The burgeoning business activity described in the previous chapters required increasing amounts of investment in facilities, transport, infrastructure, and working capital, raising the questions of where the capital was coming from, how it was mobilized, and by whom. The answer to the “where” question is of course from agriculture and industry, the ultimate sources of wealth. As a result of the incremental improvements and diversifications we have discussed, farming and manufacturing were becoming increasingly market-oriented and cost effective, so that by the middle of the fifteenth century they were capable of producing healthy surpluses. Even the disruptions of recurring war and pestilence, serious as they were to the areas affected, could only temporarily impair the productivity of the economies in most parts of western Europe. And those calamities had a positive effect by stimulating the circulation of money – in economists' terms, by increasing the “velocity” of circulation.

The questions of who mobilized the capital and how are more difficult to deal with. The simple answer to the “who” is mainly governments, and to a lesser extent businessmen, sometimes working independently, more often in cooperation with governments, acting as their agents or even as members of their administrations. The “how,” inseparable from the “who,” does not have a simple answer, and its explanation will require a detailed analysis of the forces at play in various parts of Europe.

MOBILIZING CAPITAL: THE KEY ROLE OF GOVERNMENTS

One of the notable developments of the fourteenth and fifteenth centuries was the growth in the size and efficiency of government bureaucracies throughout Europe and in their ability to extract cash flows from their economies.