Download Enforcement of Mercantilism

Mercantilism
Mercantilism

An economic system where a nation
establishes colonies to provide raw
materials and serve as a market for
manufactured goods creating a favorable
balance of trade for that country which in
turn increases that nation’s wealth and
power.
Goals of Mercantilism



To become
wealthiest, most
powerful nation
Become self-sufficient
= meet all needs
within the empire
Develop favorable
balance of trade

Export more than
import = profit
Favorable Balance of Trade
Exporting more than you import
Exports: goods
that are sent
from your
country to
another or to
your colony to
be sold
Imports: goods
brought into
your country
from another
country or from
your colony
Favorable Balance of Trade
pg. 52 in Textbook
Mercantilism in Effect

Establish colonies


Build colonial empire to provide
base of raw materials and market
for manufactured goods
Develop strong military

Strong army and navy to defend
empire
Navy especially important to protect
trade

Make rules/policies

Must maintain control over colonies
and protect from foreign
interference
TIMBER
RESOURCES
IRON
FISH
MANUFACTURED GOODS
INDIGO
RESOURCES
RICE
COTTON
French Mercantilism
Purpose of Colonies/Benefits to Mother
Country




Raw materials for
manufacturing industry
or re-export (trade)
Markets for
manufacturing goods
Growth of merchant
fleet
Additional bases for
Navy
Benefits for Colonies


Bounties: incentive
payments to
encourage production
of highly desired
goods (tobacco)
Steady market for
raw materials & cash
crops

Defense -> protect
colonies

Shipbuilding industry
developed in colonies
Enforcement of Mercantilism

Restrictions on buying


Restrictions on selling


Could only ship/sell to mother
country(enumerated goods)
Restrictions on shipping


Buy only from mother country;
duties on foreign goods
All trade only on mother county’s
ships, all goods shipped through
mother country’
Restrictions on manufacturing

Prohibited in colonies: keep
colonies dependent on mother
country, prevent competition
(monopoly)
Cons of Mercantilism

Limited profits of
colonists (threatened
prosperity)

Foreign goods more
expensive (taxes)

Colonists resentful of
restrictions

Colonists treated as
inferiors – “colonials”

Need for cheap labor
leads to slavery
Viewpoint on Mercantilism
Thomas Mun
“Although a kingdom may be
enriched by gifts received, or
by purchases taken from some
other nations, yet these things
are uncertain and of small
consideration when they
happen.
The ordinary means therefore
to increase our wealth and
treasure is by foreign trade,
where we must observe this
rule: to sell more to strangers
yearly than we consume of
theirs in value.”
Viewpoint on Mercantilism
Adam Smith
“Consumption is the sole end
and purpose of all production;
and the interest of the producer
ought to be attended to, only so
far as it may be necessary for
promoting that of the consumer.
The maxim is so perfectly selfevident, that it would be absurd
to attempt to prove it.
But in the mercantile system,
the interest of the consumer is
almost constantly sacrificed to
that of the producer. And it
seems to consider production
and not consumption, as the
ultimate end of all industry and
commerce.”
QuickWrite #4
The mercantilist system
would/would not be an effective
system to a country and its
colonies because…