Mercantilism is an economic system that was developed in Europe during the 16th century. It is based on the idea of a country exporting more than they import. Thus, they should be making money because they are selling more goods than they are making. The problem with this system is that in order for it to work, those countries need a market that wants to buy large amounts of their goods. European nations, in order to create this market, created colonies and established territories where they attempted to generate a market for certain goods. The triangle came about from the system of mercantilism where Europe was trying to increase exports of their manufactured goods to the Americas and Africa. In contrast, previous European markets that were much more open and unregulated. The monarchies in Europe ran these new trade paths very strictly in order to ensure that the products and goods their colonies were buying were from their own mother country.
Joint-Stock companies are companies in which instead of having one or two owners instead you have many investors. These investors give money in exchange for shares of the company. As the companies become more successful the value of these shares increase and thus there is a profit for these investors that can then sell their shares for a gain in capital. Starting mainly in the 16th century they started forming. Before these companies to start a business one or a few individuals would have to risk all their money in a business. With these several people could risk much less and the company could have more money invested in it. This allowed more companies in Europe to produce manufactured goods and also give them the means to spread them throughout the world.
As you can see from the picture, the triangle trade was a trade network that traded goods between Europe, Africa, and the new world, although not necessarily in that order. The triangular trade system impacted the economies of the three regions because of the fact that these three regions were receiving goods not found in that region. As these three regions became dependent on a certain good from the triangle trade, the trade became even more indispensable and used.The facilitator of the trade was England, England produced both textiles and manufactured goods which were not available in either North America or Africa which kept the need for Europe in the network. The biggest section of the trade network was connected to Africa. This was to gain access to African slaves which were the most important product exchange between the three regions. Africa also had various riches such as gold and silver which were very attractive to European traders. America would trade for tobacco, fish, lumber, flour, or foodstuffs for the goods and slaves from the previous three locations.
Global Circulation of Silver
From 1500 to 1800, Mexico and Peru produced 85 percent of the world's silver. That silver was sent around the world by the Europeans as a way to pay for foreign goods. Over 40 percent of all that silver eventually wound up in China. The Europeans traded the silver for luxury goods, such as silk, porcelain, and tea. This resulted in inflation in China's economy, this is because when silver became more and more common in the area its value began to drop in correspondence to its increasing availability. Europe also tried to export the silver to Japan, but Japan cut off its trading borders to Europe in order to avoid European influences entering their country and also to avoid the problem of inflation that the Chinese had encountered.
- Mr. Compton