What are the causes of the commercial revolution in Europe?


A number of factors contributed to commercial revolution in Europe. Firstly, the discovery of the sea routes to both Asia and America provided a great fillip to the expansion of European commerce. The spice trade particularly thrived and the Europeans imported large quantities of cloves, cinnamon or pepper.

They also imported clothes, calicoes, chintzes and ginghams. They also imported a large variety of new products from the new world such as potatoes, maize, tomatoes, sugar, warm furs, cocoa, tobacco, gold, and ivory was also brought to Europe’s economy.

Secondly, the rise of the banking institutions also greatly contributed to commercial revolution. No doubt private banks existed in various coun­tries of Europe during the fourteenth and fifteenth centuries but their resources proved inadequate to meet the growing needs of the seventeenth century.


Therefore, these private banks were superseded by the public demands chartered by the government. The first such bank was chartered in 1609 and is known as Bank of Amsterdam. In 1694 Bank of England was chartered.

Thirdly, the government also contributed to commercial revolution by encouraging the formation of trading companies. The government felt that trading companies would be able to bear the probable losses involved in long distance trade and would be ‘in a better position to secure conces­sions for trade from foreign rulers.

Above all, they felt that they would be able to realize taxes from the companies and there would be very little chance of being defrauded.

The commercial practices also underwent a great change during this period and they fundamentally differed from the practices existing in the medieval age. The new commercial practice was characterized by three distinct features, viz.. expansion, specialization and integration.


Expansion means that the market for the commodities greatly expanded. It was not confined to local, provincial or even national level but even covered inter­national trade. Trade grew between different countries of Europe and later on even with different corners of the globe. In other words, the commercial markets greatly expanded.

In contrast with the practice prevailing in the medieval age when indus­trial and commercial functions were combined, these two functions were separated, and a special class of merchants, exclusively devoted to busi­ness, made its appearance.

The percentage of the total population en­gaged in commercial activities also steadily increased. Certain new classes of commercial functionaries like brokers, commission agents, commercial travellers also made appearance. These classes devoted themselves to some particular branch of commercial activity.

The practice of integration was another feature of commercial revolu­tion. The practice was a reaction against excessive specialization and once again led to reunion of the economic functions. This practice manifested itself in the form of establishment of large shops, invasion in the field of production by the mercantile firms, and greater share of the manufactur­ers in the marketing of their goods.


A number of selling agencies were established through which the industrial firms began to dispose of their goods. Likewise the retail traders also tried to establish control over the manufacturing process by setting up factories for production of items were selling. As a result of this process of integration the economic functions which had been served during the earlier period, were once again combined. In a way we can say that it reverted to earlier type.

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