Overview

http://www.youtube.com/watch?v=b3fYF6YvesA

Overview

Commodities−mainly silver, but also including agricultural products−from the Americas led to:

1. A marked increase in many areas of industry due to increased money circulation.

2. The revival of the economic notion of capitalism and the introduction of mercantilism.

3. Population growth from the foods obtained through the Columbian Exchange.

Silver Imports• Spain obtained approximately 180 tons of gold and 8200 tons of silver through its toil in the New World and an unknown amount through smuggling (Walton 85).

• The quantities of silver acquired by Spain passed from Spain to Italian and German merchants, thus affecting the entire continent (Chambers 397).

• In 1545, the Spaniards discovered an enormous amount of silver at Potosì; the silver from these mines contributed to much of Spain’s silver imports (Chambers 405).

Inflation and Price Revolution

• Webster’s New World Dictionary defines inflation as the: increase in circulation resulting in a fall in its value and a rise in prices (166).

• In other words, this means that more money is available for a fixed amount of products, leading to a decrease in the purchasing power of each currency unit.

• From 1500 to 1600, inflation totaled 75 percent in Spain, growing steadily at about one to two percent a year.

• By the mid 1600s on the European continent, the quantity of gold had increased by one-fifth and the quantity of silver had tripled (Chambers 397).

Results of Inflation

• Peasant protests over the increased prices in relation to wages.

• Reduced debts (the value of a loan grew less and less each year).

• Boosted profits (Chambers 397).

• In Spain, landowners raised rents and replaced tenants.

• The increasing gap between wages and prices increased the opportunity to accumulate capital (Lynch 390).

Results of Inflation (cont.)

http://csmres.jmu.edu/geollab/fichter/GS102/2008PowerPoints/29-GreatWave-GG102.pdf

Commercial RevolutionThe increased circulation of money led to an increase

in the profits of traders and financers, leading to greater amounts of investing (Chambers 398).

“Allegory of Trade” by Jost Amman glorifies the world of the merchant. The bottom left shows the shipment of goods, the bottom right shows bankers keeping accounts, and the middle shows the various transactions taking place.

http://www.wallsave.com/wallpapers/1920x1080/goya/733548/goya-allegory-of-trade-amman-jost-733548.jpg

http

://ki

ds.b

ritan

nica

.com

/com

pton

s/ar

t-109

695/

Early

-16t

h-ce

ntur

y-ba

nker

s-st

ored

-gol

d-an

d-si

lver

-for

-dep

osito

rs

Bankers counting, storing, and exchanging currency.

Increasingly complicated exchanges and bookkeeping (Chambers 398).

“The Moneylender and his Wife” by Quentin Massyshttp://en.wikipedia.org/wiki/File:Matsys_the_moneylender.jpg

Commercial Revolution (cont.)

Capitalism• The Random House College Dictionary defines capitalism as “an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations.”

• The individuals that engaged in capitalistic enterprises were generally motivated by their desire for profit (Viault 80) or the accumulation of capital for its own sake (Chambers 398).

• Many merchants gained great wealth from overseas trade, and many used their profits to finance more voyages and/or to start trading companies (“Age of Exploration” 14).

• Bankers and merchants who lent their capital in the hopes of great profit did so with great risk; it could take months or years before a return was collected (Chambers 398).

• Some of the silver imported from the New World was redirected towards financing imports of spices and luxuries from Asia (“The Impact of Expansion”).

Growth of Industry

• As a result of exploration, more raw materials entered Europe (“Age of Exploration 14).

• New ocean trading routes sparked an industrial increase in shipbuilding (Krieger 66).

• The expansion of cities led to a greater demand for various skills. As a result, guilds allowed the widows of guild members to take over their husbands trades (Chambers 400).

• In order to bypass the restrictive guild system, capitalists pioneered the putting-out system in which “entrepreneurs provided cloth, looms, and other equipment to rural families” (Krieger 67).

http

://cd

n.di

pity

.com

/upl

oads

/eve

nts/

3595

0c69

951c

cf0d

1466

5d49

56a7

9e33

_1M

.png

Joint Stock Companies• International trade required enormous amounts of capital to:

1. Arm merchant ships2. Buy special privileges for

local authorities3. Build trading posts

• In a joint-stock company, investors (generally capitalists) bought shares of ownership, which would translate as either proportional loss or proportional profit.

• The English and the Dutch both formed joint-stock companies to reduce risks and to maximize profits (Krieger 67).

Dutch East India Companyhttp://en.wikipedia.org/wiki/File:Voc.jpg

Columbian

Exchange

http

://po

mi.u

s.com

/imag

es/to

mat

oes.j

pg

http

://bl

ogs.m

call.

com

/.a/6

a00d

8341

c4fe

353e

f017

743f

6695

5970

d-80

0wi

http

://im

g.21

food

.com

/201

1060

9/pr

oduc

t/130

6411

9293

23.jp

g

http

://w

ww

.shril

alm

ahal

.org

/pro

duct

s/D

K-T

obac

co.jp

g

Old World (Krieger 64).

Potatoes Tomatoes

MaizeTobacco

Columbian

Exchange

http

://bl

og.c

alor

icio

us.c

om/w

p-co

nten

t/upl

oads

/201

1/03

/who

le-w

heat

1.jp

g

http

://ar

ound

thep

late

.org

/wp-

cont

ent/u

ploa

ds/2

012/

03/ri

ce.jp

g

http

://w

ww

.eric

cres

sey.

com

/wp-

cont

ent/u

ploa

ds/2

011/

11/c

of.jp

g

http

://dr

awsk

etch

.abo

ut.c

om/o

d/le

arnt

odra

who

rses

/ss/

hors

e-dr

awin

g_6.

htm

Old World (Krieger 64).

Sugar Cane Wheat

CoffeeHorses

• Wealth accumulated from the New World (for example, from Caribbean sugar plantations) led to a dramatic increase in the power of the European continent.

• New crops revolutionized the European diet and helped feed a growing population as well as increasing mortality rates due to varied diets (Krieger 65).

• The New World added another entity to export products to, thereby promoting mercantilism.

Consequences of the Columbian Exchange

Mercantilism

“The world [contains] a fixed amount of wealth and each nation could enrich itself only at the expense of others” (Chambers 450).

• Rulers tried to reduce the items they bought from other countries and increase the items they sold: exports over imports (“Age of Exploration” 15).

•Therefore, state control of industry was needed, including a system of high tariffs, encouragement of native industries, and the allocation of resources (Chambers 450).

• The New World served as the base to this system, providing the raw materials for a nation’s industries (“Age of Exploration” 15).

References"The Age of Exploration." History Alive! The United States Through Industrialism. N.p., n.d. Web. 16 Dec.

2012. <http://info.teachtci.com/resources/ha/AgeofExploration.pdf>. Chambers, Mortimer. The Western Experience. Boston: McGraw-Hill, 2007. Print.

Goldman, Jonathan L. Webster's New World Pocket Dictionary. Foster City, CA: IDG Worldwide, 2000. Print.

"The Impact of Expansion." Big Site of History. N.p., n.d. Web. 17 Dec. 2012. <http://bigsiteofhistory.com/the-impact-of-expansion-european-exploration-and-expansion>.

Krieger, Larry. AP European History: Crash Course. Piscataway, NJ: Research & Education Association, 2010. Print.

Lynch, John. "Spain During the Price Revolution." Global History and Geography. N.p., n.d. Web. 17 Dec. 2012. <http://www.p12.nysed.gov/ciai/socst/ghgonline/units/4/documents/Lynch1.pdf>.

Viault, Birdsall S. Modern European History. New York: McGraw-Hill, 1990. Print. Walton, Timothy R. The Spanish Treasure Fleets. Sarasota, FL: Pineapple, 1994. Print.