Europe experienced radical economic and social changes between the 11th and 14th centuries. The medieval world was based on feudalism, a highly regulated and hierarchical form of society in which everyone had their place and responsibilities. The manorial system, in which lords owned the land worked by their vassals, or serfs, started to wane in the late Middle Ages with the development of nation-states. Medieval cities, dominated by the guilds that brought economic stability, became the centers of commerce.
Many people moved from the country to the city where they found more opportunities to make a living. This demographic shift diluted the power of the feudal lords and forced them to make several compromises. For example, many people who remained in the country negotiated long-term leases for their own plots of land on which they could grow crops to sell or to feed their families. Medieval farmers also increased their crop yields—and their profits—by adapting the horse collar, an improved iron plow, and the three-field system of agriculture. Although many former feudal lords continued to receive a percentage of the harvest, an emerging cash economy undermined feudalism in the countryside and helped support a growing population throughout Europe.
Economic changes further stimulated the growth of commerce. The emergence of capitalism created a largely urban middle class committed to expanding markets. National and international trade interests grew as more people looked to buy products and goods.
Uniform printed documents, including sales receipts and licenses, also advanced the growth of commerce in Europe. Bills of exchange, which served as an early form of credit based on promissory notes, took the place of oral agreements in the purchase of products or services. The widespread use of printed documents increased the importance of reading and writing skills and allowed shoppers to compare the value of goods different tradesmen offered. The printing of mercantile newspapers also promoted literacy. By learning about commercial laws and regulations and the dealings of other merchants, the middle class became more business savvy in their transactions and added to the economic burst. As the members of the middle class attained more wealth, their influence over government leaders increased. More importantly from the perspective of American history, the emergence of capitalism and the growth of commerce gave impetus to voyages of trade and discovery.
The founding of the colonies in the New World coincided with the rise of mercantilism. Many European rulers during the 16th and 17th centuries embraced the precepts of mercantilism, an economic system that sought to increase national wealth through a strictly regulated economy and a favorable balance of trade. In short, a nation’s strength was directly linked to its ability to be self-sufficient and accumulate capital. Colonies were acquired to supply raw materials to the “mother country” and serve as exclusive markets for domestic manufactured goods.
One of the first countries to embrace mercantilism in America was Spain, whose colonies existed primarily to increase national wealth and power. Commodities such as sugar and tobacco, as well as precious metals and jewels plundered from the Indians, were sent directly to the mother country and Spain’s economy prospered. However, since most of the riches were used to create great displays of wealth for the nation’s elite, and no new trade opportunities were developed, Spain remained a reasonably poor country.
The English also embraced mercantilism as they entered the race for American colonies. Since the Dutch controlled a majority of the merchant vessels used to ship products from the New World, the English Parliament enacted the first of a series of Navigation Acts that permitted only English ships to carry American goods. The Navigation Act of 1660 enumerated specific commodities, including tobacco, sugar, and cotton, that could be shipped only within the English empire.
This protective navigation system employed by Parliament was an immediate success. Merchant shipping increased dramatically at the expense of the Dutch, who ceded their colony of New Netherland to the English. Ironically, the Navigation Acts, which ultimately drove a wedge between the American colonists and the mother country, increased smuggling and hastened the march toward independence.