Maritime Empires Develop

Maritime Empires Develop All of the residents of these United Provinces [the Netherlands) shall be allowed to participate in [the Dutch East India] Company and to do so with as little or as great an amount of money as they choose. -Charter, Dutch East India Company, 1602 Essential Question: What economic strategies did maritime empires use to increase their power, and how did the developing empires affect political, economic, religious, and cultural dynamics? Maritime (sea-based) empires transformed commerce from local, small-scale trading, mostly based on barter, to large-scale international trade using gold and silver. These empires employed new economic models, such as joint-stock companies, through which investors financed trade by buying shares in corporations such as the East India Company, supporting increased trade in Asia. New ocean trade routes were opened, aiding the rise of this extended global economy. The Atlantic trading system involved the movement of labor-including slaves and the mixing of African, American, and European cultures and peoples, with all groups contributing to a cultural synthesis. Silver, sugar, and slavery were the keys to the development of these mercantilist empires. Economic Strategies In the 17th century, Europeans generally measured the wealth of a country in how much gold and silver it had in its coffers. To achieve this wealth, countries used economic strategies designed to sell as many goods as they could to other countries in order to obtain maximum amounts of gold and silver. To keep their wealth, countries would also spend as little of their precious metals as possible on goods from other countries. The accumulation of capital, material wealth available to produce more wealth, in Western Europe grew as entrepreneurs entered long-distance markets. Capital changed hands from entrepreneurs to laborers, putting laborers in a better position to become consumers and even investors, as the above quote suggests. Despite restrictions by the Church, lending money at high rates of interest became commonplace. Actual wealth also increased with gold and silver from the Western Hemisphere. Commercial Revolution The transformation to a trade-based economy using gold and silver is known as the Commercial Revolution. The Commercial Revolution affected all regions of the world and resulted from four key factors: the development of European overseas colonies; the opening of new ocean trade routes; population growth; and inflation, caused partly by the pressure of the increasing population and partly by the increased amount of gold and silver that was mined and put in circulation. The high rate of inflation, or general rise in prices, in the 16th and early 17th century is called the Price Revolution. Aiding the rise of this extended global economy was the formation of joint-stock companies, owned by investors who bought stock or shares in them. People invested capital in such companies and shared both the profits and the risks of exploration and trading ventures. Offering limited liability, the principle that an investor was not responsible for a company's debts or other liabilities beyond the amount of an investment, made investing safer. The developing European middle class had capital to invest from successful businesses in their home countries. They also had money with which to purchase imported luxuries. The Dutch, English, and French all developed joint-stock companies in the 17th century, including the British East India Company in 1600 and the Dutch East India Company in 1602. In Spain and Portugal, however, the government did most of the investing itself through grants to certain explorers. Joint-stock companies were a driving force behind the development of maritime empires as they allowed continued exploration as well as ventures to colonize and develop the resources of distant lands with limited risk to investors. Commerce and Finance The Dutch were long the commercial middlemen of Europe, having set up and maintained trade routes to Latin America, North America, South Africa, and Indonesia. Dutch ships were faster and lighter than those of their rivals for most of the 17th century, giving them an early trade advantage. The Dutch East India Company was also highly successful as a joint-stock company. It made enormous profits in the Spice Islands and Southeast Asia. Source: Wikimedia Commons The Dutch ship Vryburg on Chinese export porcelain, 1756 Pioneers in finance, the Dutch had a stock exchange as early as 1602. By 1609, the Bank of Amsterdam traded currency internationally. The Dutch standard of living was the highest in Europe as such goods as diamonds, linen, pottery, and tulip bulbs passed through the hands of Dutch traders. France and England were not so fortunate. Early in the 18th century, both fell victim to speculative financial schemes. Known as financial bubbles, the schemes were based on the sale of shares to investors who were promised a certain return on their investment. After a frenzy of buying that drove up the price of shares, the bubble burst and investors lost huge amounts of money, sending many into bankruptcy and inflicting wide damage to the economy. Triangular Trade The Europeans' desire for enslaved workers in the Americas coupled with Portugal's "discovery" of West Africa meant that Africa became the source for new labor. Enslaved Africans became part of a complex Atlantic trading system known as the triangular trade, because voyages often had three segments. A ship might carry European manufactured goods such as firearms to West Africa, and from there transport enslaved Africans to the Americas, and then load up with sugar or tobacco to take to Europe. Sugar was the most profitable good from the Americas. By the 1700s, Caribbean sugar production and rum (made from sugar) were financing fortunes in Britain, and to a lesser extent, in France and the Netherlands. Triangular Trade NORTH AMERICA You lumber dstuber dstuffs, molasses sugar, slaves, WEST INDIES SOUTH AMERICA GREAT BRITAIN raw goods manufactured goods sugar, molasses ATLANTIC OCEAN rum enslaved Africans 1,000 miles 1,000 keometers manu rum nufactured goods SPAIN AFRICA Rivalries for the Indian Ocean Trade After Europeans stumbled on the Americas, trade over the Atlantic Ocean. became significant. However, states continued to vie for control of trade routes on the Indian Ocean as well. The Portuguese soundly defeated a combined Muslim and Venetian force in a naval battle in the Arabian Sea in 1509 (see Topic 4.4) over controlling trade. They met different fate, though, when they tried to conquer Moroccan forces in a battle on land in 1578. Its coffers depleted after the victory, Morocco looked inland to capture the riches of the Songhai Kingdom, despite the prohibition of waging war on another Muslim state. With thousands of soldiers, camels, and horses, as well as eight cannons and other firearms, Moroccan forces traveled months to reach Songhai. In 1590, in a battle near Gao, the Songhai despite their greater number of fighters were overcome by the force of firearms. The empire crumbled. The Spanish and Portuguese soon overtook much of this territory. Change and Continuities in Trade Networks The trading networks involved a new global circulation of goods, wealth, and labor. Silver from the Spanish colonies in the Americas flowed to Asia, where Asians were eager to exchange their goods silks, porcelain, steel products-for silver. Asian goods were eagerly purchased in the Atlantic markets. New Monopolies One way these patterns of trade were maintained was through monopolies chartered by European rulers. Monopolies granted certain merchants usually through a joint-stock company or the government itself the exclusive right to trade. For example, the Spanish government established a monopoly first over all the domestic tobacco grown and then over all the tobacco grown in its American colonies. The profits from this monopoly greatly enriched the Spanish government. The income from tobacco in Spain made up about one-third of total revenues. Ongoing Regional Markets At the same time, traditional regional markets continued to flourish in Afro-Eurasia. However, improved shipping offered merchants the opportunity to increase their volume of products. The increasing output of peasant and artisan labor-wool and linen from Western Europe, cotton from India, and silk from China exchanged hands in port cities with global connections. Effects of the Atlantic Slave Trade The Atlantic slave trade greatly weakened several West African kingdoms, such as Kongo. The loss of so many people slowed population growth. Trade competition led to violence among their societies, but also made African slave-raiding kingdoms economically dependent on goods from Europe. Such societies were slow to develop more complex economies in which they produced their own goods. Thus, the slave trade set the stage for European conquest and imperialism of the late 19th century. (See Topic 6.2.)