Download Commerce in a Global Age WHAP/Napp “Two European

Commerce in a Global Age
WHAP/Napp
“Two European innovations enabled private investors to fund the rapid growth of the
Atlantic economy. One was the ability to manage large financial resources through
mechanisms that modern historians have labeled capitalism. The essence of early modern
capitalism was a system of large financial institutions – banks, stock exchanges, and
chartered trading companies – that enabled wealthy investors to reduce risks and increase
profits.
Banks were a central capitalist institution. By the early seventeenth century Dutch banks
had developed such a reputation for security that individuals and governments from all
over Western Europe entrusted them with large sums of money. To make a profit, the
banks invested these funds in real estate, local industries, loans to governments, and
overseas trade. Individuals seeking returns higher than the low rate of interest paid by
banks could purchase shares in a joint-stock company, a sixteenth-century forerunner of
the modern corporation. Shares were bought and sold in specialized financial markets
called stock exchanges. The Amsterdam Exchange, founded in 1530, became the greatest
stock market in the seventeenth and eighteenth centuries. To reduce risks in overseas
trading, merchants and trading companies bought insurance on their ships and cargoes.
The capitalism of these centuries was buttressed by mercantilism, policies adopted by
European states to promote their citizens’ overseas trade and accumulate capital in the
form of precious metals, especially gold and silver. Mercantilist policies strongly
discouraged citizens from trading with foreign merchants and used armed force when
necessary to secure exclusive relations. Chartered companies were one of the first
examples of mercantilist capitalism. A charter issued by the government of the Netherlands
in 1602 gave the Dutch East India Company a legal monopoly over all Dutch trade in the
Indian Ocean. This privilege encouraged private investors to buy shares in the company.
They were amply rewarded when Dutch East India Company captured control of longdistance trade routes in the Indian Ocean from the Portuguese.
Such successes inspired other governments to set up their own chartered companies. In
1672 a royal charter placed all English trade with West Africa in the hands of a new Royal
African Company, which established its headquarters at Cape Coast Castle, just east of
Elmina on the Gold Coast. The French government also played an active role in chartering
companies and promoting overseas trade and colonization. Jean Baptiste Colbert, King
Louis XIV’s minister of finance from 1661 to 1683, chartered French East India and
French West India Companies.” ~ The Earth and Its Peoples
1. Mercantilism refers to
2. In order to facilitate colonization,
(A) A collection of economic philosophies
settlement, and exploration, the British,
prevalent in the nineteenth century.
French, and Dutch
(B) An economic philosophy favoring
(A) Chartered companies and created
minimalist government.
commercial monopolies in given regions.
(C) An economic philosophy that
(B) Hired mercenaries to conquer.
encouraged colonialism.
(C) Negotiated peacefully.
(D) A set of government policies intended to (D) Relied on missionaries to establish
keep population growth rates low.
markets and colonies.
Key Words/ I. Motivation for Global Trade
Questions
A. Deliberate century-long Portuguese effort to explore a sea route to Asia,
by sailing down West African coast around South Africa to India
B. Immediate motivation: spices – cinnamon, nutmeg, mace, cloves, pepper
C. Western Europe: recovered from plague, monarchies taxing more
effectively, gunpowder weapons, growth of cities
D. Capitalist economy: markets, private ownership, and capital to invest
E. Search for all-water route to Asia: to avoid Muslim and Venetians
F. Rumor of a Christian monarch, Prester John, in Asia or Africa
II. Complexities
A. Few products of less developed Europe were attractive in Asian markets
B. Europeans were required to pay in gold or silver for Asian goods
C. Persistent trade deficit contributed to intense desire for precious metals
D. Portuguese voyages along West African coast: seeking access to gold
E. Enormously rich silver deposits of Mexico and Bolivia
F. Yet Portuguese learned Indian Ocean ships were not heavily armed
G. Portuguese: “trading post empire” to control commerce with arms
H. By 1600: other European countries contested Portugal’s monopoly
I. Spain was the first to challenge Portugal’s position
J. Spaniards established themselves on “Philippine Islands”…named after
Philip II – Discovered on Ferdinand Magellan’s “round world”
K. Far more important than Spanish were the Dutch and English (1600s):
Indian Ocean ventures through private trading companies
III. British and Dutch
A. British East India Company and Dutch East India Company:
government charters, trading monopolies, power to make war, etc.
B. British East India Company in India and Dutch in Indonesia
C. Dutch controlled production of cloves, cinnamon, nutmeg, and mace
D. British traded with permission of Mughals or local rulers or bribes
E. Slowly evolved into a more conventional form of colonial domination
F. Yet Tokugawa expelled Christian missionaries and isolated Japan
IV. Silver Trade
A. More than spice, silver trade gave birth to a global network of exchange
B. Mid-16th discovery of rich silver deposits in Bolivia, and simultaneously
in Japan, suddenly provided a vastly increased supply
C. 1570s, Ming authorities consolidated a variety of taxes into a
single tax (Single Whip), which China’s population had to pay in silver
D. This sudden new demand for silver caused its value to skyrocket
E. Foreigners with silver could now purchase far more of China’s goods
F. At the world’s largest silver mine [Bolivia] in the city of Potosí, some
families held funeral services for men drafted to work the mines
G. Infusion of silver in Spain generated inflation of prices not growth
H. Shoguns used profits from silver to developed a market-based economy
and invested heavily in agricultural and industrial enterprises
Reflections:
1. Which New World commodity was of the
greatest value to the Spanish monarchy?
(A) Potato
(B) Tomato
(C) Silver
(D) Sugar
(E) Quinine
2. What was the long-term impact of the
massive influx of silver into the Spanish
economy that resulted from its domination
of the New World?
I. Inflation and unwise government
spending
II. A permanent economic advantage over
other European powers
III. Development of the most sophisticated
banking system in the world
(A) I only
(B) II only
(C) III only
(D) I and II
(E) I and III
3. The initiative for Western exploration
and conquest came from the kingdom of
(A) Spain
(B) Sicily
(C) France
(D) Portugal
(E) Tunisia
4. Which of the following changes best
justifies the claim that the late 1400s mark
the beginning of a new period in world
history?
(A) The rise of the Aztec and Inca empires
(B) The economic recovery in Afro-Eurasia
after the Black Death
(C) The incorporation of the Americas into
a broader global network of exchange
(D) The emergence of new religious
movements in various parts of the world
5. Which statement most accurately
describes Japanese participation in the
global trade network?
(A) The Japanese warmly accepted Western
commercial interests and became part of the
dependent zones of the global trade
network.
(B) The Japanese did display some openness
to Christian missionaries and they were also
fascinated by Western advances in gunnery
and shipping.
(C) After 1600 all Europeans were banned
from Japan, but Japanese traders continued
to travel and trade abroad.
(D) Japan, like China, showed no interest in
any aspect of Western trade.
6. In which of the Asian manufacturing
zones were paper, porcelain, and silks major
products?
(A) Chinese
(B) Arab
(C) Indian
(D) African
7. What was the economic policy that
encouraged the Portuguese to use force in
entering the Asian trade network?
(A) Mercantilism
(B) Socialism
(C) Feudalism
(D) Capitalism
8. What happened to the English attempts to
enter the spice trade?
(A) The English were able to establish
themselves on the island of Java.
(B) The English were able to exert a
monopoly over the shipment of spices from
Dutch possessions in the Spice Islands.
C) The English were forced to fall back on
the cotton textile trade of India.
(D) The English decided to abandon efforts
to be involved in the spice trade and focus
instead on triangular trade in the Atlantic.
“The Portuguese lacked the manpower and ships necessary for enforcement. Many
Portuguese ignored their government and traded independently, while rampant corruption
among officials and losses of ships further hampered policies. The Dutch challenged the
weakened Portuguese in the seventeenth century. The Dutch captured Malacca and built a
fort at Batavia in Java in 1620. They decided to concentrate on the monopoly control of
some spices. The Dutch trading empire resembled the Portuguese, but they had ships that
were better armed and they controlled their monopoly with ruthless efficiency. The Dutch
discovered that large profits came from peacefully exploiting the established system. For
example, when the spice trade declined, they relied on fees charged for transporting
products from one Asian place to another.” ~ World Civilizations
Change over Time Thesis Practice:
Analyze changes and continuities in interregional trade from 600 C.E. to 1750 C.E.
Thesis:
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Terms, People, Events:
The following terms, people, and events are important to your understanding of world
history. Define each term.
Asian sea-trading network
Caravels
Goa
Caravel
Dutch trading empire
Mercantilists
Toyotomo Hideyoshi
Tokugawa Ieyasu
Edo
Vasco da Gama
Sanskrit
Friars
Yuan era
Middle Kingdom
Emperor Yongle
Neo-Confucianism
British East India Company
Forbidden City
Ferdinand Magellan
Matteo Ricci
Joint-Stock Company
Single Whip Tax
Dutch East India Company
Potosí
Silver Trade
Vasco da Gama
Prester John
Philippines
Tokugawa Shogunate
Mughals
Trading Post Empire
All-Water Route
Indian Ocean