HIST103 Study Guide

Unit 6: Colonization and Economic Expansion

6a. Discuss the different motivations for colonization of the Americas and how different colonies formed

  • Why did Europeans travel west across the Atlantic Ocean? What was their impact on the Americas?
  • How did the motivations of the Dutch, French, and English differ from the Spanish and Portuguese?
  • How were settlement patterns in New Spain and British North America similar and different?

Each European country adopted a different approach to colonizing the Americas.

The Spanish conquered the existing empires and forced those who survived European diseases to work as slaves in the encomienda system. They created a vast network of Spanish missions, Catholicized the native population, and married Native American women. The French created missions to convert the tribes to Catholicism but preferred to trade rather than enslave the native population.

The Dutch focused on establishing trading footholds, such as commercial outposts for the Dutch East India Company in New Amsterdam (New York). They negotiated, traded, and sometimes married the Native Americans. The tribes imparted their knowledge of the land, hunting, and tracking in exchange for European goods.

The British established colonies with women and children in the northeast and adopted a cautious approach toward the Native Americans. They tended not to intermarry or convert them to Christianity but formed trade alliances that often crumbled and engaged in wars to diminish native control of the land.

To review, see:


6b. Identify the main characteristics of mercantilism and capitalism, as well as critiques of both of these

  • What were the benefits and issues related to mercantilism and capitalism?

Mercantilism is an economic system that features a centralized government whose goal is to expand wealth and power by importing cheap raw materials and precious metals from the colonies and exporting manufactured goods sold at a premium to the colonies in return. Native populations were prohibited from trading freely with other nations and forced to buy the more expensive manufactured goods the colonial power produced at home with the raw materials they had extracted. 

For example, although the Qing in China initially maintained a fairly equal trade relationship with European powers, they eventually lost control and their advantage. In India, the British government forced Indians to buy the manufactured goods Britains created in England using the raw materials they had extracted from India. This system destroyed India's once-thriving textile, metalwork, glass, and paper industries.

The colonial settlers were subservient to those living at home. For example, while the American colonists considered themselves British citizens, the British Parliament believed the 13 colonies existed to provide inexpensive raw materials for British factory workers.

A capitalist economy, on the other hand, relies on private individuals and companies to produce and sell goods to others on an open market. Government intervention is discouraged as the Laws of Supply and Demand (Adam Smith's invisible hand) determine the price of goods in a free trade environment. Capitalists focus on producing as many products as people are willing to buy at the highest price people are willing to spend. Societal well-being, the welfare of consumers and the workforce, environmental protections, and other ethical concerns are usually second to generating profits.

To review, see Mercantilism and Exploration and Mercantilism.


6c. Describe how economic systems such as mercantilism fostered conflict

  • How did the lopsided power dynamic of mercantilism cause conflict and foment rebellion?

The colonies were a source of cheap natural resources and free slave labor within the principles of the mercantilist economic system. These same colonies were also a market for the manufactured goods the mother country created, such as the cloth made with Indian cotton, which they sold to the Indians for an inflated price.

The colonists were not considered full-fledged citizens. For example, the Navigation Acts (1651) prohibited American colonists from trading with nations other than Great Britain. The Europeans increased their taxes and restrictions when they needed more cash to pay for the Seven Years War (1756–1763) in Europe and the French and Indian War (1754–1763) in North America. These laws fostered great resentment and encouraged the formation of black markets, smuggling, and other types of illegal trade. The protests boiled over and eventually led to the American Revolution (1765–1783) and independence movements, such as in India (1857–1947), when colonists protested the oppressive nature of the mercantile system.

To review, see The Rise of a Global Economy.


6d. Compare the impact of capitalism on the Industrial, Scientific, and Agricultural Revolutions

  • What were the Industrial, Scientific, and Agricultural Revolutions?
  • Who was Adam Smith, and what did he say in Wealth of the Nations?
  • How was capitalism key to the Industrial Revolution?
  • How and why did Karl Marx criticize capitalism?

Britain experienced an Agricultural Revolution beginning in the mid-1600s with advances in farming technologies. Unemployed farmers soon moved to the towns and cities in search of work when they were no longer needed at home. Here, inventors and entrepreneurs eventually flourished, creating an Industrial Revolution during the mid-18th century (1760–1840).

Manufacturing, specialization, and economies of scale would eventually create a complex urban factory system. Most workers were paid low wages and endured miserable living conditions. However, a hierarchical class system developed with an expanding merchant and middle class that earned income to spend on clothing, household items, and other manufactured goods. The upper classes bought luxury goods they imported from the colonies, such as chocolate, coffee, tea, and tobacco.

Adam Smith (1723–1790), the Scottish economist, used his concept of an invisible hand to explain how supply and demand drive the market toward economic efficiency. Support for laissez-faire capitalism would transform Europe and the United States into modern countries with large cities and factories while increasingly large-scale commercial farms produced high-demand cash crops. However, Karl Marx (1818–1883) and Friedrich Engels (1820–1895) criticized the exploitative nature of industrial capitalism. Smith had ignored the social byproducts of capitalism when he wrote The Wealth of Nations (1776).

In their influential book The Communist Manifesto (1848), Marx and Engels protested the extreme poverty, alienation, and poor living conditions they witnessed in the industrialized cities. They predicted a class struggle would occur over the means of production. The proletariat (working class) would revolt against the bourgeoisie (upper classes and wealthy elite) to demand better working conditions, and capitalism would implode. We return to these ideas in later units because they fueled revolutions in Russia, China, and around the world into the 20th century.

To review, see:


Unit 6 Vocabulary

  • Adam Smith
  • Agricultural Revolution
  • alienation
  • black market
  • bourgeoisie
  • capitalism
  • capitalist economy
  • commercial farms
  • Dutch East India Company
  • economic efficiency
  • economies of scale
  • Encomienda system
  • Friedrich Engels
  • hierarchical class system
  • invisible hand
  • Karl Marx
  • laissez-faire capitalism
  • Laws of Supply and Demand
  • manufacturing
  • merchant class
  • means of production
  • Mercantilism
  • middle class
  • mother country
  • Navigation Acts
  • proletariat
  • Qing
  • Seven Years War
  • smuggling
  • Spanish Mission
  • specialization
  • The Communist Manifesto