Sea-Borne Empires
HISTORY 100
WORLD HISTORY
SPRING 1998
9 MARCH
THE SEA-BORNE EMPIRES
DICTIONARY TIME-LINES
LEARNING OBJECTIVES
In this assignment you should learn to identify and discuss the following
terms.
Mercantilism, The Sea-Borne Empires, Balance of Trade, Joint Stock
Companies, Limited Liability, Monopolies, Capital Gains, Tariff, Embargo,
Smuggler, Letter of Marque, Privateers, The Netherlands, The Protestant
Reformation, Age of the Religious Wars, Sir Francis Drake, Fur Trade, The
Seven Years' War, The French and Indian War, Adam Smith, The Wealth of
Nations, Free Trade, Realism, Laissez-faire Economics.
In addition, you should be able to discuss the following matters:
- How did the pursuit of mercantilism goals affect the relations between
nations?
- How did the pursuit of mercantilist goals affect the internal economies of
countries?
- Why did mercantilist countries establish colonies?
- Why was Spain unable to hold her empire?
- Why did the Seven Years' War lead to an imperial crisis for Britain?
- What were Adam Smith's economic views and how did they affect the European
nations?
In addition, you should be considering the following issues:
- Do nations today generally pursue a mercantilist or a free trade economic
philosophy?
- Why does the United States have an unfavorable balance of trade year after
year, and how can it continue to do so?
- What was the major defect in the theory of Mercantilism?
TEXT
In the years 1500-1775, European commerce was conducted according to the
principles of an economic philosophy known as Mercantilism, and
out of the application of this philosophy arose the sea-borne
empires.
According to the tenets of Mercantilism, a country should sell as much as it
can, and buy as little as possible. It then has a favorable balance of
trade in which other countries are in debt to it, and it can collect the
difference in cash -- gold or silver -- and save it up. The rulers of countries
trying to achieve a favorable balance of trade organized its economy to meet
that goal.
First, countries had to encourage the pooling and investment of capital in
profitable pursuits. Wealthy individuals, often with the participation of their
ruler would form what were called joint stock companies, in which
each participant would contribute a sum of money and would own a portion of the
company, and of its revenues, proportionate to the amount that he had
contributed. Governments would grant such companies special privileges. The
companies were granted limited liability, which meant that the
partners in a joint stock company could not be held responsible for any debt
greater than the value of the portion of the company they owned. Governments
would also grant such companies monopolies over certain industries
and commercial pursuits, and would protect their operations with armed force, if
necessary. They would also attract people with money to invest by exempting such
people from paying taxes on their capital gains. If a company
proved successful, someone who had originally invested the equivalent of
$100,000 in the company might find that he could sell his "share" of the company
to someone else for $250,000. That $150,000 difference would be his "capital
gain".
That was not the end of it, however, the governments of mercantalist
countries tried to keep the wages of their working class as low as possible.
This kept the costs of their export goods low and, just as important, keeping
the consumption of their own population to a minimum so that a greater portion
of the country's total production would be available for sale by export. They
also kept the prices of foreign goods artificially high through
tariffs, taxes paid by anyone attempting to import foreign goods
for sale, or even embargoes that made it illegal to import certain
goods or to import goods from certain foreign countries. This had the hidden
benefit of encouraging smugglers, people who attempted to sneak
such goods past the government agents and sell them at market value. The
smugglers developed fast ships and personal cunning that were valuable to a
country in case of war at sea.
The joint stock companies of mercantilist countries attempted to establish
colonies that would produce cheap raw materials and foodstuffs to ship back to
the mother country. These companies would sell foodstuffs and other consumer
goods at high prices, thus making a profit from the general population, and
using the raw materials to produce their own trade goods as cheaply as possible.
They would not allow their colonies to develop their own local industries, and
sold them goods from the mother country at inflated prices. Neither would they
allow them to develop their own shipping, at least for shipping to the mother
country, and the companies developed what were, for the day, valuable merchant
navies through their monopolies of shipping to and from their colonies.
Of course, it was just as profitable for mercantilist countries to smuggle
goods into another country's colonies, and countries being abused in such a
fashion often responded by issuing letters of marque, official
documents to private individuals allowing them to seize foreign ships engaged in
smuggling and to sell them, often to the government that had issued them the
letters, for a profit. Such privately-owned fighting ships, often themselves
captained and manned by smugglers, were called privateers and
played an important role in the battle for colonies and control of the
sea-lanes.
In the beginning, spices were flowing into Portugal and, soon after, gold and
silver into Spain. Neither country could hold on to its advantage, however.
Portugal expended much of it wealth in fruitless attempts to conquer Morocco and
was soon taken over by Spain. For its part, Spain poured its treasure into
fighting the Turks, gaining control of Italy, and attempting to keep control of
the Netherlands, which, at the time, included modern Belgium. Even
apart from this, Spain failed to invest its windfall wealth from the New World
in building a manufacturing capacity sufficient to construct its own navies and
supply its own colonies. Part of this was no doubt due to the fact that 2% of
the population, the nobles, owned 90% of the country's landed wealth and looked
down on commerce and manufacturing as menial. There were not a sufficient number
of men of wealth to form the joint stock companies and joint ventures that began
to arise in other countries. Spain and Portugal did not completely accept the
competition-based mercantilist economic model and used their wealth to hire
armies with which they hoped to enforce a political unity on Europe by force.
They saw no problem in buying the needed supplies from foreign countries, and
so English cloth, tar and pitch, and iron-goods were soon flowing into Spain in
exchange for Spanish gold; the shipyards of the Netherlands grew to be the
greatest in western Europe, using timber imported from Germany and Sweden,
cannon made in France, and manned by Swiss and Flemish marines. As the sixteenth
century progressed, the economies of the countries of northwestern Europe
flourished while Spain found that shipments of gold from the Americas were
beginning to dwindle. The privateers of other nations had begun smuggling needed
goods into the Spanish colonies.
By the mid-1500's, the situation had worsened. Spain had absorbed Portugal
and was engaged in on-again-off-again wars with all of those countries which it
had strengthened by its economic dependence on them. The Protestant
Reformation, a rift in the Catholic Church that had up to then included
all of the Christians of Western Europe, had led to armed conflict. Spain
attempted to restore religious unity to Europe by forcing Protestant countries
to return to obedience to Rome. This Age of the Religious Wars
lasted until 1648, and altered the balance of power in Europe considerably. The
Netherlands, which had been possessions of Spain, broke away and formed the
Dutch Republic, England joined the Protestant group, and France, although
remaining Catholic (after a bitter civil war), began to challenge Spain for
power on the Continent.
Although the attention of history textbooks seems focused upon these great
continental conflicts, the conflict was worldwide. The Dutch navy quickly seized
the chain of coastal stations that it had taken the Portuguese a century to
construct, and soon controlled the sea-lanes all the way to the East Indies,
China and Japan. The English and French soon built their own chain of stations
and concentrated on opening up India as a market rather than simply a supplier.
All three nations noted the demand for African slaves in Brazil and the
Caribbean and soon established a regular and increased trade in human chattels.
Dutch, English, and French privateers were soon raiding Spanish shipping around
the world, but this activity was nowhere so great as it was in the Caribbean. In
time, these "freebooters", usually operating with their government's tacit
approval, shifted from seizing Spanish cargo ships and began hunting down the
yearly convoys by which the Spanish transported gold and silver from the
Americas to the mother country.
The most famous of these raiders, Sir Francis Drake, beat out
his competitors by not waiting for the gold fleets to sail, but attempted to
seize the gold before it was loaded. He captured and plundered Cartagena, the
capital of the Spanish Main, and went on to capture the gold shipments from Peru
as they were being carried across the Isthmus of Panama on their way to the gold
galleons. Spain grew steadily weaker and was eventually no longer able to
protect her overseas discoveries.
By the early seventeenth century, trading companies of Spain's opponents took
control of some of the Caribbean islands and established colonies elsewhere.
France laid claim to what is now Canada and began a far-flung trade with the
inhabitants for furs that Europe craved, the Dutch established their colony at
what is now New York and developed an extensive and profitable fur
trade with the interior of the continent via the Hudson River, the
Swedes settled on the shores of Chesapeake Bay, the Scots in what is now the
Central American republic of Belize, and the English all along the eastern coast
of North America.
By the early eighteenth century, the Dutch, French, and English dominated the
world's sea-lanes. Throughout the next fifty years, these nations developed the
mercantile empires in the fashion we have already described. It was perhaps
inevitable that these three should contend for supremacy, but in 1756-1763, the
French and English clashed in what is known in European history as The
Seven Years' War and as The French and Indian War in North
America. It was the first truly global conflict, and English and French fleets
and armies clashed in places far removed from Europe. Although the British were
victorious and managed to establish their complete control over trade with
India, both the British and French were exhausted and their treasuries almost
empty. The British government decided that British armies had fought to protect
Britain's colonists from French domination, so it was only fair for those
colonists to pay taxes as their share of the cost of the war. The colonists were
well aware that they had been controlled and their development restricted by
previous British governments so that Britain might gain as much profit from as
them as possible. The North American colonists argued that, if they were to pay
"their share" to defend Britain's empire, they should enjoy "their share" of the
benefits of that empire. The British government refused them the full rights of
English citizens, the colonists refused to pay the taxes demanded of them, and,
in 1776, the colonists declared that they were now independent of British
control.
In that same year, Adam Smith, a British political economist,
wrote one of the most influential works of his time, The Wealth of
Nations. Like other influential works, this was based upon the
Realist view of the world, that things are controlled by laws that
are not subject to human management. More specifically, he argued that economics
-- trade and commerce -- are governed by natural laws, and that all human
attempts to manage trade and commerce can do is interfere with the natural
course of economic development. Moreover, he held, if those laws were allowed to
operate without interference, a rational economy would emerge that would
be more productive and equitable than anything achieved by the application of
mercantilist principles. Although it took some time, most governments adopted
this view and adopted Free Trade, the idea that trade and commerce
should not be subject to governmental control except for the essential element
of producing a modest revenue. Many governments adopted the same philosophy for
their internal economies in the form of laissez-faire economics.
This French phrase means, more or less, "let it work", and was the basis of
governments refusing to regulate business and refusing to let workers attempt to
regulate it through trade unions and collective bargaining. Although this soon
led to a disaster, most governments continued to apply this principle with only
minor modifications.
Meanwhile, the American Revolution against England was only the first of a
wave of colonial revolts. By 1825, the European powers had lost their sea-borne
empires and had begun to construct new empires based upon free trade and made
possible by the steam engine, quinine, and rapid-fire cannons.
ASSIGNMENTS
REQUIRED ASSIGNMENTS
The era of the Sea-borne empires includes four periods of European History,
and you should become acquainted with each: the Renaissance, the Reformation, and
the Age of Religious Wars. We
will cover the age of the Enlightenment in a separate set of assignments.
RECOMMENDED ASSIGNMENTS
There are a great number of fine sites to visit, too many to recommend to you
in the limited time you have available, so I will suggest only one for each of
the periods I have mentioned. You should visit the Table of Contents of the
Vatican Library exhibit entitled Rome Reborn. This is
not only a very fine site, but an historic one as well. It was the first major
exhibit made available through the World-Wide Web, back in 1994. There are
several sites for the Reformation, most of them denominational. The life of Thomas More has been put up
by the Roman Catholic College of Maynooth, outside of Dublin, Ireland. Although
it is rather uncritical, it provides the best picture of one of the most widely
admired figures of the Reformation era. The Age of the Religious Wars may be
represented by a site dedicated to the story of The
Spanish Armada. Although a K-12 presentation, you should find it informative
and enjoyable.
Just as an opportunity for you to do a bit of surfing, I might recommend
three sites to look at in your spare time. Mutiny on the HMS
Bounty discusses an actual event that has spawned several motion pictures
and novels. Wichamstow
Village portrays village life in Early Modern England, and Le Poulet Gauche allows you to
visit a Paris tavern and to meet the people of its neighborhood.
This text was produced by Lynn H. Nelson, Department of
History, University of Kansas.
8 March 1998
Lawrence KS
