HIS109Y1 Lecture 3: LECTURE 3
28/09/2015
Lecture 3
Mercantile Economy & Towns
COMMENDA
BARDI
PERUZZI
MEDICI
FLORIN 1252
DUCAT 1284
Lecture 2 ending Where does the money come from?
• Feudalism functioned on no liquid capital
• What were the forces that broke down the manorial system? Shift to mercantile
economy…
Crusades (began 1095)
• Symptom of knight class in Europe
• If they ere’t set aay, they’d kill their o people
• Trade between east Mediterranean and Europe
• Question of control over trade
• Growing luxury trade between Eastern Mediterranean and Europe
• Defined by religion
• Need to concentrate capital and services to ship hundreds or thousands of knights from
Europe to Jerusalem
• Money needed was a lot—ships/travelling, once there there was passage payments,
needed to buy new horses, pay for servants, food supply
• Economic imperialism—had to speak in terms that others could understand, money
economies, exchange of coins
• Fighting against armies, but occupying other cities and towns, so allies had to be bribed
• Piracy and trade are the same occupation, just executed by different means
• Medium of exchange in foreign economies was needed
• Europeans had to find sufficient money/liquid capital to buy what they wanted from the
east
• If you try to rig liestok to trade they’d proaly e dead y the tie you arrive
• If you are going to engage in economic imperialism you had to deal in terms that those
people you were working with/fighting against could understand
• Islamic states, byzantine had money economies
• Might be fighting somebody and still trade with them or fight their armies but still
occupy town
• Need to win allies bribery
• Had to have some form/medium of exchange that these sophisticated economies could
accept
• Europeans had to find sufficient liquid capital to buy things they wanted to buy
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28/09/2015
• So, where did the money come from?
There were issues with the coin itself
Minting coins against wealth in trade, the manorial economy that supported
feudalis did’t alidate this
Coins were a symbol of sovereignty
Feudal wars were started over minting coins
The eooy as’t deep eough to hae ay real tradig poer
Lords ho had gie lad to peasats ere’t rih eough to it, o oe as
really able to produce coins
People ho did it ois did’t ko hat it really eat
People did’t ko hat to do when they were short of cash, so they would take
what coins they had, mix with other metals (de-basing), and this meant that
there were no means to engage in long-distance trade
Even trading during the 11th century, trade was mostly byzantine, Islamic, or
ancient roman
Trade ould’t e otrolled y the feudal people or northern Europe, so
sophisticated Italian cities, specifically Florence (banking, silk) and Venice
(trading centre for the east) took over long-distance trade
In 1252, the Florin was coined, named after Florence (Much of coinage is still
named after this coin)
The Ducat was brought into Venice trade in 1284
These were stable coins by which stable coinage could be measured (money of
account)
These innovations allowed for very sophisticated growth, because they brought
prosperity to the cities (pre-supposed that the economy would grow, greater
employment, encouraged investment)—economy grew
Changes in business activity to help finance, the money coming in for the first
crusade into Genoa, double-entry bookkeeping (tighter control over how much
money you have, are owed, and must pay out)
System of investment and shared responsibility over economic activity allowed
poorer merchants to gain wealth, the rich to stay rich, and townsmen to gain the
experience to control Europe
This challenged the feudal order and feudal-founded nobility economic
revolution
Allowed real revolutions (renaissance and reformation) to happen
A trader or small group of traders almost always related by family would have to
travel with goods, sell the goods, and come back with more goods or money
(they only trusted their family)
Long-distance trade between southern and eastern Mediterranean
COMMENDA: legal contract that lasted for only one voyage, several investors would put
money into a particular voyage, capital provided merchants who has surplus wealth,
youger erhats did’t hae as uh apital, they’d put i less apital ut ork the
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Document Summary
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