The Age of Exploration fundamentally changed Europe's economic structure. The massive inflow of silver from the New World and the expansion of trade caused an economic transformation from the Middle Ages to the modern era.
The Price Revolution
Because Spain brought large quantities of silver from Mexico（including the Potosí silver mines）to Europe, prices rose two- to threefold throughout the 16th century. This is called the Price Revolution.
- Feudal lords who depended on fixed rent income declined→the breakup of feudalism accelerated
- Merchants and manufacturers profited from rising prices and accumulated capital
- Workers suffered as real wages declined
- Spain itself eventually experienced worsening finances because of an import surplus
The Commercial Revolution and the Shift of the Economic Center
・Expansion of trade and the inflow of new goods（spices・sugar・tobacco・cotton）→the Commercial Revolution
・The economic center shifted from the Mediterranean（such as Venice）to the Atlantic coast（Lisbon・Antwerp・Amsterdam・London）
・The birth of joint-stock companies：the Dutch East India Company（1602）and the English East India Company（1600）distributed risk among many investors and enabled large-scale trade
・Banking developed from money-changing, and the credit economy spread
・Expansion of trade and the inflow of new goods（spices・sugar・tobacco・cotton）→the Commercial Revolution
・The economic center shifted from the Mediterranean（such as Venice）to the Atlantic coast（Lisbon・Antwerp・Amsterdam・London）
・The birth of joint-stock companies：the Dutch East India Company（1602）and the English East India Company（1600）distributed risk among many investors and enabled large-scale trade
・Banking developed from money-changing, and the credit economy spread
Triangular Trade and the Integration of the World Economy
Triangular trade linking Europe, Africa, and the Americas（weapons and cloth from Europe→Africa, enslaved people from Africa→the Americas, sugar, tobacco, and silver from the Americas→Europe）was established, and the world economy became integrated for the first time.
Practice
- What was the economic phenomenon that occurred in Europe because of the massive inflow of silver from the New World?
- From where to where did the economic center move as a result of the Age of Exploration?
- Explain why the East India Companies were historically groundbreaking.