Effects of mercantilism

Luca FerriniAug 28views This content was written by a student and assessed as part of a university degree. Classical liberal economic theory widely recognises and portrays the benefits of free trade. The maximum benefits can be gained from the markets only when barriers to trade are open and the state does not pose limitations to trade. A lot has been written to defend this position, and economists have even aspired to explain it in scientific terms, through such theories as the law of comparative advantage.

Effects of mercantilism

Colbertism French finance minister and mercantilist Jean-Baptiste Colbert served for over 20 years. Mercantilism arose in France in the early 16th century soon after the monarchy had become the dominant force in French politics.

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Inan important decree banned the import of woolen goods from Spain and some parts of Flanders. The next year, a number of restrictions were imposed on the export of bullion.

The height of French mercantilism is closely associated with Jean-Baptiste Colbertfinance minister for 22 years in the 17th century, to the extent that French mercantilism is sometimes called Colbertism. Under Colbert, the French government became deeply involved in the economy in order to increase exports.

Protectionist policies were enacted that limited imports and favored exports. Industries were organized into guilds and monopolies, and production was regulated by the state through a series of more than one thousand directives outlining how different products should be produced.

Colbert also worked to decrease internal barriers to trade, reducing internal tariffs and building an extensive network of roads and canals. He was less successful in turning France into a major trading power, and Britain and the Netherlands remained supreme in this field.

Effects of mercantilism

Economic history of Canada France imposed its mercantilist philosophy on its colonies in North America, especially New France. It sought to derive the maximum material benefit from the colony, for the homeland, with a minimum of imperial investment in the colony itself.

The ideology was embodied in New France through the establishment under Royal Charter of a number of corporate trading monopolies including La Compagnie des Marchands, which operated from toand the Compagnie de Montmorency, from that date until These were the first corporations to operate in what is now Canada.

Mercantilist policies were also embraced throughout much of the Tudor and Stuart periods, with Robert Walpole being another major proponent.

In Britain, government control over the domestic economy was far less extensive than on the Continentlimited by common law and the steadily increasing power of Parliament. With respect to its colonies, British mercantilism meant that the government and the merchants became partners with the goal of increasing political power and private wealth, to the exclusion of other empires.

Effects of mercantilism

The government protected its merchants—and kept others out—through trade barriers, regulations, and subsidies to domestic industries in order to maximize exports from and minimize imports to the realm.

The government had to fight smuggling, which became a favorite American technique in the 18th century to circumvent the restrictions on trading with the French, Spanish, or Dutch. The goal of mercantilism was to run trade surpluses, so that gold and silver would pour into London.

The government took its share through duties and taxes, with the remainder going to merchants in Britain. The government spent much of its revenue on a superb Royal Navy, which not only protected the British colonies but threatened the colonies of the other empires, and sometimes seized them.

The colonies were captive markets for British industry, and the goal was to enrich the mother country. British mercantilism thus mainly took the form of efforts to control trade. A wide array of regulations were put in place to encourage exports and discourage imports.

Tariffs were placed on imports and bounties given for exports, and the export of some raw materials was banned completely. The nation aggressively sought colonies and once under British control, regulations were imposed that allowed the colony to only produce raw materials and to only trade with Britain.

This led to friction with the inhabitants of these colonies, and mercantilist policies such as forbidding trade with other empires and controls over smuggling were a major irritant leading to the American Revolution. The other nations of Europe also embraced mercantilism to varying degrees.

The Netherlands, which had become the financial centre of Europe by being its most efficient trader, had little interest in seeing trade restricted and adopted few mercantilist policies. The Habsburg Holy Roman Emperors had long been interested in mercantilist policies, but the vast and decentralized nature of their empire made implementing such notions difficult.

Some constituent states of the empire did embrace Mercantilism, most notably Prussia, which under Frederick the Great had perhaps the most rigidly controlled economy in Europe. During the economic collapse of the 17th century, Spain had little coherent economic policy, but French mercantilist policies were imported by Philip V with some success.

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Wars and imperialism[ edit ] Mercantilism was the economic version of warfare using economics as a tool for warfare by other means backed up by the state apparatus, and was well suited to an era of military warfare.

A number of wars, most notably the Anglo-Dutch Wars and the Franco-Dutch Warscan be linked directly to mercantilist theories. Mercantilism fueled the imperialism of this era, as many nations expended significant effort to conquer new colonies that would be sources of gold as in Mexico or sugar as in the West Indiesas well as becoming exclusive markets.

With the establishment of overseas colonies by European powers early in the 17th century, mercantile theory gained a new and wider significance, in which its aim and ideal became both national and imperialistic. Mercantilism functioned as the economic counterpart of the older version of political power:The history of capitalism has diverse and much debated roots, but fully-fledged capitalism is generally thought to have emerged in north-west Europe, especially in the Low Countries (mainly present-day Flanders and Netherlands) and Britain, in the sixteenth to seventeenth alphabetnyc.com the following centuries, capital has been accumulated by a variety of different methods, in a variety of.

Mercantilism had an effect in many areas, including politics, economics and culture. Some of the major impacts included the expansion of colonies overseas, increased government regulation of trade and the promotion of manufacturing. The Meaning and Definition Mercantilism: Mercantilism, also called the mercantile system, was based on the benefits of profitable trading.

Countries adopted trade policies that favored the flow of wealth from the colonies to the mother country. Get started on that final review for APUSH! Try these new multiple choice questions created by me below in the new format. Many quizzes here to test your.

The colonial economy was dominated by mercantilism, where the colonies would supply raw goods. Read on to learn about the effects of British mercantilism on the economy and well-being of its imperial colonies, especially the American colonies.

Colonists increasingly complained about mercantilism, but did it harm them? The chronic colonial shortage of hard money was superficially caused by the flow of specie—gold and silver—to England to.

How Did Mercantilism Effect the Colonies? | alphabetnyc.com