the british mercantile system
Post on 13-Mar-2016
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MERCANTILISM = 16th – 18th century
political/economic philosophyWealth = PowerWealth is measured in gold
and silverSo…need to export more
than import, known as “favorable balance of trade”“favorable balance of trade”
Role of American Colonies in British Mercantile System:1. Provide raw materials, esp. for
shipbuilding2. MARKETS - purchase finished
goods3. Grow products that would
otherwise have to be purchased from other nations: e.g., tobacco, sugar, rice …
The most infamous of the laws to enforce mercantilism were the:
NAVIGATION ACTS, 1650s – originally aimed at what rival?
Laws restricting colonial trade & manufacturing: All commerce to & from colonies must be in
British vessels European goods destined to America must
stop in British ports first Certain enumerated goods can only be sent
from the colonies through England … not directly to European markets (tobacco, rice, indigo)
Certain goods (e.g., woolen cloth and beaver hats) forbidden from manufacture in colonies – why?
Benefits of Mercantilism: SALUTARY NEGLECT!
BR laws only loosely enforced Smuggling abounds! John Hancock is
King of Smugglers (sugar) Price supports for makers of naval goods Ready markets for specific products
VA tobacco has monopoly on BR market Tobacco growing in England/Ireland
prohibited Protection by British Navy without much
taxation Trickle Down Prosperity
Avg. American was better off than avg. Englishman
The Downside of Mercantilism: England begins enforcing policies more vigorously
after 1763 Stifles economic initiative
Americans not at liberty to buy, sell, ship or manufacture under conditions most profitable to them
Perpetual indebtedness to mother country VA forced to sell in BR & thus at mercy of BR
buyers, who drive price down Perpetual debt cycle; planters mortgage future
crops to pay for English goods Resentment at being used for the benefit of the
empire “Revolution broke out because England failed to recognize
an emerging nation when it saw one.” Theodore Roosevelt
CURRENCY CRISIS: Colonies buy more than they sell to
England Drains hard currency from the
Colonies Not enough cash left to make
everyday transactions in the colonies Solutions: barter system & calls
for paper $ Paper money schemes restrained by
Parliament
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