The Commercial Revolution

World History

17th Century Europe

• Although most of Europe remained agricultural during this period, the fastest growing part of the European economy was the trade of goods. This was due to European exploration.

Global Trade

• The Commercial Revolution in Europe marked an important step from Europe being a local economy TO the formation of a truly global economy.

TRADE

• People began to produce more goods for sale rather than for their own use.

• Europe imported goods from the Americas, Ming China, and India.

• Europe exported goods such as woolen cloth, lumber, and finished goods.

Mercantilism

• European kings hoped to increase their power through the system of mercantilism.

• Mercantilism-an economic system used to unify and increase the power and monetary wealth of a country by strict government regulation of trade and foreign trading monopolies.

Mercantilism (2)• Mercantilists removed

trade barriers with other countries.

• Wealth and power were based on amassing gold and silver to pay soldiers to defend the state.

• For this reason, European countries began to establish overseas colonies.

Mercantilism (3)• What is the easiest

way to ensure you have the resources you need?– Take over that land,

and take the resources (colonies)

– This led to a series of wars between the major European powers. They each wanted control for resources.

Trans-Oceanic Trade

• The creation of European colonial empires resulted in increased trans-oceanic trade (trade across oceans).

• As a result, new institutions were created to aid people in trade. These included– Banks– Stock Exchanges– Insurance Companies

Capitalism

• The rise of capitalism occurred as the private ownership of goods and opportunities for investment led to a merchant class.

• Business owners risked their capital (money) in a business in order to make profits.

• The growth of new businesses led to a demand for huge sums of money.

• Over time, a middle class grew and money became a sign of wealth in the growing social classes.

Merchant Class

Joint-Stock Companies• To raise the large sums, joint-

stock companies were formed. They were privately owned companies that sold stock to investors. – Investors bought the stock for a

share of the profit.– It reduced individual risk in new

expeditions.

– When investors purchased stock, the companies accumulated money to buy large amounts of raw materials.

Investors buying stock.

Banking• Banks developed new ways

of raising and lending money. • Bankers and merchants

became more influential in government.

• Banking became a respectable profession as the Church eased restrictions on money lending and the charging of interest.

The Commercial RevolutionA Summary

• The Commercial Revolution occurred as Europeans entered a new age of global trade.

• As a result of the Commercial Revolution, Europeans had many more products from which to choose.– Tea, Sugar, Coffee, cotton cloth.– More books and new forms of learning and

entertainment.– More choices in occupation as well as consumption.

The End