Mercantilism

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Mercantilism

Mercantilism is the economic theory that a nation's prosperity depends

on its supply of gold and silver; that the total volume of trade is

unchangeable. This theory suggests that the government should play an

active role in the economy by encouraging exports and discouraging

imports, especially through the use of tariffs. Spain and England used

the mercantile system to benefit the mother countries. The mercantile

system had special regulations, which usually extracted some sort of

reaction from the colonies. If necessary, the policies would be

changed to better suit the mother country.

The favorable balance of trade was upheld through certain regulations.

No foreign trade was allowed for the colony unless it passed through

the mother country first and it moved on mother country ships.

Furthermore, no foreign settlers were allowed in the colony. No

colonial industry was allowed. The colony had to remain dependent on

the mother country for industrial necessities, it was not allowed to

become competition for foreign markets, and migrations restrictions

limited availability of skilled artisans. Regulatory taxation was

another mercantile regulation. Protective “tariffs” were used on

foreign imports to the colony, and revenue was raised for the mother

country. No colonial self-government was allowed, either. The mother

country avoided challenges to its economic authority, and the colonies

couldn’t enact pro colonial/anti-mother country laws. The Spanish used

three mercantilist devices to protect their commercial monopoly in the

New World. They prohibited foreign ships from entering Spanish

colonial ports, and no foreigner could send goods to the colonies or

take gold bullion out of Spain in pay...

... middle of paper ...

...land, vigorous attempts to

prevent smuggling in the American colonies after 1765 led to arbitrary

seizures of ships and aroused hostility. The legislation had an

unfavorable effect on the Channel Islands, Scotland (before the Act of

Union of 1707), and especially Ireland, by excluding them from a

preferential position within the system. Shaken by the American

Revolution, the system, along with mercantilism, fell into decline.

The acts were finally repealed in 1849.

Mercantilism was widely used in many different superpowers in the 18th

century. Depending on what superpower used it, the colonies under the

superpowers were restricted from doing certain things, and had to

follow certain mercantile regulations. The mercantile systems most

likely ended up with the colonies undergoing revolutions (America and

England) which resulted in the end of mercantilism.

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