5.1/5.2 - The Rise of Global Markets

The Rise of Global Markets and Economic Competition

• As European states engaged in the Age of Exploration and the development of the Columbian Exchange and Triangular Trade, economic competition between them intensified.

• This competition extended beyond the Americas to the Indian Ocean trade, where European powers vied for dominance.

Early European Players in the Indian Ocean

• Portugal was the first major European power to establish a presence in the Indian Ocean.

  • Vasco da Gama was the Portuguese sailor who first rounded the Cape of Good Hope and established trade routes with India, leading to Portuguese dominance in India and Southeast Asia.

Competition from Other European Powers

• During the 17th century, other European powers, including the Dutch, English, and French, began to challenge Portuguese dominance in the Indian Ocean.

• To compete, these powers formed joint-stock companies:

  • The Dutch East India Company (VOC) became the first transnational corporation, raising funds by selling shares to investors. The VOC was highly profitable, eventually challenging and overtaking Portuguese influence in the region.

  • The British East India Company struggled initially but later became a significant competitor in India, taking advantage of the declining Mughal Empire to establish British dominance in the subcontinent.

  • Louis XIV of France established the French East India Company under Finance Minister Jean-Baptiste Colbert to compete with the British and Dutch.

Economic Rivalries and Conflicts

• These economic rivalries often led to conflicts, with European powers fighting to control lucrative trade routes.

  • For example, during the War of Austrian Succession, France seized Madras, a British stronghold in India, but had to return it to Britain after the war, restoring British dominance in the region.

The Atlantic Trade and Navigation Acts

• Similar economic rivalries developed in the Atlantic Ocean trade.

  • The Dutch Republic became the dominant maritime trade power in the Atlantic after the Eighty Years' War.

  • To counter Dutch dominance, Britain enacted the Navigation Acts, which required goods shipped to Britain or its colonies to be transported on British vessels. This created a monopoly for British merchants, weakening Dutch influence in the Atlantic.

The French-British Rivalry

• With the Dutch weakened, France became Britain’s chief economic rival in the West.

  • The ongoing tensions between Britain and France led to a series of wars, one of which was the War of Spanish Succession.

    • This war was driven by concerns over the balance of power in Europe, particularly the potential unification of France and Spain under Louis XIV.

    • The Treaty of Utrecht (1713) ended the war, forcing France to cede some of its colonial holdings to Britain, including Newfoundland, Nova Scotia, and the Hudson Bay territory.

    • Spain had to grant Britain control over its West African slave trade, leading to a significant economic shift in Britain’s favor.