The Commercial Revolution

The commercial revolution in Europe was a result of the worldwide globalization that occurred due to the exploration starting in the 1400’s. Ideas such as capitalism, and joint-stock companies came into effect, along with inflation. It was a chain of cause-and-effect from the first voyage of Columbus to the Columbian Exchange of plants, animals, and ideas, to the rise of the middle class.

The rise of capitalism was one of the first visible effects of exploration. Because of the valuable goods found in the newly discovered lands, trade became a booming investment. Europe, the Americas, and Africa, were being connected by the Columbian Exchange, making the merchants who conducted this trade very rich. Merchants were making their profits from individual ownership of goods, which is how capitalism is defined. This class of merchants, called the “middle class,” grew larger and more powerful, spurring the rise of capitalism. The middle class became entrepreneurs, people that owned private companies, most of which were involved in the booming overseas trade market which had created this new economic system. However, sometimes these private companies would need an amount of money the merchants who wanted to found a company couldn’t finance on their own. This spurred the rise of an idea called joint-stock companies.

Exploration led to the system of joint-stock companies because colonies such as Jamestown would have never been possible without them. Groups of a few individuals who wanted to journey to the new world had to fund their journey themselves, which would be too expensive for so few people. Joint-stock companies eliminated this problem. These companies were built on investments from other people, which means that others agreed to pay for a share of the company. The people that invest in this way essentially own part of the company, and will profit a little from it themselves if it does well (or the other way around). This was one of the ways the