Global Economy & Atlantic Trade
Chapter 19
Overview

 The 18th C saw enormous changes in the lives of
ordinary people, with agricultural improvements
and new patterns of manufacturing, a rapid rise in
population and increasing prosperity, particularly in
the Atlantic countries involved in colonization and
trade in Asia, Africa and the Americas. These
widespread economic changes set the stage for the
Industrial Revolution and are comparable in their
significance to the economic and social expansion in
the 11th & 12th C that paved the way for the
Renaissance.
KEY CONCEPTS

 Colonial markets provided ready consumers of European
goods, benefiting manufacturing interests, both individuals and
states. Europeans competed with each other for control over
these colonial markets and adopted mercantilism to improve
their economies. The Atlantic states, particularly England,
France and Holland – grew wealthy and increasingly
competitive with each other.
 Adam Smith developed a new economic theory called
economic liberalism that opposed mercantilism for its
hindrance of competition. His theory held that governments
should limit themselves to a protective function and leave the
economy free to operate. Such laissez-faire politics would
promote social harmony and the general welfare.
World Trade

 England – under the Stuarts & the Commonwealth)
 Advanced position – adoption of mercantilism in 17thC
 Mercantilism - Government involvement in the economy was necessary to
increase the amount of gold - by decreasing imports and increasing
exports
 Governments encouraged industry with tax subsidies and the granting of
monopolies.
 Colonists required to buy almost all goods from England
 Cromwell passed the 1st Navigation Act 1651
 All goods coming into Scotland & England be brought in by British ships
 Goal – make Britain the dominant maritime power by strengthening the
British shipping industry & outmaneuvering its competition
 17th C chief competitor – Holland
 3 wars with the Dutch in the mid-17th C
 Won New Amsterdam in 1664 – now New York
 Damaged Dutch shipping & trade
England fights for world
trade

New competition – France
 Advantages Dutch didn’t have:
 Large population
 Alliance with Spain
 Strongest military power
 Substantial resources
 Highly regulated colonies
England V France

 Wars 1700-1763
 War of Spanish Succession
 Threat to the balance of power in Eur
 Treaty of Utrecht
 France lost Newfoundland, Nova Scotia & Hudson Bay
 Britain won control of African slave trade – the asiento
 War of Austrian Succession
 Britain helped Austria’s Maria Theresa hold her throne
 Seven Years’ War (French and Indian War) – most decisive
 Fought on both European and American continents
 British naval power defeated the French forces in Quebec
 Treaty of Paris of 1763
 France lost Quebec and possessions east of the Mississippi, &
holdings in India to England and Louisiana to Spain
 Spain lost Florida to England
England
Supreme on the seas

 Basis for its empire in India & Canada, expanded
American colonies
 Trade boomed for Eng
 London became Europe’s riches & largest city
 Trade in manufactured goods, slave & sugar
By the end of the 18th C, London had become the largest city in
Europe. It rebuilt itself after the Great Fire of 1666, moving west
with townhouses built around squares
THE ATLANTIC SLAVE TRADE

 Key element in the expansion of Europe and the Atlantic economic
system
 More than ½ of the 11.7 million Africans brought to the Americas arrived
in the 18th C
 Up to 80,000 a year
 Slaves were vital to the success of the Amer. Econ
 Produced crucial items like sugar & coffee
 Slave trade
 Shore trading
 Local traders supplied slaves
 Small-scale slave raids, kidnapping, punishment for crimes
 African traders used wealth to buy European arms

One of the impacts of the Slave trade on African states was
to encourage warfare among Africans.
Slavery In Britain

 A slave who ran away was supported by the law
 Free and escaped black – some whom intermarried
with whites
 In 1807 Parliament abolished the slave trade – 1st
large scale peaceful movement for social change
 The height of the slave trade was 1780s – spanning
about 30 years
AP TIP
The US Constitution of 1787 allowed for the importation of slaves
until 1808, as a compromise between those opposed to slavery
and the slave holding states. Slavery was abolished in the British
Empire in 1833 and in the French Empire in 1848: it continued in
Brazil until the 1880s.

COLONIAL LATIN AMERICA

Phillip V – Bourbon grandson of Louis XIV
 Capable leader – lead Spain’s recovery
 Enlarged empire in the Americas with the acquisition of Louisiana
 Silver mines – produced ½ of the world’s silver
 Spanish colonial social/econ
 Creoles – became wealthy consumers of Euro manufactured goods
 Depended on the Native Amer. for labor
 1st as slaves – serf in new system debt peonage
 People worked to pay off debts (almost required to acquire)
 Mestizos – mixed Spanish and Indian blood
 Mestizos made about 30% of pop – Creoles about 20% - Blacks much
smaller %
 Casta Paintings – demonstrated the whites fascination by issues of race –
portrayed a variety of racial mixtures

Spain’s South American colonies were similar to Britain’s
New England in that African slavery was relatively
uncommon. In Argentina, Chile, and Peru, the most
important Spanish colonies, most of the laborers were
native people. There was relatively little African slavery
there or in New England, where there was little plantation
agriculture.
TRADE AND EMPIRE IN ASIA

 The Dutch- The Dutch East India Company
 Importers of Spice Island goods
 Did not diversify and suffered when the Euro spice market
declined
 England – British East India Company
 Focused on India
 Won trade enterprises from Mughal emperor
 Engaged in local politics
 Competed with the French
 Seven Years’ War British won French territories in India
 The next year they defeated the Mughal emperor
 Kept him on the throne – in name only
 Robert Clive – governor had power
 “Jewel in the Crown” of the British Empire
Order of world trade domination
in Asia from the 16th c to 18th C

 Portugal
 Holland
 France
 Britain
ECONOMIC LIBERALISM

 New doctrine: laissez-faire, economic liberalism or free enterprise
 Adam Smith – Scottish Enlightenment philosopher
 The Wealth of Nations (1776) - Established basis of modern capitalism
 Free competition – preferable to mercantilist monopolies
 Offers the greatest benefits to the society as a whole
 Protects the consumer and offering opportunities to individuals
 Governments should limit themselves to 3 tasks




Military defense
Maintenance of public order and justice
Public works
Do not intervene in the economy
 Free enterprise would create social harmony & raise the standard of living for all
 Smith did not support subsistence wages or the division of labor that was part of
industrialization
 Argued workers should be paid decently and be protected by the government
AP TIP

Adam Smith searched for fundamental laws; the law of
supply and demand (which required free operation. He
believed that if every businessperson, pursued his
“enlightened self-interest in an atmosphere of free
competition, it would produce the greatest quantity of goods
at the highest quality and lowest prices. An “invisible hand”
would act as a regulator if needed. Mercantilism protects the
manufacturer, but the chief beneficiary of laissez-faire is the
consumer. Although the US and many other states claim
their economies are laissez-faire in fact government
intervention in the economy never disappeared.
Adam Smith
Invisible Hand

Modern Capitalism