Apart from the guilds, the two classes of capitalists and free workmen were 89 being created by the development of commerce, which needed them both as instruments for her progress. Mediæval commerce knew nothing of capitalistic exchange; the demands of local markets were supplied by the direct barter or sale of the superfluity of the produce of the various districts and countries. All this was now being changed, and a world-market was being formed, into which all commodities had to pass; and a mercantile class grew up for the carrying on of this new commerce, and soon attained to power, amidst the rapid break-up of the old hierarchical society with its duly ordered grades.
The fall of Constantinople was followed in thirty years by the discovery of America, and about the same time of the Cape passage, which ultimately superseded the old trade route overland by the Levant and the Bavarian cities. And now the Mediterranean was no longer the great commercial sea, with nothing beyond it but a few outlying stations. The cities of Central Europe—e.g. Augsburg, Nuremberg, Munich, and the Hanse towns—were now sharing the market 90 with Venice and Genoa, the children of Constantinople: there was no longer one great commanding city in Europe. But it was not only the rise in the commercial towns that was overturning feudal society. As they conquered their enemy, the feudal nobles, they fell into the clutches of bureaucratic monarchs, who either seized on them for their own possessions, or used them as tools for their projects of conquest and centralisation. Charles V., e.g., played this game through South Germany, Austria, and the Netherlands, and with Venice, under cover of the so-called “Holy Roman Empire,” while at the same time he had fallen into possession of Spain by marriage; and disregarding his sham feudal empire, he bent all his efforts into turning these countries into real bureaucratic states. In France the liberties of the towns were crushed out by Louis XI. and his successors. In England the plunder of the religious houses enabled Henry VIII. to found a new nobility, subservient to his own absolutism, in place of the ancient feudal nobility destroyed by their late civil war.