Exploration and Expansion
New Patterns of Trade
Preview
• Main Idea / Reading Focus
• The Columbian Exchange
• Quick Facts: The Columbian Exchange
• Mercantilism
• Quick Facts: Basic Principles of Mercantilism
• The Rise of Capitalism
Section 3
Exploration and Expansion
Section 3
New Patterns of Trade
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.
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?
Exploration and Expansion
Section 3
The Columbian Exchange
• 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 Exchange of Goods
Sharing Discoveries
• Plants, animals developed in very
different ways in hemispheres
• Arrival of Europeans in Americas
changed all this
• Europeans—no potatoes, corn,
sweet potatoes, turkeys
• Previously unknown foods taken
back to Europe
• People in Americas—no coffee,
oranges, rice, wheat, sheep, cattle
• Familiar foods brought to Americas
by colonists
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.
Exploration and Expansion
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Exploration and Expansion
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Effects of the Columbian Exchange
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
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
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
Exploration and Expansion
Section 3
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
Exploration and Expansion
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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
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
Exploration and Expansion
Section 3
Find the Main Idea
What were two lasting effects of the
Columbian Exchange?
Answer(s): possible answers—changes in
cuisine, changes in crops grown around the world,
epidemics
Section 3
Exploration and Expansion
Mercantilism
New Economic Policy
• Founding of colonies, new
goods in Europe led to
significant changes
• 1500s, Europeans developed
new economic policy,
mercantilism
Intense Competition
• Wealth measured by amount of
gold, silver possessed by nation
• Mercantilists believed there was
fixed amount of wealth in world
• Nation’s strength depended on
its wealth
• For one nation to become
wealthier, more powerful—had
to take wealth, power away
from another nation
• Wealthy nation had power for
military and expanded influence
• Mercantilism led to intense
competition between nations
Section 3
Exploration and Expansion
Balance of Trade
• Mercantilists built wealth two ways—extract gold, silver from mines at
home, in colonies; sell more goods than it bought from foreign
countries, creating favorable balance of trade
• With favorable balance of trade, country received more gold, silver
from other nations than it paid to them
• Increased its power; weakened foreign competitors
Imports
• To achieve favorable balance of
trade, could reduce amount of
imports by placing tariffs on goods
Exports
• Encourage exports that could sell
for higher prices than raw materials
• Importer paid tariff, added cost to
price of good
• Countries encouraged
manufacturing and export of
manufactured goods
• Imported goods more expensive,
discouraged people from buying
• Governments provided subsidies
to help start new industries
Exploration and Expansion
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Controlling Sources
Third approach for favorable balance of trade,
controlling sources
• Nation that controlled own sources would not need to
import from competing nations
• Why important
– Country did not need to spend own money to obtain raw
materials
– Foreign countries considered rivals, might become active
enemy, cut off supply of raw materials
• European nations worked to become more self-sufficient
• Nations began to establish colonies
Exploration and Expansion
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Section 3
Exploration and Expansion
Colonies
Building colonial empires essential to mercantilist system
Colonies
• European powers wanted to
establish colonies
Strict Laws
• Monarchs restricted economic
activities in colonies
– To control sources of raw
materials
• Colonists could not sell raw
materials to other countries
– To provide new markets for
manufactured goods
• Could not buy manufactured
goods from other nations
• To mercantilist, colonies
existed only to benefit home
country
• Strict laws forbade colonies
from manufacturing goods
• Forced to buy only from home
country
Section 3
Exploration and Expansion
Impact on Society
Many Changes
Rural Life
• Changes taking place because
of colonization
• Impact of colonization not felt
throughout society
• Had impact on European
societies
• Rural life continued as it had for
centuries
• Towns cities grew as business
activity increased
• Generations would pass before
many began to grow new foods
from Americas
• New class of wealthier
merchants emerged, began to
wield more power in their towns
• Most people remained poor
Exploration and Expansion
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Summarize
What were the main principles of
mercantilism?
Answer(s): nation's strength depended upon its
wealth; needed a favorable balance of trade
Section 3
Exploration and Expansion
The Rise of Capitalism
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.
Capitalism
Emerges
Overseas Trade
Increased Business
Activity
• During this time,
capitalism expanded
• Individuals amassed
great trade fortunes
• Overseas trade made
many merchants rich
• In capitalism, most
economic activity
carried on by private
individuals,
organizations in order
to seek profit
• Merchants supplied
colonists with
European goods
• Wealth enabled them
to invest in more
business ventures
• Returned products,
raw materials
• Business activity in
Europe increased
greatly
Exploration and Expansion
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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
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
Exploration and Expansion
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A New Business Organization
New Ventures
• Overseas business ventures
often too expensive for
individual investors
• Investors began pooling money
in joint-stock companies
Joint-Stock Companies
• Investors bought shares of
stock in company
• If company made profit, each
shareholder received portion
Shares
Financing Colonies
• Profit, loss based on number of
shares owned
• British East India Company, one
of first joint-stock companies
• If company failed, investors lost
only amount invested
• 1600, imported spices from Asia
• Others formed to bear cost of
establishing colonies
Exploration and Expansion
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Identify Cause and Effect
Why did new business practices develop in
Europe?
Answer(s): because of increasing trade between
Europe and its colonies