IMPACT OF CHANGE

18TH CENTURY

Prelude to the Industrial Revolution

The rise of Capitalism

Netherlands and Antwerp Large Trading port in the north of

Europe Perfectly situated for trade

Netherlands and Antwerp Large Trading port in the north of

Europe Perfectly situated for trade Frugal people who put a high value on

saving Which leads to…

Banking!!!

Surplus of capital leads to banks Banks are able to invest in businesses

and people are able to take out loans Businesses can take out capital to build

themselves This leads to accelerated development

of business

Before we move on: Just a little bit of British History…

Scotland and England? Together at last?

Just a little bit of British History… Scotland and England? Together at

last?

1706 Treaty of the UnionUnified Scotland and England politically

○ Brings to the end centuries of fighting

What’s so great about Scotland and England coming together?

England has great food producing capacity

Scotland is nothing but rocks…Where there are rocks…

○ There are minerals: coal and iron

Therefore…

England and Scotland are a match made in heaven to dominate the worldAnd they do.

English System 18th Century Englishmen were becoming Capitalists

One that invests money in a business By the 17th Century English bankers had

developed a deposit banking service:They had enough money to lend out and

gain interestInvented a system of checkingBank notes were accepted as money

Why was Banking Necessary? With the rise of capital and countries

investing cross border:Currency needed to be converted and

changedAccounts needed to be paid from long

distancesMoney needed to be stored

England

Inflation hit everywhere except England where rising incomes rose faster than prices

Inflation

Rising prices Too much money chasing too few goods Increase in spending which exceeds

increases in real production

England

Inflation hit everywhere except England where rising incomes rose faster than prices

This lead to more investment abroad

Cottage System (Putting out System) Central agency contracted out work to

subcontractors who completed work in their own facilities (usually their own home)

No more guilds Could charge whatever was market

price Supply and demand = more capital

Conclusion

In England the putting out (Cottage system), extra money, banking, colonialism, larger markets all lead to the development of capitalism as an economic ideology.