The Columbian Exchange

• The voyages of discovery started a global exchange of people, goods, and ideas
• European nations embraced the concept of mercantilism
• Economic changes in Europe led to the development of capitalism

The Columbian Exchange

• Columbus's voyages linked the Americas to the rest of the world
• People, plants, animals, diseases, and ideas were exchanged between the Eastern and Western Hemispheres
• Plants from the Americas altered eating habits and increased global population
• Maize, or corn, led to population growth in Africa and Asia
• Peanuts became a staple crop in Africa
• Potatoes, manioc, beans, and tomatoes were also important crops
• Plants from the Eastern Hemisphere also changed life in the Americas
• Sugar cane became a major profit source in the Caribbean and Brazil
• Ranchers in the Americas used grains like barley and oats
• New crops like rye, rice, grapes, bananas, and coffee also transformed the Western Hemisphere
• Soon after the first wave of European settlers came enslaved Africans
• A larger migration in the 1800s brought more than 50 million people from all across Europe to settle in the Americas
• People from Asia also came to the Americas by the thousands, starting in the 1800s
• North America and South America have diverse societies as a result

The Arrival of Horses

• The conquistadors who arrived in the Americas brought horses.
• The Spanish ranchers rode horses and used them to herd cattle.
• Columbus introduced horses, cows, pigs, goats, and chickens to the Americas on his second voyage.
• Horses and cows thrived on the pampas, or grassy plains, of South America
• Some native groups from the North American Great Plains stopped farming and began hunting buffalo from horseback
• They used horses and European guns in warfare
• The first cowboys in the New World were South American gauchos and North American vaqueros
• Some exchanges happened by accident
• European diseases had a deadly effect on the people of the Americas
• The Columbian Exchange led to shared technologies between the hemispheres

Mercantilism

• Mercantilism is an economic policy that promotes strengthening a nation by expanding its trade
• The goal is to bring as much wealth as possible into the country and make it powerful
• Merchants pursued this goal by selling goods in exchange for gold and silver
• Mercantilists urged lawmakers to adopt policies to regulate trade and boost production
• Most European nations practiced mercantilism by the 1600s and the 1700s

Mercantilism in the Tea Trade

• England's tea trade shows mercantilism at work.
• Buying and selling tea and tea tax revenues supported merchants, traders, and artists worldwide
• England established tea plantations throughout its empire in Asia and Africa
• The British East India Company kept tea prices high with its monopoly on the tea trade
• The British designed faster ships to bring tea from China
• English tea drinkers began to add sugar to their tea
• Sugar production in the Caribbean increased to meet demand
• English porcelain and silver manufacturers exported tea service items to the colonies and Europe

Sugar

• Sugar had been available in Europe since medieval times, but by the 1600s, Europeans were demanding more sugar from the Americas
• The sugar trade was part of a commercial cycle of investment, land development, labor, and manufacturing

A Commercial Revolution

• Expanded trade, money supply, and overseas empire-building spurred the growth of capitalism
• Capitalism is an economic system in which business is privately owned and operated for profit
• Also called the free market or free enterprise system
• The interplay of supply and demand determines prices in a free market
• In the 1500s, prices for food and other goods went up, while there was a sharp increase in the amount of money in circulation
• A rise in prices and an increase in available cash called inflation
• This inflation in Europe is known as the price revolution
• Farmers could not keep up with the demand that rapid population growth caused in terms of food
• The flow of gold and silver from the Americas into Europe added to the money supply and drove prices up
• Higher prices meant greater profits for landowners and merchants, who reinvested in their businesses
• Another part of capitalism is the private ownership of land

The End of Feudalism

• Landowners benefited most from the price revolution
• Higher prices for crops increased profits, so some landowners in Holland and England forced peasants off their land to breed sheep
• Economic changes ended the feudal system in the Netherlands and in England
• Peasants moved to cities to find new ways to make a living

Cloth Production

• The price revolution also drove up prices for goods, such as cloth
• Cloth merchants bought wool cheaply from sheep farmers and took it to nearby villages
• Families were paid to spin and weave the wool into cloth, and merchants sold it for top dollar
• This system was referred to as cottage industry.
• Capital and labor separated and capitalists invested money in new developing industries
• Dutch capitalists founded printing, diamond-cutting, sugar-refining, and even chocolate industries
• Over time, these changes transformed the English and Dutch economies from a traditional economy to one in which prices and the distribution of goods are based on competition in a market
• A market economy requires private property ownership, a free market, and profit-making incentives

The Middle Class Grows

• In growing cities, merchants and skilled workers thrived and became prosperous
• This becomes the middle class and contrasts greatly with rural poor