Exploration: The Finding, Founding, and Discovery of the New World

0:00Okay, as I said in the first class, we're starting the section of lectures on colonialism. The beginnings, the origins of the United States, and while it may seem distant in time, what we're going to find out is that that initial imprint that the old world made onto the new world is really vital. It still has lingering effects to this very day. And so the first full lecture here in this class, we're going to start right at the beginning with exploration. The finding, the founding, the discovery of the new world. And we want to answer the first question, why did people move from the old world to the new world?

0:51Obviously the first step of that is exploration and discovery. now the economist has a simple answer why did people move from the old world to the new world and that is that the benefits outweighed the cost okay so that's just a very very sketchy beginning point and we could well imagine that places that are discovered are not subsequently colonized. So discovery can actually be haphazard or random or just for the fun of it and not actually result in colonization.

1:41But why are we here? Well, if we look at this notion of Benefits Being Greater Than Costs we really have to we can step back just a minute and look at where we came from the old world you really have to wonder why they would bother to even come here in the first place other than just for the heck of it first of all there's the transactions cost the cost involved in getting from the old world to the new world a very very expensive process not many people owned a boat that could get from point A to point B and of course the passage even after the new world was discovered and settled the passage of a european for example coming to the united states might be equal to several years of their labor.

2:50So it's a very expensive transaction to get from point A to point B. And then there are all the risks and uncertainties involved in getting from the old world to the new world, like being shipwrecked, or being wiped out by disease or the native population. And you know if you look at Europe at the time things were not really all that bad. It wasn't like they were running away from the worst spot on the globe. It's not like people in Cuba wanting to get out of Cuba because of a declining standard of living and boy we're only 90 miles away from Miami.

3:42It would be a sure need to get there, and I'd be willing to do everything to get there. No, Europe was the place to be at the time. A rising standard of living, growing prosperity in Europe. The cultural signs sort of back that up. A period of time, say the 16th century, where we have the likes of Shakespeare, Michelangelo and Da Vinci And Europe was not particularly overcrowded. If you look at Europe in the Middle Ages, Auburn, Opelika would qualify as one of the world's largest cities.

4:37So it wasn't like it was hugely overcrowded and there was no place left to put people. That really wasn't the case on a massive scale. So there was not a mad rush to the new world, quite the contrary. However, there is this overriding resource explanation that we're going to be looking at. And that is that in the old world, if we compare that to the new world, What we find is that the old world was relatively labor rich.

5:36There were a lot of people, a lot of laborers, a lot of artisans. In the New World, there was a lot of land available. So if we compare the Old World to the New World, the Old World had lots of labor relative to land, and in the New World they had lots of land relative to labor.

6:21So there's this, going to be this draw here, where labor can benefit itself and also capital. The New World was capital poor, they didn't have a lot of tools, buildings, machinery, Roads, things of that nature where the old world did. And so what we were going to see over the first 300 years of American history, and this really continues today, is that labor and capital flow from the old world to the new world in order to take advantage of the relative scarcity differences.

7:13Exploration. Exploration is going to be the main topic today and it's kind of interesting because we see all of a sudden a burst of energy in terms of exploring around the globe by the European powers. The Portuguese were actually the first to go on a world scavenger hunt for new colonies, new land and new resources. And the Portuguese started in the 15th century, they started moving down the western coast of Africa, setting up colonies and bases. They are actually the ones that first moved around the Cape and into the Indian Ocean, founding colonies in places like India and even China, Southeast Asia, and so they were the first explorers and colonizers, followed by the Spanish and Christopher Columbus, who who was Italian but flying under the Spanish flag, Cortez discovers America and 1517 conquers Mexico within a very short period of time, Magellan discovers the Philippines under the The Spanish Banner, De Soto discovered Florida, discovered the Mississippi River, and I think

9:07actually was in the state of Alabama for a short period of time as well. Coronado discovered of the Grand Canyon in 1540, and so the Spanish are actually here in the New World ahead of many of the other European powers. And of course the Spanish and the Portuguese basically, Spain in particular, are going to have colonial territories from California to Kansas and down into Florida and then all through Mexico and most of South America. South America also has colonies. The Portuguese These have Brazil, the Dutch have some small colonies, things of that nature.

10:11The British and the French and the Dutch are more late comers and they end up with colonies in the United States and Canada. Now what is driving these explorers? What drove this spurt of exploration and discovery? Well we could probably look at a lot of different types of explanations involving knowledge accumulation, involving technology of shipping and that sort of thing. But the overriding reason from an economic perspective is the economic philosophy of mercantilism.

11:05Not really going to go through sort of a European history prelude to all this, but within Europe In Europe at this time, the philosophy of mercantilism had become dominant and basically what you have here with mercantilism is kind of a symbiotic relationship or union between government and business This is an idea of basically building the nation state.

11:53So the goal here was not that economic policy or philosophy should be for the general well-being of society or for the average man. The purpose of economic policy was to strengthen the state, to strengthen the nation militarily, to be able to defend and enlarge your nation versus your competitors. And the engine through which you did this was through a set of what's often considered pro-business policies.

12:56High up on this list was the idea that money is wealth. Especially gold. Got to get the gold. That's the key to everything under the mercantilist banner. Now you've all taken Principles of Economics and one of the things that you've forgotten but I'm going to remind you is that money is not wealth we all feel like it is the more money you have the wealthier you feel okay so if we can all imagine that someone made a mistake and they added four zeros to your checking account balance so that all of a sudden for every dollar that you had you now really think you have thousands of dollars and so in that individual case money is wealth but that's of course a fallacy an economic fallacy in the sense that Money for the individual may be viewed as wealth, but money is really just the medium of exchange.

14:19Wealth, I mean it's basically just the grease that makes the economic wheels turn in society. Wealth is represented by things like homes, cars, roads, buildings, warehouses, factories, machinery, farmland. that's what is wealth in the sense that that is what can produce consumer goods and make us better off. Money is just the medium of exchange but this is one of the fallacies under which they operated and on which they based their economic policies. Another fallacy exports, good Imports Bad

15:24They thought that it's much better to work real hard, and that's one of the things that they wanted. They wanted everybody working. All farmland under production, nobody just laying around, sitting around doing nothing. you better be working and what we want to do is work real real hard produce all these sophisticated goods and we want to send them to somebody else and not use them ourselves and we don't want to import anything from those other countries And why would you want to do that? To make money, that's right. She's getting all the bonus points here in this class. To make money. So you've got more gold locally. Now, of course, you can't do much with gold outside of jewelry, but this is another There are other aspects of mercantilism, including colonialism, that we'll be exploring, but I think that this is enough to get the flavor for what the European powers were up to at this particular point in time.

16:54and enough of a motivating factor for their ventures of exploration, discovery and colonialism. They basically wanted money. Now the organization of these exploration ventures and discoveries and ultimately of colonialism is based on the mercantilist model, where you have a public-private partnership, of course they didn't call it, that's what we call it today, a public-private partnership, where Where you have government in bed with big business, and this, it turns out, is a very powerful tool.

17:55It's a very powerful tool, many would argue it's too powerful, because these explorers that you've all heard about Columbus and Magellan DeSoto and so on and so forth these guys of course they faced a lot of risks but they had the fact that they were privately motivated they were motivated by a for-profit venture they were in it for the Money.

18:46Second of all, they had the government behind them. They had government subsidies, in many cases, and they were also given the rights to, for example, declare that new discoveries were now the property of whoever sent them. So whatever king or whatever nation sent them out on these voyages, they had the power to put the flag down and declare all the land between this river and that river, as long As long as it didn't belong to another European power, or as long as it didn't belong to a Christian nation, they could declare it the property of whatever king sent them.

19:42And of course, in addition to the subsidies, in addition to the backing of the government, sometimes with government ships, government money, government soldiers, sailors, things and other things of that nature. Whatever you discovered, of course, the king would allow you to keep a portion of whatever you discovered for yourself. So it's a very powerful tool where you have this for-profit motivation, where you're going to make a lot of money off of this stuff if you discover something, and you have the power of the King Behind You.

20:31So this is the mercantilist approach to exploration, it was very powerful, very successful in obtaining new territories. All of those we're going to see, it wasn't necessarily successful in terms of colonization itself. Now the other two systems that I mentioned in the first class, Capitalism, Socialism and Mercantilism, this is Mercantilism where you have both the private sector and the public sector sort of working together with a very powerful force. Now I'm going to look at the other two where you have private Explorers, and Public Explorers.

21:48In 1818, in 1909, there were a whole host of expeditions up into the Arctic to discover to discover, to lay out the lands of the Arctic area, to discover a northwest passage around the upper part of Canada to Asia, scientific expeditions to discover the North Pole, the magnetic North Pole, things of that nature. So there were many reasons for exploring an This was an area that wasn't intended for colonization really.

22:44This was explored for commercial purposes, for fishing grounds, hunting grounds, transportation routes, and for scientific purposes. So you have a variety of reasons why people were exploring that particular area. That's for a nice sort of laboratory experiment. It's not very often in economics where we can isolate enough factors to really explore something empirically in an isolated area. But this is about as isolated as you can get. Now, the public sector undertook some of these These explorations and the private sector undertook some of these explorations.

23:37Some of them were profit motivated for commercial purposes, others were for scientific purposes, but there was very often prizes associated with these scientific discoveries, much like the X Prize for space travel. And on top of that, of course, if you were to discover something, you would become famous, You could go on the lecture circuit, you could write a book, you would become a celebrity. So there were a lot of reasons, both economic and non-economic, why people were doing this. There were 57 private expeditions and the other, the public did 35, the public sector did 35 expeditions.

24:36So there's enough on both sides to be able to tell that both the public sector and the private sector were actively involved in exploring the Arctic area. Now one of the big issues about exploring an in an area like this is tragedy. I mean, it wasn't just that you didn't get the prize or you didn't find the island or the North Pole. In many cases, people died on these expeditions. On the public ventures, the average was 5.9 deaths per trip.

25:28In the private sector, there was less than one death per trip. so in the private sector there was a much lower amount of crew deaths than in the public sector ships lost a lot of the ships were destroyed sunk uh... one of the problems they would find is they'd get up there in the Arctic and uh... the ice pack would form around them and the ice would strengthen and basically crush their ship and they'd be of course forced to flee onto the ice pack uh... which is not uh...

26:19all that uh... your chances of survival after that are not too too good there was about one quarter of a ship lost per uh... expedition in the private sector There was more than a half of a ship on average lost in the public sector. In terms of the size of the losses, the public sector actually lost three times the amount of ship tonnage. If you look at the size, consider the size of the ship, the public sector actually lost twice the number of ships, but three times the tonnage.

27:12And scurvy. Scurvy is a disease. I'm sure you're all familiar with this. If you don't have access to vitamin C on a regular basis, over a long period of time, if you don't have vitamin C, your vision becomes blurry, your bones become brittle, your gums begin to bleed and your teeth fall out and then you die. It's a slow painful sickening process. Very often you don't die from it. 13% of private ships experience scurvy on their adventures, whereas in the public sector 47% of the ventures were known to have experienced scurvy.

28:17The actual results are much worse than that because some of these 92 adventures or expeditions we don't know anything about. They didn't say whether they had it or not. Of those ventures where we know whether they said it or not, five of 22 of the private sector experience scurvy. 20 to 25 percent, whereas 14 out of 17 of the public sector ventures experienced scurvy on their expedition, so a very very high percentage of public sector expeditions experienced that disease.

29:08The crew size is very interesting on these ventures in terms of the characteristics of these voyages. The crews in the private sector trips average only 16 members, sometimes as few as 3, whereas in the public sector the average crew size was 70, so a much larger crew for the public Sector, much larger ships as well. The number of ships in the private sector averaged 1.15 ships per expedition. So most of the, you know, couldn't get below one. You got to have So most of the private ventures were a single ship. The public sector averaged 1.63 ships. So they tended to be more than one ship. And the ship sizes were also very different. The private sector averaged 260 tons. The public sector averaged 1.63 tons. The private sector averaged 1.63 tons. The private sector averaged 1.63 tons. The private sector averaged 1.63 tons.

30:29Average 366 tons. So they've got more ships, bigger ships and a larger crew. Now that information is given because one of the pieces of information we don't really have much information about is what their budgets were. We can only presume from the fact that they had more ships, bigger ships and larger crews, that they also had much larger budgets in the public sector. So basically it wasn't the case, I mean it is the case that the public sector adventures were spending more money in order to achieve their prizes.

31:21Now, in terms of prizes, the private sector was successful in 5 out of 57 attempts. So this is a fairly risky business. And the private sector actually got all of the major prizes that were available to win or to discover up in the Arctic.

32:11They discovered the Northwest Passage, they discovered the North Pole, they discovered the Franklin Expedition, which was a public sector expedition that failed. A little bit more on that. The public sector only got one prize out of 35 attempts.

32:42So you have a success rate here of, what, about 9% and 3%. Most of the great tragedies were amongst the public sector expeditions. The Franklin Expedition, which I just mentioned, was from the UK in 1845. life, all ships were lost, all the crew died, there's evidence of widespread cannibalism.

33:28The Greeley Expedition, which was a U.S. expedition of 1881 through 1884, 19 of 25 of the crew The crew died during the expedition, and the DeLong Expedition of 1879 was a privately funded but government-run expedition, it's kind of unusual, the ships were lost and 20 out of 33 of the crew died. It was something that the private sector actually provided the funding for, but the ships and the crew, particularly the crew leadership, were military based.

34:18Now, as far as the general characteristics of these expeditions are concerned, what caused this difference here? What caused the private sector to be safer, less expensive, less dangerous to the crew on a smaller budget, and yet they end up with almost all of the prizes? And what causes that? Well, the first thing you can look at is nationality. There were expeditions from Great Britain, there were expeditions from the United States, there were expeditions from many of the European powers, particularly seafaring nations like Sweden.

35:08But there doesn't seem to be any statistical significance of where these expeditions originated from. That doesn't seem to help explain that British were better sailors or Americans were better sailors. Nothing like that comes out in the evidence. you could look at the experience of the captain how many previous trips to the Arctic had the captain made but that doesn't help explain it either because public sector ship captains or leaders actually averaged more experience in the So that doesn't really explain it either. Money, the amount invested in the expedition, doesn't seem to explain it because the public sector actually had a larger investment in their expeditions than did the private sector.

36:19So what are the reasons? Some of these you would probably be able to guess. The public sector expeditions were less motivated and they had less prepared leaders. So the leaders of the expedition were less prepared and less motivated than the private sector expeditions were.

37:11The public ventures also had poor leadership structures.

37:23And the public sectors were slow to adapt to new information.

37:32Okay, what does that actually mean in real terms? Well, public sector leaders were often appointed to their position, whereas with private sector ventures, the leader was actually three times more likely to be the same guy who came up with the idea in the first place. So it's like, you know, someone should discover the North Pole. I'll go do it. This is my idea. I'm going to lead the ship. Whereas in the public sector, it would be like, you know, someone ought to go up to the Arctic and discover the North Pole. You go do it. That's the difference. Three times more likely to be led by the person who initiated the project.

38:23Another example of the difference here in a more intimate level is that the public sector used clothing that was tight wool clothing. Okay, now you're walking across the ice pack in heavy wool, tight clothing, you're sweating. And your wool clothing is getting wet, and it's below zero out. So your clothes are actually turning to ice at some point. The private sector adopted the native customs of using double-walled animal skin furs so that you had two layers of leather, I guess, with fur in between.

39:19So it was like you're walking around in a giant leather pillow, which is kind of what That's what the Eskimos used, except prettier. The public sector tended to use tents. The private sector used snow houses. Anybody in here grow up in the north where it snows? Well, you probably don't understand this, but if the snow gets high enough, you can actually dig down in there and dig out a little area and lay down there or sleep in there and it's pretty warm.

40:08You've got no wind, you've got no heat loss, and basically the temperature difference between being on top of the snow in the Arctic and in a snow house underneath the snow could probably be 50 or 60 degrees different. That's what the Eskimos did and that's what the private sector adopted. The private sector used dog sleds. So the movies and stories you will see about Arctic exploration are usually following the private sector model. They used dog sleds, snowshoes and Skis, dog sleds, snow shoes, you've seen snow shoes, big wide things that you put onto your shoes so you don't go through the snow and skis.

41:11The public sector used boots and men actually pulled the cargo sleds. You can see that there's quite a more or less obvious disadvantage here to being on a public sector venture. The private sector used fresh meat. They killed animals along the way and ate fresh meat. Where the public sector used salt meat. Where the meat would be purchased, dried with salt, put in containers and carried along with the trip now. What is, does anybody know what the advantage is of fresh meat over salt meat besides the taste?

42:08No hunters, no biologists in here? Yeah, that's true. There's more moisture in the meat, but that wasn't much of a problem. Salt dehydrates you. Salt does dehydrate you. Do you use iron? No, I don't know if there's much of a difference with iron. Well, fresh meat has vitamin C in it, because the animal has to have vitamin C in it. People don't make vitamin C, animals do. That's the one genetic defect that, important genetic defect that we all have as humans, is we don't make vitamin C like everything else on the planet basically.

42:55So they were getting fresh vitamin C all along, whereas the public sector didn't. And also, the more obvious thing is you don't have to carry every ounce of meat with you through the whole trip. You just get it along the way. This information was well known and available and the public sector never adopted. The public sector, in fact, continued to use a flawed open polar sea theory of the Arctic. the open polar sea theory said that that there's a little crust of ice around the top of the earth but once you break through that you're into the open polar sea uh... that just wasn't true the ice got thicker and thicker and heavier and heavier as you went to the north pole or towards the pole and despite knowing this they continue to operate on the basis of this flawed theory a few other things in terms of organizational structures in the private ventures responsibility was delegated still got a couple minutes here responsibility was delegated amongst the crew

44:24where the public sector used a military hierarchy so that if you lost your leader it wasn't like getting your head cut off so you can see that the role of incentives played a very important, very dramatic and in some cases very deadly consequences and the difference between a public and private approach to exploration. In the next class on Friday, we're going to look at actual colonization, actual movement of people, and look at the question, why did the people come and why did they not come to the New World.