Joint Stock Companies and Mercantilism

Joint Stock Companies and Mercantilism

Results of the Age of Exploration JOINT STOCK COMPANIES AND MERCANTILISM The Commercial Revolution

The establishment of colonial empires in the Americans influenced the nations of Europe. New wealth from the Americas was coupled with a dramatic growth in overseas trade These prompted a new wave of business and trade practices in Europe during the 16th and 17th centuries. This dramatically changed the economic atmosphere of Europe and became known as the Commercial Revolution. Joint-Stock Companies (!!!)

Worked much like a modern-day corporation. A number of people pooled their wealth for a common purpose Ex: VA Company going to Jamestown Joint-Stock Companies

Purpose = American colonization Took large amounts of money to establish overseas exploration While profits may have been great, so were risks Many ships never completed the long and dangerous ocean voyage Would only lose your small share if you invested and the colony failed Mercantilism

New economic policy A countrys power depended mainly on its wealth It was wealth that allowed nations to build strong navies and purchase vital goods The goal of every nation became the attainment of as much wealth as possible!!! Favorable Balance of Trade (!!!)

A country could increase its wealth and power in two ways: It could obtain as much gold and silver as possible Second, it could establish a favorable balance of trade, in which it sold more goods than it bought Colonies and Mercantilism

A nations ultimate goal was to become selfsufficient. Mercantilism went hand in hand with colonization, for colonies played a vital role in the new economic practice. Aside from providing silver and gold, colonies provided raw materials that could not be found in the home country, such as wood or furs. In addition to playing the role of supplier, the colonies under mercantilism also provided a market The home country could sell its goods to their colonies Main Characteristics of

Mercantilism 1. A nations wealth depends on its stores of bullion (gold and silver)...(achieving more wealth/prosperity means another nation suffers a simultaneous loss of wealth/prosperity); 2. Favorable balance of trade (when goods exported of

greater value than those imported); 3. Raw materials from colonies to the mother country; 4. Colonies to become markets for the Mother Countrys goods; 5. Closed market: required to purchase manufactured

goods from Mother Country http://www.investopedia.com/video/play/ mercantilism /

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