AOE: Lesson - Effects of Exploration: Europe

Effects of Exploration: Europe

Banking Revolution

With ships sailing around the world carrying expensive cargoes, investors had every right to worry - cargo could be lost due to weather, poor maps, sailing error, pirates...anything really. And if cargo was lost, the investor(s) didn't get paid. Then, of course, there was the money that was needed upfront to participate in the global trade that resulted from the Age of Exploration. Therefore, new financial practices went into effect to fund the new global economy.

Painting details (image to right): Port de mer au soleil couchant (Seaport at Sunset) by Claude Lorrain, 1639. The painting shows a European port city, bustling with merchants, buyers, and ships.

In Amsterdam, the Dutch set up a stock exchange, an exchange bank, and businesses that insured cargo. Starting with the Dutch East India Company, the joint-stock company originated. Businessmen and banks bought stocks in the company; thereby providing capital with which to start the company. The company invested the capital in ships and manpower that sailed to ports for trade.

Under the influence of mercantilism, a nation established a trade monopoly at a foreign port and European companies then sailed for that port for the best trade deals. For example, the Dutch East India Company sent ships to trade along the ports in India and the Spice Islands that the Dutch controlled. The British East India Company sent its ships to those ports controlled by their business or nation. Other European nations and companies followed suit.

These companies established trade monopolies in Asia, the Americas, and Africa at either independent ports or colonies founded by their home nation. Through government protectionism, the company's profits increased allowing for additional investments in ships, manpower, and cargo. The additions brought in more cargo and profits increased again.

Wealth and War

The Age of Exploration resulted in tons of wealth flooding into Europe. This wealth, however, became a double-edged sword for many of the key nations involved in the Age of Exploration. Competition over colonial lands, concurrent with the spread of the Protestant Reformation, led to war between the powerful nations of Europe. The earliest explorers, the Portuguese, established trading ports along the African coast, South Asia, and the Spice Islands; later the Portuguese grew even richer off their colony in Brazil. However, Spain invaded Portugal in 1580 and retained control until 1640.

Painting details (image to left): Bataille de Denain. 24 juillet 1712 (Battle of Denain: July 24, 1712) by Jean Alaux, 1839. The French military commander Claude Louis Hector, duc de Villars, defeating Prince Eugene of Savoy during the War of the Spanish Succession.

The Spanish also initially grew in wealth and power. The King of Spain, Charles V, was ultimately elected emperor of the Holy Roman Empire in 1519. This meant that the Spanish king ruled Spain, parts of France, the Netherlands, Austria, and Germany. Under Charles V, Spain fought many wars against France, the Ottoman Empire, and the Protestants. Despite the wealth that the "New World" colonization brought, Spain declared itself bankrupt four times between 1550 and 1570 due to the expense of constantly fighting wars.

In 1581, the Dutch revolted against Spain and formed its own Protestant nation—the Netherlands. In 1588, the Spanish Armada (once the strongest navy in the world) fell to the British. By the mid-1600s, Spain's glory days were over along with a lot of its wealth.

England initially began exploration under Henry VIII (from the last module, the monarch who created Anglicanism) but didn’t have successful colonies until his great-grandnephew James I took the throne. His family was overthrown by Puritans who supported Calvinism. They initiated another round of wars with the Spanish over colonial privateering. Meanwhile, the English were also wrapped up in a “second Hundred Years War” with the French! The Dutch also grew powerful, and their empire expanded across 3 continents, but like the Spanish, their golden age ended due to costly European wars. Ultimately, the Age of Exploration led to quite a lot of competition, and even more wasted wealth, in Europe.

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