1. THE WORLD ECONOMY EXCHANGES, CAPTIALISM, COLONIALISM, AND EMPIRE BUILDING

2. CHINESE RECONNAISSANCE ► Ming China  Expel Mongols, reestablish traditional Chinese institutions ► Reestablish Chinese tributary system; reestablish East Asian trade ► Resurrects Chinese fleet  2 nd Ming Emperor seizes control from nephew ► Nephew flees abroad ► Emperor sends fleet to find nephew, reestablish Chinese influence, trade, tribute ► The Chinese reconnaissance of the Indian Ocean basin  Zheng He's expeditions ► Ming emperor permitted foreigners to trade at Quanzhou and Guangzhou ► Refurbished the navy and sent seven large expeditions to the Indian Ocean basin ► Purposes: to control foreign trade and impress foreign peoples ► Admiral Zheng He's ships were the largest marine crafts in the world ► Visited southeast Asia, India, Ceylon, Arabia, and east Africa  Chinese naval power ► Zheng He's voyages diplomatic: exchanged gifts, envoys ► Used force to impress foreign powers, for example, against coastal pirates ► Expeditions enhanced Chinese reputation in the Indian Ocean basin ► End of the voyages, 1433  Confucian ministers mistrusted foreign alliances  Resources redirected to agriculture and defense of northern borders  Technology of building large ships was forgotten, nautical charts destroyed

3. EUROPEAN EXPLORATION ► European exploration in the Atlantic and Indian Oceans  Portuguese exploration ► European goals: to expand Christianity and commercial opportunities ► Portuguese mariners emerged as the early leaders ► Prince Henry of Portugal determined to increase Portuguese influence ► Seized Moroccan city of Ceuta in 1415  Colonization of the Atlantic Islands ► Portuguese ventured into the Atlantic, colonized Madeiras, Azores, other islands ► Italian investors, Portuguese landowners cultivated sugarcane on the islands  Slave trade expanded fifteenth century ► Portuguese traders ventured down west coast of Africa ► Traded guns, textiles for gold and slaves ► Thousands of slaves delivered to Atlantic island plantations ► Indian Ocean trade  Portuguese searched for sea route to Asian markets without Muslim intermediaries  Portuguese mariners dominated trade between Europe and Asia, sixteenth century  Portuguese ships with cannons launched European imperialism in Asia ► Christopher Columbus hoped to reach Asia by sailing west  Plan rejected by Portuguese king but sponsored by king and queen of Spain  1492, led three ships to the Caribbean Sea, believed he was near Japan  Other mariners soon followed Columbus and explored American continents

4. MOTIVES FOR EXPLORATION ► Portugal searched for fresh resources  Resource poor country block from expanding on land  13 th to 15 th century they ventured out onto Atlantic  Established sugar plantations in Azores, Madiera ► Direct trade without Muslim intermediaries  Bypass Italian trade monopolies with Ottomans  Asian spice trade  African gold, ivory, and slaves ► Missionary efforts of European Christians  Christians urged to spread the faith throughout the world  Crusades and holy wars against Muslims in early centuries  Reconquista of Spain inspired Iberian crusaders ► Motives  Gold, glory, God  Combined and reinforced each other

5. INFLUENCE OF TECHNOLOGY ► New technologies help Europeans travel offshore  Sternpost rudder  Two types of sails  New types of ships  Advance, sail against wind ► Navigational instruments  Magnetic compass  Astrolabe (and cross and back staffs) ► Knowledge of winds and currents  Enabled Europeans to travel reliably  Trade winds north and south of the equator  Regular monsoons in Indian Ocean basin  The volta do mar

6. VOYAGES OF EXPLORATION ► Henrique, King of Portugal  Encouraged exploration of west Africa  Portuguese conquered Ceuta in north Africa in 1415  Established trading posts at Sao Jorge da Mina, west Africa  Dias rounded the Cape of Good Hope, entered Indian Ocean, 1488 ► Vasco da Gama of Portugal  Crossed Indian Ocean; reached India, 1497  Brought back huge profit  Portuguese merchants built a trading post at Calicut, 1500 ► Christopher Columbus, Genoese mariner  Proposed sailing to Asian markets by a western route  Sponsored by Catholic kings of Spain; sailed to Bahamas in 1492 ► Columbus's voyage inspired others  England, France, Holland begin to explore  Spain, Portugal sent out more expeditions, conquistadors

7. OTHER VOYAGES ► Ferdinand Magellan, Portuguese navigator, in service of Spain  Crossed both the Atlantic and Pacific Oceans 1519-1522  One ship out of five completed the circumnavigation of the world  Magellan died in conflict in a Philippine island on the way home ► Exploration of the Pacific took three centuries to complete  Trade route between the Philippines and Mexico, by Spanish merchants  Other European mariners searched for a northwest passage from Europe to Asia ► The English, French, Dutch  France: Explored Northern North America, Settled Canada, exploited furs  English ► Atlantic seaboard of North America, Hudson Bay area ► English East India Company opened Indian Ocean to English trade  Dutch ► Tended to prey on Spanish, Portuguese existing holdings ► Won independence from Spain, seized control on much of Indian Ocean ► Dutch East India company established to exploit Indian possessions ► By 18 TH century, Europeans had accurate knowledge of the world

8. GLOBAL EXCHANGES ► Biological exchanges between Old and New Worlds  Columbian Exchange ► Global diffusion of plants, food crops, animals, human populations, diseases ► Columbus's voyages began and explorations furthered exchange ► All continents effected  Permanently altered the earth's environment ► Epidemic diseases  Smallpox, measles, diphtheria, whooping cough, and influenza  Led to staggering population losses  Smallpox reduced Aztec population by 95 percent in one century  Contagious diseases had same horrifying effects in the Pacific islands  Between 1500/1800, 100 million people died of imported diseases ► New foods and domestic animals  Wheat, horses, cattle, sheep, goats, and chickens went to Americas  American crops included maize, potatoes, beans, tomatoes, peppers, peanuts ► Growth of world population: from 425 million in 1500 to 900 million in 1800 ► Migration of human populations ► Enslaved Africans were largest group of migrants from 1500 to 1800 ► Sizable migration from Europe to the Americas

9. ORIGINS OF EUROPEAN TRADE ► European intermediaries  Comparative Advantage ► Country can do many things but it will excel in some over others ► Countries develop trade based on comparative advantage  Advantage is based on where the nation has greatest advantage  Concentrate economic resources in that area ► European advantage was to act as middle men and shipping for others  Absolute Advantage ► One country has natural advantage in producing certain goods, services ► Absolute advantage is often a natural monopoly ► Asians produced spices, goods, which Europeans could not ► Europeans began by trading with silver, gold  European establish monopolies ► Europeans establish chock points at areas where all trade had to pass ► Seized lands where spices grown, destroy competition, create monopoly ► Transoceanic trade  European merchants created global trading system  Based on supply and demand; linked ports of the world ► Manila galleons  Heavily armed ships sailed between Manila, Mexico  Asian luxury goods to Mexico; Silver from Mexico to China  East Asia became dependent on American silver

10. WORLD TRADE ► Terms of Trade  Agreements on what will be exchanged  Agreements on payments, amounts to be exchanged  Bilateral is when two nations negotiate equally ► Europeans had to negotiate with China, Japan, Muslims, Russia (too powerful) ► Only allowed to trade though one port  Canton (Guangzou) in China  Nagasaki in Japan  Unilateral is when one nation dictates terms of trade ► Composition of Trade  Europe and Trade ► Europeans traded finished goods, especially manufactured( Guns, cloths) ► Europeans purchased unfinished goods to trade (Silver, sugar) ► Europeans sought luxuries, spices, slaves, gems, silks, porcelain  World and Trade ► Low-cost goods: gold, silver; sugar, spice, tobacco, cotton; slaves ► Africa, Latin America became one commodity exporters ► E. Europe sold commodities through W. Europe (grains, timber, tar, fish) ► E. Asia, S. Asia, S.E. Asia, S.W. Asia: balanced agreements of trade ► Balance of Trade  Amount to the profit or loss involved in trade  Europeans had an enormous surplus or positive balance of trade

11. INTERNATIONAL INEQUALITIES ► International Inequality  Center or Core of world trade was Western Europe ► Most of world in an unequal relationship to Europe ► Most countries did not control own economies  Local trading elites often grew rich trading ► Worked with Western Europeans on seas, coasts ► Controlled their own interior economies  Most of locals not involved in world economy ► Population existed at subsistence level ► Contacts limited to coasts, ports ► Coercive Labor  Most of world labor was unfree  Slavery differed little from serfdom, caste slavery, peasants  Profits often depended on keeping labor cheap  Europeans often established plantations with cheap labor

12. WAS THERE A WORLD ECONOMY, c. 1600? ► Yes  Western Europe ► European Atlantic Seaboard ► Colonial possessions in North America, South America  Poland and Russia  Coasts of West, East Africa  Coasts of India, S.E. Asia, E. Asia  Muslim S.W. Asia ► No  European areas of Ottoman Empire  Interior of Africa  Interior (steppes, deserts) of Eurasia  Interior of South Asia  Indochina  Australia and New Zealand  Interior of North and South America  Pacific islands of Micronesia, Polynesia, Melanesia

13. EAST ASIA ► Benefited from global trade  Allowed Limited Contacts ► Strong government disincentives to trade ► Used Chinese navy to keep pirates, Europeans out ► Tended towards official isolation ► Japan, Korea equally apprehensive  Chinese manufacturing better than Europeans ► Tended towards luxury goods ► Chinese demanded silver in payment  Not active participants on scale of Europe ► China failed to appreciate European threat  Neo-Confucianism clouded understanding  Technology considered beneath Chinese  Profits, trade considered inferior occupations ► Japan understood impact of Europeans  Most troubled by European firearms as un-samurai  Eventually limited trade to one yearly ship at Nagasaki  Officially closed Japan until 1854

14. OTHER PARTS OF WORLD ► Muslim World: Mughal India, Ottomans, Safavids  Interested in trade, cooperated to a degree  Allowed small port colonies to arise  External trade often handled by ethnic minorities  Exchanged goods for silver, luxuries, processed goods  Eventually became dependent on European manufactured goods  Internal expansion, development over external trade ► Russia  Agricultural economy  More concerned with steppe nomads, internal problems  Not involved until 18 th century ► Africa  Except for coasts, Cape Colony generally outside world economy  Diseases, climate kept Europeans out of Africa  Contacts limited to coastal states

15. COLONIAL EXPANSION ► The Americas  Spain: Began with control of Caribbean, Invaded Mexico 1521, Peru 1531  Portugal: Cabral visit coast of Brazil; Treaty of Tordesillas granted Brazil  Colonies developed ► By small band land hungry conquistadors, colonial rulers exploit Indians ► Only later did formal Iberian rule replace corrupt conquistators  Direct Rule ► Colonial administrators sent out from Spain, Portugal ► Established agricultural (ranching or plantation) colonies ► Colonial societies with Europeans at top created rarely had European majorities ► Missionaries sent out to covert Indians ► English, French, Dutch create smaller empires on fringes  Caribbean holdings more profitable than North American colonies  Caribbean islands and Southern American colonies ► Export sugar, rice, tobacco, cotton, indigo rice ► Dominated by slaves, plantations; relied on importation of Africans for labor  Atlantic Seaboard: settler colonies for Europeans (called Neo-Europes) ► Land grants made to encourage colonization ► European populations surpassed native Indians ► European society, economic systems reestablished; mini copies of Western European ► Europeans displaced, drove off most Indians and converted land to agriculture

16. TRADING POST EMPIRES ► No attempt to create empires but control trade, wealth ► Portuguese built 50+ posts between west Africa and east Asia  Alfonso d'Albuquerque ► 16 TH century Portuguese commander in Indian Ocean ► Seized Hormuz in 1508, Goa in 1510, and Melaka in 1511 ► Forced all merchant ships to purchase safe-conduct passes  Portuguese hegemony grew weak by the late sixteenth century ► English, Dutch established trading posts in Asian coasts  English in India, the Dutch at Cape Town and Indonesia  Created efficient commercial organization ► Joint-stock company  Shares could be bought by anyone with money  % of shares correspond to percentage of profit due  Allowed for larger, richer entities to operate  Limited risk of any one participant to cost of the stock purchased  Privileges, terms often guaranteed by government, which often also owned stock ► Insurance  Companies arose which insured ventures  Lloyds of London is the oldest in world ► Formation of powerful, profitable joint-stock companies  English East India Company, founded in 1600  United East India Company (VOC), Dutch, founded in 1602  Private enterprises, enjoyed government support, little oversight

17. EUROPEANS IN INDIAN OCEAN ► Posts were commercial ventures not areas of colonization ► Portuguese controlled area initially  Established ports in India, dominated trade to, from India ► Goa was capital for Indian Ocean Portuguese Empire ► Conquered Sri Lanka, several other ports with permission of Mughals ► Introduced Catholic missionaries to Indian Ocean  Seized port of Malacca on Malay peninsula to do same as in India ► Traded with locals for spice ► Later conquered parts of Spice Islands ► Spanish conquest of the Philippines  Manila, bustling port city, became Spanish capital; Spanish tended to live in cities  Islands divided into plantations to grow sugar  Spanish, Filipinos massacred Chinese merchants  Christianity spread by Dominicans throughout archipelago  Muslim resistance on southern island of Mindanao ► Conquest of Java by the Dutch  Began with VOC trading city of Batavia in 1619  Drove Portuguese out, seized their possessions  Policy: secure VOC monopoly over spice production, trade  Enormous monopoly profit led to prosperity of Netherlands  Forced locals to grow rich, coffee in place of regular crops ► English arrive 17 th century to attack Portugal, later displaced Dutch  Establish British East India Company  Relied heavily on Royal backing, Royal navy, and acquisition of Indian lands

18. COMMERICAL RIVALRIES ► Global competition and conflict  Dutch forces expelled most Portuguese merchants from southeast Asia  Conflict between English and French merchants over control of India ► Began as rivalry with Portuguese ► Each side made alliances with local rulers to establish trading rights ► Cotton and tea from Ceylon, early eighteenth century  Competition in the Americas among English, French, and Spanish forces ► Anglo-Dutch Wars (1640s to 1670s)  English and Dutch fight three wars for control of seas  English win and take New Netherlands (New York); Dutch reduced in world role ► War of Spanish Succession (1704-1714)  Hapsburg family has no heirs to Spanish throne  France set to inherit empire; England, Dutch, Austrians oppose ► The Seven Years' War (1756-1763)  In Europe: British and Prussia against France, Austria, and Russia  In India: fighting between British and French forces, each with local allies  In the Caribbean: Spanish and French united to limit British expansion  In North America: fights between British and French forces ► Outcome of All: British hegemony  British gained control of India, Canada, Florida  Dutch allowed to retain Ceylon, South Africa, Indonesia as English allies  In Europe, Prussian armies held off massive armies of the enemies  War paved the way for the British empire in the nineteenth century  British influence paramount in Latin America

19. EARLY CAPITALISM ► First arose in Italian city-states, Dutch controlled Netherlands ► Early capitalism and proto-industrialization  Capitalism is use of capital, money, investments to create industry, profit ► Relies on freedom to invest capital in most profitable venture ► Relies on minimal government regulation and right of investors to make a profit  The nature of capitalism ► Private parties sought to take advantage of free market conditions ► Economic decisions by private parties, not by governments or nobility ► Forces of supply and demand determined price  Supply and demand ► Merchants built efficient transportation and communication networks ► New institutions and services: banks, insurance, stock exchanges  Joint-stock companies like EEIC and VOC organized commerce on a new scale  Capitalism actively supported by governments, especially England, Netherlands ► Protected rights of private property, upheld contracts, settled disputes ► Chartered joint-stock companies authorized to explore, conquer, and colonize distant lands  The putting-out system of seventeenth and eighteenth centuries ► Entrepreneurs bypassed guilds, moved production to countryside ► Rural labor cheap, cloth production highly profitable ► Mercantilism is government supported national capitalism  Nations should not important products from outside its own empire  Goods should be shipped only on national ships  National tariffs, taxes discourage importation, stimulate local production  Economic health reflected in positive balance of trade  Wealth measured in positive amounts of gold, silver earned  All currencies backed by gold, silver

20. EARLY CAPITALIST SOCIETIES ► Mindset about capitalism  Profits and ethics ► Medieval theologians saw profit making as selfish and sinful ► Renaissance altered concepts of wealth, profit  Reformation ► Protestants saw success as vindication of God’s favor ► Many Protestants in upper middle class, Protestant states supported capitalism ► Population growth and urbanization  Population growth ► American food crops improved Europeans' nutrition and diets ► Increased resistance to epidemic diseases after the mid-seventeenth century ► European population increased from 81 million in 1500 to 180 million in 1800  Urbanization ► Rapid growth of major cities (Paris from 130,000 in 1550 to 500,000 in 1650) ► Cities increasingly important as administrative and commercial centers ► Social change in early modern Europe  Early capitalism altered rural society ► Societies became monetary based and not barter ► Improved material standards if grains sold for high profits  Increased financial independence of rural workers  Society would prosper as individuals pursued their own interests  New propertied classes, especially urban middle classes began to appear ► Capitalism created problems  Generated deep social strains  Aristocrats, peasants on fixed incomes, payment of wealth in kind hurt  Crime associated with wealth, poverty arose  Massive importation of gold, silver led to massive inflation  The nuclear family strengthened by capitalism ► Families more independent economically, socially, and emotionally ► Love between men and women, parents and children became more important

21. EUROPEAN IMPACTS ► Western Europe  Commercial impacts ► Beginning of Commercial Revolution, Capital Revolution, Price Revolution ► Incredible wealth generated ► Wealth funds European internal development ► New products, foods imported  Diplomatic impacts ► European trans-Atlantic empires created ► Colonial rivalries ► War for colonies  Social Impact ► Rise of groups with wealth based on money not land ► Rise of cities, urban groups ► Commercialization made new products available ► Dependence on agriculture reduced  Intellectual Impact ► European ideas, religions, philosophies began to spread abroad ► Europeans began to borrow foreign ideas if it suited their needs ► Contacts with the world challenged traditional European beliefs

22. NEW WORLD ORDER ► All continents eventually connected by trade  American silver, foodstuffs spread throughout world  Terms of trade tend to favor Western Europeans for first time  Commerce generateS wealth which only agriculture had in past  Europeans began to dominate world trade  Increase of unfree labor systems to support commercialization ► Rise of Atlantic Slave trade ► Spread of serfdom in Russia ► Changes in non-European social classes  Non-European landowners in Asia make money from trade, too  Muslim merchants largely replaced by European merchants  Rise of African slave trading states, kings who made great wealth