1. The Commercial Revolution: Economic Expansion
Changes in Economics Middle Ages  Renaissance

2. EQ: What was the Commercial Revolution, and what was its impact on Europe?

3. What was the Commercial Revolution?
“The shift from a town-centered economy to a nation-centered economy.”
The emergence of commercial capitalism

4. Changes in Agriculture A Growing Food Supply

5. Climate - A Growing Food Supply
From 800 to 1200 the climate generally warms and more land became open to farming

6. Methods of Production Horses replaced oxen in pulling plows and wagons
Horses plow three times as much a day

7. Fallow means left unfarmed
Three-Field System
Before
After
Fallow
Farm
Farm
Fallow
Fallow means left unfarmed

8. Three Field System

9. Increased Agricultural Productivity
Cultivation of more land (e.g. forests and marsh lands; reclaiming land from North Sea)
Results in agricultural surplus = additional money for investment

10. Changes in Population

11. Beginnings of the Commercial Revolution
Population growth
Since 1450 slow recovery from Black Death
Continues to rise until mid-17th century when religious and dynastic wars and new plagues led to the “age of crisis”
Allows for the growth of middle class – wealthy merchants
Population growth
Since 1450 slow recovery from Black Death
Continues to rise until mid-17th century when religious and dynastic wars and new plagues led to the “age of crisis”
Growth of middle class – wealthy merchants (think Fuggers & Medicis)
Increased Agricultural Productivity
Cultivation of more land (e.g. forests and marsh lands; reclaiming land from North Sea)
Results in agricultural surplus = additional money for investment
Rural industry (aka cottage industry) – primarily woolen and textile manufacturing
New Economic centers in Amsterdam and London; Italy fades away and Spain, France, England and Dutch Untied Provinces emerge as major European powers

12. Changes in Medieval Society –Urban Life Flourishes
From 1000–1150, Europe’s population rises from 30 million to 42 million
Most towns are small, but they help drive change
In some places, serfs can become free by living in a town for a year and a day

13. Relative Peace Promotes the Growth of Cities
Invasions and warfare decline, allowing for safer travel.
In response, new trade routes form all over Europe.
Trade itself is conducted at trade fairs.
Semi-permanent bazaar-like settlements where large numbers of merchants gathered to buy and sell with local populations and each other.
Over time, the development of the trade route discourages them from leaving.
Artisans move here to met the needs of these merchants.
Slowly, develop into the first true medieval cities

15. Changes in Economics

16. Growth of banking
Entrepreneurs ignore church laws banning usury, leading to growth in banking.
First major banking firms being in northern Italy (Medici)
Banking expanded to Antwerp in 16th c., Amsterdam in 17th c. (Fugger family of Augsburg)
Bills of Exchange – birth of the stock market – Amsterdam Bourse, 1609
Allowed for use of credit

17. Beginnings of the Commercial Revolution
“price revolution”:
(long slow upward trend); increased food prices, increased volume of money, influx of gold & silver from the New World. (good and bad)
Shift in Economic Centers
Italy fades away and Spain, France, Dutch Republic and England emerge as major European powers
Rise in Capitalism
(laissez-faire):entrepreneurs; bourgeoisie (middle class) at the forefront
Price revolution (a very slow “revolution”)
rise in prices = fall in value of currency Causes for the Price Revolution
“Bullionism” influx of gold & silver bullion, provided primarily by Spain
Increase in population also increases demand for land and food = higher prices
Who suffers from higher prices?
Peasant and laborer wages rose the least = drop in standard of living
Some governments – excessive borrowing from bankers = new and higher taxes
Who benefits?
Landowners and Entrepreneurs profit from higher rents, higher prices, bigger markets, and cheap labor costs
Increased Social Tension
Continuing cracks in breakdown of feudal society; clergy vs. laity, nobility vs. peasantry, urban elite vs. guilds/artisans
Population growth
Since 1450 slow recovery from Black Death
Continues to rise until mid-17th century when religious and dynastic wars and new plagues led to the “age of crisis”
Growth of middle class – wealthy merchants (think Fuggers & Medicis)
Increased Agricultural Productivity
Cultivation of more land (e.g. forests and marsh lands; reclaiming land from North Sea)
Results in agricultural surplus = additional money for investment
Rural industry (aka cottage industry) – primarily woolen and textile manufacturing
New Economic centers in Amsterdam and London; Italy fades away and Spain, France, England and Dutch Untied Provinces emerge as major European powers

18. Capitalism
Capitalism had existed in some forms in antiquity, but faded away with manorial system of the Middle Ages.
Investment and money lending (usury) limited by Church laws.
Revived in the late Middle Ages through trade (Hanseatic League) and population growth.

19. Mercantilism Total volume of trade is unchangeable
One country can only increase its volume of trade at the detriment of another country
Competing countries (i.e. England, France, Dutch Republic) all want the balance of trade to be tipped in their favor
Prosperity of nation dependent on influx of gold (Bullionism)
Export more, import less
Government regulation of trade required in order to protect export industries
Trade monopolies
Gov’t. subsidies
Importing foreign artisans (insure quality of product)
Improve transportation (roads, canals, bridges)
Payment in precious metals
Establish colonies

20. New Kinds of Business
chartered companies: state provided monopolies in certain areas
joint-stock companies: investors pooled resources for common purpose (forerunner of modern corporation), reduced risk.
1600 English East India Company
1602 Dutch East India Company
1664 French East India Company
Governments profited from ventures.

21. Significance: brought about age of discovery and exploration

22. New Kinds of Business
Cottage Industry (Putting-out System) grow and begin to replace guilds

23. Review : Guild
A group of individuals working together to improve economic and social conditions for its members
Set prices
Provide security
Guilds set standards for:
Quality
Wages
Working conditions
Training

24. The Cottage Industry Pros Avoided guilds Cons
Helped farmers supplement income
Created entrepreneurs
Created new consumer goods
Work could be done at home
Rural workers cheaper
Could start families sooner
Cons
Inefficient
Workers spread out in many places
Labor wasn’t coordinated and organized
Lack of capital

26. Effect of Commercial Revolution
Some made ENORMOUS profits: (Mining, Shipbuilding, etc.)
HOWEVER most of Europe still dependent on agricultural economy
80 % of Europeans worked the land
Western peasants are free from serfdom BUT they still pay feudal dues, increased rents, and higher taxes
Eastern peasants suffer under resurgence of serfdom = even more bound to the land and feudal lord than before