COMMERCIAL REVOLUTION (16th century: approx )

The “Change” A switch from land-based manorialism as the main economic system to one based on capital (i.e. money)

Significance: brought about age of discovery and exploration Significance: brought about age of discovery and exploration

Causes population growth: 60 million in 1400; 75 million in 1500; 100 million in 1600population growth: 60 million in 1400; 75 million in 1500; 100 million in 1600 Desire for spices and luxury goods without having to use expensive Italian merchants or Muslims (Turks blocked land routes)Desire for spices and luxury goods without having to use expensive Italian merchants or Muslims (Turks blocked land routes) rise of capitalism (laissez-faire):entrepreneurs; bourgeoisie at the forefrontrise of capitalism (laissez-faire):entrepreneurs; bourgeoisie at the forefront

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

Causes (cont) Developed better navigational techniques, maps (printing press), astrolabeDeveloped better navigational techniques, maps (printing press), astrolabe Monarchs needed wealth to consolidate their power to become ABSOLUTE MONARCHSMonarchs needed wealth to consolidate their power to become ABSOLUTE MONARCHS Desire to spread Catholic faith. (especially with rise of Protestant movements)Desire to spread Catholic faith. (especially with rise of Protestant movements)

Results Rise of banks – Medici in Florence. Would lend out money to individuals, countries, and even Popes. Charge interest and could invest.Rise of banks – Medici in Florence. Would lend out money to individuals, countries, and even Popes. Charge interest and could invest. Joint-Stock Companies (like Dutch East India Company) – merchants combine funds to raise large amount of capital – each partner received a share in proportion to contribution. This enabled expensive adventures with minimal risk. Joint-Stock Companies (like Dutch East India Company) – merchants combine funds to raise large amount of capital – each partner received a share in proportion to contribution. This enabled expensive adventures with minimal risk. C. Rise of the Middle Class (burgesses, bourgeoisie) – nobles looked down on them because not of high birth, church looked down on them for capitalist ideas, monarchy liked because could tax.C. Rise of the Middle Class (burgesses, bourgeoisie) – nobles looked down on them because not of high birth, church looked down on them for capitalist ideas, monarchy liked because could tax.

Results (cont) Mercantilism – economic system in which the nation-state carefully controls most economic activities, especially colonies, in order to strengthen a nation’s economic wealth and power (measured by gold and silver).Mercantilism – economic system in which the nation-state carefully controls most economic activities, especially colonies, in order to strengthen a nation’s economic wealth and power (measured by gold and silver). Goal – Favorable Balance of Trade

Results (cont) Exploration & Colonies existed to enrich home country. They would send raw materials to mother country where a finish product was made. The colony would then be forced to buy the finished product at a profit.Exploration & Colonies existed to enrich home country. They would send raw materials to mother country where a finish product was made. The colony would then be forced to buy the finished product at a profit.

Results (cont) Imports of silver from the New World and population growth led to inflation – effected the poor and peasants the most.Imports of silver from the New World and population growth led to inflation – effected the poor and peasants the most. Landowners, merchants, artisans grow rich – reinvest money in exploration ventures.Landowners, merchants, artisans grow rich – reinvest money in exploration ventures. Population growth and enclosure pushed people of the land into citiesPopulation growth and enclosure pushed people of the land into cities Tariffs – heavy taxes placed on foreign goods to protect home industries.Tariffs – heavy taxes placed on foreign goods to protect home industries.

Results – Longer Term Decline in guilds – replaced by domestic system where raw goods were sent to individuals to produce final product at home.Decline in guilds – replaced by domestic system where raw goods were sent to individuals to produce final product at home. Spurred Industrial Revolution by providing increased resources and encouraging consumer demand for finished productsSpurred Industrial Revolution by providing increased resources and encouraging consumer demand for finished products

Results – Longer Term Colonization will lead toColonization will lead to –Forced labor system of natives, then Africans as slaves –Abuse of native peoples and destruction of culture and Meso/South-American populations (diseases)

Results – Longer Term –Cultural Diffusion of western beliefs to New World –Demographic shifts with migrations of peoples (Europeans for opportunities, Africans as labor) –Competition between European nations states leading to eventual world wars.