Economic Trends in Europe

1. Economic Trends in Europe 14th century – 19thcentury Billy Ohlund, Will Gardner, Vivian Torres, Andrew Lee 2nd Period

2. Economics of the 14th Century The impact of the Black Death on European economy

3. Population Collapse • Black Death killed off a third of European population • Labor shortage caused a rise in the cost of labor • Prices dropped due to low demand of goods • Income for aristocrats and landlords dropped, causing worry amongst the elite

4. Response to the Economic Crisis • Nobility sought to lower the wage rate • Parliament passed the Statute of Laborers (1351), which limited wages to pre-plague levels • Position of landlords deteriorated as peasants improved ( they were paid almost double that of pre-plague wages) • Decline in peasants freed them from servitude on a manor

5. Taxes = Revolts • Taxes placed on the peasants helped aristocrats alleviate their problems temporarily • England imposed the poll tax for every adult member of the population • Taxes met with dissent and revolts broke out all over Europe • The Hundred Years’ War left France in deep debt

6. Economics of the Renaissance Recovery from the Black Death

7. Trade • Trade began to expand on the Mediterranean and Atlantic seaboard • Hanseatic League became the leader of trade after the plague • Silting in the Port of Bruges led its decline • The Venetian Flanders Fleet took over as the leader of trade • Italians maintained a wealthy commercial empire

8. Industry • Old industries such as wool began to recover, especially in Italy • New industries such as printing, mining, and metallurgy began to rival the textile industry • Entrepreneurs developed large mining operations to produce precious metals such as gold, silver and copper

9. Banking • Florence became the Renaissance capital for banking because of the Medici family • Medici Bank invested in various businesses, including textile, commerce, and mining • Decline in competent family leaders led to sharp decline of its bank • Medici’s were expelled from Florence in 1494, ending the Medici financial empire

10. The Reformation

11. Church in Debt • Corruption of the clergy left the Church in debt • High positions were held by nobility and upper middle class • Indulgences were sold to gain profit as well as collect holy relics with attached indulgences

12. Age of Expansion Increase trade, population, and global economy

13. Economic Motive • The economic motive for expansion was primarily to expand trade and find gold, spice and other precious commodities • The Spanish and Portuguese Empires were the first to search for the Northwest Passage, but landed in the Americas • Enslaved the natives and forced them to farm and mine for precious metals

14. Triangular Trade • Triangular Trade was between Europe, Africa, and the Americas • Europe traded manufactured goods to Africa and the Americas • Africa traded slaves and raw material • America traded molasses, corn, and other raw material

15. Columbian Exchange • Trade between Europe and the New World • Imports to the New World: horses, small pox, technology, wheat, rice, domestic animals, coffee, sugar cane, alcohol • Imports to Europe: syphilis, corn, tobacco, potato, turkey, llama, cocoa, tomato, molasses

16. Commercial Revolution • Causes:More trade, population growth, Price Revolution causes inflation and more shopping, and a broadening national economy • New entrepreneurs: Medici and Frugger • New industries: Books, shipbuilding • Cottage System: Investor pays local workers to make separate parts for cheap and sells the final product to generate profit with little loss; beginning of commercial capitalism • Joint-Stock Companies: Investors pool money for expensive financial ventures; less risk of losing money and the company is liable, not the investor • Mercantilism: Economic theory that power of a nation is based on its wealth, which is finite • Rise of Capitalism: Open economy; endless ways to make money • Amsterdam Stock Exchange becomes capital of finance • British East India Co. and Dutch East India Co. established in the East can tax the people of colony

17. Wars of the 17th century • German economy was devastated after the Thirty Years’ War • France was in debt after Colbert tried and failed using mercantilist ideas to increase wealth of France • Wars of King Louis XIV left France in debt • Charles I imposed ship taxes without Parliament consent among other things led England into a civil war

18. Economics during the Scientific Revolution and the Enlightenment Philosophy Influences the Economy

19. The Scientific Revolution • During the Scientific Revolution, Europe experienced a minor influx in new job employment • Women were able to apply for jobs such as scientists and astronomers

20. The Enlightenment • New ideas impacted financial spending • Francois Quesnay and the Physiocrats founded the laws of modern economics: 1) Property is the true source of wealth, 2) Supply and demand, 3) Laissez-faire; free economy • Adam Smith wrote the Wealth of Nations, advocating for the three natural laws of economics

21. Economics in the 18th Century

22. Change for the Better • European economy began to flourish in the 18th century • Paper money was introduced into the banking system, making it easier to make transactions and loan money with return credit • Emergence of government bonds paying interest created the notion of a public debt versus a monarchial debt • Textile Industry expanded; cotton became the main export in England and gave rise to the cottage system • The global economy continues to grow as trade flourishes

23. Textile Industry • By the eighteenth century, textile production began to take on the new system of cottage industry in which spinners and weavers worked at home in cottages using the raw materials supplied by capitalist entrepreneurs in order to make the wool cloth. • This system allowed rural people to earn incomes that supplemented their pitiful wages as agricultural workers. • The introduction of cotton also proved to be a profitable market due to the growing demands for lightweight cotton clothes that were less expensive that linens and woolens.

24. Agricultural Revolution • Agricultural Revolution improved farming practices and methods • It moved from small, local farming to large scale farming • Causes: More farmland in use, increased yield per acre, healthier livestock, and better climate • Crop rotation divided a field into sections so the plants can replenish the soil with nitrogen when rotated during the seasons • Seed drill made growing food more effective; it buries seed deep into soil at intervals to birds don’t eat them • Devices soon displaced the peasants who work the land through the Enclosure Act, which fenced off land to peasants • Peasants went to cities and became the main workforce

25. French Revolution • King Louis XV asked aristocrats to borrow money • 50% of the budget is spent paying for debt; 25% for the army; and 6% for the lifestyle of the king and queen • The king spent a lot of money and by 1789, France was in debt • He called a meeting with the Estates-General to sort out the financial crisis • Bread shortage caused inflation of bread prices, angering the people and causing the French Revolution

26. Industrial Revolution

27. Causes • Agricultural Revolution provided more food, inducing a population growth that nearly doubled from 1750-1850 • England had a highly centralized banking system with a steady influx of capital that helped invest in new factories and machinery • Coal and Iron were important natural resources, which England had a lot of • The government helped fund public projects such as roads, canals, and railroads for smooth transportation of goods • With its large, international market, Britain had plenty of places to sell is goods to • Britain did not have free trade, therefore by placing high tariffs on imports and exports, they can generate a lot of profit from trade

28. Banking • Joint-Stock Investment banks pooled together large sums of money and subsidized is shareholders with returns • Friedrich List wrote the National System of Political Economy, refuting free trade and calling for high tariffs on trade; ideas are contrary to Adam Smith • Factors of Production: Land, Labor, Capital • American System: Identical, individual, interchangeable parts were made so that the final product can be assembled quickly and easily, thus reducing costs and saving labor

29. Economics of the 19th century Conservatism, Liberalism, and Socialism

30. Economic Liberalism • Economic Liberalism is the idea that the government should not interfere with the natural economic forces i.e. laissez-faire, supply and demand, etc. • Thomas Malthus wrote Essay on the Principles of Population, stating that the food supply rate is lagging far behind the population growth rate, therefore causing starvation once it reaches crisis point • David Ricardo wrote Principles of Political Economy; argued against government interference with the natural laws of economic and the iron law of wages • Iron Law of Wages: Population growth= more workers -> lower wages-> more poverty-> disease/ death= population decrease-> higher wages-> better living conditions-> population growth, etc. It is a natural cycle; the government should not disturb its course • John Stuart Mill- Utilitarianism is the government promoting the greatest good for the largest number of people i.e. minimum wage

31. Socialism • Socialism theorizes that human cooperation is superior to capitalist competition • Utopian socialists such as Fourier, Owens ,and Blanc were against private property and competition; believed in public property and equal distribution of property

32. Links to Primary Sources • Adam Smith, Wealth of Nations, http://www.fordham.edu/halsall/mod/adamsmith-summary.html • Friedrich List, National System of Political Economy, http://www.fordham.edu/halsall/mod/1856list.html • David Ricardo, Principles of Political Economy, http://www.fordham.edu/halsall/mod/ricardo-summary.html