Of even wider importance was the increased demand for trade goods - Europeans developed a tremendous appetite for cloth, spices, jewels, and more from the Muslims as well as lands even further east, such as India and China, spurring an increased interest in exploration. At the same time, markets were opened in the East for European goods.
Such has always been the case with wars in far-off lands because war teaches geography and broadens one's horizons - assuming you live through it, of course. Young men are sent to fight, they become acquainted with the local culture, and when they return home they find that they no longer want to do without some of the things they had grown accustomed to using: rice, apricots, lemons, scallions, satins, gems, dyes, and more were introduced or became more commonplace throughout Europe.
It is interesting just how much of the changes were encouraged by climate and geography: the short winters and especially the long, hot summers were good reasons to set aside their European wool in favor of the local attire: turbans, burnooses, and soft slippers. Men sat cross-legged on the floors while their wives adopted the practice of perfumes and cosmetics. Europeans — or at least their descendants, intermarried with the locals, leading further changes.
Unfortunately for the Crusaders who settled down in the region, all of this ensured their exclusion from all sides. The locals never really accepted them, no matter how many of their customs they adopted. They always remained occupiers, never becoming settlers. At the same time, Europeans who visited decried their softness and the effeminate nature of their customs. The descendants of the First Crusade had lost much of the distinctive European nature which made them strangers in both Palestine and Europe.
Although the port cities which Italian merchants hoped to capture and did indeed control for a time were all lost in the end, Italian merchant cities ended up mapping and controlling the Mediterranean, making it effectively a Christian sea for European trade. Prior to the Crusades, trade in goods from the East had been widely controlled by Jews, but with the increase in demand the growing number of Christian merchants pushed the Jews aside - often through repressive laws that restricted their ability to engage in any trade in the first place. The many massacres of Jews throughout Europe and the Holy Land by marauding Crusaders also helped clear the way for Christian merchants to move in.
As money and goods circulate, so do people and ideas. The extensive contact with Muslims led to a less materialistic trade in ideas: philosophy, science, mathematics, education, and medicine. Hundreds of Arabic words were introduced into European languages, the old Roman custom of shaving one's beard was returned, public baths and latrines were introduced, European medicine improved, and there was even influence on literature and poetry.
More than a little bit of this was originally of European origin, ideas which the Muslims had preserved from the Greeks. Some of it was also later developments of the Muslims themselves. Together, all of this led to faster social developments in Europe, even allowing them to surpass Islamic civilization - something which continues to rankle Arabs to this very day.
Financing the organizing the Crusades was a tremendous undertaking that led to developments in banking, commerce, and taxation. These changes in taxation and commerce helped hasten the end of feudalism. The feudalistic society was sufficient for individualistic actions, but it wasn't well-suited to the massive campaigns that require so much organization and financing.
Many feudal nobles had to mortgage their lands to moneylenders, merchants, and the church - something which would later come back to haunt them and which served to undermine the feudal system. More than a few monasteries populated by monks with a vow of poverty in this manner acquired vast estates that rivaled the richest nobles in Europe.
At the same time, tens of thousands of serfs were granted their freedom because they volunteered for the Crusades. Whether they died in the process or managed to come home alive, they were no longer tied to the land owned by the nobles, thus eliminating what little income they had. Those who did return no longer had the secure farming position they and their ancestors had always known, so many ended up in towns and cities and this hastened the urbanization of Europe, closely connected to the rise of commerce and mercantilism.
