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The Commercial Revolution…
Banking, Mercantilism,
&
The Rise of the Middle Class!!!
The Crusades revived a ‘money
economy’ in Europe…
Cultural diffusion w/ the Near
East brought Europeans into
contact with…
• Spices
• Silk
• Ancient manuscripts
• New technologies
…European coins flowed East
Renaissance bankers developed new techniques
•
•
•
•
Medici Family—Florence, Italy
Fugger Family—N. Germany
Letters of Credit
Managing risks
– Joint Stock
Companies/Insurance
– Stock Exchanges
• Bank of Amsterdam, 1609
– Bourse—paper money to
increase money supply
– Center of European finance
to 1700s
Westward Exploration
• Fall of Constantinople in 1453 = higher prices
• Portugal & Spain: geographic advantage in
Exploration
• COLONIALISM: Intersection w/ “1K, 1L, 1F”
makes Colonies = measure of power
Mercantilism
• General theory—
– exports > imports
– Colonies provide raw
materials/markets
– Mother country
manufactures/sells to
colonies
– Laws restrict trade to keep
money w/in system
• Monopolies [East India Co.s]
• Finite resources = Competition
• Competition = wars of 1700s
Mercantilism Defined
Mercantilism
An economic practice
adopted by European
colonial powers in an
effort to become selfsufficient; based on the
theory that colonies
existed for the benefit
of the mother country.
Commercial Revolution
- Maritime countries
- New economic
(those with sea-going
system emerges.
- New money and banking
ships) competed for
created.
overseas markets,
- Mercantilism begins.
colonies and
- Colonial economies
resources (raw
limited by needs of
mother countries.
materials).
Effects of Commercial Revolution
Columbian Exchange
Plants, animals, &
diseases:
• Europe Americas
– Horses & Cattle
– Smallpox
• Americas Europe
– Potatoes, Corn
– Syphillis
Triangular Trade
• Manufactured goods
from England
• Slaves from Africa to
Caribbean/America
• Raw materials from
Americas
Price Revolution [1450-1650]
Demographics
• Steady pop. Increase
in 15th-16th centuries
•
•
• Productivity steady
•
• Wages stagnant
•
Inflation
Rising demand = higher
prices
Influx of bullion from
New World mines
[AG>AU]
Hurts traditional landed
nobility most
Rise of “middling sort”