Exploration and Expansion Section 3

Essential Questions

• How did exploration result in a new exchange of plants and animals?

• What was mercantilism, and how did it push the drive to establish colonies?

• How did global trade lead to the rise of capitalism in Europe?

Main Idea

The creation of colonies in the Americas led to the exchange of new types of goods, the establishment of new patterns of trade, and new economic systems in Europe.

New Patterns of Trade

Exploration and Expansion Section 3

The introduction of the horse to the Americas was a significant development from the Columbian Exchange. It provided a new source of labor and transportation.

• Voyages launched large-scale contact between Europe and Americas.

• Interaction with Native Americans led to sweeping cultural changes.

• Contact between the two groups led to the widespread exchange of plants, animals, and disease—the Columbian Exchange.

• Europeans—no potatoes, corn, sweet potatoes, turkeys

• People in Americas—no coffee, oranges, rice, wheat, sheep, cattle

The Exchange of Goods

The Columbian Exchange

• Previously unknown foods taken back to Europe

• Familiar foods brought to Americas by colonists

Sharing Discoveries

Exploration and Expansion Section 3

Exploration and Expansion Section 3

Different Foods

• Exchange of foods, animals had dramatic impact on later societies

• Activities like Texas cattle ranching, Brazilian coffee growing not possible without Columbian Exchange; cows, coffee native to Old World

Widespread Effects

China- Arrival of easy-to-grow, nutritious corn helped population grow

Africa- Two American crops (corn, peanuts) still among most widely grown

One-third of all food crops grown in world are of American origin

Italian Food without Tomatoes

• Traditional cuisines changed because of Columbian Exchange

• Until contact with Americas, Europeans had never tried tomatoes, most Europeans thought they were poisonous

Effects of the Columbian Exchange

Exploration and Expansion Section 3

Devastating Impact

• Native American population continued to decline for centuries

• Inca Empire decreased from 13 million in 1492 to 2 million in 1600

• Intermittent warfare, other violence also contributed

The Introduction of New Diseases

• Native Americans had no natural resistance to European diseases

• Smallpox, measles, influenza, malaria killed millions

• Population of central Mexico decreased by more than 30% in the 10 years following first contact with Europeans

Exploration and Expansion Section 3

Find the Main Idea

What were two lasting effects of the Columbian Exchange?

Answer(s): possible answers—changes in cuisine, changes in crops grown around the world, epidemics

Exploration and Expansion Section 3

• Selling more goods than it bought from foreign countries created a favorable balance of trade

• Increased its power; weakened foreign competitors

• Could reduce amount of imports by placing tariffs on goods, Importer paid tariff, which added to cost

• Encourage exports that could sell for higher prices than raw materials

Balance of Trade

- Europeans developed mercantilism = Nation’s strength depended on its wealth

- Wealthy nation had power for military and expanded influence

- 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

New Economic Policy

Mercantilism

Exploration and Expansion Section 3

Controlling Sources

Third approach for favorable balance of trade was 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

Exploration and Expansion Section 3

Exploration and Expansion Section 3

Building colonial empires essential to mercantilist system

• European powers wanted to establish colonies to control sources of raw materials & provide new markets for goods

• Colonies existed only to benefit home country

• Monarchs restricted economic activities in colonies

• Colonists could not buy or sell with other countries or manufacture goods themselves

Colonies • Towns cities grew as business

activity increased

• New class of wealthier merchants emerged

• Rural life continued as it had for centuries

• Most rural people remained poor

Impact on Society

Colonies

Exploration and Expansion Section 3

Summarize

What were the main principles of mercantilism?

Answer(s): nation's strength depended upon its wealth; needed a favorable balance of trade

Exploration and Expansion Section 3

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.

- Most economic activity carried on by private individuals or org. to seek profit

- Individuals amassed great trade fortunes

- Wealth enabled them to invest in more business ventures

Capitalism Emerges • Investors took risks of

investing because of inflation

• Inflation = steady increase in prices

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

Rising Prices

- Increase of money in circulation pushed prices for goods still higher

Money Supply

The Rise of Capitalism

Exploration and Expansion Section 3

New Ventures

• Overseas business ventures often too expensive for individual investors, so they 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

• Others formed to bear cost of establishing colonies

A New Business Organization

Exploration and Expansion Section 3

Identify Cause and Effect

Why did new business practices develop in Europe?

Answer(s): because of increasing trade between Europe and its colonies