FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Money to finance nat’l monarchies (FC.79) New...

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Money to finance natl monarchies (FC.79) New business techniques to handle larger trade volume: Joint stock companies People w/ moderate $ can also invest More money invested & circulating rather than being hoarded More tradeMore jobsStimulates increased production Merchants undercut guilds w/cottage industs (FC.65) Capitalism: Economic system using large sums of money in large scale trade, manufacture,or agriculture & characterized by: Private ownership of means of prod. Unlike guilds strict control Insurance companies Safer to invest Money to finance Ital. Renaissance (FC.76) Deposit banks & credit Safer to invest Law of supply & demand, not guild regulations, determines prices Profit motive (vs. Church view of profit as sin) Incentive & innovations Large scale of manuf. Growing gap b/w workers & owners Black Death especially hurts nobles (FC.71) Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Age of Explor. New mkts & sources of $ (FC.81) Look for new markets & goods outside Europe Middle class replenishes noble ranks by buying titles & offices from king Surviving peasants inherit victims property & buy freedom from serfdom Revival of kings power to safeguard peace & order Radically alters W. Eurs polit. & social structure: Adoption of Arabic numerals & accounting Ger. mining boom More $ in circulation

The Black Death radically altered Europes political & social structure, hurting Church & nobles with the new money econ., while helping peasants who could buy their freedom, middle Class who could buy noble titles and offices, & esp. kings whom everyone looked to safeguard the public peace. -> Econ as merchants set up cottage industs & the age of exploration ->mkts outside Eur. -> New business techs (banks, credit, insurance, & joint stock comps), which along with a mining boom & Arabic numerals & accounting -> Cycle of increasing investment, trade, production, and employment. -> Capitalism an econ. system using large sums of money in large scale trade, manufacture, or agriculture & characterized by private ownership of the means of prod., the law of supply & demand determining prices, profit motive, &a growing gap b/w owners & workers as the scale of prod. increased. -> $ to finance the Renaissance & rising nation states.

Social change FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Turmoil of the Later Middle Ages especially hurt what classes?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline Nobles new jobs or positions?

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71)

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71)

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries What did many Middle Class (MC) do?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries Why?

Because for some reason, they thought this looked cool

THE WOULD BE GENTLEMAN: HOW TO BECOME A NOBLE IN EARLY MODERN EUROPE Qualifications for nobility were different from one country to the next. For example, in England, it was purely through heredity, so there was a fairly small class of nobles (known as the peers or peerage). However, there was no specific legal status or class known as the gentry, who have popularly been seen as the lower nobility.

In France, there were three ways to become a noble: 1)inheriting the status from your father if he had permanent noble status; 2)by a special letter from the king; or 3)buying the status. By the 1700s, there were 4,000 offices that could be bought and confer nobility. To buy noble status, one must buy an office that conferred nobility. Some offices (e.g., judges in the Paris Parlement and the hundreds of royal secretaries) immediately conferred permanent nobility on the first generation holding that office. Others (e.g., mayors and tax collectors) typically did not receive permanent status until after the third generation of a family holding that office.

Keep in mind that buying an office (and noble status) was like buying a car or house today. It was the personal property of the person who bought it and could be handed down to succeeding generations. By the same token, one could sell an office, thus depriving ones descendants of that office and noble status, unless he sold it after attaining permanent noble status, which he could then hand down to his heirs without the office being attached.

Military offices were one category of positions that commoners could not buy. While this kept a lot of rich people with no military talent from infecting the army with their incompetence, it also kept out a lot of potential new talent, often to Frances detriment in its many wars all the way down to the revolution in 1789.

Noble status was just the first step in social climbing among the elite. There were four main factors determining your position within the noble hierarchy: how long your family been noble, three generations being a major threshold; what other families you had married into; what offices and titles you & your family members had achieved; and what notable actions they had performed

One critical step was finding a suitable marriage into a family with power, prestige, and wealth, especially the latter, because an aspiring noble needed a sizable dowry to climb the ladder of success. However, you had to be careful not to set your sights too high, because trying to win a bride from an extremely prestigious and powerful family would likely meet with rejection and damage your still fragile status.

Having children was another important decision for building a powerful family. Having too many sons could dissipate your wealth, but having none to succeed you would be the end of the line. Of course, the fly in the ointment was the high rate of infant and child mortality, probably 50% by age twenty. But child mortality varied widely from family to family, so you never know how many, if any, children will survive you. If you were blessed with several healthy sons, you could limit the size of your family by finding romance with a mistress or various peasant girls. (Unfortunately for your wife, she doesnt have such options, since any children born would be of suspect legitimacy.) If all your legitimate sons die, you could have any bastard sons declared legitimate noble heirs by a letter from the king.

Money is important to a noble, not as goal in itself, but as a means to social prestige. Thus you need to make astute investments within the legal restrictions of your class. Practicing certain ignoble occupations, such as retail commerce or manual crafts, would cost you your noble status. Other trades, such as medicine, glass blowing, exploitation on mines and maritime and wholesale commerce are tolerated. So is tilling the soil, as long as it is your own land and not someone elses. And especially forbidden was

.gambling on giraffe fights

Three types of investments are in tax farms, textiles (wholesale) and land. Tax farms are the most lucrative, but also disreputable, so getting involved in that might lose status in the eyes of your peers. Textiles are also lucrative, but also riskier, while land is the safest, but least dynamic long-term investment.

A noble with Land also has two main options on how to manage it. You could collect fixed monetary rents, which were stable, but also more subject to inflation. Or you could let your peasants sharecrop and take a percentage of their grain as rent. You could then either sell the grain in town or store it and wait for a year when grain production is down and then sell it for a greater profit. One danger here, however, is that rats and spoilage will reduce your grain stores each year.

An aspiring noble also wants to get a title, such as duke or count. In the middle ages, these were titles held by noble families that had fought their way up in society as members of the warrior class and established as much power and independence from the king as they could. However, over the centuries, the monarchy has gradually regained control of these titles through such things as marriage and the extinction of family lines, whereby the titles reverted to the king by a custom known as escheat. By 1600, the king controlled these titles and could grant them at will to those gaining his favor. The hierarchy of titles is: 1) Duc (duke) 2) Marquis (marquis) 3) Comte (earl) 4) Viscomte (viscount) 5) Baron (baron)

Of course, a lowly first generation noble like you cant expect to get a title on your own. Much like medieval homage, you need help from a patron, so you should vie for the patronage of a powerful noble who can work in higher circles of power for your benefit and protect you from enemies who would try to subject you to fines, confiscations, and the humiliation of scandal. Thus a lower nobles fortunes are tied to those of his patron, and if that patron fell from favor, so did his clients.

And no self-respecting noble is going to be taken seriously if he doesnt have his own castle in the country, or what we now refer to as a chateaux. Many or most castles fell into disrepair, but a number of them, in particular along the Loire River close to Paris, were renovated as country estates. Except now they were built more for comfort, and less for defensive purposes. Below: Chateau De La Hulpe (left) and Beloeil castle, both in Belgium.

Modave Chateaux Jehaye Chateaux

Chambord Chateaux

Chateau de Blois, an example of what happened to the luckier medieval castles during the Renaissance

Another French chateau. Notice the simulated giants in the upper left. The last real giant was executed during the Reign of Terror in 1794 for trying to sell magic beans to a peasant woman. Contrary to popular belief, giants rarely attained a height of more than 10 meters. Those who did were considered freaks by their fellow giants.

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles What eventually happens to the MC who do this?

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks - Old nobility called nobles of the sword FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Old nobility called nobles of the sword -Newer nobles called Nobility of the robe FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom

Now the new nobles (of the robe) could go hunting, trampling over peasants crops and children just like the older established nobles of the sword got to do.

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword Big winners politically?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword What gave kings an edge over nobles?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs

Fairy tales, or more properly folk tales, give us one of the few insights into how common people felt about medieval society. Take, for instance, the villains, who typically are evil ministers or women, often with diabolical magical powers that allow them to control events. Since the kings ministers and advisors typically came from the noble classes, their portrayal as evil largely reflects the commoners views of nobles as the enemy and source of their troubles.

Women also feature prominently among villains, because of the belief that it was an inversion of the natural order for women to be in power. Therefore, such women must be evil. This also means that real women in power, such as Marie de Medici and Marie Antoinette of France, were typically seen as evil and scheming (maybe even witches) and had a hard time getting fair treatment from historians of the time (almost all of them men). Only recently have historians been reassessing these womens lives & giving them more balanced treatment ..sometimes.

By contrast, kings are seen as good, because they were the natural allies and protectors of peasants and townsmen against their common enemy: the nobles. Therefore, if things are going badly in the kingdom, its not because the kings are bad, but because they are under the influence (or spell) of evil ministers or queens. Once the spell is broken, the king or his son the prince (AKA Prince Charming, right) can again rule and bring the kingdom prosperity.

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs Surviving peasants inherit victims property & do what with it?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants Impact on productivity & why?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Impact on towns & trade?

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450

The Venetian ducat (above), which maintained a purity of 99.9% for 500 years, and the Florentine florin (below) especially symbolized the increasingly money based economy

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises How did the markets change?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises How did merchants deal w/guilds restrictions?

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $

The rise of cottage industries Once upon a time, there was a town where the local guild had total jurisdiction & the gates to lock out any competition Peasant cottages where guild has no jurisdiction

The rise of cottage industries Then one day a bright and enterprising young merchant came along with some wool to weave and sell. However, the evil guild masters locked the poor merchant out of the town & refused to let him do business there. Keep out! $ Baa! Keep out! Stupid sheep

The rise of cottage industries But being bright and resourceful, the merchant had an idea. $ Baa! Keep out! I dont know, but I dont like it. Whats that coming out of his head?

The rise of cottage industries He would give peasants in their cottages raw wool to spin and weave into cheaper quality cloth during the off season. $ $ Peasant cottages where guild has no jurisdiction I dont know, but I dont like it. Whats he up to? Keep out! $ Baa! = Bag of raw unworked wool

The rise of cottage industries Since the wool was only Wal Mart quality, he could pay the peasants Wal Mart wages (which they couldnt count anyway) and undersell the guilds outside of town and their jurisdiction Peasant cottages where guild has no jurisdiction Hey, stop that! Keep out! $ $ $ $ $ $ $ $ $ Ouch! He just hit me in my wallet.

Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits The rise of cottage industries Peasant cottages where guild has no jurisdiction Keep out! $ $ $ $ $ $ $ $ $ $

The rise of cottage industries Peasant cottages where guild has no jurisdiction Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits $ $ $ $ $ $ $ $ $ $ $

The rise of cottage industries $ $ $ $ $ $ $ $ $ $ $ $ Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits

The rise of cottage industries Peasant cottages where guild has no jurisdiction $ $ $ $$ $ $ $ $ $ $ $ $ Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits

The rise of cottage industries Peasant cottages where guild has no jurisdiction $ $ $ $$ $ $ $ $ $ $ $ $ $ Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits

The rise of cottage industries Peasant cottages where guild has no jurisdiction $ $ $ $$ $ $ $ $ $ $ $ $ $ $ Everyday the merchant would get richer & richer & give the peasants even more wool to weave more profits

The rise of cottage industries Peasant cottages where guild has no jurisdiction - until one day. $ $ $ $$ $ $ $ $

he exploded with money! The rise of cottage industries $ Peasant cottages where guild has no jurisdiction $ $ $ $ $ $ $ $ $ $ $ $ I just got hit in the Head with a quarter! Run for your lives! $ $ $

The rise of cottage industries Peasant cottages where guild has no jurisdiction $ $ $ $ $ $ $ $ And they all lived happily ever after except for the guilds. Stupid sheep! Stupid merchant! $ $$ $ Stupid guild!

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises How else did markets & resources expand?

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it

Florence Rome $

France Florence Rome $

France Florence Rome $ England Sicily

France Florence Spain Portugal Rome $ England Sicily

France Florence Spain Portugal N. Africa Rome $ Sicily England

France Florence Spain Portugal N. Africa Rome $ Sicily England Japan

France Florence Spain Portugal N. Africa Rome $ A bunch of stuff in between Sicily England Japan

France Florence Spain Portugal N. Africa Rome $ Japan A bunch of stuff in between Sicily England A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. 5k$ cash

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. 5k$ cash

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England $ A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. Unfortunately, on the way there

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England $ A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. Unfortunately, on the way there, a storm hits

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. Unfortunately, on the way there, a storm hits $ Gosh darn it $ Well, shiver me timbers* * Whatever that means

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England A Florentine merchant sends his agent to England with 5,000 florins to buy wool he plans to weave into fine woolen fabric back at Florence. Unfortunately, on the way there a storm hits & sinks his ship with all his money (not to mention his agent).

France Florence Spain Portugal N. Africa Rome $ Church taxes Japan A bunch of stuff in between Sicily England After the funeral (for his money) the merchant has an idea. He knows the Church collects taxes in England to be sent to Italy, risking the same dangers as he does.

France Florence Spain Portugal N. Africa Rome $ Church taxes Japan A bunch of stuff in between Sicily England So he gets a letter of credit* from the pope for 5,000 florins and sends a new agent with it to England. *marked in red to distinguish it from green cash) $

France Florence Spain Portugal N. Africa Rome $ Church taxes Japan A bunch of stuff in between Sicily England So he gets a letter of credit from the pope for 5,000 florins and sends a new agent with it to England. On the way, the ship is waylaid by pirates. ARRRH! $

France Florence Spain Portugal N. Africa Rome Church taxes Japan A bunch of stuff in between Sicily England So he gets a letter of credit from the pope for 5,000 florins and sends a new agent with it to England. On the way, the ship is waylaid by pirates. ARRRH! 5k$ cash $

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England So he gets a letter of credit from the pope for 5,000 florins and sends a new agent with it to England. On the way, the ship is waylaid by pirates. ARRRH! Church taxes 5k$ cash $

Too bad. This is all Ive got France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England Unfortunately (for the pirates) all they find is a worthless letter of credit worth 5,000 florins. But, since they cant read, they let the ship go on its way. Yes, but can you read? Well.no I said ARRRH Church taxes 5k$ cash $

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England Unfortunately (for the pirates) all they find is a worthless letter of credit worth 5,000 florins. But, since they cant read, they let the ship go on its way. ARRRH! Stupid pirates Church taxes 5k$ cash $

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England Unfortunately (for the pirates) all they find is a worthless letter of credit worth 5,000 florins. But, since they cant read, they let the ship go on its way. Church taxes 5k$ cash $

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England When he gets to England, the agent gives the credit note worth 5000 florins to the archbishop in charge of collecting church taxes. He gets 5000 florins from the archbishop & proceeds to buy a bunch of wool. Baa! Church taxes 5k$ cash 1k$ cash 1k$ cash 1k$ cash 1k$ cash 1k$ cash Rich sheep herders $

France Florence Spain Portugal N. Africa Rome $ Japan A bunch of stuff in between Sicily England On the way home, the agent is waylaid by the same pirates who dont recognize him because his ship is turned backwards. ARRRHBaa! 5k$ credit

France Florence Spain Portugal N. Africa Rome $ Japan A bunch of stuff in between Sicily England On the way home, the agent is waylaid by the same pirates who dont recognize him because his ship is turned backwards. Once again, since they cant read and they hate the smell of wool, the pirates let the agent go. ARRRH Baa! 5k$ credit

France Florence Spain Portugal N. Africa Rome $ Japan A bunch of stuff in between Sicily England On the way home, the agent is waylaid by the same pirates who dont recognize him because his ship is turned backwards. Once again, since they cant read and they hate the smell of wool, the pirates let the agent go. Baa! 5k$ credit

France Florence Spain Portugal N. Africa Rome $ Japan A bunch of stuff in between Sicily England On the way home, the agent is waylaid by the same pirates who dont recognize him because his ship is turned backwards. Once again, since they cant read and they hate the smell of wool, the pirates let the agent go. Baa! Stupid sheep 5k$ credit

France Florence Spain Portugal N. Africa Rome 10k $ cash Japan A bunch of stuff in between Sicily England So the agent returns home safely & then has the wool woven and sold for 10,000 florins, a profit of 5,000 florins.

France Florence Spain Portugal N. Africa Rome 5k$ cash Japan A bunch of stuff in between Sicily England So the agent returns home safely & then has the wool woven and sold for 10,000 florins, a profit of 5,000 florins after he sends $5,000 to his branch office in Rome to repay the pope. Thanks $ 5k$ cash

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England With his increased credit rating, the merchant can borrow 10,000 florins & send two ships out at a time, thus doubling his profit to 10,000 florins after paying back the loan. $10,000 5k$ credit 5k$ credit

France Florence Spain Portugal N. Africa Rome Japan A bunch of stuff in between Sicily England With that increased credit rating, the merchant can borrow 20,000 florins & send four ships out at a time, thus doubling his profit again to 20,000 florins after paying back the loan, etc., etc.,etc. $20,000 5k$ credit 5k$ credit 5k$ credit 5k$ credit

Lets review

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Storms

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING PiratesStorms

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING PiratesStorms Church collects taxes all over W. Europe

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy

FC.75A THE BIRTH OF BANKING PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe Other people deposit money with wool merchants branch offices in one place & take letters of credit to withdraw money in other branch offices so they do not have to carry cash across Europe

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe Other people deposit money with wool merchants branch offices in one place & take letters of credit to withdraw money in other branch offices so they do not have to carry cash across Europe Merchants charge service fees for transferring funds from one branch office to the next

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe Other people deposit money with wool merchants branch offices in one place & take letters of credit to withdraw money in other branch offices so they do not have to carry cash across Europe Merchants charge service fees for transferring funds from one branch office to the next Merchants start to use the money deposited with them for loans & investments

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe Other people deposit money with wool merchants branch offices in one place & take letters of credit to withdraw money in other branch offices so they do not have to carry cash across Europe Merchants charge service fees for transferring funds from one branch office to the next Merchants start to use the money deposited with them for loans & investmentsBirth of banking

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash FC.75A THE BIRTH OF BANKING Rise of capitalism (FC.75) Merchants send agents to other countries who borrow local Church taxes & use them for their business PiratesStorms Church collects taxes all over W. Europe Need to send those taxes to Pope in Italy N. Italian merchants trade all over W. Eur. Need to send $ from Italy to do business Risky to carry cash long distances Send letters of credit back to N. Italy worth the amount of Church taxes they had borrowed Home office repays the pope in Italy the Church taxes it had borrowed abroad without either party having to transfer cash across Europe Other people deposit money with wool merchants branch offices in one place & take letters of credit to withdraw money in other branch offices so they do not have to carry cash across Europe Merchants charge service fees for transferring funds from one branch office to the next Merchants start to use the money deposited with them for loans & investmentsBirth of banking

Social change -BD & 100 Yrs War-> Nobles milit. & econ. (inflation) decline -Some become courtiers & officers in kings army; -Some work-> lose noble status in some countries -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks Banking centers in Europe Bruges (c.1487) Augsburg (c.1485-1525) Antwerp (1500s)Lyons (1500s)

A merchant dealing money from a counter (banco)

Quentin Metsys, Banker and his Wife, 1514. The presence of the bankers wife in this and the next slide reflect a somewhat higher status for women in Northern Europe, where they actively helped in their husbands business. In England, a guild masters widow could run his business if she had no sons or until her sons were old enough to take over on their own. Notice how she is leafing through a book, indicating she is literate.

Marinus Claesron van Reymerwarle (late 1400s-1567), The Moneychanger and His Wife, 1539

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes How could they involve investors who each have only a little cash?

I only have $100 We only have $100 I only have $100 I only have garbage I only have $100 I only have 10, 20, 30,40,50,60,70, 80, 90, $100 I only have $100 One day, a bunch of characters wanted to send out a trading expedition and make a ton of money. Unfortunately, none of them had the $1,000 needed to finance the voyage. I only have $100

Then one of them had a great idea: Lets cooperate!

Heres my$100 Heres my$100 from record sales Heres my$100 Heres my garbage Heres my$100 Heres my 10, 20, 30,40,50,60,70, 80, 90, $100 Heres my$100 And they did. Heres my$100

So they bought a ship and sent it sailing off to make tons of money through off-shore tax shelters You sure dont get much for your money anymore, do you?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes What also made investing safer?

-MC settle on Chateaus & waste $ like other nobles -> Constant turnover in ranks -Newer nobles called Nobility of the robe -Old nobility called nobles of the sword -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest

France Florence Spain Portugal N. Africa Rome $ A bunch of stuff in between Sicily England Japan Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason

France Florence Spain Portugal N. Africa Rome $ A bunch of stuff in between Sicily England Japan Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason I dont think were welcome here.

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance worth 10% value of the expeditions to merchants sending them out.

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies ->

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies -> He gets 1100 ducats ->

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies -> He gets 1100 ducats -> If the odds play out & 1 expedition doesnt make it back ->

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies -> He gets 1100 ducats -> If the odds play out & 1 expedition doesnt make it back -> He pays out 1000 ducats for that policy ->

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies -> He gets 1100 ducats -> If the odds play out & 1 expedition doesnt make it back -> He pays out 1000 ducats for that policy -> He makes 100 ducats profit for doing what?

Some businessman notices that 1/11 (9%) ships dont make it back for whatever reason. -> He sells insurance sells insurance worth 10% value of the expeditions to merchants sending them out. -> If each expedition costs 1000 ducats & he sells 11 policies -> He gets 1100 ducats -> If the odds play out & 1 expedition doesnt make it back -> He pays out 1000 ducats for that policy -> He makes 100 ducats profit for doing nothing Nothing!!!

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes Insurance Example: -1/11 ships crash -> Charge 10% value of exped. for insur. -> 1% profit for doing NOTHING Trade? What also increased $$ supply?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Adoption of Arabic numerals & accounting Ger. mining boom More $ in circulation Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes Insurance Example: -1/11 ships crash -> Charge 10% value of exped. for insur. -> 1% profit for doing NOTHING Trade? What helped record keeping?

-Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes Insurance Example: -1/11 ships crash -> Charge 10% value of exped. for insur. -> 1% profit for doing NOTHING FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Adoption of Arabic numerals & accounting Ger. mining boom More $ in circulation Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Adoption of Arabic numerals & accounting Ger. mining boom More $ in circulation Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes Insurance Example: -1/11 ships crash -> Charge 10% value of exped. for insur. -> 1% profit for doing NOTHING The modern consumer cycle More money invested & circulating rather than being hoarded Trade?

FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) New business techniques to handle larger trade volume: Merchants undercut guilds w/cottage industs (FC.65) Black Death especially hurts nobles (FC.71) Age of Explor. New mkts & sources of $ (FC.81) Radically alters W. Eurs polit. & social structure: Adoption of Arabic numerals & accounting Ger. mining boom More $ in circulation Middle class replenishes noble ranks by buying titles & offices from king Revival of kings power to safeguard peace & order Surviving peasants inherit victims property & buy freedom from serfdom Agric., popul., towns & trade revive by 1450 New mkts w/more people w/modest amounts of $ Look for new markets & goods outside Europe Deposit banks & credit Safer to invest Joint stock companies People w/ moderate $ can also invest Insurance companies Safer to invest -Only kings (w/MC help) can buy armies (esp. Guns) & burs - Free peasants -> Incentive to work -> Productivity rises Credit & deposit banks -Eng clergy & Ital. Merch both need to transfer $ w/o carrying it -> Flor. Merch. w/letter of credit borrows $ from church in Eng -> Ch. Cleric carries letter of credit to Italy & cashes it -> Both get cash in others country w/o carrying cash -> Others wanting to transfer $ pay Fl. merch. to move it w/letters of credit to their Fl. Merchs branch offices -> Banks -Credit -> Merch. could send sev. agents, each w/ letter of credit worth all his cash -> Can work w/sev. X more $ as he has cold hard cash Florence pro-papal (Guelph)-> right to collect church taxes Insurance Example: -1/11 ships crash -> Charge 10% value of exped. for insur. -> 1% profit for doing NOTHING The modern consumer cycle More money invested & circulating rather than being hoarded More trade Production?

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FC.75 THE ECONOMIC RECOVERY OF EUROPE (c.1450-1600) Money to finance nat’l monarchies (FC.79) New...

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