Mercantilist Era

Definition

The Mercantilist Era refers to the period from the 16th to the 18th century when European nations adopted mercantilism as their dominant economic policy. This system emphasized the accumulation of wealth through trade and the belief that a nation's power depended on its wealth, particularly gold and silver. Countries sought to achieve a favorable balance of trade by exporting more than they imported, leading to increased government involvement in economic affairs and colonial expansion.

5 Must Know Facts For Your Next Test

1. Mercantilism promoted state intervention in the economy, leading to the establishment of monopolies and trade regulations that favored domestic production.
2. Colonial expansion was vital during the Mercantilist Era, as European powers sought new lands for resources and markets to boost their economies.
3. Countries engaged in fierce competition for colonies, leading to conflicts and rivalries among European powers, such as the Anglo-Dutch Wars.
4. The concept of bullionism, which held that a nation's wealth was best measured by its stock of precious metals, heavily influenced mercantilist thought.
5. The decline of mercantilism in the late 18th century was largely due to the rise of classical economics, which advocated for free trade and minimal government intervention.

Review Questions

• How did the principles of mercantilism influence European colonial policies during the Mercantilist Era?
  • Mercantilism heavily influenced European colonial policies by encouraging nations to expand their territories to secure resources and establish markets for their goods. Countries believed that by controlling colonies, they could ensure a favorable balance of trade, thus increasing national wealth through exclusive trade rights and resource extraction. This led to intense competition among European powers for territorial acquisitions and shaped international relations during this era.
• In what ways did mercantilist policies contribute to the economic rivalry between European nations?
  • Mercantilist policies fostered economic rivalry by promoting the idea that national strength was directly tied to wealth accumulation. Nations sought to out-export each other while minimizing imports, leading to tariffs and trade barriers against rival countries. This competition resulted in conflicts over trade routes and colonies, exemplified by wars such as the Seven Years' War, as countries tried to dominate global trade networks.
• Evaluate the long-term impact of the Mercantilist Era on modern economic practices and theories.
  • The Mercantilist Era laid foundational ideas that influenced modern economic practices, such as protectionism and government involvement in trade. While mercantilism itself eventually declined with the rise of classical economics advocating free trade, many nations still implement protective measures today. The legacy of colonialism initiated during this era also shaped global economic dynamics and inequalities that persist in contemporary international relations, highlighting how historical economic theories continue to resonate in today's policies.

Related terms

Balance of Trade: The difference in value between a country's exports and imports, which mercantilism aimed to keep positive by maximizing exports and minimizing imports.

Colonialism: The practice of acquiring and exploiting territories for economic gain, which was central to mercantilist policies as nations sought new resources and markets.

Protectionism: An economic policy that restricts imports to protect domestic industries, often implemented during the Mercantilist Era through tariffs and trade regulations.