AP Euro - 1.10 - The Commercial Revolution

Commercial Revolution

The revolution of money becoming the most desirable item in Europe instead of land

Bank of Amsterdam

• Opened by the Dutch in 1609

• Before the 16th century, there were no other major banks

• This bank reflected a massively growing and changing economy

• A lot of money was flowing in and out of this bank

What circumstances in the Netherlands and Europe called for the opening of a new bank?

• Europe was becoming a money economy, which allowed for an exchange for money for any desire

• Banks were needed to keep track of everyone’s money due to the rapid change in the European economy

money economy

goods, services, and wages for work were paid with money

Double-entry bookkeeping

How banks kept track of money

• All debits went into one column

• All credits went into another column

The need for this system meant that a lot of money was flowing through banks

Dutch East India Company

• Created by private investors to oversee their trade ventures in the Atlantic Ocean

• It was a joint-stock company

The Dutch dominated trade in the Indian Ocean, and the profit was handled by the Bank of Amsterdam

joint-stock company

A private company (not state sponsored) in which investors bought shares in the company, therefore sharing the risks and rewards

Mountain of Cerro Rico

Located in the city of Potosi, which is located in present-day southern Bolivia and in the 16th century, part of the Spanish empire

• This mountain had plenty of silver inside, leading to the Price Revolution

Price Revolution

Prices steadily rose for about a century and a half due to large amounts of gold and silver (inflation)

• Started in Spain, but the rest of Europe felt it as well

Manor

The agricultural land that nobles controlled and where the peasants’ lives were oriented around

Subsistence Farming

Growing only what was needed to survive

• Peasants did this during feudalism

Crop Rotation

• Two field system: half of the land would be planted each season, then alternate (Mediterranean Europe)

• Three field system: 2/3 of the land would be planted each season, then alternate (Northern Europe)

The land that was not planted on was allowed to recover its nutrients for the next season; this was a solution for soil exhaustion

How did the wealth of silver impact agriculture?

• The open-field system was seen as wasteful by large landowners and capitalist investors

• They wanted increase available land to increase crop yields

Enclosure Movement

In England, investors were allowed to purchase public land where everyone could graze their animals

Effects of the Commercial Revolution

• Rise of new economic elites (Nobles of the Robe in France who bought their way into nobility)

• Increasing freedom of serfs (mainly in Western Europe)

  • It was the opposite in Eastern Europe

• Urban migration

Urban migration

Peasants were freed from their land and moved into cities looking for work, causing strain on cities’ resources

• Old buildings were subdivided into small apartments to cram many people, causing diseases such as the plague and tuberculosis to spread rapidly

• Urban poverty became a problem due to an insufficient amount of jobs for the people