Before 1950s, European had vast history that had a strong backbone in commerce and the development of human capital. Trade and Economic activities of Europe were purely driven by Mercantilism doctrine. The European Economic development encouraged Merchant Capitalism and Maturity of absolutism. This trade led to acquisition of material property and power control by Merchants and their domination over serfs. As a result, the European society developed into a capitalistic phase, with major draws on Agriculture, Manufacturing and Mining, Development in Money and Banking services,. In addition, the modes of production that depended on Capitalism and Feudalism expanded their Trade and influence through expansion of Transport and Communication across the Mediterranean throughout the Venice, which consequently led to transfer of powers.
The Europeans expanded their Economy and Trade through improvement in Agricultural Production. Land Ownership was managed by Feudalism, and Merchants employed the peasants and serfs in their farms. By the late 1400s, Serfdom declined in Europe and the Population Increased leading to rise in demand for food. The peasants were freer to move about and own land for themselves which made the landowners to increase wage rates for labor units. The Merchants were encouraged to expand their Agricultural production as there was inflation and increased population which produced excess demand for goods in the entire Europe.
The Agricultural system
The Agriculture was driven by the Enclosure and Feudal system, where strip-cropping was practiced. As early as 12th Century, the Enclosure system dominated the Agricultural practice which accelerated unemployment rate due to loss of individual land ownership rights. This however drastically came to an end between 1500 to1600 as the clergy and state legislation opposed it.(Mark,122-235).
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Mechanization in agriculture expanded trade as the technological innovation led to faster productivity. The merchants practiced a 3 year period crop rotation in different fields and grew crops e.g. barley. In addition, they planted legumes that facilitated fertility of the previously fallow lands. The produce made them to enquire much wealth in exchange for species. This drove the spirit of mercantilism and encouraged capitalism as they exchanged agricultural produce with material species, for example, Flanders (Belgium). An effective four -fields’ rotation system was developed that made use of clovers (typical legume) which increased the soil fertility and increased livestock production as clover was an ideal fodder crop. This enabled farmers in Europe to keep more livestock and invest productive crops for benefits of Trade and Exchange .consequently, resource owners used livestock mature (at less cost) as fertilizers that enhanced more crop productivity. The increased productivity and selective breeding in livestock led to qualitative and quantitative increase in output which further enhanced exchange and trade (Kagan, 535-536).
Improvement in Manufacturing and Mining sectors
European economy was further strengthened by improvement in Manufacturing and Mining sectors. As a result of Renaissance, European economy diversified in 1300-1400s. Merchants in Milan, Florence and Venice controlled the manufacturing sector. Specialization drove the capitalism of the trade centers, as Milan produced and majored in armor (Metal goods), Florence specialized in woolen cloths and silk production. Consequently, Venice which was also a trade centre had merchants dealing in spices and other goods basically fro Ottoman. In the 1500s, as a result of Renaissance, major transformations occurred in the Manufacturing and Trade sectors. The sector was dominated by merchants and private investors who controlled major guilds e.g. the production of woolen cloths, (Charles, 124).
They used immense political power and control to serve their personal interest at the expense of laborers and the less unfortunate e.g. the serfs, who were not entitled to guild membership. This made merchants to increase their wealth, encouraging Mercantilism and Capitalism across Europe. Self correcting nature of mercantilism changed the dynamism of trade in Europe. For instance, the decline of one industry prompted another industry to take shape. Venice became the major centre of printing after losing its dominance role in spice trade. The Renaissances economy therefore encouraged economic growth and material prosperity of capitalists and merchants increasing their influence.
Before 1550s, the development of Trans- Atlantic trade was facilitated by extensive Banking services which were pioneered by Italy. Adaptation to changes and comparative advantages increased the merchants’ opportunity set and controls, which were necessitated by services. Due to banking facility, international trade was made easier as the bank provided efficient and reliable financial services to the merchants. As a result, the merchants became bankers, advanced loans, transferred funds across the Atlantic and exchanged various forms of money e.g. commodity money, paper money notes and coins. These financial services rendered by banks in Europe to entrepreneurs and merchants enabled them to acquire materials and production factors inputs. In addition, they managed to finance human capital and meet the financial implications of transportation.
European trade and economic stability was therefore strengthened as merchants and businessmen could transfer money over long-distances effectively with minimum risks, and inconvenience of carrying coins and metallic money. The major banking facilities during this period were provided by the MEDICI of Florence and the FUGGER FAMILY (Augsburg in Germany). Due to historical transformation and geographical advantage, the key banking roles was taken over by the northern Europe i.e. Netherlands and England, with Amsterdam and London being the major centers of trade. The opened trade routes from Eastern Europe and Atlantic to Mediterranean and Northern Europe (Genoa). (Blainey,78)
Establishment of Transportation and Communication across the trade routes
Between 1550s and 1960s, social disintegration and trade revolution led to the desire for merchants to increase their wealth and consequent establishment of Transportation and Communication across the trade routes. Efficient transportation encouraged the Spanish Armada and movement of traded goods. The economic upheavals were contained as Europe faced the age of renaissance Economic trends re-emerged in this period as mercantilism promoted property through supply of bullion (Gold and silver). This was necessitated by transportation of he finished goods in exchange for species. As a result, colonies were created and overseas expansion facilitated.
With the development of colonies and overseas control, trading posts were initiated immeasurably, and adventure in international commerce founded. The transoceanic trade increased the volume of traded goods, hence commercial expansion of merchants’ joint stroke. Commercial capitalism grew increasingly the economic stability of resource owners and the European economy. Trade was therefore revolutionized by mobilized of production factors and communication. Trade was expanded as merchants embraced bullionism as fundamental maxim of mercantilism and stability driven by improvement in communication.
The Europe took trade and economic strength was practiced with major emphasis on regulation on the economy based on favorable balance. Absolute merchant monarchies and subdivision, chartered monopolies, harbor tolls and prohibitions to encourage exports and discourage commodity imports. Wage regulation enabled merchants to accumulate more wealth and suppress the serfs and peasants, increasing their participation in trade. Merchants observed trade markets in terms of competing states and engineered territorial expansion. The European state transacted titles to merchant nobles and wealthy commoners to sustain income for monarchy. (William,230)
In the 1400s, the nobilities of merchants exploited trade and gained dominant position. The European society’s regular economic orbits of trade were further influenced by policies and transfer for power. The Columbian exchange was therefore developed to the southern Asia. Human skills of wood carving, sculpture, silver and gold objects were traded alongside glasswork in line with power and influence. This influence made the Spanish merchants to prosper in trade, as their power led to engagement in olive oil, wine and fruit exchange. This power from wealth of species and bullions expanded from France to Holland as capitalism took centre stage with feudalism. As a result, trade control and power led to establishment of center of economic activity in the northern Europe in between 1550-1650.
Trade encouraged monopolies as merchants thieved throughout history, increasing their economies base. Trade and economic development was necessities in Europe through expansion in transport infrastructure of canals, roads and docks. Remarkable revolution in agriculture and transformation of manufacturing sector by merchants also boosted trade. The mechanism doctrine, with support of capitalism created a basis for self driven economy with resource ownership and trade projected to species. Trade was therefore a foundation in the1650s. The doctrine enabled movement of commodities across the Mediterranean to Crete, Turkey, the Netherlands and to Cyprus, increasing economic trade-offs.( Donald,23)