After the collapse of the Western Roman Empire in the fifth century A.D, most of Europe endured centuries of lower population, weaker governments, and a more feeble economy. But by the eleventh century, as populations rose, cities, long-distance trade networks. local markets. and new business arrangements meshed to create a profit-based economy. With improvements in agriculture and more land in cultivation, great estates produced surpluses that helped feed-and therefore make possible-a new urban population.

Commerce was not new to the history of the West, of course, but the commercial economy of medieval Europe spawned the institutions that would be the direct ancestors of western businesses: corporations, banks, accounting systems, and. above all, urban centers that thrived on economic vitality. Whereas ancient cities had primarily religious, social, and political functions, medieval cities were primarily centers of production and economic activity.Wealth meant power: it allowed city dwellers to become self-governing.

Commercial centers developed around castles and monasteries and within the walls of ancient towns. Great lords (powerful landowners) in the countryside were eager to take advantage of the profits that their estates generated. In the late tenth century, they had reorganized their lands for greater productivity, encouraged their peasants to cultivate new land, and converted the services and dues (traditionally owed to them by peasants and vassals) to money payments. Now with ready cash, they not only fostered the development of sporadic markets where they could sell their surpluses and buy luxury goods but even encouraged craftspeople and traders to settle down near them. The lords gained at each step. Their purchases brought them an enhanced lifestyle and greater prestige. But they also collected tolls and sales taxes from merchants, in this way profiting even more from trade.

Trade did not benefit only great lords. The vassals who lived with them enjoyed a better standard of living. Peasants too participated in the new economy, selling their meager surpluses at local markets. Commerce sometimes opened up unexpected opportunities for enrichment. Former servants of an important church official in Mácon (today in France), for example, set up a bakery near the bridge of the city and sold bread to travelers. They soon grew prosperous.

The immediate stimulus for the formation of a city varied. At Bruges (today in Belgium), the local lord's castle became the magnet around which a city formed. Other commercial centers clustered around a number of monasteries that by the eleventh century had become large communities with many needs to supply.Still other markets formed just outside the walls of older cities; these gradually merged into new and enlarged urban communities as town walls were built around them to protect their inhabitants.Sometimes informal country markets might eventually be housed in permanent structures. To the north, in places like Frisia, the Vikings originally raiders down from the Scandinavian lands-had already established centers of wealth and trade, and these settlements became permanent, thriving towns. Along the Rhine and other river valleys, cities sprang up to service the merchants who traversed the route between Italy and the north. And at Reims, the middle of a forum (a public meeting place) dating back to the Roman Empire became a new commercial center. Around the marketplace at Reims grew a network of streets whose names (many of which still exist) revealed their essential commercial functions: Street of the Butchers, Street of the Wool Market, Street of the Wheat Market.

The look and feel of such developing cities varied enormously.Nearly all included a marketplace, a castle, and several churches however. And most had to adapt to increasingly crowded conditions;for example, in one English town at the end of the eleventh century, city plots were still large enough to accommodate houses parallel to the street, but the swelling population soon necessitated destroying these houses and building instead long, narrow, hall-like houses constructed at right angles to the thoroughfare.