1. Exploration led to the Columbian Exchange where crops, animals and diseases were shared between the Americas and Afro-Eurasia, changing global agriculture and devastating American indigenous populations. 2. Europeans developed the economic policy of mercantilism in the 1500s to build wealth through favorable trade balances and by establishing colonies to control trade. 3. Growing global trade between Europe and its colonies in the 1500s-1600s expanded capitalism as merchants profited and joint-stock companies financed riskier ventures, fueling increased business activity in Europe.

1. Exploration and Expansion Section 3
Preview
• Main Idea / Reading Focus
• The Columbian Exchange
• Quick Facts: The Columbian Exchange
• Mercantilism
• Quick Facts: Basic Principles of Mercantilism
• The Rise of Capitalism
New Patterns of Trade

2. Exploration and Expansion Section 3
Reading Focus
• How did exploration result in a new exchange of plants and
animals?
• What was mercantilism, and how did it push the drive to
establish colonies?
• How did global trade lead to the rise of capitalism in Europe?
Main Idea
1. The creation of colonies in the Americas and elsewhere led to
the exchange of new types of goods, the establishment of new
patterns of trade, and new economic systems in Europe.
New Patterns of Trade

3. Exploration and Expansion Section 3
The introduction of beasts of burden to the Americas was a significant
development from the Columbian Exchange. The introduction of the horse
provided people in the Americas with a new source of labor and transportation.
• Voyages launched large-scale contact between Europe and Americas.
• Interaction with Native Americans led to sweeping cultural changes.
• Contact between the two groups led to the widespread exchange of
plants, animals, and disease—the Columbian Exchange.
• Plants, animals developed in very
different ways in hemispheres
• Europeans—no potatoes, corn,
sweet potatoes, turkeys
• People in Americas—no coffee,
oranges, rice, wheat, sheep, cattle
The Exchange of Goods
The Columbian Exchange
• Arrival of Europeans in Americas
changed all this
• Previously unknown foods taken
back to Europe
• Familiar foods brought to Americas
by colonists
Sharing Discoveries

4. Exploration and Expansion Section 3

5. Exploration and Expansion Section 3
Different Foods
• Exchange of foods, animals had dramatic impact on later societies
• Over time crops native to Americas became staples in diets of Europeans
• Foods provided substantial nutrition, helped people live longer
Italian Food Without Tomatoes?
• Until contact with Americas, Europeans had never tried tomatoes
• Most Europeans thought tomatoes poisonous
• By late 1600s, tomatoes had begun to be included in Italian cookbooks
Economics and Gastronomics
• Activities like Texas cattle ranching, Brazilian coffee growing not possible
without Columbian Exchange; cows, coffee native to Old World
• Traditional cuisines changed because of Columbian Exchange
Effects of the Columbian Exchange

6. Exploration and Expansion Section 3
Effects Widespread
Effects of Columbian Exchange felt not only in
Europe, Americas
• China
– Arrival of easy-to-grow, nutritious corn helped population grow
tremendously
– Also a main consumer of silver mined in Americas
• Africa
– Two native crops of Americas—corn, peanuts—still among most
widely grown
• Scholars estimate one-third of all food crops grown
in world are of American origin

7. Exploration and Expansion Section 3
Devastating Impact
• Native American population continued to decline for centuries
• Inca Empire decreased from 13 million in 1492 to 2 million in 1600
• North American population fell from 2 million in 1492 to 500,000 in
1900—but disease not only factor in decrease of population
• Intermittent warfare, other violence also contributed
The Introduction of New Diseases
• Native Americans had no natural resistance to European diseases
• Smallpox, measles, influenza, malaria killed millions
• Population of central Mexico may have decreased by more than 30
percent in the 10 years following first contact with Europeans

8. Exploration and Expansion Section 3
Find the Main Idea
What were two lasting effects of the
Columbian Exchange?
Answer(s): possible answers—changes in
cuisine, changes in crops grown around the world,
epidemics

9. Exploration and Expansion Section 3
• Wealth measured by amount of
gold, silver possessed by nation
• Mercantilists believed there was
fixed amount of wealth in world
• For one nation to become
wealthier, more powerful—had
to take wealth, power away
from another nation
• Mercantilism led to intense
competition between nations
Intense Competition
• Founding of colonies, new
goods in Europe led to
significant changes
• 2. 1500s, Europeans developed
new economic policy,
mercantilism
• Nation’s strength depended on
its wealth
• Wealthy nation had power for
military and expanded influence
New Economic Policy
Mercantilism

10. Exploration and Expansion Section 3
• Mercantilists built wealth two ways—extract gold, silver from mines at
home, in colonies; sell more goods than it bought from foreign
countries, creating favorable balance of trade
• With favorable balance of trade, country received more gold, silver
from other nations than it paid to them
• Increased its power; weakened foreign competitors
• To achieve favorable balance of
trade, could reduce amount of
imports by placing tariffs on goods
• Importer paid tariff, added cost to
price of good
• Imported goods more expensive,
discouraged people from buying
Imports
• Encourage exports that could sell
for higher prices than raw materials
• Countries encouraged
manufacturing and export of
manufactured goods
• Governments provided subsidies
to help start new industries
Exports
Balance of Trade

11. Exploration and Expansion Section 3
Controlling Sources
Third approach for favorable balance of trade,
controlling sources
• Nation that controlled own sources would not need to
import from competing nations
• Why important
– Country did not need to spend own money to obtain raw
materials
– Foreign countries considered rivals, might become active
enemy, cut off supply of raw materials
• European nations worked to become more self-sufficient
• Nations began to establish colonies

12. Exploration and Expansion Section 3

13. Exploration and Expansion Section 3
Building colonial empires essential to mercantilist system
• European powers wanted to
establish colonies
– To control sources of raw
materials
– To provide new markets for
manufactured goods
• To mercantilist, colonies
existed only to benefit home
country
Colonies
• Monarchs restricted economic
activities in colonies
• Colonists could not sell raw
materials to other countries
• Could not buy manufactured
goods from other nations
• Strict laws forbade colonies
from manufacturing goods
• Forced to buy only from home
country
Strict Laws
Colonies

14. Exploration and Expansion Section 3
• Impact of colonization not felt
throughout society
• Rural life continued as it had for
centuries
• Generations would pass before
many began to grow new foods
from Americas
• Most people remained poor
Rural Life
• Changes taking place because
of colonization
• Had impact on European
societies
• Towns cities grew as business
activity increased
• New class of wealthier
merchants emerged, began to
wield more power in their towns
Many Changes
Impact on Society

15. Exploration and Expansion Section 3
Summarize
What were the main principles of
mercantilism?
Answer(s): nation's strength depended upon its
wealth; needed a favorable balance of trade

16. Exploration and Expansion Section 3
3. Increasing trade between Europe and colonies created new
business and trade practices during the 1500s and 1600s. These
practices would have a great impact on the economies of European
nations.
• During this time,
capitalism expanded
• In capitalism, most
economic activity
carried on by private
individuals,
organizations in order
to seek profit
Capitalism
Emerges
• Individuals amassed
great trade fortunes
• Merchants supplied
colonists with
European goods
• Returned products,
raw materials
Overseas Trade
• Overseas trade made
many merchants rich
• Wealth enabled them
to invest in more
business ventures
• Business activity in
Europe increased
greatly
Increased Business
Activity
The Rise of Capitalism

17. Exploration and Expansion Section 3
Money Supply
• Increase of money supply another factor in higher prices
• Shiploads of gold, silver flowed into Europe from Americas to be
made into new coins
• Over time, increase of money in circulation pushed prices for goods
still higher
Rising Prices
• Investors took risks of investing in overseas trade because of
inflation
• Inflation, steady increase in prices
• Demand for goods increased due to growing population, scarcity of
goods; rising demand drove prices higher

18. Exploration and Expansion Section 3
New Ventures
• Overseas business ventures
often too expensive for
individual investors
• Investors began pooling money
in joint-stock companies
Shares
• Profit, loss based on number of
shares owned
• If company failed, investors lost
only amount invested
Joint-Stock Companies
• Investors bought shares of
stock in company
• If company made profit, each
shareholder received portion
Financing Colonies
• British East India Company,
one of first joint-stock
companies
• 1600, imported spices from
Asia
• Others formed to bear cost of
establishing colonies
A New Business Organization

19. Exploration and Expansion Section 3
Identify Cause and Effect
Why did new business practices develop in
Europe?
Answer(s): because of increasing trade between
Europe and its colonies