The Commercial Revolution

1. The Commercial Revolution

2. Europe’s Economy • Nation = basic economic unit • Nations competed for markets and trade goods • New business methods needed: • Investing money • Speeding flow of wealth • Reducing business risk

3. New Business Methods • Raising capital – Overseas traders needed $ to finance trips • Family Bankers – Medicis of Florence, Fuggers of Augsburg • Gov’t Chartered Banks – issued bank notes and checks, exchanged foreign currency

4. New Business Methods • Joint-stock companies – individual merchants combined resources, sold stock/shares in an overseas trading venture • Share profit/risks among many • Some joint-stock co.’s had gov’t support/monopoly on trade (EX: Dutch East India Company)

5. Results of Commercial Revolution • Inflation – gold and silver flowed into Europe, prices rose very quickly (= inflation). Hardest hit was Spain (never recovered) and China/Japan (exchange of New World silver for goods) • More capital available – new business created

6. Results of Commercial Revolution • Goal of business = solely to make profit, expand business, develop new ventures (capitalism) • Entrepreneur = individual who combined $, ideas, raw materials, & labor to make goods and profits

7. Results of Commercial Revolution • New centers of trade – Atlantic Ocean countries (Portugal, Spain, England, the Netherlands) replace Med. Sea cities (Genoa, Venice) as leaders in world trade

8. Results of Commercial Revolution • Development ofmercantilism – new economic theory • Nation’s power depended on its wealth (amount of bullion, or gold & silver it possessed)

9. Results of Commercial Revolution • Development ofmercantilism (cont.) • Colonies existed solely for the benefit of the mother country (provide raw materials, markets for finished goods)

10. Results of Commercial Revolution • Development ofmercantilism (cont.) • Nation to possess a favorable balance of trade – export more goods than it imports, bullion received for exports more than paid out for imports = surplus of bullion

11. Results of Commercial Revolution • Change in European society • Merchants pass nobility in both wealth and power • Middle class expanded – more leisure time, coffeehouses popular as gathering places for businessment

12. Results of Commercial Revolution • Change in European society (cont.) • Peasants did not see any real benefits from the Commercial Revolution – life was still rough

13. The Columbian Exchange Global Exchange of Goods, People, Ideas, and Diseases

14. The Columbian Exchange • Europe’s growing population = demand for more goods and services • Trade expanded worldwide exchange of people, goods, technologies, ideas, diseases • Became known as the Columbian Exchange

15. The Columbian Exchange Europe Americas Wheat Corn Grapes Potatoes Livestock Chocolate Christianity Tomatoes Disease Beans Slaves (from Africa) Tobacco Asia Silk/Spices Sugarcane Coffee Tea

16. The Columbian Exchange • Effects • Cultural Diffusion- Local cultures integrated European beliefs (and vice versa) • Large movement of population (slavery, Eur.migration to New World) • Decline of Native American pop. due to disease (EX: smallpox)

17. The Great Circuit A “Triangular Trade Network”

18. GREAT CIRCUIT Knives, Swords, Guns, Cloth, Rum Sugar, Molasses, Cotton, Tobacco EUROPE 3 Mfr. goods Raw Materials 1 AMERICAS AFRICA 2 Middle Passage Enslaved Peoples

19. Triangular Trade Networks

20. Triangular Trade Networks