Regents Prep: Global History: Change & Turning Points: Commercial Revolution
Toward the end of the European Middle Ages, the Catholic Church launched a series of Holy Wars against the Muslims in the Middle East. These wars were known as theCrusades, and while their original goals were not achieved, they nevertheless, had long reaching effects. As a result of the Crusades, trade increased, which also increased cultural diffusion between the Islamic world and Europe. As this trade flourished and grew, new practices in business were developed, and a fundamental change in European society took place. This time period is know as the Commercial Revolution.
Resurgence of Trade
In the late 1300s, Italian City States became the center of the resurgence of trade. Venice was the richest and most powerful of these states. From Italy, goods were shipped to large trade fairs, which were located on major trade route crossroads. The larger of these trade fairs evolved into towns, with a change in the way of life for their inhabitants.
The Black Plague
A result of the increased interaction between Europe and the Middle East was the spread of the Bubonic Plague, also known as, the Black Death. Starting in the 1100s, the plague was spread along trade routes and had an enormous impact on Europe, including the loss of 1/3 of the population, a decline in their economy, and a weakening of feudalism. In China, 35 million people died as a result of the plague, and in Cairo, Egypt, 7,000 people a day died at the disease’s height.
Despite some setbacks due to the plague, the resurgence of trade continued across Europe, with many new innovations in business.
Guilds: were trade associations of craft workers and merchants. All of one craft would form together to set standards on prices and quality. Guilds dominated economic life during this period and were the main mode of production.
Capitalism: emerged with the decline of feudalism. Capitalism is based on trade and capital, which is money for investment. Higher demand for a product means higher prices and higher profits. Capitalism becomes the new economic system and resulted in the development of new business practices to handle the increase in trade.
|New Business Practices|
Joint Stock Company
|Used to raise capital for larger projects. Less financial risk to the individual|
|Banks||Provided money lending services as well as issuing Bills of Exchange.|
|Bills of Exchange||Worked like modern checking account. Merchant would deposit gold and receive a Bill of Exchange. Could then turn that in for gold at other banks. Easier and Safer than carrying gold along trade routes|
|Insurance||Paid a small fee to insure goods during travel. If goods were damaged or lost, insurance company pays replacement costs. If arrive safely, insurance company keeps the fee.|
The Commercial Revolution and the resurgence of trade across Europe completely reshaped society. These changes resulted in the decline of feudalism, and a revival of arts, literature, and science known as the Renaissance.