Trade patterns, banking and insurance

what is the criteria for a successful economy? list as many as possible.

• good international connections

• good harvests (supply) + ability to recover after a bad harvest

• low inflation - prices matching wages

• strong currency/profit levels/distribution of wealth

• low unemployment

in the first half of the 17th century, what % of exports were contributing to the cloth trade?

92%

by 1700, what % of exports were in the cloth trade?

72%

what was the domestic system?

encouraged entire families (including children) to partake in the family business, leading to larger production rates

why was the domestic system so appealing and such a long-lasting system?

• tax-free

• free from guild regulation

• easily accessible

how much did the value of cloth trades rise in london alone from 1650-1660?

1650 → £600,000

1660 → £1.5 million

what does the historian colman estimate the cloth exports increased by between 1485-1714?

15-fold

what were new draperies?

new, lighter mixtures of wool brought over by immigrants

how did new draperies increase mercantilism?

provided competition to materials such as linen and silk which threatened the British trade

how did immigration impact the cloth industry?

• dutch immigrants introduced new innovative technologies

• re-training of british workers by immigrants = more skill, better product

what new technology was invented that improved the cloth trade?

frame-knitting machines and worsted draperies → created cloth through weaving instead of traditional methods

how did new technologies impact the economy and society?

+ive: increased productivity; reduces need for sampling as quality is guild-checked where the yarn comes from = more profit

-ive: some people rioted about losing their jobs to machines - could be contributing to unemployment

what is credit?

the total amount of money a person can borrow

what were bills of exchange?

a form of credit → purchaser would pay for goods they had received at a specific time

list some jobs that became available as a result of the creation of banking and insurance.

• money scriveners

• goldsmith bankers

• investment bankers

what did money scriveners do?

arranged the lending/investment of money on behalf of clients for a fee

similar to a financial advisor

when did goldsmith bankers become a profession?

developed in the second half of the 17th century

what would goldsmith bankers do?

• forge goods out of silver/gold for sale

• store/loan money for merchants and businessmen

how were banks and bankers negatively affected by the royal family across the years (1625-88)?

• charles I seized all of the money from the banks in 1640s for the english civil war

• charles I illegally collected taxes which was troublesome for the banks

• bankers lost around £1 million due to charles II and stop the exchequer

when was marine insurance introduced?

1601

what did marine insurance do and why was it introduced?

• protects investors of trading ships = financial coverage provided against risks to shipping (including loss/theft of a ship or damage to cargo)

• created to encourage international voyages + regulate the market

what was the impact of marine insurance on the economy?

increases investment in trade ships = increases mercantilism

good for the economy

when was fire insurance introduced?

introduced in 1667 after the great fire of london (in 1666)

what did fire insurance do?

helped with the rebuilding of the city + settling insurance claims for the damage the fire did

what is the impact of fire insurance on the economy?

encourages people to become homeowners and business owners = increased profits + employment