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Chapter 1

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Department
Economics
Course
ECON 2P19
Professor
Indra Hardeen
Semester
Fall

Description
Chapter 1 – The Era of Imperial Rivalry: Beginning to 1763 The Background to Colonization • Canada’s origins as a nation state are part of the expansion of the European population around the globe and the colonization of North America by Europeans after A.D. 1400 • Europeans developed guns, germs, and steel, but other factors, such as writing and maritime technology, also conferred political and economic powers to the Europeans ahead of other people • Europe’s wealth and power from its generous endowment of wild plants and animal species that were available for domestication, which other continents did not share • These advantages led to the production of food surpluses to feed non-food- producing citizens, thereby boosting their population and increasing their potential to invent and innovate as well as building up their military strength Prerequisites to European Expansion • The timing of Europe’s outward expansion to the rest of the globe coincided with the emergence of European nation-states in the 15 century • Throughout the 1400s, the monarchies of England, France, Spain, and other nations of Europe embarked on campaigns of war to consolidate their territorial powers • The process encouraged expansion out of Europe in two ways: • First, the emerging nation-states in Europe faced a critical problems – the need to acquire the necessary resources to finance the cost of warfare, to enforce the expanding margins of the state • Second, by the middle of the 15 century, the states of Europe had reached an uneasy equilibrium • Once the monarchical states had consolidated their power over their own nobility, they sought to expand outward • In the areas of Africa, Asia, and the Americas that had not mastered gunpowder technology, European expansion was much easier and less costly, and the payoff in resources was potentially enormous th • Europeans were already engaged in some long-distance commerce in the 14 century • Most valuable and difficult of all was the trade between European and Asia, which developed during the 13 century • The characteristics of medieval European trade were localism, small volume, and an absence of financial services • There were various reasons for this state of affairs • First, since specie was a limited supply and no adequate credit system yet existed, trade was limited to what could be sustained through the relatively inefficient barter system • The miserable state of transportation, especially over land • Roads were bad, axle and wheel designs were inefficient, and good horses were scarce • Europe’s fragmented political state exacerbated these transportation problems, and tolls, tariffs, and the lack of personal safety further hindered the hauling goods over long distances • The prerequisites for successful European expansion beyond these traditional frontiers were many, but three stand out • First, there had to be a commercial system that allowed private interests to respond to profit opportunities at great distance from home • Second, for profit opportunities that involved long distance trade, there had to be the technology to journey to the new lands and return safely • Third, since private commercial ventures in far off lands were rarely profitable without some state subsidy or regulation, there had to be some reason for European governments to become involved in colonial ventures The European Commercial Revolution • Commercial revolution encompassing the years from 1450 to 1750 • Measurements are inexact, it is reasonable to suggest that between 1400 and 1600, the overall European population increased from approximately 50 million to between 85 and 95 million • A growing market for goods provided a stimulus to expanding trade • In the middle ages, only the very top rungs of society would have been affected by long distance trade • The vast majority of people depended on products grown or manufactured in the local community • Through 15 and 16 centuries, standards of living improved, and more and more people were able to purchase goods that were available only outside of the local economy • The king of the emerging system was the merchant-entrepreneur, who profited not by manufacturing, but by buying, transporting, and selling goods • As these merchant undertook longer distance commitments, they increasingly needed institutions to provide market information, handle credit, transfer funds, trade in foreign currencies, and assist in funding large-scale ventures • Long distance trade was generally much riskier, they needed to find ways to reduce their exposure • Credit arrangements in domestic and foreign currencies evolved beyond the simple bills exchange of medieval times, and discounting became common • Partnerships and joint shareholding companies provided the means to accumulate savings and spread risk • Insurance, marine insurance, became available • Banking houses began to develop • Many had regional offices and provide credit arrangements, financial transfer, and other financial services needed for a dynamic merchant sector • Europe wanted several things from Asia – jewellery, calico, jade, silks, and spices for the luxury market • In the centuries before refrigeration, spices were essential, not just to enhance the flavour of foods, but also to disguise the smell and taste of decay • Pepper was the most important • Estimates indicate between 2 million to 3 million pounds of pepper were being shipped annually to Europe by the end of the 15 century • Between the Asian sources and the European market lay the powerful Arabic regions • Europe could not penetrate these regions militarily, and had to depend on Arabic self-interest and goodwill to allow the trade to continue • Pepper caravans regularly made their way overland from the Persian Gulf to Tripoli, or from the Red Sea to Cairo and Alexandria • Disruptions such as war or disease in the middle east could interrupt trade for considerable periods of time • When trade was not interrupted, there was a natural tendency for the Arabic nations to use their strategic position to extract certain tolls and tariffs from the traders • The desire to find a safer and cheaper route to Asia, together with the incentive to circumvent the Venetians, would lead Europeans to major new overseas ventures, including those that resulted in their discovery of the Americas Improvements in Technology • The medieval sailor’s horror of the open sea, as one historian has described it, had dissipthed • By the 15 century, the Europeans were gaining ground, both by borrowing from other civilizations and by developing innovations of their own • Overlapping planking on the hull was increasingly replaced by carvel (smooth) planking that had several advantages: it was easier to be cleaned of barnacles, help up better under the stress of heavy seas, and allowed for greater cargo space without loss of stability • A second area of change was the move from the single to the triple masted ships • Most important was the combination of sails hoisted on these masts • The first two masts used a combination of square sails • The third mast used a lateen or triangular sail • The combination of a triangular mizzen mast sail and square sails on the other masts provided a level of power, manoeuvrability, and stability that neither the triangular nor the square sails alone could have achieved • The mizzen mast permitted the ship to tack with much greater efficiency against the wind • These technological improvements did two crucial things • First, they made the trans-Atlantic voyage less likely to be a suicidal act • Second, the improvements made the trip more efficient and thus less costly Colonialism • Long distance ventures were highly profitable, and economic self-interest was sufficient to see them underway • Third prerequisite for expansion to North America was the interest by European governments in claiming, and then retaining, overseas territories • The main interest was economic, and the guiding doctrine was a set of policies that later writers were to label mercantilist • Mercantilism is the name given to the group of ideas and practices particular characteristic of the period 1500 to 1800 by which the national state acting in the economic sphere sought by methods of control to secure its own unity and power • A basic tenet of mercantilism was bullionism – the accumulation of precious metals • The goal was achievable through the promotion of agricultural and industrial self- sufficiency and the restriction of trade and commerce to vessels from their nation • Colonies contributed to a positive payments balance by providing raw materials not available in the home country, by absorbing its processed products, and by acting as training grounds for its navy and merchant marine • Mercanti
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