Afonso I granted Lisbon a Foral in 1179, and tried to restore the city’s commercial connections by inaugurating a major new fair or market. Consequently, the Portuguese merchants, Christian and Jewish, not only reestablished some of the old trade links of al-Us̲h̲būna with Seville and Cádiz, and in the Mediterranean with Constantinople, but also opened up new trade routes to the ports of northern Europe that the Muslims rarely visited because of religious differences. Lisbon became a conduit for maritime trade between the North Sea and the Mediterranean, and thanks to advances in navigation, the volume of ocean shipping increased. Portuguese merchants opened trade houses in Seville, Southampton, Bruges, and in the cities of the Hansa, which later joined to form the Hanseatic League. Meanwhile, the Portuguese Jews continued to trade with their relatives in North Africa. They exchanged Portuguese olive oil, salt, wine, cork, honey and wax as well as wool and fine linen textiles, tin, iron, dyes, amber, guns, furs and artisanal works of the north for the spices, silks and herbal remedies of the Mediterranean countries, in addition to the gold, ivory, rice, alum, almonds and sugar bought from the Arabs and Moors. Shipyards were founded to build more commercial and military vessels for the naval fleet (armada) essential to protect this trade from Saracen pirates. Increasing demand for goods by the growing populations of Europe in the 12th and 13th centuries stimulated innovations in the construction of boats, the sturdy but clumsy barge (barca) becoming obsolete when a gradual synthesis of Christian, Viking and Arabic sea-going knowledge led to the development of the caravel (first mentioned in the early 13th century), the first truly seaworthy Atlantic sailing ship. Professions in the maritime industry, such as those of ships-carpenters and sailors, were allowed certain privileges and protections, including the creation in 1242 of a maritime judicial office in Lisbon called the Alcaide do Mar (Alcaide of the Sea).
An indirect effect of this economic dynamism was that Lisbon’s trade contributed to the ruin of the south German merchants, who engaged in the same commerce by using a more costly land route between the ports of Italy and those of the Netherlands and the Hansa that was only viable when Muslim pirates and their ships controlled southern Spain and the Strait of Gibraltar. As the Holy Roman Empire lost influence over its kingdoms, duchies and city-state constituents, the German merchants, hitherto the masters of European trade, were forced to seek new markets in the East.
With the new prosperity and increased security of Lisbon after the final conquest of the al-Gharb or al-Garve (Arabic: al-Gharb, “the west”), in 1256 Afonso III took note of its obvious advantages and chose the largest and most powerful city in the kingdom for his capital, moving his court, the national archives and the treasury from Coimbra to Lisbon. Denis, the first Portuguese king to rule during all his reign at Lisbon, created the University in 1290, which was transferred to Coimbra in 1308 because of increasing conflicts between the students and Lisbon residents. At this time the area where the Praça do Comércio (Commerce Square) is today was reclaimed from the sea by draining the already muddy terrain (the river flowed freely until the time of the conquest, but had become clogged due to sediment deposits). New streets were laid out, such as Rua Nova, while the Rossio square became the city centre, stealing that distinction from the Castle hill. Other construction projects initiated by King Denis included a wall to protect the Cais da Ribeira from pirate raids, and reconstruction of the Alcáçova or Moorish Palace (later destroyed in the 1755 earthquake) and the Sé.
Just as there were Portuguese communities in the cities of northern Europe, there were colonies of merchants from the rest of Europe in Lisbon, then one of the most important cities in international trade. Not counting the Jewish population (already established as a Portuguese minority), the Genoese were the most numerous expatriate community, followed by those of the Venetians and other Italians, and the Dutch and English. These merchants brought new cartographic and navigational techniques to Portugal, as well as an understanding of financial and banking practices and of the mercantilism system, not to mention the knowledge gained through their contacts with Byzantine and Muslim middlemen of the origins of imported Asian luxury goods such as silks and spices.
Political tensions with Castile were counterbalanced by an alliance made in 1308 by King Denis between Portugal and England, the main trading partner of Lisbon (and also of Porto), which has continued uninterruptedly until the present. This alliance later fought on one of the two sides of the so-called Caroline War; the second phase of the Hundred Years’ War, on the other were Castile and France. During Ferdinand’s reign, Portugal started a war with Castile, and Lisbon boats armed with cannons were recruited to participate in an unsuccessful Genoese attack on Seville. In response to this provocation, the Spaniards laid siege to Lisbon, taking it in 1373, but departed when they were paid a ransom. It was following this calamity that the Great Fernandine Walls (Grandes Muralhas Fernandinas de Lisboa) of Lisbon were built.
On the lower end of the social scale in Lisbon were all types of labourers and street merchants, as well as fishermen and farmers of vegetable gardens. In this era the streets were occupied by tradesmen who had organised artisans’ guilds directed by masters of their respective trades. These included: Rua do Ouro (Goldsmiths’ Street), Rua da Prata (Silversmiths’ Street), Rua dos Fanqueiros (Drapers’ Street), Rua dos Sapateiros (Cobblers’ Street), Rua dos Retroseiros (Mercers’ Street) and Rua dos Correeiros (Saddlers’ Street). Such corporations were formed for social protection and to educate apprentices, and were employed to enforce a system of price controls for the benefit of their members. The aristocracy, attracted to Lisbon by the court, established its presence in the city with the building of large palaces, and served in the bureaucratic offices of governmental administration. But the most powerful segment of society in Lisbon, even after the city gained its status as the nation’s capital, was the bourgeoisie, the merchant class that was the economic powerhouse of this rising commercial centre, now among the most important in Europe. They were the magnates of commerce who controlled the city and its oligarchic council. It was to serve their needs that business professionals organised in the city: bankers to raise capital and coordinate the financial risks; lawyers to protect the rights of citizens and handle their legal cases; naval architects and marine engineers to build boats, and scientists to design their navigational instruments. With their political influence, they could extract from the monarchy concessions that favored their mercantile interests, and were a great impetus for exploration to find new markets. A mutual benefit association, the Companhia das Naus, was founded in 1380 as a kind of insurance company which required the payment of compulsory quotas from all ship owners in exchange for the sharing of losses after shipwrecks. As an umbrella organisation covering more than five hundred large vessels owned by the magnates of the city, it was the forerunner of Portuguese overseas expansion. With rising profits, the wealthiest merchants acquired titles of nobility, even as the poorer nobles engaged in trade.
Minorities in the city included Sephardic Jews and Muslims (not only the Moors but also Arabs and Islamised Arabic-speaking Latinos). There was a large Jewish quarter occupying the parishes of St. Mary Magdalene, St. Julian and St. Nicholas along the Rua Nova dos Mercadores, where the Great Synagogue was located. The Jews (perhaps 10% of the population, or even more) were great traders, who took full advantage of connections to their coreligionists throughout Europe, North Africa and the Middle East. Those who did not engage in trade were largely scholars or professionals such as doctors, lawyers, cartographers and other specialists in the sciences or arts. The Jewish community’s business activities were fundamental to the vitality of the city’s economy. The Jews of Lisbon included such distinguished families as the Abravanels, descendants of Samuel Abravanel, a converso who had served as royal treasurer in Andalusia and comptroller in Castile. He apparently fled to Portugal with his family where they reverted to Judaism and later served in high governmental positions. No matter how eminent a social position individual Jews of Lisbon might attain, however, they were always the first victims of popular revolts. Their living quarters were segregated from those of the rest of the population and they were forbidden to go out at night; as well as being forced to wear distinctive clothes and to pay extra taxes.
The Moorish quarter was the corresponding ghetto for Muslims, containing the Great Mosque situated on the Rua do Capelão (Chaplains Street). However, they were not as prosperous nor as educated as the Jews, since the Muslim elites had fled to North Africa, while the Jews, who were literate speakers of Portuguese, had no other homeland. Most Muslims were workers in low-skilled, low-wage jobs and many were slaves of Christians. They had to display identifying symbols on their robes and pay extra taxes, and suffered the violence of the crowds. The deprecatory term saloio (countryman) came from a special levy, the salaio, that the Muslims who cultivated gardens within the city limits had to pay. Likewise, the term alfacinha (little head of lettuce) came from the cultivation by the Moors of lettuce plants, then little consumed in the north.
The city’s prosperity was interrupted in 1290 by the first major earthquake in its recorded history, with many buildings collapsing and thousands of people dying. Earthquakes were recorded in 1318, 1321, 1334, and 1337; the temblor of 1344 leveled part of the Cathedral and the Moorish palace, or Alcáçova, and later quakes occurred in 1346, 1356 (destroying another portion of the Cathedral), 1366, 1395 and 1404, all probably resulting from displacements in the same geological fault. Famine in 1333 and the first appearance of the Black Death in 1348 killed half the population; new outbreaks of lower mortality occurred in each succeeding decade. The aftermath of these disasters, in Lisbon as well as in the rest of Europe, led to a series of religious, social, and economic upheavals, destroying the vibrant European civilization of the Middle Ages and the spirit of universal Christianity symbolised by the soaring Gothic architecture of its cathedrals. Yet it also paved the way for the emergence of a new civilization with the coming of the age of discovery and the rise of a revitalised spirit of scientific inquiry.