The crusades, a series of European holy wars waged from the 11th to the 13th century, had an enormous impact on the European economy. The long term effects of the crusades included the establishment of lending institutions across the continent, standardized methods of taxation and an increase in European trade.
Financing the Crusades
The cost of joining a crusade was cripplingly high. Soldiers were expected to leave in groups and were required to finance their journey across a continent, a cost which was impossible for most to pay even after selling their lands and all personal goods. Stipends from the ruling class and the church relieved some of this burden, but most of the cost of the Crusades fell on the shoulders of the individuals and groups who participated. Nobility and the church responded to these costs by raising taxes and by pooling their resources. Individuals sold property and took loans to finance the journey.
Redistribution of Wealth
One of the most significant results of the crusades was a reduction of economic power in the church and the increased power of the lower classes and middle class, who were known as the bourgeoisie. Peasants benefited from a higher demand on their products and from the availability of real estate. The newly-created middle class profited from collecting interest on loans, buying and selling property for the elite, and from providing transportation. The Church, which was obligated to provide interest-free loans due to policies on usury, and which had to liquidate assets and share their wealth with other crusaders, suffered a reduction in power that allowed others in Europe to flourish.
Higher Quality of Life
Another major result of the crusades was the urbanization of Europe. Before the holy wars began, Europe's economy was centered around manorial estates, but the onset of the crusades marked the decline of feudalism and the rise of towns as the centers of trade and commerce. New access to the Middle East brought increased trade and a demand for new goods that drove inflation, but which also prompted an increase in European quality of life.
The crusades became a catalyst for permanent change in the European economy. The taxes nobles and the clergy levied during this time provided the template for future taxation throughout Europe. The popularity of financing crusades through borrowing resulted in the formation of the continent's first credit institutions, stimulated the European economy and led to the growth of the middle class. In addition, the demand for trade caused the reemergence of the town, which led to the creation of guilds. Guilds created standardized practices and the regulation of trade that would become centerpieces of modern economics.