Mercantile Economy.docx

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22 Apr 2012
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Mercantile Economy
first crusade 1095 B.C.- required funding because needed capital to transport western knights
across Mediterranean
fostered capitalization and trade cities
required a medium of exchange recognized across cultures
gold coins needed to be accepted in Venice and Jerusalem
crusades stimulated European economy
piracy and war were trading my any other names
what you stole you would sell
war, crusades and piracy supported trade
This required a different commercial organization
Europe was developing, becoming more sophisticated
Significant changes taking place with regard to Europe’s social and economic structure
Enabled planning and business organization
Social mobility for people’s whose wealth and inheritance wouldn’t help them achieve their
goals
This reorganization of society created a new class of wealthy townsmen who controlled their
towns
Economic, political and social revolution allowed a platform for early modern Europe
Merchants traveled long distances with valuable goods often
Was impossible for one person to accumulate huge amounts of capital
Needed a system where partners pooled their money and drew up contracts
Older partners would provide more funding, but the younger partners would take on more
dangerous ventures but were paid more
Contracts were drawn up deciding what each partner would get if the trip was successful
Once wealthy these partners would use their influence to further their social, political and
economic ambitions
Merchants became more sophisticated and politically powerful as they became wealthier
Challenged the traditional structure of society, challenged landlords
Merchants were learned, secular, engaged labourers
They didn’t fit into the structure of feudal Europe
More people with capital invested their money in inventions
Wealthy people looked for new ways to make money, lent surplus capital out to people and
charged interest- banks
Money to borrow and invest in new ideas
Access to loans stimulated economy
Allowed for cities and towns to grow
But failed because monarchs borrowed more than they could ever pay back
Black plague 1347- saved European banks- recapitalized by inheritance
Population became smaller and leaner
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