From Growth to Recession

Population grew and prices rose in the second half of the sixteenth century. England’s population grew by 70 percent and in parts of Spain the population grew by 100 percent (that is, it doubled). The supply of precious metals from the New World reached its height in the 1590s. (See “Taking Measure: Precious Metals and the Spanish Colonies, 1550–1800.”) This flood of precious metals combined with population growth to fuel an astounding inflation in food prices in western Europe—400 percent in the sixteenth century—and a more moderate rise in the cost of manufactured goods. Wages rose much more slowly, at about half the rate of the increase in food prices.

Recession did not strike everywhere at the same time, but the warning signs were unmistakable. Foreign trade slumped as war and an uncertain money supply made business riskier. Imports of gold and silver declined, in part because so many of the native Americans who worked in Spanish colonial mines died from disease. Textile production fell in many countries, largely because of decreased demand and a shrinking labor force. The trade in African slaves grew steadily between 1580 and 1630 and then it, too, declined by a third, though its growth would resume after 1650 and skyrocket after 1700. African slaves were first transported to the new colony of Virginia in 1619, foreshadowing a major transformation of economic life in the New World colonies.

Demographic slowdown also signaled economic trouble. In the Mediterranean, growth had already stopped in the 1570s. The most sudden reversal occurred in central Europe as a result of the Thirty Years’ War: one-fourth of the inhabitants of the Holy Roman Empire perished in the 1630s and 1640s. Population growth continued only in England, the Dutch Republic, the Spanish Netherlands, and Scandinavia.

Where the population stagnated or declined, agricultural prices dropped because of less demand, and farmers who produced for the market suffered. The price of grain fell most precipitously, causing many farmers to convert grain-growing land to pasture or vineyards. The only country that emerged unscathed from this downturn was the Dutch Republic, thanks to a growing population and a tradition of agricultural innovation. Inhabiting Europe’s most densely populated area, the Dutch developed systems of field drainage, crop rotation, and animal husbandry that provided high yields of grain for both people and animals. Their foreign trade, textile industry, crop production, and population all grew. After the Dutch, the English fared best; unlike the Spanish, the English never depended on infusions of New World gold and silver to shore up their economy, and unlike most continental European countries, England escaped the direct impact of the Thirty Years’ War.

Historians have long disagreed about the causes of the early-seventeenth-century recession. Some cite the inability of agriculture to support a growing population by the end of the sixteenth century; others blame the Thirty Years’ War, the states’ demands for more taxes, or the waste caused by middle-class expenditures in the desire to emulate the nobility. To this list of causes, recent researchers have added climatic changes. Cold winters and wet summers meant bad harvests, and these natural disasters ushered in a host of social catastrophes. When the harvest was bad, prices shot back up and many could not afford to feed themselves.