The Rise of Absolute Monarchs

In the 16th century, political power shifted to a few sovereigns who:

• overturned public liberty
• oppressed the smaller states
• destroyed the privileges of the towns and provinces
• controlled the national fortunes
• were absolutely ignorant of the industry that created and preserved wealth

Before the reign of Charles 5th, half of Europe was under the feudal system. It had:

• no liberty
• no knowledge
• no finance.

The other half had already reached a high degree of prosperity through its increasing agricultural riches, factories, and trade.

• It was governed by men who studied economy in private life when they were acquiring their own property
  • They had learned what is suitable in that of states
  • They governed free communities according to the interest of all.

Until the 15th century, wealth and credit were nowhere in:

• the republics of Italy
• the Hanseatic league
• the imperial towns of Germany
• the free towns of Belgium and Spain
• some towns in France and England

These instead enjoyed great municipal privileges.

The Magistrates of all those towns were men constantly brought up in business.

• They had no knowledge of political economy as a science
• Yet they had the feeling and experience of what would serve or injure the interests of their fellow-citizens.

The 19th century wars:

• overturned the balance of Europe
• transferred a nearly absolute monarchy to 4 all-powerful monarchs

Charles 5th united all the industrious and wealthy counties after having ruined them:

• Spain, nearly all Italy, Flanders, and Germany

He suppressed all their privileges and prevented the recovery of former opulence.

The ministers of Charles 5th:

• were all equally ignorant of pecuniary affairs
• ruined the public finances, agriculture, trade, and every kind of industry, from one end of Europe to the other

The following monarchs wished to hold the balance between them:

• Charles 5th,
• his rival Francis 1st,
• Henry 8th

They spend more than they earned.

As the suffering became more general, the humane people defended the poor. Thus, the science of political economy sprung from that of finance.

Philosophers:

• wished to shield the people from the speculations of absolute power
• felt that, to obtain a hearing from kings, they must speak to them of royal interests, not of justice or duty
• investigated the nature and causes of national wealth, to show governments how it might be shared without being destroyed

Europe had too little liberty to allow those early political economists to present their speculations

Finance were then enveloped in deep secrecy to know how it worked.

This is why the study of political economy began with ministers who were interested in:

• finance and
• the public interest

The 2 great French ministers were:

• Sully under Henry 4th
• Colbert under Louis 14th

They were the first who threw any light on the political economy which was then regarded as a secret of state.

Yet, in spite of all their genius and authority, they could not bring it any order, precision, or uniformity.

Sully’s policy was to protect agriculture.

Colbert’s policy was to protect the merchants.

• He descended from a family engaged in the cloth trade
• He studied to encourage manufactures and commerce.
• He asked the advice of merchants on all emergencies.

Both statesmen:

• opened roads and canals to facilitate trade
• protected the spirit of enterprise
• honoured the industrious activity which diffused plenty over their country.