Euro econ 1400's-1800's

The end!

=D

Alexander Hamilton

Adam Smith

• Alexander Hamilton gathered ideas from Adam Smith, the Bank of England, the blunders of the Bank of North America and his experience in establishing the Bank of New York.

• Wanted to establish a chartered, central bank of the United States.

• believed a central bank was necessary to stabilize and improve the nation's credit, and to improve handling of the financial business of the United States government under the newly enacted Constitution.

• Adam Smith wrote "The Wealth of Nations". It was a precursor to the modern academic discipline of economics.
• Adam argued how rational self-interest and competition can lead to economic prosperity.

• He came up with the "invisible hand" theory; that a free markets and capitalism will simply help itself through competition.

• He was a supporter of laissez-faire and division of labor.

Industrial Revolution

• The Industrial Revolution started with the textile industry in Britain as the cotton industry grew factories became a necessity to produce the cotton.
• New methods and more improved methods of transportation like the train and automobile were developed from the newly improved iron industry and steam power.
• With Napoleon and the preoccupation he caused continental states those countries began to fall behind Britain.
• Although behind the British such countries as France, Germany, and Belgium were able to narrow the gap by using British technology and imposing high tarriffs on other countries.

I.R. cont...

European Economics

1400's- 1800's

Industrial Revolution

• As the Industrial Revolution went along new social classes including a more complete middle class of entrepenaurs arrived.
• The middle class started to control the economy and therefore they also started to control the government and its policies.
• During this time new and higher standards of living became relevant as even peasants had more money to spend on goods of leisure.
• To help the working conditions unions were formed and some even developed into socialist political parties.

• As countries went further and further into the Industrial Revolution new rivalries were formed, such as Britain and Germany.
• Also women started to become apart of the new workforce although they were payed much less then their male counterparts.
• As more money was earned and profits continued to rise families were able to spend more time and money on leisure activities.

Global Economy

• Trade within Europe still dominated total trade figures 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 other products.

• British merchant ships carried British manufactured goods to Africa, where they were traded for a cargo of slaves, which were then shipped to Virginia and paid for by tobacco, which in turn was shipped back to England where it was processed and then sold in Germany for cash. This was called the triangular trade.

• The cottage industry was a family enterprise since women and children could spin while men wove on the looms, enabling rural people to earn incomes that supplemented their pitiful wages as agricultural laborers.
• It utilized traditional methods of manufacturing and spread to many areas of rural Europe.

Cotton Industry

By:Jessica Flowers, Peyton Padjen, Kyle Roe

• The second half of the eighteenth century, the importation of raw cotton from slave plantations encouraged the production of cotton cloth in Europe where a profitable market developed because of the growing demand for lightweight cotton clothes that were less expensive than linens and woolens.
• New machines like the flying shuttle which sped up the process of weaving on a loom and the “water frame” which turned out yarn much faster than cottage spinning wheels and lead to the development of mechanical looms.

• The most important product of European industry in the eighteenth century was textiles. Woolen cloth made up 75% of Britain’s exports. In cities that were textile centers, master artisans employed timeworn methods to turn out finished goods in their guild workshops. On the countryside, textiles were produced by the “putting-out” or “domestic” system in which a merchant-capitalist entrepreneur bought the raw materials and put them out to rural workers who spun the raw material into yarn and then wove it into cloth on simple looms. Capitalist-entrepreneurs sold the finished product, made a profit, and used it to manufacture more. This became known as the “cottage industry” because spinners and weavers did their work in their own cottages.

Industry

• Shipbuilding, mining and metallurgy were technological innovations that brought enormous profits.

Population Growth

The Eighteenth Century

The eighteenth century was characterized by rapid population growth, expansion in banking and trade, an agricultural revolution (mostly in Britain), the beginnings of a new pattern of industrialization, and an increase in worldwide trade.

• Improvements in agriculture largely due to increases in food production because of more land under cultivation, increased yields per acre, healthier and more abundant livestock, and improved climate.

• The creation of new public and private banks and the acceptance of paper notes made possible am expansion of credit.

• The Bank of England founded in 1694 made loans in addition to receiving deposits and exchanging foreign currencies; issuing paper “bank notes” backed by its credit. Which eventually provided a paper substitute for gold and silver currency.

• Britain and France speculators in the early eighteenth century provided opportunities for people to invest in colonial trading companies.

Trade

European trade flourished in the sixteenth century, revolving around mainly 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.

• The joint stock trading company was a new form of commercial organization where individuals bought dividends on their investment while a board of directors ran the company.

• Investors received 30 percent on their money from the Dutch East India Company, which opened the Spice Islands and Southeast Asia to Dutch activity and raised large amounts of capital for world trading ventures.

• The duit was a copper Dutch coin worth 2 penning.

• The Dutch East Company made special coins with the VOC monogram which meant that they were the only pieces valid in Indonesia in order to prevent smuggling because 4 duit pieces were the equivalent to 1 stuiver in Indonesia

• 8 duit pieces were equivalent 1 stuiver

• 160 duit pieces equaled one gulden

• The gulden (guilder) originated as a gold coin but has been a common name for a silver coin and monetary unit of the Netherlands until the euro was adopted January 1, 2002.
• Equal to 100 cents

• The stuiver was a pre-decimal coin used in the Netherlands.
• It was worth 16 penning or 8 duit.
• Twenty stuivers equalled a guilder.

1700's

• The Italian florin used from 1252 to 1533
• Made up of 54 grains of pure gold
• Originated in the Republic of Florence
• First issued under Edward III in 1252.

• In the fourteenth century, a hundred and fifty European states and local coin issuing authorities tried to mimic the florin and made their own copies of it.
• The design of the original Florentine florins was the distinctive 'fleur de lis' badge of the city on one side and on the other a standing facing figure of St. John the Baptist wearing a hair shirt.

• The rivalry between Britain and France continued through their colonial possesions as both sides tried to gain as many resources through their colonies.
• They even tried to create deals with Spain and Portugal to have a further impact on the New World economics.
• During the 1700s new agricultural practices, tools, and crops helped produce better and more abundant food.
• The textile industry in Britain started to develop and eventually would give rise to the Industrial Revolution.
• Not all of the 1700s was based on profits though.
• As France neared revolution economic crises continued to plague the country and eventually led to revolution.

• the rise of new national banks, expanding empires, and new trade routes gave way to the economic system of mercantilism.
• The principle idea of mercantilism was that the total volume of trade was unchangable.
• So, each country was basically fighting each other for control over certain products.
• Mercantilism also saw the inventiom of joint stock companies like that of the Dutch East India Company.
• Through these companies a global economy was created where trade took place in a triangle between Europe, Africa, and the New World.
• Europe would buy slaves in Africa, trade them in the Americas for goods, and bring those goods back to Europe.
• These economic wars helped continue old rivalries and lead to wars like the Seven Years' War.

Banking

• By the seventeenth century, traditional family banking firms were not able to supply the numerous services needed for the commercial capitalism of the seventeenth century and 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.

Population and the Growth of Cities

Bank of Amsterdam

• Population expanded greatly due to warmer climates and increased food supplies. Estimating to have increased from 60 million in 1500 to 85 million by 1600 and marked the first major recovery of the European population since the Black Death in the mid-fourteenth century.

• Rise in population was reflected by the growth of cities such as Paris, Constantinople, Naples, Venice, Milan, and Genoa had populations above 100,000.

• The close ties between commerce and urban growth were reflected by the prosperous cities along coasts and well-traveled trade routes.

• The English channel in London dominated the commercial and financial life pushed its population to 250,000 by 1600.

Agriculture

• Despite the major growth of commercial capitalism, 80 to 90 percent of Europe still depended on an agricultural system.

• Most peasants were free from serfdom in Western Europe but many still owed feudal dues to the nobility.

• Expanding markets and rising prices had little or no positive effect on peasants who faced increased rents and fees and higher taxes imposed by the state.

Seventeenth Century

Rich nobles and wealthy merchants contrasted sharply with the crowded tenements and dirty hovels of the lower classes. Crime, pollution, filth, and lack of sanitation, fresh water, and food were accompanied by social tensions between landed nobles who moved into the cities and the wealthy merchants who resented their presence.

Overseas Trade and Colonies

• English imports totaled 360,000 tons, but only 5,000 tons came from the East Indies. The value of goods across the Atlantic was what made transoceanic trade most rewarding.

• Pepper and spices from the Indies, West Indian and Brazilian sugar, and Asian coffee and tea were becoming more readily available to European consumers. The first coffee and tea houses opened in London in the 1650s and spread rapidly to other parts of Europe.

• The joint-stock company monopolized all Asian trade and also possessed the right to make war, sign treaties, establish military and trading bases, and appoint governing officials.

• Competition from English and French and years of warfare with rivals led to the decline of the dutch commercial empire.

The start of trade and currency

• European trade routes sprouted up from formed countries to connect each other and get into the new growing economy.
• countries wanted spices from Asia so they sent explorers to find new, fast trade routes.
• some countries stumbled upon new continents, and this started a race to gain colonies in the new found land.
• the new european colonies were used primarily for the harvesting of new resources to bring back to the homeland.
• at first, it boosted most countries' economies.

• after a while inflation rose from the increase in the gold being imported.
• the development of large maritime trade empires came about that dominated the economy.
• with the growing and changing economy, small family owned banks couldn't handle the overload of more people wanting to use banks.
• government controlled banks rose up in their places in 1609.

• after the black death, feudalism was hit hard by the population loss, which created a shortage of workers.
• not as many workers meant higher wages.
• but that stopped when the lords saw the prices of goods went down and lords were losing profit.
• this led to revolts such as the French Jaquerie and the English peasants' revolt of 1381

• feudalism was used all across Europe.
• Three types of people: Kings, Lords, and Vassals.
• kings gave land to the nobles in return for loyalty. the nobles then let peasants live and farm on the land in return for loyalty as well.
• The kingdoms the people of the time lived in were cut off from the rest of the world
• there was barely any trade outside of the walls of any kingdom.

Feudalism

And the barter system