A concentrated area of people and dwellings where trade usually occurs.
Sometime around 3000 B.C.E., the so-called urban revolution occurred in the Middle East. At this time, both writing and the city arose. These two concurrent developments were important for trade, as writing allowed for the recording of transactions, and as cities grew, so did commerce. Cities became busy and prosperous because of the growth of trade. These urban centers came to dominate transportation routes, surrounding agricultural areas, and nearby villages. Therefore, the most powerful cities sought to expand and conquer others who might block trade routes.
Trade played a key role in the earliest cities. Increased trade made cities into commercial and communications centers. For cities to develop into large urban centers, they must be established at a location of some economic significance. That is, they tended to be located near a navigable river or the sea. Often, they could be found at “transportation breaks,” where one mode of transportation was changed for another. It is not a coincidence that most early cities were located in river valleys and that the rise of cities was accompanied by improvements in navigation. This situation in turn meant that cities required loading and unloading facilities, warehouses, taverns and lodging, and offices for merchants. The disruption of passage on a river could threaten the growth or even the existence of cities. These factors allowed cities to sell surplus products and have access to products from distant places.
To facilitate trade, urban residents created marketplaces. Such marketplaces performed the functions of procurement, storage, and distribution of goods. In the earliest cities, these markets could often be found in the temple precinct. As urban populations grew, merchants could make large profits by buying and selling expensive commodities from far away. This economic incentive in turn led to increased human interaction as long-distance trade grew. Growing populations and increasing economic complexity led to the creation of marketplaces outside of the temple districts. By at least 2000 B.C.E., secular bazaars or commercial streets lined with shops could be found in cities.
During the first millennium B.C.E., extensive trade developed around the Mediterranean Sea and a number of key trading cities grew. Among the earliest traders were the Phoenicians, who emerged early in the first millennium along the coastal region of the eastern Mediterranean. The Phoenicians, who were the best sailors and traders in the ancient world, built several important port cities, including Tyre, Sidon, Berytus, and Byblos. Chief among these trading cities was Tyre, where in the 900s King Hiram developed trade and improved the harbor of the city located on an island just off the coast. The city of Byblos was also important in that the script used there spread along the trade routes and became the basis of the Greek and Roman alphabets. From these port cities in the eastern Mediterranean, the Phoenicians visited all the region’s major trading centers and even reached as far as Spain and Great Britain. The Phoenicians carried products such as timber, manufactured goods, and dyes from their ports to exchange them for grains and metals. Thus, they began the first stages in the process of linking the Mediterranean through a series of trading cities.
The Phoenicians later founded the city of Carthage in North Africa. Increasingly, they had developed a rivalry with the Greeks. The Phoenicians fought against the Greeks in the Persian Wars, causing their domination of the eastern Mediterranean to decline. However, Carthage developed into a prosperous trading city that later competed with Rome for control of the western Mediterranean. The city’s central location and excellent harbor allowed it to become the preeminent trading city in the region. From Carthage flowed wine, textiles, and manufactured goods from the city or from the Hellenistic east in exchange for gold, silver, and tin from Spain and Africa. However, this trade was endangered by the rise of Rome. A series of conflicts known as the Punic Wars clearly established Rome as the dominant trading center in the western Mediterranean.
The cities of ancient Greece would later surpass those of Phoenicia in importance. Starting in the eighth century, Greeks began to move east and west by sea. Especially attracted to the east, Greek traders from cities such as Corinth set up trading posts. The Greeks also established colonies to remove excess population. Notable among Greek colonial cities was Syracuse, established by Corinth. By the sixth century B.C.E., Greek trade expanded around the Mediterranean. Cities themselves played a role in spurring on this trade. Many Greek cities grew in population while at the same time food production declined, forcing the Greeks to rely on trade. They turned to commerce to obtain grains such as corn from Egypt, Sicily, the Black Sea region, and the Po plain in exchange for wine, oil, and manufactured goods. At other times, warfare in the Greek city-states led to an increase in trade. For example, during the Persian and Peloponnesian Wars, Athens had to import grain.
By the fifth century, Athens and its port of Piraeus surpassed the Ionian cities of Corinth and Aegina as the major Greek entrepôt. Several factors allowed Athens to develop as the predominant trading city in the Greek world. Its geographic position and good port gave it an advantage over many rivals. The city’s dominant political position made the Mediterranean safe for trade. Athens also developed navigation laws that allowed it to control trade. The city possessed financial facilities that contributed to the growth of trade. Furthermore, Athens had developed a complex and cosmopolitan market system that required long-distance trade to sustain it. Thus, through Piraeus flowed food, raw materials, and manufactured products.
During the thirteenth and fourteenth centuries, there was increased long-distance trade and cultural contact among the peoples of Eurasia, as can be seen in the travels of Marco Polo and Ibn Battuta. This growing trade linked the Mediterranean to China. The great port cities of Europe, Asia, and North and East Africa played a key role in expanding commercial relationships. It was through these cities that merchants took goods from where they were cheap and abundant to where they were rare and expensive.
Cities served as centers of trade in the Islamic world. Granada in southern Spain, Fez in Morocco, Isfahan in Iran, and Delhi in India were among the key urban enters. However, in the thirteenth-century Islamic world, Cairo was the preeminent city. The Egyptian city of nearly 500,000 inhabitants was an extremely cosmopolitan one, with distinct Christian, Jewish, and Greek quarters. Cairo served as a commercial center; it had many markets, with each one specializing in a particular product ranging from spices to textiles.
One of the keys to Cairo’s success was its location along a river that connected the city to oceangoing vessels. Muslims had designed ships called dhows for long-distance trade. These ships used lateen sails and planks that were sewn together. Cairo and other North African cities also served as the starting points for huge caravans bound for West Africa. Led by expert guides and accompanied by armed guards, caravans with as many as 5,000 camels journeyed across the desert landscape and were the key to the trans-Saharan trade.
A good illustration of the key role of cities in the Indian Ocean trade is the case of Kilwa in southeastern Africa. The city enjoyed a reputation of having great riches, and visitors invariably described well-dressed residents who wore silk and cotton clothing and adorned themselves with gold and precious stones. Indeed, the gold trade was the key to the success of Kilwa, as was its strategic location, which allowed the city to dominate much of the Indian Ocean trade for 400 years.
Trade in Kilwa was already well developed by the mid-twelfth century and the city’s merchants dealt with places as far away as China. By 1200, the Shirazi, a Muslim merchant dynasty, had come to dominate the city. Much of their trade flowed north to Mogadishu. Then by the end of the thirteenth century, the Mahdali trading family had replaced the Shirazi. Under the Mahdali, Kilwa became the key African port in the Indian Ocean trade, exporting items such as gold, ivory, and cotton.
Key to the city’s success was its location. The monsoon winds made it the southern terminus for traders coming from Arabia and the Persian Gulf. Kilwa took advantage of this fact by charging high tariffs. Its wealth could be seen in the rebuilding of the city begun in the fourteenth century, including construction of the Great Mosque and the Husuni Kubwa, a combination palace and emporium.
The city declined during the 1500s. The Portuguese, who had first arrived in 1497, sacked and occupied the city in 1505. When they withdrew in 1512, the city recovered somewhat. However, Portuguese control of Sofala to the south hurt commerce in Kilwa. Interference by the Ottoman empire hurt the city’s trade to the north. Thus, by 1587 the city was overrun by the Zimba people and never recovered.
During the Song dynasty in China, an active mercantile sector operated in a network of cities. An elaborate system of rivers and canals allowed for a transportation system that facilitated trade. A large domestic market generally sustained trade, while overseas exports also played a role. Merchants brought products such as silk to Chinese coastal cities, from where they could be shipped overseas.
The most important city in this Chinese trade was Hangzhou, capital of the Song dynasty. With a population of over 1 million, Hangzhou was the largest city in the world. It was also home to great wealth and trade, as well as to culture and entertainment.
Several cities in Europe played a crucial role in the growing Eurasian trade. Among them was Venice, which became wealthy through the spice trade. The earliest product that contributed to Venice’s prosperity was salt. Venetians dried salt on coastal marshes and sold most of it locally. Other spices would then expand long-distance trade. For example, Venetian merchants began to trade in saffron, which they imported from long distances. The local market for the spice was small, and merchants began to increasingly trade the product to the rest of Europe. Venice would become the “hinge of Europe,” bringing Asian spices to Europe.
To maintain their dominant position in this trade, Venice had to control the seas. As early as 1000 C.E., Venice dominated the Adriatic Sea. Because the city controlled the route to Jerusalem, it became an important passage city during the Crusades. After the Third Crusade, Venice acquired trading rights with Asia and began importing spices. There were even specialized government offices to deal with the spice trade, such as the Office of Saffron. Once Venetian merchants acquired the right to trade in Asia, they became the providers for the rest of Europe.
In the post-Mongol era, three great Islamic land empires appeared. The Ottoman, Safavid, and Mughal empires dominated the Muslim world in the aftermath of the Mongol decline. All three empires made significant achievements in world trade. Cities played a major role in the trade of the three Islamic dynasties.
Despite being far from the sea, Isfahan, the capital of the Safavid empire, had a vibrant trade in the hands of Jewish, Hindu, and Armenian Christian merchants. Situated on the north bank of the Zayandeh River, the city regained its preeminent position during the Safavid period. Isfahan’s golden age began in 1598 when the Safavid ruler ‘Abbas I (the Great), made it his capital and rebuilt it into one of the largest and most beautiful cities of the seventeenth century. The city became famous for products such as silverware, copper work, and brass work, as well as for pottery. The city is also well known for its rugs and cotton fabrics.
Perhaps most significant of the Muslim trading cities was Istanbul. Formerly known as Constantinople, the city had been the heavily fortified capital of the Byzantine empire before being conquered by the Ottomans in 1453. After being renamed Istanbul and becoming the Ottoman capital, the city’s busy harbor was the primary seaport of the empire. Much of Istanbul’s trade was controlled by a colony of European merchants. The city’s merchants organized themselves into guilds that dominated the mazelike covered market.
Soon the Ottoman’s fought Venice for Mediterranean supremacy. Venice had limited Ottoman trading activity in the Aegean Sea. As the Ottoman empire grew in power, it allowed Venetians and other European traders to practice their trade in ports such as Istanbul if they acknowledged Ottoman authority. These European traders were eager do business in Istanbul, as Asian luxury products flowed through the city. Expanded trade, however, had a long-term negative effect on the economy of Istanbul and the Ottoman empire. European merchants paid for cheap goods in Istanbul with silver that originated in the mines of the New World. This influx of American silver through European traders led to inflation in Istanbul and throughout the empire.
Exchange in early modern European cities underwent significant transformations. In particular, both the volume and distance of trade expanded between 1450 and 1750. Furthermore, there were new ways of extending credit and organizing commerce in these cities. In addition, the role of the state grew.
By the end of the Middle Ages, the city was the center of local, regional, and long-distance trade. On the local level, urban residents bought and sold goods produced in their cities. At the regional level, there were often weekly markets where merchants and producers bought and sold both goods from the city and from the countryside. Finally, there was the risky but profitable long-distance trade. Great trade fairs, held once or twice each year, facilitated this trade. At these fairs, goods were bought and sold, business contacts were made, and accounts were settled. This well-developed system meant that in general urban-based merchants in Europe no longer had to travel to acquire goods themselves. They could now depend on agents, factors, and middlemen in other cities to obtain products.
One of the key developments that contributed an ever-increasing role for cities in world trade was the growth of capitalism. For example, many banks could be found in cities. These banks were often involved in foreign trade and possessed widespread international connections. Illustrative of this process was the Medici bank in Florence. Besides the banks, the appearance of joint-stock companies in European cities contributed to expanding world trade. While early trading companies often were not permanent, by the late sixteenth and early seventeenth centuries, investors created more perpetual joint-stock companies because of the need for large amounts of capital and the time-lag in earning profits from long-distance commerce. Companies such as the Dutch East India Company in Holland played an important role in international trade.
Cities played a crucial role in the transatlantic trade that Spain and Portugal developed starting in the late fifteenth century and continuing until the early nineteenth century. The Spanish conquerors captured and destroyed the Native American imperial capitals of Tenochtitlán in Mexico and Cuzco in Peru. However, they quickly rebuilt them and constructed other cities as symbols of the new colonial order and centers of trade.
Much colonial trade revolved around the vice regal capitals of Mexico City and Lima, as population and wealth concentrated in these two cities. Of particular importance was the presence of consulados, or merchants’ guilds, in the two cities. Originally, the Spanish government had granted a monopoly over trade with the colonies to the consulado in Seville. Spanish merchants then sent agents to New World cities. Spanish authorities then allowed for a consulado in Mexico City in 1592 and in Lima starting in 1613. Members of these New World merchants’ guilds had a monopoly over trade in their respective viceroyalties and were able to determine the value of colonial products such as silver.
Large boomtowns emerged around the great silver mines in the New World. Most significant was the city of Potosí. The city came into existence after the discovery of silver there in 1545. Potosí became famous for its wealth, and within thirty years its population surpassed 120,000, making it the largest city in the Americas. Spanish merchants traded Potosí silver across both the Atlantic and Pacific Oceans. The city’s population declined from a peak of 160,000 around 1650, as silver production declined and a typhus epidemic struck in 1719. By the early nineteenth century, Potosí had fewer than 20,000 inhabitants.
Port cities also played an important role in the emerging trade of the Atlantic world. This fact can be seen in the fleet system devised by the Spanish government to protect its valuable New World treasures. Two fleets left the Spanish port of Seville each year. One traveled to the city of Veracruz on the coast of Mexico. Here, merchants traded European goods for Mexican silver, dyes, hides, and other products. A second fleet called on Cartagena and Portobelo. At Portobelo, the fleet acquired Peruvian silver that had been shipped from Lima to Panama City and then transported across land to the Atlantic Coast. The two fleets then joined at the port of Havana for the return trip to Spain.
Cities in British North America were both similar and different from their counterparts in the Spanish and Portuguese colonies. It is impor tant to understand that Great Britain was colonizing the New World at the time of a second urban revolution in Europe. This revolution occurred along with the rise of the nation-state. Cities no longer had to be restricted to a small design out of concerns for defense. Instead, as the nation-state took on duties such as military defense, cities in Europe grew in size, allowing for economies of scale and agglomeration.
Colonization was part of the process of the creation of the nation-state. Cities in the colonies often looked different from those in the Old World, as they rarely had fortifications. Instead, trade became the main function of the New World cities. Mercantile, shipping, and legal services concentrated in the seaports. Cities such as Philadelphia, Boston, New York, Newport, and Charleston all became key colonial cities, linking the colonial hinterland to markets and merchants in England. Indeed, colonial seaports often had closer ties to London than to each other.
Port cities, then, became outposts of the empire, serving the homeland’s trade interests. By the end of the eighteenth century, New York had become the key colonial metropolis, with its commercial dominance and communications advantages over other cities. By 1626, the Dutch West India Company had started a settlement called New Amsterdam, and the advantages of its location made it immensely valuable. Commerce fueled the city’s development, and trade expanded with New England and the world. By the late 1600s, the city had come under control of the British and was known as New York. English merchants and politicians hoped that commerce would make them rich. New York held the flour-bolting monopoly for the area, was declared the sole port of entry for the colony, and its active community of merchants carried on a world trade. New York witnessed the growth of merchants’ coffeehouses in the eighteenth century. In these locations, merchants could obtain and exchange shipping information, while also meeting trading partners and customers. Later, New York’s merchant community led the nonimportation program that forced the repeal of the Stamp Act in 1766. After the American Revolution, the city continued to enjoy commercial primacy in the newly created United States.
Another aspect of the Atlantic economy was the growth of the African slave trade. In Europe, one of the cities that benefited the most from the transatlantic slave trade was the English coastal town of Liverpool. Traditionally, Liverpool had maintained trade with Ireland, mainly cattle. The city also produced pottery, glassware, and salt. It was slaves and sugar that soon came to dominate trade in Liverpool. A financial crisis had bankrupted London’s slave merchants. Liverpool took advantage of its more western location on the Irish Sea to replace London as the chief slave port in Europe. By 1750, some 200 ships from this English port city served the slave trade, bringing great wealth to the city. Slave merchants owned and operated many banks, insurance companies, and other financial institutions in the city. Docks and warehouses also dominated the city, where slaves could be bought until 1772, when slavery in Britain was outlawed. Slavery, however, continued in the colonies, and Liverpool reaped the benefits. As Europe became increasingly interconnected with other regions of the world and the global economy grew, the wealth of Liverpool’s merchants contributed to the continued rise of Great Britain as a world power.
World trade and the Industrial Revolution went hand in hand. The growth of foreign trade encouraged industrial production, which in turn fostered even greater international commerce. By the eighteenth century, Great Britain had become the world’s principal maritime power, expanding its long-distance trade and imperial possessions. First, the British overtook the Dutch, and then they competed with the French for supremacy. By the end of the Seven Years’ War (1754–1763), Great Britain had created a vast trade and colonial empire. This expansion was a major step toward the Industrial Revolution, as colonial markets served as a stimulus for manufacturing. In particular, the British sent industrial goods to North America, the West Indies, Latin America, and West Africa.
Cities played a central role in industrialization and the expansion of trade. While many early factories could be found in the countryside, increasingly factories were located in urban areas. The development of the steam engine freed industrialists from having to build factories near rivers. Since cities had better transportation facilities, it was easier to get coal and other raw materials necessary for factories to the cities than to rural areas. This situation led to a dramatic growth of population in many European cities. Smaller and medium-sized cities grew at a particularly rapid rate. Such population growth led to the infamous overcrowding of the early industrial city, which in turn revealed the already poor conditions of urban areas, such as disease and lack of public transportation facilities.
One of the best examples of the relationship of industry, trade, and the city is the case of Manchester, England. Connected to Liverpool by the river Mersey, Manchester had long been a regional marketing center. Then in the 1770s and 1780s, the cotton industry transformed the city. Indeed, Manchester became the stereotypical industrial city. Its population grew from a mere 17,000 to 142,000 by 1831. The city witnessed the growth of factories and population. There was a great divide between rich and poor, with many of the city’s poorer residents living in slums where disease spread quickly and services were lacking. Such a situation often led to a great deal of class conflict. Despite these problems, Manchester developed into a key trading city, even when many of its factories became outdated. The Manchester Exchange, which opened in 1809, became the largest brokerage facility in Europe after its 1838 expansion.
Across the Atlantic Ocean and beyond the eastern seaboard of the United States, the city of Chicago developed into an important trading city. The opening of the Erie Canal in 1825 joined the Atlantic seaboard states and the Great Lakes. Chicago became the principal western terminus of movement and trade between the East and West. Many retail stores opened to outfit newcomers to the West, and the volume of animal pelts and products for eastern markets increased. In 1837, Chicago became incorporated as a city. In 1848, the completion of the Illinois and Michigan Canal, which linked the Great Lakes and Mississippi systems, allowed Chicago to become a water gateway. Then by the 1850s, Chicago became the country’s principal rail center, as rail lines linked the city to the East.
Industrial development followed the appearance of the railroads. By the late 1850s, ships brought iron ore from the upper peninsula of Michigan to Chicago. The city became the nation’s major lumber-distributing center by the 1880s. The railroads brought agricultural goods from the West and South, and Chicago’s Board of Trade became the center of the commodities market. The railroads also transported cattle, hogs, and sheep to Chicago for slaughtering and packing.
Soon, Chicago emerged as the major city of the Midwest, surpassing St. Louis in population and importance. Migrants from home and abroad flooded the city, drawn by Chicago’s factories and carried by the rail network. Though much of it was destroyed by a fire in 1871, Chicago quickly rebuilt itself. The central business district held the major department stores, the larger banks, the Board of Trade, the regional headquarters of rising national corporations, and the centers of commerce, law, and government. The district was the birthplace of the steel-frame skyscraper. Completion of the Home Insurance Building in 1885 led during the next nine years to the construction of twenty-one buildings ranging from twelve to sixteen stories throughout the downtown area. Heavy industry, warehouses, and rail yards could be found along the banks of the Chicago River. Industrial pockets also existed at Chicago’s outskirts. As in the industrial cities of Europe, public health and sanitary conditions were poor. For example, until 1900 Lake Michigan supplied fresh water to the city and received its untreated sewage, contributing to frequent epidemics. In 1889, Chicago annexed many inner suburbs, doubling its area and its population and surpassing Philadelphia as the second most populous city in the United States. By 1900, it was a center of nearly all parts of the U.S. economy.
During the late nineteenth and early twentieth centuries, Western powers formally and informally colonized much of Asia and Africa. Cities played a key role in these areas brought under European domination. In China, the city of Shanghai became a bastion of foreign privilege. The city’s foreign settlements had their own municipal councils, police forces, and laws. Chinese dissidents also sought refuge in the foreign settlements, including many Chinese communists in the 1920s. By 1910, Shanghai had become China’s largest city and a center of culture, publishing, and literature.
The city was also China’s largest port and commercial center. By 1900, half of the country’s foreign trade flowed through Shanghai. The city was also home to more than half of Chinese industry. Both Chinese and foreign merchants, manufacturers, and bankers operated in the city. The foreign settlements looked much like Western cities and many of the Chinese who lived and worked there adopted Western ways. Typical of the Western influence was the Bund, the embankment along the Huangpu River that was built in the nineteenth century. The Bund became the city’s main thoroughfare, containing many establishments including banks and hotels.
Goods from the interior of China such as silk and tea arrived in Shanghai for export. Shanghai merchants also imported foreign goods such as metal, machinery, and manufactured goods. However, this extensive import-export trade largely benefited the Shanghai commercial elite and their foreign counterparts and had little impact on the interior of the country. Many Chinese rejected the city as too “alien.” During the revolution in China that culminated in 1949, the communists swept away foreign privileges. However, the city remained the country’s biggest and most industrial city.
One of the best examples of a city that rose to prominence in the twentieth century was Los Angeles. Once a land of vineyards, orange groves, and dairy farms, Los Angeles developed into a highly industrialized urban area radiating from the city’s financial district. Before World War I, San Francisco was the manufacturing hub of the U.S. West Coast. However, since the 1920s it has been far outstripped by Los Angeles. Oil, airplanes, and motion pictures would make Los Angeles a major trading city and see its port develop into one of the busiest in the United States and the world.
Starting in the late nineteenth century, the city produced significant amounts of petroleum, noticeably from the rich deposits of Signal Hill. In 1910, the first international air meeting in the Western Hemisphere was held in Los Angeles. By the 1920s, Donald W. Douglas was producing an airplane a week in Santa Monica. One-third of the United States’ World War II military aircraft were built in the Los Angeles area. The development of the motion picture industry in the early twentieth century also helped to put Los Angeles on the map, as not only were the films themselves exports, but so was American culture. Later in the century, high-technology industries such as aerospace equipment and computers became import trade items emanating from Los Angeles.
Ronald Young
See also: Financial Institutions; Marketplaces.
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