The rise of European capitalism was significantly fueled by the labor of enslaved individuals who were transported across the seas. This period saw a shift in commercial dominance from the Italian cities of Venice and Genoa to the Iberian ports of Lisbon and Seville. However, despite these cities’ emergence as new hubs of commerce, the wealth generated from overseas ventures did not stay within Spain or Portugal. Instead, it largely benefited foreign entities and a select few within the local bourgeoisie involved in colonial and commercial activities.
Shift in Commercial Dominance
During the height of European exploration and expansion, Lisbon and Seville rose to prominence as the main commercial centers, surpassing the previously dominant Italian cities. This shift was due to their strategic positions in the burgeoning Atlantic trade routes, which were essential for the transportation of enslaved people and goods. The profits from these overseas enterprises, however, did not substantially contribute to the Spanish and Portuguese economies. Rather than being reinvested locally, these profits often ended up in the hands of foreign bankers who financed the colonial expeditions.
Impact on Local Economies and Society
In Spain and Portugal, the majority of the population was engaged in agriculture, which at the time was not highly developed. As a result, there was a limited domestic market for the goods brought back from the colonies. With the masses largely excluded from the benefits of overseas trade, the economic growth that could have been spurred by these activities was stunted. The reliance on foreign capital meant that the returns from investments in exploration and colonial ventures frequently went abroad, particularly to bankers from Germany and the Netherlands.
Decline of Italian Pre-eminence
The Italian states, once at the forefront of maritime trade and finance, experienced a decline in their economic standing. The challenge from the Ottoman Empire, which controlled key trade routes, and the competition from the Portuguese and Spanish discoveries, significantly affected Italy’s trade position. As Lisbon and Seville grew in importance, the Venetian economy suffered, leading to a downturn in its manufacturing sector as well.
Emergence of German and Dutch Bankers
Bankers from Germany and the Netherlands capitalized on the shifting economic landscape. They had the necessary capital to fund the increasingly expensive colonial ventures and were strategically positioned to profit from them. The mineral stores available in these regions also allowed them to invest in and expand their manufacturing capabilities, further strengthening their economic position. Unlike the Italians, the German and Dutch traders could continue to develop their traditional trade links with countries like Russia, Scandinavia, and England, despite the advancements of the Ottoman Turks.
Questions for UPSC
1. How did the control of trade routes by the Ottoman Empire impact the economic pre-eminence of Italian city-states during the rise of European capitalism?
2. In what ways did the reliance on foreign capital for colonial ventures affect the economies of Spain and Portugal?
3. What factors enabled German and Dutch bankers to gain economic advantages over their Italian counterparts in the context of early European overseas expansion?