Section 3.12
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Transcript of Section 3.12
Section 3.12
The Commercial Revolution
Questions to consider:
• What important economic changes in the early modern centuries does the term “Commercial Revolution” encompass?
• How extensive was the growth of the European population in the sixteenth century?
• What was the nature of this growth?
Questions to consider:
• What are 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?
• What was the general nature and purpose of mercantilism? What are some examples of mercantilist policies and regulations? What comparison may be made between mercantilism and New Monarchies?
What were the results of the voyages of discovery?
• Columbian Exchange• Population Rise (1600)
– England=5 mil– France=20 mil– Russia= 10 mil
• Price Revolution– Rise due to population
growth– More gold/debasing =
inflation– New land less fertile
What were the results of the voyages of discovery?
• New Economic Models (mercantilism)
• Commercial Revolution– Economic changes in Europe
marked by capitalism, transformation from town to nation-centered economy
– Particularly hard on the agricultural class, who were forced more and more to rely on one staple crop, such as the potato in Ireland
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
• Craftsmen=provincial 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
Changes in Commerce and Production
• Medieval Economic Model– Craftsmen, consequently,
lacked ability to network in long distance trade, lacked capital to tie up in stocks of unsold wares, and lacked knowledge of distant customer needs
– A new type of economic ‘actor’ arrived on the scene:
• The Merchant
Changes in Commerce and Production• 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
Putting Out/Domestic SystemCottage Industry
Checkmates guildsEntrepreneur “puts out” manufacturing work to country peopleHe owns the capital, means of productionThey’re out of guild’s reach
Putting Out/Domestic SystemCottage Industry
• Checkmates guilds• Entrepreneurs “put out” manufacturing work to
country people• He owns the capital, means of production• Out of guild’s reach
Wool Industry
Farmer shearssheep
Wool taken to
Spinner
Thread taken to
Weaver
Fabric taken to Dyer
Dyed clothTaken to Tailor
Entrepreneur sellsFinished product
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 was crucial for the advent of mercantilism, and the later phase of capitalism•Even Church began to allow “reasonable return”•What was previously deemed usury was now allowed•Banking initially centered in Amsterdam
Banking
Mercantilism• Economic theory in which a nation’s
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
How Mercantilism
Works
Raw materials manufactured into finished products.
England trades finished products
for slaves
Slaves are transported to
colonies
Slave labor is used to acquire raw materials
Raw materials taken back to
England
Finished product is traded for gold.
How did the New Monarchs increase regulations 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• Subsidized desirable goods
manufacturers• Encouraged joint-stock companies
– Granted monopolies