1. Honors History 9 Early Modern Europe I: Resurgence & Renaissance
The Commercial
Revolution
Honors History 9
Early Modern Europe I: Resurgence & Renaissance

2. Industrial Capitalism
Rise Of
Industrial Capitalism

3. Rise Of Industrial Capitalism Defined
Break from the old individualistic craft system of production practiced in the Middle Ages.
Based on trade and capital (money).
Development of new methods of production and the creation of two distinct groups: entrepreneurs and wage workers.
Entrepreneur owns the plant and the tools and supervises all stages of production and distribution.
Wage worker is independent and only owns his own labor, which he sells to the entrepreneur.
Pinocchio With Stromboli

4. Rise Of Industrial Capitalism Laws OF Supply & Demand
Laws of supply and demand guide the economy.
Law of Demand: As prices drop, consumers will buy more. As prices rise, consumers will buy less.
Law of Supply: As prices drop, producers will produce less. As prices rise, producers will produce more.
Equilibrium: Where quantity demanded and quantity supplied meet.
Laws Of Supply & Demand

5. The Commerical Revolution

6. The Commercial Revolution Defined
A revolution in business practices.
Influenced by two major events: the return from the Crusades and the oceanic exploration beginning in the 1300s and 1400s.
Europeans traded European and newly acquired American gold and silver for Asian spices, silks, and porcelain.
European Seagoing Vessel

7. The Commercial Revolution Impact
Feudalism loses force.
The methods used under feudalism would no longer work.
People needed more freedom to trade.
They also needed to rely less on barter and more on cash.
Feudal Peasants Paying Homage

8. The Commercial Revolution Impact
Merchants evolve from small roving traders to large businessmen operating from a central base of operations.
Establishes offices in other cities, hires managers, and keeps regular correspondence on activities.
Allowed for diversity of interests.
Provided opportunity and freedom to more individuals.
Marco Polo

9. Changes In
Business
Practices

10. New Business Types Reduce Risk & Increase Resources
Partnerships.
Two or more people would band together.
Had to share profits, losses, and responsibilities.
Chaos OF A Medieval Faire

11. New Business Types Reduce Risk & Increase Resources
Joint-stock companies.
A large number of people would buy shares, or stock, in a company.
Limited the liability and risk to individuals.
Instead of losing everything, you only lost what you put into it.
Formation Of A Joint-Stock Company

12. New Business Types Reduce Risk & Increase Resources
Diversity of interests.
Smart merchants did not specialize.
Did not put all of their eggs in one basket.
Business Transactions In Florence

13. New Business Types Banking & Money
Money lending increases as Catholic Church rules concerning usury change.
Dangerous to carry gold and silver, so bankers issued bills of exchange.
A merchant would deposit his money into a hometown bank.
That bank would give him a receipt, known as a bill of exchange.
When reaching his final destination, the person can exchange it for money at the bank in that town.
Medieval Banker

14. New Business Types Banking & Money
Banking leaders.
The Low Countries, especially the town of Antwerp, serve as the financial capital of Europe as they were opened to “the merchants of every nation and language.”
Other leading bankers: Medici Bank in Florence and the Fugger Company of Augsburg.
Jakob Fugger The Wealthy

15. New Business Types Banking & Money
Impact of banking.
Would lend money to kings who were looking to consolidate power and suppress the power of their nobles.
Bankers would also finance public works projects, plays, and artistic endeavors.
The Fugger Chapel

16. New Business Types Insurance
Travel and trade was still dangerous.
Pirates and bandits hijacked caravans and ships.
A merchant could lose everything he had.
Modern Insurance

17. New Business Types Insurance
To reduce this risk, insurance was created.
A merchant would purchase a policy on his shipment.
If the shipment was damaged, lost, or stolen, the insurance company reimbursed the merchant whatever amount was written in the contract.
Harbor of Medieval Antwerp

18. Consolidation of Nation-States
Leads to greater security, improved transportation, and protection of business interests by monarchs who rely on the support of the merchants.
Henry VIII of England

19. Definition Of Mercantilism
Economic theory that the strength of a nation-state came from its gold supply, a nearly self-sufficient economy, and expansion of trade.
Needed to obtain more gold and silver than it spends.
Gold Ingots Recovered From A Sunken 16th Century Spanish Galleon

20. Factors Of Mercantilism
Involved a number of things that a nation needed to control.
Protection of domestic industries with high tariffs (taxes on imports).
Low tariffs on raw materials.
Regulation of a nation’s commerce by the government.
Encourage a thriving agricultural base.
Establish power at sea.
Obtain overseas colonies for raw materials and market for excess goods.
Prohibit the export of tools, capital, and skilled labor.