid. q. 78 2 ad 6.

13. Ibid. q. 78 1 ad 6—also G. O’Brien, Op. Cit. 6, 13.
14. R. H. Tawney, Religion and the Rise of Capital-

ism. N. Y.. 1926, p. 33.



12 THE RISE OF CAPITALISM

up in the words of Henry of Langen-

stein:

'‘He who has enough to satisfy his

wants and nevertheless ceaselessly

labors to acquire riches, either in

order to obtain a higher social posi-

tion, or that subsequently he may
have enough to live without labor,

or that his sons may become men of
wealth and importance—all such are
incited by damnable avarice, sensu-

ality and pride/’^^

What we have described so far was the

ideal of the "Ages of Faith,’’ and just as

today there are many Catholics who vio-

late many laws of God and Church, so

likewise, there were sinners in the Mid-

dle Ages. There is no other way of ex-

plaining the treatises of St. Thomas

Aquinas, Duns Scotus, and other school-

men, on avarice and usury, and likewise

the condemnation of these vices by Popes

and Councils of the Church, except by

admitting that not a few men did not

live up to the ideal held up for them by

the Church.

If this interpretation be true, we al-

ready had capitalism, namely the invest-

ing of money for profit in practice in the

Middle Ages. Yet even these men were

not imbued with the capitalist spirit;

they did not seek wealth for its own

sake. Neither could medieval society in

15. Ibid. p. 36.



IN THEORY AND PRACTICE 13

any way be considered capitalistic for

these men, though admittedly more than

a few, were nevertheless the exception.

Invariably they repented on their death-

beds, admitted their errors, and made

amends by building churches, schools,

and orphanages.

Individualism

The second period, which we have des-

ignated the transition period, was char-

acterized by a growing sense of individ-

ualism.^'^ This term also defies defini-

tion. One historian has called it ‘‘an

assertion of exaggerated individual

rights and liberties to the exclusion of

the rights of society and the family.”

This mode of action began to grow in

Europe from about the middle of the

fourteenth century not merely in one

phase of life, but in all the component

parts of life. In the religious order it

manifested itself by a growing discontent

with the “moral restraint” so character-

istic of the Middle Ages, both on the

part of the merchant and on the part of

certain feudal lords, who were becoming

national kings. In the political order na-

16. Amintore Fanfani, Op. Cit., 32 and R. G. Taw-
ney, Op. Cit., 30, 31.

17. The designation of the period from 1325 to 1600
as the Transition period, though personal, is not
without authority. Carleton B. Hayes in A
Political and Cultural History of Europe, New
York, 1936, I, p. 26, at least suggests such a
division.

18a. Raymond Corrigan, S.J., Op. Cit. p. 305.



14 THE RISE OF CAPITALISM

tional monarchs were asserting absolute

power which conflicted with the rights

of the lords and the Church, to say noth-

ing of the peoples. In the commercial

order it meant the throwing off of the

moral restrictions of the Church togeth-

er with the rather narrow provincialism

of the Middle Ages and the subsequent

seeking of new worlds and new markets.

In cultural life it meant the turning

from the idealism and mysticism of the

Middle Ages to a pursuit of the natural.

Because this spirit of individualism, of

every man for himself, is one of the dom-

inant characteristics of the capitalistic

spirit it might be well to examine briefly

the causes which brought it into being.

The causes of necessity are identical with

those which rang down the final curtain

on the Middle Ages and prepared for the

advent of our Modern Age.

One of the undermining forces of the

Middle Ages was travel. Before the Cru-

sades the population of Europe lived in

thousands of scattered, isolated little

hamlets. In fact, according to Carleton

B. Hayes, prior to the year 1500 there

was not a city in Europe with a popula-

tion of 100,000. The majority of the

population lived and died within the nar-

row confines of his native hearth and the

surrounding countryside. This provin-

cialism was especially shaken by the later

crusades because all of Europe was on



IN THEORY AND PRACTICE 15

the road. From this peoples received the

desire for the good of other peoples ; this

stimulated trade and commerce. It like-

wise weakened religious and ethical sanc-

tions, for the trader moved from his cir-

cle of friends into the growing cities

where he was unhampered by any social

or religious inhibitions. Also doing busi-

ness on a large scale, the merchant’s risks

were greater, and hence he fought the

trade restrictions of the guilds in order

to make greater profit to cover possible

losses.i^b

Black Death

Another cause in the breakdown of

medieval society and the rise of individ-

ualism was the Black Death. This ter-

rible scourge which decimated over half

of the man power of Europe brought

about the freeing of the serfs from the

land and the subsequent enclosure of the

common lands by the lords. Most of the

serfs in the beginning welcomed this

freedom, but it had this effect that it

broke down the social organism of the

Middle Ages, and freed the lord of the

manor from his duties toward the serfs.^^

During this period the merchants,

traders, and bankers, who had fretted

under the ethical restrictions of the Mid-

18b. Carleton B. Hayes, Op. cit., 61-66, and John F.
Cronin, S.S. Op. Cit., 14-15.

19. J. F. Cronin, Op. Cit., 16-17—Carleton B. Hayes,
Op. Cit., 50-53.



16 THE RISE OF CAPITALISM

die Ages were growing wealthy and pow-

erful. They could exact protection and

privileges from National monarchs

against the guilds and lords of the manor,

by financing his growing national ambi-

tions. Once national unity was achieved,

political power was vested in the hands

of the Bourgeosie or Middle Class.^^

The final blow to the tottering Middle

Ages was the decline of her center and

source of life the Church and the waning

of faith. During the entire period of

transition there is a notable decline in

her power and authority brought about,

to some extent, by the forces mentioned

above, and greatly enhanced by the Papal

Exile at Avignon, and the Great Western

Schism, coupled with many abuses within

the Church.2i All of these divergent and

sometimes conflicting incidents occasion-

ed a notable decline in fervor and faith in

the fourteenth and fifteenth century, and

set the stage for the final death-knell of

any conception of an organic society

—

The Protestant Revolt.

In view of what has been said above

it must be conceded that technical forms

of capitalistic business organization ex-

isted in Catholic times.^^ Whether the

20. Carleton B. Hayes, Op. Cit., Vol. I, pp. 26, 46,

55-60.

21. John F. Cronin, Op. Cit., p. 14, Carleton B.
Hayes, Op. Cit., I. pp. 146-152.

22. On this point cf. Max Weber (Talcott Parsons
Tr.) The Protestant Ethic and the Spirit of
Capitalism, London, 1930, p. 91.



IN THEORY AND PRACTICE 17

impetus to capitalistic enterprise was

occasioned by the decline of faith or the

decline in faith brought about by the rise

of the spirit of individualism is a diffi-

cult point to determine. Practical cap-

italism was flourishing in Italian cities,

characterized by intense competition, un-

bridled speculation in loans, and maxi-

mum profits through minimum wages.
Even a system of insurance was devised

to diminish risks. By 1500 the Medici

family of Florence dominated Italian fin-

ance and the early Spanish expeditions

were financed at least in part by the

Fugger family of Augsburg, who by the

year 1546 had amassed a fortune of four

million gulden ($40,000,000 in present

day American currency) . The same per-

iod saw the rise of another famous bank-

ing family, the Welsers of Augsburg.

Venice, Genoa, Florence, Antwerp, Lyons,

Paris, and Rouen, Frankfurt, Strass-

bourg, Lisbon, and Seville became the

centers of capitalist enterprise.^^

During this transition period theolog-

ians and moralists were coming to the

realization that services such as trade

and finance acually created wealth. Nec-

essary adjustments to the usury code

were attempted in the fourteenth and

fifteenth century. It was now broaden-

ed so as to allow a premium for risks.

23. Carleton B. Hayes, Op. Cit., I, 84 and R. G.
Tawney, Op, Cit., 72-76.



18 THE RISE OF CAPITALISM

loss, and other legitimate hazards of

business.24

However, though capitalist practices

were flourishing even a half century be-

fore the Protestant Revolt the whole or

even the majority of society was not im-

pregnated with the spirit of capitalism.^^

One can only conjecture what could have

happened if the Protestant Revolt had

been averted. But it seems fairly certain

that the Church with a reform taking

place from within would have insisted

upon the personal dignity of man, de-

nouncing the setting up of unlimited

worldly possessions as an end, and in-

sisted upon a fair distribution of wealth

to the lower classes as she has done with-

in the past fifty years.^^

Whatever hope there was to preserve

the old interdependent and correlated

society of Europe vanished in 1520 when

Martin Luther broke definitely with the

Church by publishing three bold pamph-

24. Callistus III, “Regimini Universale,” Maii, 1455,

and Bulls “Inter Multiplici,” Councilium) Later-

aneuse, Apri. 28, 1515 Henrians Demzinger et

Clementas Bonnewort, Enchiridion Symbolorum,

Friburg, 1928. 249-250, and 256.

25. A. Fanfani, Op. Cit., 178.

26. Leo XIII, Rerum Novarum and Pius XI, Quad-
ragesimo Anno. Also on this point see Preserved

Smith, The Age of the Reformation, New York,
1930, p. 26.

“Had the forces already at work within the

Church been allowed to operate, probably much
of the moral reform desired by the best Cath-

olics would have been accomplished quietly with-

out violent rending of Christian unity that actu-

ally took place.”



IN THEORY AND PRACTICE 19

lets An Address to the Nobility of the

German Nation, On the Babylonian Cap-

tivity of the Church of God, and On the

Freedom of Christian Man, The first

pointed out to the nobles that there was

nothing particularly sacred about the

Christian priesthood, and slyly pointed

out that they might easily enrich them-

selves by confiscating the holdings of the

Church. The second pamphlet denied the

authority of the papacy and the efficacy

of the sacramental system. And the

third held that salvation was not de-

pendent on the sacraments and good

works, but rather on man’s despairing of

his own efforts and throwing himself on

God’s assurancos.^*^

Luther in reality did little to help the

growing capitalist spirit, and it is doubt-

ful if he ever intended to help it in any

way. True he sided with the nobility in

the Peasants Wars of 1524, but that was

merely to protect his own interests for

he saw that only with the protection of

the nobility could he escape the ban of

Empire issued against him at Worms in

1521. In his writings, particularly in his

Long Sermon on Usury, and his tract

On Trade and Usury, he maintains the

teaching of the schoolmen of the twelfth

and thirteenth century. With customary

violence he gave no quarter to capitalis-

27. Carleton B. Hayes, Op. Cit., I, 154-155.



20 THE RISE OF CAPITALISM

tic desires. Price must be determined by

the income needed to maintain the merch-

ant in his station of life, and must be

proportioned to his labor and his risk.

He must not take advantage of scarcity,

nor corner a market. Above all he must

not sell dearer for deferred payments.

He denounced all interest and said:

‘The devil invented it, and the

Pope by giving sanction to it, has

done untold evil throughout the

world.^'2®

What Luther definitely, though possi-

bly inadvertedly, accomplished was to un-

leash the capitalist spirit by removing

the “moral restraint” ever present in a

United Christendom. His making the

Bible the sole authority in religious mat-

ters and each individual a judge unto

himself unleashed a force beyond his

control and gave to capitalism one of the

predominating notes in its ideology

—

“every man for himself,” and led almost

directly to the formation of the secular

state.2^

It is easily conceivable that this new

force which was unleashed may have re-

mained sterile and unproductive, limited

to a few German counties and finally ob-

literated in the Catholic Counter Refor-

mation carried out so thoroughly by the

28. Joseph Clayton, Luther and His Work, Milwau-
kee, 1937, p. 267 and R. H. Tawney, Op. Cit.,

p. 94-95, John F. Cronin, Op. Cit., p. 16.

29. R. H. Tawney, Op. Cit., p. 100-103.



IN THEORY AND PRACTICE 21

Jesuits and the Capuchins in the latter

half of the sixteenth century if capitalist

enterprise had not received an encourag-

ing hand and greater incentive to its

ideology by John Calvin. He like Luther,

though they were poles apart in economic

theory, brought about the breakdown of

the moral restraint of the Church. But

further than this, unlike Luther, he

openly espoused the capitalist cause by

allowing '‘pure interest’" with certain re-

strictions. He did not go the length of

justifying all usury in every case and

circumstance. He started from the pre-

mise that capital, banking, credit, large

scale commerce and finance were perfect-

ly natural and profit its natural comple-

ment. He wrote:

"What reason is there why the in-
come from business should not be

greater than that from land-owning.

Whence do the merchant’s profits
come except from his own diligence
and industry

The restrictions placed upon the ac-

quisition of wealth were that interest

should not be allowed or at least limited

where the urgent need or the borrower,

the emergency of the poor, and the wel-

fare of the state demanded it. In this he

differed radically from the eighteenth and

nineteenth century individualists who

30. R. H. Tawney, Op. Cit., p. 104, and George
O’Brien, Op. Cit., p. 21.



22 THE RISE OF CAPITALISM

feel the only restriction is the relative

bargaining power of the lender and bor-

rower, but at least he gave rise to their

philosophy. He justified usury and re-

jected the teaching and authority of the

Church.^^ The implication contained in

this doctrine was to determine economic

thought for the next four hundred years.

The impetus that the Protestant doc-

trines gave to the capitalistic spirit can-

not be exaggerated. From the Protest-

ant Revolt down, to the present day the

end of modern society has been the ac-

quiring and the accumulation of wealth.

Wealth became the one important and

sought-after end, it was no longer con-

sidered as a means. Once the fetters of

‘'moral restraint’’ imposed by the Cath-

olic Church were rent asunder, the greed-

iness of fallen man was unleashed.

Princes, lords and barons, eager to ac-

quire new sources of wealth, were happy

to learn from Luther, Henry VIII, and

other reformers that the extensive land-

ed estates of the Catholic Church might

and should be confiscated. Bankers, mer-

chants, and manufacturers, intent upon

the profitable conduct of their business,

heard with joy the considered judgment

of Calvin that the charging of “pure in-

terest” had been unjustly condemned by

the Catholic Church and that morality

was exclusively a matter of individual

31. G. O’Brien, Op. Cit., p. 20-21.



IN THEORY AND PRACTICE 23

conscience. Added to this, the doctrine

of predestination effected the consecrat-

ing of the economic virtues. Calvinism,

and later its offspring, Puritanism, open-

ly taught that financial effort and thrift

were the badge of the godly ; poverty and

idleness under their guidance became the

greatest of economic sins. God was mere-

ly manifesting his present displeasure

and foreshadowing His future discrimin-

ation against the poor and the idle;

whereas, energy, thrift, prosperity, and

success, was an open manifestation of

future glory.^2 This doctrine differed

radically from the Catholic teaching of

resignation to the will of God, of Char-

ity to the poor, and of poverty itself be-

ing a badge of God's special love. In a

word these doctrines gave moral sanc-

tions to economic individualism.

The practical results of these doctrines

was almost immediately manifested. In

1525, while Luther was still fulminating

against the traders, the Imperial Council

passed an ordinance expressly allowing

merchants to sell at the highest prices

they could get, and certain monopolies

32. Carleton B. Hayes, Op. Cit., 1, 214-215, How
quickly this spirit grew may be judged by the
fact that prior to Calvin’s judgment a law was
enacted in Protestant England forbidding usury
as “a vice most odious and detestable,” and “by
the word of God forbidden.” Later in 1571,
Elizabeth repealed the law as having operated to
“the utter undoing of many gentlemen, merch-
ants, occupiers, and others.” Usury up to ten
per cent was legal. Ibid, Cit., footnote.



24 THE RISE OF CAPITALISM

were recognized. At Antwerp in the

year 1531 a new merchants’ exchange

was built in which all the transactions

now seen on our stock or produce ex-

changes took place. Wild speculation

predominated, many times on borrowed

money, bets were made on prices and

events.^^ All moral restraints were re-

moved, and the badge of godliness was

enterprise and initiative. Capitalists in

England drew dividends from buccaneer-

ing and slave trading. Trading compan-

ies were formed from the year 1550 on,

among the more notable being the Mer-

chant Adventurers (Russian company)

which had two hundred and forty mem-

bers in joint stock corporation, Levant

Company, the East India Company. All

of these were formed before the year

1600, generally to discover and exploit

regions, dominions, islands and places

unknown.^^

The middle of the sixteenth century

marked the broadening of capitalism

from the commercial to the industrial

field. The Guilds were not able to keep

up with the demands for merchandise

and many times would not consent to the

traders’ demands to cheapen or adulter-

ate their products, so one by one the

great guilds fell under the control of the

large commercial companies.

33. Preserved Smith, Op. Cit., p. 632.

34. Ibid, p. 632-536.



IN THEORY AND PRACTICE 25

But capitalism didn’t stop at control

of economic life, its influence was exerted

on the political life as well. Town coun-

cils and governments were more or less

dominated by the wealthy burghers. Na-

tional monarchs were bribed into extend-

ing economic privileges to the capitalist

class, and parliaments became little more

than the expression of their wills.^®

This trend in the political order had

grave economic consequences. In Brus-

sels, in the year 1544, a law was enacted

which gave the capitalists control over

the tapestry guilds and abolished their

mutual benefits and religious functions.

Brandenburg enacted a law which laid

down terms for entrance into any guild,

which matter was formerly decided by

the members. Under Edward VI in Eng-

land the religious endowments of the

guilds were confiscated. And under Eliz-

abeth the Weavers Act practically start-

ed the factory town system and the

Statute of Apprentices placed the mas-

ters in power at the expense of the jour-

neymen. Act after act in the various

countries of Europe favored the employ-

ers at the expense of the laborers.^®

Capitalist procedure likewise affected

agriculture. We have already alluded to
the “enclosure system” which began in

England before the Protestant Revolt.

35. Ibid, p. 549-550.

36. Ibid, p. 540-541.



26 THE RISE OF CAPITALISM

After this event and the consequent cess-

ation of ''moral restraint’’ it took on un-

bounded proportions. By Elizabeth’s

time one-third of all the arable land in

England, much of which was enclosed

"common land,” was used for grazing.

The reason for this was to supply the

looms of the Netherlands with much

needed wool. Between the years 1525

and 1534 the price of "raw wool” doubled.

Also about the same time the ancient

copyhold by which land was held for

centuries was changed to a leasehold, at

the end of which the rent could be raised

or the tenant ejected at the will of the

owner. Under the copyhold system, prev-

alent throughout the Middle Ages the til-

ler of the soil had certain vested rights,

all of these were now obliterated.^'^

From these few examples one sees that

the Protestant Revolt and the theories

of the Reformers while they are not the

direct cause of technical capitalism are

nevertheless almost exclusively the source

of capitalistic ideology. The doctrines

of private interpretation of the Bible, of

the negation of the efficacy of good

works, and of predestination led to the

exaltation of the individual with himself

as the sole code of morality, charity was

looked upon as being effeminate, and

wealth and material progress the sole

problem of man here below. Why worry

37. Ibid, p. 544-547.



IN THEORY AND PRACTICE 27

about a future life, a final judgment, a

day of reckoning, questioned the good

Protestant burgher, if this has already

been irrevocably decided.

Once this idea permeated the whole of

society, once wealth became its sole end

then we have the setting up of capitalist

philosophy of life. This we believe was

a consequence of the Protestant Revolt.

Once this idea became the motivating

force of society the transition period

ends and we launch into Modern History.

Then it was but a series of necessary

consequential steps from freedom of re-

ligious restraint, to freedom of political

restraint or laissez-faire philosophy, and

thence to freedom from economic re-

straint, or free competition.

The full consequences of any move-

ment cannot be honestly judged at the

time when the movement begins. Many

of the consequences are not foreseen,

much less desired by the leaders of the

movement itself. Hence to see the full

consequences of the Protestant revolt on

the Growth of the Capitalistic spirit we

have found it best to examine the writ-

ings prevalent in England one hundred

years after the revolt, and to see the

effect the fundamental Protestant tenets

had on capitalistic ideology.

Nowhere in Calvinistic thought so

prevalent as amongst the various pamph-

leteers during the years of the Puritan



28 THE RISE OF CAPITALISM

Revolt in England, and, strange as it

may seem, most of the ideology, most of

the stock phrases, and the philosophy of

Modern Capitalism can be found in these

works written but a hundred years after

Calvin and directly traceable to his doc-

trines, whether he willed it so or not.

Most of these pamphlets are concerned

primarily with toleration and liberty of

conscience. Much material can be found

in them for the development of the demo-

cratic secular states, but as these issues

do not concern us here they shall be

passed over.

Thus William Walwyn, one of the Lev-

ellers, while urging religious freedom

brings out that the true end of religious

freedom was not the toleration of a sect

or congregation, but the free flourishing

of the commonwealth.^® To him the in-

dividual had the perfect right of deter-

mining his religious belief and likewise

the government of the land. Govern-

ment, law, religion, and social institu-

tions should foster individual enterprise

for labor, production and trade. He al-

most laid down the norm which England

was to follow in building up her Empire

when he said:

‘T conceive it will appear upon in-

quiry, 1. That in whatsoever country

the greatest stock of money and

38. William Holler, Tracts on Liberty in Puritan

Revolution, 1638-1647, 1934, V. 62.



IN THEORY AND PRACTICE 29

credit shall be raised, there will the

greatest trade of the world be estab-

lished. 2. That the greatest trade

of one country, both a capacity of

undermining and eating out the less-

er trades of any countries (sic). 3.

That the greatest trade will be able

to make the greatest number of

shipping. And 4. That what na-
tion soever can attain to and con-

tinue the greatest trade and number

of shippings, will get and keep the

Sovereignty of the Seas, and conse-

quently the greatest dominion of the

world.’’^^

The part of government is merely to

preserve the peace and leave every man

to his own judgment in all things pos-

sible. Here the pleader for religious tol-

eration speaks like the true British im-

perialist. In another work he urges Par-

liament to adopt measures for the expan-

sion of trade, manufacuring, shipping,

plantations in America and for the estab-

lishment of a system of financial credit

and exchange. Further he advises that

the vexing question of the ethics of usury

(10% already allowed by law—see above)
be settled by the advice of merchants as

well as clergymen.^® Thus for him pri-

vate judgment or toleration is merely a

stepping stone to the right of private

enterprise or property. Tolerance was

39. Ibid, 66, also 93-94.

40. Ibid. p. 66.



30 THE RISE OF CAPITALISM

unsustaintable because it hindered trade

and commerce.

Another pamphleteer of this period

William Robinson thought much in the

same vein. He wanted England to con-

vert the unbelievers of other lands. Con-

version was impossible without inter-

course, and intercourse without tolerance.

And unless you have both there will be

no trade. Religion should be made to

serve capitalist enterprise and foreign

missions set up to grace foreign trade.**^

John Milton, Richard Overton, Thomas

Prince, John Goodwin, John Lilburne all

agreed on the rights of private judgment

though they disagreed on various minor

points. All of them exalted the individ-

ual above society, above the state, and

of course primarily above any religious

matter. Hence less than one hundred

years after the revolt we find one of the

predominating notes of modern capital-

ism, and the center of its whole philoso-

phy, namely individualism, held by many

and seemingly it had become the accepted

mode of thinking.

As the Levellers and the Separatists

and the Puritans thought so the business

world reacted. The Commercialism,

Mercantilism, and growth of industry in

this same seventeenth century, whether

it be in England or the Netherlands, was

41. Ibid. p. 69.



IN THEORY AND PRACTICE 31

only putting into practice what most

men engaged in commerce and trade

were already thinking. The ideals of in-

dividualism had come to their natural

conclusion the setting up an almost tot-

ally material order free from any res-

traint whatsoever.

Such a society would have not only

been impossible, but even inconceivable

in the “Ages of Faith.’’ An isolated in-

dividual or an isolated section of society

may haveacted in a capitalistic manner,

but the great body of society frowned

upon, if they did not actually avoid and

condemn such exceptions. This idea is

most admirably expressed by Tawney in

his exhaustive study on the subject:

“But the quality in modern soci-

eties which is most sharply opposed

to the teaching ascribed to the

Founder of the Christian Faith lies

deeper than the exceptional failures

and abnormal foibles against which

criticism is most commonly direct-

ed. It consists in the assumption,

accepted by most reformers with

hardly less naivete than by defend-

ers of the established order, that the

attainment of material riches is the

supreme object and the final criter-

ion of human success. Such a phil-
osophy, plausible, militant, and not

indisposed, when hard pressed, to
silence criticism by persecution, may
triumph or may decline. What is
certain is that it is a negation of



32 THE RISE OF CAPITALISM

any system of thought or morals,

which can, except by a metaphor, be

described as Christian. Compromise

is as impossible between the Church

of Christ and idolatry of wealth

which is the practical religion of

capitalist societies, as it was between

the Church and state idolatry of the

Roman Empire.’’^^

42. R. G. Tawney, Op. Cit., p. 286.



IN THEORY AND PRACTICE 33

BIBLIOGRAPHY

1. Burns, Bernard E., “The Roots of Dis-

order,” Columbia XVIII. 1938, March.

2. Callistus III, “Regimini Universali,”

Maii 6, 1455.

3. Clayton, Joseph, Luther and His Work,

Milwaukee, 1937.

4. Corrigan, Raymond J., S.J., “The

Church” and the Nineteenth Century.

Milwaukee, 1938.

5. Cronin, John F., S.S., Economics and

Society, Baltimore. 1938, (3rd Ed.)

6. Denzinger, Henrians et Bonnewort,

Clementas, Enchiridion Symbolorum,

Friburg, 1928.

7. Fanfani, Amintore, Catholicism, Pro-

testantism, and Capitalism. New York,
1939.

8. Hayes, Carleton B., A Political and
Cultural History of Europe. New York,
1936.

9. Moulton, Harold G. Income and Econ-

omic Progress, (Brookings Institute

Study) Washington, 1936.

10. O’Brien, George, An Essay on the
Economic Effects of the Reformation,

London, 1923.

11. Fallen, Conde B., & Wynne, John J.,
S.J. The Catholic Dictionary, New York
1929.

12. Papal Bulls

“Inter Multiplius” Concilium Later-

aneuse, April 28, 1515.

Leo XIII, Rerum Novarum.

Pius XI, Quadragesimo Anno.



34 THE RISE OF CAPITALISM

13. Smith, Preserved, The Age of the Re-
formation, New York, 1930.

14. St. Thomas Aquinas, “Summa Theo-
logica,” Taurini, 1929.

15. Tawney, R. H., Religion and the Rise

of Capitalism, New York, 1926.

16. Weber, Max, The Protestant Ethic and

Spirit of Capitalism, London, 1930.



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