Elements of the New World EconomyCatalysts for its Creation

West’s new military advantages

Need/Desire to explore

Light Cannon on ships

3 Gs, competition etc.

1. Europe’s emerging dominance

in shipping

-Battle of Lepanto:

-Harbors

-Europeans enjoy Special Trade Status in major cities

-Portugal was first in the race for colonies

Spanish defeat Ottomans in Med. Sea—Shows European dominance

European presence in West Africa and India

Characteristics of the New World Economy2. Columbian Exchange-Global Transfer of foods, plants and

animals between the Old Worlds (Europe and Africa) and the New World (Americas)POSTIVE: New crops/livestock –larger food supplies—longer life expectancy

NEGATIVE: European diseases

Imposition of European Culture

3. Ruling ColoniesIn the AmericasSpanish Means of Control:Goals determined the method of rule:

1. Ecomienda System-Natives were subjects of the crown-Spanish collect tribute and use natives as laborers

Tighter regulation

Find Precious Metals—Quick Riches

-Natives receive protection and have its material needs met

3. Ruling Colonies cont. Dual Authority System

Board of Trade

Council of Indies

Viceroys (Terr. Governors)

Oversee Natives

Rule on behalf of king

Catholic Church

Pope

Missionaries

Assimilate natives in European Culture

3. Ruling of Colonies cont.• North AmericaFrench/English means of control:

Goals determined method of rule:Less regulation

Concerned with long term stability

English tradition of more democratic rule

4. Core-Periphery Model Takes ShapeMercantilism Theory-nations wealth is

key to its power position in the world

Mother Country

ColonyExpensive Finished Goods

Cheap Raw Materials

Dependent on a favorable balance of trade

Colonies made this possible

5. Commercial Revolution in EuropeMoney based Economy emerges

Joint Stock Companies

Rise of the Entrepreneur

6. New Trade Pattern

Triangle Trade

Slaves and Gold

Rum and GunsSugar and Molasses.

GoodsManufacturedRum, Tobacco

Sample products on the Triangle Trade

7. Effect of InflationInflation—

Overabundance of Money in Circulation

Value of Money decreases

Prices Increase to make up for lossof profits

8. Effect of InflationSpain was most effectedMassive amounts of gold and silver from the

AmericasNearly destroyed economySpain declines as a power…England rises