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Three-quarters of the population of the High Middle Ages worked the land, and the agricultural surpluses they generated are what made everything else possible — the towns, the fairs, the cathedrals, the universities, the standing armies of the twelfth-century kings. Robert S. Lopez called the period c. 950–1350 the “Commercial Revolution” of medieval Europe, and his 1971 book of that title is still the standard framing of the economic story. Robert Bartlett, in The Making of Europe (1993), refined and partly corrected the picture by reading the period as one of colonisation (the German Ostsiedlung, the Reconquista in Iberia, the Norman settlement of England) more than of simple growth. This pillar combines the two readings and walks through the agricultural base, the new towns, the trade routes, the merchant companies, the fairs, and the financial instruments (the bill of exchange, the deposit bank, double-entry bookkeeping) that first appeared in Italy in the thirteenth century and would shape the European economy for the next seven hundred years.
The five clusters attached to this pillar examine the parts: the Hanseatic League (the confederation of North German merchant cities that dominated Baltic and North Sea trade), the trade fairs (Champagne, Brie, Stourbridge, the Italian fairs of Genoa and Piacenza), guilds and craft production (the regulation of urban industry), agriculture and the three-field system (the agricultural revolution behind everything else), and money, minting, and banking (the silver penny, the gold florin, the Templars as bankers, the bill of exchange).
The Agricultural Revolution
The foundation of the medieval economy was agriculture. The vast majority of the population — perhaps 85 to 90 percent — lived in the countryside and derived their livelihood from the land. The manor, with its demesne lands, peasant holdings, and common resources, was the basic unit of rural production, and the rhythms of agricultural labor governed the lives of most medieval Europeans.
The agricultural productivity of the early Middle Ages had been low. The Roman agricultural techniques that had supported the cities of the ancient world had been largely forgotten or abandoned, and the new Germanic rulers of the post-Roman West had relied on extensive rather than intensive agriculture, cultivating land until it was exhausted and then moving on. The result was a sparsely populated, largely self-sufficient rural economy in which most villages produced little surplus and towns were few and small.
Beginning in the late tenth century, however, a series of agricultural innovations began to transform this situation. The heavy plow, developed in the eighth or ninth century and diffused across northern Europe in the tenth and eleventh, allowed for the cultivation of the heavy, wet soils of the North European plain, which had resisted the lighter Mediterranean plow. The three-field system, in which one field was planted in winter grain, one in spring grain, and one left fallow, replaced the older two-field system and increased the proportion of land under cultivation in any given year. The horse collar and the horseshoe, both developed in the early Middle Ages, allowed horses to be used for plowing and other heavy work, replacing the slower oxen. The introduction of new crops, especially oats, legumes, and flax, diversified production and improved nutrition.
These innovations had a cumulative effect. Higher yields supported a larger population; the larger population provided labor for the clearing of new land; the new land produced more food; and the surplus supported the growth of towns and the development of non-agricultural industries. By the thirteenth century, the agricultural productivity of Western Europe was substantially higher than it had been in the early Middle Ages, and the demographic and economic boom that resulted was one of the most remarkable in European history.
The settlement of new land was a major feature of the medieval period. Forests were cleared, marshes were drained, and villages were founded across the European landscape. The most dramatic expansion occurred in eastern Europe, where German, Flemish, and other settlers moved into the lands between the Elbe and the Oder, into Silesia, Pomerania, Prussia, and the Baltic region. This process, known as the Ostsiedlung (eastern settlement), transformed the demographic and political map of central Europe and created the foundations for the later economic development of the region.
The manor was the basic unit of production and social organization. A typical manor was an estate that belonged to a lord and consisted of one or more villages, the surrounding fields and woods, and the peasants who worked them. The lord’s demesne — the portion of the land that he kept for his own use — was worked by the peasants, who were required to perform a certain number of days of labor on the demesne in addition to cultivating their own holdings. The peasant holdings were divided into strips scattered throughout the open fields, a system that allowed for a fair distribution of good and poor land and that required cooperation among the peasants for the plowing, sowing, and harvesting of the crops.
The common land — pasture, woodland, and waste — was used by all the tenants of the manor, providing fuel, timber, grazing for animals, and a place to gather wild foods. The manor court, presided over by the lord or his steward, regulated the use of these resources and settled disputes among the tenants. The customary law of the manor, transmitted orally and recorded in the manorial court rolls, defined the rights and obligations of the lord and the peasants and provided a measure of stability and predictability in rural life.
The Growth of Towns
The most visible sign of the economic transformation of the High Middle Ages was the growth of towns. In the early Middle Ages, towns had been few, small, and largely dependent on the surrounding countryside. By the thirteenth century, towns had become major centers of population, production, and trade, and they were the engines of the new commercial economy.
The revival of long-distance trade was a major stimulus to urban growth. The towns that grew up along the major trade routes — along the Rhine, the Rhône, the Danube, and the English Channel, in northern Italy, in Flanders, and along the Baltic coast — became centers of commerce and manufacturing. The Italian maritime republics — Venice, Genoa, Pisa, and Amalfi — grew rich on the trade between Western Europe and the Byzantine Empire and the Islamic world. The Flemish towns of Bruges, Ghent, and Ypres became centers of the woolen textile industry, importing wool from England and exporting finished cloth across Europe. The Hanseatic towns of northern Germany dominated the trade of the Baltic and the North Sea.
Towns were not merely centers of trade; they were also political and legal entities with their own institutions and privileges. The charter of liberties granted by a king or lord to a town defined the rights and obligations of the townspeople, and the commune — the sworn association of the townspeople for mutual defense and self-government — became the basic unit of urban government. The townspeople, or bourgeoisie, acquired the right to govern themselves, to raise taxes, to administer justice, and to defend their walls.
The economic basis of the town was its market. The market was not merely a place of exchange; it was a legal institution, often established by a royal or lordly charter, with the right to hold a regular market (usually weekly) and one or more annual fairs. The market regulations prescribed the weights and measures to be used, the quality standards for goods, and the fees to be paid to the lord for the right to sell. The market cross or market hall was the symbolic and physical center of the town’s commercial life.
The towns of the High Middle Ages were not all of the same kind. The great commercial cities of northern Italy, Flanders, and the Rhineland were centers of long-distance trade and high finance, with wealthy merchants and sophisticated financial institutions. The smaller market towns of the interior served as local centers of exchange, providing the surrounding countryside with the manufactured goods and exotic luxuries that the rural population could not produce for itself. The port cities of the Mediterranean, the Atlantic, and the Baltic were nodes in the wider network of long-distance trade.
The Commercial Revolution
The commercial revolution of the High Middle Ages involved a dramatic expansion of long-distance trade and the development of new financial and commercial institutions. The volume of trade grew, the variety of goods exchanged increased, and the geographical range of commercial activity expanded to include most of Europe and the Mediterranean.
The Italian maritime republics were the pioneers of the new long-distance trade. Venice, the most successful of the Italian maritime republics, had established trading relations with the Byzantine Empire as early as the ninth century, and by the eleventh century it had become the dominant commercial power in the eastern Mediterranean. The Fourth Crusade and the Sack of Constantinople in 1204 extended Venetian influence to the islands and ports of the Aegean, and the Battle of Lepanto in 1571 would later mark the end of Venetian naval power.
Genoa and Pisa were the other major Italian maritime powers. Genoa developed close commercial relations with the Crusader States, the Byzantine Empire, and the Islamic world, and it competed with Venice for dominance of Mediterranean trade. The rivalry between the two cities would lead to several wars, including the War of Chioggia (1378–1381).
The Hanseatic League dominated the trade of the Baltic and the North Sea. The League was a confederation of northern German towns, joined by a number of non-German towns, that cooperated to protect their commercial interests. The League established kontors (trading posts) abroad, dominated the herring trade, and exported grain, timber, fur, amber, and other products of the Baltic region. The League’s power peaked in the fourteenth and fifteenth centuries, and it gradually declined in the face of competition from the new nation-states.
The Flemish textile industry was one of the great manufacturing centers of medieval Europe. The towns of Bruges, Ghent, Ypres, and Lille imported raw wool from England and produced fine woolen cloth for export across Europe. The Flemish cloth industry employed thousands of workers, generated enormous wealth, and produced some of the most sumptuous textiles of the medieval period.
The Champagne fairs, held six times a year in the towns of the County of Champagne, were the great meeting place of European commerce in the twelfth and thirteenth centuries. Merchants from Italy, Flanders, England, Germany, and the Mediterranean converged on the fairs to exchange goods and settle debts. The Champagne fairs were a major factor in the development of European banking and credit, and they were the model for the later trade fairs of Lyon, Geneva, and other cities.
Guilds and Craft Production
The guild was the basic institution of urban production and trade in medieval Europe. Two main types of guild emerged in the High Middle Ages: the merchant guild, an association of the merchants of a town, and the craft guild, an association of the craftsmen of a particular trade.
The merchant guild was the older of the two. In the early medieval town, the merchants formed an association to protect their interests, to regulate trade, and to represent the town in its dealings with the lord and with other towns. The merchant guild controlled the right to engage in wholesale trade, regulated the quality and price of goods, and maintained the commercial privileges of the town. As towns grew and craft production became more important, the craft guilds gradually eclipsed the merchant guilds in many places.
The craft guild was an association of the craftsmen of a particular trade. The tailors’ guild, the smiths’ guild, the bakers’ guild, the weavers’ guild, and the goldsmiths’ guild were among the most common. The craft guild regulated the quality of goods, the training of apprentices, the standards of workmanship, and the prices that could be charged. The guild controlled entry into the trade, supervised the work of its members, and represented the trade in its dealings with the town government.
The career of a craftsman typically began with apprenticeship. A young man (or, less commonly, a young woman) would be bound to a master craftsman for a term of years, usually seven, during which he would learn the trade by assisting his master. At the end of his apprenticeship, the young craftsman would become a journeyman, working for wages for other masters. After several years of travel and experience, and on the production of a masterpiece that demonstrated his skill, the journeyman could apply to become a master and to set up his own workshop.
The guild system was not a static institution. It was constantly evolving in response to changes in the economy, the technology, and the political environment. The oligarchic tendencies of the guilds, in which a small number of wealthy masters controlled the trade, were a source of constant tension with the journeymen and apprentices, who often found it difficult to accumulate the capital needed to become masters. The women’s role in the guilds was complex; in some trades (especially those connected with clothing and food preparation), women were important members of the guild, while in others they were excluded.
Money, Credit, and Banking
The commercial revolution of the High Middle Ages required the development of new financial instruments to facilitate long-distance trade. The simple barter and gift economies of the early Middle Ages were gradually replaced by a sophisticated system of money, credit, and banking that would lay the foundations for the later development of European capitalism.
The coinage of the High Middle Ages was based largely on the silver penny (or denarius), struck in local mints under the authority of the king or the local lord. The pound (or libra), originally a pound of silver, was the unit of account, even though no one actually used a pound of silver for ordinary transactions. The English pound sterling is the survival of this medieval system. Gold coins, struck by the Italian city-states and the Byzantine Empire, circulated in the Mediterranean, and the gold florin of Florence (first struck in 1252) became an international currency.
The debasement of the coinage was a recurring problem. Kings and lords often responded to financial difficulties by reducing the silver content of the coins, a practice that produced inflation and the loss of confidence in the currency. The English currency reform of 1279, which produced the famous Edwardian penny, was an attempt to standardize the coinage and to prevent debasement.
The development of credit was one of the most important financial innovations of the medieval period. Merchants needed credit to finance the long voyages and the long delays between the purchase of goods and their sale. The bill of exchange, developed by the Italian merchants in the thirteenth century, allowed a merchant to draw a bill in one currency and have it paid in another, with the exchange rate reflecting the interest and the risk. The bill of exchange was the ancestor of the modern promissory note and bank draft, and it was one of the most important financial innovations of the medieval period.
The banking houses of medieval Europe were an outgrowth of the merchant firms that handled international trade. The Templars were the most famous medieval bankers, providing financial services to kings, the papacy, and individual pilgrims. The Florentine banking houses — the Bardi, the Peruzzi, the Acciaiuoli, the Strozzi, and the Medici — were the major financial institutions of the fourteenth and fifteenth centuries, providing loans, handling payments, and managing the finances of the papacy and the great secular rulers. The bank failures of the 1340s, which ruined the Bardi and the Peruzzi, were a major financial crisis of the Late Middle Ages, and they led to a long period of instability in European finance.
The deposit bank developed in the thirteenth and fourteenth centuries, particularly in the Italian city-states. The Monti di Pietà (pawnshops), founded in Italy in the fifteenth century, were an attempt to provide credit to the poor at reasonable rates of interest and to combat the moneylenders who charged exorbitant rates. The Monte dei Paschi di Siena, founded in 1472, is the oldest surviving bank in the world.
Trade Routes and Commodities
The trade routes of the High Middle Ages were complex and varied. The Mediterranean was dominated by the Italian maritime republics, which traded with the Byzantine Empire, the Crusader States, the Islamic world, and the other Mediterranean powers. The Atlantic was the great highway of the long-distance trade of northern Europe, with the Hanseatic League and the English dominating the trade of the North Sea and the Baltic. The overland routes of central Europe, especially the Champagne fairs and the trade routes through the Rhineland, connected the Mediterranean to the North Sea.
The commodities traded in medieval Europe ranged from the staples of daily life to the most exotic luxuries. Wool, grain, salt, iron, timber, and fish were the bulk commodities of the medieval period. Wool was the most important export of England, and the wool tax was a major source of revenue for the English crown. Salt was essential for the preservation of food, and the salt mines of central Europe (especially Wieliczka in Poland) and the salt pans of the Atlantic coast were major economic enterprises. Fish, especially herring from the North Sea and the Baltic, was an important source of protein, and the herring fisheries of Scandinavia and Flanders were a major industry.
The luxury trade included spices, silk, and precious stones from the East, which were imported through the Italian maritime republics and sold at high prices across Europe. The silk of China, the pepper and cinnamon of India, the porcelain of the Far East, and the precious stones of the East were among the most valued commodities, and they were paid for in gold, silver, and Western European goods. The fur trade of the Baltic — sable, ermine, fox, and other pelts — was another important luxury trade, and the Hanseatic League dominated the import of furs into Western Europe.
The slave trade of the medieval period is often forgotten. Slaves were traded across the Mediterranean and the Balkans, and the markets of Verdun, Liège, and other northern European cities were major centers of the slave trade. The Christianization of the Baltic and the conversion of pagan peoples in eastern Europe produced a steady supply of slaves, who were sold in the markets of western Europe and the Mediterranean. The papal prohibition of Christian slavery in the thirteenth and fourteenth centuries, combined with the gradual decline of the supply of non-Christian slaves, contributed to the disappearance of the European slave trade by the early modern period.
The Role of the State
The state played a major role in the medieval economy. Kings and lords derived significant revenue from the regalian rights — the right to coin money, to levy tolls, to hold markets, and to grant charters — and they used these rights to encourage economic development and to extract revenue from it. The royal mints produced the coinage that circulated within the realm; the royal customs collected duties on goods entering and leaving the kingdom; the royal courts enforced the law of contracts and property; and the royal charters granted to towns and merchants provided the legal framework for commercial activity.
The Italian city-states were particularly innovative in their approach to the economy. The republics of Venice, Genoa, and Florence developed sophisticated systems of public finance, including the issuance of government bonds (the prestiti of Venice), the regulation of guilds and trades, and the management of state revenues and expenditures. The bank of Venice, the bank of Genoa, and the Monte dei Paschi of Siena were major financial institutions that supported the commercial activities of the city-states.
The English crown was one of the most active economic actors in medieval Europe. The English wool trade was the basis of English royal finance, and the customs duties on wool were the most important source of royal revenue. The English kings also developed the common law of contracts and property, which provided a stable legal framework for commercial activity.
The French monarchy gradually developed its own system of royal finance, drawing on the revenues of the royal domain, the taille (direct tax), the gabelle (salt tax), and the aides (customs duties). The Hundred Years’ War (1337–1453) was in part a struggle over the wool trade and the territory of Aquitaine, and the development of French royal finance was closely tied to the needs of war.
The Cultural Impact of the Commercial Revolution
The commercial revolution of the High Middle Ages had a profound impact on the culture and society of medieval Europe. The growth of towns and the rise of a wealthy bourgeoisie challenged the traditional feudal order and produced new forms of political, social, and cultural life. The urban patriciate — the wealthy merchants, bankers, and landowners who dominated the city governments — became a new social class with its own values, its own ambitions, and its own culture.
The literature of the towns reflected the new urban values. The chansons de geste and the courtly romances of the aristocratic tradition were joined by new forms of literature that celebrated the merchant, the craftsman, and the city. The fabliaux, short comic tales often with a bourgeois or anti-clerical edge, were popular in the towns of northern France, and the Theatre of the Absurd of the Confrérie de la Passion in Paris was a major form of urban entertainment.
The architecture of the towns reflected the wealth and ambition of the new urban patriciate. The town halls of the great commercial cities — the Palazzo Vecchio in Florence, the Belfry of Bruges, the Rathaus of Lübeck, the Hôtel de Ville of Brussels — were among the most impressive buildings of the age. The merchant houses of the Italian cities, with their tower-houses, their painted facades, and their elegant courtyards, were a distinctive form of urban architecture.
The universities of medieval Europe were largely urban institutions, and they were supported by the wealth and ambition of the towns. The University of Bologna, the University of Paris, the University of Oxford, and the University of Cambridge all developed in major commercial cities, and the students and masters who populated them were an important part of the urban population. The colleges that were founded in the late medieval period — University College and Balliol at Oxford, Peterhouse at Cambridge, the Sorbonne in Paris — were often endowed by wealthy merchants, bankers, and churchmen.
Conclusion
The commercial revolution of the High Middle Ages was one of the most important economic transformations in European history. It laid the foundations for the later development of European capitalism, the rise of the great commercial empires of the early modern period, and the global economic system of the modern world. The towns, the guilds, the trade fairs, the long-distance trade, and the sophisticated financial instruments that emerged in the High Middle Ages would shape the European economy for centuries to come.
The articles that follow examine these themes in greater depth. The pages on the Hanseatic League, the trade fairs, the guilds, agriculture, and banking provide detailed treatments of the major aspects of the medieval economy and trade.
Sources
Principal sources used in this article:
- Robert S. Lopez, The Commercial Revolution of the Middle Ages, 950–1350 (Prentice-Hall, 1971) — the founding statement of the commercial-revolution thesis.
- Robert Bartlett, The Making of Europe, chs. 6–8 (Allen Lane, 1993) — the colonisation-of-Europe reading that supplements Lopez.
Further reading:
- David Abulafia (ed.), The New Cambridge Medieval History, vol. 5: c. 1198–c. 1300 (Cambridge, 1999), parts II and III.
- Peter Spufford, Power and Profit: The Merchant in Medieval Europe (Thames & Hudson, 2002).
- William Chester Jordan, The Great Famine (Princeton, 1996).
For a recent single-volume synthesis with full scholarly apparatus, see the relevant chapter of Barbara H. Rosenwein, A Short History of the Middle Ages (University of Toronto Press, 2014).