The Commercial Revolution

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Section 3.12

• The Commercial Revolution

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Questions to consider

• What important economic changes in the early
  modern centuries does the term Commercial
  Revolution signify?
• Describe the growth of European population in the
  sixteenth century and the nature of this growth.
• Explain the origins, nature, and effects of the
  putting out system. Of what importance were the
  needs of the military in the rise of capitalism?
  What change in attitudes could be noted toward
  the lending of money at interest?
• Explain the general nature and purpose of
  mercantilism, citing examples of mercantilist
  policies and regulations. What comparison may be
  made between mercantilism and New Monarchies?

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What were the results of the voyages of discovery?

• Columbian Exchange
• Population Rise (1600)
• England5 mil
• France20 mil
• Russia 10 mil
• Price Revolution
• Rise due to population growth
• More gold/debasing inflation
• New land less fertile
• New Economic Models (mercantilism)
• Commercial Revolution
• Economic changes in Europe marked by capitalism,
  transformation from town to nation-centered
  economy

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Changes in Commerce and Production

• Medieval Economic Model
• Comprised of town and surrounding farmland
  (manors)
• Manors used as colony by towns
• Towns controlled by Guild System
• Craftsmenprovincial production
• Produced only upon order
• Little risk, little profit, little innovation
• Instituted Protectionists policies and large
  barriers of entry into trades
• Capital his workbench, tools, workshop
• Lack of ability to network in long distance
  trade, capital to tie up in stocks of unsold
  wares, knowledge of distant customer needs

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Changes in Commerce and Production con.

• Commercial System
• Merchants
• Act as middlemen between manufacturers and
  consumers
• Usurp guilds
• Bankers
• Jacob Fugger
• Augsburg businessman
• Got rich from fustian (cotton/wool mix)
• Expanded into spice, silk, mining business
• Financed Hapsburgs, Popes, and Portuguese
  trade/merchants

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Putting Out/Domestic SystemCottage Industry

• Checkmates guilds
• Entrepreneurs put out manufacturing work to
  country people
• He owns the capital, means of production
• Out of guilds reach

Wool Industry
Farmer sheers sheep
Wool taken to Spinner
Thread taken to Weaver
Entrepreneur sells Finished product
Dyed cloth Taken to Tailor
Fabric taken to Dyer
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Capital and Labor

• Cottage Industry
• Separates owner from worker
• Allows mass production
• New Industries
• Printing
• Large overhead
• Rising literacy creates demand for books
• Shipbuilding, weapons
• New Monarchs
• Need uniforms, muskets, uniforms, food
• Banking
• Even Church begins to allow reasonable return
• Usury allowed
• Centered in Amsterdam

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Mercantilism

• Economic theory in which a nations power
  depended on keeping and increasing its gold
  supplies by maintaining a favorable balance of
  trade
• Doctrine of Bullionism- gold is wealth
• Government should encourage manufacturing
• Favorable balance of trade- export more than you
  import
• Make country self-sufficient
• Acquire colonies to supply raw materials to
  mother-country
• Achieved through National Regulations!!!
• The Navigation Acts

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How mercantilism works
Raw materials manufactured into finished products.
Finished product traded for gold.
Raw materials taken back to England
England trades finished products for slaves
Slaves are transported to colonies
Slave labor used to acquire raw materials
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How did the New Monarchs increase regulation
within mercantilism?

• Navigation Acts
• Statue of Artificers (1563)
• Regulates artisans entering guilds
• English Poor Law (1601)
• Puts indigents, poor to work
• Government relief program
• Encouraged espionage
• Turkish dyers (1582)
• Protective tariffs
• Subsidizing desirable good manufacturers
• Encouraged joint-stock companies
• Granted monopolies