How Exploration Remade World Trade
1Before 1500, pepper, cinnamon, silk and other Asian goods reached Europe along long land and sea routes. A sack of pepper might pass through the hands of Indian, Arab and Ottoman traders before merchants from Venice or Genoa carried it across the Mediterranean. Each trader along the way added a profit, so by the time the pepper reached a market in Europe, it cost many times what it had cost where it was grown.
2European rulers wanted a share of this trade. In 1498 the Portuguese captain Vasco da Gama sailed around Africa and reached India. Spain sponsored Columbus, whose voyages after 1492 led to Spanish conquests in the Americas. In 1545 the Spanish found a huge silver mountain at Potosí, in what is now Bolivia. American silver poured into Spain, and much of it was eventually spent in Asia, especially China, to buy silk, porcelain and tea. Over the next century, Atlantic ports such as Lisbon, Seville, Amsterdam and London grew busy, while Venice handled a smaller share of Europe's trade.
3Many European leaders of this time believed in an idea later called mercantilism. They saw gold and silver as the measure of a nation's wealth and thought the world's wealth was limited, so one country's gain was another's loss. A mercantilist government tried to export more than it imported. It taxed foreign goods, rewarded merchants who sold goods abroad, and expected colonies to send raw materials home and to buy finished goods only from the home country.
4Long voyages cost a great deal and often failed. Storms, pirates, disease and wars could sink a fleet. To raise money and share the danger, merchants formed joint-stock companies. A company sold shares to many investors. If a voyage made a profit, each investor received part of it according to the shares he owned; if it failed, the loss was spread among them all. Queen Elizabeth I granted the English East India Company a charter in 1600, and the Dutch East India Company followed in 1602. In 1607 the Virginia Company of London founded Jamestown. Governments often gave these companies monopolies, the sole right to trade in a region, in return for their help in building national power.