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PRESENTATION OUTLINE
The Commercial Revolution
1488 - late 18th century
Review
Atlantic Exploration
A Portuguese Caravel
Of course, from a global perspective Europeans did not discover the New World but from a European perspective these lands were not known until the late 1400s and early 1500s. The impulse to set sail across the Atlantic came partially from the Fall of Constantinople in 1453 to the Ottoman Turks. The Mediterranean trade that had made the Italian City-States so wealthy came to be completely replaced by these new sea routes. The caravel, improved maps and map projections (Mercator) and navigational instruments like the astrolabe and compass made this exploration technically possible. The competition among the European nations of Spain, Portugal, England, and the Netherlands and the desire to spread Catholicism during the Reformation provided additional motivation.
Of course, from a global perspective Europeans did not discover the New World but from a European perspective these lands were not known until the late 1400s and early 1500s. The impulse to set sail across the Atlantic came partially from the Fall of Constantinople in 1453 to the Ottoman Turks. The Mediterranean trade that had made the Italian City-States so wealthy came to be completely replaced by these new sea routes. The caravel, improved maps and map projections (Mercator) and navigational instruments like the astrolabe and compass made this exploration technically possible. The competition among the European nations of Spain, Portugal, England, and the Netherlands and the desire to spread Catholicism during the Reformation provided additional motivation.
Untitled Slide
The Portuguese were the forerunners of Atlantic Exploration, mapping and establishing colonies on groups of islands like the Azores, Madeiras, Canaries, and trading up and down the African Coast. Their first profits came from the slave trade and they were the first to use African slaves in a plantation style work system that the Spanish and English would later copy in the Caribbean and in North and South America. The Portuguese were also the first to establish sea trading routes with India and the Spice Islands of Indonesia with Vasco da Gama rounding the Cape of Good Hope.
Portuguese Discovery
- First to round the Cape of Good Hope - 1488
- Vasco da Gama landing in Calcutta - 1498
- Colonization of Brazil - 1500
- Macao - 1st permanent European settlement in Asia
- Maluccas - Spice Islands in Indonesia
Untitled Slide
These are Columbus' first four voyages. An Italian, financed by Queen Isabella, Columbus became the first to establish contact and trade with what would become known as the West Indies. He would also garner a brutal reputation for his enslavement and murder of the Taino, and a tribute system that cut the hands off of every indigenous male not able to pay in gold or cotton. Bartolome de Las Casas would criticize Spanish policies toward the native islanders in his book "Destruction of the Indies".
Spanish Exploration
- Columbus's voyages 1492-1503
- Discovery of the West Indies
- Colonized South and Central America
- Balboa - first European to find Pacific Ocean
Untitled Slide
The Spanish and Portuguese occupied the same Iberian peninsula at home in Europe and competed with one another for access to the riches of the New World. Pope Alexander VI and representatives from both countries agreed on the treaties of Tordesillas and Saragossa that provided for the establishment of spheres of exclusive trade and exploration for each country. The Spanish would control the continents of North and South America and the Caribbean and the Portuguese would stay within the Indian Ocean trading with Africa and East Asia.
First Circumnavigation
Magellan-Elcano 1519-1522
English and Dutch Exploration
- Refused to acknowledge the Treaty of Tordesillas
- 1568 - Dutch rebel against Spain and King Philip II
- With British help defeated Spanish Armada in 1588
- John Cabot, Francis Drake, Henry Hudson
- All tried to found Northwest Passage
As the 16th Century came to a close the Dutch rebelled against the Spanish and King Philip II for his policies of taxation and the increasingly repressive methods used against growing number of Protestants. The English under Elizabeth I, also moving away from the Catholic Church and competing against Spain for access to Atlantic Trade, saw an opportunity and together they defeated the Spanish Armada in 1588. The Netherlands, with this victory became the financial center of Europe and Atlantic Trade and the English soon after established permanent colonies in North America. The English and French, in particular, searched in vain for a Northwest Passage to the Pacific Ocean and mapped much of the coast and inland rivers and bays of Eastern Canada.
The Columbian Exchange
Unification of E. and W. Hemisphere
The Columbian Exchange is the exchange of plants, animals, people, and diseases between the Eastern and Western Hemisphere.
Effects of Colonization
Rise in Prices and Population
The next three slides explain the general trends that will produce a commercial revolution in which the nobility will lose political influence and economic position relative to a new class of merchants and capitalists. The old guilds and craftsmen will lose out as well as town laws and tariffs protecting them will give way to national ones enforced by an increasingly centralized monarch. Prices are going up due to inflation from New World silver and, with populations in rural areas growing and becoming more dense, rising costs of producing food on less fertile land. Population and trade has fully recovered from the destruction of the plague and the most important industries of the day (shipbuilding, mining, printing) had high barriers of entry. The merchant or the capitalist has both the knowledge and money to coordinate the supply of goods over larger trade networks and to invest in creating businesses with economies of scale.
Silver from the New World
- Led to gradual inflation
- Each monetary unit is worth less
- Monarchs must keep finding ways to increase money
- Not just money but supply of BULLION
Rise in Population
- Rural Areas became more densely populated
- Small towns stayed about the same
- Larger cities saw an increase
Agricultural Prices
- More difficult land being farmed
- Leads to an increase in price of crops
Rise of Merchant Families
The Medici and The Fuggers
The Merchant Replaces the Craftsman
- Expanded trade required knowledge and capital
- The Craftsman only produced on order and locally
- Inherently large businesses:
- Shipbuilding, Mining, Printing
Government Policies
- Monarchs supported the new Merchant Capitalists
- Supported the "Putting Out System"
- Maintained national rather than local tariffs
- Established colonial empires for raw goods
- Established the new theory of Mercantilism
The New Monarchs, so named because of their increasing power over the state, would support the new merchant capitalists with policies that would later be called Mercantilism. At home this meant allowing the practice of putting out work to the countryside to circumvent existing guild laws in the town, dismantling local tariffs in favor of national ones, and putting all hands to work in the new textile industries to maximize domestic production with full employment. These New Monarchs would also establish overseas colonies and grant and enforce trade monopolies in order to import the necessary raw materials. See the Navigation Acts or any number of nationalized trading companies from your outline.
New Monarchs:
Henry VII: England
Queen Isabella and King Ferdinand: Spain
Charles VII and Louis XI: France
New Monarchs:
Henry VII: England
Queen Isabella and King Ferdinand: Spain
Charles VII and Louis XI: France
Effects
- Guilds became wage workers for hire
- The Factory System
- Population growth - increase in labor force
- The Great Dying in the Americas
- Legal and institutional foundations for Capitalism
Banks
Amsterdam Exchange Bank
Banks like the one pictured here in Amsterdam would benefit from the conflict between Catholics and Protestants. The Catholic Church under usury laws, had made it difficult to charge interest on loans and investments but many of the new Protestant denominations would differentiate between a reasonable rate of return and usury.
Stock Exchanges
Amsterdam Stock Exchange
Stock Exchanges were and still are an important way for companies to raise capital and spread risk. By selling of portions of ownership (stocks) in a company it could use the money to expand and scale up.
Insurance Companies
Lloyd's of London 1688
Insurance companies allow subscribers to pool their money together in order to spread risk out. The larger the pool, the more effective this enterprise becomes and the cheaper premiums become. Overseas trade was particularly risky with privateers and natural disasters and with so much capital at stake in the new industries Insurance Companies became an attractive way to manage risk. Lloyd's of London was started in a coffee house in 1688.
These new institutions, banks, stock exchanges, and insurance companies couple with new laws would lay the groundwork for capitalism to emerge in the industrial revolution. The growth in population and labor force and concentration of capital in Europe would make the industrial revolution possible.
These new institutions, banks, stock exchanges, and insurance companies couple with new laws would lay the groundwork for capitalism to emerge in the industrial revolution. The growth in population and labor force and concentration of capital in Europe would make the industrial revolution possible.
