In the Middle Ages, England was very ill-supplied with capital; religion, warfare, or pleasure, providing the most noteworthy capitalist enterprises. Nevertheless, in historical times there were many ventures that needed wealth to some small extent, especially those connected with transport. The shipping industry had always required capital, and, for many centuries, it was the traders who used their surplus funds most productively.
The application of capital to industry was a very gradual process; a few tools and a small supply of raw material sufficing in most cases. The larger industrial enterprises were for centuries quite undeveloped owing to lack of capital. The monks, in the ninth century, were the first to turn their attention to the coal-mines,1 just as they were the earliest scientific farmers. However, their place, both in agriculture and mining, was being taken, at the end of the seventeenth century, by the great landowners. Apart from shipping, mining, and some little inland transport, there was comparatively little invested capital in the year 1700 ;2 in fact, the total sum of capital in England, at that date, was ridiculously small.
A careful study of the growth of capital was made by Giffen,3 in 1889. He bases his earliest estimate upon that of Sir Wm. Petty, who deduced the national capital from the national income in 1679. In this estimate the total income is given as £40 million, and this is capitalized at £250 million.
The amount is divided as follows:
| Income | Capital | |
| Land | £8 million | £144 million |
| Houses | £2.5 million | £30 million |
| Shipping | £3 million | |
| Stock and Cattle | £36 million | |
| Coined gold and silver | £6 million | |
| Wares, merchandise, plate, and furniture | £31 million | |
| Income from above sources exclusive of land and houses; and from personal sources | £29.5 million | |
| £40 million | £250 million4 |
This estimate is confirmed by that of Gregory King and Davenant concerning the year 1688. Their estimate is £320 million, but this is the result of their having placed a higher value on the rental of land, and having capitalized it at eighteen years' purchase, instead of twelve, as Petty did. The value of the rest of the nation's capital, that is without agriculture, is given by Sir William Petty as £106 million, and by Gregory King as £86 million, thus, an average estimate of the fixed and trading capital of this country in 1700 would put it at about £100 million.
But, though it is necessary to know the total amount of capital, and its distribution is the key to later industrial development, yet there is another and more important point. The eighteenth century is a century of rapid expansion, and, of course, expansion in capitalist enterprise can only take place when each year shows a surplus of income over expenditure unconsumed. It has been suggested that, though Petty included the income from houses in his estimates, yet he did not include the rent from them; an item, which Prof. Scott estimates at £1.5 million, and, as Petty's estimates of national expenditure and income previously balanced, this item would make the annual balance added to the national capital about £1.5 million too.5 This deduction, by itself, would be inconclusive, but Gregory King has estimated that the annual increment of stock in 1664 was only about £1.25 million. Thus, it is obvious that the rate at which capital, and consequently industrial and commercial enterprise, was increasing at the end of the seventeenth century was slow, and it was only when the mineral wealth of the country was developed with the aid of the steam-engine that capital began to increase rapidly. These two things, the development of steam-power and the accumulation of capital, are inextricably bound together, and their stories cannot be separated.
The increase of capital in 1700, then, was about £1.5 million annually, and the industrial and commercial capital about £100 million.
The allocation of this capital to the various trades and industries of the country, is a task of extreme difficulty. At the beginning of the eighteenth century, the weight of the wars of William III and Anne was still heavy6; for by the financial expedient of a National Debt, payment had been spread over the future, and, consequently, there was a general increase in taxation. Ministers found this by taxing industry and trade; it is, therefore, impossible to find accuracy in any trade pamphlet of 1700-50. Such pamphlets were meant as propaganda to protect an industry from the hands of the rapacious tax gatherer, either by emphasizing its importance and the number of people whose welfare was bound up in its success, or by minimizing its size and profitableness, and pointing out that the yield of a tax upon it would hardly balance the expenses of collection.7
For these reasons, it is hard to tell which were the wealthy trades in the interval between the decay of the gilds and the beginning of modern capitalism. Hence it is necessary to take industry by industry, estimating the number and class of the people engaged, the amount of capital invested, and the volume and value of the resulting product.
1 R. Meade, The Coax and Iron Industries of the United Kingdom, 1882, p. 1 .
2 Scott, Early History of Joint-Stock Companies to 1720, Vol. 1, pp. 335-6.
3 Giffen, Growth of Capital, 1889, p. 74.
4 Ib., p. 80.
5 Scott, op. cit., Vol. 1, p. 265.
6 Kennedy, English Taxation (1640-1799). pp. 96-7.
7 Social England, Vol. V, ed. Traill, p.162.