It's all About the Benjamins - economy, chartered company, East India Company, Virginia Company
It's all About the Benjamins
economy, chartered company, East India Company, Virginia Company
Development of American Constitutional Democracy Unit
Let's say you found a tree with a spout that poured lemonade. Stick with me here. You go out hiking one
day deep into the forest and you stumble across it. You give it a taste. It's delicious. Better than any
lemonade you've ever had. You fill up your water bottle and bring some home. You let your friends and
family taste some. They LOVE it. They offer you money to hike back into the forest and bring them some
more. Every day, you hike back to the lemonade tree and bring back lemonade to sell. You decide not to
tell anyone where this tree is so you can make all of the money. You're a little greedy. You have a
monopoly, which means you are the only person who sells this drink and you also get all of the money.
You also do all of the work. This isn't going to be easy . . . but the hard work just might pay off.
After a year, you get tired of hiking to the lemonade tree. You never have time to spend all of the money
you make! You decide to hire a trusted friend to hike up to the tree for you. For doing this, you will pay
her some of what you make. It works out for a while. But then one day, someone follows your friend and
finds the lemonade tree! He starts selling the same lemonade for less, and everyone's buying from him
instead! You have to lower your prices. Something is happening around this lemonade tree that wasn't
happening before. An economy is the system for all the things that are being traded, bought, and sold in
a place. Right now, your economy is based around one lemonade tree and people walking up to the tree
and selling it to their friends. In a country today, an economy includes millions of people and companies
selling all kinds of things in many different ways. Oh no! Now you find out that the kid has found another
lemonade tree! The lemonade tree economy is healthy, but you're not making as much money as you
once were. What will you do?
Well, if you want to try to make a lot of money, you can do what some rich people in 17th century England
did. You can team up with your friend and this other kid who found the tree and take turns walking up and
then share the money you make. A chartered company is a group of people who pool their money
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It's all About the Benjamins - economy, chartered company, East India Company, Virginia Company
together in order explore, trade, or start a colony. It takes a lot of money to get started and it is very risky,
but if you are successful you can become rich. You can all chip in money to buy more glasses to carry
more lemonade and hire more people to carry the glasses for you. If someone drops a glass on the walk
back and it breaks, you will only lose 1/3rd of the cost of the glass, because three people bought it. This is
the same idea that people in England and other countries had. They knew they could make lots of money
bringing things back to England from America and India. With all these people putting money into the
company, one person would never lose all they had if one of the ships carrying goods back from India or
America sinks. This is the safest way to colonize . . . and get tree lemonade.
Just as lemonade is coming out of the forest for you and your friends, good things were coming out of
India and China in the 1600's. People all over the world wanted spices and silks. They wanted them very
bad and would pay a lot of money for them. It was a very long trip over land to get these spices and silks,
so people looked for an easier way. Some rich people in England, who had enough money, started a
company together. Their goal was to sail to these far places and bring them back. The East India
Company was started in 1600 C.E. by rich traders in England, traded with parts of India and China, and
was around for over 250 years. This company got so big, at one point they were responsible for half the
trade in the world and they even ruled parts of India with their own armies. Now that you and your two
friends have control over the lemonade tree, you are raking in money. What else can you and your
friends do?
I will tell you what you can do. You can set up camps around the tree to make sure no one else finds it
and steals your lemonade. In England, another group of traders wanted to make money off of America.
They sent out ships of people to start living there and hoped to find gold. Life was very hard for these
people, many of them died and they did not find gold. What they did find was tobacco. Once people back
in Europe tried tobacco, they went crazy for it. The Virginia Company was started in 1606 C.E. to start
colonies in the New World, America, and bring back valuable things. After you pool your money together
to buy new and better lemonade jars and pay people to hike up there, you can also start a colony of your
own. I just hope the people who live around the tree really like lemonade . . .
Now that you have set up trade and camps around your lemonade trees, you have a little economy, a
system for buying, selling, and trading things. You and your friends make a chartered company by putting
your money together to do something bigger together. This is how the East India Company was made,
when traders in Britain set up trade with India and China. It's also how the Virginia Company was made,
when many people came together to start colonies in America. Good luck with your lemonade tree
business! What do you mean lemonade trees aren't real? Well, people were shocked by India spices and
silks when they were first introduced in the 1600's. You never know.
References:
Mocomi. "East India Company" mocomi.com, 2012. <http://mocomi.com/east-india-company/>
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It's all About the Benjamins - economy, chartered company, East India Company, Virginia Company
About Education. "Colonization of the United States" economics.about.com, 2012.
<http://economics.about.com/od/useconomichistory/a/colonization.htm>
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