1. Global Economy & Atlantic Trade Chapter 19

2.   The 18th C saw enormous changes in the lives of ordinary people, with agricultural improvements and new patterns of manufacturing, a rapid rise in population and increasing prosperity, particularly in the Atlantic countries involved in colonization and trade in Asia, Africa and the Americas. These widespread economic changes set the stage for the Industrial Revolution and are comparable in their significance to the economic and social expansion in the 11th & 12th C that paved the way for the Renaissance. Overview

3.   Colonial markets provided ready consumers of European goods, benefiting manufacturing interests, both individuals and states. Europeans competed with each other for control over these colonial markets and adopted mercantilism to improve their economies. The Atlantic states, particularly England, France and Holland – grew wealthy and increasingly competitive with each other.  Adam Smith developed a new economic theory called economic liberalism that opposed mercantilism for its hindrance of competition. His theory held that governments should limit themselves to a protective function and leave the economy free to operate. Such laissez-faire politics would promote social harmony and the general welfare. KEY CONCEPTS

4.   England – under the Stuarts & the Commonwealth)  Advanced position – adoption of mercantilism in 17thC  Mercantilism - Government involvement in the economy was necessary to increase the amount of gold - by decreasing imports and increasing exports  Governments encouraged industry with tax subsidies and the granting of monopolies.  Colonists required to buy almost all goods from England  Cromwell passed the 1 st Navigation Act 1651  All goods coming into Scotland & England be brought in by British ships  Goal – make Britain the dominant maritime power by strengthening the British shipping industry & outmaneuvering its competition  17 th C chief competitor – Holland  3 wars with the Dutch in the mid-17 th C  Won New Amsterdam in 1664 – now New York  Damaged Dutch shipping & trade World Trade

5.  New competition – France  Advantages Dutch didn’t have:  Large population  Alliance with Spain  Strongest military power  Substantial resources  Highly regulated colonies England fights for world trade

6.   Wars 1700-1763  War of Spanish Succession  Threat to the balance of power in Eur  Treaty of Utrecht  France lost Newfoundland, Nova Scotia & Hudson Bay  Britain won control of African slave trade – the asiento  War of Austrian Succession  Britain helped Austria’s Maria Theresa hold her throne  Seven Years’ War (French and Indian War) – most decisive  Fought on both European and American continents  British naval power defeated the French forces in Quebec  Treaty of Paris of 1763  France lost Quebec and possessions east of the Mississippi, & holdings in India to England and Louisiana to Spain  Spain lost Florida to England England V France

7.   Basis for its empire in India & Canada, expanded American colonies  Trade boomed for Eng  London became Europe’s riches & largest city  Trade in manufactured goods, slave & sugar By the end of the 18 th C, London had become the largest city in Europe. It rebuilt itself after the Great Fire of 1666, moving west with townhouses built around squares England Supreme on the seas

8.   Key element in the expansion of Europe and the Atlantic economic system  More than ½ of the 11.7 million Africans brought to the Americas arrived in the 18 th C  Up to 80,000 a year  Slaves were vital to the success of the Amer. Econ  Produced crucial items like sugar & coffee  Slave trade  Shore trading  Local traders supplied slaves  Small-scale slave raids, kidnapping, punishment for crimes  African traders used wealth to buy European arms THE ATLANTIC SLAVE TRADE

9.  One of the impacts of the Slave trade on African states was to encourage warfare among Africans.

10.   A slave who ran away was supported by the law  Free and escaped black – some whom intermarried with whites  In 1807 Parliament abolished the slave trade – 1 st large scale peaceful movement for social change  The height of the slave trade was 1780s – spanning about 30 years Slavery In Britain

11.  The US Constitution of 1787 allowed for the importation of slaves until 1808, as a compromise between those opposed to slavery and the slave holding states. Slavery was abolished in the British Empire in 1833 and in the French Empire in 1848: it continued in Brazil until the 1880s. AP TIP

12.  Phillip V – Bourbon grandson of Louis XIV  Capable leader – lead Spain’s recovery  Enlarged empire in the Americas with the acquisition of Louisiana  Silver mines – produced ½ of the world’s silver  Spanish colonial social/econ  Creoles – became wealthy consumers of Euro manufactured goods  Depended on the Native Amer. for labor  1 st as slaves – serf in new system debt peonage  People worked to pay off debts (almost required to acquire)  Mestizos – mixed Spanish and Indian blood  Mestizos made about 30% of pop – Creoles about 20% - Blacks much smaller %  Casta Paintings – demonstrated the whites fascination by issues of race – portrayed a variety of racial mixtures COLONIAL LATIN AMERICA

13.  Spain’s South American colonies were similar to Britain’s New England in that African slavery was relatively uncommon. In Argentina, Chile, and Peru, the most important Spanish colonies, most of the laborers were native people. There was relatively little African slavery there or in New England, where there was little plantation agriculture.

14.   The Dutch- The Dutch East India Company  Importers of Spice Island goods  Did not diversify and suffered when the Euro spice market declined  England – British East India Company  Focused on India  Won trade enterprises from Mughal emperor  Engaged in local politics  Competed with the French  Seven Years’ War British won French territories in India  The next year they defeated the Mughal emperor  Kept him on the throne – in name only  Robert Clive – governor had power  “Jewel in the Crown” of the British Empire TRADE AND EMPIRE IN ASIA

15.   Portugal  Holland  France  Britain Order of world trade domination in Asia from the 16 th c to 18 th C

16.   New doctrine: laissez-faire, economic liberalism or free enterprise  Adam Smith – Scottish Enlightenment philosopher  The Wealth of Nations (1776) - Established basis of modern capitalism  Free competition – preferable to mercantilist monopolies  Offers the greatest benefits to the society as a whole  Protects the consumer and offering opportunities to individuals  Governments should limit themselves to 3 tasks  Military defense  Maintenance of public order and justice  Public works  Do not intervene in the economy  Free enterprise would create social harmony & raise the standard of living for all  Smith did not support subsistence wages or the division of labor that was part of industrialization  Argued workers should be paid decently and be protected by the government ECONOMIC LIBERALISM

17.  Adam Smith searched for fundamental laws; the law of supply and demand (which required free operation. He believed that if every businessperson, pursued his “enlightened self-interest in an atmosphere of free competition, it would produce the greatest quantity of goods at the highest quality and lowest prices. An “invisible hand” would act as a regulator if needed. Mercantilism protects the manufacturer, but the chief beneficiary of laissez-faire is the consumer. Although the US and many other states claim their economies are laissez-faire in fact government intervention in the economy never disappeared. AP TIP

18.  Modern Capitalism Adam Smith Invisible Hand