Medieval Innovations and Early Colonial Expansion (15th-18th Centuries)
Innovations in Agriculture, Crafts, and Trade During the Middle Ages (pp. 40-44)
Agricultural output growth resulted from technological change. Innovations from the Roman era and early Middle Ages continued into the twelfth century, creating an agricultural system encompassing energy, equipment, and cultivation organization. Key innovations included controlling animal energy and hydraulic systems through herding, water mills, and windmills. Iron tools improved versatility and efficiency. Cultivation was organized around rotation, allotment, and community coordination, benefiting productivity and territorial control for tax collection. These advancements increased land and labor productivity.
External economies from these innovations spurred technological change in transport, metallurgy, and textiles, especially in populated regions and cities where market proximity reduced transport costs and increased capital supply.
Medieval trade innovations included trader specialization, the shift from itinerant to sedentary trade via networks and agencies, reciprocal treatment fostering trust and stable institutions, new contracts, banking and credit instruments (e.g., bills of exchange), and commercial institutions reducing transaction costs and stimulating market exchange.
The commenda was a highly innovative corporation, more flexible than its Roman-Byzantine predecessor. It divided capital and management, distributing profits among participants. While partners were initially liable for all company losses, merchants limited liability by distributing capital across multiple short-term companies. This diversified risk and mobilized savings from non-partners through interest-bearing deposits.
Banking emerged from money changers, trusted currency exchange and credit specialists. They facilitated transfers between accounts and banks, initially without fees or interest. Later, private interest-bearing deposits, liens, and probate courts enabled fractional reserve lending, though this led to some bank failures. Banking was regulated due to its public good aspect, providing sound money and credit, despite inherent risks.
The bill of exchange, a credit instrument evidencing debt from a commercial operation, allowed deferred payment (30-90 days) and debt offsetting among merchants. Originating in Italy in the 12th-13th centuries, it reduced cash transaction needs. Fair banks offset debts, with balances settled in cash or new bills at future fairs, making fairs international trade clearinghouses.
Features, Phases, and Dominant Countries of the First Colonial Expansion (15th-18th Centuries)
Europe’s Overseas Expansion
Europe’s overseas expansion began in the 15th century (1400s) during an economic depression. Causes included depleted precious metal deposits, land and booty demand from impoverished nobility and merchants, increased Mediterranean trade costs due to political disruptions and insecurity, and the search for more profitable Eastern routes (around Africa) for gold, spices, fishing grounds, and sugar plantations. The crusading spirit also played a role. Conquerors were supported by merchants and clerics. Navigational innovations reduced information and transport costs, expanding sea navigation. These innovations were driven by the desire to reduce transport costs and address ocean challenges. Naval artillery also helped reduce competition in Asian seas.
Initial Roles and Expansion
The Kingdom of Portugal initially led, followed by Castile, driven by the crusading spirit, a strong fishing fleet, and their geographical position. Merchant and gentlemen initiatives, supported by state charters, financed and planned expeditions. Settlement and exploitation patterns varied based on colony resources. The Portuguese established fortified trading enclaves (factories). The Spanish conquered territories in America between 1519 and 1534, establishing towns that were politically organized and tax-paying but technologically backward. The Netherlands, Britain, and France participated later, after Iberian dominance was established in America and the Indian coast. Plantations using slave labor for labor-intensive crops, a practice revived from the late Middle Ages in the Mediterranean, created a lucrative triangular trade between America (sugar, tobacco, etc.), Africa (slaves), and Europe (manufactured goods).
Impact of Overseas Expansion
Overseas expansion was vital for Europe’s economic growth. It led to profit accumulation, new trade areas, market-oriented settlements, and new high-income elasticity products, expanding market size. Precious metal exploitation increased the international money supply. Regions best able to capitalize on these opportunities led European growth, shifting the economic axis from the Mediterranean to the Atlantic, where Holland and England emerged as maritime powers with strong navies and state income.
Trade Centers and Shifts
Trade revolved around several centers, influenced by increased traffic volume, locational advantages, and increasingly complex payment systems. Bruges (Belgium) initially led, followed by Antwerp (Belgium) in the early 16th century until the 1566 political-religious conflict shifted merchant capital. Amsterdam (Netherlands), with its strong maritime fishing and locational advantages, then took over. By the 18th century, London (United Kingdom), powered by wool exports and colonial re-exports, became the leading trade center.