Commercial Revolution
The
Renaissance and the Reformation were accompanied by fundamental economic
changes. The series of economic changes, making the transition from the
semistatic, localised, non-profit economy of the late Middle Ages to the
dynamic, world- wide, capitalistic regime of the fourteenth and succeeding
centuries is known as the Commercial Revolution. This Revolution was gradual.
The
causes of the beginning of the Revolution were (a) the capture of Mediterranean
trade by the Italian cities; (b) the development of a flourishing trade between
Italian cities and the merchants of Hanseatic League (a merchant guild) in
northern Europe; (c) introduction of coins such as the duca of Venice and the florin
of Florence; the accumulation of surplus earned out of trading, shipping and
mining enterprises; the demand for war materials and the encouragement given by
the new monarchs to the development of commerce in order to create more taxable
wealth. The combination of these factors along with the stimulus given by the
voyages resulting in Spanish and Portuguese merchants to discover a new route
to the Orient, independent of Italian control, paved the way for Commercial
Revolution.
An
important element of the Commercial Revolution was the growth of banking.
Because of the strong religious disapproval of usury, banking was not a
respectable business in the Middle Ages. But by the fourteenth century lending
money for profit became an established business practice. The real founders of banking
institutions were the great commercial houses of Italian cities. By the
fifteenth century, the banking business had spread to southern Germany and
France. The rise of private financial houses was followed by the establishment
of government banks. The first was the Bank of Sweden (1657). The Bank of
England was founded in 1694.
New
industries like mining and smelting had sprung up and these enterprises were
stimulated by technical advances. There was also change in business
organisation. Regulated companies came to be formed. The regulated company was
an association of merchants for a common venture. A leading example of this
type was an English company known as the Merchant
Adventurers established for the
purpose of trade with the Netherlands
and Germany.
The
system of manufacture developed by the craft guilds in the later Middle Ages
became defunct. In the seventeenth century the regulated company was superseded
by a new type of organisation called the joint-stock company. Joint stock
company with limited liability was a Dutch innovation that made large scale
investment possible by spreading out the risks (and profits) across large
numbers of people.
In later
stages, the Commercial Revolution was accompanied by the adoption of a new set
of doctrines and practices known as mercantilism. Mercantilism is a system of
government intervention to promote national prosperity and increase the power
of the state. The purpose of intervention was not merely to expand the volume
of manufacturing and trade, but also to bring more money into the treasury of
the state.
Other
significant results of the Commercial Revolution were the rise of the middle
class to economic power. The middle class ranks included merchants, bankers,
ship owners, principal investors and industrial entrepreneurs. Their rise to
power was the result of increasing wealth and their support to the king against
the feudal aristocracy.
The most
negative result of the Commercial Revolution was the revival of slavery.
Slavery had virtually disappeared from European society by the end of the first
millennium. But the development of mining and plantation farming in the
Spanish, Portuguese and English colonies led to the recruitment of slaves as
unskilled labourers. The attempt to enslave native Americans ended in failure,
as they proved too tough to manage. The problem was solved by importing
Africans. This transatalantic slave trade that exported more than 11 million
Africans to the Americas is a sordid story that is a shame on the making of the
modern world.
Finally,
the Commercial Revolution prepared the way for the Industrial Revolution. By
creating a class of capitalists and pursuing the mercantilist policy, stimulus
was provided to the growth of manufactures. The outstanding example of factory
production was the manufacture of cotton textiles.
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