New Patterns of Trade Today’s LEQ: How did the creation of colonies lead to the exchange of new types of goods, new patterns of trade, and new economic systems?

The Columbian Exchange Voyages of Christopher Columbus and those that followed launched large-scale contact between societies of Europe and the Americas Led to sweeping cultural changes in both societies Exchange of plants, animal, and disease

Economic Changes During the 1500s, a new type of economic policy called mercantilism was developed A nation’s strength depended on its wealth

Mercantilism Wealth could be built in two ways: Extract gold and silver from mines at home or in its colonies Create a favorable balance of trade - sell more than you purchase from other countries Subsidies Tariffs Colonization

Impact on Society Towns and cities grew as business activity increased New class of wealthy merchants emerged Most people remained poor

Rise of Capitalism During the 1500s and 1600s, new economic system known as capitalism emerged Economic activity is operated by private individuals or organizations Profit seeking Wealthy merchants willing to invest in new business ventures

Rise of Capitalism Cont’d… Prices rise Growing population = scarcity of goods Increase in European money supply Joint-stock companies emerge Individual business ventures are too costly Investors pool their money together and buy shares of companies If the company achieves a profit, shareholders receive portion of profit depending on how many shares they own; If the company fails, investors only lose the money they invested British East India Company, Dutch East India Company (VOC)