1. European Expansion and Business
Standard 7-1.3, 7-1.4

2. Part 1: Mercantilism

3. Mercantilism
Growth of International Trade + Colonization in the New World + Growing Merchant Class = Mercantilism
This growth of international trade leads Europeans away from the Feudal system.

4. Mercantilism
Mercantilism- was the new economic theory for how trading nations could earn wealth. The theory stated that a nation became more powerful by building up a large supply of bullion, or gold and silver.
Some gained bullion by taking over gold and silver mines but most achieved this through trade.

5. Mercantilism: How It Works
Step 1: Export more than you Import!
A country needs to export, or sell goods to another country, more than it imports, or buys from them.
Mother countries sought to create a more favorable balance of trade: the value of the exports is more than the value of the imports.
This allowed countries to build big supplies of gold, thus making the country very wealthy.

6. In other words…
Favorable Balance of Trade = Export > Import

7. Mercantilism Step 2: Build Colonies!
Colonies were critical because they provided the Mother Country inexpensive raw materials and resources, and then the Mother Country could turn around and sell the finished products back to the colonies for a profit.
Looking at the trade patterns, what shape do you begin to see?

8. Mercantilism Step 3: High Tariffs on Imports (taxes)
Countries charged expensive tariffs on products made in rival countries. This kept citizens from buying imported goods, so the Mother Country could make more money.

9. Mother Country Makes Money!!!
Mercantilism Summary
Step 1: Export more than you import.
Step 2: Build colonies
Source of inexpensive raw materials
Make the colonies buy the finished products from the Mother Country
Step 3: High tariffs on imports
Mother Country Makes Money!!!

10. Part 2: Growth of Capitalism

11. Vocabulary Columbian Exchange
The exchange of goods, people, ideas and diseases across the Atlantic Ocean.
Commerce
Buying and selling of goods over a long distance.
Supply
Amount of a product available to buy.
Demand
The amount of people who want that product.
Capitalism
When people, not the government, own businesses to make money.
Entrepreneur
A person who assumes risk by owning his/her own business.
Joint-stock company
When individual entrepreneurs take risk and invest in a company by purchasing “shares” in that company in hopes of making a profit.

12. Columbian Exchange
Europeans began trading with the world after the age of exploration.
This began what would be called the Columbian Exchange.

13. Columbian Exchange
Columbian Exchange- the movement of goods, people, ideas, and even diseases across the Atlantic.

14. Commercial Revolution
The Columbian Exchange led to what is called a commercial revolution.
Commerce- is the buying and selling of goods in large quantities over long distances.
Supply- refers to the amount of a product available for purchase and Demand- how many people want that product. (If supply is high and demand is low, a product is cheap. If supply is low and demand is high, a product is more expensive.)

15. Capitalism
Capitalism – private ownership of business and production for a profit. (People own a business to make their own money!)
Government regulates trade (mercantilism), but people own the businesses that are doing the trading (capitalism).
This leads to a growing middle class of merchants and ship owners.

16. Risk Commerce led to the rise of the entrepreneur.
Entrepreneur- risks money in hopes of earning a profit.
Some risks were to large for one person so joint-stock companies were created.
Joint-stock company- allowed individual entrepreneurs to buy stocks, or shares, in a company.
Wealth from trade brought about a new social class- a group of people who share similar position in society.
Middle Class- group made up of artisans and merchants.