Economic Changesin European History (14th - Early 20th Centuries)By Ned Satchfield

Part 1: Commercial Revolution & OldEarly 14th Century-Mid 18th Century

What Was The Commercial Revolution?

● A period of economic expansion in Europe● Increase in overseas trade and colonization● Acceptance of the concept of Mercantilism● Creation of a money-based, rather than a bartering, system● Start of a capitalist society

Before the Commercial Revolution

● Countries were more isolated economically○ Very little overseas and international trade

● The Economy was based on bartering system○ Trading goods for goods, rather than currency

● The economy was very small in comparison

Capitalism

● Business owners controlled prices and owned private companies● Based on trade and capital

○ Capital- Money used for investment○ Supply and Demand

● New Business Practices

New Business Practices

● Banks: Money lending services● Joint Stock Companies: Individuals own portions of a business or company● Insurance Companies

Development of Mercantilism

● Mercantilism is the national goal of exporting more than it imports○ Favorable balance of trade to make profit

● Governments used tariffs, taxes, and other methods○ Incentivized buying native goods rather than foreign imports○ Nationalized certain necessities, such as gunpowder and salt

● Attempts to create national self-sufficiency

Exploration and Early Colonialism

● Creation of trade stations in foreign lands○ Such as China and other Asian Countries○ Allowed for transfer of previously rare goods like tea and silk

● In the “New World”, actual colonies were established○ Politically and economically dominated areas○ Creation of sugarcane plantations○ Native peoples often exploited and/or enslaved○ Growing popularity of Africans being imported as slaves

Triangular Trade

● 3 stop exchanging of “goods” between Europe, Africa, and the New World.○ Raw materials traveled from New World colonies to Europe for manufacturing

○ Manufactured Goods transported from European Colonial powers back to colonies and to Africa.

○ Slaves from Africa were shipped to the New World for intensive labor

● Colonial powers made massive profits

Chartered Companies

● State-supported organizations centered on foreign trade○ Colonization, exploration○ Typically had control over a region’s trade

● Ex. East India Company○ British company with huge influence in India, making huge profits

Old Imperialism: Impact on Europe’s Economies

● Initially very prosperous for European colonial powers● New World gold imported to Europe in mass quantities

○ Extreme surplus of gold led to massive inflation

● Completely devastated Spanish Economy○ Marked the beginning of the end for Spanish Dominance○ England became the most wealthy

Part II: Agricultural & Industrial Revolutions (Early 18th-Mid 19th Centuries)

Laissez Faire Economics

● Free-Market economic system created by Adam Smith○ Government has no role in Economy○ Regulated by economic principles i.e. Supply and Demand

● Capitalism● Brought about by Enlightenment● Popular model in constitutional governments, like Britain & US

Cottage Industry

● Capitalists paid farmers to produce textiles and other materials at home○ Gave them raw materials at the beginning of the week, gave them a quota○ Returned at end of the week to collect finished products and pay workers

● People typically farmed every day until saturday, when they’d pull an all-nighter

○ Rushed to finish so they stayed up all night working

Enclosure Movement in Britain

● Parliament legally privatised and sold lands in country previously considered to be common

○ Wooden fences partitioned areas off○ Since most people relied on common lands for livestock grazing, it severely crippled them

● Forced people to migrate and move○ Created vagrants and caused people to move to cities

Agricultural Revolution

● Due to Enclosure movement, people needed to produce more food from their small plots of land

● Development of new farming techniques and tools○ Crop Rotation: instead of letting land lay fallow every other year, they planted different crops

annually ○ Development of iron plows and other tools

● Huge increase in harvests, massive increase in produce

Early Industrial Revolution

● Developmed first machines: Water Frame, Spinning Jenny● Transition into factory system from cottage industries● Primarily centered on textiles, clothes became affordable● Rapid growth of towns into cities, urbanization● Originated in England in late 18th Century, but moved to continental Europe

later○ Gave Britain a huge boost economically, creating a huge gap from other European nations

Factory System

● Instead of employing people in their own homes, capitalists put all of their workers in one building

○ Gave business owners more control of workers○ More efficient than cottage industry

● Workers travelled to the factory every day● Factories were typically located in larger towns and cities

○ Led to rapid urbanization, as people migrated to cities so they could work in factories

Coal and Iron

● Commercialization of steam engine○ Extremely popular and useful○ Factories could run on fuel instead of rivers○ Coal became an extremely important industry

● Steam engine allowed for more energy-intensive industries:○ Iron Mills sprung up○ Cheap, Strong, Steel became the base of industry and industrial machines○ Products could be mass produced and shipped

Railroads

● Creation of steam engine also allowed for the development of the first locomotive

○ Establishment of huge railroad networks stretching across Europe

● Further expanded markets○ For Example: Goods from Britain could now be easily transported to and sold in Germany

● Travelling became easy and possible for most people○ Tourism became a very prevalent industry

Urbanization

● Rapid city growth around factories● Initially very crowded and unsanitary● Led to the rize of city planning and public health concerns

○ People were hired to organize, plan, and reconstruct cities

Emergence of Communism

● Karl Marx & Friedrich Engels: Communist Manifesto in 1845○ Proletariat should capture the “means of production”, Communist society

● Goal was to create a society where everyone was equal○ Everybody owns everything collectively through the government○ No private property○ Complete governmental control of economy

● Reaction to shoddy treatment of the poor by capitalists

Capitalism vs. Communism

Capitalism

● Gov’t has no role in economy● Regulated by supply and demand● Survival of the Fittest● Private industry● Business owners & Consumers hold the

power

Communism

● Heavily controlled by gov’t● Gov’t is the main regulator● Collective Industry● Fixed prices and wages

Modern Period(1850-1950)

2nd Industrial Revolution

● Steel overtook iron as construction material○ Cheaper and stronger than iron

● Oil overtook coal as fuel○ Used in factories for machinery○ Became an extremely profitable industry

● Germany became a huge economic force to be reckoned with as well

New Imperialism

● Complete subjugation of foreign areas by European powers○ Political, Social, Economic control of region

● Carelessly stripped African and Asian regions of resources○ Later resulted in terribly poor countries with practically nothing going for them

● Took advantage of the natives○ Forced labor, Cruel punishments

● Made huge profits for Europe, but destroyed most of Africa

WW1’s Impact

● The war required inordinate amounts of resources.● Participating countries and their colonies went into total war

○ Total War’s First real appearance

● Screwed over Germany Financially○ Huge Reparations and Unemployment○ Work force decimated

Total War

● Entire country is working towards the war effort○ Economy included

● Gov’ts took control over economy temporarily○ Taxes went towards war, & supplies were heavily rationed○ Factories forced to create Military supplies○ Women, Children, and the Elderly took the men’s place in factories

Communism In Russia

● October Revolution of 1917 put in place a communist regime○ Under Lenin, and later Stalin

● Lenin moved slowly towards communism○ Took lands from the wealthy and rewarded the peasants○ New Economic Plan: Allowed for some private businesses to sell on the market

● Nationalization of Industry○ State took control of private companies

Great Depression

● Stock Market Crash 1929 led to economic devastation around the world○ Rapid inflation○ Mass Unemployment○ Devaluing of Currency○ Poverty became rampant

● Affected Different Countries differently○ Some recovered relatively quickly, like the US○ Germany was hit the hardest, and was in a complete nightmare

WW2

● Total War reappeared● France, Britain, & Germany devastated economically

○ Lands, Factories, and workforce were devastated

● US and Russia were now the only Superpowers

Stalinist Reforms in USSR

● 5 Year Plans○ Focus on heavy industry

○ Collectivization: Gov’t took control of farmlands, and large groups were forced to work on them

● Led to famines and poor living conditions but caused extreme boost in production

● Heavy Focus on Military supplies and weaponry● Communism took hold in most of E. Europe