Changes in Trade

1450-1750
Early Modern Period

1. Changes in Trade
   1. European Exploration
      1. Before late 15th century
         1. Trade restricted to land travel
         2. Ships used on Mediterranean and Indian Ocean
            1. But…linked to land routes
      2. Causes of exploration – interrelated factors converging on one continent at the same time
         1. Success of Hanseatic League
         2. Crusades spawned new, efficient trade routes
         3. Apply new technologies
            1. Sternpost rudder – improved steering - Invented in China – Han Dynasty
            2. Lateen sails – sail in any direction regardless of wind
            3. Astrolabe – measured distance of sun/stars above horizon – latitude
            4. Magnetic Compass – Chinese – direction without sight of land
               1. Lodestone from Chinese – magnetic – always points north
            5. Three-Masted Caravels – larger sails, large cargo rooms w/ more provisions
               1. Large ships can crest large waves without capsizing
            6. Better knowledge of stars
               1. Gained from Arabs
            7. Sextant – able to journey further without getting lost
            8. Gunpowder – 1500s and 1600s – huge gunships
               1. Sailors equipped with muskets, pistols, small artillery
               2. Gunpowder weapons at sea
               3. Explorers/conquerors could use against less technologically advanced nations
         4. Economic goals
            1. Fiercely competitive about trade routes
            2. Newly wealthy
            3. Access to luxury goods
               1. Silk, metal goods, spices, fruit, jewels, precious metals
            4. Need a direct route
               1. Tired of Middle East being middlemen
               2. Gain access, increase profits
         5. Political goals
            1. Increasingly organized under strong leaders
         6. New ideology
            1. Renaissance thinking looked externally not internally
            2. Renaissance thinking led to belief that man could affect destiny
         7. European visitors to Mongol court learned of Asian technology
            1. printing press
            2. gunpowder
            3. magnetic compass
         8. Marco Polo stories
         9. Rise of nation-states
            1. encouraged economic development
            2. created rivalry between nations for new territories and new wealth
         10. Renaissance ideals
             1. Sense of curiosity and adventure
         11. precedent of Italian merchants making money – Venice – want to get a piece of the action
      3. Early Exploring Nations – Iberian wave
         1. Why Portugal?
            1. Location
               1. Coast of Africa – strategic
               2. On Europe’s Atlantic frontier
            2. Trade relations with Muslim nations
            3. Royal family supported exploration
               1. Prince Henry the Navigator
                  1. Created maritime center/navigation school at port of Sagres
                  2. He and princes sent out voyage after voyage
            4. Maritime experience
               1. Mediterranean trade
               2. Long series of naval wars with Ottoman Turks
            5. Who? Famous Explorers
               1. Dias – Cape of Good Hope 1488
               2. Vasco de Gama – India, E. Africa 1497
                  1. Returns in 1499 filled with cargo
                     1. Returned 6000% of original investment
                        1. Hmmmm…guess what happens next?
               3. Ferdinand Magellan – Portuguese but traveling from Spain
                  1. Inspired by Vasco de Balboa – saw Panama canal
                     1. First European to see Pacific Ocean from new world
                  2. Dies in Philippines
                  3. His ships return to Europe in 1522 – first circumnavigation
            6. Strategy
               1. Explore Africa Coast – around and East
               2. Claimed several Atlantic island groups – Madeiras and Azores
            7. Colonization
               1. Far East and Southeast Asia – too strong/advanced to conquer
                  1. Settled for trading ports – Goa, Malacca, Sri Lanka
         2. Spain – Head west
            1. Distracted/delayed by Reconquista
               1. War against the Moors
               2. Not as quick as Portuguese
                  1. Would have to find option B, Portuguese already have Africa
            2. Columbus’s voyage
               1. Financed by Ferdinand and Isabella
               2. Earth a sphere, but size estimates incorrect
                  1. Columbus’s claims surprising not that it’s round – accepted idea
                     1. Proximity surprising
               3. 1492 – Cuba, W. Indies
                  1. Changed forever the history of the globe
               4. Mistaken all his life that he had found Indies – “Indians”
                  1. Portuguese/Spanish realized it was somewhere different
                     1. Amerigo Vespucci – mapped New World
            3. Colonization
               1. Started in Caribbean
                  1. Island bases on Cuba, Puerto Rico, and Hispaniola (DR/Haiti)
         3. Treaty of Tordesillas – line of demarcation – Brazil vs. Rest
            1. W. side’s size not clear
            2. 1493, 1494 Pope draws line
      4. Northern Exploring Nations – Northern Wave
         1. Background
            1. Spanish/Portuguese jealously guarded geographic knowledge/navigational techniques
               1. Wanted to lock northern Europe out of Atlantic exploration
               2. What was at stake?
                  1. Military power
                  2. Immense wealth
                  3. Religious rivalry
            2. In 1500s, N. Europe only really can explore N. Atlantic coast of N. America
               1. Considered useless to Spain/Portugal
               2. Hoping to find a “Northwest Passage” to China/India through Arctic
            3. By middle 16th century, 17th century – gained knowledge from Spanish/Portuguese
               1. Stole information
               2. Shadowed ships
               3. Gained enough independent knowledge
            4. Led to conflict wherever they went
               1. Fighting for old claims meant wars on water and on land
         2. England
            1. 1500s – English fought series of naval wars with Spain
               1. All over the world
               2. Goals
                  1. harass Spanish colonies
                  2. capture Spanish treasure ships returning from New World
               3. Gained navigational/geographic knowledge from these wars
                  1. In process of fighting Spanish, Sir Francis Drake circumnavigates
            2. 1600s – English establish colonies
               1. Failed early colonies in N. America – Roanoke most famous
               2. Eventually Plymouth Rock (escaping Puritans) and Jamestown – Virginia
            3. British East India Company – 1600
               1. Manage economic/military relations
            4. Eventually landed and explored Asia – took Asian port in Malacca
            5. Motivations
               1. Gain military strength
               2. Gain wealth
               3. Difference
                  1. Eager to turn colonies into permanent settlements
               4. Exploitation of natural resources the norm
               5. Brought slaves to the New World
         3. France
            1. Surveyed Atlantic coast near Canada
            2. Colonized Canada
               1. Main reason – rich supply of animal furs
            3. Later explored Misissippi, Great Lakes and major rivers
               1. 1600>1700 took over Mississippi Basin area
         4. Netherlands – aka the Dutch
            1. At first, closely tied to War of Independence against Spain
               1. Strategy – attack Spanish at sea – disrupt connections to colonies
               2. Later did same to the Portuguese
                  1. Malacca, Sri Lanka, Spice Islands
            2. Dutch East India Company
            3. Invaded Indonesia – maintain colonial presence for hundreds of years
               1. Ran pepper and spice plantations
               2. Established Batavia 1619 > later became Jakarta
            4. N. America
               1. Henry Hudson – explore bay
               2. Purchased Manhattan – New Amsterdam – 1624
                  1. English took from Dutch in mid 1600s
               3. Briefly held colony in Brazil
            5. Africa – Cape Colony – Southern tip
               1. Supply station for ships sailing to Indonesia
         5. Effects
            1. created colonies
            2. conquering new lands
            3. led to wars
            4. led to nationalism
            5. legitimacy of absolute monarchy
         6. Why Northern colonies?
            1. Risky, expensive – needed backing of strong/wealthy states
            2. Merchants needed protection – need strong navies
      5. Effects of European colonization
         1. emergence of truly global economic system
         2. worldwide system of military competition among European powers for global dominance
            1. Some European wars that took place on other continents – first world wars
      6. Themes of European exploration
         1. Nations of Europe tried to establish control over territories they encountered
            1. Conquered and colonized
            2. Forced open markets
         2. Legacy – Positive for Europe
            1. Nations of Europe unprecedented amount of geographical, navigational, scientific knowledge
            2. Europe became extremely rich and powerful
            3. No longer the smallest/weakest civilization
         3. Legacy – Moral and ethical price
            1. Connection to war, greed, prejudice, religious intolerance, slavery
            2. Parts of the world remained under European control for hundreds of years
            3. Tensions between nations still have impact on international relations
            4. Environments, populations, economies, political systems altered dramatically
      7. World would never be the same
         1. Indian Ocean and Silk Road had connected before, but restricted from open seas
      8. Patterns of world trade
         1. Europeans established ports in East Asia, Southeast Asia, India, and west coast Africa
         2. involvement in international trade positively affected local and regional economies
         3. where direct trade not possible, Europeans negotiated special economic rights
            1. Russia – factors establish agencies in Moscow/St. Petersburg
            2. Ottoman Empire – Western European traders formed colonies with Constantinople
               1. Granted special commercial considerations
      9. Regions outside the world trade system
         1. China relied primarily on regional trade
            1. Most of economic activity through the port of Macao
            2. Disinterest in European products
            3. Trade imbalance – Europeans paid for Chinese products with silver
               1. England/Netherlands eventually developed own porcelain
         2. Tokugawa Japan prohibited foreign trade
            1. Except for limited commercial activity with the Dutch – Nagasaki
         3. Russia traded primarily with the nomads of central Asia
            1. 18th century began trading grain with the West
         4. Ottomans dismissed the impact of European technology
            1. showed little enthusiasm for trade with the West
         5. Mughal India encouraged trade with the West
            1. More preoccupied with imperial expansion
         6. Internal Africa – Europeans afraid to enter
            1. Risk of contracting malaria
            2. Lack of navigable rivers
   2. Commercial Revolution
      1. New Financing
         1. Joint Stock Company
            1. Pool the resources of many merchants
            2. Reducing the costs and risks of colonization
            3. Investors buy shares/stocks in company
            4. Each investor receives profit if company makes money
               1. Potential for huge profits
                  1. Piracy rampant
                  2. Huge cargoes on ships
         2. Substantial middle class of merchants
            1. attracted more investors
            2. beginnings of modern stock market
      2. Changing views
         1. Church revised ban on standard business practices
            1. lending money – usury
            2. charging interest on loans
         2. Monarchies granted trade monopolies to trade routes
            1. These companies would essentially run the nation they traded from
               1. Dutch East India Company – Spice Islands – Indonesia
               2. British East India Company – parts of India
               3. Moscovy Company – England – Russia
            2. Fostered the growth of capitalism
         3. Mercantilism
            1. Why?
               1. country actively sought trade
               2. don’t import more than export
                  1. trade deficit implied weakness in own country
            2. Country’s surplus had to be met by another’s deficit
               1. Pushed for colonization
               2. All resources to mother country
               3. Colonies must buy from mother country only
               4. Must ship using mother country’s sailors/ships
            3. Protected domestic industry
               1. Huge tariffs on imports
               2. Reduced/banned tariffs on trade within country
            4. Colonies annoyed
               1. Resources shipped to Europe
               2. Not free to buy cheapest/best products from overseas
               3. Added taxes create greater resentment
         4. Social diversification
            1. Growing importance of nonagricultural ways to earn money
            2. Bourgeoisie – middle class
               1. banking
               2. commerce
               3. trade
               4. shopkeeping
               5. artisanry
               6. craftsmanship
            3. small middle class to begin with, but grew in size and importance
         5. Wealth now based on industries around money, not merely land
         6. Extraction of precious metals – especially silver
            1. affected economies around the world
            2. glut of precious metals
            3. severe inflation
         7. Birth and growth of Atlantic slave trade
            1. 1400-1800 12 million Africans
      3. Chartered companies – companies allowed to exist by Charter from the crown
         1. Independent traders looking for profit from business
      4. State banks
         1. Large banks chartered by monarchy
            1. Facilitated lending and managing of kingdom’s economy
            2. Lent money to the government
            3. lent money and issued bank notes – redeemable for coin (gold/silver)