1.10 The Commercial Revolution

Commercial revolution

the revolution of money becoming the most desirable commodity in Europe instead of land

money economy

an economy in which goods and services and wages for work were paid with money (instead of a good being sold for another good)

why did a bank open up in Amsterdam

Europe underwent a huge economic shift into a money economy so a new institution to track money was needed —> huge amounts of money was being transferred in and out of the

how did the Bank of Amsterdam keep track of the money flowing in and out?

they used a method called Double Entry Bookkeeping where debits were written in one column and credits were written in the other

effects of the rise of banking centers

it shifted the economic power in Europe to places like Amsterdam, Genoa, and London

how does the Bank of Amsterdam and the increase of the Dutch’s economic power related to their imperialism?

private investors created the Dutch East India company —> an innovation in finance

so when the Dutch East India Company was successful (it was pretty successful) the Bank of Amsterdam handled all the money

in summary: the Bank of Amsterdam stands as a monument to the massive economic shift toward a money economy in 16th century Europe

Dutch East India Company

it’s a Joint-Stock Company which means a private company rather than a state sponsored company in which investors bought shares in the company, therefore sharing the risks and rewards (it turned to be very successful)

the importance of the mountain Cerro Rico in Potosi, Bolivia which used to be part of the Spanish empire

the Spanish found TONS of silver in the mountain which they sent back to Spain to grow the economy a ton

it had 2 effects:

• the price revolution (which was felt all throughout Europe not just Spain, where is started)

• inflation because there was more money circulating in their economy so the money becomes of less value

the price revolution

a phenomenon in which prices steadily rose for about a century and a half (INFLATION because tons of silver —> more money circulating in the economy so more spending and increased prices like when the US prints more money then inflation rises)

Subsistence farming

a system used by peasants under feudalism used which means growing only what they needed to survive

European agriculture before vs after price revolution

before the 16th century:

feudalism was the main system for peasants in agriculture where subsistence farming occurred. Soil exhaustion was common —> they created a system called Crop Rotation/Two-Field System where only half of the land would be used each season and you switch between the two.

AFTER the Cerro Rico’s silver came to Spain increasing wealth in some people’s pockets:

Large landowners and capitalist investors began to see the open-field system as wasteful and desired to increase available land so that crop yield would increase

for example: the enclosure movement was passed in England which allowed investors to purchase public land (which peasants and everyone used if they couldn’t afford their own land) —> disrupted peasants’ lives by making them more poor than they already were while the rich became richer and more powerful

capitalism definition plus how it became the new economic system

an economic system in which the means of production are owned by private individuals as opposed to the state. it happened because there was an increased influence of money so it changed many places from mercantilism to capitalism

4 effects of the commercial revolution

• rise of the new economic elite

• increasing freedom of Serfs (peasants who work the land)

• urban migration

• change in family patterns

rise of the new economic elite

an effect of the Commercial revolution where in France they were called Nobles of the Robe who were those who didn’t have nobility in their blood but could afford to buy their way into nobility

increasing freedom of Serfs (peasants who work the land)

an effect of the Commercial revolution where many of them were cut free of the feudal arrangement —> only in Western Europe, not Eastern Europe because it became more ingrained there

urban migration

an effect of the Commercial revolution where many of them migrated to cities for work because they don’t work for the elites anymore which put strain on the old city buildings (crammed many people into small apartment buildings) which spread deadly diseases like the plague and tuberculosis

change in family patterns

the rate of marriage began to rise as people were getting married younger to repopulate after the 20 million dead from the black death/bubonic plague. and because of the effects of the little ice age (diseases because of the scarcity of food), the agricultural class or people of lower class waited or had a small family. and there was a decline in multi-generational households because when waiting to start their family, they would experience more miscarriages and stillbirths as well as higher infant mortality rates

the Little Ice Age

a period (1300-1850) where average temperatures were colder resulted in the malnutrition and disease because of the scarcity of food which spread diseases