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    The Commercial Revolution in Europe lasted from the late 13th century to the early 18th century and was marked by an increase in general commerce and financial services like banking. European states sought new trade routes through voyages of discovery which expanded their territorial empires and introduced new commodities to Europe. Factors that contributed to the Commercial Revolution included the establishment of sea routes to Asia and America, the rise of banking institutions, governments encouraging trading companies, and changes in commercial practices toward expansion, specialization, and integration.

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    The Commercial Revolution in Europe lasted from the late 13th century to the early 18th century and was marked by an increase in general commerce and financial services like banking. European states sought new trade routes through voyages of discovery which expanded their territorial empires and introduced new commodities to Europe. Factors that contributed to the Commercial Revolution included the establishment of sea routes to Asia and America, the rise of banking institutions, governments encouraging trading companies, and changes in commercial practices toward expansion, specialization, and integration.

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    229 views6 pages

    Commercial Revolution

    Uploaded by

    adarsh aryan
    The Commercial Revolution in Europe lasted from the late 13th century to the early 18th century and was marked by an increase in general commerce and financial services like banking. European states sought new trade routes through voyages of discovery which expanded their territorial empires and introduced new commodities to Europe. Factors that contributed to the Commercial Revolution included the establishment of sea routes to Asia and America, the rise of banking institutions, governments encouraging trading companies, and changes in commercial practices toward expansion, specialization, and integration.

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    COMMERCIAL REVOLUTION

    The Commercial Revolution in Europe, was a period of economic expansion,


    colonialism, and mercantilism which lasted from approximately the late 13th
    century until the early 18th century. It was succeeded in the mid-18th century
    by the Industrial Revolution. The Commercial Revolution is marked by an
    increase in general commerce, and in the growth of financial services such as
    banking, insurance, and investing.

    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

    A number of factors contributed to commercial revolution in Europe. Firstly,


    the discovery of the sea routes to both Asia and America provided a great
    incentive to the expansion of European commerce. The spice trade with Asia
    particularly thrived and the Europeans imported large quantities of cloves,
    cinnamon or pepper. Other imported items included silk and cotton textiles.
    They also imported a large variety of products new to the economy of Europe,
    from the new world, such as potatoes, maize, tomatoes, sugar, warm furs,
    cocoa, tobacco, gold, and ivory.

    Secondly, the rise of the banking institutions also greatly contributed to


    commercial revolution. No doubt private banks existed in various countries of
    Europe during the 15th and 16th centuries but their resources proved
    inadequate to meet the growing needs of the 17 th century markets. Therefore,
    these private banks were superseded by the public banks chartered by the
    government. The first such bank was chartered in 1609 and is known as Bank
    of Amsterdam. In 1694, the Bank of England was chartered.
    COMMERCIAL REVOLUTION

    Thirdly, the governments also contributed to commercial revolution by


    encouraging the formation of trading companies. The government felt that
    trading companies would be able to bear the probable losses involved in long
    distance trade and would be in a better position to secure concessions for
    trade from foreign rulers. Above all, they felt that they would be able to realise
    taxes from the companies and there would be very little chance of being
    defrauded.

    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.

    The practice of integration was another feature of commercial revolution. It


    came about as a reaction against excessive specialisation and once again led
    to reunion of economic functions. This practice manifested itself in the form of
    establishment of large shops, invasion in the field of production by the
    mercantile firms, and greater share of the manufacturers in the marketing of
    their goods. A number of selling agencies were established through which the
    industrial firms began to dispose off their goods. Likewise the retail traders
    COMMERCIAL REVOLUTION
    also tried to establish control over the manufacturing process by setting up
    factories for production of items they were selling. As a result of this process
    of integration the economic functions which had been served during the earlier
    period, were once again combined. In a way we can say that it reverted to
    earlier type.

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