European Trade In The 17th Century Essay
Bills of Exchange, Centralized Banking and Pawning
The rise of intercontinental trade between Europe, Africa and the Americas radically changed European markets and led to an enormous commercial expansion in the seventeenth and eighteenth centuries. What did such a world look like? Regular scheduled cargo ships from the Americas arrived at European ports, increasing the supply of luxury goods such as rum, sugar, mahogany and tobacco. Slave ships regularly sailed for and to Africa in search of human labor that would power the production of said goods. At no time in the past had the continents been so closely connected through trade. However, despite the rapidly modernizing and increasingly globalized world, European merchants and traders still faced problems that plagued the Old World since the middle ages. Many of these problems arose from the issues of distance and difference, problems that sparked the creation …show more content…
The Bank of England was a brilliant idea that managed to stabilize the British monetary crisis of the 17th century. In its essence, the Bank of England (From now on referred as BoE) promised its creditors to pay them back with large interests, and since the bank was backed by the government/government taxes, creditors often felt secure and deposited money in the BoE. When the BoE collected enough money, they gave it to the government, but in exchange they took a cut of the money by a percentage higher than the interest rate promised to its creditors. Thus, BoE became profitable and started lending money and credit to people, which allowed for the creation of businesses and other ventures. Furthermore, the BoE started Fractional Reserve Banking which meant that it lent more money that it actually had and injected liquidity into the economy which invigorated trade and would create the right conditions for the English government to solve the problem of debasing. (Rockman,
The rise of intercontinental trade between Europe, Africa and the Americas radically changed European markets and led to an enormous commercial expansion in the seventeenth and eighteenth centuries. What did such a world look like? Regular scheduled cargo ships from the Americas arrived at European ports, increasing the supply of luxury goods such as rum, sugar, mahogany and tobacco. Slave ships regularly sailed for and to Africa in search of human labor that would power the production of said goods. At no time in the past had the continents been so closely connected through trade. However, despite the rapidly modernizing and increasingly globalized world, European merchants and traders still faced problems that plagued the Old World since the middle ages. Many of these problems arose from the issues of distance and difference, problems that sparked the creation …show more content…
The Bank of England was a brilliant idea that managed to stabilize the British monetary crisis of the 17th century. In its essence, the Bank of England (From now on referred as BoE) promised its creditors to pay them back with large interests, and since the bank was backed by the government/government taxes, creditors often felt secure and deposited money in the BoE. When the BoE collected enough money, they gave it to the government, but in exchange they took a cut of the money by a percentage higher than the interest rate promised to its creditors. Thus, BoE became profitable and started lending money and credit to people, which allowed for the creation of businesses and other ventures. Furthermore, the BoE started Fractional Reserve Banking which meant that it lent more money that it actually had and injected liquidity into the economy which invigorated trade and would create the right conditions for the English government to solve the problem of debasing. (Rockman,