Mercantilism

Definition

Mercantilism is an economic theory that emphasizes the role of government in managing the economy to increase national power, primarily through regulating trade and accumulating wealth, especially gold and silver. This theory was crucial in shaping the economic policies of European colonial powers, influencing their trade practices, colonial structures, and the relationships they developed with their colonies.

5 Must Know Facts For Your Next Test

1. Mercantilism dominated European economic thought from the 16th to the 18th centuries, prioritizing the accumulation of precious metals as a measure of national wealth.
2. Colonies were seen as vital to a mercantilist economy, providing raw materials to the mother country and serving as markets for finished goods.
3. Under mercantilism, trade restrictions and tariffs were commonly imposed to protect domestic industries and limit competition from foreign products.
4. The competition between colonial powers often led to conflicts and wars as nations sought to expand their influence and control over lucrative trade routes.
5. The principles of mercantilism contributed to the economic tensions that played a significant role in the lead-up to the American Revolution, as colonies resisted British trade regulations.

Review Questions

• How did mercantilist policies shape the economic structure of the American colonies?
  • Mercantilist policies shaped the economic structure of the American colonies by enforcing trade restrictions that required colonists to export raw materials exclusively to their mother country and import finished goods solely from it. This created a system where colonial economies were heavily dependent on Britain for manufactured products while providing raw resources such as tobacco and timber. As a result, this structure limited colonial economic autonomy and fostered resentment towards British control.
• In what ways did colonial trade patterns reflect mercantilist principles during the 17th and 18th centuries?
  • Colonial trade patterns during the 17th and 18th centuries were heavily influenced by mercantilist principles, characterized by a triangular trade system that linked Europe, Africa, and the Americas. This system allowed European powers to exploit colonial resources while enforcing strict trading regulations that prioritized their own economic interests. Goods produced in the colonies would be shipped back to Europe for profit, reinforcing mercantilism's emphasis on accumulating wealth and controlling trade to enhance national power.
• Evaluate how mercantilism contributed to the economic causes of the American Revolution and its impact on colonial society.
  • Mercantilism significantly contributed to the economic causes of the American Revolution by imposing strict trade regulations through laws like the Navigation Acts, which limited colonial trade opportunities and fostered widespread discontent among colonists. The perceived inequities in this system led to growing frustration with British authorities, as colonists felt they were being exploited for Britain's benefit without fair representation. This economic tension fueled revolutionary sentiments, ultimately culminating in a desire for independence as colonists sought greater control over their own economic affairs.

Related terms

Colonialism: A practice where a country establishes control over foreign territories, often exploiting them for resources and labor while imposing its culture and governance.

Triangular Trade: A historical term describing the three-way trading system between Europe, Africa, and the Americas that facilitated the exchange of goods, slaves, and raw materials.

Navigation Acts: A series of laws passed by the English Parliament that regulated colonial trade to benefit England's mercantilist policies by ensuring that trade was conducted through English ships.