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Commercial Revolution
Commercial Revolution
European states, through voyages of discovery, were looking for new trade
routes in the 15th and 16th centuries. It allowed the European powers to build
a vast network of new international trade routes. Nations also sought new
sources of wealth. To deal with this new-found wealth, new economic theories
and practices were created. Also, because of competing national interest,
European powers had the desire to increase their territorial empire through
colonial expansion. Beginning with the Crusades, Europeans acquired spices,
silks, and other commodities rare in Europe. This development created a new
desire for trade, leading to trade expansion on an unprecedented scale in the
second half of the Middle Ages.
COMMERCIAL REVOLUTION
The economy of the Roman Empire had been based on money. However
after the fall of the empire due to Germanic invasions, money became scarce.
Power and wealth became based strictly on land, and local fiefs (or manorial
estates) emerged as self-sufficient units of production. This economic
condition came to be known as “Feudal mode of production”. It was
pronounced throughout Europe. There was simultaneous decline of urban
centers and trade. The little trade that continued in parts of Europe, was
dangerous and not viable. The scarcity of money did not help; however, the
European economic system had begun to change in the 14th century, partially
as a result of the Black Death, and the Crusades.
Banks, stock exchanges, and insurance became ways to manage the risk
involved in the renewed trade. New laws came into being. Travel became
safer as nations developed. Economic theories began to develop in light of all
of the new trading activities. The increase in the availability of money led to
the emergence of a new economic system, and new problems to go with it.
The Commercial Revolution was also marked by the formalisation of pre-
existing, informal methods of dealings in trade and commerce.
COMMERCIAL REVOLUTION
The commercial practices also underwent great changes during this period
and they fundamentally differed from the practices existing in the medieval
ages. The new commercial practices were characterised by three distinct
features- expansion, specialisation and integration.
Expansion meant that the market for the commodities spread over a larger
area. It was not confined to local, provincial or even national level but
extended to a basic form of international trade. Trade grew between different
regions over the years, gaining considerable sophistication. In other words,
the commercial markets expanded greatly.
COMMERCIAL REVOLUTION
In contrast with the practice prevailing in the medieval age when industrial and
commercial functions were combined, these two functions were now
separated, and a special class of merchants, exclusively devoted to business,
made their appearance. A majority of the population withdrew from the
agricultural sector to participate in specialised occupations associated with
trade and manufacturing. The percentage of the total population engaged in
commercial activities steadily increased. Certain new classes of commercial
functionaries like brokers, commission agents, commercial travellers also
made appearance. These classes devoted themselves to some particular
branch of commercial activity.