The Commercial Revolution

Europe’s Economy• Nation = basic economic

unit• Nations competed for

markets and trade goods• New business methods

needed:–Investing money–Speeding flow of wealth–Reducing business risk

New Business Methods• Raising capital – Overseas

traders needed $ to finance trips–Family Bankers – Medicis of Florence, Fuggers of Augsburg

–Gov’t Chartered Banks – issued bank notes and checks, exchanged foreign currency

New Business Methods• Joint-stock companies –

individual merchants combined resources, sold stock/shares in an overseas trading venture–Share profit/risks among many–Some joint-stock co.’s had gov’t support/monopoly on trade (EX: Dutch East India Company)

Results of Commercial Revolution• Inflation – gold and silver

flowed into Europe, prices rose very quickly (= inflation). Hardest hit was Spain (never recovered) and China/Japan (exchange of New World silver for goods)

• More capital available – new business created

Results of Commercial Revolution• Goal of business = solely to

make profit, expand business, develop new ventures (capitalism)–Entrepreneur = individual who combined $, ideas, raw materials, & labor to make goods and profits

Results of Commercial Revolution• New centers of trade –

Atlantic Ocean countries (Portugal, Spain, England, the Netherlands) replace Med. Sea cities (Genoa, Venice) as leaders in world trade

Results of Commercial Revolution• Development of

mercantilism – new economic theory–Nation’s power depended on its wealth (amount of bullion, or gold & silver it possessed)

Results of Commercial Revolution• Development of

mercantilism (cont.)–Colonies existed solely for the benefit of the mother country (provide raw materials, markets for finished goods)

Results of Commercial Revolution• Development of

mercantilism (cont.)–Nation to possess a favorable balance of trade – export more goods than it imports, bullion received for exports more than paid out for imports = surplus of bullion

Results of Commercial Revolution• Change in European

society–Merchants pass nobility in both wealth and power

–Middle class expanded – more leisure time, coffeehouses popular as gathering places for businessment

Results of Commercial Revolution• Change in European

society (cont.)–Peasants did not see any real benefits from the Commercial Revolution – life was still rough

The Columbian Exchange

Global Exchange of Goods, People, Ideas, and Diseases

The Columbian Exchange• Europe’s growing population

= demand for more goods and services

• Trade expanded worldwide exchange of people, goods, technologies, ideas, diseases

• Became known as the Columbian Exchange

The Columbian ExchangeEurope

AmericasWheat CornGrapes PotatoesLivestock ChocolateChristianity TomatoesDisease BeansSlaves (from Africa) Tobacco

AsiaSilk/SpicesSugarcane

CoffeeTea

The Columbian Exchange• Effects

–Cultural Diffusion- Local cultures integrated European beliefs (and vice versa)

–Large movement of population (slavery, Eur.migration to New World)

–Decline of Native American pop. due to disease (EX: smallpox)

The Great CircuitA “Triangular Trade Network”

GREAT CIRCUITEUROPE

AFRICAAMERICASMiddle Passage

Mfr. goods

Raw M

ater

ials

Knives, Swords, Guns, Cloth, Rum

Sugar, Molasses, Cotton, Tobacco

Enslaved Peoples

1

2

3

Triangular Trade Networks

Triangular Trade Networks