Download Turn to page 11 in your ISN and answer the following questions

Turn to page 23 in your ISN and answer
the following questions
1. As trade with Europe and the colonies in
America was established, what were some
things that the wealthy entrepreneurs would
need?
2. Where would they produce their items that
they were trading?
3. What do you think existed between the end
of the farm-centric era and the dawn of the
age of factories?
On page 25
• Explain what an economy is and how it works
Mercantilism
• Who: European Countries
• What: economic theory -- nation should export more than imports
to maintain and increase wealth
• How:
–
–
–
–
import raw materials, export finished goods
strictly regulate business (guild restrictions)
limit amount of materials a worker could make in a day
Tightly regulate when items could be bought and sold (Fish Friday)
• When: 1600’s
• Why: Kept control of $$ and resources in the hands of the wealthy
few and the government and the guilds
• Problem: Greatly limited expansion and growth; producers were
limited, consumers were limited, economy stagnated
• What: By 18th century, guilds had lost their power, and as the
wealthy became wealthier, demand for new products increased
• Why: With new demand for finished goods, Merchants
responded by recognizing that a supply of products that would
be in demand would be profitable
• Where: Primarily England (British Isles)
• How: Merchants acted as coordinators between producers and
consumers
– Merchants would purchase large amounts of raw materials (like
cotton or wool)
– Supply these materials to rural carders*
• Combed the fibers to prepare them for spinning
– The combed fibers were then sent to rural spinners
• Spun into thread and yarn
– Merchants would take the thread or yarn to rural weavers
• Weave into cloth
– Cloth taken to workers who would bleach or dye it
– Merchants would take finished cloth and sell it to consumers
Merchants used their profits to purchase more materials which allowed cycle
to continue
Cottage Industry
On page 25, respond to the following
• Describe an item that used to be in demand
and is no longer in demand
• Describe what happened to the price on each
occasion
Foldable
• Take your sheet of paper and create a 2-do
foldable
Capitali$m
Effects
of
Cottage
Industry
• On the left door (outside) write “Capitali$m”
• On right door (outside) write “Effects of
Cottage Industry”
Capitalism
• Economic System based on private ownership,
free competition, and profit
– Cottage Industry is an example of early capitalism
– Famous 16th century Scottish economist, Adam
Smith, wrote “Wealth of Nations” in which he
described an economy that was free to govern
itself by the natural forces of supply and demand
• Increase supply – prices go down
• Increase in demand – prices go up
– Called his philosophy ‘laisse-faire’
• meaning hands off
Key Characteristics of Capitalism
• Private ownership: government, king, etc DO NOT
OWN THE FACTORS OF PRODUCTION
– The Factors of Production (land, labor and capital…
machines and $$) are PRIVATELY OWNED BY PRIVATE
CITIZENS, NOT THE GOVERNMENT
(draw a quick sketch to show that)
• Free Competition: there is little to no regulation,
respond to laws of supply and demand
(quick sketch)
• Profit: goods/services are bought and sold to
increase wealth. (quick sketch)
Effects of the Cottage Industry
• Merchants benefitted
from not needing to buy
equipment
• Merchant entrepreneurs
received most of the
profits
• Workers could work in
their homes, pace their
work as they saw fit
(based on the seasons,
around church holidays in
the village, etc)
• Rural workers received
benefits as well; helped
families avoid starvation
during bad crop harvests
• Rural homes, tended to be
small, crowded and poorly
ventilated, thus working
conditions were often
unpleasant
• Merchants were
dependent upon separate
locations to complete
tasks to create finished
product
Assignment
• Tweet me the answer to the question: “What
is one thing that could be done to make the
cottage industry better” use #indrev
@msDworldciv