Industry and the agricultural depression

The seventeenth and eighteenth centuries witnessed major changes in European industry. These were not primarily technological changes. Rather, industrial organization experienced profound though gradual changes while industrial location was dramatically altered. Also affected was the composition of output. Although there is controversy about whether or not total output rose significantly in this era of stable population, there can be no doubt that certain key industries grew enormously.

To understand how the industrial sector of a basically agricultural economy was restructured we cannot avoid considering it in the context of the agricultural depression that gripped Europe during the century after 1650. Industrial production could not fail to be affected by falling farm prices and declining rents. We will outline the nature of that impact in a generalized model that is meant to serve as background for the more detailed account of industrial change that follows it.

The demand for basic foodstuffs eased off after about 1650 as population growth slowed or was reversed while output remained stable. The resulting decline of grain prices, by liberating income from expenditure on basic necessities, stimulated the demand for such relative luxuries as meat, beverages, horticultural crops, and manufactures. As described in the preceding chapter, the improvement of the ratio of livestock to grain prices stimulated cost-reducing innovation in some areas which, by increasing output, further dampened agricultural prices.