Lesson 1 Commercial Revolution

I. Introduction

- Almost one-third of the Western Europe population was wiped out by the Black
Death that causes the end of the economic growth in the Late Middle Ages. However, in
1400 the population grew and the demand for clothing and food increased.
- People moved to cities from the country side to work but are really needed by
the growing population that caused farmers to be highly valued. Trading locally and
internationally is done. And on the Renaissance period merchants became more
important. They were so wealthy that some of them are like princes and one of them was
Medici of Florence who also dominated politics in their land.

II. Presentation
A. Entrepreneur
- Many merchants became interested into overseas ventures because of the high
profits that they can gain. They imported spices, sugar, silk, minerals and other valuable
cargoes. But this kind of trade is really expensive and dangerous but still merchants kept
looking for trade opportunities in different lands.
- These entrepreneurs found ways to reduce financial risks from the threat of
robbers, pirates and natural disaster that can cause their bankruptcy. They use a system of
insurance; a merchant would ensure a certain amount of their shipment. When the goods
arrived safely, he will only lose the insurance payment and still he will have a good
profit. But when the goods were robbed or destroyed, the insurers will pay most of the
goods value to the merchant.
- Others formed partnership with 2 or 3 others because when the shipments were
lost, they would also share the lost. And also some invests in different kinds of business
so that if one of their investments fails they will still have a business that will give them a
profit.

B. New Ventures
- Because of the capitals that are needed some wealthy merchants made loans to
those other entrepreneurs and monarchs to give them a capital. Actually, a bank was
founded in Germany by Johann Fugger in the late 1300. He began importing cotton to
Egypt for fustian, cloth that is even better that linen and wool, and then he also started
other business. By 1500, the Fugger family became one of the richest families in Europe.

A joint-stock company was founded; it was a private trading
company that sells shares to investors.
Charter gave companies the exclusive right to trade in a
particular area.

- In the late1500, some Dutch joint-stock companies sent fleets to the East Indies
and the Dutch East India Company was formed because it could negotiate treaties, enlist
soldiers, and wage war on enemies. However some of the conflicts the Dutch government
gave up the trading rights in the East Indies.
C. Search for Gold and Silver
- Europeans do not use paper money but they use gold, silver, and copper coins so
when trade increased, the need for these also increased. And because Europe has limited
supplies, there was a shortage of money. This resulted to the search for gold led by the
Portugal to explore the African coast. The Spanish, Dutch, French, and English also
explored new lands.

D. Mercantilism
- Europeans believe that their power depended on precious metals is the key to
economic strength. So they collect and keep as much gold and silver as possible.

Principle of Mercantilism A nations economic strength depended
on keeping and increasing its gold by exporting more goods than
importing.

Effects of Mercantilism:
Encouraged nations to manufacture finished goods for export
Rulers should support industries such as ship building
It fitted colonists because they could supply raw materials to the industries of
their conquerors.

E. Changing Pattern
- Commercial Revolution changed the daily life in Europe. From the guilds, it was
changed to domestic system which means that the work is done in the countryside. And
the great production changed the lifestyles of the people in the upper lines of society by
building huge palaces and decorated them with the finest works of art.

III. Questions
Identify the ff.

__________ 1.A nations economic strength depended on keeping and increasing its gold
by exporting more goods than importing
__________ 2.Work done in the country side
__________ 3.Cloth that is even better that linen and wool
__________ 4.Bussiness risk taker
__________ 5.Large sum of money to be used in business ventures
__________ 6.Powerful merchant that dominated political power of their city
__________ 7.Private trading company that sells shares to investors
__________ 8.Economic theory that believes in the strength of gold and silver
__________ 9.Formed out of the charter granted to trading companies
__________ 10.Founder of a bank in Germany in the late 1300





IV. Answer Keys

1. Principle of Mercantilism 6. Medici of Florence
2. Domestic system 7. Joint-stocks Company
3. Fustian 8. Mercantilism
4. Entrepreneur 9. Dutch East India Company
5. Capital 10.Johann Fugger


V. Remarks

--- Needs Improvement
--- Good
--- Satisfactory
--- Very Satisfactory
--- Outstanding