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HIS109Y1 (520)

Mercantile Economy / The Church in the Middle Ages

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University of Toronto St. George
Kenneth Bartlett

Sept. 27 , 2010 Mercantile Economy Very little produced beyond which people needed to survive; this was known as a manorial economy Towns, Commerce and Economic Change Breakdown of the manorial economy: Crusades stimulated long-distance trade, required capitalization of money, fostered states of trade, cities that provided basic materials for trading Individual trades benefitted as well (for ex. ship-building) Trades mobilized to provide for the needs of men Goods and services could not be paid for by a bartering economy, thus intro of money Some kind of generally accepted medium of exchange was required (money) Services providing support over long distances established trading relations War and expansion lead to knowledge of the enemy Sophisticated money economies in the far-eastern nations, Western traders had to pay in cash 1348: black death broke out; always was recurrent plagues, but nothing like the black plague Up to 50 % of the population died, human suffering was extreme Upside to widespread death – sellers market in labour, if you lived you could offer labour services for more money due to the small population of peasants, also able to improve terms of employment Those who survived were better off All of Western Europe tended to be a different place; there was a new dynamic making it an exciting place to be Idea of enterprise and business became powerful – growth in cities, new classes The way business was done was an important factor in how Europe changed, there were now new classes that challenged those that had gone before New means of business organization lead to the accumulation of large amounts of capital New class of townsmen, the bourgeoisie; challenged the feudal orders while growing richer Fundamental changes in the structure of European society – permitted people to do things differently, challenge the old order Merchants had to spend a lot of time away; this was often risky Style of early capitalism was highly personal, and limited to the amount of money that an individual could amass to put the capital in place Enforceable contract required to put capital together in a more reasonable place Thus; a system was developed where individuals would put their capital together, or labour, (investment of time or capital) making everyone responsible for the voyage Several men would pool money, another would agree to do the actual voyage taking on dangers and risks, another agreed to ensure the entire operation (everyone signed on to this contract, profits they would receive if everything turned out right, was legally-binding, rich merchants could get very large amounts of capital Merchants with large amounts of capital became the rulers – people who made economy and social structures of towns operate, had wealth, leisure to run the towns By taking on rigors there was a greater profit People who ran towns became richer, developed into a set of patricians, did not like being patronized by the nobles Able to rule over cities, and the surrounding territories, became a group in a thorn of the psychological side of the feudal rulers Merchants didn’t really fit in the 3 estate, they were not peasants or craftsman; there was a movement to redistribute wealth and power in Europe so that these new groups could be recognized Success and business also lead to new expansions of urban growth = cities grew larger) New outlets for wealth had to be found, another way to get richer and use surplus capital to ensure that power and wealth would grow Merchants entered the field of banking, anyone who had any extra cash put it with merchants who promised them a return by giving them some of the interest from those who borrowed capital Wealth of mercantile cities grew drastically, however; there were risks Contracts had to be made against those who had political prestige and the ability to overrule law due to military strength For ex. the Bardi and Peruzzi banks collapsed: Banked both sides during the 100 years war, King Edward realized that he owed them a lot of money (more than he could pay back) As a feudal monarch he was controlled by no one, he defaulted on his loans, thus the two firms collapsed, along with thousands of others that were dependent on them The result was a huge depression in Florence and all of Europe Became re-capitalized b/c of the inheritance affect, you married people as rich as you were, thus accumulating a significant amount of wealth Broad distribution of wealth in patrician families would be funneled down to the survivors (of the black death for ex.) Merchants began making branches of their company separate, so that one failure wouldn’t bring down the entire company Line of credits became common, bank notes allowed for Europe to re-capitalize Mid 15 cent. the wealthiest had their wealth in cash, whereas the nobles had it in land Stable coinages established, more money circulated Money was used in place of bouillon (gold and silver coins would be shaved down/ made smaller, and melted down to produce more coins) Coinage was more stabilized b/c it always maintained its value Fragmentation of power meant it was difficult to identify a source in which a single coinage would be widely accepted Only coins that could be trusted were Roman, Byzantine, Middle Eastern coins Problem was solved by trading cities in Europe, had to have coins to ensure that they would have stability of economy Florin, ducat (Venice) – solidify the value of money Faster growth and greater prosperity, money poured into Italian cities Kings took advantage of renewed interest in Roman law, used Roman law to establish laws over their territories Where did the king get his military power? The king needed the very people he controlled in order to control Status of towns and cities under feudal law was obscure, difficult to impose taxation The feudal structure was rural based; reintroducing Roman law saw one of the regaling rights of kings as the control of cities In theory, kings had much to offer to towns-people, towns and cities wanted protection from thugs, therefore an alliance btw towns and monarchs was fostered Taxes granted to kings to raise up armies – in return towns-people got protection One of the things kings wanted was a means of communication amongst their territories, which was beneficial for towns, in return towns gave kings what they wanted = cash Kings began to invite representatives from towns and cities to the meetings they had with feudal powers (where the king got advice from powerful forces in the kingdom) Kings began the process of piecing together fragmented states Population increased, as did voyages of discovery. As a result cities begin to grow in size and influence Mercantile capitalism had began, everything else grew to service these economies For ex. The selling of indulgences in Germany – this attracted the attention of Martin Luther (later leadi
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