1.10 The Commercial Revolution

• Double-entry bookkeeping: recording every transaction twice, as a debit and a credit, so errors stand out. Italian merchants used it, and Luca Pacioli described it in print in 1494.
• Banking: families like the Medici of Florence and the Fuggers of Augsburg lent to kings and popes. The Fuggers helped pay for Charles V's election as Holy Roman Emperor in 1519. The Bank of Amsterdam (1609) gave merchants a stable place to deposit and transfer money.
• Joint-stock companies: firms like the English East India Company (1600) and the Dutch VOC (1602) pooled money from many investors and shared the risk of long voyages.
• Exchanges: Antwerp's exchange (1531) and later Amsterdam's let merchants trade goods, bills and, at Amsterdam, company shares.

Inflation means a general rise in prices. The price revolution was a long period of inflation across Europe in the 1500s and early 1600s, when prices rose several times over.

Historians debate the cause. One explanation is monetary: American silver flooded in through Spain, so more money chased the same goods. The other is demographic: Europe's population recovered from the Black Death, raising demand for food and land faster than supply. Most historians now see both at work.

Wages rose more slowly than prices, so many workers grew poorer. Landowners who could raise rents or sell crops at higher prices gained, while those living on fixed rents lost ground. In England this helped the gentry, landowners just below the nobility, rise.

Most Europeans were still peasants doing subsistence farming, meaning they grew food mainly to feed their own families. In northern Europe villages often used three-field rotation: one field for winter grain, one for spring crops and one left fallow (unplanted) to recover. Around the drier Mediterranean, farmers used two fields, half planted and half fallow. Many peasants paid rent to a lord and still owed him labor services, such as days of work on his land.

When landlords tried to raise dues or cut off peasants' traditional rights to common woods and pastures, peasants often revolted. The German Peasants' War of 1524–1525 is the biggest example (see 2.2).

Towns grew as the population recovered, swelled by poor migrants from the countryside. Newcomers strained food supplies and housing and challenged the merchant elites and craft guilds that ran town life. Successful merchants and bankers became a new economic elite. In the west many bought land and titles or married into old noble families; in the east, nobles kept their grip on economic life.

In western Europe, serfdom had largely faded after the Black Death. More peasants rented land as free tenants or worked for wages and produced for markets. In England, enclosure, meaning fencing off common fields for private use, often for sheep, pushed some poor villagers off the land, as Thomas More complained in Utopia.

In eastern Europe the opposite happened. Western cities needed grain, so nobles in Poland, Prussia and Russia expanded large estates to grow grain for export through Baltic ports like Danzig. To get cheap labor they bound peasants more tightly to the land and demanded more unpaid work. Historians call this the second serfdom. Russia's Law Code of 1649 made serfdom hereditary and permanent.

In northwestern Europe people married late, often in their mid-twenties, and set up their own nuclear households, meaning parents and children only. A good share never married at all. This European marriage pattern meant couples had to save money or land first, and it limited the number of children per family. From the late 1500s, hard times, including the colder weather of the Little Ice Age, pushed couples to wait even longer. Smaller families helped households hold on to land and savings. Households were also economic units where husbands, wives and children all worked.