The Renaissance was a time of great intellectual and artistic growth in Europe. It was also a time of great change when people began to question the old ways and explore new ideas.

This led to many advances in science, art, and literature. But one of the most important changes that came about during the Renaissance was the growth of trade and commerce.

The question we will answer in this article is – Exactly how did the Renaissance lead to a trade and commercial revolution?

We’ll explore the changes that took place during the Renaissance which served as catalysts for the revolution in trade and commerce and changed Europe’s fortunes forever.

How did the Renaissance lead to a Trade and Commercial Revolution?

Here are some of the main aspects and events of the Renaissance that triggered a Trade and Commercial Revolution in Europe:

  1. Demand for new products and goods
  2. Wealth & Power in the hands of merchants and bankers
  3. Growth of Mercantilism and Capitalism
  4. Modern Financial Instruments
  5. Rapid advances in maritime technology
  6. Age of Exploration: New Markets Overseas

Let’s look closely at each of these aspects of the Renaissance that led to a Trade and Commercial Revolution.

#1. Demand for new products and goods

The Renaissance saw an increased demand for products and not just basic everyday products like foods and supplies. People began to desire luxury goods, such as silks, spices, tea and jewelry from distant lands.

This led to the establishment of trading companies to bring these products back to Europe and add to the wealth and prestige of individual nations.

#2. Wealth & Power in the hands of merchants and bankers

Wealth during the Renaissance was accumulated by merchants and bankers due to their involvement in the trade and commerce of goods throughout Europe.

One of the biggest impacts that the Renaissance had on merchants was that these merchants (and bankers) held powerful positions in society and had the means to finance voyages of exploration.

The Medici family, for instance, began as merchants and bankers but within a century of their setting up the famous Medici Bank, they became rulers of Florence with the hereditary title Duke of Florence. The Medicis went on to produce 4 Popes and 2 Queens of France further cementing their power.

With both wealth and power concentrated in the hands of merchants, traders and bankers, risk capital was readily available for the expansion of trade and commerce.

#3. Growth of Mercantilism and Capitalism

The growth of mercantilism was particularly important in the development of trade and commerce.

Mercantilism was an economic system that encouraged nations to export more goods than they imported and achieve financial reserves through a positive balance of trade.

This led to increased competition between nations for control of overseas lands, and resources and eventually colonial expansion. European monarchs encouraged exploration to enhance their own political power back home.

Also, the seeds of modern Capitalism were sown during the Renaissance. Innovations in banking, insurance, production, accounting, etc. provided a framework and structure for risk-taking which was essential for the growth of trade and commerce.

The development of the Joint Stock Company, in particular, enabled large-scale investments to be made in the exploration and production of goods and to finance the expansion of trade.

#4. Modern Financial Instruments

Many elements of modern finance can be traced back to the Renaissance. A classic example comes from Accounting. The double-entry method of accounting which is now common around the world was first used in the Renaissance.

It was a revolutionary way of keeping track of a company’s finances and helped businesses accurately measure how much money was coming in and how much was going out. Because it gave an accurate picture of how profitable a business was, it helped attract investors and finance trade and commerce.

As we saw in the previous point, the Renaissance also saw the development of the Joint Stock Company. The limited liability feature of this entity protected shareholders from personal financial losses if a venture failed and enabled entrepreneurs to attract risk capital for trade and commerce.

The development of modern currencies, letters of credit, bills of exchange and insurance during the Renaissance also provided a basis for trading and enabled merchants to explore distant lands with more confidence.

#5. Rapid advances in maritime technology

The Renaissance was a time of great strides in technology and innovations that advanced trade.

Advances in shipbuilding allowed for larger, stronger ships to be built which could handle long trading voyages. Naval and military technology also increased the power of nations with maritime capabilities allowing them to protect their trading routes from other nations.

Mariners and navigators also developed new techniques and instruments for navigation. The compass and the astrolabe, in particular, allowed sailors to confidently navigate long distances. This improved safety at sea and opened up new trading routes.

#6. Age of Exploration: New Markets Overseas

The advancements in maritime technology gave sea powers like Spain, Portugal, the Netherlands and England the confidence to explore unknown lands for trade and commerce, leading to colonial expansion. The same was true of Italian city-states like Venice and Genoa.

The Renaissance had started the Age of Exploration which opened up new markets for trade and commerce. New resources from the Americas, India, Africa and Asia became available to Europe through these voyages.

The Bottom Line

So, how did the Renaissance lead to a trade and commercial revolution? There were many aspects of the Renaissance that came together to create the proper environment for the biggest boost in commerce and trade that Europe had ever seen.

It began with markets for products that were not even available in Medieval times. Merchants that successfully served these markets became wealthy and accrued tremendous power including becoming rulers.

With wealth and power, these merchants with support from larger monarchs the age of exploration which opened up even more markets for European products and goods, and led to a revolution in trade and commerce.