The Commercial Revolution

The Commercial Revolution

New trade routes

New ways of creating wealth

New desire to increase power

Mercantilism

Direct governmental intervention in economic policy

Purpose is to increase prosperity of state and its power

Colonies exist to benefit the mother country (colonies exist for wealth)

Nation’s power = Nation’s wealth

Self Sufficiency

Economy should operate in a closed system (no imports, just trade with mother country and colonies)

Bullionism

Growth of banking and wealth creation led to a need for bullion

Bullion is precious metals

More bullion = more wealth = more power

Capitalism

Free enterprise

Private ownership means production and distribution

Ideally not interfered with by the government or anyone else

New Banks

Family Banks such as the Medici in Florence and Fuggers of Augsburg

Lent money to kings and bishops (to be used for war)

National Chartered Banks

Charters granted by government

Banks of London, Sweden, Amsterdam (print and circulate money)

Rise of Stock Companies

Stocks are shares (pieces) of companies

Regulated companies

Joint-stock companies

Joint Stock Company

A business entity that is a type of corporation or partnership

Certificates of ownership or stocks are issued by the company for each contribution and shareholders are free to sell their own stocks to others

Two systems of private or public stocks

Insurance Companies

Need to insure against shipping losses

Pool money to share risk

Lloyd’s of London is the first insurance organization for ship owners, losing their ships at sea

Gablining that disaster doesn’t happen

Before the Agricultural Revolution

Village/Manor

3-field system

Use of Common Pasture

Inefficient

Little Experimentation

Population increase

Agricultural Revolution

Enclosure movement

Peasant field turned to private use

“Turnip Townsend”

Jethro Tull and Seed Drill

Maize and Potatoes

Turnip’s Crop Rotation System

Seed Drill

Seeds are evenly spaced in rows

Seeds are buried in soil at optimum depth

More seeds germinate and less are wasted

New Crops

Maize and potatoes are easy to grow in cold climates

Potatoes have pure starch and some vitamins

Potatoes are carbohydrate rich

Don’t spoil for a long time

Domestic System

Merchants buy cotton and wool

Free competition

Cottage industry - spinning/business in the home

Inefficiency and unreliability

Beginning of Capitalist Manufacturing Enterprise

Specialization (different people do different things)

Capitalists entrepreneurs organize production and buy in bulk

Beginning of the end of the guild system

Opening up markets and competition

Pre-European Overseas Exploration

The Chinese and the Arabs made significant contributions to overseas exploration and navigation before the European took the lead in the sixteenth century

Zheng He (Cheng Ho) 1371-1422

Born to Muslim parents from Arabia

Ming Dynasty (1368-1644) conquered his province in 1378 and was made a court eunuch

Emperor Cheng Zu (Ming Dynasty) made Zheng an admiral to establish tributary relations with other states

1405-1433: Zheng sailed 7 times with 40-63 ships with over 27,000 people

His voyage are 87 before Columbus 93 years before deGama, 116 years before Magellan

Shihab al-Din (Ibn Majid) 1432-1500

As Islam spread eastward, so did Muslim maritime interests

Ibn-Majid was known as the expert on navigating the Indian Ocean - might have guided the Portuguese from Malindi to Calicut

First Arab navigator to describe the southeastern coast of Africa

Eastern Contributions to Navigational Technology

Astrolabe - Ancient Greece/Muslim world

Compass - China

Lateen Sail - Muslim world

Sternpost rudder & square hull - China

Triple-mast ships - China

Chinese Involvement in Commercial Revolution

The Chinese traded with foreign countries including direct trade with Europe

By the late sixteenth century, China was intimately a part of the growing global economy

The Chinese were trading actively with the Portuguese, the Dutch, and the Japanese who traded silver for silks and porcelain (with the Silk Road)

Decline in Asian Exploration

China had to concentrate its resources on fighting Mongols to the North and expanding the Great Wall

1435, court scholars convinced the emperor that the decline of the dynasty would be signaled by a taste of imported goods

China greatly contract its commercial and maritime expansion it had begun so auspiciously

Age of Discovery

Exploration spurred by need for silver and gold and search for colonies

Secondary reason- convert natives to Christianity

Prince Henry the Navigator

First Europeans to reach Asia by sea are the Portuguese

Diaz and da Gama

Columbus - 1492

Insisted he had reached India

Went back three (four?) times

Terrible administrator

Explorers

Amerigo Vespucci - cartographer that determines that the new land is not Asia

Balboa - saw the Pacific Ocean

Magellan - first voyage around the world

Ponce de Leon - searched for the fountain of youth in Florida

Cortez - met and conquered the Aztecs

Pizarro - met and conquered the Incas

Treaty of Tordesillas

1494 agreement arranged by the Pope

Portugal gets everything to the east of the Line of Demarcation, Spain gets everything to the west of it

Portuguese Empire

First global empire (went over oceans)

Created trading posts on both west and east coasts of Africa and India

Explored and settled Brazil using donatario system

Practiced mercantilism, but failed from outside competition and was too small

Spanish Empire

Taken by conquistador, stretched over much of the Americas

Governed by viceroys, used encomienda system

Peninsulares (spain-born), creoles (born in spanish america), mestizos (mixed race, between native and european), mulattos (mixed race, between african slaves and europeans)

Used Jesuits to spread catholicism

Officially practiced mercantilism, really practiced bullionism

Dutch Empire

Just achieved independence from Catholic Spain

Powers of the Dutch East Company

Compete and steal territory from the Portuguese and Spanish

Half of all European ships are Dutch

Free trades

French Empire

Trading companies establish colonies in North America, Caribbean, and Asia

Lightly settled, colonies are for profit

Mercantilist - furs, timber, etc., go back to France

British Empire

British, French, Dutch pirates attack Spanish shipping

Spain unsuccessfully tries to conquer Britain with Spanish Armada (1588 - Elizabeth I)

British companies establish colonies on mercantilist principles

Privately established colonies

British colonies in America become heavily populated

Colonial Wars

Spain and Portugal compete

Dutch emerge after decline of Spain and Portugal

Dutch fight English

English and French fight 4 years

French and Indian War (7 Years War) is really the first world war - Britain emerges triumphant

Empire Comparison

Effects of the Commercial Revolution

Inflation

Population Increase

Increase in world trade

Shift in trade from Mediterranean to the Atlantic

Trade Rivalries/War

Economic depression

African slave trade

Continued downfall in power nobility

Columbian exchange