Chapter Info (Click Here)
Book No. – 48 (History)
Book Name – Western Civilisation: Their History and Their Culture (Edward Mcnall)
What’s Inside the Chapter? (After Subscription)
1. CAPITALISM, MERCANTILISM, AND THE COMMERCIAL REVOLUTION
2. COLONIZATION AND OVERSEAS TRADE
3. AGRICULTURE AND INDUSTRY
4. POPULATION PATTERNS
5. LIFE WITHIN A SOCIETY OF ORDERS
Note: The first chapter of every book is free.
Access this chapter with any subscription below:
- Half Yearly Plan (All Subject)
- Annual Plan (All Subject)
- History (Single Subject)
- CUET PG + History
LANGUAGE
The Economy and Society of Early-Modern Europe
Chapter – 16
Table of Contents
- The study of early-modern European society focuses on change and the factors that led to political upheaval (e.g., the French Revolution) and economic stimulus (e.g., the Industrial Revolution).
- The most profound change from 1600 onward was economic, driven by the overseas expansionism that began in the 16th century.
- By the late 18th century, Europe became the center of a vast global trade system.
- The expansion of commerce led to the development of banks and joint-stock companies to finance international ventures.
- Urban workshops emerged in response to the growing demand for manufactured goods, changing the conditions for urban artisans.
- The rise of international banking created a new class of powerful men.
- European society faced significant tension between old hierarchies (e.g., landlord and peasant, nobleman and serf) and new economic realities.
- Traditional social structures were built on divinely sanctioned communal orders, posing challenges for entrepreneurs and laborers outside these hierarchies.
- Tensions between old and new forms were heightened by the civil and religious turmoil of the 17th century.
- Disruptions were further fueled by demographic swings caused by warfare, disease, and fluctuating weather that led to famine.
- Death and the graveyard were central to the lives of many Europeans, especially those still bound to the land.
CAPITALISM, MERCANTILISM, AND THE COMMERCIAL REVOLUTION
- The early-modern world of commerce and industry was governed by the assumptions of capitalism and mercantilism.
- Capitalism is a system of production, distribution, and exchange where wealth is invested by private owners for profit.
- Key features of capitalism: private enterprise, competition, and business for profit.
- Capitalism often involves the wage system, where workers are paid not based on wealth created, but on competing for jobs.
- Capitalism challenges the medieval guilds, which were focused on benefiting society and limiting profits.
- Capitalism encourages commercial expansion beyond local markets to national and international scales.
- Guildmasters lacked the capital and expertise to engage in large-scale commercial enterprises.
- Capitalist entrepreneurs invested in goods, studied international trade, and manipulated markets for profit.
- Mercantilism emphasized government intervention to increase the general prosperity of the state.
- Mercantilism was a variation of medieval ideas about community and economic regimentation for the benefit of the whole.
- Mercantilism extended the concept of community from towns to the state level in the 17th and 18th centuries.
- Example of mercantilism: Spanish conquest and plundering of the New World.
- Mercantilist policies: self-sufficiency, maximizing exports, and minimizing imports to build national wealth.
- Bullion (gold and silver) was seen as the measure of a state’s wealth and power.
- Mercantilism led to the establishment of overseas colonies for raw materials, supporting industrial production and trade.
- State governments aimed to discourage domestic consumption by keeping wages low, ensuring workers had only enough for basic needs.
- National policies on mercantilism varied by country: Spain failed to achieve self-sufficiency, while Dutch merchantsrejected centralization and favored free trade.
- Dutch supported free trade but kept colonies closed to rivals.
- France and England combined government centralization and commercial enterprise, succeeding in mercantilism.
- Capitalism focused on making individuals rich, while mercantilism aimed to make the state powerful.
- Despite differing goals, capitalism and mercantilism worked together, leading to the Commercial Revolution.
- The expansion of commerce relied on the availability of capital, generated mainly by rising agricultural prices.
- Banks played a vital role in the Commercial Revolution, with early disapproval of lending at interest in the Middle Ages.
- Medici in Florence and the Fuggers of Augsburg were notable examples of private financial houses in Italy and Germany.
- Government banks were established to serve state needs, starting with the Bank of Sweden (1657) and the Bank of England (1694).
- The Bank of England played a significant role in international finance as England became a world commercial power.
- The growth of banking was accompanied by the adoption of financial tools like bills of exchange, checks, and bank notes for large-scale transactions.
- Bills of exchange allowed merchants in different cities (e.g., Amsterdam and Venice) to settle transactions through banks.
- Checks were adopted to facilitate local payments and expand bank credit resources beyond actual cash reserves.
- Bank notes served as substitutes for gold and silver, invented by the Italians and later adopted in northern Europe.
- The Medieval business units like shops or family-owned stores were not suitable for large-scale, high-risk ventures.
- The regulated company emerged as an association of merchants cooperating for mutual advantage and maintaining monopolies on trade.
- Example of regulated companies: Merchant Adventurers, a group for trade with the Netherlands and Germany.
- In the 17th century, the joint-stock company replaced the regulated company, expanding business scope.
- Joint-stock companies issued shares to investors, allowing larger capital accumulation and permanent business structures.
- Dutch United East India Company, a key early joint-stock venture, initially planned to pay off investors in 10 years but ended up selling shares on the Amsterdam exchange to ensure continued operation.
- Joint-stock companies were sometimes founded for industrial ventures, and chartered companies granted monopolies by the government.
- Example of a chartered company: British East India Company, which controlled trade in India.
- The Commercial Revolution led to the development of a more efficient money economy.
- Coins like the gold ducat of Venice and the gold florin of Florence were widely accepted in international markets by 1300.
- Before uniformity, coins issued by kings circulated alongside foreign currencies, and their value often fluctuated.
- Kings increased their revenues by debasing coins, increasing the proportion of cheaper metals in them.
- The growth of trade and industry led to the need for more stable and uniform monetary systems.
- England began creating a standard coinage during Queen Elizabeth’s reign, but the task was not completed until the late 17th century.
- France adopted a more standardized currency system in the early 19th century.
- The Commercial Revolution led to inflation from the increase in the supply of silver, causing severe economic instability.
- Price fluctuations created economic instability, prompting businessmen to expand too rapidly and bankers to extend excessive credit.
- Noblemen often defaulted on loans, leading to financial difficulties in Spain and Italy.
- Wages failed to keep pace with rising prices, causing severe hardship for the lower classes, widespread impoverishment, and the rise of bandits.
- Spain saw ruined nobles joining vagrants, and the Medici Bank in Florence closed at the end of the 15th century.
- The 16th century saw bankruptcies in Spain and the decline of fuggers in Germany, while England, Holland, and France prospered.
- Between 1540 and 1620, the economy alternated between booms and recessions, followed by speculative bubbles.
- The South Sea Bubble in England and the Mississippi Bubble in France were prominent examples of speculative excess.
- The South Sea Company in England inflated stock values by offering to assume the national debt, leading to a crashin 1720.
- In France, John Law proposed a scheme to pay off national debt with paper money and create the Mississippi Company for Louisiana’s colonization.
- Mississippi Company stock soared to forty times its value, with many investing without understanding the risks, leading to a burst in 1720 and widespread ruin.
- French joint-stock companies were more dependent on the state, reflecting mercantilist theory and involving heavy investments from court officials and the king.
- State interference in companies, like the French East India Company, hindered operations, particularly with colonial regulations from Paris.
- During wars, governments relied on commercial capitalists for financing.
- Example: During the 1689 war against France, the Bank of England helped raise over £170 million for England’swar efforts and stabilized its national debt at £40 million.
- In return, trading companies pressured governments for treaties that would benefit their long-distance commercial interests.