1. Mercantilism and Triangular Trade
Daffy Duck as greedy coward, 21 seconds 1

2. Overview
Mercantilism is an economic system practiced by European countries from around 1600 through the 1700’s.
It established patterns of trade that helped shape the 13 colonies. 2

3. Goals
First: Create a favorable balance of trade. Each country wanted to EXPORT more products than it IMPORTED.
Second: You want to maximize the amount of gold and silver in your country 3

4. Weakness
Each country in Europe practiced mercantilism. Thus, nobody really wanted to trade with each other, as that was seen as strengthening your enemy.
Some trade could not be avoided, but it was not enough to grow the economy and keep people employed. 4

5. Solution
Colonies provided the answer. Colonies provided a market for England’s industrial goods such as metal tools and cloth. 5

6. Solution
To feed English industry, the colonies provided raw materials, such as lumber, iron, and food. 6

7. Making it Work
For Mercantilism to work, you can’t let your colonies trade or export goods to other countries.
England passed laws to control colonial trade. 7

8. Navigation Acts
The Navigation Acts of 1651,1660 & 1663 were the earliest attempts by England to control colonial trade.
They said all goods had to be shipped on ships built in England or its colonies, and that the colonies could not trade with foreign countries. 8

9. Navigation Act of For the increase of shipping and encouragement of the navigation of this nation, wherein, under the good providence and protection of God, the wealth, safety, and strength of the kingdom is so much concerned…from thence forward, no goods or commodities whatsoever shall be imported into or exported out of any lands, islands, plantations, or territories to his Majesty belonging or in his possession…in Asia, African, or America, in any other ship or ships, vessel or vessels whatsoever, but in such ships or vessels as do truly and without fraud belong only to the people of England…or are of the built of and belonging to any of the said lands, islands, plantations, or territories, as the proprietors and right owners thereof, and whereof the master and ¾ of the mariners at least are English.
NOTE: The text in red above helped shipbuilding in the Colonies and in New England in particular. Some of the southern colonies like Maryland also built ships, but they exhausted the local lumber supply and so had to have lumber brought from farther distances, which increased costs.

10. Effect on Colonies
Under mercantilism, the 13 colonies developed little industry or the ability to manufacture finished goods such as tools and firearms.
The economy was focused on agriculture and the production of raw materials such as lumber and iron ore (the aforementioned ship building an exception). 10

11. Effects on Colonies
Smuggling became common as colonists resisted these trade rules that decreased their imports.
The colonists learned early to defy the authority of the English government. Salutary neglect after the Glorious Revolution facilitated this. 11

12. Salutary neglect: Salutary means healthy
Salutary neglect: Salutary means healthy. England lightened up on enforcing the Navigation Acts while it focused on its conflict with France. So this put off for a time the conflict that will result when England again tries to enforce the Navigation Acts.
Glorious Revolution – the English, who had been suppressing Catholics since Henry the VIII in 1530s got a Catholic King in 1685, James II. This didn’t sit well with Parliament, so in 1688 they invited his son- in-law and nephew, William III of Orange from the Netherlands to take over with his wife and James’ daughter Mary. This they did, eliminating the possibility that a Catholic king might try to take England back to Catholicism.

13. Triangular Trade
Triangular trade grew out of a combination of the slave trade and the Mercantilism economic policy of England. 13

14. Triangular Trade
The demand in England for raw materials and agricultural products such as rice, indigo, tobacco, and cotton helped fuel the transatlantic slave trade between Africa and the Americas. 14

15. How it got its name
In triangular trade, each trade route had three stops. Thus, a triangle is formed when plotted on a map. 15

16. Trade Route #1 From Africa, slaves are sent to the West Indies.
From the West Indies, molasses and sugar are sent to the 13 colonies.
From the 13 colonies, raw iron and rum are shipped to Africa.
These are traded for more slaves, and the process starts over again. 16

17. Trade Route #2
From England, pots, pans, firearms, and rum are shipped to Africa.
From Africa, slaves are shipped to the colonies in America.
From the colonies, lumber, iron, grain, and rum are shipped to England. 17

19. Impacts of Mercantilism: England
England’s economy thrives due to its ability to sell manufactured products to the colonies.
The large amount of wealth generated will help fund wars against France and Spain for control of the Americas. 19

20. Impacts of Mercantilism: Colonies
Very little industry is developed due to restrictions placed by England.
Smuggling becomes common as colonists try to get around trade restrictions. The colonists learn to defy the authority of the English government.
Economy is based on supplying raw materials to feed English industry. 20

21. Impacts of Mercantilism: Africa
A huge migration of human beings take place, as Africans flee the slave traders and move inland.
Traditional cultures are disrupted due to the introduction of firearms and manufactured goods.
Many areas on the coast see a dramatic decrease in population due to the slave trade. 21

22. End result
Mercantilism contribute to the tensions between England and its American colonies that end in the Revolutionary War.
Mercantilism will be replaced by capitalism and somewhat free trade (you will learn about tariffs later in this course).
Adam Smith was a key proponent of capitalism. His book, “An Inquiry into the Nature and Causes of the Wealth of Nations (1776) which is usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics.
We will talk more about him in our next lesson.