1. 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?

2. 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

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

4. 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

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

6. 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

7. 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)