The Commercial
Revolution
th
17
CENTURY
EUROPE
Although most of Europe remained agricultural
during this period, the fastest growing part of the
European economy was the trade of goods. This
was due to European exploration.
Why Early Leaders Declined
• Spain and Portugal
– very wealthy in 16th century
• from New World gold
– Spent money on wars and luxuries
– Did not have to make things
• could buy them
– Did not have to improve agriculture
• could buy food
– Eventually money ran out
Why Early Leaders Declined
• Italy was a renaissance center
of trade and manufacture
– But no colonies in New
World
– Old power structures
prevented change
Venice, Italy
Dutch East Indies Company
1602-1798
• Netherlands
– Half the population lived in
cities: industrial
– Prosperous shipping, trading:
Middlemen
– Money lending allowed
– Protestant
• Spain wages war on
Protestantism in Netherlands
• Dutch send own ships to
Indian Ocean:
– Dutch East Indies Company
Dutch East Indies Company
1602-1798
• Soon dominant in
Spice Trade
• Virtual Monopoly on
spice Islands of
Indonesia
British Rise
• British pirates
– better ships, guns
• American Colonies
– settled by dissidents to start a new life
• Britain ahead of Europe in
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Queen Elizabeth, 1600
http://keidahl.terranhost.com/Spring/EUH3501England/ImagesElizabethI.htm
Textiles
Iron
Coal
Agriculture
Roads
Freedoms
GLOBAL TRADE
The Commercial Revolution in Europe marked
an important step from Europe being a local
economy TO the formation of a truly global
economy.
TRADE
• People began to produce
more goods for sale rather
than for their own use.
• Europe imported goods
from the Americas, Ming
China, and India.
• Europe exported goods
such as woolen cloth,
lumber, and finished
goods.
MERCANTILISM
European kings hoped to increase their
power through the system of mercantilism.
Mercantilism - an economic system used to
unify and increase the power and monetary
wealth of a country by strict government
regulation of trade and foreign trading
monopolies.
MERCANTILISM
• Mercantilists
removed trade
barriers with other
countries.
• Wealth and power
were based on
amassing gold and
silver to pay soldiers
to defend the state.
• For this reason,
European countries
began to establish
overseas colonies.
Bullionism (gold)
Bullionism was the belief that the economic health of a
nation could be measured by the amount of precious metal,
gold, or silver, which it possessed.
The rise of a money economy, the stimulation produced by the
influx of bullion from America, the fact that taxes were collected
in money, all seemed to support the view that hard money was the
source of prosperity, prestige, and strength.
Bullionism dictated a favorable balance of trade.
That is, for a nation to have gold on hand at he end oft he year, it
must export more than it imports. Exports were later defined to
include money spent on freight, or insurance, or travel.
Each nation tried to achieve economic self-sufficiency.
Those who founded new industries should be rewarded by
the state.
MERCANTILISM
• What is the easiest
way to ensure you
have the resources
you need?
– Take over that land,
and take the
resources (colonies)
– This led to a series
of wars between
the major European
powers. They each
wanted control for
resources.
TRANS-OCEANIC TRADE
• The creation of European colonial empires
resulted in increased trans-oceanic trade
(trade across oceans).
• As a result, new institutions were created to
aid people in trade. These included
– Banks
– Stock Exchanges
– Insurance Companies
England vs. Spain
England was late in joining the competition for Asian
trade, but England also reached out.
In the New World England and Spain were bound to
come in conflict. England had participated little in the
process of exploration yet insisted that its occupation
provided a legitimate claim to title.
Of course, Spain claimed that discovery provided the
claim to title. The Spanish not only desired to
monopolize the trade of their colonies, but the also
wished to prevent the English from establishing a
foothold which would constitute a base for penetration
of Spanish territory.
Generally speaking, the English disliked the Spanish.
New Colonial Rivals (slave trade)
Trans-Atlantic Slave Trade
“Coffin” Position Below Deck
Slave Ship
Favorable Balance of Trade
Regulated commerce could produce a
favorable balance of trade.
In general, tariffs should be high on
imported manufactured goods and low
on imported raw material.
CAPITALISM
• The rise of capitalism occurred as
the private ownership of goods
and opportunities for investment
led to a merchant class.
• Business owners risked their
capital (money) in a business in
order to make profits.
• The growth of new businesses led
to a demand for huge sums of
money.
• Over time, a middle class grew and
money became a sign of wealth in
the growing social classes.
Merchant Class
JOINT-STOCK COMPANIES
• To raise the large sums,
joint-stock companies were
formed. They were
privately owned companies
that sold stock to investors.
Investors buying stock
– Investors bought the stock
for a share of the profit.
– It reduced individual risk in
new expeditions.
– When investors purchased
stock, the companies
accumulated money to buy
large amounts of raw
materials.
BANKING
• Banks developed new
ways of raising and
lending money.
• Bankers and merchants
became more
influential in
government.
• Banking became a
respectable profession
as the Church eased
restrictions on money
lending and the
charging of interest.
THE COMMERICAL REVOLUTION
A SUMMARY
• The Commercial Revolution occurred as
Europeans entered a new age of global trade.
• As a result of the Commercial Revolution,
Europeans had many more products from which
to choose.
– tea, sugar, coffee, cotton cloth
– more books and new forms of learning and
entertainment
– more choices in occupation as well as consumption
– these advances led to a rising standard of living