(iv) Thus we come to the fourth stage, when, with Holland as the ally, but much the weaker ally, Britain ruined the navy and shipping of France. This lasted from 1688 to 1713, during which time France was also engaged in the continental struggles of the Wars of the League of Augsburg and of the Spanish Succession. Now it is to be noticed that a supreme military navy does not of itself give sea-power. At the beginning of the period France had a navy superior in numbers and equipment to the combined navies of Britain and Hol land; what she lacked was the sea commerce by which energy was accumulated. The losses which Britain suffered were speedily made good, while there was such a continuous drain on the resources of France that her ships could not be replaced; and these resources drained away, because they were expended on fighting on her land frontiers. Britain supplied to the opponents of France the subsidies with which this fighting was kept up. Thus, though there are no important sea-fights after the first year or so, though Britain appears to have very little connection with the affairs on the Continent, yet the period was one of the most noteworthy in British history, and the silent pressure exerted by her increasing sea-power was the important factor in the whole struggle.
Her commerce suffered somewhat from French priva teers, but the losses were much more than made good by the enormous increase in that commerce, with the profits of which, i. e. the accumulated energy, Britain was able without undue strain to support the land contest till France was exhausted.
During the struggle Holland finally ceased to be a sea power at all. She was unable to make good, as Britain did, the losses of her navy, for her resources, like those of France, were exhausted by land warfare, and she tended more and more to lean on Britain on the sea. She gained nothing of any account at the peace of Utrecht, and her carrying trade and her navy were gone. . To Britain came all the advantages of the struggle. Her commerce had been greatly increased : this was her outstanding gain. She obtained control of the trade of Portugal, while the cession of Gibraltar and Port Mahon in the Mediterranean, and of Newfoundland and Nova Scotia across the Atlantic, gave her new bases from which to extend and protect her trade.
There was another result to the commerce of Britain which followed from the geographical conditions and the use that was made of them. Not only could com modities be carried more safely by her vessels than by those of her rivals, so that the carrying trade of the world gradually came into her hands, but, the whole land being more secure, that trade was managed with greater economy of energy than elsewhere.
It was a great advance in civilization when metallic coin took the place of barter. The things to be ex changed were clumsy and difficult to carry, and it might easily happen that, though one man had more surplus products, yet he could not find another who had the things he wanted and at the same time was in need of those products. Metallic coin, acceptable to many people, facilitated exchange, i. e. the energy of produc tion was made more available.
In all civilized lands now, but in Britain especially, a further advance has been made. Except for small retail transactions practically no coin changes hands. All the commerce of the country is simplified by systems of book entries by banks, by which a man, or business, is credited with the possession of so much wealth as the value of so much work done, i. e. energy expended. When he wishes to buy anything, he transfers by writing a cheque assigning this to someone else, who in his turn may transfer it again. Now all this is possible only in. a country which is secure, where men trust one another, where there is little unnecessary expenditure of energy. It is no accident that the Bank of England, the key stone of this edifice of credit or trust, was established in the last decade of the seventeenth century, nor that in London alone in all the world is one certain of obtaining gold 1 at will in exchange for a piece of paper which shows that money is owed. London became and remains the centre of the commerce of the world because trade could be organized there safely with less expenditure of energy than elsewhere.
Thus commerce began to be organized on a large scale about the beginning of the eighteenth century, when and because Britain had become the sea-power. The condition of things at the time of the South Sea Bubble, in 1720, shows on the one hand that there was a great accumulation of surplus energy, i. e. capital, in the country, and on the other that beginnings were being made in organiAng that capital on a larger scale, this being possible because security was great. The South Sea Company was formed in 1711, before the end of the war, and owed its institution to the fact that government wished to reduce the rate of interest for money it had borrowed. It was another attempt, in 1719, to reduce still further the rate of interest, that opened people's eyes to a way of increasing their money by using it. The Bubble burst, not because security was not great— the £100 shares of the Company never fell below 175— but because the element of trust in security, which depended on command of the sea, was quite naturally but unjustifiably extended to things with which the command of the sea had nothing to do.