Before the 11th century, European kingdoms were not particularly wealthy; farmers worked long days to produce necessary crops, selling their meager surplus just to survive. Thousands of peasants served a handful of princes who were content with feasts and political squabbles. These images of Europe would change with the Commercial Revolution, a slow but impactful transition from feudalism to the economic and social structures we see today. Merchants, banking, and global markets were on the rise, fueling the European powers' global expansion. Keep reading for the timeline, summary, and more.
Commercial Revolution Definition
The European-based Commercial Revolution was a period of economic change beginning in the Middle Ages (approximately 5th to 15th centuries) and the following in Early Modern Period (1450-1750). The Commercial Revolution does not refer to a single particular event, as a political revolution like the French Revolution might, but rather a trend of systematic change within Europe's economies. As simple as it might sound, trade was the driving force for the Commercial Revolution, trade in the Mediterranean, European trade in the Indian Ocean, and trade between colonies and home countries across the Atlantic Ocean.
Fig. 1- Portuguese ships in the Red Sea during the 16th century.
The Commercial Revolution defines a transition from sustained European agriculture to increasingly complex systems of trade. Going beyond basic barter, the Commercial Revolution established systems of monetization and exchange rates across global markets, general banking (interest rates, loans, investments, credit), and national economic policies. The profits of commercial ventures created a new world separate from agriculture; carpets woven in Persia could be purchased in England, Portuguese investors could jointly fund an expedition to China, and a new European working class of artisans funneled to growing cities.
Commercial Revolution Timeline
The Commercial Revolution is a relatively new historical concept, popularized in the 20th century. The timeframe of the Commercial Revolution is broad and often disputed. American Professor Walt Whitman Rostow placed Vasco Da Gama's 1488 sailing around Cape of Good Hope (becoming the first European to sail into the Indian Ocean) as the beginning of the Commercial Revolution. Other historians assert that economic changes began earlier with the 11th century First Crusade. The following timeline provides a brief progression of important events in the Commercial Revolution (though it should be noted that these events don't necessarily constitute the full scope and concept of the Commercial Revolution):
11th century CE: the Italian Maritime Republics gain power through the Mediterranean Sea Trade.
1096 CE: The beginning of the First Crusade initiates cultural and economic interaction between the farthest reaches of Europe and the Islamic Middle East.
1350: The Black Death ravages Europe's population, slowing its economic progression.
1397 CE: The House of Medici founds the Medici Bank, rising as the foremost economic house in Italy.
1453: The Ottoman Turks successfully besiege Constantinople, seizing control of the land trade routes to the East; European economic focus transitions from the Mediterranean to Western Europe.
1488: Vasco Da Gama sails around the Cape of Good Hope in South Africa, opening European sea trade routes to the Middle East, India, and beyond.
1492: Christopher Columbus discovers the American continents for Europe.
16th century: The European Maritime Empires begin colonizing the globe.
1602: The Dutch East India Company is founded.
Causes and effects of the Commercial Revolution:
The causes of the Commercial Revolution can be traced to the Roman Empire and beyond. Very few of the innovations of the Commercial Revolution were new. Banks, insurance, and loans all existed in Ancient Mesopotamia, carrying into the Roman Empire of the Classical Period. A slowdown in Eurasian trade saw these economic concepts disappear for a time in Europe, to be reintroduced in the second half of the Medieval Era. Simply put, the demand for foreign goods, coupled with these ancient economic ideals caused the Commercial Revolution. Its effects are still felt today, as our modern world economy was shaped by the commercially driven European maritime empires.
Commercial Revolution Summary
The Commercial Revolution reshaped the European economy and by extension the economy of the world. The effects of the Commercial Revolution can be best split into the Medieval Period and Early Modern Period.
Fig. 2- Photograph of a Medieval Italian coin.
Commercial Revolution in the Medieval Period
When Pope Urban II called upon the forces of the Christian world to combat the Seljuk Turks in the Middle East at the end of the 11th century, Western Europe answered with enthusiasm. The first of the four Crusades was fought from 1096 to 1099, ending in victory for the unified European Crusaders. The political and religious victory of the conflict was small, however, in comparison to the coming changes to world economics. Volunteer soldiers from Western Europe returned to their homes after the war, bringing with them direct knowledge of a strange, foreign world. In the east, there were perfumes, incense, and spices, all of which soon caught the attention of European peoples.
Fig. 3- Art depicting Christian Priest Peter the Hermit preaching during the First Crusade.
Western European trade with the Middle East through the Christian Byzantine Empire increased, but there was already another strong economic presence in the Mediterranean. The Italian Maritime Republics were driving trade throughout the sea, their fleets transporting goods during the First Crusade. Money began to flow in Southern Europe and even throughout Germany from the flourishing Italian Maritime Republics such as Venice and Genoa.
The growing wealth of Italy facilitated Venetian explorer Marco Polo's adventure into China, which further promoted trade between east and west. In the 14th century, the House of Medici came to prominence, establishing a powerful bank in Italy.
Bank:
A financial institution (often regulated by a government) that can acquire deposits and distribute loans.
The Mediterranean Sea was the center of European trade during the Middle Ages, but the fall of Constantinople in 1453 changed that reality. The Christian stronghold bridging Western Europe and the Middle East had fallen, but the European desire for eastern goods persisted.
Commercial Revolution in the Early Modern Period
European ambition for wealth and glory drove both Vasco Da Gama and Christopher Columbus to find a new route to India (since the traditional land routes were under Ottoman control). Financed by royal treasuries, Vasco Da Gama found a sea route around the southern tip of Africa, called the Cape of Good Hope, in 1488. Four years later, Christopher Columbus discovered two new continents for Europe. New trade opportunities arose, based on maritime trade and exploration.
Fig. 4- European ships off the coast of the Cape of Good Hope in Southern Africa.
Throughout the Early Modern Period, often called the Age of Discovery, the European Maritime Empires stretched their economic dominion across the globe. England established colonies in North America; Spain created colonies in South and Latin America; Portugal designed a trading post empire that policed trade throughout Africa and the Indian Ocean. More wealth than ever before began flowing into Western Europe.
With this newly acquired wealth came new systems of managing it. Not all maritime expeditions were royally funded. Individual investors pooled their resources into joint-stock companies such as the Dutch East India Company in 1602. Relying upon coins and bank notes entrusted with real economic value, merchants watched as their ships set sail across vast oceans full of dangers. Often, these merchants insured their risky investments through banks and these joint-stock companies.
Joint-Stock Company:
A business structure that is owned by a multitude of investors, known as shareholders.
On a macro level, the European Maritime Empires were driven by a concept called Mercantilism. The following list highlights some of the core tenets of the Mercantilist trade system:
- Maximize exports and minimize imports to acquire maximum wealth.
- There is a constant amount of wealth in the world; wealth cannot be created; it can only be acquired (this fueled much of the competition between the European nations in their trade).
- Governments should play a direct role in regulating their nation's economies.
Commercial Revolution Significance
The Commercial Revolution is significant in that its effects are still felt in our daily lives today. Massive global economies, corporations with thousands of employees, and banks that finance entire industries, as well as the money and credit cards we have in our pockets all are due to the Commercial Revolution. Additionally, the Commercial Revolution of the Medieval and Early Modern Period facilitated Europe's colonial expansion across the globe, a history that has directly shaped our modern world.
Commercial Revolution - Key takeaways
- The Commercial Revolution refers to changes and innovations in European economic systems from the Medieval Era to the Early Modern Period.
- There is no single event that corresponds to the Commercial Revolution.
- The Commercial Revolution began with the Italian Maritime Republics and First Crusade in the 11th century and was based around the Mediterranean Sea.
- After the fall of Constantinople in 1453 (and the approximate end of the Medieval Era), the Commercial Revolution shifted its focus to Western Europe.
- Joint-stock companies, banks, credit, loans, and insurance were all introduced into modern economics through the Commercial Revolution.
References
- Fig. 2 Medieval Italian Coins (https://commons.wikimedia.org/wiki/File:Post_medieval_coin,_Venetian_soldino_(obverse,_reverse)_(FindID_216820).jpg) by Birmingham Museums Trust, Duncan, licensed by CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0/deed.en).
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