1. Exploration and Expansion Section 3 Wealth measured by amount of gold, silver possessed by nation Mercantilists believed there was fixed amount of wealth in world For one nation to become wealthier, more powerful—had to take wealth, power away from another nation Mercantilism led to intense competition between nations Intense Competition Founding of colonies, new goods in Europe led to significant changes 1500s, Europeans developed new economic policy, mercantilism Nation’s strength depended on its wealth Wealthy nation had power for military and expanded influence New Economic Policy Mercantilism

2. Exploration and Expansion Section 3 Mercantilists built wealth two ways—extract gold, silver from mines at home, in colonies; sell more goods than it bought from foreign countries, creating favorable balance of trade With favorable balance of trade, country received more gold, silver from other nations than it paid to them Increased its power; weakened foreign competitors To achieve favorable balance of trade, could reduce amount of imports by placing tariffs on imported goods Importer paid tariff, added cost to price of good Imported goods more expensive, discouraged people from buying Imports Encourage exports that could sell for higher prices than raw materials Countries encouraged manufacturing and export of manufactured goods Governments provided subsidies to help start new industries Exports Balance of Trade

3. Exploration and Expansion Section 3 Controlling Sources Third approach for favorable balance of trade, controlling sources Nation that controlled own sources would not need to import from competing nations Why important –Country did not need to spend own money to obtain raw materials –Foreign countries considered rivals, might become active enemy, cut off supply of raw materials European nations worked to become more self-sufficient Nations began to establish colonies

4. Exploration and Expansion Section 3

5. Exploration and Expansion Section 3 Building colonial empires essential to mercantilist system European powers wanted to establish colonies –To control sources of raw materials –To provide new markets for manufactured goods To mercantilist, colonies existed only to benefit home country Colonies Monarchs restricted economic activities in colonies Colonists could not sell raw materials to other countries Could not buy manufactured goods from other nations Strict laws forbade colonies from manufacturing goods Forced to buy only from home country Strict Laws Colonies

6. Exploration and Expansion Section 3 Impact of colonization not felt throughout society Rural life continued as it had for centuries Generations would pass before many began to grow new foods from Americas Most people remained poor (General standard of living in Europe was the same or slightly worse in 1700s than in 1500s) Rural Life Changes taking place because of colonization Had impact on European societies Towns and cities grew as business activity increased New class of wealthier merchants emerged, began to wield more power in their towns (growth of bourgeoisie) Many Changes Impact on Society

7. Exploration and Expansion Section 3 Summarize What were the main principles of mercantilism? Answer(s): nation's strength depended upon its wealth; needed a favorable balance of trade