The Columbian Exchange

Good or Bad?

What You Will Know…• Difference between Triangular Trade and Columbian

Exchange• The effects of the Columbian Exchange (how did the new

foods, animals impact society?)• The emergence of capitalism & its effects on European

economy• Purpose of joint-stock companies• Mercantilist system – goals of a country• Importance of colonies to European nations• Effects of Mercantilism

Triangular Trade/Transatlantic Trade• Europe Africa N. and S. America• 3 legs of the journey

– 2nd leg = slaves from Africa to Americas = = MIDDLE PASSAGE!MIDDLE PASSAGE!

The Middle Passage• Crowded, unsanitary• Disease spread• 20% died on voyage

Slavery within Africa

• Not based on race• Not life-long• Not born into slavery• Treated more humanely• Could earn freedom

Slavery under Europeans• Life-long• Hereditary if parent was

slave, you were slave• Not likely to earn freedom• Treated like property

(chattel)• Based on race

Effects on Africa • Loss of population• Loss of traditions within

Africa• Conflicts among African

groups• INTRODUCTION OF GUNS

– Traded to Africans in exchange for slaves

The “Columbian The “Columbian Exchange”Exchange”

The “Columbian The “Columbian Exchange”Exchange” Squash Avocado Peppers Sweet

Potatoes

Turkey Pumpkin Tobacco Quinine

Cocoa Pineapple

Cassava POTATO

Peanut TOMATO Vanilla MAIZE

Syphilis

Olive COFFEE BEAN Banana Rice

Onion Turnip Honeybee Barley

Grape Peach SUGAR CANE

Oats

Citrus Fruits Pear Wheat HORSE

Cattle Sheep Pigs Smallpox

Flu Typhus Measles Malaria

Diptheria Whooping Cough

Trinkets

Liquor

GUNS

Increasing trade between Europe and colonies created new business and trade practices during the 1500s and 1600s. These practices would have a great impact on the economies of European nations.

• During this time, capitalism expanded

• In capitalism, most economic activity carried on by private individuals, organizations in order to seek profit

Capitalism Emerges

• Individuals amassed great trade fortunes

• Merchants supplied colonists with European goods

• Returned products, raw materials

Overseas Trade

• Overseas trade made many merchants rich

• Wealth enabled them to invest in more business ventures

• Business activity in Europe increased greatly

Increased Business Activity

The Rise of Capitalism

Money Supply

• Increase of money supply another factor in higher prices

• Shiploads of gold, silver flowed into Europe from Americas to be made into new coins

• Over time, increase of money in circulation pushed prices for goods still higher

Rising Prices

• Investors took risks of investing in overseas trade because of inflation

• Inflation, steady increase in prices

• Demand for goods increased due to growing population, scarcity of goods; rising demand drove prices higher

New Ventures

• Overseas business ventures often too expensive for individual investors

• Investors began pooling money in joint-stock companies

Shares

• Profit, loss based on number of shares owned

• If company failed, investors lost only amount invested

Joint-Stock Companies

• Investors bought shares of stock in company

• If company made profit, each shareholder received portion

Financing Colonies

• British East India Company, one of first joint-stock companies

• 1600, imported spices from Asia

• Others formed to bear cost of establishing colonies

A New Business Organization

• Wealth measured by amount of gold, silver possessed by nation

• Mercantilists believed there was fixed amount of wealth in world

• For one nation to become wealthier, more powerful—had to take wealth, power away from another nation

• Mercantilism led to intense competition between nations

Intense Competition

• Founding of colonies, new goods in Europe led to significant changes

• 1500s, Europeans developed new economic policy, mercantilism Nation’s strength depended on its wealth

• Wealthy nation had power for military and expanded influence

New Economic Policy

Mercantilism

Building colonial empires essential to mercantilist system

• European powers wanted to establish colonies

– To control sources of raw materials

– To provide new markets for manufactured goods

• To a mercantilist, colonies existed only to benefit home country

Colonies • Monarchs restricted economic

activities in colonies

• Colonists could not sell raw materials to other countries

• Could not buy manufactured goods from other nations

• Strict laws forbade colonies from manufacturing goods

• Forced to buy only from home country

Strict Laws

Colonies

• Mercantilists built wealth two ways—extract gold, silver from mines at home, in colonies; sell more goods than it bought from foreign countries, creating favorable balance of trade

• With favorable balance of trade, country received more gold, silver from other nations than it paid to them

• Increased its power; weakened foreign competitors

• To achieve favorable balance of trade, could reduce amount of imports by placing tariffs on goods

• Importer paid tariff, added cost to price of good

• Imported goods more expensive, discouraged people from buying

Imports • Encourage exports that could sell

for higher prices than raw materials

• Countries encouraged manufacturing and export of manufactured goods

• Governments provided subsidies to help start new industries

Exports

Balance of Trade

Controlling Sources

Third approach for favorable balance of trade, controlling sources

• Nation that controlled own sources would not need to import from competing nations

• Why important– Country did not need to spend own money to obtain raw materials

– Foreign countries considered rivals, might become active enemy, cut off supply of raw materials

• European nations worked to become more self-sufficient

• Nations began to establish colonies

Effects of Economic Revolution

• Growth of towns• Rise of wealthy merchant class• Increased wealth of nations

HOWEVER…• Most of Europe’s population remained poor• Mainly rural

INCREASE IN MONARCH’S POWER ABSOLUTISM!

What You Should Know…• The effects of the Columbian Exchange (how did the new

foods, animals impact society?)• The emergence of capitalism & its effects on European

economy• Purpose of joint-stock companies• Mercantilist system – goals of a country• Importance of colonies to European nations• Effects of Mercantilism

Effects of Economic Revolution

• Growth of towns• Rise of wealthy merchant class• Increased wealth of nations

HOWEVER…• Most of Europe’s population remained poor• Mainly rural

INCREASE IN MONARCH’S POWER ABSOLUTISM!

What You Should Know…• The effects of the Columbian Exchange (how did the new

foods, animals impact society?)• The emergence of capitalism & its effects on European

economy• Purpose of joint-stock companies• Mercantilist system – goals of a country• Importance of colonies to European nations• Effects of Mercantilism

Effects on Africans

• Introduction of guns• Conflicts among tribes• Loss of population due to enslavement

– Mostly men lost – lack of food, defense

• Poor treatment in Middle Passage, slavery

Effects on Natives in New World• Introduction of guns• Introduction of horses, pigs, cattle• Forced to learn new culture (especially Spanish

colonies)• Missionaries spread Christianity • Disease killed large part of population• Loss of territory/became colonies

– Exploited for raw materials• Encomienda system mistreated natives

Effects on Europeans• Merchants gained wealth & power from increased trade• Capitalism led to individual wealth

– BUT most Europeans remained poor– WHY?

• Inflation!!!• Mercantilism led countries to become wealthy

– Increased control over colonies– Pride in one’s country Nationalism – Increased power of monarch = Absolutism!