Application Question
Medium difficulty • Concept in a practical situation
Question 1
Applied ConceptA merchant in seventeenth-century England is considering whether to set up a production unit in a town or in a village. With reference to the chapter, advise him on the pros and cons of each option.
- Setting up in a town means facing powerful guilds that control production, restrict entry of new merchants, regulate prices and hold monopoly rights granted by rulers — making it legally and practically difficult for a new merchant to compete.
- Moving to the countryside allows the merchant to employ poor peasants and artisans who have lost their common lands and are eager for supplementary income; he can give them advances and get goods produced at lower cost with no guild interference.
- However, rural production is harder to supervise for quality and regularity; production is dispersed across many households, and the merchant must manage a complex supply chain — from wool stapler to spinner to weaver to fuller to dyer — without any centralised control, which eventually made factory production more efficient.