The Commercial Revolution

The Commercial Revolution

Economic factors leading towards “The Commercial Revolution”

• The global trading of new foods and animals• Europeans established colonial empires in the

Americas• The discovery of New wealth in the

Americas(gold & silver)

• A commercial revolution means that there is a change in commerce.

• Commerce is the buying and selling of goods in large quantities over long distances.

Can you think of any other examples in history when goods were traded over long distances?

Economic Transition

Global Trade: People began producing more good for sale rather for their own use.

Local EconomiesEx: farming, Feudalism

(Middle Ages)

Global trading

Mercantilism

Export more than they importwhich means

SELL more than they buy!!

European kings hoped to increase their power through the system of Mercantilism.

King’s action plan

Build colonies in other areas of the world that have natural resources that can be taken rather than purchased.

After England builds colonies in America, lets move their and help the government take the natural resources so they can

make more money!

Mercantilism

• Keep foreign made products out of their country or charge them a higher tax, so that their products are less expensive than competing nations!

• Make colonies purchase items just from their ruling country. It will increase the country’s exports.

Buy England's Goods…..

And Support England's Economy!!

MOTHER COUNTRY COLONIES

Gold, Silver, Fur, Lumber, Food

LOW PRICES

HIGH PRICESManufactured goods

EUROPENAN TRADE WITH THEIR COLONIES

This was suppose to lead to a flow of money back to the “Mother Country”

Supply and Demand

*In order to make money the merchants had to make decisions based on the law of SUPPLY AND DEMAND

SUPPLYThe amount of product

available

DEMANDWhat people want

Supply and Demand Rule #1If something is scarce, or difficult to get, people

will pay a lot of $$$ for it!

How would a smart merchant use the laws of supply and demand to make money?

Merchants would find goods that were cheap in one place and in high demand somewhere else in the world.

• For example: The Caribbean had a lot of sugar, so it was cheap. Sugar didn’t grow in Europe so the Europeans would pay merchants a lot of money for sugar.

Commerce, the buying and selling of goods, led to the rise of a business person called an entrepreneur.

Entrepreneurs risk money in hopes of earning a profit.

Discuss: How do people today risk money in hopes of earning a profit compared to entrepreneurs during the 1600’s?

ENTREPRENEUR ENTREPRENEUR

Joint Stock Company

• When business ideas were too risky or expensive for one person, people formed joint-stock companies.

• This allowed people to buy stock in a company, which means they own part of the company and will share in its profit or loss.

• For example: If a trading voyage was successful, all the stock holders made money. If it was unsuccessful, everyone lost money.

• Why would this be appealing to business people?

Joint Stock Company

Merchants and Artisans that were once poor were able to make money by investing and working in commerce.

The result of risk taking Entrepreneurs is the rise of the

Middle Class!

Free Enteprse(capitlisim)

Merchants and bankers laid the foundations for the free enterprise system(capitalism). Under this system, business owners risked their capital(money) in a business in order to make profits.

Free Enterprise(capitalism)

Free Enterprise The freedom of private businesses to compete for profits without government involvement.

For Example: McDonalds Vs. Burger King

Can you think of another competing business???

When business ideas were too risky or expensive for one person, people formed joint-stock companies.

This allowed people to buy stock in a company, which means they own part of the company and will share in

its profit or loss.

For example: If a trading voyage was successful, all the stock holders made money. If it was unsuccessful,

everyone lost money. Why would this be appealing to business people?

JOINT STOCK COMPANY

Financial Revolution

• Banks developed new ways of raising and lending $$$$

• Some governments issued funds that were sold to the public. The government then paid interest to the purchaser of these funds.

• This Financial Revolution help governments raise money for their armies and navies. ALSO bankers and merchants became more influential in government.

FINANCIAL REVOLUTION

Result of Commercial Revolution

1. Europeans had more products to choose from(tea, sugar, coffee)

2. There were more books and new forms of learning(newspapers & schools)

3. More occupations***These advances led to a rising standards of living for many Europeans

Results of Commercial Revolution

Writing Assignment

• Pretend you are a merchant. Choose a product you would want to sell to make money.

• Use the mercantilism model to explain how you’d become rich selling this product.

• Use your notes and what you just learned about mercantilism to do so. Consider what natural resources you’ll need and who would buy your product.