Changes in the European Economy
Due to the voyages of exploration and the colonization in the Americas and all over the world, the European economy changed drastically from 1450 to 1700. In Spain inflation lead to economic problems, while in the Netherlands, the Dutch East India Company flourished their economy, and in all of Europe, the merchant class grew due to mercantilism.
The increase of business and hauls of gold and silver lead to inflation in Spain. Inflation is the decline in the value of money, with the rise in prices of goods and services. The American mines gave Spain about 339,000 pounds of gold, but later this leads to more problems for Spain’s economy. The two main reasons for inflation in Spain are the growth of Spain’s population and the silver bullion losing its value. As Spain’s population grew, more and more people needed food and other goods. Due to supply and demand, merchants could then charge more for their goods. As the silver bullion lost its value, it required more silver to by the things people needed. This led to a large upper and lower class but hardly any middle class.
In the Netherlands the Dutch East India Company was the richest and most powerful in all of Europe. After their rebellion against Spain, the dutch economy flourished and they acquired the largest fleet of ships in Europe. They established and founded a direct trade route to Asia. The Dutched seized lots of land and with that they controlled a lot of the major ports, thus controlling most trade in Europe. The Netherlands capital, Amsterdam, became the commercial center in Europe. Due to the Netherlands controlling most of the trade they gained a lot of money and had a stable economy.
The policy of mercantilism emphasizes the national wealth as a source of power. Or, in other words, whoever owned the most gold had the most power. This policy spread all over Europe. Countries tried to find gold by establishing and exploiting colonies and by...
Please join StudyMode to read the full document