Regents Prep: Global History: Economic Systems
Global Trade

Resurgence of Europe
Between the 14th and 18th centuries, life in Europe drastically changed due to a renewed interest in the rest of the world, and subsequently, an increase in trade.  The initial motivating factor for the renewed interest was the series of holy wars known as the Crusades.  Fighting men returning from the wars brought back many different products.  These products became the basis for early trade which expanded over time.  Along with trade goods came new business practices and a shifting in the European way of life.

Resurgence of Trade
In the late 1300s, Italian City States became the center of the resurgence of trade. This was due in part to their location on the Mediterranean, which was a economic super highway during this time period.  Also, these city states never experienced the full effects of medieval life because of frequent contact with the Islamic Empire during its golden age.  Venice was the richest and most powerful of these states.  From Italy, goods were shipped to large trade fairs, which were located on major trade route crossroads.  The larger of these trade fairs evolved into towns, with a change in the way of life for their inhabitants.

Commercial Revolution
The growth of trade, towns, and cities resulted in a commercial revolution.  A new social class emerged composed of merchants, artisans, and traders.  This new social class was called the Middle Class.  The middle class quickly gained power and influence as feudalism came to and end, and the economies of Europe became reliant on money instead of service.

  

Production and the Economy

Guilds

Trade associations of craft workers and merchants.  All workers in a single craft would form together to set standards on prices and quality.  Guilds dominated economic life during this period and were the main mode of production.

Capitalism
&
the Market Economy

Capitalism and Market Economies are based on trade and capital, which is money for investment. Higher demand for a product means higher prices and higher profits for traders and merchants.  Lower demand means lower prices and lower profits.
New Business Practices

Partnerships 
&
Joint Stock Company

Used to raise capital for larger projects.  Less financial risk to the individual

Banks Provided money lending services as well as issuing Bills of Exchange.
Bills of Exchange Worked like modern checking account.  Merchant would deposit gold and receive a Bill of Exchange.  Could then turn that in for gold at other banks.  Easier and Safer than carrying gold along trade routes
Insurance Paid a small fee to insure goods during travel.  If goods were damaged or lost, insurance company pays replacement costs.  If arrive safely, insurance company keeps the fee.

The Commercial Revolution and the resurgence of trade across Europe completely reshaped society.  These changes resulted in the decline of feudalism, and a revival of arts, literature, and science known as the Renaissance.

Exploration and Discovery of the New World
The resumption of trade following the Middle Ages in Europe resulted in a demand for goods from Asia.  Trade routes established across the Mediterranean and through the Middle East were soon disrupted by the expansion of the Ottoman Empire.  Europeans were forced to seek alternative ways of importing and exporting goods to and from Asia.  The result was an exploration of water routes to Asia, and eventually the discovery of the Americas by the Europeans.

In the early 1400s, Europeans began exploring the west coast of Africa in search of an all water route to Asia.  These early explorations were led by the Portuguese. In 1488, Bartholomeu Dias rounded the Cape of Good Hope at the southern tip of Africa.  In 1498, Vasco Da Gama established an all water route to India.  The success of these explorations led Spain to begin its own voyages. In 1492, Christopher Columbus crossed the Atlantic Ocean and discovered the Americas for Spain.  These discoveries resulted in Europe establishing colonies throughout the Americas, which were used to further their economic power.

Columbian Exchange
A major result of the colonization of the New World was a  vast exchange of people, plants, animals, ideas, and technology.  This is known as the Columbian Exchange, because it starts with Columbus.  These products were shipped all around the world to such places as Africa, India, and Asia.  The infusion of New World foods into China allowed their population to continue to grow.

Columbian Exchange

From Old World to New World

From New World to Old World

  • wheat
  • sugar
  • bananas
  • rice
  • grapes
  • horses
  • pigs
  • cattle
  • sheep
  • chickens
  • smallpox
  • measles
  • typhus
  • corn
  • potato
  • beans
  • peanuts
  • squash
  • pumpkin
  • tomatoes
  • avocados
  • chili pepper
  • pineapple
  • cocoa
  • tobacco
  • quinine (a medicine for malaria)

Triangle Trade and Slavery
As colonies in the Americas grew, so did the need for cheap, reliable labor.  At first, European settlers attempted to enslave Native Americans. This was a failure because Native Americans were unsuited to plantation work.  Also, it was easy for them to escape and return to their people.  Europeans then turned to Africa for its labor source.  Starting in the 1500s, large numbers of Africans were bought and transported to the Americas for agricultural work. This trade eventually became very large and profitable and was known as the Triangle Trade due to goods and people moving from Europe to Africa to the Americas.  The slave trade resulted in the African Diaspora, which is the large, forced migration of millions of people.

The Triangular Trade Routes

Mercantilism
Mercantilism is the policy of building a nation's wealth by exporting more goods than it imports.  Colonies were instrumental in this policy as they supplied their parent nations with raw materials that were used to produce finished goods, and then exported back to the colonies.  Colonies not only served as a source for the raw materials, but also as an exclusive market for the parent country.  The result of this policy was the further weakening of the feudal system and the rise of the Middle Class as the dominating force in Europe.

African Trading Kingdoms
The African Trading Kingdoms consist of three main cultures, Ghana, Mali, and Songhai, all located in West Africa.  All three kingdoms maintained vast trading networks across the Sahara desert and into the Middle East and North Africa.  The main export was gold, which made each kingdom wealthy and strong, and provided them with the conditions necessary for cultural and intellectual achievement

Commerce
Ghana, Mali, and Songhai established trade routes that were in use for centuries.  Early trade networks were setup inside of Africa.  As these networks grew and became more prosperous, they expanded to include the Mediterranean and then eventually Europe.  Trade goods included gold, salt, cooper, iron, various minerals, and agricultural products.  A negative effect of this interaction was the start of the slave trade, when Europeans needed a cheap, reliable labor source for their New World colonies.

 

Created by Jeffery Watkins
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