Commercial Revolution

The Commercial Revolution was a period of European economic expansion, colonialism, and mercantilism which lasted from approximately 1520 until 1650. Voyages of discovery in the fifteenth and sixteenth centuries allowed European powers to build vast networks of international trade, which in turn generated a great deal of wealth for them. This growing global economy was based on silver, which allowed the purchase of goods (like Chinese spices) which Europeans desired but had nothing of similar interest for which to exchange it. Until this time there had been no economic theory; the stresses of the new global order, however, brought about two opposing theories of how a nation accumulates wealth: mercantilistic and free-trade policies. Mercantilism inflamed the growing hostilities between the increasingly-centralized European powers, leading to such famous conflicts as the American Revolution. Another important outcome of Europe's "commercial revolution" was a foundation of wealth needed for the industrial revolution.

This period was marked by the creation and loss of many fortunes, for instance of Portugal, Spain, England, and France. Spain amassed approximately 200 tons of gold and 16,000 tons of silver through its endeavors in the New World, taking control of Portugal in 1580, and eventually losing the entire quantity. The English also ventured to the New World, mainly North America, creating colonies there. 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 France discouraged settlement. The French also created the French East India Company, a joint-stock company, in 1664.

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. This, combined with overpopulation, affected the system of 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. Failed attempts were made by the aristocracy to counteract this by creating short-term leases of their lands to allow periodic revaluation of rent. 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 (from "burghers", the city-dwelling middle class), who wanted to buy land and thereby increase their social status. Former "common lands" were fenced by the landed bourgeois, a process known as "inclosure" which increased the efficiency of raising livestock (mainly sheep's wool for the textile industry). This "inclosure" forced the peasants out of rural areas and into the cities, resulting in urbanization and eventually the industrial revolution.

During this period (1450-1600 s), the global economic center shifted from the Islamic Mediterranean to western Europe (Spain, France, the Netherlands, and to some extent England). This shift was caused by the successful circumnavigation of Africa opening up sea-trade with the east: after Portugal's Vasco Da Gama rounded the Cape of Good Hope and landed in Calicut, India, a new path of eastern trade was possible ending the monopoly of the Ottoman Turks and their European allies, the Italian city-states. The Dutch city of Antwerp replaced it as the meeting-point of the primary players in the global economy, from (1485-1576). Antwerp had one of the first money exchanges in Europe, a Bourse, where people could change currency; later, the Bank of Amsterdam, following the example of a private Stockholm corporation, began issuing paper money to lessen the hassle of trade, replacing metal (coin and bullion) in exchanges. Antwerp was sacked in 1576 by the looting soldiers of the Spanish Fury, and economic exchanges moved elsewhere.