What Is Mercantilism?
As Europe transitioned into the era of overseas empires, states adopted Mercantilism—an economic philosophy rooted in the belief that the world’s wealth was finite. In this zero-sum view of global economics, one nation’s gain was another’s loss.
To compete for dominance, European states aimed to:
- Maximize exports and minimize imports
- Accumulate bullion (gold and silver)
- Use colonies to enrich the mother country.
Mercantilism wasn’t just an economic theory—it became a tool of state power. Governments intervened directly in the economy to control trade and secure colonial resources. Colonies were restricted from trading with other nations and were expected to supply raw materials to the home country while also serving as exclusive markets for finished goods.
This shift in thinking changed how nations approached commerce. Previously, trade had been a more private and local enterprise, but now it became nationalized and strategic, often enforced through economic warfare and restrictive trade laws.
Examples of Mercantilist Policy
France: Colbert and Economic Centralization
Under King Louis XIV, France’s economy was shaped by Jean-Baptiste Colbert, the king’s finance minister and a staunch mercantilist. Colbert believed that France’s power depended on a favorable balance of trade and worked to increase domestic manufacturing while reducing reliance on foreign imports.
- Colbert expanded the French navy and invested in infrastructure like roads and canals to boost internal trade.
- He offered subsidies to industries like textiles, shipbuilding, and glass.
- He imposed high tariffs on foreign goods and restricted imports to protect French industry.
- Colbert also supported the establishment of overseas trading companies (like the French East India Company) and strengthened France’s control over its colonies.
Through these policies, France became a model for state-directed economic expansion and aggressive trade protectionism in Europe.
England: Navigation Acts and Trade Control
In England, Parliament passed the Navigation Acts in the 17th century to assert economic dominance over colonial trade.
- These laws required goods imported to England or its colonies to be carried on English ships.
- Certain valuable goods like sugar and tobacco could only be exported to England, forcing colonial producers to sell to British merchants at set prices.
- These acts were aimed at cutting the Dutch out of transatlantic trade and ensuring that English colonies supported the home economy.
The Navigation Acts reflected the broader trend of mercantile warfare, in which economic regulation was used to weaken rivals and expand imperial power. Conflicts like the Anglo-Dutch Wars were sparked by these tensions.
Colonialism and Global Trade
Mercantilism fueled imperial expansion and reshaped the global economy. Colonies became not only sources of raw materials like sugar, tobacco, and precious metals but also captive markets for European manufactured goods.
The Columbian Exchange intensified this transformation by transferring crops, animals, and diseases between the Old and New Worlds. Foods like potatoes and corn boosted Europe’s population, while crops like sugar and cotton became the backbone of plantation economies in the Americas.
This economic system increased wealth in Europe, but at a staggering human cost. Plantation agriculture, fueled by European demand, created a global system of forced labor and slavery.
The Growth of Consumer Culture
As goods like chocolate, sugar, coffee, and tobacco became more affordable and available, they were no longer exclusive to elites. A consumer culture emerged, reshaping social habits and driving further demand for goods. Even the working and middle classes began to desire—and afford—these products, creating what historians call the early Modern Consumer Revolution.
This growing demand in turn reinforced colonial exploitation. European states expanded plantations, increased slave imports, and fought wars to protect their colonial trade networks.
Triangular Trade and the Middle Passage
At the heart of this new global economy was the Triangular Trade, a system of transatlantic exchange between Europe, Africa, and the Americas:
- Europe exported manufactured goods (like weapons and textiles) to Africa.
- Africa supplied enslaved people, who were transported across the Middle Passage to the Americas.
- The Americas sent raw materials (sugar, tobacco, cotton, coffee) back to Europe.
The Middle Passage was the most brutal leg of this journey. Packed into overcrowded ships, enslaved Africans endured unspeakable conditions—starvation, disease, and abuse—resulting in high mortality. This horrific system supported Europe’s growing economies but devastated African societies and created long-lasting legacies of racial inequality and displacement.
Economic Impact on Europe
European economies were fundamentally reshaped by mercantilist policies and global trade. The wealth generated from colonies, plantations, and trade financed militaries, bureaucracies, and infrastructure, strengthening the absolutist states of the 17th and 18th centuries.
Additionally:
- The rise of joint-stock companies (like the British and Dutch East India Companies) allowed merchants and investors to share risk and profit, accelerating overseas expansion.
- States increasingly used tariffs, monopolies, and subsidies to direct economic growth.
- The bourgeoisie (urban middle class) gained power through commerce and finance, challenging the traditional aristocracy and laying the groundwork for future social changes.
Although Europe prospered under mercantilism, its wealth was built on violent exploitation. Colonized regions were drained of resources, and millions of enslaved people suffered under the economic systems that made Europe rich.
🎥 Watch: AP Euro - Economics & Society (1450-1789)
Vocabulary
The following words are mentioned explicitly in the College Board Course and Exam Description for this topic.
| Term | Definition |
|---|---|
| Agricultural Revolution | The 18th-century transformation in farming practices and productivity that increased food supply, reduced famines, and enabled population growth. |
| consumer culture | A society organized around the production and consumption of goods and services, enabled by mass production, new technologies, and increased disposable income, featuring domestic comforts like electricity, indoor plumbing, and synthetic materials. |
| European-dominated worldwide economic network | The global system of trade and commerce centered on European commercial interests, connecting Europe, Africa, the Americas, and Asia from the 17th century onward. |
| finished goods | Manufactured products produced in Europe and traded in colonial and foreign markets as part of commercial networks. |
| industrial revolution | The period of rapid industrialization and mechanization that began in Great Britain and spread to continental Europe, fundamentally transforming economic and social life. |
| mercantilist policies | Economic policies pursued by European states that aimed to accumulate wealth and power by drawing resources from colonies and maintaining a favorable balance of trade. |
| Middle Passage | The forced voyage across the Atlantic Ocean that transported enslaved Africans to the Americas, characterized by brutal conditions and high mortality rates. |
| raw materials | Unprocessed natural resources extracted from colonies and foreign lands that were used in European commercial and industrial enterprises. |
| transatlantic slave-labor system | The forced labor system that transported enslaved Africans across the Atlantic to work in colonies, particularly in the Americas, expanding significantly in the 17th and 18th centuries. |
| Triangle trade | A three-part transatlantic trading system in which goods, enslaved people, and raw materials were exchanged between Europe, Africa, and the Americas. |
Frequently Asked Questions
What is mercantilism and how did it work in Europe?
Mercantilism was the dominant economic idea in Europe (1600s–1700s) that held a nation’s wealth = its stock of precious metals (bullion). States used heavy regulation to increase exports, limit imports, and get gold/silver—through tariffs, subsidies, colonies, and laws like the English Navigation Acts. Colonies supplied raw materials (sugar, tobacco, timber) and served as captive markets for mother-country goods; joint-stock companies (Dutch/British East India Companies) ran long-distance trade. That system encouraged the triangular trade and the expansion of the transatlantic slave-labor system to produce plantation commodities. Mercantilism helped grow European manufacturing, consumer culture, and global networks but also raised rivalries between states. For AP exam purposes, connect mercantilism to bullionism, Navigation Acts, joint-stock companies, triangular trade, and consumer/plantation changes (CED keywords). Review the Topic 3.4 study guide for clear examples (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice problems (https://library.fiveable.me/practice/ap-european-history).
What was the Middle Passage and why was it so brutal?
The Middle Passage was the transatlantic leg of the triangle trade that carried enslaved Africans from West Africa to the New World as part of the Atlantic slave-labor system (a key example in Topic 3.4). Ships packed people into cramped, filthy holds for weeks or months; overcrowding, poor ventilation, disease, malnutrition, and lack of sanitation caused very high mortality rates. Captives were often shackled, separated from families, and subjected to brutal treatment by crew; resistance was met with harsh repression. Its brutality matters for AP Euro because it ties mercantilist extraction, plantation economies (sugar, tobacco), and the growth of consumer culture in Europe to human suffering—useful for contextualization and evidence in short-answer or DBQ/LEQ essays on economic developments (Unit 3). For the Fiveable Topic 3.4 study guide, see (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE). For broader unit review and practice questions, check (https://library.fiveable.me/ap-european-history/unit-3) and (https://library.fiveable.me/practice/ap-european-history).
How did the triangle trade system actually function between Europe, Africa, and the Americas?
The triangular trade was a three-leg commercial network that tied Europe, Africa, and the Americas together under mercantilist logic. 1) European ships left with manufactured goods (textiles, guns, metalwares) and sailed to West Africa. 2) There they traded goods for enslaved Africans; the Middle Passage carried those captives across the Atlantic to New World plantations. 3) Plantation economies produced raw materials (sugar, tobacco, cotton, coffee, and molasses/rum) that sailed back to Europe as colonial exports and as inputs for European industry and consumer markets. States and companies (Navigation Acts, joint-stock companies) regulated routes to increase bullion and favorable balances of trade. The system fueled the transatlantic slave-labor system, expanded consumer culture in Europe, and fed mercantilist aims (bullionism, colonial markets). For more detail tied to the AP CED keywords (Middle Passage, plantation system, Navigation Acts), check the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE). Practice questions are at (https://library.fiveable.me/practice/ap-european-history).
Why did European countries think mercantilism was a good economic policy?
They thought mercantilism was smart because it tied wealth to state power. Mercantilist ideas (bullionism, favorable balance of trade) said a country should export more than it imported to accumulate bullion and strengthen the treasury—important for paying armies, navies, and bureaucracies in the 17th–18th centuries. Colonies were seen as sources of raw materials, captive markets, and profit (e.g., sugar, tobacco) so navigation acts and joint-stock companies protected trade and funneled resources back to the mother country. Mercantilism also encouraged the transatlantic slave-labor system and triangular trade to supply plantations and European consumer demand. For AP you should link mercantilism to state-building, the Consumer Revolution, and sources like Navigation Acts on multiple-choice/short-answer or as evidence in DBQs/LEQs (Unit 3 LO C). Review this topic’s study guide for concise examples (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions at (https://library.fiveable.me/practice/ap-european-history).
I'm confused about how colonies were supposed to benefit the mother country - can someone explain this simply?
Colonies helped mother countries under mercantilism by supplying cheap raw materials, serving as guaranteed markets, and sending back precious metals (bullion)—all meant to increase national wealth and power. Practically: colonies produced sugar, tobacco, timber, and cotton that European manufacturers used (lower costs), and they were often forced to buy finished goods from the mother country (captive markets). Governments backed this with policies like Navigation Acts and supported joint-stock companies (e.g., British/Dutch East India companies) to control trade and profits. That system fed the Triangle Trade and the transatlantic slave-labor system, and helped spark Europe’s consumer and industrial changes in the 17th–18th centuries (CED KC-2.2.II and keywords). For AP prep, knowing these links helps on short-answer and LEQ prompts about mercantilism and economic continuity/change. See the Topic 3.4 study guide on Fiveable for a quick review (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and try practice questions (https://library.fiveable.me/practice/ap-european-history).
What's the difference between mercantilism and capitalism?
Mercantilism (17th–18th c., Topic 3.4) is a state-centered, zero-sum economic policy: monarchies sought to increase national power by accumulating bullion, regulating trade (Navigation Acts, tariffs), developing colonies for raw materials and captive markets, and supporting joint-stock companies (KC-2.2.II.A; keywords: bullionism, Navigation Acts, triangular trade). Capitalism is market-centered: private property, profit motive, competition, wage labor, and free markets drive production and investment. Adam Smith criticized mercantilism and argued for free trade and specialization—ideas that helped shift Europe toward capitalist economies and the consumer/industrial changes after 1750. For the AP exam, you should be able to explain mercantilist policies and how they contrast with emerging capitalist principles (use Topic 3.4 study guide: https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE). Practice applying this comparison on AP-style short answers and essays (practice questions: https://library.fiveable.me/practice/ap-european-history).
How did products like sugar and tobacco change European society and culture?
Sugar and tobacco reshaped European society by fueling new consumption habits, economic systems, and social rituals. As luxury imports turned into staples, they drove the Consumer Revolution—sugar sweetened daily diets and tea/coffee/tobacco created new social spaces (coffeehouses, tea drinking) and fashions. Their demand expanded the transatlantic triangular trade and the plantation system, which increased the transatlantic slave-labor system and the Middle Passage (a major continuity/change in global economic networks per the CED). States and merchants used mercantilist policies and joint-stock companies to control these profitable markets and accumulate bullion. Culturally, these products changed class behavior (conspicuous consumption), gender norms around socializing, and public life (political discussion in coffeehouses). On the AP exam you might see these as causes/effects or continuities/changes (Unit 3 LO C). For a focused review see the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and more unit review/practice questions at (https://library.fiveable.me/ap-european-history/unit-3) and (https://library.fiveable.me/practice/ap-european-history).
Why did the demand for New World products lead to more slavery?
Because European consumer demand for sugar, tobacco, cotton, and coffee exploded, colonies needed huge, reliable labor forces to run large-scale plantation systems that produced those crops for export. Under mercantilist policies (KC-2.2.II.A/C), European states and joint-stock companies funneled resources and markets into colonies, encouraging monoculture plantations that required year-round, intensive labor. Native populations were devastated by disease and enslaved labor from Europe wasn’t sufficient, so planters turned to the transatlantic slave trade and the Middle Passage to supply millions of African laborers. The triangular trade made this profitable: European goods for African captives, captive labor for New World commodities, and commodities back to Europe (KC-2.2.II.B; Plantation System; Atlantic Slave Trade). This connection is a key AP topic—review the Topic 3.4 study guide on Fiveable (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions (https://library.fiveable.me/practice/ap-european-history) to prep for DBQ/LEQ evidence.
What were the long-term effects of the transatlantic slave trade on Africa?
Long-term effects of the transatlantic slave trade on Africa were deep and lasting. Demographically, it removed an estimated millions of people (mostly young men), producing population loss and gender imbalances that hurt family formation and labor structures. Politically and socially, the trade fueled increased raiding, warfare, and state centralization in some regions as rulers profited from selling captives—bringing guns and instability and weakening traditional institutions. Economically, reliance on slave exports distorted local economies, discouraged diversified industry and investment, and helped create long-run underdevelopment that made parts of Africa more vulnerable to later European imperialism. Culturally, communities were fragmented and trauma persisted across generations. These changes link directly to the CED’s KC-2.2.II about the Atlantic slave-labor system and Europe’s extraction of labor and resources. For more AP-aligned review, see the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions (https://library.fiveable.me/practice/ap-european-history).
How do I write a DBQ essay about the economic impact of European colonialism?
Start with a clear thesis that answers the prompt (claim + line of reasoning)—e.g., “European colonialism reshaped European economies by supplying bullion and raw materials that fueled mercantilist states, expanded slave-based plantation production, and sparked a consumer revolution, while also creating uneven regional growth.” In your intro quickly contextualize (mercantilism, bullionism, Navigation Acts, joint-stock companies, 17th–18th c. Atlantic economy). During the 15-minute reading, pick 4+ documents to use and note POV/audience for at least two (how a merchant, colonial governor, or abolitionist’s stance shapes evidence). Use 4+ docs to support subclaims: bullion → state finance; plantations & Triangular Trade → slavery and labor; New World crops & consumer goods → changing diets and consumer culture. Add 1+ piece of outside evidence (Navigation Acts, Dutch/British East India Companies, Middle Passage, enclosure/cottage industry). Show complexity: compare winners/losers, short vs long-term effects, and causation vs contingency. Remember AP DBQ rubric tasks (thesis, context, use ≥4 docs, outside evidence, sourcing for ≥2 docs, complexity). For review examples and practice, see Fiveable’s Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and Unit 3 resources (https://library.fiveable.me/ap-european-history/unit-3). For extra practice questions, use (https://library.fiveable.me/practice/ap-european-history).
Did mercantilism actually make European countries richer or was it just exploitation?
Short answer: Mercantilism did make European states richer in specific ways, but that “richness” was largely built on extraction and exploitation. Why: Mercantilist policies (bullionism, Navigation Acts, support for joint-stock companies like the Dutch/British East India Companies) boosted state revenues, accumulated bullion, expanded merchant shipping, and funded armies/navies—helping states centralize power and finance wars. Colonies supplied cheap raw materials (sugar, tobacco) and captive labor via the Atlantic slave trade, which fed European manufacturers and consumer demand (consumer revolution). Those gains concentrated wealth in metropoles, merchant elites, and state coffers. Why it’s exploitation: Colonial economies were reorganized for European benefit—plantation systems, the triangular trade, and forced labor caused massive human suffering and stunted local development. Long-term: mercantilism helped create the conditions for Europe’s Agricultural and Industrial Revolutions, but benefits were unequal. For AP prep: you should be able to explain continuities/changes 1648–1815 using examples (Navigation Acts, joint-stock companies, slave-labor system). See the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and more unit review (https://library.fiveable.me/ap-european-history/unit-3). Practice with 1000+ AP questions here: (https://library.fiveable.me/practice/ap-european-history).
What caused the consumer revolution in Europe during the 1600s and 1700s?
The consumer revolution of the 1600s–1700s happened because supply, demand, money, and culture all changed together. Overseas trade (Columbian Exchange, sugar, tea, coffee, tobacco) and mercantilist empires funneled new goods and bullion into Europe, creating variety and status items. Rising real incomes, urban growth, and expanding credit (banking, joint-stock companies, and more available consumer credit) let middling families buy non-essentials. The plantation system and Atlantic trade (including the triangular trade and slave labor) increased volume and lowered prices of colonial goods. Growth of cottage industry and better distribution meant goods reached towns; advertising and changing social norms made consumption a marker of identity. For AP Euro, connect these causes to KC-2.2.II (overseas networks, mercantilism, colonial products) and use examples on the exam. For a focused recap, see the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions (https://library.fiveable.me/practice/ap-european-history).
How did new foods from the Americas affect European population growth?
New foods from the Americas—especially potatoes and maize—dramatically raised Europe’s food supply and calories per person, which helped drive sustained population growth from the 17th into the 18th century. Potatoes grew well on poor soils and produced more calories per acre than many old crops, so peasant families and urban workers had more reliable food. More food meant lower death rates, better childhood survival, and a bigger labor pool for expanding towns and proto-industrial enterprises. This change is part of the Columbian Exchange and the transatlantic economic network the CED highlights (KC-2.2.II.D). On the AP exam, use this as specific evidence in short-answer or DBQ/LEQ responses about economic change, demographic effects, or mercantilist networks. For review, see the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and try related practice questions (https://library.fiveable.me/practice/ap-european-history).
I missed class - what's the connection between mercantilism and the agricultural revolution?
Mercantilism and the Agricultural Revolution connect because mercantilist goals (more exports, bullion, colonial resources) pushed changes in how Europe produced food. States and merchants demanded cash crops, raw materials, and exportable surpluses—so landowners enclosed common land, expanded the plantation system, and adopted new crops from the Columbian Exchange (potatoes, maize). That raised agricultural productivity, freed labor for cottage industry, supported population growth, and created excess grain and capital that fueled the Consumer Revolution and early industrial activities. For the AP CED: this shows continuities/changes in commercial/economic development (Unit 3 LO C): mercantilism drew on colonies (KC-2.2.II.A, D, E) and helped drive enclosure and the cottage industry shifts listed in the keywords. Review this topic in the Fiveable study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions (https://library.fiveable.me/practice/ap-european-history) to prep for short-answer and LEQ/DBQ connections.
Why were raw materials from colonies so important for European industrial development?
Colonial raw materials mattered because they fed Europe’s growing commercial and proto-industrial system under mercantilism. Colonies supplied cheap, non-European inputs—sugar, tobacco, cotton, timber, and precious metals—that European manufacturers and merchants used to lower costs, expand production, and create new consumer goods. That steady supply supported cottage industries and later larger workshops, helped develop joint-stock trade firms (East India companies), and created markets for finished European products. Plantation crops and bullion also fueled the Consumer Revolution by increasing variety and demand, while the triangular trade and slave-labor systems supplied the labor and volume colonies needed (CED KC-2.2.II, A–E). For the AP exam, connect these economic links to mercantilist policy (Navigation Acts, bullionism) and show cause-and-effect in short answers or essays. For a focused review, see the Topic 3.4 study guide (https://library.fiveable.me/ap-european-history/unit-3/economic-mercantilism/study-guide/7jDVSULA0PVUyqjVHqtE) and practice questions (https://library.fiveable.me/practice/ap-european-history).