Economic Impact Of Mercantilism

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Mercantilism is essentially economic nationalism, with a goal of economic prosperity. It controlled Western European thought between the 16th and 18th centuries, with economic powers like Britain, France and the Dutch Republic adopting mercantile policies to restrict imports and maximise exports. This was thought to be the foremost way to achieve a positive balance of trade, resulting in the amassing of gold and silver. Although mercantile policies were thought to bring wealth in the form of precious metals, many disagreed that this was the true measure of wealth, notably Adam Smith who argued that wealth is measured by what these metals purchase, such as commodities and a strong labour force (Smith, 2017). This essay will outline the main …show more content…

The Dutch Republic were still the most powerful economy at the time, nonetheless, by limiting colonial trade to only Britain, London could develop as a key hub for shipping services and became a major port for colonial trade (specifically American). This allowed the British economy to develop at a rapid rate in comparison to its colonies and the rest of the world, as their ships were being used worldwide and London was favoured for shipping instead of the Dutch Republic. The British were therefore able to develop their Royal Navy, which (after the Anglo-Dutch wars) was made easier to do so as the Dutch weren’t allowed a navy above sixty percent the size of theirs, so Britain was able to capitalise and use their navy to sustain strong economic growth. Even Adam Smith, who led the ‘attack on the Mercantile system’ agrees that this had a positive impact on Britain’s economic development and navy. Smith writes, “As defence, however, is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of England.” (Smith, 2017). He argues that defence is a higher priority than wealth, and that the Navigation Acts had a very positive effect on the Royal Navy, so for him (in some respects) it may be a wise

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