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Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Mercantilism was an economic system of trade that spanned from the 16th century to the 18th century.
Mercantilism is based on the principle that the world's wealth was static, and consequently, many European nations attempted to accumulate the largest possible share of that wealth by maximizing their exports and by limiting their imports via tariffs. First popularized in Europe during the s, mercantilism was based on the idea that a nation's wealth and power were best served by increasing exports, in an effort to collect precious metals like gold and silver.
Mercantilism replaced the feudal economic system in Western Europe. At the time, England was the epicenter of the British Empire but had relatively few natural resources.
To grow its wealth, England introduced fiscal policies that discouraged colonists from buying foreign products, while creating incentives to only buy British goods. For example, the Sugar Act of raised duties on foreign refined sugar and molasses imported by the colonies, in an effort to give British sugar growers in the West Indies a monopoly on the colonial market.
Similarly, the Navigation Act of forbade foreign vessels from trading along the British coast and required colonial exports to first pass through British control before being redistributed throughout Europe. Programs like these resulted in a favorable balance of trade that increased Great Britain's national wealth. Under mercantilism, nations frequently engaged their military might to ensure local markets and supply sources were protected, to support the idea that a nation's economic health heavily relied on its supply of capital.
Mercantilists also believed that a nation's economic health could be assessed by its levels of ownership of precious metals, like gold or silver, which tended to rise with increased new home construction, increased agricultural output, and a strong merchant fleet to provide additional markets with goods and raw materials.
Arguably the most influential proponent of mercantilism, French Controller General of Finance Jean-Baptiste Colbert studied foreign-trade economic theories and was uniquely positioned to execute these ideas.
As a devout monarchist, Colbert called for an economic strategy that protected the French crown from a rising Dutch mercantile class. Colbert also increased the size of the French navy, on the belief that France had to control its trade routes to increase its wealth.
Although his practices ultimately proved unsuccessful, his ideas were hugely popular, until they were overshadowed by the theory of free-market economics.
The British colonies were subject to the direct and indirect effects of mercantilist policy at home. Below are several examples:.
Defenders of mercantilism argued that the economic system created stronger economies by marrying the concerns of colonies with those of their founding countries.
In theory, when colonists create their own products and obtain others in the trade from their founding nation, they remain independent from the influence of hostile nations.
Meanwhile, founding countries benefit from receiving large amounts of raw material from the colonists, necessary for a productive manufacturing sector. Critics of the economic philosophy believed the restriction on international trade increased expenses, because all imports, regardless of product origin, had to be shipped by British ships from Great Britain. Press ESC to cancel. Skip to content Home Social studies What was the main goal of the colonies with mercantilism?
Social studies. Ben Davis September 2, What was the main goal of the colonies with mercantilism? What should happen to colonies according to the theory of mercantilism? What is the theory of mercantilism? Who benefits under mercantilism? The Restraining Act banned the export of woolen products out of the colonies, even banning it from being sold from one colony to the next.
By the Restraining Acts had been expanded to forbid the export of beaver hats very fashionable in London at the time and processed iron. How did the colonists respond to the Restraining Acts? Most colonials complied with the system without much complaint and it proved an efficient system immediately.
The colonists had achieved a high standard of living in a short amount of time, which seemed to buy their happiness. More importantly the restrictions on manufacturing affected few Americans. There was so little industrialization in the colonies at the time that it was not a hardship for most colonials. And there were benefits to the mercantile system.
Although the Navigation Acts imposed taxes upon the colonists, it also protected their goods from foreign competition, which kept prices high and created a monopolistic stronghold on the market. The British paid subsidies on some goods, especially on shipbuilding and tobacco, and rice exporters received rebates to help offset the imposed taxes. Despite the benefits, colonials began to complain about the system by the s. The colonists hardest hit were those who traded in the West Indies, where real money could be made in the triangular slave trade.
The British enacted the Molasses Act of , trying to cut down on colonial trade in the West Indies by imposing a huge tax on the sugar and molasses imported into the colonies.
The act would have seriously disrupted colonial trade and while it was made legal, the crown never enforced it. Instead government agents allowed colonials to smuggle in molasses and sugar as contraband, making shippers believe that it was alright to break British law.
But allowing shippers to break the law had other repercussions—it made the colonials distrustful of British intentions. Why would the King enact a law and not enforce it? Claude Lorrain, French seaport at the height of mercantilism. Did you know? Adam Smith.
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