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

New Patterns of Trade Main Idea Reading Focus 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?

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. Plants, animals developed in very different ways in hemispheres Europeans—no potatoes, corn, sweet potatoes, turkeys People in Americas—no coffee, oranges, rice, wheat, sheep, cattle The Exchange of Goods Arrival of Europeans in Americas changed all this Previously unknown foods taken back to Europe Familiar foods brought to Americas by colonists Sharing Discoveries 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.

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

Effects of Columbian Exchange felt not only in Europe, Americas 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

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

What were two lasting effects of the Columbian Exchange? 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

Mercantilism New Economic Policy Intense Competition Founding of colonies, new goods in Europe led to significant changes 1500s, Europeans developed new economic policy, mercantilism Nation’s strength depended on its wealth Wealthy nation had power for military and expanded influence New Economic Policy Wealth measured by amount of gold, silver possessed by nation Mercantilists believed there was fixed amount of wealth in world For one nation to become wealthier, more powerful—had to take wealth, power away from another nation Mercantilism led to intense competition between nations Intense Competition

Balance of Trade Imports Exports 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 To achieve favorable balance of trade, could reduce amount of imports by placing tariffs on goods Importer paid tariff, added cost to price of good Imported goods more expensive, discouraged people from buying Imports Encourage exports that could sell for higher prices than raw materials Countries encouraged manufacturing and export of manufactured goods Governments provided subsidies to help start new industries Exports

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

Building colonial empires essential to mercantilist system Colonies Building colonial empires essential to mercantilist system European powers wanted to establish colonies To control sources of raw materials To provide new markets for manufactured goods To mercantilist, colonies existed only to benefit home country Colonies Monarchs restricted economic activities in colonies Colonists could not sell raw materials to other countries Could not buy manufactured goods from other nations Strict laws forbade colonies from manufacturing goods Forced to buy only from home country Strict Laws

Impact on Society Many Changes Rural Life Changes taking place because of colonization Had impact on European societies Towns cities grew as business activity increased New class of wealthier merchants emerged, began to wield more power in their towns Many Changes Impact of colonization not felt throughout society Rural life continued as it had for centuries Generations would pass before many began to grow new foods from Americas Most people remained poor Rural Life

What were the main principles of mercantilism? Summarize What were the main principles of mercantilism? Answer(s): nation's strength depended upon its wealth; needed a favorable balance of trade

Increased Business Activity 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. During this time, capitalism expanded In capitalism, most economic activity carried on by private individuals, organizations in order to seek profit Capitalism Emerges Individuals amassed great trade fortunes Merchants supplied colonists with European goods Returned products, raw materials Overseas Trade Overseas trade made many merchants rich Wealth enabled them to invest in more business ventures Business activity in Europe increased greatly Increased Business Activity

Rising Prices Money Supply 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

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 Profit, loss based on number of shares owned If company failed, investors lost only amount invested Financing Colonies British East India Company, one of first joint-stock companies 1600, imported spices from Asia Others formed to bear cost of establishing colonies

Identify Cause and Effect Why did new business practices develop in Europe? Answer(s): because of increasing trade between Europe and its colonies