Royal Port or Chartered Company? Two Ways to Run World Trade

Ships, Silver and Charters

1After Columbus crossed the Atlantic in 1492 and Vasco da Gama sailed around Africa to India in 1498, European ships could reach the Americas and Asia directly by sea. Most European rulers of the time followed ideas later called mercantilism. They believed a kingdom grew strong by piling up gold and silver, selling more than it bought, and using colonies to supply raw materials and buy the home country's goods. Rulers agreed on these goals, but they used different tools to reach them.

2Spain's crown kept trade in royal hands. In 1503 it created the Casa de Contratación, or House of Trade, in the river port of Seville. Every ship, cargo and passenger going to or coming from Spain's American colonies had to be registered there. For more than two centuries, this trade had to pass through Seville and, later, the nearby port of Cádiz. The crown claimed a fifth of the silver mined in its colonies. By the 1560s, ships had to cross the Atlantic in armed convoys called flotas to guard against pirates and enemy fleets. Colonists were forbidden to trade with foreign merchants.

3In 1565 a Spanish expedition found a way to sail east across the Pacific from the Philippines to Mexico. Soon large ships called Manila galleons crossed the Pacific about once a year. They carried silver from the mines of Mexico and Peru west to Manila, where Chinese merchants traded silk and porcelain for it. The galleons brought these goods back to Acapulco, and some were carried on to Spain.

4England's rulers had less money to spend on voyages, so they let groups of merchants take the risks. In 1553 an English ship searching for a northern sea route to Asia reached the coast of Russia instead. In 1555 the queen granted a charter to the Muscovy Company, whose investors bought shares to pay for its voyages. The charter gave the company the sole right to England's trade with Russia. In 1670 King Charles II chartered the Hudson's Bay Company and gave it the sole right to English trade in the huge region whose rivers drain into Hudson Bay, in what is now Canada. Cree and other First Nations hunters brought beaver furs to the company's posts and traded them for metal tools, kettles, cloth and guns. The furs were shipped to England and made into hats.