Urganch ranch texnologiya Universiteti Iqtisodiyot va ishlab chiqarishni tashkil qilish fakulteti

The recovery of the European economy

From 11th century, more stable conditions began to prevail in western Europe. Population began to increase, the volume of trade expanded, and towns in many parts of Europe multiplied in number and grew in size. On the North Sea coast a particularly dense network of trading towns emerged in Flanders; and in northern Italy an even greater concentration of large urban centers developed. Cities such as Venice, Genoa, Milan and Florence grew wealthy on the growing trade handled by their merchants. Much of this went north-west, up the Po and Rhone valleys into central and northern France, where the trade routes linked up with those coming south west from Flanders and the North Sea. International trade fairs in the towns of Champagne, in north-east France, became a regular feature of the international trading scene where merchants from Italy and Flanders dealt directly with one another.

The rise of banking

The growth of trade led to the rise of banking. At first, banking was in the hands of Jewish moneylenders, who were able to use their links with Jewish communities throughout Europe and the Middle East to handle the money needed for international trade. Given the strategic place of north Italy in international trade, it is no surprise that banking networks tended to be based in northern Italian cities (the word “bank” derives from the Italian word for the tables at which the bankers sat in the market place). In the 13th century indigenous Italian banking houses grew up, with agencies as far afield as London and Paris. The financial center of London became known as Lombard Street (Lombardy is another name for north Italy).
The Jewish and Italian bankers of medieval Europe pioneered financial instruments which would be vital to the rise of modern global commerce. Limited liability companies, stocks and shares, bills of exchange and letters of credit all developed at this time (although it is quite possible that some or all of these were based on earlier Arabic practices).