The
Commercial
Revolution
Section
3.12
Questions to consider
• What important economic changes in the early
modern centuries does the term “Commercial
Revolution” signify?
• Describe the growth of European population in the
sixteenth century and the nature of this growth.
• Explain the origins, nature, and effects of the “putting
out” system. Of what importance were the needs of
the military in the rise of capitalism? What change in
attitudes could be noted toward the lending of money
at interest?
• Explain the general nature and purpose of
mercantilism, citing examples of mercantilist policies
and regulations. What comparison may be made
between mercantilism and New Monarchies?
What were the results of the voyages of
discovery?
• Columbian Exchange
• Population Rise (1600)
– England=5 mil
– France=20 mil
– Russia= 10 mil
• Price Revolution
– Rise due to population growth
– More gold/debasing = inflation
– New land less fertile
• New Economic Models
(mercantilism)
• Commercial Revolution
– Economic changes in Europe
marked by capitalism,
transformation from town to
nation-centered economy
Changes in Commerce and Production
• Medieval Economic Model
– Comprised of town and surrounding
farmland (manors)
• Manors used as colony by towns
– Towns controlled by Guild System
• Craftsmen=provincial production
– Produced only upon order
– Little risk, little profit, little
innovation
– Instituted Protectionists policies
and large barriers of entry into
trades
– Capital = his workbench, tools,
workshop
– Lack of ability to network in long distance
trade, capital to tie up in stocks of unsold
wares, knowledge of distant customer
Changes in Commerce and Production con.
• Commercial System
– Merchants
• Act as middlemen between
manufacturers and
consumers
• Usurp guilds
– Bankers
• Jacob Fugger
– Augsburg businessman
– Got rich from fustian
(cotton/wool mix)
– Expanded into spice, silk,
mining business
– Financed Hapsburgs,
Popes, and Portuguese
trade/merchants
Putting Out/Domestic System
Cottage Industry
• Checkmates guilds
• Entrepreneurs “put out” manufacturing
work to country people
• He owns the capital, means of
production
• Out of guild’s reach
Wool Industry
Farmer sheers
sheep
Entrepreneur sells
Finished product
Wool taken to
Spinner
Thread taken to
Weaver
Dyed cloth
Taken to Tailor
Fabric taken to
Dyer
Capital and Labor
• Cottage Industry
– Separates owner from worker
– Allows mass production
• New Industries
– Printing
• Large overhead
• Rising literacy creates demand for books
– Shipbuilding, weapons
• New Monarchs
– Need uniforms, muskets, uniforms,
food
– Banking
• Even Church begins to allow “reasonable
return”
• Usury allowed
• Centered in Amsterdam
Mercantilism
• Economic theory in which a nation’s
power depended on keeping and
increasing its gold supplies by
maintaining a favorable balance of
trade
• “Doctrine of Bullionism”- gold is wealth
• Government should encourage
manufacturing
• Favorable balance of trade- export
more than you import
• Make country self-sufficient
• Acquire colonies to supply raw
materials to mother-country
• Achieved through National
Regulations!!!
– The Navigation Acts
Raw materials
taken back to
England
Raw materials
manufactured into
finished products.
Finished product
traded for gold.
How
mercantilism
works
Slave labor used
to acquire raw
materials
Slaves are
transported to
colonies
England trades
finished products
for slaves
How did the New Monarchs increase
regulation within mercantilism?
• Navigation Acts
• Statue of Artificers (1563)
– Regulates artisans entering
guilds
• English Poor Law (1601)
– Puts indigents, poor to work
– Government relief program
• Encouraged espionage
– Turkish dyers (1582)
• Protective tariffs
• Subsidizing desirable good
manufacturers
• Encouraged joint-stock companies
– Granted monopolies