Chapter 8 The Transatlantic Economy The Global Economy
Chapter 8 The Transatlantic Economy
The Global Economy th of the 18 Century
Increase in wealth will be brought about by methods of commercial capitalism and handcraft industry
th 18 Most people in the century live in the country and are in agriculture-still the greatest single source of wealth
Urbanization not a sure sign of economic advancement Spain and Italy have more large cities (+50, 000) than Great Britain
Urbanization does not mean industry since most industry was cottage industry About 50% of British population involved part time in manufacturing
Dutch no longer important politically, but are still an economic power-still leaders in shipping and banking
A series of ‘India’ trading companies are formed in numerous countries or republics Most fail in a few years with only a few exceptions Two most important are the Dutch and the British East India Companies
Trade will become the economic life blood of Western Europe and the cause of friction between several countries, especially France and England
Trade with Asia, Africa, and the Americas
Europe had little that Asia wants except gold & h t in Clo cela r po
A great demand in Europe for Asian products, especially cotton cloth and porcelain
Asian cloth is popular for its light weight, colors and patterns To protect British textile industry the government places a heavy tariff or outright bans import of Indian cloth
American trade based mainly on sugar cane ~1650 sugar cane brought from East to West Indies islands in the Caribbean
A new system of production was developed based on the plantation Required: large tract of land force of impressed labor large amount of capital
System needs slaves to work Begin to tap into existing slave trade in Africa Jamaica has 610, 000 slaves brought over from 1700 -1786 Products from slave labor are ¼ 1/3 of British trade
Eastern Europe has to buy foreign goods from the West since they have no colonies Offer in return grains, foods, and timber
Gives incentive to make estates more productive-they develop a system similar to plantations which keeps most of population as serfs
While the labor is done in all parts of the world, the profits go to Europe – primarily England Holland France
The wealth went to individuals as part of the system of private property of capitalism
Individual supports gov. who protects investments Gov. depends on people for loans and taxes
While standard of living rises in 18 th century, real wealth is held by a few The bottom layer is worse then before
With the emergence of new wealth based on trade and manufacturing there occurs a mixing of new & old wealth
New money wants respectability of old money New wealth often bought estates to be like old wealth
Old landed wealth often married daughters of new money New money gets respectability and old gets infusion of cash
Thomas Pitt ‘Diamond’ Pitt ‘Interloper’ in India Competed against the John Co. illeagally
Returns to England buys an estate and surrounding borough that has a seat in Parliament Stratford sub Castle Mawarden Court
Returns to India and works for the company as President of Madras Helps increase company holdings in India
Known for the 410 carat diamond (originally 426) he bought for £ 20, 000 Pitt sells it to the Regent of France for £ 135, 000 It is placed in the crown of Louis XV Now in the Louvre
The Regency Diamond Worth ₤ 48, 000
Thomas Pitt’s grandson and great-grandson will be Prime Ministers of England
Jean-Joseph Laborde Starts in shipping Takes his profits and Build plantations in The West Indies
Becomes major banker Raises money for France for: 7 Years War American Revolution
rd 3 Joins Estate and gives money to Revolution Guillotined at end of Reign of Terror
Western Europe after the Peace of Utrecht 1713 -1740
England & France have some similarities in the post war period Both will have ineffective kings so other must run the government
Cardinal Fleury Sir Robert Walpole
Louis XV takes over at 5 His regent allows aristocrats to get back into government They will gain some powers lost to Louis XIV
England has Parliament
House of Lords – hereditary House of Commons – representation not uniform, most could not vote Don’t
Various interests are represented in Parliament: Landed interest-gentry Funded interest-bankers West/East Indies interest-trade
Queen Anne dies in 1714 Last of Protestant Stuarts
To avoid Catholic Stuarts, have to go to Hanover George I *spoke no English *little interest in England *spends little time in England *not popular
Since there is no help from the crown, Parliament will gain more power
Supporters of the government and Anglican Bishops are known as the Whigs Those who are removed from the government-country gentlemenare the Tories
Some lower clergy are critical of the bishops and are known as Non-Jurors Some of the Scotts are unhappy with the monarchy and the rejection of the Stuarts
Helping the unrest was the Pretender-the Stuart heir His followers are the Jacobites In 1715 the Pretender lands in Scotland to start a revolt-quickly fails
1745 the new Pretender lands and is more successful His troops make their way south until he is defeated the Battle of Culloden Bonnie Prince Charles at
After the defeat the British break up the social system and land holdings in the Scottish highlands The Jacobites are finished as a threat
The Bubbles
After the wars of Louis there is debt in both France and England Large scale banking is still evolving Individuals are looking for new investments for their money
Under mercantilism there is a close connection between gov. and business Gov. would charter a company, give it a monopoly, then get loans from the company when necessary
Much of England’s debt held by: Bank of England-banking operations in London East India Co. -trade in the East South Sea Co. -trade w/Spain and her colonies
France: Prince Regent meets John Law, Scottish financier Law sets up the Mississippi Co. that has monopoly on trade w/Louisiana
Sets up the city of New Orleans as a trading center Soon has monopoly on all French colonial trade
Seeing trade as the solution to the debt, the Regent gives Law France’s debt
Law exchanged stock in company for certificates of royal indebtedness Law would: • Pay dividends to investors • Wipe out debt from trade profit • Reform tax system
A buying frenzy took place Prices rose to 18, 000 livres per share Investors worried about how long this could last-started to sell Causes selling panic
Some lost life savings, some lost ancestral estates that had been mortgaged to buy shares
England has a similar situation South Sea Co. takes over debt Prices rise so £ 1050 of dedt bond to buy £ 100 of stock
Some people realize profits from Spanish trade are exaggerated – start to sell stock Triggers panic Topples the scheme
People in both countries upset Law goes to Brussels The Regent resigns French affairs handled by Cardinal Fleury
England: Robert Walpole-country gentleman who warned about South Seas became principle or Prime Minister Set up Cabinet-executive leaders who sit in Parliament
France has more trouble recovering Gov. shuts down Law’s bank
*France has no central bank for the rest of the century *Investors dislike capital ventures and prefer land *Growth of credit institutions slowed
England Bubble laws: only companies chartered by the government can raise capital by stocks Hurts ability to raise moneybusiness now single propriotor or partnership
Credit of both countries hurtpeople less likely to loan money France repudiates loans Nobles continue to pay no taxes French kings find it hard to raise money
England in better shape Walpole sets part of budget into a sinking fund to pay off debt and interest Helps England’s credit All classes in England pay taxes
Cardinal Fleury takes office at 73 (1726) and leaves at 90 Runs state affairs and advises the king
King Louis XV Not particularly smart and liked to party
“After us, the deluge” Madam de Pompadour
Walpole liked things to run smooth “let sleeping dogs lie” Supports Bank, trading companies and money interests and they support him
Walpole is first PM Makes sure he has a majority of the Commons on any vote Avoids any issue that might be a loss
Both countries realize the best way to keep country quiet is low taxes Best way to keep down taxes is no war
Both try, but neither is successful 1733 France in War of Polish Succession
1739 England involved in War of Jenkins Ear with the Spanish
The Great War of the mid 18 th Century & Peace of Paris
A series of wars are fought in the period from 1733 to 1763 Two main issues: *global duel between France and England over colonies, trade & sea power *Contest between Prussia and Austria for land power in Central Europe
18 th Century Warfare Armies made up of those least necessary to the economy They are often ‘drafted’ from taverns and other similar locals They become trained, professional soldier
Wars are limited Countries can’t afford massive armies Generals not willing to lose an army or suffer large casualties-have to train a new army Look for low impact methods: siege or battle of maneuver
Primary weapon of the infantry was the musket British Brown Bess-. 70 caliber barrel allowed for the use of a variety of shot
Due to poor transportation systems, armies depended on supply depots from which they did not travel more than a few days march from.
Most armies use mercenaries to fill out the ranks England – uses German troops Prussia – ½ of the army is foreign Little nationalistic feelings Wars fought by governments for political reasons
Decision for war made lightly since it had little impact except for cost Few civilian casualties Few dramatic changes CE A E P WAR
Decision to make war easier since it is easy to make peace Do not crush enemy at peace table Treaties are negotiated not imposed-try to make sure everyone gets something
Frederick II aka Frederick the Great Becomes king May 31, 1740 Did not get along well with his father Frederick William I
FW I is no nonsense army lover Frederick II: likes the arts wrote poems in French played the flute corresponded with French writers Dad thought his son was too soft
Charles VI of Austria Charles VI Dies October 20, 1740 Daughter Maria Theresa new Queen
Frederick the Great invades Silesia December 16, 1740 Starts War of Austrian Succession England, Austria vs. France, Spain, & Dutch $ Prussia, Bavaria, & Saxony
Maria Theresa a shrewd ruler Secures support from all of her kingdom- rallies Hungarians by addressing Hungarian parliament with infant son, the future Joseph II
After winning key battle, Frederick makes allies angry by making separate peace with Austria France doing well in Europe with victories in Bohemia and Belgium
Overseas France is having some problems: *British and New England colonists capture Louisburg at enterance of the St. Lawrence
British navy blockades French West Indies France more worried about possible losses in America than gains in Europe
England not pleased: Unhappy with Austria as a ally Feel George II is getting them involved in German politics Willing to talk
Treaty of Aix-la-Chapelle A French/British agreement forced on everyone else France/England return to how it was before-all captured territory returned Frederick keeps Silesia Austria unhappy
Both sides from the war are unhappy with their allies France upset with Frederick’s desertion during the war England unhappy Austria did not protect England’s continential interests (Hanover)
Diplomatic Revolution England feel Prussia will do a better job protecting Hanover France and Austria put aside a century of fighting to join together Seal the deal with engagement of future Louis XVI and Marie Antoinette
Empress Elizabeth of Russia hates Frederick joins with France
The Seven Years War
Really two wars in 1 North America Asia
European war is centered on Austria, Russia and France attempting to destroy and dismember Prussia and Frederick
Prussia has a population of 6, 000 Austria, France, and Russia each have at least 20, 000
RUSSIA FRANCE PRUSSIA AUSTRIA
Frederick is able to hold out because his army is better trained than the others
Frederick’s enemies never coordinate their attacks He is able to use his interior lines of communication to defeat each foe piecemeal
Frederick wins a major victory at Rossbach against the French
Frederick wins a victory against Austria at Leuthen
Frederick’s problem is he has no help England gives only financial support, no troops Frederick’s people are totally behind him, Junkers and peasants alike
At the lowest point things begin to work out Empress Elizabeth dies (1762)– her son Peter admires Fredrick and changes sides
France is more concerned with her war against England in the colonies The Austrian alliance was not popular with the country Couldn’t get Austria to promise Belgium to France
With only Austria left, Frederick is able to handle them and settle Peace of Huberusburg 1763 Frederick gets to keep Silesia
The war starts several years earlier in the Americas French and English colonial interests collide in the Ohio River Valley
When G. Washington leads a colonial force against the French fighting begins that will become the 7 Years War
War fought for trade, colonial and sea dominance Both have disconnected commercial establishments in India Both have islands in the West Indies
In America, the French have more land, the British more people French have stronger support from the Native Americans
War starts badly for England: *Braddock at Fort Duquesne *attack at Louisburg *loss of Minorca *Black Hole of Calcutta
After loss of Minorca Admiral Byng is shot In order to encourage the others Voltaire
Control of the war is given to William Pitt He puts country on better economic war footing Uses the enormous financial credit of the British government
I know I can save the country, and I know that no one else can.
He concentrates efforts on the navy and colonies while giving financial support to Frederick Selects better commander for Army and Navy
We shall win an empire on the plains of Germany
In America England: *captures Louisburg *General Wolfe captures Quebec *Blockade the St. Lawrence Capture Martinique
India By the 18 th century India was much like the HRE Central authority had broken down so there was numerous princes who ruled over local areas
There were numerous conflicts between princes and among the Muslims, Hindu and Sikhs This disorder made it easier for the French and English to set up costal trading posts/forts
Neither country looking to take over India at this time Each country wants to dominate trade and can not allow their India Co. to be driven out
Key man for England is Robert Clive Works on driving French out of their trading posts
Major factor is willingness of British to use their navy in India Able to keep French from reinforcing, resupplying, and moving troops
England gets new king George III George gets rid of Pitt, puts in his favorites from Parliament
Peace of Paris 1763 • France to give up Canada • France gives Louisiana to Spain • France can keep islands in Caribbean • France can keep some trading posts in India-can’t fortify nor interfere with Indian politics
England the American Revolution
After the 7 Years War England had built up a debt It was decided by the PM – George Grenville – that England would abandon its policy of Salutary Neglect and start raising revenue from the colonies
England had controlled trade with the colonies by the Navigation Acts She now wanted to enforce these stricter Revenue Act of 1764(Sugar Act) they lowered the tax, but declared that it would be enforced
Parliament follows this up with the Stamp Act and the Townshend Act Parliament is forced to repeal the Acts due to colonial boycott
Colonies claim rights of Englishmen and state ‘no taxation without representation’ England counters with virtual representation
There was a small group in parliament that told the government what they were doing was wrong Edmund Burke William Pitt Col. Isaac Barre
The use of force alone is but temporary. It may subdue for a moment; but it does not remove the necessity of subduing again: and a nation is not governed, which is perpetually to be conquered. Burke
Secretary of War Viscount Barrington said: “Our contest is merely a point of honor, and will cost us more than we can ever gain by success”
Montesquieu – separation of powers * Alters the idea of the colonial system looked at by colonies in Central and South America
*Use of written constitution and a declaration of intent used by many revolutions that follow
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