1.5 The Middle Ages: Economic Growth

Improvements in farming technology made the lives of serfs much easier. Improved technology led to increased food production. Food that wasn't eaten was sold at a profit at markets. Some serfs used their new found wealth to buy their freedom. By the end of the Middle Ages, there were few serfs left in Western Europe. The same could not be said of Eastern Europe. In Eastern Europe, serfs continued to exist in countries like Austria, Hungary and Russia well into the 20th Century.

In the 7th Century, most of Northern Europe was covered in dense forest. By the 11th Century most of that forest was gone (replaced by farmland and pasture). Two key inventions accelerated the deforestation of Europe. These inventions also led to an increase in the amount of food being produced.

The first invention was the horse collar imported from China. The European version of the horse collar fit across the animal's windpipe medieval ploughchoking the animal as it pulled. The Chinese version fit across the horse's breast allowing it to pull heavier loads without choking. This meant the horse could do more and heavier work. The second invention was the heavy wheeled plough. The plough enabled farmers to cut deep into the soil to remove the extensive root systems of the old forests. This meant more land could be farmed. This led to an increase in food production. Increased food production encouraged a growth in population.

The Growth of Towns in the Late Middle Ages
With improvements in farming technology fewer people were needed to work on farms. People not needed on farms therefore moved to towns in search of work. More people in towns made new industries possible, i.e. Cloth-making, ship building and tool making. These new industries met the demands of the new, wealthier emerging society. These industries logically sprouted up near or inside towns. Perhaps the most important feature of any town was its market place. Markets provided opportunities for merchants to sell their products to consumers.

Medieval TownKings encouraged the growth of towns for a couple reasons. Firstly, towns were not linked in any way to other nobles. Nobles were sometimes stubborn and didn't follow orders. Instead, townspeople were directly allied to the king. This meant the king didn't have to worry about the loyalty of towns.

Also, citizens of towns paid taxes for protection. Kings frequently had to worry about the loyalty of their vassals' armies; however, since towns paid taxes kings could afford to maintain a much larger army of their own without the need of vassals. This protected both towns and the kings from uppity vassals.

The relationship between kings and towns led to the emergence of a new class called the "middle class." The middle class supported itself through trade, industrial production, and the lending of money. Merchants and bankers like the de Medici’ family of Florence gained wealth and power; they came to dominate their city and town governments.

In towns and cities, craftsmen and merchants organized themselves into associations called guilds. Guilds provided training for apprentices interested in learning a trade. There were several types of trades a person could enter like shoe-making, hat making, ship building, and tailoring. Due to the importance of guilds they played an important role in the political life of any town or city.

As the economy of the town/city grew so too did inter-city and inter-regional trade increase. Increased trade meant an increase in consumption (or use) of goods. This led to increased demand for more goods and a dramatic growth in manufacturing. The increase in trade and manufacturing encouraged the development of international banking. The most important banks were located mainly in northern Italy.

The emergence of banks encouraged the adoption of a new money economy (which replaced the old barter economy). Previously, people used barter economies to exchange goods and services with one another. For example, in a barter system you could give me a chicken and in exchange I might paint your fence.

In both types of economic systems, something of value is traded for somethiflorinng sought. However, there is one fundamental difference between the two: coins, unlike the exchange of chickens, made it possible for a universal standard of money to exist throughout Western Europe. Since one gold Florin (shown at right) had the same value throughout Europe, economic growth was not limited to just Italy. Instead, French and German nobles could borrow money and encourage the growth of their own local economies. Economic growth in one region necessarily meant economic growth in neighboring regions. Thus, overall wealth increased in Europe with the emergence of the international banking system.