IN the introduction to the present work an attempt was made to show
how the origin and genesis of capitalism is to be found as far back
as the first century of the Crusades, and in the case of Italy the ele-
ments of it may be discerned as early as the eleventh century. It was
shown that the fiscal operations of the papacy probably inaugurated
the new development; but that the new fiscality of the papal curia
would have been impossible without the commercial and industrial
awakening of Europe. The papal moneys created the first great avail-
able reservoir of resources upon which investment could draw, but
the springs and streams contributory to that great pool flowed from
the new commerce and industry. Other contributory factors were the
conversion of ground-rents, formerly paid in service, into money rents
as serfs and villeins became tenant or free farmers, and perhaps even
more the unearned increment attached to urban holdings as the towns
increased in population and commerce and industry developed within
them. Another ancillary factor was increased output of the precious
metals, notably in Germany and Bohemia, owing to improved methods
of mining.

Commerce--not provincial or national commerce--but international
commerce was the foundation of fourteenth and fifteenth century capi-
talism and the base of the banking operations of the age. Commercial
exchanges are a product of a high economic civilization. As a neces-
sary factor for their development commodities must have become
fungibilia as against consumptibilia; that is, they must have been pro-
duced with the view of creating commodities of average social or mar-
ket value, which is only possible with a considerable degree of special-
ization of labor. This was the case in the mining industries, and also
in the manufacture of woolen and linen goods, especially fustians, all
of which were highly developed in Germany long before England
thought of introducing German miners and fustian weavers with their
skill and their methods. Above all other forms of commerce the wool
trade and the manufacture of woolen goods were identified with early
banking. It was this fact which made Florence the premier banking
city of Europe in the thirteenth, fourteenth and fifteenth centuries.
The competition of the banking houses there, which were family firms,
was the immediate origin of the famous rival parties--the "Blacks"

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