1. AGE OF EXPLORATION Colonization and Capitalism EQ 3:
How did exploration and colonization lead to a new type of economic system in Europe and the world?

2. THE COLUMBIAN EXCHANGE

3. I. The Columbian Exchange
A. term used to describe the global exchange of foods, plants, and animals
B. From New World to Old World
1. tomatoes 5. corn
2. potatoes 6. tobacco
3. pineapples 7. peppers
4. chocolate 8. squash
EFFECT  healthier diets  pop. boom

5. C. From Old World to New World 1. horses 5. bananas 2. pigs 6. peas
3. cattle 7. yams
4. sugar 8. disease
EFFECT  changed lifestyles of natives (attempt to “Europeanize” them  opened door for easy conquest

6. Triangular Trade
Network of trade between Europe, Africa and the Americas.
1st leg - carried European finished goods to Africa in exchange for slaves.
2nd leg – carried African Slaves to America (Middle Passage)
3rd leg – carried American raw materials to Europe for manufacturing

7. Triangle Trade

8. THE COMMERCIAL REVOLUTION

9. II. The Commercial Revolution
The development of new business methods which 1)encouraged investment, 2)utilized banking services, and 3)made profit the primary goal of a nation’s economy.
A. New Methods of “Doing Business”
1. Exploration very costly (supplies, ships, crews, trade goods, etc)
a) banking families of Renaissance could not afford
b) need new ways to attract huge sums of money
2. Banking
a) Issued loans & checks
b) Set exchange rates

10. 3. Private Investment Companies
a) joint-stock companies (granddaddy of the corporation)
• easy to attract large sums of capital
• limited liability (only lose what you invest)
b) insurance companies
B. Increase in money
1. Flow of gold/silver into Europe
2. New wealth used to invest in other ventures
3. Dev. of a new economic system: capitalism
a) business in the hands of private individuals
b) goal is to make profit

11. III. Mercantilism A. Form of national capitalism
1. goal is to derive profits for the nation rather than private individuals
2. based on belief that a nation’s power is based on its wealth; aim is to increase nation’s wealth
B. Two ways to do this
1. Import gold/silver
2. est. a favorable balance of trade (exports > imports)
D. Mother Country est. colonies to do this
1. colonies serve as suppliers of raw materials and markets for finished goods
2. closed trading system
3. profits flow into Mother Country

12. IV. Effects of Exploration, Settlement, & the Commercial Revolution
A. Shift of economic activity & power from Italy to western Europe (Atlantic)
B. Changed the economies of Europe and the New World
1. reliance on money/banking
2. set up global trade network
3. rapid growth of governments
C. Worldwide circulation of food products
1. foods grown in one area were transplanted/imported around the world
2. improved diets led to population increases & better health

13. D. Worldwide shifts in population
1. African populations were transmigrated to New World
2. Native American populations were decimated & relocated
3. Increased the power & presence of European culture around the world
E. Increased scientific knowledge of nature and the world
1. more accurate maps
2. cultural diffusion  new innovations & inventions