The World Economy in the Early Modern Period: Lecture Notes 2
I. Trade Structures
A. Terms of Trade: What will be exchanged? What quantities will
be exchanged? What price scales shall be used? How will
payments be made?
B. Bilateral Trade Terms: This occurs when two nations negotiate
trade terms equally.
C. Unilateral Trade Terms: This occurs when one nation dictates
the terms of trade.
D. Example of Bilateral Trade Terms in action: Europe was forced
to negotiate trade terms with China, Japan, Russia, and the
Muslims because these nations were strong enough to
challenge European military incursions. These nations
insisted that European merchants would only be allowed
to trade through a certain number of designated port
cities.
Nagasaki –
Japan
Guangzhou/Canton
- China
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II. Trade Relationships
a. Europe: Composition of Trade
Trades:
Purchases:
Finished manufactured
Unfinished goods
goods such as guns and
to use in further
cloth.
trade such as silver
and sugar.
Seeking:
Luxury goods such as spices,
slaves, gems, silks, porcelain
b. World: Composition and distribution of Trade
1. Low cost goods were preferable: gold, silver, tobacco, cotton, slaves, spices
2. Africa and Latin America became one commodity/product producers
3. Eastern Europe had more diversity of products (grains, timber, tar, fish) but they had
to utilize Western Europe to get their goods out
4. Balanced trade agreements existed between Europe and Eastern Asia, Southeast Asia,
South Asia and Southwest Asia
Majority of world’s Population =
Subsistence farmers. (Majority is
unfree labor: slaves, serfs, castes,
peasants).
Europeans are the center of most
trade and most trade is unequal
with Europeans holding the
advantage. Europeans set up
plantation agriculture to feed
cheaply produced product to
these relationships.
All outside contact is limited to
the coast and ports.
Local Trading Elite control
interior economies.
Maintain contact with outside
trade and become extremely
wealthy.
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c. Regions involved with world trade: 1600
Western Europe/ Eastern Seaboard North America / Central and South America / Poland/
Russia/ Western and Eastern Coastal Africa / Coast of India, Southeast Asia, and East Asia/
Muslim Southwest Asia
d. East Asia
China
- Official isolation
- Chinese manufacturing better than
Europeans
- Neo-Confucianism is against merchants,
Technology, trade, etc.
Japan
- Official isolation
- No manufacturing (agricultural economy)
- Saw firearms as un-samari (distrustful)
- Officially closed Japan to trade except once a
year in Nagasaki.
e. Muslim World: Mughal India – Ottoman Empire – Safavid Empire
- Interested in trade – allowed port colonies
- Ethnic minorities were often the merchants
- Exchanged goods for silver, luxury items, and processed goods
f. Russia
- Primarily an agricultural economy
- more concerned with security against steppe nomads
g. Africa
- Trade limited to coastal regions
- Disease kept Europeans out of the interior until the mid 1800’s
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