Merchants and the Origins of Capitalism

by Sophus A. Reinert and Robert Fredona

Overview — This chapter shows how a new kind of predominantly Italian merchants emerged as global figures during the late Middle Ages and Renaissance. Then as now, they pooled capital and shared risk to enrich themselves and their polities, utilized the infrastructure and markets that they helped make, and created new legal and financial instruments to facilitate their ventures.

Author Abstract

N.S.B. Gras, the father of Business History in the United States, argued that the era of mercantile capitalism was defined by the figure of the “sedentary merchant,” who managed his business from home, using correspondence and intermediaries, in contrast to the earlier “traveling merchant,” who accompanied his own goods to trade fairs. Taking this concept as its point of departure, this essay focuses on the predominantly Italian merchants who controlled the long-distance East-West trade of the Mediterranean during the Middle Ages and Renaissance. Until the opening of the Atlantic trade, the Mediterranean was Europe’s most important commercial zone, its trade enriched European civilization, and its merchants developed the most important premodern mercantile innovations, from maritime insurance contracts and partnership agreements to the bill of exchange and double-entry bookkeeping. Emerging from literate and numerate cultures, these merchants left behind an abundance of records that allow us to understand how their companies, especially the largest of them, were organized and managed. These techniques can also be put in the context of premodern attitudes toward commerce and the era’s commercial-political relations. The Commercial Revolution anticipated the Industrial Revolution by over half a millennium and laid the groundwork for today’s world of global business.