1. THE ORIGINS OF MERCANTILISM

2. Mercantilism Discovery and conquest left their marks on the economy and politics of Europe. Discovery and conquest left their marks on the economy and politics of Europe. Without consulting anyone else in Europe, the rulers of Portugal and Spain, the first two economics powers in world trade, quickly divided any new lands to be found in any part of the world between them. Without consulting anyone else in Europe, the rulers of Portugal and Spain, the first two economics powers in world trade, quickly divided any new lands to be found in any part of the world between them.

3. Mercantilism After the Treaty of Tordesillas of 1494, another treaty, in 1529, drew a line east of the Moluccas which allocated everything on its pacific side to the Spanish, and Africa, the Indian Ocean and the Spice Islands to the Portuguese. After the Treaty of Tordesillas of 1494, another treaty, in 1529, drew a line east of the Moluccas which allocated everything on its pacific side to the Spanish, and Africa, the Indian Ocean and the Spice Islands to the Portuguese.

5. Red/pink = Spanish territory Blue/light blue = Portuguese territory

6. Mercantilism This arrangement did not sit well with the other major powers in Europe. This arrangement did not sit well with the other major powers in Europe. One way to deal with the influx of new wealth was to tap the new-found Spanish wealth either through legal or illegal means. One way to deal with the influx of new wealth was to tap the new-found Spanish wealth either through legal or illegal means. Drake

7. Mercantilism The sixteenth century has often been called the “Golden Age” of Spain. The influence of the Spanish armies, Spanish Catholicism, and Spanish wealth was felt all over Europe. The sixteenth century has often been called the “Golden Age” of Spain. The influence of the Spanish armies, Spanish Catholicism, and Spanish wealth was felt all over Europe. This greatness rested largely on the influx of precious metals from the New World. This greatness rested largely on the influx of precious metals from the New World.

8. Mercantilism To protect this treasure from French and English pirates, armed convoys transported it each year to Spain. Between 1503 and 1650, 16 million kilograms of silver and 185,000 kilograms of gold entered Spain. To protect this treasure from French and English pirates, armed convoys transported it each year to Spain. Between 1503 and 1650, 16 million kilograms of silver and 185,000 kilograms of gold entered Spain.

9. The Spanish Main

10. Mercantilism Meanwhile, Spain was experiencing a steady population increase, creating a sharp rise in the demand for food and goods. Meanwhile, Spain was experiencing a steady population increase, creating a sharp rise in the demand for food and goods. Spanish colonies in the Americas also represented a demand for products. Spanish colonies in the Americas also represented a demand for products. Because Spain had expelled the Jews and Muslims, they could not meet the new demands. Because Spain had expelled the Jews and Muslims, they could not meet the new demands.

11. Mercantilism Prices rose and with them, the costs of manufacturing cloth and other goods. Prices rose and with them, the costs of manufacturing cloth and other goods. As a result, Spanish products could not compete in the international market and cheaper products made elsewhere. As a result, Spanish products could not compete in the international market and cheaper products made elsewhere. Prices spiraled upward faster than the government could levy taxes to dampen the economy. Money flowed out of Spain to the rest of Europe through the increased demand for cheap products and the religious wars of Philip II. Prices spiraled upward faster than the government could levy taxes to dampen the economy. Money flowed out of Spain to the rest of Europe through the increased demand for cheap products and the religious wars of Philip II.

12. Mercantilism Another way Europeans dealt with the newly discovered lands and their bounty was through competition. The discoveries has opened a global battleground for traders and soldiers. Each country developed economic policies to protect themselves from foreign competition. Another way Europeans dealt with the newly discovered lands and their bounty was through competition. The discoveries has opened a global battleground for traders and soldiers. Each country developed economic policies to protect themselves from foreign competition. Mercantilism became the theory of trade espoused by the major European powers from roughly 1500 to 1800. Mercantilism became the theory of trade espoused by the major European powers from roughly 1500 to 1800.

13. Mercantilism Mercantilism advocated that a nation should export more than it imported and accumulate bullion (especially gold) to make up the difference. Mercantilism advocated that a nation should export more than it imported and accumulate bullion (especially gold) to make up the difference. The exportation of finished goods was favored over extractive industries like farming. Underlying this theory was the belief that wealth was finite. The exportation of finished goods was favored over extractive industries like farming. Underlying this theory was the belief that wealth was finite.

14. Mercantilism If one nation hoped to grow richer, it had to do so at the expense of some other nation. The development of colonies became very attractive during the era. If one nation hoped to grow richer, it had to do so at the expense of some other nation. The development of colonies became very attractive during the era. Wealth could be kept by a nation if its colonies provided raw materials to the mother country and the mother country could sell finished goods to the colonies. Wealth could be kept by a nation if its colonies provided raw materials to the mother country and the mother country could sell finished goods to the colonies.

15. Mercantilism European merchants, with the support of their home governments, acted upon the mercantilist theories often using force, robbery, bribery, extortion, and government regulations. European merchants, with the support of their home governments, acted upon the mercantilist theories often using force, robbery, bribery, extortion, and government regulations. In the 16 th century, the Portuguese won dominance over the Asian trade routes from India to the Spice Islands from the Arabs by fortifying bases at the entrance of to the Red Seas and the Persian Gulf. The Portuguese treated any non-Christian ship as a lawful prize In the 16 th century, the Portuguese won dominance over the Asian trade routes from India to the Spice Islands from the Arabs by fortifying bases at the entrance of to the Red Seas and the Persian Gulf. The Portuguese treated any non-Christian ship as a lawful prize

16. Portuguese Empire at its height

17. Portuguese Empire in 1800

18. Mercantilism By the end of the 16 th century, the Portuguese were being elbowed aside by the Dutch who set up the East India Company with the aim of replacing the Portuguese control of the spice trade to Europe. By the end of the 16 th century, the Portuguese were being elbowed aside by the Dutch who set up the East India Company with the aim of replacing the Portuguese control of the spice trade to Europe. Through ruthlessness, and sometimes blood- shed, the Dutch pushed the Portuguese aside and then fought to keep the English out of the Spice Islands as well. Through ruthlessness, and sometimes blood- shed, the Dutch pushed the Portuguese aside and then fought to keep the English out of the Spice Islands as well. Dutch dominance of Indonesia caused the British to focus on India and the Caribbean Islands in the 17 th century. Dutch dominance of Indonesia caused the British to focus on India and the Caribbean Islands in the 17 th century.

19. Dutch Empire

20. Mercantilism Despite its own civil war in the middle of the 17 th century, the British tried to establish themselves as world merchants. Despite its own civil war in the middle of the 17 th century, the British tried to establish themselves as world merchants. The result was the series of Anglo-Dutch wars throughout the later half of the 17 th century in which England gained control of several overseas possessions from the Dutch, including New Amsterdam and many Caribbean Islands. The result was the series of Anglo-Dutch wars throughout the later half of the 17 th century in which England gained control of several overseas possessions from the Dutch, including New Amsterdam and many Caribbean Islands. By the 18 th century, the importance of overseas possessions became more and more important in European affairs leading to the first world war: The Seven Years’ War or the French and Indian War. By the 18 th century, the importance of overseas possessions became more and more important in European affairs leading to the first world war: The Seven Years’ War or the French and Indian War.

22. THE SLAVE TRADE, 1400–1860