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TRANSCRIPT
Preview Main Idea / Reading Focu
s The Columbian Exchange Basic Principles of Merca
ntilism The Rise of Capitalism
The First Global Economic Systems
Main Idea
The creation of colonies in the Americas and elsewhere led to the exchange of new types of goods, the establishment of new patterns of trade, and new economic systems in Europe.
Colony: A country or area under the full or partial political control of another country, typically a distant one.
New Patterns of Trade
New Colonial RivalsNew Colonial Rivals
Colonial Land Claims by 1914
Reading Focus
• How did exploration result in a new exchange of plants and animals?
• What was mercantilism, and how did it push the drive to establish colonies?
• How did global trade lead to the rise of capitalism in Europe?
• Voyages launched large-scale contact between Europe and Americas.
• Interaction with Native Americans led to sweeping cultural changes.
• Contact between the two groups led to the widespread exchange of plants, animals, and disease—the Columbian Exchange.
The Columbian Exchange
• Plants, animals developed in very different ways in hemispheres
• Europeans—no potatoes, corn, sweet potatoes, turkeys
• People in Americas—no coffee, oranges, rice, wheat, sheep, cattle
The Exchange of Goods
• The introduction of beasts of burden to the Americas was a significant development from the Columbian Exchange.
• The introduction of the horse provided people in the Americas with a new source of labor and transportation.
Beasts of Burden
Different Foods• Exchange of foods, animals had dramatic impact on later societies• Over time crops native to Americas became staples in diets of Europeans• Foods provided substantial nutrition, helped people live longer
Italian Food Without Tomatoes?• Until contact with Americas, Europeans had never tried tomatoes• Most Europeans thought tomatoes poisonous• By late 1600s, tomatoes had begun to be included in Italian cookbooks
Economics and Gastronomics• Activities like Texas cattle ranching, Brazilian coffee growing not possible without
Columbian Exchange; cows, coffee native to Old World• Traditional cuisines changed because of Columbian Exchange
Effects of the Columbian Exchange
Effects Widespread
Effects of Columbian Exchange felt not only in Europe, Americas
China Arrival of easy-to-grow, nutritious corn helped population grow
tremendously Also a main consumer of silver mined in Americas
Africa Two native crops of Americas—corn, peanuts—still among most
widely grown Scholars estimate one-third of all food crops grown in world
are of American origin
Devastating Impact
• Native American population continued to decline for centuries
• Inca Empire decreased from 13 million in 1492 to 2 million in 1600
• North American population fell from 2 million in 1492 to 500,000 in 1900—but disease not only factor in decrease of population
• Intermittent warfare, other violence also contributed
The Introduction of New Diseases
• Native Americans had no natural resistance to European diseases
• Smallpox, measles, influenza, malaria killed millions
• Population of central Mexico may have decreased by more than 30 percent in the 10 years following first contact with Europeans
Find the Main Idea
Write a paragraph describing the effects of the Columbian Exchange.
Answer(s): possible answers—changes in cuisine, changes in crops grown around the world, epidemics
Mercantilism
Bellringer
Founding of colonies, new goods in Europe led to significant changes
1500s, Europeans developed new economic policy, mercantilism
New Economic Policy
Balance of trade
Mercantilists believed there was fixed amount of wealth in world
Mercantilists believed that the prosperity of a nation depends on a large supply of gold and silver.
To bring in gold and silver payments, nations tried to have a favorable balance of trade.
Balance of Trade
Balance of trade: difference in value between what a nation imports and what it exports over time.
When the balance is favorable, the exported goods are of greater value than the imported goods.
Intense Competition
• For one nation to become wealthier, more powerful—had to take wealth, power away from another nation
• Mercantilism led to intense competition between nations
Does the US have a favorable balance of trade with China?
Colonies
Why did European colonization provide a favorable balance of trade?
Raw materials imported from colonies: not expensive
Manufactured goods exported: expensive! VALUE ADDED AT HOME
Summarize
What were the main principles of mercantilism?
Answer(s): nation's strength depended upon its wealth; needed a favorable balance of trade
Increasing trade between Europe and colonies created new business and trade practices during the 1500s and 1600s. These practices would have a great impact on the economies of European nations.
• During this time, capitalism expanded
• In capitalism, most economic activity carried on by private individuals, organizations in order to seek profit
Capitalism Emerges
• Individuals amassed great trade fortunes
• Merchants supplied colonists with European goods
• Returned products, raw materials
Overseas Trade
• Overseas trade made many merchants rich
• Wealth enabled them to invest in more business ventures
• Business activity in Europe increased greatly
Increased Business Activity
The Rise of Capitalism
Money Supply
• Increase of money supply another factor in higher prices
• Shiploads of gold, silver flowed into Europe from Americas to be made into new coins
• Over time, increase of money in circulation pushed prices for goods still higher
Rising Prices
• Investors took risks of investing in overseas trade because of inflation
• Inflation, steady increase in prices
• Demand for goods increased due to growing population, scarcity of goods; rising demand drove prices higher
New Ventures• Overseas business ventures often too
expensive for individual investors
• Investors began pooling money in joint-stock companies
Shares• Profit, loss based on number of
shares owned
• If company failed, investors lost only amount invested
Joint-Stock Companies• Investors bought shares of stock in
company
• If company made profit, each shareholder received portion
Financing Colonies• British East India Company, one of
first joint-stock companies • 1600, imported spices from Asia• Others formed to bear cost of
establishing colonies
A New Business Organization
Identify Cause and Effect
Why did new business practices develop in Europe?
Answer(s): because of increasing trade between Europe and its colonies