AP European History
AP European History
Theme, particularly how Europe moved from a subsistence agriculture system to one based on money and capital. Be careful not to overstate the changes, as much of traditional economy persisted in regions and localities.
Europe’s colonization of the Americas and its creation of maritime empires led to significant changes within Europe. We examine some of the economic and social changes here; in a later chapter, we’ll take a turn at the diplomatic and political results.
The economic result of exploration and colonization is termed the Commercial Revolution – an acceleration in global trade involving new goods and techniques. Often underestimated as a topic, the Commercial Revolution fed the growth of modem society. Two of these changes were an increase in Europe’s population (to about 90 million in 1600, finally surpassing the pre-plague level) and a steady rise in prices. This latter development promoted a money-oriented economy, which further undermined the feudal system in western Europe. Though traditionally the Price Revolution was attributed to the importation of precious metals from New World, more recent interpretations have stressed population growth as the source. With rising demand chasing a limited supply of goods, prices for scarce products were bid up. Landowners benefited from the inflation, unless they had leased their land via long-term rents, and many turned to the production of cash crops (those for sale, not consumption). A new class of independent farmers, outside the feudal structure and focused on producing for the market, began to arise. In England, they were called the gentry (gentlemen), and they attempted to imitate the lifestyles of the lords and nobles. Like the bourgeoisie, they were resented by those below and scorned by those above.
Traditionally the guilds dominated the production of goods in towns and cities; workers owned the capital and performed the labor. With the increase in profit from trade, merchants began to invest their earnings in long-distance business ventures, often ending up in banking like the Medici in Italy or the Fuggers in Germany. Families such as the Fuggers formed close relationships with monarchs, as with Charles V, loaning money for state enterprises such as mining. Eventually larger banks were formed from the resources of numerous investors. One of the more prominent, the Bank of Amsterdam (founded in 1609), fueled the commercial dominance of the Netherlands. By this time, bankers ignored the traditional Christian prohibition against usury (the charging of interest on loans); the profits were just too great to ignore. The separation of capital and labor is a major feature of capitalism, and the divergence became more pronounced beginning in the 16th and 17th centuries. Entrepreneurs began investing in their own manufacturing enterprises. To sidestep the guild structure, they provided (or “put out”) the raw materials to rural families eager to supplement their marginal incomes by finishing goods. This was especially pronounced in the textile industries, where the various steps of manufacture – spinning, carding, weaving – were mechanized at different times. The putting-out system (cottage industry) signaled the decline of the guild structure and served as an intermediate step toward factory production in the late 18th century. Other industries did not fit neatly into the guild structure and also received stimulus from the new capital – printing, bookmaking, mining, shipbuilding, and weapons manufacture.
During the late 16th and into the 17th centuries, Europeans gained a strong appetite for luxury and staple items from overseas. As the goods became more common, such as tea and coffee, they gradually exercised a cultural influence on European styles and diet, often beginning with the aristocracy and seeping down through the bourgeoisie into the lower classes. The New World tomato and potato took a strong hold on European diets, though the latter had to overcome resistance to its appearance and taste. Eventually, however, the potato became the salvation of many nations, especially Russia, Germany, and Ireland, because of its versatility and ease of cultivation. Coffee- and tea-drinking provided opportunities for socializing outside more traditional networks (in coffeehouses) and also gave workers a jolt of midday energy, particularly when combined with the largest profit-maker of the era – sugar. A status-conscious aristocracy and its middle-class imitators craved symbols of style and status. This meant silks and porcelain from China, calicoes (light, brightly colored cotton cloth) from India, and spices from the East Indies. Hunger for luxury goods fed the Commercial Revolution; competition among nations encouraged new trading techniques and the search for new goods, carried in the merchant marines of trading powers.
theme (“other institutions of power”).
Scarcity The total amount of global resources and wealth are limited. Therefore, any advances by one nation come at the expense of another; trade is a “zero-sum game.”
Wealth = specie (hard money) Mercantilists held that real wealth equaled the amount of gold and silver flowing into a nation. Given this assumption, governments attempted to promote exports through trade monopolies, acquisition of colonies, and subsidies at the same time that they limited imports, via tariffs, trade restrictions, and war aimed at an enemy’s mercantile potential.
Government intervention Though governments did not generally own the means of production, they did actively intervene to promote national objectives. States provided incentives to key industries, sought new colonies, and worked to establish national markets by building roads and canals and abolishing localism. The ultimate goal of these efforts proved to be a favorable balance of trade, i.e., more specie flowing into the nation than flowing out. In the next chapter, we’ll examine the mercantilist policies of specific nations.