Medieval Europe Economic History
The urban population of Europe began to decline even before the fall of Rome. The city of Rome had a million inhabitants in the 1st century ce. By the time barbarians crossed the Rubicon River on their way to plunder Rome the city had lost over half its population. At the end of the 14th century Rome had less than 20,000 people.
Many urban sites in northern Europe were abandoned during the Dark Ages. Others remained hollow shells, the population largely depleted. Basic supplies were drawn from the surrounding countryside.
Trade over long distances was largely confined to luxury goods, including slaves. This was conducted by foreigners, mainly Jews and Syrians, for the benefit of both secular and religious men of means.
Urban Renewal
Although Italian cities suffered from invasions and pillage, the urban tradition clung. Their association with the Byzantine Empire between the 6th and 9th centuries was vital, as were contacts with Islamic civilization after the 7th century, which helped kept port cities alive despite incursions. By the 11th century Italian cities were at least as vibrant as those to the north.
While urban renewal began in the port cities it was not long confined there. The Lombard and Tuscan plains were the hinterlands of Venice, Genoa, and Pisa. They were also the most fertile and productive agricultural areas in Italy.
Milan in Lombardy and Florence in Tuscany were vibrant examples of an intense interaction between city and country that fed cities both supplies and people. In the 11th and 12th centuries these cities repulsed feudal attempts at takeover.
The manorial system was designed for self-sufficiency. Market pressure hastened its demise. By the 10th century money rents were replacing tenant labor services.
Feudal lords leased or sold properties to agricultural entrepreneurs who had made their money through commerce. Manorial open fields were splintered, enclosed, and subjected to intensive cultivation by applying the same calculations of cost and revenue that accompanied business dealings.
Feudalism was overwhelmed in the cities. Some kings and lords tried to treat towns as vassals, but the exigencies of governance over wealthy merchants were beyond them. Instead, similar to ancient Greco-Roman city-states, urban centers extended their power over the surrounding countryside.
By 1300 200,000 lived in Milan, while over 100,000 each populated Florence, Genoa, and Venice. Several other Italian urban centers housed 20,000–50,000.
Meanwhile, the population of Paris was around 80,000. London was home to some 30,000. Cologne, the largest city in Germany, was about the same.
The only region comparable to northern Italy was the southern Low Countries, especially Flanders and Brabant. The population density of this region was the greatest in Europe, coupled to the most advanced and intensive agriculture, as well as hosting the predominant commercial and industrial centers.
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With commerce ascendant, the to-and-fro of conquest, pillage, and trade continued apace, centered between Italy and the Levant. The Venetians and Byzantine Empire had been trading since the empire was founded. In the 11th century the Venetians secured a commercial coup in return for aid against the Seljuk Turks: duty-free port access throughout the empire, a privilege that native merchants lacked.
Meanwhile, Genoa and Pisa drove the Muslims off the islands of Corsica and Sardinia, attacked and looted their north Africa strongholds, and then extracted most-favored trading status for themselves.
The Crusades were a series of Christian assaults against various targets, including a pogrom against endemic Jews in Europe during the upswing to the 1st Crusade at the end of the 11th century. Though billed by the papacy as reclaiming the Holy Land (and other conveniently located territories), the Crusades were essentially overelaborated looting sorties that failed more often than not. Regardless of outcome, in the aftermath the Italians made the necessary treaties with Muslims which ensured that trading continued.
Some of the most exotic wares to Europe in the 13th to mid-14th century came from China, and, to a much lesser degree, India. Again, Italians dominated the trade.
The Mongol rulers, despite their reputation for ferocity, welcomed Christian missionaries and Western traders. The crusade there was strictly commercial.
As early as the 12th century, regional specialization in producing various goods occurred. The most famous example was wine from Bordeaux, but grain from the Baltic lands increasingly fed the urban Low Countries, and Flemish weavers relied upon raw wool from England.
Champagne Fairs
The Counts of Champagne ruled that northeast region of France from 950 to 1316. In the 12th–13th centuries an annual cycle of trade fairs was held in different towns in the region. The counts provided facilities and travel protection for the Champagne fairs as well as special commercial courts to resolve disputes. Located roughly halfway between Europe’s most economically developed areas – northern Italy and the Low Countries – the Champagne fairs significance echoed through time.
Credit instruments were devised that survived long after the fairs had ceased. Champagne fair business was conducted entirely on credit. At the end of one fair an unsettled balance was carried over to the next; a kind of bill of exchange. Although bills of exchange emerged from commodity trade they evolved into purely financial instruments, only indirectly connected to commodities.
The precedents of the Champagne commercial courts carried on as an influence in law and adjudication in several European countries.
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The capitalist system did not start with industrialization in 18th century England, but with the commercial and financial enterprises that were first most vibrant in Italy. In outlook and impact this early phase was as revolutionary as later industrial capitalism.
Early traders and financiers had the impulses and methods of capitalism: pursuit of profit so as to accumulate wealth, and long-distance operations from long-term planning. Contract and exchange replaced the status and servitude of early economic activity, as competition was condoned as the inevitable outcome of acquisitiveness.
Faith in rationality permeated economic pursuits which translated into market transactions infused with utilitarian business ethics. It was this early vibrant capitalist activity which led to the intellectual movement that launched the Renaissance in the 14th century.
By Land & Sea
Mile for mile, transport by sea was much easier and less expensive than hauling goods over land. This was especially true prior to the employment of fossil fuel engines. Hence the especial importance of Mediterranean seaborne trade, and the necessity of access, if not control, of the best shipping lanes.
Trade between southern and northern Europe was the exception to water transport. Before technological advances in shipbuilding and navigation in the late 13th century the sea route between the Mediterranean and North sea was hazardous and largely unprofitable. Despite their jeopardy the Alpine passes were more heavily trafficked than the Straits of Gibraltar.
In the 2nd decade of the 14th century both Venice and Genoa organized annual seagoing convoys from Mediterranean ports directly to the great perennial market in Bruges, and later Antwerp. This undercut the Champagne fairs somewhat, but the fairs’ historic significance was much greater.
Trading Companies
Besides opening a new phase of transport and economic relations between southern and northern Europe, the seagoing ventures inspired a shift in scale, both in commercial volume and business organization. Trading and financial companies replaced itinerant merchants.
European merchants until the 10th century were typically foreigners: anyone from the Levant, Jews included. With the revival of commerce, native Europeans increasingly took up the occupation.
The mercantile life was arduous: requiring stamina, courage, and business acumen. These medieval road warriors typically traveled in caravans for safety, bearing their own arms, or employing armed guards to ward off bandits. Travel by sea tempted piracy and risked shipwreck.
Under the simplest scenario a merchant’s entire capital was his merchandise. An early form of partnership arose in the 10th century – commenda – where 1 or more merchants provided the capital for another who traveled and traded. The money typically came from merchants too old to take the rigors of the road and the sea, and who could afford to do otherwise. Commenda were generally used for maritime trade. The practice evolved into investment capital; thus arose the concept of a company.
The Italians were early adopters of vera societá. By the 12th century Italian companies were combining commerce with banking. The Florence-based Bardi and Peruzzi companies were the biggest business organizations in the world before the great chartered companies arose in the 17th century. Both went bankrupt in the 1340s from extending too much credit to impecunious sovereigns like King Edward III of England.
Finance
As maritime commerce grew, financing and risk-spreading was arranged for merchants unable to afford their own ship, or without sufficient merchandise to fill a ship. Ship owners might lease their ships to several separate merchants who joined forces, or an entrepreneur might lease an entire ship then sublease to other merchants.
Sea loans were devised that gave investors a share of the trading profits without violating usury laws. Maritime insurance was common by the end of the 13th century.
A major reason for widespread dependence upon credit owed to coinage confusion. Europe has no stable currency until the famous gold florin, first issued in 1252 in Florence. Nonetheless, credit had already become an indispensable mainstay of commerce.
Manufacture
Although medieval Europe was largely an agrarian society, manufacture increasingly became a significant part of the economy with the passing centuries.
There was some regression in technology and competence during the Dark Ages, such as architecture and building, but by 1000 technical acumen had at least recovered to the standard of Roman times. Innovation made fairly steady progress thereafter. From a historical viewpoint, there was a continuity from medieval to modern times.
The manufacture of cloth dominated medieval industry, followed by building. Early only, most households in every country spun cloth. By the 11th century, some specialization had occurred. Flanders was a locus of one of the most important fabric regions. Other centers include northern Italy, southern and eastern England, and southern France.
Wool was woven more than any other fiber. Quality differences accounted for widespread trade within Europe.
Linen was made in many areas, especially France and eastern Europe. Cotton and silk production were limited to Italy and Muslim Spain.
Technological innovation spread quickly throughout Europe at the beginning of the 12th century. Water-mill wool-fulling was invented. The pedal loom supplanted the simpler weaving frame, and the spinning wheel replacing the distaff.
Metallurgy only progressed in the latter Middle Ages. As iron became cheaper, its use went from weaponry to more utilitarian tools.
Improved technology in ironworking and increasing output owed to consumer demand. When peasants and artisans owned their own tools, they bought the best they could afford, as their well-being owed to the efficacy of their efforts. The widespread use of horseshoes, iron fittings on harnesses, carts, and plows evidenced awareness of this.
Leather was an important material, put to diverse use: saddles, harnesses, clothing, furniture, and industrial equipment, such as bellows. Likewise, worked wood found hundreds of uses, both utilitarian and ornamental.
Waterwheels & Windmills
Simple, horizontal waterwheels were used by the 2nd century BCE in both China and Europe. Roman engineer Vitruvius (31 BCE–14) described them. No one knows who invented waterwheels.
There were occasional instances where waterwheels were used to grind grain during imperial Roman times, but Emperor Vespasian (69–79) reputedly rejected using a water-driven hoist to raise boulders for fear of engendering unemployment.
Whether slave or free, labor was cheap in the Roman empire. No need was seen for labor-saving devices. That would change, even in Roman times: in the 4th century, an immense flour mill at Barbegal in southern France employed 16 overshot watermills.
A survey of England in 1086 counted 5,624 waterwheels in 3,000 villages. Most of the waterwheels were vertical, overshot wheels with complicated gearing. England at the time was by no means the most advanced country in Europe, either economically or technologically.
By the beginning of the 14th century waterpower was used for grinding, crushing, and mixing many materials, in the making of paper and cloth, among other things, as well as moving bellows and trip hammers for furnaces and forges.
As early as the mid-11th century a waterwheel powered by the movement of the tides was used in Venice. Within the next few centuries many other such wheels were erected on the seacoasts of Europe.
Despite their utility waterwheels had limitations, starting with the need for flowing water. This made them unsuitable for dry or marsh lands.
Windmills appeared on the plains of northern Europe in the 12th century. They were especially important in the Low Countries (which were mostly marsh).
Clocks
Water and windmills required complicated gearing. This need drove empirical knowledge of practical mechanics, which was put to use in making clocks.
As early as the 12th century, the demand for water clocks flowed so strongly that there was a specialized guild of clockmakers in Cologne. The next century saw the mastery of gravity-driven clocks.
By the 14th century, every city in Europe with any civic pride had at least 1 large clock that not only tolled the hours, but also entertained with mechanical dancing bears, marching soldiers, or bowing ladies.
In 1364, after 16 years toil, Italian physician and astronomer Giovanni de’ Dondi completed building a clock that not only told time, but also tracked the movements of the Sun, Moon, and 5 known planets. This was 2 centuries before Copernicus’ heliocentric model of the universe was posthumously published.
Time Is Money
Medieval conquest of clockwork had implications beyond mechanical manipulation and labor-saving. Clocks made people more aware of the passing of time within the day.
While the concept that “time is money” dates at least to the ancient Greeks, the increasing ubiquity of clocks introduced greater punctuality into human affairs.
Coupled with commerce, technology – especially clockwork – fostered an empowering mental shift about the material world. Man appeared no longer a mere pawn of natural forces. Nature now seemed to be something which could be tamed and harnessed for profit.
The clock paradigmatically inspired science. Shortly after Dondi completed his clock, French philosopher Nicole Oresme compared the dynamics of the universe to clockwork, created and regulated by the supreme clockmaker: God.
Oresme’s mechanical mantra was taken up by Johannes Kepler, Isaac Newton, and other natural philosophers. Its appeal was a cognizable cosmos, instilling a mind-set that intended to codify the workings of the world via axioms.
This mechanistic worldview would dominate science to the present day. Formulaic approaches to physics and genetics have suffered as an avalanche of facts insist upon subtle complexities which have shown sophistic models as rough approximations at best. Humanity doesn’t have the math to model what lies beyond its blinkered understanding.
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While political power centralized during the 12th and 13th centuries, the energies and talents of Europe were gathering in one of civilization’s great bursts of development. Stimulated by commerce, a surge took place in art, technology, building, learning, exploration by land and sea, universities, cities, banking and credit, and every sphere that enriched life and widened horizons. Those 200 years were the High Middle Ages. ~ American historian Barbara Tuchman
Bouts of prosperity have repeatedly ended because of greed gone overboard and grasping governance. In the instance of medieval Europe, a perfect storm of misfortune swept the continent.
The Black Death
How many valiant men, how many fair ladies, breakfast with their kinfolk and the same night supped with their ancestors in the next world! The condition of the people was pitiable to behold. They sickened by the thousands daily and died unattended and without help. Many died in the open street, others dying in their houses, made it known by the stench of their rotting bodies. Consecrated churchyards did not suffice for the burial of the vast multitude of bodies, which were heaped by the hundreds in vast trenches, like goods in a ship’s hold, and covered with a little earth. ~ Italian author Giovanni Boccaccio in the mid-14th century
The episode that closed the Middle Ages began in 1348, as bubonic plague reached Europe from Asia. The Black Death spread rapidly along trade routes, infecting cities and towns.
For 2 years the Yersinia pestis bacterium ravaged the continent. Nearly 90% of the population of Paris died. Europe as a whole lost at least 1/3rd of its people. Some mortality estimates run as high as 60%. 75 to 200 million people died.
The Black Death traveled down the Silk Road, reaching the Crimea by 1346. From there, oriental rat fleas, riding on the black rats that were regular stowaways on merchant ships, made their way throughout the Mediterrean and Europe.
The pandemic became endemic as the bacterium evolved into several forms of plague. New outbursts occurred every 10–15 years until the end of the 14th century.
The cause of the Black Death was unknown at the time. Superstition took hold and spurred religious fanaticism. Various minorities were blamed, including Jews, foreigners, friars, pilgrims, beggars, lepers, and Roma (gypsies). People with skin diseases – lepers and those with acne or psoriasis – were singled out and exterminated throughout Europe.
The Black Death itself was furthered by superstition. Cats, which normally kept the rat population in check, were slaughtered in large numbers: feared as consorts of Satan.
Pogroms against Jews were popular. The Jewish communities in Cologne and Mainz were exterminated in 1349. By 1351 210 European communities of Jews were wiped out.
War added to the calamity. During the 100 Years’ War (1338–1453) between France and England, much of western France was devastated by a deliberate policy of destruction. In eastern Europe, the venerable Byzantine Empire finally succumbed to the onslaught of the Ottoman Turks.
While the Black Death was the most melodramatic crisis of the medieval economy, it only compounded a dismal situation. By the end of the 13th century population growth was slowing from the past 2 centuries.
Toward the end of the 13th century, the extensive deforestation of earlier centuries stopped. In some areas, including Spain and Italy, the loss of trees had contributed to soil erosion and fertility decline. Farther north, landlords opposed further clearings, fearing for their hunting privileges, while peasants needed the remaining forests for firewood and grazing animals. Disputes between peasants and lords erupted over forest use, with occasional outbreaks of violence.
With no new arable land, the meadows and pastures previously used for grazing were converted to growing crops. This led to fewer livestock, and less manure fertilizer; worsening a shortage that already existed.
Even as more land was brought into cultivation, crop yield declined. The new lands were not as productive, and efforts made to increase yields were too little and too late.
The climate turned unfavorable in the 14th century. In northern Europe, winters became colder, longer, and wetter. The entire Baltic Sea froze over on 3 occasions.
Grain refused to ripen in Norway. Grapes would not grow in England. Crop failures and famine increasingly afflicted the continent during the 1st half of the 14th century. The Great Famine of 1315–1317 hit all of northern Europe. The death rate leapt to 10 times the norm.
As the medieval economy expanded in the 12th and 13th centuries there came the trend to turn labor services into money rents, whereupon landlords leased their demesnes to the more prosperous farmers. As growth continued, the prices of agricultural goods rose while wages fell, owing to surplus population.
While those with land made out well, peasants found themselves in steadily worsening straits. Meantime, kings and other rulers were increasing the tax burden.
The Black Death reversed the wage-price squeeze. Demand diminished with the sharp population drop. Prices fell precipitously while the labor shortage shot wages skyward. The first reaction by the authorities were wage controls.
With all the dramatic upheavals, long-simmering resentments against oppression turned violent. Flemish workers and peasants rose up against their lords and masters during the Great Famine. During the 2nd half of the 14th century, revolts, revolutions, and civil wars erupted all over Europe. The violence seldom achieved its intended aims; but, in western Europe, the changed economic conditions released peasants from manorial bondage.
Despite the strength of the ruling classes, controlling labor proved impractical, as landlords competed with one another to attract peasants to work the land. Real wages were the highest ever in history to date and remained unmatched until the 19th century.
The Black Death and its aftermath proved a strong social purgative. Western Europe was poised to enter a period of renewed vigor as the 15th century dawned.
Increased competition resulted in regional shifts in manufacture and trade. Some cities, such as Venice and Florence, exercised military force to extend their dominion.
Regional alliances jockeyed for power. The German Hansa – a league of trading cities – revived, and for almost a century dominated trade in the North and Baltic seas, until overwhelmed by Dutch and English organizations toward the end of the 15th century.
In contrast to western Europe, social evolution in eastern Europe went in reverse. There were fewer towns in this less-populated region. Market forces were weaker. After the Black Death, town life withered and markets mummified. The economy reverted to subsistence. Peasants had the unhappy alternatives of serfdom or fleeing to unoccupied or uncharted lands, a prospect fraught with peril. Unchecked by higher authority, landlords forced peasants into a servitude not experienced in western Europe since the 9th century.
