Commercial Revolution

The Commercial Revolution lasted from (approximately) 1520 to 1650. The Commercial Revolution was a period of European economic expansion, colonialism, and mercantilism. This period was marked by the fortunes, and misfortunes, of Spain, which amassed (and lost) approximately 200 tons of gold and 16,000 tons of silver. In 1580, Spain would take control of Portugal.

England gained influence by sending out probes. John Cabot sailed during the reign of Henry VII and discovered (1497) Cape Breton Island off the coast of Nova Scotia. Also, John Hawkins, Francis Drake, Martin Frobisher, and others (1558-1603) raided the Spanish colonies and gold ships; Drake's circumnavigation showed that the Pacific was not safe from their raids. They established England's future maritime operations. England began establishing colonies in the New World. Their first attempt was the colony of Roanoke Island (1585), which failed miserably and all of the settlers died of starvation and freezing. The English then settled in Jamestown, Virginia in 1607. The successful colony became the first permanent North American English settlement. The English eventually acquired Madras on the Southeastern coast of India in 1636, and took over Portugal's naval bases there in 1682.

The French followed the English to the New World, and settled Quebec in 1608. They did not populate North America as much as the English did, because they did not allow the Huguenots to travel to the New World and the heavy governmental regulations placed on trade in New France discouraged settlement. The French also created the French East India Company, a joint-stock company, in 1664.

England restricted its colonies' trade with other European nations. When colonists did ship goods, they were required to ship them on British ships. The colonies had to pay a tax on some of the goods that they shipped directly to Europe, including naval stores, which meant anything that had to do with ships. Thus, the colonies had to pay taxes when directly shipping things such as turpentine and resin (both used for varnish on ships), pitch and tar (both used for waterproofing), and varnish (preserved the life of the wood on sea vessels).

Capitalism, or the making of profits and reinvestment of those profits into new and larger business ventures, was the economic philosophy that replaced mercantilism. Joint-stock companies, which later evolved into modern-day corporations, played an important role in European colonization. The first such joint-stock company, the British East India Company, was formed in 1600.

The abundance of money caused widespread inflation, which widened the gap between the rich and the poor. The inflation was worsened by a growing population but a static production level, low employee salaries and a rising cost of living.

Inflation and overpopulation affected agriculture. The landholding aristocracy suffered under the inflation, since they depended on fixed rents paid by peasant tenants that were becoming poorer and unable to pay their lords (the aristocracy tried to counteract this by making short term leases of their lands in order to reevaluate the rent often, but it didn't work). The manorial system (manor system of lord and peasant tenant) eventually vanished, and the landholding aristocrats were forced to sell pieces of their land in order to maintain their style of living. This attracted the rich bourgeois (burghers/city-dwelling middle class), who wanted to buy land (to move up in social status, since land was a symbol of status). The bourgeois landholders broke the rules of allowing the peasants to have free access to the “common lands” (public lands) by buying them and enclosing them with fences (therefore driving peasants off of the land) in a process known as “inclosure” that allowed for a more efficient way of raising cattle (mainly sheep's wool for the textile industry). This “inclosure” forced the peasants out of the rural lands and into the cities, which made the cities' populations swell, and this growth led to the later industrial revolution.

During this period (1450-1600s), the economic focus shifted from the Mediterranean to the West (Spain, France, the Netherlands, and to some extent England); this shift occurred after Portugal's Vasco Da Gama rounded the Cape of Good Hope and landed in Calicut, India, which destroyed the Italian city-states' monopoly on eastern trade with the Ottoman Turks. Antwerp, a territory in the Netherlands, became the leading economic state in capitalism (1485-1576) until it was sacked in 1576 by the looting soldiers of the Spanish Fury. Antwerp had one of the first money exchanges in the New World where people could exchange one type of currency for another; such a money exchange was called a Bourse.

Later, the Bank of Amsterdam issued paper money (not the first to do so) to cope with the hassle of metal money.

See also: Age of Discovery