Mercantilism

Chapter 16 Standard 10.5: Analyze the patterns and effects of global domination by European powers. explain the relationship between Mercantilism and the drive for colonialism Essential Question What was Mercantilism and what role did it play in colonialism and colonial rivalries?

European Overseas Empires Four phases of European contact with the New World: discovery, exploration, conquest, settlement—to end of 17th c. mercantile empires & great power trade rivalries; slavery; colonial independence—to 1820s 19th-c. empires in Africa & Asia decolonization, mid- to late 20th c. source of European world domination: technology (ships & guns)

Mercantilist Goals underlying economic theory of 18th-c. empires international trade as zero-sum game; whoever gets the most gold wins colonies meant to trade exclusively with home country; hard to enforce because it was more profitable to trade with other colonies

Characteristics of Mercantilism “Bullionism”  the eco. health of a nation could be measured by the amount of precious metal [gold or silver] which it possessed. ‘Hard’ money was the source of prosperity, prestige, and strength for a nation. Bullionism dictated a “favorable balance of trade.” Export more than you import [a trade surplus]. High tariffs on imported manufactured good. Low tariffs on imported raw materials. Each nation must try to achieve economic self-sufficiency. Those founding new industries should be rewarded by the state.

Characteristics of Mercantilism Thriving agriculture should be carefully encouraged. Less of need to import foods. Prosperous farmers could provide a base for taxation. Sea power was necessary to control foreign markets. Less need to use the ships of other nations to carry your trade goods. Your own fleet adds to the power and prestige of the nation. Impose internal taxes of all kinds.

Characteristics of Mercantilism Colonies would provide captive markets for manufactured goods & sources of raw materials. Trade is a “zero-sum” game. A nation can gain in international trade only at the expense of other nations. Manufactured goods Mother Country Colony Raw materials Cheap labor

Characteristics of Mercantilism A large population was needed to provide a domestic labor force to people the colonies. Luxury items should be avoided They took money out of the economy unnecessarily. State action was needed to regulate and enforce all of these economic policies. State-sponsored trade monopolies.

Who Benefited Most From Mercantilism? Monarchs. Merchant capitalists. Joint-stock companies. Government officials.

Impact of Mercantilism mid-18th c. renewal of European warfare: Austria vs. Prussia over dominance of central Europe Great Britain vs. France for commercial & colonial supremacy outcomes: Prussia emerges as great power, Great Britain gains world empire peace results in restructuring of taxation & finance, leading in turn to: American Revolution Continental enlightened absolutism continuing French financial crisis reform of Spanish South American empire