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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

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

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 empireNavy especially important to protect trade

� Make rules/policies� Must maintain control over colonies and protect from foreign interference

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TIMBER

FISH

IRON

INDIGO

RICE COTTON

RESOURCES

RESOURCES

MANUFACTURED GOODS

French Mercantilism

Purpose of ColoniesBenefits 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)

� Had a steady market for raw materials & cash crops

� Defense -> protect colonies

� Shipbuilding industry developed in colonies

Enforcement of Mercantilism� Restrictions on buying

� Buy only from mother country; duties on foreign goods

� Restrictions on selling� Could only ship/sell to mother country(enumerated goods)

� Restrictions on shipping

� 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