1. Mercantilism

2. Mercantilism
An economic system where a nation establishes colonies to provide raw materials and serve as a market for manufactured goods creating a favorable balance of trade for that country which in turn increases that nation’s wealth and power.

3. Goals of Mercantilism To become wealthiest, most powerful nation
Become self-sufficient = meet all needs within the empire
Develop favorable balance of trade
Export more than import = profit

4. Exporting more than you import
Favorable Balance of Trade
Exporting more than you import
Exports: goods that are sent from your country to another or to your colony to be sold
Imports: goods brought into your country from another country or from your colony

5. Favorable Balance of Trade pg. 52 in Textbook

6. Mercantilism in Effect
Establish colonies
Build colonial empire to provide base of raw materials and market for manufactured goods
Develop strong military
Strong army and navy to defend empire
Navy especially important to protect trade
Make rules/policies
Must maintain control over colonies and protect from foreign interference

7. MERCANTILISM COLONIES ENGLAND $$$ RESOURCES TIMBER IRON FISH
MANUFACTURED GOODS
ENGLAND
INDIGO
RICE
COTTON

8. French Mercantilism

9. Purpose of Colonies/Benefits to Mother Country
Raw materials for manufacturing industry or re-export (trade)
Markets for manufacturing goods
Growth of merchant fleet
Additional bases for Navy

10. Benefits for Colonies
Bounties: incentive payments to encourage production of highly desired goods (tobacco)
Steady market for raw materials & cash crops
Defense -> protect colonies
Shipbuilding industry developed in colonies

11. Enforcement of Mercantilism
Restrictions on buying
Buy only from mother country; duties on foreign goods
Restrictions on selling
Could only ship/sell to mother country(enumerated goods)
Restrictions on shipping
All trade only on mother county’s ships, all goods shipped through mother country’
Restrictions on manufacturing
Prohibited in colonies: keep colonies dependent on mother country, prevent competition (monopoly)

12. Cons of Mercantilism
Limited profits of colonists (threatened prosperity)
Foreign goods more expensive (taxes)
Colonists resentful of restrictions
Colonists treated as inferiors – “colonials”
Need for cheap labor leads to slavery

13. Viewpoint on Mercantilism Thomas Mun
“Although a kingdom may be enriched by gifts received, or by purchases taken from some other nations, yet these things are uncertain and of small consideration when they happen. The ordinary means therefore to increase our wealth and treasure is by foreign trade, where we must observe this rule: to sell more to strangers yearly than we consume of theirs in value.”

14. Viewpoint on Mercantilism Adam Smith
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer. And it seems to consider production and not consumption, as the ultimate end of all industry and commerce.”

15. QuickWrite #4
The mercantilist system would/would not be an effective system to a country and its colonies because…