Essay On The Role Of Mercantilism

During the 16th through 18th centuries, the major European powers were at an arms race to acquire as many colonies as possible. These powers, such as Britain, France, and Spain actively sought out territories to colonize all throughout Asia, Africa, and the Americas. The end result was a type of imperialist system that saw Europe dominate most of the modern world. The major reason for this was the dominant economic system at the time. Mercantilism is the reason why countries like Britain attempted to expand to virtually every continent throughout 1500-1700s, and became imperialist powers for centuries. Mercantilism directly affected colonization, trade, war, and the building of imperial empires.
The first important step in examining the role of mercantilism in colonialism and imperialism is to thoroughly explain how the system works. Mercantilism is an economic theory that stated a government’s regulation and control of the nation’s economy, at the expense of other countries, would be the most profitable method. In order to see economics shift in a countries favor, they must win the balance of trade. Mercantilism dictated that countries wishing to make a profit and increase their collective wealth would have to export more than import. This would mean producing more finished products than any other country and selling them to surrounding countries. Of course, in order to produce finished goods, raw materials are needed, and this is why colonization began. In search of raw materials for finished goods, countries like Britain and France established settlements throughout America and Africa in an attempt to bring in more raw materials for the country. This would keep them from having to import products from other countries, thus growing their wealth. The mercantilist system calls for high tariffs to prevent importing raw materials from foreign countries (London, 2013).
The mercantilist theory also had several other policies and assumptions attached to it. When a country would colonize a land, the colony would be forbidden to trade with other nations. All economic activity done would have to be with the mother country. The markets within each mother country and the colonies would be monopolized. The entire purpose of exporting more than importing is to build up a countries stockpile of gold. This is usually referred to as “bullionism” where the sole purpose of economics is to acquire gold. Each country sought to increase their own levels of wealth, and the best way to do so is to acquire more territory to acquire raw materials. No goods should ever be imported from other countries if they could be manufactured in the home country (London, 2013).
Because of mercantilism, the colonial and imperialist eras were marked by triangular trade. Due to the nature of shipping materials throughout the colonized territories, triangular trade became a staple of colonialism. Triangular trade is when a colony specializes in a certain commodities and exports it off to other regions in the empire which require those goods. The common example is the British system where slaves were shipped to the Americas, the Americas shipped raw materials like sugar and tobacco to Britain, who then shipped finished goods to Africa and America. This was a way of mutually benefit each colony within an empire (“The Triangular Trade”).
Another aspect of mercantilism that shaped colonialism was war. The major countries often did not hesitate to engage in a war because it was usually economically beneficial to do so. Mercantilism believed that the world trade level was fixed, so the only way to increase wealth and trade margin was to take if from another country. Many wars during these centuries were directly affected and influenced by mercantilist economic policies (Landenburg, 2007).
An examination of the American colonies further shows how mercantilism affected colonization and imperial empires. Once Britain had settled the American colonies, they had to start regulating trade, as this was crucial to maintaining a profitable economy under mercantilism. While they did not do so at first, England placed restrictions on colonial imports, exports, and manufacturing. In the 1660’s, Britain passed a set of laws referred to as the “Navigation Acts.” These laws forced the American colonies to become dependent on British manufactured goods. Britain did not allow the American colonies to manufacture their own finished products. Instead, the colonies had to buy more finished goods from Britain than they sold in raw materials. Thus, Britain’s net trade profit would go up, even at the expense of their own colonies. This shows that an imperial power could even use their own colonies to create trade advantages, let alone with other countries. The British also kept foreign trade ships from doing business with the American colonies. In terms of imports, the Staples Act, passed in 1663, forbade the colonists from buying products from Africa, Europe, or Asia. Therefore, the colonies were completely dependent on Britain for everything (Ladenburg, 2007).
In conclusion, mercantilism was the primary driving force during the colonial growth and creation of imperial powers. It impacted every area of colonial development. The triangle trade was a product of mercantilism, as was the reason so many countries went to war with each other. The reason countries like Britain were able to create an imperial empire is because they could use their colonies directly for their benefit and grow their trade margin. Everything the colonies did economically was based on mercantilist principles, and it was not until later in the 18th century when this system broke down and revolutions sprang up among the colonies.

References

The Triangular Trade. (n.d.). Retrieved February 22, 2015, from http://abolition.e2bn.org/slavery_43.html
London, C. (2013, August 23). What was mercantilism? Retrieved February 22, 2015, from http://www.economist.com/blogs/freeexchange/2013/08/economic-history
Ladenburg, T. (2007, January 1). British Mercantilism and the Cost of Empire. Retrieved February 22, 2015, from http://www.digitalhistory.uh.edu/teachers/lesson_plans/pdfs/unit1_4.pdf