1. World History: Teaching the Economic Concepts Jean Walker Director, West Texas Center for Economic Education College of Business West Texas A&M University 1

2. This powerpoint was used in a workshop at ESC 16 in Amarillo on June 26, 2012. It includes Lessons 18, 20, and 11 from the Focus: Middle School World History publication from CEE. Many slides are procedural directions for teachers. Any teacher can use the powerpoint as a springboard for teaching the lessons with some modifications. 2

3. Columbus the Entrepreneur; Queen Isabella the Venture Capitalist Jean Walker Director, West Texas Center for Economic Education College of Business West Texas A&M University Canyon, Texas jwalker@wtamu.edu 3

4. These three lessons are all related and can be taught in almost any order. Lessons 11 and 20 use the Incas and Aztecs to teach economic systems. Lessons 18 and 20 show how explorers like Columbus changed the new world. Lesson 18: Christopher Columbus, Entrepreneur? Queen Isabella, Venture Capitalist? Lesson 20: The Columbian Exchange Lesson 11: Economic Systems of the Incas and Aztecs 4

5. Workshop and Materials Funded and/or Sponsored by: 5

6. STARR World History Blueprint 6

7. What do these people have in common? 7

8. They are both ENTREPRENEURS. 8

9. What is an entrepreneur? An entrepreneur has an idea for a business venture (good or service) and bears the risk of success or failure associated with the venture. Why do this? To seek profits. What is profit? The income that remains after a business pay all expenses. Entrepreneur: from the French entreprendre – to undertake 9

10. An entrepreneur has the vision to: Discover or invent a new product (good) Create a new service Improve an existing good or service ◦ Better price ◦ More choice ◦ Better quality ◦ More convenience Offer a complement for existing goods or services Offer a substitute for existing goods or services Reorganize an existing market Solve a problem for a customer New technologies may create these opportunities. 10

11. How do entrepreneurs benefit society? Increased employment ◦ (which expands economic opportunities for individuals) Increased competition ◦ (which lowers prices and increases choices) Increased economic growth ◦ (by encouraging new methods & technologies) 11

12. Funding the dream... How do entrepreneurs fund their dreams? ◦ Personal savings ◦ Borrowing  Banks  Friends and family ◦ Investments from others  Venture capitalists  Friends and family 12

13. Back to these entrepreneurs: How did each fund his enterprise? 13

14. Facebook funding: Zuckerberg launched Facebook on February 4, 2004, using his own money earned since middle school from programming jobs. By the end of the semester, it had 100,000 users on 30 college campuses. A well-connected Harvard classmate took Zuckerberg to New York and introduced him to a financier who offered him $10 million for the company. He declined. That summer he decided to relocate the company to a house in Palo Alto, California. (Why Palo Alto? See next slide.) In Palo Alto, Zuckerberg met and became friends with Sean Parker, who had launched Napster and Plaxo. Over the summer, the number of users grew to 200,000. When fall came, Zuckerberg realized he needed more money, so Parker introduced him to Reid Hoffman, the founder of LinkedIn, who arranged a meeting with Peter Thiel, PayPal’s founder, who invests $500,000 for a 10.2% stake. We would use the term VENTURE CAPITALIST to describe Thiel. 14

15. Silicon Valley 15

16. Facebook funding: June 2010 – Elevation Partners invests $122 M Feb. 2011 – Kleiner, Perkins, Caufield & Byers invests $25M Jan. 2012 – Hercules Technology invests $9.6M 16

17. How do venture capitalists work? Venture capital (VC) is private equity capital used to fund early-stage firms with attractive growth prospects. Venture capitalists maintain strong oversight over the firms they invest in and have clearly defined exit strategies. Typically the exit strategy involves taking the company public, where the IPO gives a publicly traded value to the shares. Angel capitalists (angels) are wealthy individual investors who invest in promising early-stage companies in exchange for a portion of the firm’s equity. 17

18. Back to Columbus... What do we actually know about Columbus? “Columbus sailed the ocean blue in 1492” 18

19. Christopher Columbus: Early Years Born in Genoa, Italy Father: an Italian wool weaver who also owned a cheese stand and then a tavern 3 brothers (Bartolomeo was a cartographer) Columbus sailed on a Genoese ship 1473 – Columbus apprenticed as a business agent In his business, Columbus traveled to the Aegean Sea, northern Europe, England, Ireland, and Iceland In Lisbon, he married the daughter of a Portuguese nobleman and his son Diego was born 1482-1485: Columbus traded along the coasts of West Africa He also knew Latin, Portuguese, and Castilian and read widely about astronomy, geography, and history (including the writings of Marco Polo) He was interested in the Bible and Biblical prophecies 19

20. Why was trade & exploration so important? Europeans searched for spices, gold, and precious stones ( See Lesson 19 – “What’s the Big Deal About Spices?” ) ◦ The “Silk Road” to China and India was a safe land passage years, bringing silk, ceramics, gunpowder, and magnetic compasses from China. ◦ Copper, dates, and finished goods were accumulated along the way. Gold was used for trades.  See Lesson 7 – “The Silk Road” ◦ When Constantinople fell to the Ottoman Turks in 1453, passage became more difficult. A sea route to Cathay (China) to replace the Silk Road was sought by traders in many countries. Silk Road Travels of Marco Polo 20

21. What was known about the world? MAPS of the era show that most scholars did recognize the world was round, not flat. Fra Mauo map, 1459 Genoese map, 1457 Pietro Vesconte’s World Map, 1321 21

22. What did Columbus believe? Columbus focused on a map made by Toscanelli: He believed ships could sail west to find China and began to seek financing to support his plan. 22

23. Read Activity 18.2: “Columbus Looks for a Venture Capitalist,” A Reader’s Theater 23

24. Distribute Activity 18.3, telling students they will use information from Activity 18.1. Have students fill in the charts. (p. 285) 24

25. King Ferdinand and Queen Isabella, Venture Capitalists? Characteristics of Venture Capitalists Example from Columbus’ Voyage? Invest in new technologies Sailing west to reach India or China was an untested idea. Even though most people did not think the Earth was flat, this journey presented new challenges. Invest in risky ventures Many things could go wrong that would prevent Columbus from returning to Spain: getting lost, starving, shipwreck, illness and injury, etc. And Columbus—for all his passion— might have been wrong. Own a portion of the company Even after granting all Columbus’ demands, Spain still retained seven-eighths of any returns from the first voyage, and seven-eighths of the returns from subsequent voyages. FOCUS MIDDLE SCHOOL WORLD HISTORY © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY LESSON 18 – CHRISTOPHER COLUMBUS, ENTREPRENEUR? QUEEN ISABELLA, VENTURE CAPITALIST? 25

26. Columbus as Entrepreneur? Characteristics of Entrepreneurs Example from Columbus’ Voyage? Start new businesses/ enterprises Sailing west to reach India or China was an untested idea. Even though most people did not think the Earth was flat, this journey presented new challenges, mainly because the distances involved were much longer than Columbus estimated. Bear all the risks of starting the business All Queen Isabella and Spain risked was investment capital. Columbus was risking his life. Many things could go wrong that would prevent Columbus from returning to Spain: getting lost, starving, shipwreck, injury and illness, etc. If the venture had failed, Columbus and his crew might be dead. Invest some of own resources in the business Columbus invested his time and resources. He also asked that he be allowed to invest an amount equal to one-eighth the cost of additional journeys in return for one-eighth of the profits. FOCUS MIDDLE SCHOOL WORLD HISTORY © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY LESSON 18 – CHRISTOPHER COLUMBUS, ENTREPRENEUR? QUEEN ISABELLA, VENTURE CAPITALIST? 26

27. Cost/Benefit Analysis of Spain’s investment in the voyage: Costs: ◦ 3 ships ◦ Crew & supplies ◦ % of profits to Columbus ◦ Titles for Columbus Benefits: ◦ Vast riches (spices, gold, precious stones) ◦ Glory of discovery (finding new route to China) ◦ Expansion of kingdom ◦ Spread of Christianity 27

28. Why did Columbus need a royal investor? He needed the power of a throne to defend any claims made to the territory he discovered. That is why he focused on King John of Portugal then King Ferdinand and Queen Isabella. 28

29. THE FOUR VOYAGES OF COLUMBUS: 1 2 3 4 29

30. Results: Columbus was wrong about the distance west from the Canary Islands. The greater distance was mitigated by having “easterly” winds which took his ships to the Bahamas in 5 weeks. Without the easterly winds, his food and drink could have been exhausted before he sighted land. By taking a more northern route back to Spain, he caught the “westerly winds” which also made that trip shorter. Columbus never realized he had found a new continent—he always believed Japan and China were very close to where he explored. 30

31. What about the other entrepreneur? Facebook went public on May 18, 2012, @ $38/share. That initially valued FB at $104 billion. Zuckerberg sold shares worth $1.2 billion, and the rest of his stock was worth $19.1 billion. Facebook stock has since dropped, reducing the value of the company and causing grief for the Nasdaq, the subject of lawsuits involving their inability to support trading in a timely way on the day of the IPO. 31

32. Lesson 20: The Columbian Exchange In this lesson, students learn that the Columbian Exchange resulted in an enormous exchange of goods, resources, and institutions between the Old World and the New World and that the results of the Exchange were both positive and negative. Students learn that Tenochtitlan, the capital city of the Aztec civilization, had a relatively well-developed economy in the 15th century despite the lack of capital resources such as iron tools, wheels, and draft animals. Students learn that the Aztecs adopted legal institutions that protected property rights and supported a market economy. The Spanish, who conquered the Aztecs in 1521, replaced these with institutions that restricted the ability of the native population of Mexico to produce and trade. 32

33. Trading in the Old World– New World Market: Activity 20.1, p. 343 Half of the students will be “New World Consumers” and the other half will be “Old World Consumers.” Each New World Consumer will be given two New World food cards. Each Old World Consumer will be given two Old World Food Cards. Students will have five minutes to trade their cards. L ESSON 20 – T HE C OLUMBIAN E XCHANGE F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY 33

34. Trading in the Old World– New World Market (Round 1) New World Consumers may only trade with other New World Consumers. Old World Consumers may only trade with other Old World Consumers. If you prefer the cards you were given, you don’t have to trade. L ESSON 20 – T HE C OLUMBIAN E XCHANGE F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY 34

35. Trading in the Old World – New World Market (Round 2) Students will have another five minutes to trade their cards. You can now trade with anyone in either the New World or Old World. If you prefer the cards you were given, you don’t have to trade. L ESSON 20 – T HE C OLUMBIAN E XCHANGE F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY 35

36. Trading in the Old World – New World Market (After Round 2) Those with a card that has an “X” on the back have been exposed to disease(s). Old World Consumers: You have immunity from the disease(s). New World Consumers: You have no immunity—you will perish! L ESSON 20 – T HE C OLUMBIAN E XCHANGE F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY 36

37. L ESSON 20 – T HE C OLUMBIAN E XCHANGE F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY 37 Use the complete list in Activity 20.2 on pages 348 and 349.

38. The Rise and Fall of Tenochtitlan (Activity 20.3 – page 350-351) 38 Tenochtitlan (now Mexico City), the capital of the Aztec empire, had a population of 250,000 in 1492. The city was located on an island in Lake Texcoco; canals and caseways moved goods and people; dikes controlled flood waters and aqueducts carried water to the city.

39. The Rise and Fall of Tenochtitlan 39 The Aztecs had no iron tools, wheels, or work animals. They specialized in growing one crop or making one good and then traded. Spanish explorers found a central market visited by 60,000 people per day trading building materials, clothing, jewelry, and other goods.

40. The Rise and Fall of Tenochtitlan 40 The Aztecs’ legal system protected property rights. People could own and sell property. They had rules against dishonest trade, a population big enough to support trade, and legal institutions that allowed trade to grow. Their govt. imposed steep taxes. Tribes conquered by the Aztecs also paid high taxes, so they fought with Cortes against the Aztecs in 1521 when he conquered the Aztec empire under Moctezuma I. The Spanish had horses and steel weapons, which helped them conquer the Aztecs. Diseases such as smallpox brought by the Spanish caused sickness and death. Depiction of Marketplace

41. The Rise and Fall of Tenochtitlan The Spanish conquistadores destroyed Tenochtitland and filled in the lakes, rebuilding it as Mexico City. The conquistadores required all trade with Spanish settlements in the New World to pass through Seville and gave power over trade to a small merchant guild in Mexico City, which only allowed a small number of people to own land. Limits were placed on the ability of Mexicans to own their own businesses. Legal institutions were exchanged as well as goods in the Columbian Exchange. 41

42. Lesson 11: Economic Systems of the Incas and Aztecs This lesson includes much of the information about the Aztecs that is in Lesson 20, The Columbian Exchange. This is a good lesson for teaching about economic systems in their most basic forms: ◦ Traditional systems ◦ Command systems ◦ Market systems 42

43. All societies have scarcity because societies have limited resources and unlimited wants, so each society has to make choices. Economic System: The institutional framework of formal and informal rules that a society uses to determine: ◦ What to produce ◦ How to produce ◦ For whom to produce How a society or nation allocates its resources forms its economic system. L ESSON 11 – E CONOMIC S YSTEMS OF THE I NCAS AND A ZTECS F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY Basic Economic Proposition

44. Lesson 11: Economic Systems of the Incas and the Aztecs This lesson has a production activity that introduces the types of economic systems. It also includes a reading describing the systems of the Incas and Aztecs. The production activity is a good way to teach about the systems, but you can skip it and use the reading. 44

45. Activity 11.1: On page 178 are instructions for each of three production teams. Each group should have 4 or 5 students, (but Group B must have 5 students.) Groups will produce jewelry made from macaroni. For each group you will need: ◦ string or yarn ◦ a ruler ◦ scissors ◦ colored markers ◦ tubular macaroni Show the production specifications on the next slide. 45

46. Production Specifications L ESSON 11 – E CONOMIC S YSTEMS OF THE I NCAS AND A ZTECS F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY Production StepsOne BraceletOne Necklace Cut piece of string10 inches long16 inches long Draw dots on macaroni using two different color markers—use one color per piece of pasta 10 pieces of macaroni—5 with each color dot 16 pieces of macaroni—8 with each color dot Place macaroni on string 10 pieces of macaroni— alternate color dots 16 pieces of macaroni—alternate color dots Knot stringKnot two ends of string together to create a bracelet Knot two ends of string together to create a necklace Trim knot using scissors Trim knot

47. Activity 11.1: After showing production specifications to the whole class, give each group their “additional instructions” and explain they must follow them. 47

48. Activity 11.1: 48

49. Activity 11.1: 49

50. Activity 11.1: After each group has instructions, give them 15 minutes to produce. Call time in 15 minutes. Explain that the value of a necklace is $10 and the value of a bracelet is $5. Have each group report so you can fill out the production form on the next slide. 50

51. Production Recording Sheet Group# of Group Members # ProducedValue of Production BraceletsNecklaces L ESSON 11 – E CONOMIC S YSTEMS OF THE I NCAS AND A ZTECS F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY

52. Activity 11.1: When Group A reports, tell them that it is tradition that the men in the group divide the bracelets equally among themselves and have them do that after you record their production. If Group B reports more than five bracelets or any necklaces, tell them the extra output will go to the central planners. Record 5 bracelets at $5, and as the Central Planner, seize the rest. Then as the Central Planner, distribute the 5 bracelets the group can keep any way you want. Tell Group C you will pay them the value of their whole output and they can use the money to buy whatever goods they want. 52

53. Activity 11.1: Discussion Questions What differs about production output of groups? What explains the differences? What is different about the value of what the groups produced? What explains this? 53 Then have each group explain how the group decided what to produce, how to produce it, what job each member of the group would have, and who would get the final product. Use the following slide to focus their discussion. Use the next slide to put names to those production systems.

54. Economic Systems GroupWhat to Produce How to Produce For Whom to Produce A B C L ESSON 11 – E CONOMIC S YSTEMS OF THE I NCAS AND A ZTECS F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY

55. Systems Definitions Command System: An economy in which most economic issues of production and distribution are resolved through central planning and control. Market System: An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest. Traditional System: An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution. L ESSON 11 – E CONOMIC S YSTEMS OF THE I NCAS AND A ZTECS F OCUS M IDDLE S CHOOL W ORLD H ISTORY © C OUNCIL FOR E CONOMIC E DUCATION, N EW Y ORK, NY

56. Read Activity 11.2 – Economic Systems of the Incas and Aztecs Many societies before the Incas and the Aztecs in Pre-Columbian Latin America followed a “domestic mode” of production. The groups were self-sufficient. They produced and gathered everything they needed. The men fished, hunted, produced stone tools, and engaged in warfare. Women were responsible for weaving, cooking, gathering food and collecting water. Men and women worked together in agriculture and house construction. 56

57. The Incan Society : (early 1200 – late 1500) In Incan society, all land, the products of the land, and the labor output belonged to the state. Central authority collected resources and stored large amounts of goods in warehouses and then redistributed. Incan administrators kept track of these goods using the khipu, a system of knotted strings. Inca controlled all craft specialists and what they produced. The centralized Incan state provided all of the needs—material and spiritual—for its people. 57

58. The Incan Society : (early 1200 – late 1500) The Incan Empire lacked currency and had few central markets. Trading was controlled by the state and accomplished through barter. Military conquest and expansion were important to the Incans; conquests resulted in more subjects for labor and tributes. Tributes were goods that provinces were required to pay, similar to taxes. Tributes were important for state financing. 58

59. Aztec society (1200 to 1500) 59 Communal and private land was controlled by the nobles. Communal land was allocated to commoners in exchange for military service and for labor and food for the noble household. The Aztec created chinampas, artificial islands or floating gardens. Raising crops on chinampas created a surplus of farm goods, which meant Aztecs did not have to grow their own crops. Aztec workers could fully specialize in other areas of production. Specialized production became quite extensive in the Aztec Empire. Specialists such as feather workers, paper makers, wood carvers, charcoal makers, obsidian tool- makers, and hide tanners achieved a guild-like status.

60. Aztec society (1200 to 1500) 60 Markets were central to the Aztecan economy at all levels. Towns held daily markets selling basic and luxury goods. Many farmers and merchants came to the market to sell their produce and products. Even commoners could exchange their surplus goods. It was illegal to exchange outside the markets. A portion of goods brought to market was paid to the ruler. About 60,000 people came into the markets daily to buy food, firewood, slaves, clothing, jewelry, feathers, etc. using commodity money such as cacao beans and quills.

61. Aztec society (1200 to 1500) 61 Military conquest was important to the Aztecs. The Aztecan system also used tributes to support the military but allowed individuals to receive tributes of luxury items as payment or rewards. Individuals could exchange the tributes in the marketplace for more practical items.

62. Use Activity 11.3, Economic Systems Review, to assess understanding. Answers: ◦ Traditional  3, 9, 12 ◦ Command  1, 6, 7 ◦ Market  2, 4, 5, 11 62

63. Mayan Civilization Although the World History TEKS include the Mayan Civilization alongside the Incas and Aztecs, this book has no lessons on the Mayans. 63

64. 64 Jean Walker Director, West Texas Center for Economic Education College of Business West Texas A&M University Canyon, Texas 79016 806-651-2515 jwalker@wtamu.edu