MAP 14.3 The Columbian Exchange. In addition to their diseases, which killed vast numbers of indigenous inhabitants of the Americas, Europeans transplanted many of their crops and domestic animals to the New World. Europeans also imported plants from the New World that increased food production and nutrition in Europe.
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Where were the main source regions for native plants imported into Europe?
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European expansion also had other economic effects on the conquerors. Wherever they went in the New World, Europeans looked for sources of gold and silver. One Aztec commented that the Spanish conquerors “longed and lusted for gold. Their bodies swelled with greed, and their hunger was ravenous; they hungered like pigs for that gold.”14 Rich silver deposits were found and exploited in Mexico and southern Peru (modern Bolivia). When the mines at Potosí in Peru were opened in 1545, the value of precious metals imported into Europe quadrupled. Between 1503 and 1650, an estimated 16 million kilograms (more than 35 million pounds) of silver and 185,000 kilograms (407,000 pounds) of gold entered the port of Seville and set off a price revolution that affected the Spanish economy.
But gold and silver were only two of the products that became part of the exchange between the New World and the Old. Historians refer to the reciprocal importation and exportation of plants and animals between Europe and the Americas as the Columbian Exchange (see Map 14.3). While Europeans were bringing horses, cattle, and wheat to the New World, they were taking new agricultural products such as potatoes, chocolate, corn, tomatoes, and tobacco back to Europe. Potatoes became especially popular as a basic dietary staple in some areas of Europe. High in carbohydrates and rich in vitamins A and C, potatoes could be easily stored for winter use and soon enabled more people to survive on smaller plots of land. This improvement in nutrition was soon reflected in a rapid increase in population. Other products, such as cochineal, a red dye discovered in Mexico, gave European artists and artisans a “perfect red” for their paintings and cloth.
A Seventeenth-Century World Map. This beautiful world map was prepared in 1630 by Henricus Hondius. The four portraits are of Caesar, the Roman statesman; Ptolemy, the second-century astronomer; Mercator, the Flemish cartographer whose map projection Hondius followed; and Hondius himself. By comparing this map with the map created by Ptolemy, one can see how much Europeans had learned about the shape of the world by the seventeenth century.
© The Huntington Library, Art Collections and Botanical Gardens, San Marino, CA/SuperStock
The European lifestyle was greatly affected by new products from abroad. In addition to new foods, new drinks also appeared in Europe. Chocolate, which had been brought to Spain from Aztec Mexico, became a common drink by 1700. The first coffee and tea houses opened in London in the 1650s and spread rapidly to other parts of Europe. In the eighteenth century, a craze for Chinese furniture and porcelain spread among the upper classes. Chinese ideas would also have an impact on intellectual attitudes (see Chapter 17).
European expansion, which was in part a product of European rivalries, also deepened that competition and increased the tensions among European states. Bitter conflicts arose over the cargoes coming from the New World and Asia. The Anglo-Dutch trade wars and the British-French rivalry over India and North America became part of a new pattern of worldwide warfare in the eighteenth century (see Chapter 18). Bitter rivalries also led to state-sponsored piracy in which governments authorized private captains to attack enemy shipping and keep part of the proceeds for themselves.
In the course of their expansion, Europeans also came to have a new view of the world. When the travels began in the fifteenth century, Europeans were dependent on maps that were often fanciful and inaccurate. Their explorations helped them create new maps that gave a more realistic portrayal of the world, as well as new techniques called map projections that allowed them to represent the round surface of a sphere on a flat piece of paper. The most famous of these is the Mercator projection, the work of a Flemish cartographer, Gerardus Mercator (juh-RAHR-dus mur-KAY-tur) (1512–1594). A Mercator projection is what mapmakers call a conformal projection. It tries to show the true shape of landmasses, but only in a limited area. On the Mercator projection, the shapes of lands near the equator are quite accurate, but the farther away from the equator they lie, the more exaggerated their size becomes. For example, the island of Greenland on a Mercator projection appears to be larger than the continent of South America. In fact, Greenland is about one-ninth the size of South America. Nevertheless, the Mercator projection was valuable to ship captains. Every straight line on a Mercator projection is a line of true direction, whether north, south, east, or west. For four centuries, ship captains were very grateful to Mercator.
The psychological impact of colonization on the colonizers is awkward to evaluate but hard to deny. Europeans were initially startled by the discovery of new peoples in the Americas. Some deemed them inhuman and thus fit to be exploited for labor. Others, however, found them to be refreshingly natural and as yet untouched by European corruption. But even the latter group still believed that the Indians should be converted—if not forcefully, at least peacefully—to Christianity. Overall, the relatively easy European success in dominating native peoples (be they Africans or Indians) reinforced Christian Europe’s belief in the inherent superiority of European civilization and religion. The Scientific Revolution of the seventeenth century (see Chapter 16), the Enlightenment of the eighteenth (see Chapter 17), and the imperialism of the nineteenth (see Chapter 24) would all bolster this Eurocentric perspective, which has pervaded Western civilization’s relations with the rest of the world.
Toward a World Economy
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FOCUS QUESTION: What was mercantilism, and what was its relationship to colonial empires?
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During the High Middle Ages, Europeans had engaged in a commercial revolution that created new opportunities for townspeople in a basically agrarian economy. Although this commercial thrust was slowed by the devastating crises of the fourteenth century, the beginning of Europe’s discovery of the world outside in the fifteenth century led to an even greater burst of commercial activity and the inception of a world market.
Economic Conditions in the Sixteenth Century
Inflation was a major economic problem in the sixteenth and early seventeenth centuries. This so-called price revolution was a Europe-wide phenomenon, although different areas were affected at different times. Though the inflation rate was probably a relatively low 2 to 3 percent a year, it was noticeable in a Europe accustomed to stable prices. Foodstuffs were most subject to price increases, especially evident in the price of wheat. An upward surge in wheat prices was first noticed in the Mediterranean area—in Spain, southern France, and Italy—and reached its peak there in the 1590s.
Although precise data are lacking, economic historians believe that as a result of the price revolution, wages failed to keep up with price increases. Wage earners, especially agricultural laborers and salaried workers in urban areas, saw their standard of living drop. At the same time, landed aristocrats, who could raise rents, managed to prosper. Commercial and industrial entrepreneurs also benefited from the price revolution because of rising prices, expanding markets, and relatively cheaper labor costs. Some historians regard this profit inflation as a valuable stimulus to investment and the growth of capitalism, helping to explain the economic expansion and prosperity of the sixteenth century. Governments were likewise affected by inflation. They borrowed heavily from bankers and imposed new tax burdens on their subjects, often stirring additional discontent.
The causes of the price revolution are a subject of much historical debate. Already in the 1560s, European intellectuals had associated the rise in prices with the great influx of precious metals from the New World. Although this view was accepted for a long time, many economic historians now believe that the increase in population in the sixteenth century played an important role in
creating inflationary pressures. A growing population increased the demand for land and food and drove up prices for both.
The Growth of Commercial Capitalism
The flourishing European trade of the sixteenth century revolved around three major areas: the Mediterranean in the south, the Low Countries and the Baltic region in the north, and central Europe, whose inland trade depended on the Rhine and Danube rivers. As overseas trade expanded, however, the Atlantic seaboard began to play a more important role, linking the Mediterranean, Baltic, and central European trading areas together and making the whole of Europe into a more integrated market that was all the more vulnerable to price shifts. With their cheaper and faster ships, the Dutch came to monopolize both European and world trade, although they were increasingly challenged by the English and French in the seventeenth century.
The commercial expansion of the sixteenth and seventeenth centuries was made easier by new forms of commercial organization, especially the joint-stock company. Individuals bought shares in a company and received dividends on their investment while a board of directors ran the company and made the important business decisions. The return on investments could be spectacular. During its first ten years, investors received 30 percent on their money from the Dutch East India Company, which opened the Spice Islands and Southeast Asia to Dutch activity. The joint-stock company made it easier to raise large amounts of capital for world trading ventures.
Enormous profits were also being made in shipbuilding and in mining and metallurgy, where technological innovations, such as the use of pumps and new methods of extracting metals from ores, proved highly successful. The mining industry was closely tied to sixteenth-century family banking firms. In exchange for arranging large loans to Charles V, Jacob Fugger was given a monopoly over silver, copper, and mercury mines in the Habsburg possessions of central Europe that produced profits in excess of 50 percent per year. Though these close relationships between governments and entrepreneurs could lead to stunning successes, they could also be precarious. The House of Fugger went bankrupt at the end of the sixteenth century when the Habsburgs defaulted on their loans.
By the seventeenth century, the traditional family banking firms were no longer able to supply the numerous services needed for the expanding commercial capitalism. New institutions arose to take their place. The city of Amsterdam created the Bank of Amsterdam in 1609 as both a deposit and a transfer institution and the Amsterdam Bourse, or Exchange, where the trading of stocks replaced the exchange of goods. By the first half of the seventeenth century, the Amsterdam Exchange had emerged as the hub of the European business world, just as Amsterdam itself had replaced Antwerp as the greatest commercial and banking center of Europe.
Despite the growth of commercial capitalism, most of the European economy still depended on an agricultural system that had experienced few changes since the thirteenth century. At least 80 percent of Europeans still worked on the land. Almost all of the peasants of western Europe were free of serfdom, although many still owed a variety of feudal dues to the nobility. Despite the expanding markets and rising prices, European peasants saw little or no improvement in their lot as they faced increased rents and fees and higher taxes imposed by the state. In eastern Europe, the peasants’ position even worsened as they were increasingly tied to the land in a new serfdom enforced by powerful landowners (see Chapter 15).
Jacob Fugger the Rich. Jacob Fugger, head of one of the wealthiest banking firms of the sixteenth century, is pictured here with his faithful secretary, Matthaus Schwartz, who painted this scene in 1516. The cabinet in the background lists the names of the cities where Fugger’s firm had branch offices, including Milan, Innsbruck, Nuremberg, and Lisbon.
© Duke Anton Ulrich Museum, Braunschweig, Germany//AKG, Berlin/SuperStock
Mercantilism
Mercantilism is the name historians use to identify a set of economic tendencies that came to dominate economic practices in the seventeenth century. Fundamental to mercantilism was the belief that the total volume of trade was unchangeable. Therefore, states protected their economies by following certain practices: hoarding precious metals, implementing protectionist trade policies, promoting colonial development, increasing shipbuilding, supporting trading companies, and encouraging the manufacturing of products to be used in trade.
According to the mercantilists, the prosperity of a nation depended on a plentiful supply of bullion (gold and silver). For this reason, it was desirable to achieve a favorable balance of trade in which goods exported were of greater value than those imported, promoting an influx of gold and silver payments that would increase the quantity of bullion. Furthermore, to encourage exports, governments should stimulate and protect export industries and trade by granting trade monopolies, encouraging investment in new industries through subsidies, importing foreign artisans, and improving transportation systems by building roads, bridges, and canals. By imposing high tariffs on foreign goods, they could be kept out of the country and prevented from competing with domestic industries. Colonies were also deemed valuable as sources of raw materials and markets for finished goods.
The mercantilists also focused on the role of the state, believing that state intervention in some aspects of the economy was desirable for the sake of the national good. Government regulations to ensure the superiority of export goods, the construction of roads and canals, and the granting of subsidies to create trade companies were all predicated on government involvement in economic affairs.
Overseas Trade and Colonies: Movement Toward Globalization
Mercantilist theory on the role of colonies was matched in practice by Europe’s overseas expansion. With the development of colonies and trading posts in the Americas and the East, Europeans embarked on an adventure in international commerce in the seventeenth century. Although some historians speak of a nascent world economy, we should remember that local, regional, and intra-European trade still predominated. At the end of the seventeenth century, for example, English imports totaled 360,000 tons, but only 5,000 tons came from the East Indies. About one-tenth of English and Dutch exports were shipped across the Atlantic; slightly more went to the East. What made the transoceanic trade rewarding, however, was not the volume but the value of its goods. Dutch, English, and French merchants were bringing back products that were still consumed largely by the wealthy but were beginning to make their way into the lives of artisans and merchants. Pepper and spices from the Indies, West Indian and Brazilian sugar, and Asian coffee and tea were becoming more readily available to European consumers.
Trade within Europe remained strong throughout the eighteenth century as wheat, timber, and naval stores from the Baltic, wines from France, wool and fruit from Spain, and silk from Italy were exchanged along with a host of other products. But this trade increased only slightly while overseas trade boomed. From 1716 to 1789, total French exports quadrupled; intra-European trade, which constituted 75 percent of these exports in 1716, accounted for only 50 percent of the total in 1789. This increase in overseas trade has led some historians to proclaim the emergence of a truly global economy in the eighteenth century. Trade patterns now interlocked Europe, Africa, the East, and the Americas.
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CHAPTER SUMMARY
At the end of the fifteenth century, Europeans sailed out into the world in all directions. Beginning in the mid-fifteenth century with the handful of Portuguese ships that ventured southward along the West African coast, bringing back slaves and gold, the process of European expansion accelerated with the epochal voyages of Christopher Columbus to the Americas and Vasco da Gama to the Indian Ocean in the 1490s. The Portuguese Empire was based on trade; Portugal’s population was too small for it to establish large colonies. But Spain had greater resources: Spanish conquistadors overthrew both the Aztec and Inca Empires, and Spain created two major administrative units in New Spain and Peru that subjected the native population to Spanish control. Catholic missionaries, under the control of the Spa
nish crown, brought Christianity, including cathedrals and schools.
Soon a number of other European peoples, including the Dutch, British, and French, had joined in the process of expansion, and by the end of the eighteenth century, they had created a global trade network dominated by Western ships and Western power. Although originally less prized than gold and spices, slaves became a major object of trade, and by the nineteenth century 10 million African slaves had been shipped to the Americas. Slavery was common in Africa, and the African terminus of the trade was in the hands of the Africans, but the insatiable demand for slaves led to increased warfare on that unfortunate continent. It was not until the late 1700s that slavery came under harsh criticism in Europe.
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