key term - Mercantilism

Definition

Mercantilism is an economic theory that emphasizes the role of government in promoting national power by regulating the economy, particularly through the accumulation of wealth in the form of gold and silver. This theory led to the establishment of colonial empires, as European powers sought to control trade routes and resources to enhance their own wealth and influence.

5 Must Know Facts For Your Next Test

1. Mercantilism was the dominant economic theory from the 16th to the 18th century, influencing policies of European nations as they expanded their empires.
2. Under mercantilism, colonies were expected to provide raw materials to the mother country and serve as markets for finished goods.
3. The Hudson's Bay Company and North West Company operated under mercantilist principles, focusing on maximizing profits through control of fur trade in North America.
4. Mercantilist policies contributed to conflicts like the Seven Years' War, as nations vied for control over lucrative colonies and trade routes.
5. The Treaty of Paris in 1763 reshaped colonial holdings, reflecting the mercantilist competition between France and Britain over resources and territory in North America.

Review Questions

• How did mercantilism influence the relationship between European powers and their colonies?
  • Mercantilism created a relationship where colonies were viewed primarily as sources of raw materials and markets for finished goods. European powers sought to exploit these colonies economically by enforcing strict trade regulations that favored their own industries. This resulted in colonies having limited economic independence and being integrated into the mother country's economy, ultimately fostering resentment that contributed to revolutionary sentiments.
• Analyze the impact of mercantilist policies on the fur trade in Canada during the 17th and 18th centuries.
  • Mercantilist policies significantly shaped the fur trade in Canada as European powers established companies like the Hudson's Bay Company and North West Company to monopolize this lucrative resource. These companies were granted charters that allowed them exclusive rights to trade in specific regions, prioritizing profit maximization and market control. This competitive atmosphere led to aggressive expansion into Indigenous territories, alliances with local tribes, and eventually conflicts that were fueled by the desire for dominance in fur trading.
• Evaluate how mercantilism played a role in the geopolitical landscape following the Treaty of Paris in 1763.
  • Following the Treaty of Paris in 1763, mercantilism continued to shape the geopolitical landscape by redrawing colonial boundaries and shifting control from France to Britain. As Britain gained extensive territories in North America, it aimed to implement mercantilist policies that emphasized resource extraction and trade regulation. This shift intensified British dominance while exacerbating tensions with both Indigenous populations and American colonists, ultimately laying groundwork for future conflicts that challenged mercantilist ideologies and colonial governance.

Related terms

Colonialism: The practice of acquiring control over foreign territories, establishing settlements, and exploiting resources for the benefit of the colonizing country.

Trade Monopoly: An exclusive control over a particular trade or market, often granted by the government to a specific company or group, to regulate and profit from commerce.

Balance of Trade: The difference between a country's exports and imports; mercantilist theory holds that a favorable balance of trade (more exports than imports) is essential for national wealth.