. The Commercial Revolution is marked by an increase in general commerce, and in the growth of financial services such as banking, insurance, and investing.
Italy first felt huge economic changes in Europe from the 11th to the 13th centuries. Typically there was:
It is estimated that the per capita income of northern Italy nearly tripled from the 11th century to the 15th century. This was a highly mobile, demographically expanding society, fueled by the rapidly expanding Renaissance commerce.
In the 14th century, just as the Italian Renaissance was beginning, Italy was the economic capital of Western Europe: the Italian States were the top manufacturers of finished woolen products. However, with the Black Death in 1348, the birth of the English woolen industry and general warfare, Italy temporarily lost its economic advantage. However, by the late 15th century Italy was again in control of trade along the Mediterranean Sea. It found a new niche in luxury items like ceramics, glassware, lace and silk as well as experiencing a temporary rebirth in the woolen industry.
During the 11th century in northern Italy a new political and social structure emerged: the city-state or
).
Similar town revolts led to the foundation of city-states throughout medieval Europe, such as in Russia (
, 15th century).
Some Italian city-states became great military powers very early on. Venice and Genoa acquired vast naval empires in the Mediterranean and Black Seas, some of which threatened those of the growing Ottoman Empire. During the Fourth Crusade (1204), Venice conquered a quarter of the Byzantine Empire.
.
By the late 12th century, a new and remarkable society had emerged in Northern Italy, rich, mobile, and expanding, with a mixed aristocracy and urban borghese (burgher ) class, interested in urban institutions and republican government. But many of the new city-states also housed violent factions based on family, confraternity and brotherhood, who undermined their cohesion (for instance the Guelphs and Ghibellines ).
.
Great Famine). However, demographic expansion continued until the arrival of the
Black Death epidemic in 1347, when ca. 50% of the European population was killed by the plague. The economic effects of a labor shortage actually caused wages to rise, while agricultural yields were once again able to support a diminished population. By the beginning of the 15th century, the economic expansion associated with the commercial revolution in earlier centuries returned in full force, aided by improvements in navigation and cartography.
Geopolitical, monetary, and technological factors drove the Age of Discovery. During this period (1450–17th century), the European economic center shifted from the Islamic
Indies was now open for the Europeans to explore; the
Portuguese Empire was one of the early European empires to grow from spice trade.
[14] Following this, Portugal became the controlling state for trade between east and west, followed later by the Dutch city of
Antwerp . Direct maritime trade between Europe and China started in the 16th century, after the Portuguese established the settlement of
Goa , India in December 1510, and thereafter that of
Macau in southern China in 1557. Since the English came late to the transatlantic trade,
[15] their commercial revolution was later as well.
Geopolitical factors
In 1453, the Ottoman Turks took over Constantinople , which cut off (or significantly increased the cost of) overland trade routes between Europe and the Far East,[16] so alternative routes had to be found. English laws were changed to benefit the navy, but had commercial implications in terms of farming. These laws also contributed to the demise of the Hanseatic League , which traded in northern Europe.[17] Because of the Reconquista , the Spanish had a warrior culture ready to conquer still more people and places, so Spain was perfectly positioned to develop their vast overseas empire .[18]
Rivalry between the European powers produced intense competition for the creation of colonial empires, and fueled the rush to sail out of Europe.[19]
Monetary factors
The need for silver coinage also affected the desire for expanded exploration as silver and gold were spent for trade to the Middle and Far East. The Europeans had a constant deficit in that silver and gold coin only went one way: out of Europe, spent on the very type of trade that they were now cut off from by the Ottomans.
Another issue was that European mines were exhausted of silver ore and gold. What ore remained was too deep to recover, as water would fill the mine, and technology was not sufficiently advanced enough to successfully remove the water to get to the ore or gold.[20]
A second argument is that trade during the youth of the commercial revolution blossomed not due to explorations for bullion (gold and silver coinings) but due to a newfound faith in gold coinage. Italian city-states such as Genoa and Florence (where the first gold coins began to be minted in 1252) and kingdoms such as the Kingdom of Sicily routinely received gold through such trading partners as Tunisia and Senegal.[21] A new, stable and universally accepted coinage that was both compatible with traditional European coinage systems and serviced the increased demand for currency to facilitate trade made it even more lucrative to carry out trade with the rest of the world.
Technological factors
In 1570 (May 20) Gilles Coppens de Diest at Antwerp published 53 maps created by Abraham Ortelius under the title Theatrum Orbis Terrarum , considered the "first modern atlas". Latin editions, besides Dutch, French and German editions appeared before the end of 1572; the atlas continued to be in demand until about 1612. This is the world map from this atlas.
From the 16th to 18th centuries, Europeans made remarkable maritime innovations . These innovations enabled them to expand overseas and set up colonies, most notably during the 16th and 17th centuries. They developed new sail arrangements for ships, skeleton-based shipbuilding,[22] the Western "galea" (at the end of the 11th century), sophisticated navigational instruments, and detailed charts and maps.
After Isaac Newton published the lunar distance method and the invention of the
octant after 1730.
[24] By the late 18th century, navigators replaced their prior instruments with octants and sextants.
Important people
Significant contributors to European exploration include Prince
and others.
Key Features
The economy of the Roman Empire had been based on money , but after the Empire's fall, money became scarce; power and wealth became strictly land based, and local fiefs were self-sufficient. Because trade was dangerous and expensive, there were not many traders, and not much trade. The scarcity of money did not help;[26] however, the European economic system had begun to change in the 14th century, partially as a result of the Black Death , and the Crusades .[27]
Banks, stock exchanges, and insurance became ways to manage the risk involved in the renewed trade. New laws came into being.[clarification needed ] Travel became safer as nations developed. Economic theories[clarification needed ] began to develop in light of all of the new trading activity. The commercial revolution is also marked by the formalization of pre-existing, informal methods of dealing with trade and commerce.
Inflation
Potosí (Bolivia) silver 8 reales, Carlos III, 1768
Spanish gold doubloon stamped as minted in 1798
manorial system (manor system of lord and peasant tenant) eventually vanished, and the landholding
aristocrats were forced to sell pieces of their land to maintain their style of living.
[31] Such sales transferred ownership to wealthy commoners, who wanted to buy land and thereby increase their social status. Former "common lands" were fenced by the landed gentry, a process known as "
enclosure " which subsidized the cost of raising livestock (mainly sheep's wool for the
textile industry ). This "enclosure" forced the peasants out of rural areas and into the cities, resulting in urbanization. The increase in the availability of silver coin allowed for commerce to expand in numerous ways.
[32]
Banks
Musée du Louvre
, Paris
Various legal and religious developments in the late Middle Ages allowed for development of the modern banking system at the beginning of the 16th century. Interest was allowed to be charged, and profits generated from holding other people's money.
Banks in the Italian Peninsula had great difficulty operating at the end of the 14th century, for lack of silver and gold coin.[33] Nevertheless, by the later 16th century, enough bullion was available that many more people could keep a small amount hoarded and used as capital .[34]
In response to this extra available money, northern European banking interests came along; among them was the
Fugger family. The Fuggers were originally mine owners, but soon became involved in banking, charging interest, and other financial activities. They dealt with everyone, from small-time individuals, to the highest nobility. Their banks even loaned to the emperors and kings, eventually going bankrupt when their clients defaulted.
[35] This family, and other individuals, used Italian methods which outpaced the
Hanseatic League 's ability to keep up with the changes occurring in northern Europe.
[36]
Antwerp had one of the first money exchanges in Europe, a
Amsterdamsche Wisselbank (Amsterdam Exchange Bank) was founded which made Amsterdam the financial center of the world until the
Industrial Revolution . In a notable example of crossover between stock companies and banks, the
Bank of England , which opened in 1694, was a joint-stock company.
[37]
Banking offices were usually located near centers of trade, and in the late 17th century, the largest centers for commerce were the ports of Amsterdam , London, and Hamburg . Individuals could participate in the lucrative East India trade by purchasing bills of credit from these banks, but the price they received for commodities was dependent on the ships returning (which often did not happen on time) and on the cargo they carried (which often was not according to plan). The commodities market was very volatile for this reason, and also because of the many wars that led to cargo seizures and loss of ships.
Managing risk
Trade in this period was a risky business: war, weather, and other uncertainties often kept merchants from making a profit, and frequently an entire cargo would disappear all together. To mitigate this risk, the wealthy got together to share the risk through stock: people would own shares of a venture, so that if there was a loss, it would not be an all consuming loss costing the individual investor everything in one transaction.[38]
Other ways of dealing with the risk and expense associated with all of the new trade activity include insurance and joint stock companies which were created as formal institutions. People had been informally sharing risk for hundreds of years, but the formal ways they were now sharing risk was new.[39]
Even though the ruling classes would not often directly assist in trade endeavors, and individuals were unequal to the task,Henry VIII of England established a permanent Royal Navy, with the intention of reducing piracy, and protecting English shipping.
[41]
Joint stock companies and stock exchanges
Plan of the London Royal Exchange in 1760
Royal Exchange established in 1565 first developed as a securities market, though by 1801 it had become a stock exchange.
[39]
Historian Fernand Braudel suggests that in Cairo in the 11th-century Muslim and Jewish merchants had already set up every form of trade association and had knowledge of every method of credit and payment, disproving the belief that these were invented later by Italians. In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers . In late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurse , and in 1309 they became the "Bruges Beurse", institutionalizing what had been, until then, an informal meeting. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam .[42]
"In the middle of the 13th century
Amsterdam Stock Exchange. It was the first company to issue stocks and bonds.
[43]
The
Insurance companies
A sample insurance contract. Documents such as this helped traders survive losses.
Insurance companies were another way to mitigate risk. Insurance in one form or another has been around as far back as there are records. What differed about insurance going into the 16th and 17th centuries was that these informal mechanisms became formalized.
Lloyd's of London came into being in 1688 in English coffee shops that catered to sailors, traders, and others involved in trade. Lloyd's coffeehouse published a newspaper, which gave news from various parts of the world, and helped the underwriters of the insurance at the coffeehouse to determine the risk.[45] This innovation was one of many that allowed for the categorization of risk. Another innovation was the use of ship catalogs and classifications.
Other forms of insurance began to appear as well. After the Great Fire of London , Nicholas Barbon began to sell fire insurance in 1667.[46]
Laws were changed to deal with insurance issues, such as l'Ordonnance de la Marine (by Colbert in 1681).[47]
Economic theory
Further information:
History of Economic Thought
As the economy grew through the commercial revolution, so did attempts to understand and influence it.
nation-state. Governments' involvement in trade affected the
nobility of western European nations, because increased wealth by non-nobles threatened the nobility's place in society.
Trade monopolies
Governments became involved in trade directly through the granting of royal trade monopolies. For example,
Queen Elizabeth, for the export of
broadcloth and wine.
[48] Ironically, competition between colonial powers led to their granting of trade monopolies to the
East India Companies .
Triangular trade
A triangular trade occurred in this period: between Africa, North and South America, and Europe; and it worked in the following way: Slaves came from Africa, and went to the Americas; raw materials came from the Americas and went to Europe; from there, finished goods came from Europe and were sold back to the Americas at a much higher price.
Due the
during the 19th century.
Law
Laws began to change to deal with commerce, both internationally, and locally within individual countries.
In France, for example, the Ordinance of Marine of Louis XIV was published under the auspices of Colbert in 1691, and was the first complete code of maritime and commercial law; and "when we consider the originality and extent of the design and the ability with which it is executed, we shall not hesitate to admit that it deserves to be ranked among the noblest works that legislative genius and learning have ever accomplished."
[49]
In England, the Navigation Acts were among the British effort to regulate trade.
Effects
The commercial revolution, coupled with other changes in the early modern period , had dramatic effects on the globe.
For more than 2000 years the Mediterranean Sea had been the focus of European trade with other parts of the world. This focus shifted to the Atlantic Ocean by routes south around the Cape of Good Hope after 1488, and by trans-Atlantic trade after 1492. Older overland trade routes such as the Silk Road suffered economic decline due to the new maritime competition.
peoples and incorporated their territories into the Spanish Empire. Other Europeans similarly affected the peoples of North America as well.
An equally important consequence of the commercial revolution was the
Columbian Exchange. Plants and animals moved throughout the world due to human movements. For example,
Yellow fever , previously unknown in North and South America, was imported through water that ships took on in Africa.
[50] Cocoa (chocolate), coffee, maize,
cassava , and potatoes moved from one hemisphere to the other. Better food and more wealth allowed for larger families. The
migration of peoples from Europe to the Americas allowed for European populations to
increase . Higher caloric yields of the New World staple crops reduced the percentage of the workforce engaged in agricultural labor and accelerated Urbanization.
Europe's commercial revolution also created a foundation of wealth needed for the
industrial revolution.
[51] The expanding labor force was also redirected into nascent industrialization. Economic prosperity financed new forms of
cultural expression during this period.
See also
Notes
.
^ Robert Lopez (1976). The Commercial Revolution of the Middle Ages . [New York]: Cambridge University Press. pp. 56 –147.
.
.
.
.
.
^ Kathryn Reyerson (1999). "Commerce and Communications" in David Abulafia ed., The New Cambridge Medieval History, vol. 5 . Cambridge: Cambridge University Press. pp. 50–1.
^ Angeliki Laiou (1997). "Byzantium and the Commercial Revolution" in G. Arnaldi ed., Europa medievale e mondo bizantino . Rome: Istituto Storico per il Medioevo, Studi Storici 40. pp. 239–53.
^ Stark, Rodney, The Victory of Reason , New York, Random House, 2005
^ Skinner, Quentin, The Foundations of Modern Political Thought , vol I: The Renaissance ; vol II: The Age of Reformation , Cambridge University Press, p. 69
^ Martin, J. and Romano, D., Venice Reconsidered, Baltimore, Johns Hopkins University, 2000
^ Ferguson, Niall, The Ascent of Money: The Financial History of the World . Penguin, 2008
^ a b Gama, Vasco da. The Columbia Encyclopedia, Sixth Edition. Columbia University Press. Archived 2009-02-14 at the Wayback Machine
^ Fisk, John (1900). Old Virginia and Her Neighbours . Houghton, Mifflin, and Company. p. 14.
^ Rankin, Rebecca B., Cleveland Rodgers (1948). "Chapter 1". New York: the World's Capital City, Its Development and Contributions to Progress . Harper. {{cite book }}
: CS1 maint: multiple names: authors list (link )
^ Cunningham, William (1892). The Growth of English Industry and Commerce in Modern Times . University Press. p. 26.
.
.
^ Cowen, Richard. "Exploiting the Earth" . Archived from the original on 2007-10-09. Retrieved 2007-10-17 .
.
.
^ The Family Magazine . Redfield & Lindsay. 1838. p. 436.
.
^ Pope, Joseph (1890). Jacques Cartier, his life and voyages . Printed by A.S. Woodburn. p. 49 .
^ Webster, Hutton (1919). Medieval and Modern History . Boston: D.C. Heath & Co.
.
.
.
^ Cunningham, William (1892). The Growth of English Industry and Commerce in Modern Times . University Press. p. 15 .
.
.
.
^ Cunningham, William (1892). The Growth of English Industry and Commerce in Modern Times . University Press. p. 14 .
.
^ Cunningham, William (1892). The Growth of English Industry and Commerce in Modern Times . University Press. p. 24 .
^ Keyser, Henry (1850). The law relating to transactions on the stock exchange . Oxford [Oxfordshire]: Oxford University Press. p. 1.
^ Day, Clive (1914). A History of Commerce . Longmans, Green, and Co. p. 144 .
^ .
^ Fisk, John (1900). Old Virginia and Her Neighbours . Houton, Mifflin, and Company. p. 182.
^ Lindsay, William S. (1872). History of Merchant Shipping and ancient commerce . London: Sampson Low, Marston, Low, and Searle. p. 89.
^ .
^ Chambers, Clem. "Who needs stock exchanges?" . Mondo Visione. Retrieved 25 October 2009 .
^ Sayle, Murray (5 April 2001). "LRB · Murray Sayle: Japan goes Dutch" . London Review of Books XXIII.7. Retrieved 25 October 2009 .
^ Martin, Frederick (1876). The History of Lloyd's and of Marine Insurance in Great Britain . MacMillan and Company, London. pp. 65 –80.
^ "London Fire Brigade – History, key dates (Our history)" . Archived from the original on 2008-06-18. Retrieved 2007-10-27 .
.
.
^ Elliott, Charles Burke (1907). The law of insurance: a treatise on the law of insurance, including fire, life, accident, marine, casualty, title, credit and guarantee insurance in every form . Bobbs-Merrill. p. 3 .
^ Bergman, Leslie. "History of colonization in South America" . Stellenbosch University, Stellenbosch, South Africa. Archived from the original on 24 May 2010. Retrieved 25 October 2009 .
Stellenbosch, South Africa's Department of Modern Foreign Languages's Historical Background article South America says: "Yellow fever was an uninvited "guest" brought to the Americas on the slave ships from West Africa. Yellow fever is caused by a virus spread by the bite of a species of mosquito native to West Africa, the aedes aegypti . This mosquito was accidentally carried across the Atlantic in water barrels on the slave ships. Yellow fever struck communities from New York to Rio de Janeiro, but aedes aegypti flourished in tropical zones. The mosquito, and with it yellow fever, spread rapidly throughout the Amazon River valley. The disease was so lethal to Europeans, who had little immunity to it, that mass settlement of the Amazon region was not possible until present times."
.
References
Bernstein, Peter L. (1998). Against the Gods: The Remarkable Story of Risk (Reprint ed.). New York: .
Craig, John (1953). The Mint: A History of the London Mint from A.D. 287 to 1948 . .
Davies, Glyn (1997) [1994]. A History of Money: From Ancient Times to the Present Day (Reprint ed.). .
Gibbins, Henry de Beltgens (1891). The History of Commerce in Europe . MacMillan and Company London New York.
Gleeson, Janet (2001). Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance . New York: .
.
Lopez, Robert. The Commercial Revolution of the Middle Ages . pp. 56–147.
Marshall, Michael (1999). "From Mercantilism to 'The Wealth of Nations' " (PDF) . The World & I . 5 (Special Edition). Archived from the original (PDF) on 2011-06-06. Retrieved 2005-11-18 .
Martin, Frederick (1876). The History of Lloyd's and of Marine Insurance in Great Britain . London: .
Paine, Lincoln (2013). The Sea and Civilization: A Maritime History of the World . New York: .
"Money Management and Imperial Power" (PDF) . p. 6. Archived from the original (PDF) on 2012-02-20. Retrieved 2007-10-12 .