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• Definition: When a country like Britain (England) used its colonies to form a favorable balance of trade by exporting more than it imported. Gold $ 200 Textiles $ 300 Lumber $ 500 •England Exports textiles •England Imports Lumber Does the money England receives from France for its Export of Textiles equal NO the cost of the Lumber they import from France? _______________ $200.00 What does England have to give to France to purchase lumber? ___________ What is the result of the imbalance in trade cause in England? Debt _______________ Textiles $ 300 England imports lumber from its colonies Lumber England exports manufactured goods to the colonies Britain (England) can use the colonies to get the lumber they used to have to get from France England no longer needs French Lumber France still needs to import textiles from England. France now has to pay Britain to get the textiles it needs England sells manufactured goods to the colonists. Gold $ 300 Other Notes • Goal of Mercantilism: Create a favorable balance of trade. Colonies helped countries achieve this goal. – Example 1 England had a trade deficit. Why? » Imports cost more than exports = debt – Example 2 England created a favorable balance of trade. How? » England used its colonies to get the goods it once imported, but it still exported its textiles and sells manufactured good to the colonies. » Exports exceeded the cost of imports = profit • Colonies are only allowed to import manufactured goods from the mother country. • Colonies are only allowed to export natural resources to the mother country. • England achieves a favorable balance of trade by exporting more than it imports • Definition: A hands off policy the British had towards its colonies which let the colonies develop on their own without strict governmental control. – Colonies learn to govern themselves – The colonies also smuggle goods in from other countries because of salutary neglect. • This will lead to problems later as England tries to regain governmental control of the colonies and stop and/or tax previously smuggled goods.
