Hi, welcome back. Two quick comments at the start. First, the presentation last time had a little bit of that feel of the old, dreary grade school: empires rise, empires fall, colors move from here to here on a map. I know it felt that way. It's important to go through that stuff and orient you a little bit. But here's the first point I want to make. When you see those empires come and go, let's say the Mughal empire in India, think of that as kind of a veneer, an overlay, on top of traditional societies that actually aren't changing very much. New chiefs are in charge. They're extracting stuff from the farmers who are living there. Whatever they can extract from them, kind of like predators. And then another wave of conquerors come through to try to extract some more stuff, but the basic rhythms of life aren't changing very much. [INAUDIBLE] What we're going to talk about now, the Commercial Revolution, is more interesting than that. Because the Commercial Revolution begins to create interactions that go all the way down to the way people live their lives, the way they make money, the way they make a living. And then it kind of works its way into social changes, cultural changes, even the changes in the way, in the things people eat and drink every day. And that actually, in some ways, cuts a whole lot deeper, than the rise and fall of empires. Alright that was point one. And point two, topic here is Commercial Revolution. For those of you who are economics majors, you might be [SOUND] rubbing your hands to say at last. But for other people, they see a phrase like the Commercial Revolution. And instantly the eyes start glazing over, and they start thinking: I'm going to see a lot of stuff about supply and demand... The Commercial Revolution is so interesting because it has to do with the way people saw certain kinds of opportunities and solved their problems in ways that had a really interesting historical impact. If you really get into the problems they were trying to solve and the significance of how they solved them, I think you'll find this a pretty [SOUND] interesting discussion. So let's look at the situation, that people in Western Europe could have looked at as they looked at this Atlantic world [SOUND]. Really fundamental point [SOUND]. The Western Europeans have the historical opportunity of inhabiting this Atlantic world, and to some extent a South Seas world, too. Here again is a map of world trading empires in 1770. Two key things to notice here is, first of all, to just study that Atlantic world for a moment. The different colors on this map, those are just the different national networks, national trading monopolies. It's not really very important for our purposes. Just get a sense of the intensity of the interchange among these people who are all looking outward at an Atlantic world. If you turn the map over a little bit, you also see quite a lot of intensity in the South Seas. The spice trade. Touching on India a little bit, in the 1700s, too. So let's break down the situation. If you look at this trading world that Europeans can inhabit, can think about in the late 1700s: what are the things there that would interest them? Well first, they'd be interested in cool stuff. What kind of goods would interest them the most? At this time, probably the key goods they're thinking about are things like sugar [SOUND], Coffee [SOUND], Tobacco [SOUND]. And you can see that when sugar, coffee, and tobacco start working their way into the lives of millions of Europeans, that [LAUGH] really changes society. The whole rise of what we now think of as �breakfast� dates from this era. So there's some stuff there that interests them. Potentially moneymaking stuff, and actually there's money there. I mean literally money in the sense of money I can dig out of the ground. Quite a lot of silver and gold being mined, especially in the mines of Spanish Mexico. [SOUND] Also Spanish Peru. There's also land. A lot of land. But the native inhabitants aren't in charge anymore of deciding who gets to own the land. Also of interest there are opportunities to win honor, prestige for your family, for your king, and then there are markets, markets for the goods you can make at home, because these colonists who settled there need all sorts of things: furniture, clothing, luxury items that are made in the home country. So again, here's another glimpse at the Spanish and Portuguese new world. As I said last time, they're mostly inhabiting the coastal fringes in this world, and some areas inland, especially where there are lucrative mining opportunities. This is a useful map of the northern part of Spanish America. If you look at Mexico, you'll see that the real core of Spanish settlement [SOUND] is really right in this area around here. The areas in lighter purple that extend up here: these are just thin veins of settlement. Just a tiny string of people running up to the settlement at the top of the Rio Grande Valley at Santa Fe. You see that actual Spanish habitation of the area moving towards what we would now call California has only begun, and there's a tiny bit here on the coast of what we now call Texas. You see these little symbols here? These are silver mines. And you see how they dot this area. Then there are some livestock ranches spreading out from those areas of settlement. As you can also see, by the mid-1700s the Spanish have been well implanted in this part of the world for more than 200 years. Mexico City is the most populous city in all of North America. This is also a map I showed you before just reviewing the colonization of the Caribbean with all those wealthy islands. Mainly producing, you see that symbol there? Sugar. That symbol there for coffee. You see the pattern. And then again, I also showed you this map. These British colonies here on the fringes of Eastern North America, these were a little different though, these were mainly settler colonies, especially up here. The only area for large scale agricultural plantations of the kind you see in the Caribbean: those opportunities are for tobacco plantations in areas like Virginia, or for plantations growing things like rice down here in South Carolina. Cotton's not yet a big cash crop in that part of the world. That really starts booming around 1800. So again, people look out at this world, they see a situation where there are valuable goods, sugar, coffee, gold and silver that can be mined, land that might be had, honor, markets for the goods they can manufacture at home. And they also see opportunities for simple discovery, new knowledge. The interaction with the new world has a big cultural effect on the old world. There's this sense of we're in an age of discovery. As one European writer at the time put it: in the beginning all the world was America. In other words, America is the new Eden. In the Europe of the 1600s and the 1700s, divisions about religion were still very strong. Bloody wars of religion had been fought in the 1500s and 1600s. So, the notion that here's a new world where, perhaps in some parts of it, religious dissenters can find places where they can live and enjoy tolerance. That was an interesting opportunity for some people, especially for some of the settler colonists who planted places of tolerance in British North America. So the main point to take away from all of this is, living in an Atlantic world, the situation presents people with a lot of interesting values, things they might want, and then you would ask yourself, okay: what are the problems and challenges they would encounter if they wanted to take advantage of that situation? Well, the first problem you'd encounter is you need ships. You need really good ships, reliable ships, that can make ocean voyages with relatively low risk of foundering [SOUND]. You need scientific capabilities, scientific capabilities to navigate such ships across thousands of miles of open ocean. Scientific capabilities to take advantage of the natural resources [SOUND] of these new worlds that you're discovering. You would also need finance. Mounting these expeditions, planting these colonies, building new mines, starting new plantations, all requires some significant amounts of money, in a world where most people don't carry cash. Most people don't rely on cash. So, you need finance. You also need finance in the form of things like insurance, in case there is a loss. [SOUND]. Because there is a lot of risk involved in these ventures. Suppose you succeed in starting those plantations or those mines. You need [SOUND] labor to take advantage of the opportunities, and lots of it. Another problem you have is protection. This is an age of rival trading monopolies sniping on each other, trying to take each other's stuff. So, if you're involved in trying to take advantage of these goods, these resources, you need protection. [SOUND]. All right. So you've got an interesting situation. You have all these problems that need to be solved. It's very interesting then to look at the particular ways the Europeans [SOUND] developed solutions to these problems. In the area of ships [SOUND], some of the European countries end up creating really elaborate ship-building industries. [SOUND]. These are ships of the time are incredibly complex machines. Here's a drawing that just shows you what's involved in a large scale ship of war of the 1700s. If you study it, you can just see how elaborate it is to just build one of these large war ships. So you have to have an incentive to do that. Well, that's provided by the situation. Then you have the problem: I need warships like these. But once you've solved this problem, once you have the capability of building a warship like this, that's a pretty [SOUND] interesting capability to have. On the side of science, [SOUND], you start solving that problem. You start things like Royal Academies that recognize the study of geography, pay attention to scientific innovations. You start looking to the universities or other places for people [SOUND] who will come up with things that will help you solve these sorts of problems. Here's an example in Madrid, Spain. This is a royal facility created to study botany. You might think: well gee, why would the king set up an academy to study plants? Well, he's not just doing it because he likes fancy gardens. He's doing it because this is an academy that's studying how best to take advantage of the agriculture of the new world. What sort of plant might create a commercial bonanza, [SOUND] for the king and his colonies; and you can visit Madrid and still visit these beautiful royal botanical gardens today. Finance [SOUND]. How do they solve that problem? Well, to solve that problem they'll need stronger and more powerful banks, and they'll need to align those banks with companies that can manage these commercial opportunities, favored by government monopolies. For example, the British East India Company. Here's a representative of the British East India Company. He's not a government official. He's a company man. Yes, he has a British flag behind him. And indeed his company enjoys a government monopoly. He's making a deal with an Indian prince in the middle of the 1700s. Okay, you say: I�m solving my ships problem, I�m solving my science problem, I�m solving my finance problem, but what about labor? Where am I going to [SOUND] get the people to develop all these commercial possibilities? Well you can rely on voluntary colonists, people who want to come over and work on these things. And of course in some cases like mines and sugar plantations, the work is very hard and disagreeable. For that you need people who don't want to come over voluntarily. You need slaves, millions of slaves. The local inhabitants, what came to be called the American Indians, don't seem to do very well as slaves. They're not used to this sort of labor, and they die too quickly even if you imprison them to do the work. So what ends up happening is an extensive reliance by the 1600s on African slaves. But the great century for the importation of African slaves is the 1700s. Look at this chart. This is a chart showing how many slaves were being brought over. This red column here in the center, those are the numbers for the 1700s. You see it's usually the tallest column. Let's examine this in a little more detail. So you see in Brazil: 1.9 million, 1.35 million. So, 2 million imported just to the West Indies. Nearly another 2 million imported into Brazil. Add in the British West Indies, you have nearly another million and a half. You compare that to the number imported in the 1700's to British North America, what will become the United States, that's just 384,000. So you can see the vast majority, of the Africans being brought into the new world are being brought to Brazil and to the West Indies. So now let�s come back to this chart. You can see a little bit about what happens to these slaves after they have arrived just from these dry numbers. These are the populations of slaves lets say in Northern Brazil: 347,000, 238,000 by around 1770. Think about it, nearly 2 million people came over here in the 1700s. By the end of the 1700s, there are only 600,000 black slaves alive. More than 3 million black slaves are brought over here to the West Indies. As you can see here, little more than a million black slaves are living in these places at the end of the 1700s. These dry numbers more than anything else tells you about what the life was like for slaves in these places. By the way, an interesting contrast, you saw that in the 1700s, 384,000 slaves were imported into this part of the world. By 1800, their numbers have actually increased to 848,000. That means that not only do they tend to survive, they tend to actually have children, and their population actually grows, like the rest of the population of British North America. That doesn't mean slave owners were inherently much kinder in America. It does mean that conditions in the work often were not quite as extreme. And therefore, the methods to extract that work also didn't need to be quite as extreme. Alright. So now we've solved all of these problems in ways that you can see. How do they solve their problem of protection? Well, for protection, you build up navies and also expeditionary armies, armies that can be loaded up in ships, go places, and fight. Really expensive. That's why a lot of these solutions blend together to create a pretty distinctive kind of state. So now what I�d like to do, is diagram for you the emergence of this really powerful form of state, which historians call a Fiscal-Military State. You start with a king that's the central ruler, who before the 1700's, isn't always very strong. He relies a lot on the money he gets from his nobles, who were the land owners, who were raising a lot of the money, and who were providing a lot of soldiers that he needs to fight his wars. This is all changing now in this Fiscal- Military State. You�ve got the king at the center He�s got his courtiers, his hangers-on, his entourage at court. He's got his own little army, and his own little navy, but what the king can then do [SOUND] is grant trade monopolies, leveraging these new colonial possessions, the exclusive rights to the trade in valuable sugar or spices. The king grants these trade monopolies to companies. To represent companies, here, we've used the flag of the British East India Company of the 1700's; and the companies, of course, attract courtiers of their own. They might give jobs or preferments to some of the people who are also court favorites because there is a pretty close relationship between the king and these favorite companies getting the government granted monopolies. The companies go to bankers for credit. Give me the money for ships to conduct this trade. And of course the bankers do that because they've got this trade monopoly in the company. So the company, leveraging its trade monopoly, using the money from the bankers, earns rich profits on it, on its exclusive trade routes. With these rich profits, [SOUND] the company then can pay taxes back to the king; in other words, the king, having granted these lucrative trade monopolies, gets a kick back. Gets the �kingly cut� in the form of taxes; and also the king might say: you know I need an extra loan of money to help build something that I want, buy some soldiers, wage a war. The bankers, of course, will also loan money to the king. You can see how this circle works for the interests of everybody involved. The king is getting more money. He now has an exclusive source of income that no longer relies as much on the nobles and land owners out in the country side. He can build up central power at court because he can use these tax revenues, these loans now, to build up his army, to build up a mightier navy, commanded centrally. Of course, the courtiers enriched themselves, too. And the king is [SOUND] doing just fine by the bargain, as well. Central power much, much stronger. Powerful new armies and navies. And with stronger navies, why, you might be able to acquire more trade monopolies. Which yields even greater profits and more revenue and you see the cycle. This of course was the kind of dynamic that created the danger of tyranny that men like Thomas Jefferson would so bitterly complain about. They hated this kind of state. They associated trade monopolies with tyrannical armies and navies and hoped to invent some kind of state that would overthrow systems like these [SOUND]. But by the late 1700s, this is a distinctive innovation of the European states. But now step back and notice what we've covered. Because of a situation people found themselves in and the opportunities there, they set about solving certain kinds of problems, and over a period of something like 200 years, they developed a set of really distinctive solutions. But because they�ve developed those solutions, they've changed their world. They've changed their lives. They've changed what people eat and drink every day. And they've created a set of capabilities that will enable them to change the rest of the world, too. Next topic we'll come to, we'll delve a little more into the accompanying Military Revolution. [SOUND] See you then.
