Medieval Economy
After the fall of Rome, people used money less than they had before, and instead mostly lived on what they could produce themselves, or what they could make other people give them because they were landlords or landladies. Still even poor people in the countryside kept on using money, at least in Spain, Italy, and North Africa, though perhaps not in France, England, or Germany. Although Mediterranean trade was at first greatly disrupted by Vandal pirates, and Vikings, and then by the Byzantine reconquest, by about 800 AD trade began to be more secure and more people began to trade. This was for two reasons. First, the Arabs had conquered the southern Mediterranean, including Spain, Sicily, and southern Italy.
The Arabs imposed peace, more or less, over this whole area. Second, Charlemagne had extended his empire over all of France and Germany, and into the Balkans, and over most of northern Italy. So it was really only two big empires that controlled the whole Mediterranean, and these could protect traders better than a lot of little countries. Between 800 and about 1000, Mediterranean port cities like Genoa, Pisa, and Toulouse were doing very well. After the year 1000, the new port of Venice became increasingly powerful.
During the High Middle Ages, the Crusades helped to increase the amount of trade in the Mediterranean. Europeans who had been to the Eastern Mediterranean on crusade met Arab traders there, and brought Asian products back to Europe to sell. At the same time, the Crusades led the kings of France and England to impose a new tax in money, called the Saladin tax, that also helped to re-establish a money-based economy. Fairs and markets became more and more important.
There was also more trade in Northern Europe at this time, around the Baltic Sea. A group of ports on the Baltic Sea, in England, Sweden, the Netherlands and Russia, gradually formed themselves together into the Hanseatic League, (han-zay-AT-tic) which organized trade all over Northern Europe. The Mongol Empire, connecting China to Eastern Europe in one big empire, also helped traders to travel safely.
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By 1350, the plague wiped out about one out of every three people in Europe, and weakened many of the old relationships between lords and peasants. A lot of peasants whose families had died wanted to move to the cities. So the cities got more powerful than they had been before, and instead of country fairs and markets, people began to do their shopping at regular stores in the cities. At the same time, the lords and kings began charging more and more taxes in money rather than things, so people had to sell their crops in order to get money to pay their taxes. Soon people, especially in Italy, were setting up banks and changing money from one currency to another.
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