Commercial Revolution Essay

Commercial Revolution The discovery of the New World and the creation of its sea routes and the sea routes of the India brought plenty of changes to the whole world; these changes involved the culture, politics, economics and behaviors around the world. Moreover, during the period of the 14th to the 19th century, Europe was economically affected since they experienced the greatest economic changes in history and because of these modifications this period of time was called the Commercial Revolution.

This period marked the end of Medieval Europe and the beginning of the modern era of the development. Moreover, it is of great importance to analyze how the discovery of America helped to improve Europe’s economy, how this had also a negative effect on its economy and what were the overall consequences of the commercial revolution. As mentioned before, the Commercial Revolution was a period of time in which many changes surged.

It was characterized by the rise of a capitalistic economy and the transition from a town-centered to a nation-centered economic system (Palmer y Colton); in other words, it was a capitalistic economy because there were private ownerships of the means of production and distribution, and they were implementing new techniques like investing in order to produce more capital. Moreover, it became a nation-centered economic system because it was not only focused in a specific region, but in the entire territory.

This began as early as the fourteenth century and lasted until machine industry began to overshadow commerce in the nineteenth century. In order to understand the sequence of these events, it is important to start by pointing out that Europeans rediscovered spices, silk and other commodities in Europe. Therefore, this progress created a desire for trade which increased in the Middle Ages.

It can be say that the Europeans had a visionary mind, they could have kept all their goods, but they took the right decision by trading what they rediscovered instead of keeping it for themselves. Later on, they continued trading, so European nations were looking for new trade routes which led to new explorations. The new sea route to the East and the discovery of America brought a vast increase in trade not only for luxury items, but commodities like rice, sugar, tea, and more consumer goods.

This period marked the beginning of the Europeans control over the world’s sea lanes, also it began creating a global market and spreading their culture throughout the entire world. In the Medieval Europe the basis of wealth was land, it means that the owners of the lands had a good life just by renting their lands. However, after the discovery of the America, gold and silver began flooding from the New World back into Europe. By having so much gold and silver, the colonies started trading between them, therefore Europe did not need to purchase from neighbor countries.

Furthermore, there are cases in which the nations had power over the mines of the Americas, for example, when the Spanish crown received one fifth of all revenues from mines, they also had a right to the conscripted labor of 13, 300 Indians in the working and in the exploitation of the mines, this brought a tremendous mortality rates among such laborers. New mining techniques made it possible to produce greater quantities of silver, there was a total of ten million ounces of silver arriving in Spain from the Americas (Coffin and Stacey).

Sending ships on the long voyages to Asia or the Americas took large amount of money. As they knew, while profits could be great, so were the risks they decided to take. Unfortunately, many ships could never complete the long and dangerous ocean voyage. Therefore, the individual merchants needed to finance trading voyages, a new type of business arrangement; it was the joint-stock company. It operated in a similar way as Modern Corporation; its function was that investors purchased shares of stock that gave them part ownership in the business.

By doing this arrangement, it would attracted large amounts of money and at the same time reduced the risk to individual investors. There are two examples of the most successful joint-stock companies such as English East India Company and the Dutch East India Company. Moreover, Queen Elizabeth I was a shareholder in the voyage Francis Drake made around the world in the Golden Hind in 1577-1580, Elizabeth paid of all England’s foreign debts, balanced the nation budget, and had a large sum left over to invest (Perry).

Consequently, Europe wanted to build a wealthy and powerful nation. All trade between England and its colonies had to be carried in either English or colonial vessels. According to the Library of Economics and Liberty, Western Europe applied a mercantile system of political economy that enriches the country by holding imports and fomenting exports. In other words, they wanted to achieve a balance of trade that would bring gold and silver into the country and also to maintain the domestic employment, all of these happened during the sixteenth to the late eighteenth centuries.

It is important to state that with the growth of colonies and the shipment of gold from the New World into Spain and Portugal, it was essential the control of the oceans. While the mercantilist policies were designed to benefit the government and the commercial class, the doctrines of laissez-faire, or better said free markets which interpreted economic welfare, they were having a wealth economy, but this had a cost. Nonetheless, this mercantile idea was replaced by the more general idea of building up a strong and self-sufficient economy; it was about setting the poor on work.

To make it clear, the mercantilism became in the economic sphere what the state building of the New Monarchies was in the political. The merchants had a support from the government by creating a national market and an industrious nationwide labor supply. For example, Henry VII of England in 1496 negotiated a commercial treaty with Flanders, it is known as the Intercursus Magnus; also, the kings of France signed treaties with the Ottoman Empire, this helped the merchants obtained privileges in the Middle East (Palmer and Colton).

Furthermore, for the class of rich traders wealth had a meaning of money and goods, whereas under feudalism, wealth had meant land. The wealthy middle-class had this belief, that money should be used to make more money, this mentality gave them the possibility to go further from where they were standing. On the other hand there were the negative effects, as mentioned before a great quantity of gold and silver was coming from the New World, especially from the Inca treasure; the mines of Brazil; silver from the rich mines of Mexico and Peru, and entered in the European economy.

This made Europe find itself with an abundant supply of precious metals. Therefore, this increase in price was due to the wealth expansion, for example, by 1650 the price of grain had risen to five or six times its level in 1500 that it produced a dislocation and misery for many of Europe’s inhabitants. This situation, in which the quantity of product available was insufficient for the amount that people had available to spend in those goods (the demand) was called Price revolution.

In addition, another factor that contributed to the Price Revolution was the increase in population; Europe was in a process of recovering from the terrible effects of the Black Death. Wealthy Europeans bought more and more goods and food. Therefore, as these products became scarce, prices began to rise. And, at the same time the population throughout Europe started growing. In consequence, the prices for bread and real grains rise. There is no doubt that the three major factors such as the increased of gold and silver; population increase; and frequents devaluations, they all together play a part in the price increases of the period.

Also, the changes that occurred during this period of time brought some consequences to the social classes. With the population growth, and the falling value of money, the classes of Europe took on forms that were to last until the industrial era of nineteenth and twentieth century. But, for those who own agricultural products to sell was likely to benefit. The price inflation enabled the peasants to pay much less to the lord than in the past. Moreover, land rents went up a agricultural prices rose, and inflation and population growth drove up rentals for housing in the towns.

In conclusion, the Commercial Revolution in Europe was a period of many changes because of the discovery of the Americas, the new sea routes in the Atlantic and near India. Europe during this time enjoyed from the benefits this New World could provide it; also, it was supported by the mercantilism especially by the navigation laws, there was so many lands, luxury, mines, plants to exploit, and so they did without being conscious of the abuse over Indians. On the other hand, its result was the accumulation of capital from foreign trade, also the lower rates of interest than might have prevailed without expansion.

The foreign produce brought profit to distributors involved in land trade. After all, merchant investment in land was probably more important than capital flows to industry. Works Cited Coffin, Judith and Robert Stacey. “The Profits of Empire in the New World. ” Western Civilizations. New York: Norton & Company , 2005. 339. Palmer, R. R and Joel Colton. “The Commercial Revolution. ” A History of the Modern World. New York: McGraw-Hill, 2002. 104-112. Perry, Marvin. “Changes Bring a Revolution in Economic Life. ” A History of the World . Boston: Houghton Mifflin , n. d. 363-369.

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