Economics Drove World Trade Competition

After the collapse of the Western Roman Empire in the late 400s, Europe was divided into small kingdoms. In this Medieval Europe, agricultural production on self-sufficient feudal estates was primarily for local consumption, which prevented the efficient exploitation of natural resources. Living standards for most peasants were barely above subsistence. A bad crop often meant mass starvation, a phenomenon seen as late at the mid-19th century with the Irish potato famine. Life was truly nasty, brutish, and short. For the next 600 to 800 years, most Europeans had neither the means nor the desire to engage in foreign trade or exploration.

By the 13th and 14th centuries, Europe was pulling itself out of the Dark Ages, its countries becoming more affluent, thanks in part to the "Black Death" or bubonic plague. The disease struck and killed people with terrible speed. The Italian writer Boccaccio said its victims often “ate lunch with their friends and dinner with their ancestors in paradise.” In just under five years, between 1347 and 1352, an estimated 25 million people, approximately one-third of the European population, died from the plague. This sudden decrease in workers caused an increased demand and thus, higher wages. The result was a higher standard of living throughout Europe and the creation of a middle class.

Monetarists believe the main reason the "Age of Exploration" began was because of a severe shortage of bullion in Europe. The European economy was dependent on gold and silver currency, but low domestic supplies had plunged much of Europe into a recession. Today, we understand that the evolving and expanding middle-class created a demand on luxury products from Asia - jewels, silk, and spices such as cinnamon, pepper, and cloves, which were used to season and preserve food – and it is this increase in demand for luxury goods, and the potential for increased profits that created a renewed interest in exploration and foreign trade.

The cost of spices and Eastern luxury goods were inflated by two factors. First, Muslims controlled much of the overland route between Europe and Asia and the sea routes from Asia to the Middle East and extracted a duty on trade goods. Second, in the Mediterranean, the Italian city of Venice held a monopoly on trade between the Muslim ports and the rest of Europe. As a result, Europeans, governments, businessmen, and citizens alike, became eager to bypass the old overland and Mediterranean sea routes and find a direct ocean route to the Indies, as Europeans then called the eastern part of Asia.

Portugal and Spain took the lead in launching voyages to discover a direct ocean route to the Indies. In 1487, the Portuguese explorer Bartolomeu Dias set out to find a route around Africa. In 1488 he rounded the tip of Africa and named the continent's southern tip the Cape of Good Hope because its discovery indicated hope that a sea route to India had been found.

While the Portuguese were searching for an eastward sea route to Asia, Christopher Columbus, a sea captain from Genoa, sailing under the Spanish flag, looked to the west. Columbus developed a plan to reach Asia by sailing across the Atlantic Ocean. Columbus landed on an island in the Bahamas in 1492. Columbus, believing that he had reached the Indies, called the people he met Indians. The expeditions of Portugal and Spain opened a great period of exploration and led to the colonization of Americas, and eventually other parts of the world, by Europeans.

Spanish conquistadors sought and discovered vast quantities of gold in South American, Central America, and parts of North America, making Spain and the Spanish Netherlands the financial and manufacturing center of Europe. For a while, Spain became Europe's greatest military power until the influx of New World gold and silver created massive inflation that eventually ruined the Spanish economy and brought the end of Spain’s empire in Europe. Both Portugal and Spain failed to build a sound manufacturing/economic base to support their newfound wealth. Instead they relied heavily on imports from other countries. The result, gold, devalued in Spain and Portugal, was going out and consumable goods were coming in - both Spain and Portugal were slowly shipping their wealth outside their respective countries.

In contrast, other European nations such as the Dutch and, most notably England and France, tapped into the bountiful natural resources of North American and Canada. The vast quantities of virgin land, timber, tobacco, sugar, and later cotton further increased the wealth and power of both these nations. These successful countries were importing raw materials from their overseas colonies and exporting goods in exchange for more raw materials and hard currency.

The spread of European trade around the world had a profound impact on the native people of various lands, especially in the Americas and Africa. For American Indians, their way of life vanished in bloodshed and disease, and new activities, such as the fur-trading industry, became important to their survival. The European colonization of the New World led to the growth of one of the most inhuman practices in history - the shipping of Africans to the Americas to be used as slaves. Throughout Africa and the Americas, European governments divided the land into colonies. In these colonies they established control over the native people, most frequently under the pretext of converting them to Christianity.

Colonization of foreign lands by European sovereigns began as a search for wealth: wealth in gold and silver or wealth by domination of trade markets. Although this competition for trade markets was often carried out under the guise of spreading Christianity, as occurred here in Hawaii, the true goal of colonization was to expand the empires and spheres of control of European countries and businesses.