Mercantilism

Definition

Mercantilism is an economic theory and practice that dominated European trade from the 16th to the 18th century, emphasizing that a nation's wealth and power are best served by increasing exports and collecting precious metals in return. This system prioritized state intervention in the economy, with colonies serving as sources of raw materials and markets for finished goods, shaping the economic relationships between Britain and its colonies, especially in the context of colonial policies and resistance.

5 Must Know Facts For Your Next Test

1. Mercantilism viewed colonies primarily as sources of raw materials for the mother country and markets for its finished products, leading to restrictive trade practices.
2. The mercantilist system contributed to rising tensions between Britain and its American colonies, as colonial resistance emerged against trade regulations that favored British interests.
3. Mercantilism encouraged exploration and colonization, as nations sought to expand their resources and markets through territorial acquisition.
4. The French and Indian War was influenced by mercantilist competition, as both Britain and France aimed to control North American territories rich in resources.
5. Ultimately, mercantilism laid the groundwork for economic policies that would be challenged during the American Revolution, leading to a push for free trade and self-determination.

Review Questions

• How did mercantilism influence the economic relationship between Britain and its colonies in the 18th century?
  • Mercantilism shaped the economic relationship between Britain and its colonies by establishing a framework where the colonies were seen primarily as sources of raw materials and markets for British goods. This led to restrictive trade practices, such as the Navigation Acts, which required colonial trade to benefit Britain. As a result, colonists often found these regulations burdensome, contributing to growing discontent and resistance against British control.
• Evaluate the impact of mercantilist policies on colonial resistance movements leading up to the American Revolution.
  • Mercantilist policies played a significant role in fueling colonial resistance movements as they imposed heavy restrictions on trade, limiting economic freedom for the colonies. The imposition of taxes through acts like the Sugar Act further intensified frustrations among colonists who felt that their economic interests were being sacrificed for British profit. This sense of injustice galvanized support for resistance groups like the Sons of Liberty, ultimately leading to collective actions such as boycotts and protests.
• Analyze how mercantilism contributed to the broader context of global trade dynamics during the era of the American Revolution.
  • Mercantilism significantly influenced global trade dynamics by establishing a competitive framework among European powers that extended into their colonies. The focus on maximizing exports while minimizing imports created friction not only between Britain and its colonies but also among rival nations seeking dominance in trade. The American Revolution emerged as a pivotal moment challenging these mercantilist principles, leading to shifts towards free trade ideals that would reshape global commerce in subsequent years.

Related terms

Navigation Acts: A series of laws passed by England in the 17th century to regulate colonial trade, ensuring that trade benefited England and adhered to mercantilist principles.

Colonial Trade: The exchange of goods and services between the colonies and their mother country, which was heavily regulated under mercantilist policies to ensure that profits flowed back to the parent nation.

Balance of Trade: The difference in value between a country's exports and imports, which mercantilists sought to maximize by promoting exports over imports.