Prelude to the Industrial Revolution The rise of Capitalism

Netherlands and Antwerp  Large Trading port in the north of Europe  Perfectly situated for trade

Netherlands and Antwerp  Large Trading port in the north of Europe  Perfectly situated for trade  Frugal people who put a high value on saving  Which leads to…

Banking!!!  Surplus of capital leads to banks  Banks are able to invest in businesses and people are able to take out loans  Businesses can take out capital to build themselves  This leads to accelerated development of business

Before we move on: Just a little bit of British History…  Scotland and England? Together at last?

Just a little bit of British History…  Scotland and England? Together at last?  1706 Treaty of the Union Unified Scotland and England politically ○ Brings to the end centuries of fighting

What’s so great about Scotland and England coming together?  England has great food producing capacity  Scotland is nothing but rocks… Where there are rocks… ○ There are minerals: coal and iron

Therefore…  England and Scotland are a match made in heaven to dominate the world And they do.

English System 18 th Century  Englishmen were becoming Capitalists One that invests money in a business  By the 17 th Century English bankers had developed a deposit banking service: They had enough money to lend out and gain interest Invented a system of checking Bank notes were accepted as money

Why was Banking Necessary?  With the rise of capital and countries investing cross border: Currency needed to be converted and changed Accounts needed to be paid from long distances Money needed to be stored

England  Inflation hit everywhere except England where rising incomes rose faster than prices

Inflation  Rising prices  Too much money chasing too few goods  Increase in spending which exceeds increases in real production

England  Inflation hit everywhere except England where rising incomes rose faster than prices  This lead to more investment abroad

Cottage System (Putting out System)  Central agency contracted out work to subcontractors who completed work in their own facilities (usually their own home)  No more guilds  Could charge whatever was market price  Supply and demand = more capital

Conclusion  In England the putting out (Cottage system), extra money, banking, colonialism, larger markets all lead to the development of capitalism as an economic ideology.