The Commercial Revolution

Spanish galleons carried silver mined at Potosi, in modern Bolivia, across the Atlantic to Seville. That silver did not stay in Spain. Spaniards spent it on goods from across Europe, so it spread outward into French, Dutch, and English markets. More silver coins chasing the same amount of grain, cloth, and land meant each coin was worth less. This is basic supply and demand applied to money itself: prices roughly tripled across the 1500s, a shift historians call the Price Revolution. Wages did not keep pace, since employers were slow to raise pay even as the cost of bread climbed, so real wages for laborers fell sharply even though their coin wages looked unchanged.

The same century that flooded Europe with silver also sharpened how merchants tracked money. Double-entry bookkeeping, developed earlier in Italian trading cities, recorded each transaction twice, as a debit in one account and a matching credit in another. That let a merchant see total profit or loss across months of trading, not just whatever coin sat in a strongbox that day. Banking houses, bills of exchange, and joint-stock companies grew alongside this, letting merchants pool capital and spread risk across long, dangerous voyages.

These changes connect directly to exploration and to social strain back home. Rising prices rewarded merchants and anyone holding goods or variable income, but punished landlords locked into fixed rents and peasants living on wages. That squeeze reshaped social tensions across the century and fed into the commercial, increasingly capitalist economy that would define early modern Europe.