Economic Trends in Europe

14th century 19th century

Billy Ohlund, Will Gardner, Vivian Torres, Andrew Lee2nd Period

Economic Trends in EuropeThe impact of the Black Death on European economyEconomics of the 14th CenturyPopulation CollapseBlack Death killed off a third of European populationLabor shortage caused a rise in the cost of laborPrices dropped due to low demand of goodsIncome for aristocrats and landlords dropped, causing worry amongst the elite

Response to the Economic CrisisNobility sought to lower the wage rateParliament passed the Statute of Laborers (1351), which limited wages to pre-plague levelsPosition of landlords deteriorated as peasants improved ( they were paid almost double that of pre-plague wages)Decline in peasants freed them from servitude on a manor

Taxes = Revolts

Taxes placed on the peasants helped aristocrats alleviate their problems temporarily England imposed the poll tax for every adult member of the populationTaxes met with dissent and revolts broke out all over Europe The Hundred Years War left France in deep debtRecovery from the Black DeathEconomics of the RenaissanceTradeTrade began to expand on the Mediterranean and Atlantic seaboard Hanseatic League became the leader of trade after the plagueSilting in the Port of Bruges led its declineThe Venetian Flanders Fleet took over as the leader of tradeItalians maintained a wealthy commercial empire

Industry

Old industries such as wool began to recover, especially in ItalyNew industries such as printing, mining, and metallurgy began to rival the textile industryEntrepreneurs developed large mining operations to produce precious metals such as gold, silver and copperBankingFlorence became the Renaissance capital for banking because of the Medici familyMedici Bank invested in various businesses, including textile, commerce, and miningDecline in competent family leaders led to sharp decline of its bankMedicis were expelled from Florence in 1494, ending the Medici financial empire

The ReformationChurch in DebtCorruption of the clergy left the Church in debtHigh positions were held by nobility and upper middle classIndulgences were sold to gain profit as well as collect holy relics with attached indulgences

Increase trade, population, and global economyAge of ExpansionEconomic MotiveThe economic motive for expansion was primarily to expand trade and find gold, spice and other precious commodities The Spanish and Portuguese Empires were the first to search for the Northwest Passage, but landed in the AmericasEnslaved the natives and forced them to farm and mine for precious metalsTriangular TradeTriangular Trade was between Europe, Africa, and the AmericasEurope traded manufactured goods to Africa and the AmericasAfrica traded slaves and raw materialAmerica traded molasses, corn, and other raw material

Columbian ExchangeTrade between Europe and the New WorldImports to the New World: horses, small pox, technology, wheat, rice, domestic animals, coffee, sugar cane, alcoholImports to Europe: syphilis, corn, tobacco, potato, turkey, llama, cocoa, tomato, molassesCommercial Revolution Causes: More trade, population growth, Price Revolution causes inflation and more shopping, and a broadening national economy New entrepreneurs: Medici and Frugger New industries: Books, shipbuildingCottage System: Investor pays local workers to make separate parts for cheap and sells the final product to generate profit with little loss; beginning of commercial capitalismJoint-Stock Companies: Investors pool money for expensive financial ventures; less risk of losing money and the company is liable, not the investorMercantilism: Economic theory that power of a nation is based on its wealth, which is finiteRise of Capitalism: Open economy; endless ways to make moneyAmsterdam Stock Exchange becomes capital of financeBritish East India Co. and Dutch East India Co. established in the East can tax the people of colonyWars of the 17th centuryGerman economy was devastated after the Thirty Years WarFrance was in debt after Colbert tried and failed using mercantilist ideas to increase wealth of FranceWars of King Louis XIV left France in debtCharles I imposed ship taxes without Parliament consent among other things led England into a civil warPhilosophy Influences the EconomyEconomics during the Scientific Revolution and the EnlightenmentThe Scientific RevolutionDuring the Scientific Revolution, Europe experienced a minor influx in new job employmentWomen were able to apply for jobs such as scientists and astronomers

The EnlightenmentNew ideas impacted financial spending Francois Quesnay and the Physiocrats founded the laws of modern economics: 1) Property is the true source of wealth, 2) Supply and demand, 3) Laissez-faire; free economyAdam Smith wrote the Wealth of Nations, advocating for the three natural laws of economics

Economics in the 18th CenturyChange for the BetterEuropean economy began to flourish in the 18th century Paper money was introduced into the banking system, making it easier to make transactions and loan money with return creditEmergence of government bonds paying interest created the notion of a public debt versus a monarchial debtTextile Industry expanded; cotton became the main export in England and gave rise to the cottage systemThe global economy continues to grow as trade flourishes

Textile Industry By the eighteenth century, textile production began to take on the new system of cottage industry in which spinners and weavers worked at home in cottages using the raw materials supplied by capitalist entrepreneurs in order to make the wool cloth. This system allowed rural people to earn incomes that supplemented their pitiful wages as agricultural workers. The introduction of cotton also proved to be a profitable market due to the growing demands for lightweight cotton clothes that were less expensive that linens and woolens.Agricultural RevolutionAgricultural Revolution improved farming practices and methodsIt moved from small, local farming to large scale farmingCauses: More farmland in use, increased yield per acre, healthier livestock, and better climateCrop rotation divided a field into sections so the plants can replenish the soil with nitrogen when rotated during the seasonsSeed drill made growing food more effective; it buries seed deep into soil at intervals to birds dont eat themDevices soon displaced the peasants who work the land through the Enclosure Act, which fenced off land to peasantsPeasants went to cities and became the main workforce

French RevolutionKing Louis XV asked aristocrats to borrow money50% of the budget is spent paying for debt; 25% for the army; and 6% for the lifestyle of the king and queenThe king spent a lot of money and by 1789, France was in debtHe called a meeting with the Estates-General to sort out the financial crisisBread shortage caused inflation of bread prices, angering the people and causing the French Revolution Industrial RevolutionCausesAgricultural Revolution provided more food, inducing a population growth that nearly doubled from 1750-1850England had a highly centralized banking system with a steady influx of capital that helped invest in new factories and machineryCoal and Iron were important natural resources, which England had a lot ofThe government helped fund public projects such as roads, canals, and railroads for smooth transportation of goodsWith its large, international market, Britain had plenty of places to sell is goods toBritain did not have free trade, therefore by placing high tariffs on imports and exports, they can generate a lot of profit from tradeBanking Joint-Stock Investment banks pooled together large sums of money and subsidized is shareholders with returns Friedrich List wrote the National System of Political Economy, refuting free trade and calling for high tariffs on trade; ideas are contrary to Adam Smith Factors of Production: Land, Labor, CapitalAmerican System: Identical, individual, interchangeable parts were made so that the final product can be assembled quickly and easily, thus reducing costs and saving laborConservatism, Liberalism, and SocialismEconomics of the 19th centuryEconomic LiberalismEconomic Liberalism is the idea that the government should not interfere with the natural economic forces i.e. laissez-faire, supply and demand, etc.Thomas Malthus wrote Essay on the Principles of Population, stating that the food supply rate is lagging far behind the population growth rate, therefore causing starvation once it reaches crisis pointDavid Ricardo wrote Principles of Political Economy; argued against government interference with the natural laws of economic and the iron law of wagesIron Law of Wages: Population growth= more workers -> lower wages-> more poverty-> disease/ death= population decrease-> higher wages-> better living conditions-> population growth, etc. It is a natural cycle; the government should not disturb its courseJohn Stuart Mill- Utilitarianism is the government promoting the greatest good for the largest number of people i.e. minimum wage

Socialism

Socialism theorizes that human cooperation is superior to capitalist competitionUtopian socialists such as Fourier, Owens ,and Blanc were against private property and competition; believed in public property and equal distribution of propertyLinks to Primary SourcesAdam Smith, Wealth of Nations, http://www.fordham.edu/halsall/mod/adamsmith-summary.htmlFriedrich List, National System of Political Economy, http://www.fordham.edu/halsall/mod/1856list.htmlDavid Ricardo, Principles of Political Economy, http://www.fordham.edu/halsall/mod/ricardo-summary.html