Once contact with the Americas was open, the Spanish, French, English, and Dutch increasingly invested in the global trade race. By the 18th-century, expansion of European commerce resulted in the accelerated growth of a worldwide economic network.
Europe built off of the Commercial Revolution, and the market economy led to new financial practices with more free trade and labor
At this time, wealth was measured by how much gold or silver a country had on hand. So states began to practice mercantilist policies, which maximized imports and limited exports. Mercantilist policies drove states to find new resources and new markets. Raw materials, laborers, and markets abroad fueled European enterprises.
Europe’s growth in population directly translated to economic and agricultural productivity. More people meant there needed to be more food and essentials available for sale to an increased number of consumers.
The Agricultural Revolution stabilized population growth. Food supply was expanded through better transportation and farming methods such as irrigation systems. Disease control limited plagues and epidemics. Due to population security and overseas products, Europe developed a consumer culture.
The Transatlantic Slave Trade began immediately after the Portuguese arrived in Africa; however, it grew exponentially in the Americas after Native American populations were decimated by European disease. Cash crops like sugar and tobacco were highly profitable from slave labor.
The Atlantic Slave Trade was expanded with the global economy to supply labor throughout Europe’s colonies in the Americas. Chattel slavery and mercantilism put money in the bank for European states.
The worldwide transformation into a trade-based economy using gold and silver is known as the Commercial Revolution, which had four main causes:
Development of European colonies overseas
Opening of new trade routes over the Atlantic and Pacific
Population growth, which increased demand for goods
Inflation caused by increased mining
As a result of increased trade and mining, prices also increased across the board. This is also known as the Price Revolution. As prices increased, more people went into debt, which was a recipe for revolution in the upcoming century.
To keep up with the new global demand, joint-stock companies were formed. These minimized personal risk as investors pooled money into ventures. It was kind of like an early form of crowdfunding. Rather than one investor risking everything if a ship was destroyed, many investors could split the risk thereby increasing the number of new businesses.
There were two main joint-stock companies. The British East India Company and the Dutch East India Company (VOC). Spain and Portugal had more government than private investing, which is why they didn’t rely on joint-stock companies.
The European powers were all about the profits. Their commercial rivalries influenced diplomacy and warfare between states. In particular, colonialism heavily enriched France and Britain with wealth. The British took control of India and the Dutch gained control of the East Indies.
European naval powers fought for influence and control of the Atlantic Ocean. By 1800, Great Britain owned the largest navy in Europe.
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5.2The Rise of Global Markets in the 18th-Century