Reading Practice 49

[1] The Middle Ages or medieval period in Europe lasted roughly from the fall of the Western Roman Empire in the 5th century to around 1500. It was a period of great change. People migrated, changing the social and political structures of emergent nations. Religious wars were fought, changing the cultural landscape. And deadly diseases (along with other factors) decimated the population. Economically, it was relatively stagnant, at least when compared with the period immediately following, which featured rapid progress in several areas, including agriculture, trade, and banking.

 

[2] As populations increased after the middle ages, agriculture flourished. Seen another way, the population was able to increase because of agricultural production. Farmers spread their activity into new lands to feed the growing population, and the overall amount of arable land increased phenomenally. This happened in part through innovative techniques: between 1590 and 1615, for example, the Dutch reclaimed more than 36,000 acres of farmland from the sea through the building of dykes.

 

[3] The rise in agricultural production went beyond what was required to meet the needs of the population. Farmers across Europe were able to achieve surpluses, and rural economies flourished as a result. Surplus crops and other agricultural commodities – such as livestock could be bought and sold, providing an actual income rather than just subsistence for the local population. Additionally, rural communities became home to textile production through what is called cottage industry Rural manufacturing and industry was key to development, especially as some cities began to actually shrink during this period.

 

[4] With the expansion of production – agricultural and non-agricultural – came general economic expansion. Facilitating this growth was increased trade. During the migration of peoples around Europe came greater cultural contact and new trade routes, not only overland but also by sea. Sailing ships carried goods from coastal city to coastal city, around the north coast of the European continent, around the Iberian Peninsula, and throughout the Mediterranean Sea. Traders extended their reach beyond the European continent as well, as the age of expansion opened up relations with peoples in Asia, Africa, and North America

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[5] Trade expanded not only between nations and empires but within them. In Great Britain, a theory or policy known as “mercantilism” prevailed. Having claimed lands throughout the Americas as well as in Asia, the British Empire encouraged trade among its colonies. Domestic industries were given preferential treatment, and exports flowed from Great Britain around the world, creating a trade surplus that enriched many English leaders and merchants.

 

[6] Of course, an increase in trade and the flow of goods around the world in the 17th century brought a need for banking and financial services. Merchants began accepting “promissory” notes instead of gold and silver coins. Originating in Italy, these notes promised future payment for goods received; thus the modern idea of credit was born. With such developments came the need for actual banks, which backed promissory notes and provided loans to enterprising traders.

[7] The banking industry continued to grow into the 18th century, as banks provided capital for business investments. Profit from such activities could be reinvested, and the economy boomed. As Spanish ships returned from the Americas laden with gold and silver, new wealth was injected into the European economy. This wealth funded new manufacturing and trade, and new forms of business arrangements developed, such as joint-stock partnerships. An English innovation, joint-stock companies drew from shareholders to provide a continuing source of capital that further enabled economic growth.

 

[8] The arrival of gold and silver from the Americas, and the increasing trade with French, British, and Spanish colonies in the New World signified an important shift. The Mediterranean Sea lost its status as the focus of European trade, and the Atlantic Ocean took its place. This shift, combined with the creation of banking and money markets, marks the emerging dominance of what would come to be called capitalism, an economic system that would develop over the next four hundred years into the global economy that we see today. Compared with the slow rate of progress during the thousand years of the Middle Ages, the period from 1500 to 1700 in Europe appears rather miraculous.