1. The Effects of Mercantilism in the New World

2. Today’s Objective: To define capitalism To explain how mercantilist & capitalist ideas put European nations economically ahead of the rest of the world To compare capitalism to feudalism To compare feudalism to slavery

3. What is mercantilism? Increasing the wealth of a nation by increasing their gold and silver reserves Creating a favorable balance of trade – balance of trade is essential to increasing a nation’s wealth; a nation cannot become wealthy with trade imbalance So how does one create trade balance?

4. Mercantilism

5. Balance of Trade

6. Pros/Cons of Mercantilism Pros Trade stimulated Favorable balance of trade for Europe Low price for raw materials Europe had a growing, stable market for its finished products Taxes paid on goods were in gold & silver making Europe wealthier Cons Non-European nations exploited The end goal is wealth at the expense of other nations Competition for colonies led to wars Colonies could only trade with their colonizer/no free trade High price for finished goods Taxes only paid in gold & silver so deplete the colonies resources Leads to capitalism

7. What is Capitalism? A system where the capitalist/owner controls all the means of production. Means of production are all of the necessary elements in order to create a good or service. i.e. all the factories, land, materials, etc. The capitalist gives a wage to the worker in exchange for his/her labor but continues to own all the MOP and the profit.

8. Capitalism vs Feudalism Capitalism replaces feudalism in Europe & intro’d in NW – feudalism was based on a system of mutual obligations; a military system for protection – capitalism is based on profit – capitalism divests workers from land ownership Feudal system was based on self sustenance/Capitalism is based on the market or producing what other people need. Capitalism leads to Europe’s industrialization – in order to turn raw materials into finished products factories were necessary; factories created jobs and jobs created cities Money exchanged in capitalism but not in feudalism – Shifts from barter economy and leads to creation of money as common means of exchange needed Workers don’t receive wages in either system = Slavery – workers in the colonies are slaves/workers in feudal system receive protection but no wage or access to MOP

9. The Discovery of Cash Crops Combined w/ Mercantilist/Capitalist Ideas Leads to a New Slavery

10. Serf Vs. Slavery Both are restricted to the land; need permission to leave Both don’t receive pay Both need permission to marry Both can scarcely improve status Slaves are chattel = property meaning capable of being bought and sold Slaves have no legal rights over themselves or their family – No protection of humanity – No protection under law – No social status Slavery was racially/ethnically based

11. Recap What is capitalism? How does capitalism differ from feudalism? Why does capitalism lead to slavery? How is New World slavery different than Old World slavery?