Rise
of Trade Fairs: At first, trade fairs were
traveling marketplaces, offering goods for sale by many different
sellers. A fair would be set up for a couple of weeks. Then the
sellers would move on to another location. Trade fairs grew quickly
in both size and importance. Goods were pouring in by ship and by
caravan from Africa, Asia, and other parts of Europe. Some traders,
from faraway places, arrived personally with goods to sell in the
growing trade fairs. Along with goods, the traveling merchants and
traders brought their own coinage.
Banks:
Traders needed moneychangers who would exchange one form of currency
for another. Moneychangers charged for this service, just as bankers
did in ancient Greece, and just as banks do today. Moneychangers
only charged a small amount per exchange, but so many exchanges
happened at the fairs that most bankers became quite rich.
Money:
Barter was no longer an accepted form of payment. Merchants wanted
money for their goods. The nobles wanted the luxury goods they sold.
But the nobles did not have a lot of cash to use to buy them. Nobles
had always used the manorial system, a barter system, to gain the
goods they needed.
To raise money, the nobles began to sell their
crops for cash. They used the money they made to buy luxury goods.
Many ordered more luxury goods than they had cash to purchase. To
get more cash, some nobles borrowed money from the new banks,
offering their land as guarantee of payment.
It never occurred to these nobles that they
actually had to pay the banks back. The banks were owned and
operated, for the most part, by peasants. It came as a huge shock to
the nobles that their king was going to make them pay back their
loans or lose their lands.
Although the nobles were shocked, and many did
lose their land, the king was thrilled with the new money system. It
allowed him a way to easily tax the noble lords, the craftsmen, the
traders - both local and foreign - and the moneychangers.
