THE ORIGINS OF THE ORIGINS OF MERCANTILISMMERCANTILISM

MercantilismMercantilism

Discovery and conquest left their Discovery and conquest left their marks on the economy and politics of marks on the economy and politics of Europe.Europe.

Without consulting anyone else in Without consulting anyone else in Europe, the rulers of Portugal and Europe, the rulers of Portugal and Spain, the first two economics Spain, the first two economics powers in world trade, quickly powers in world trade, quickly divided any new lands to be found in divided any new lands to be found in any part of the world between them.any part of the world between them.

MercantilismMercantilism

After the Treaty of Tordesillas of After the Treaty of Tordesillas of 1494, another treaty, in 1529, drew a 1494, another treaty, in 1529, drew a line east of the Moluccas which line east of the Moluccas which allocated everything on its pacific allocated everything on its pacific side to the Spanish, and Africa, the side to the Spanish, and Africa, the Indian Ocean and the Spice Islands to Indian Ocean and the Spice Islands to the Portuguese.the Portuguese.

Red/pink = Spanish territoryBlue/light blue = Portuguese territory

MercantilismMercantilism This arrangement did not sit well This arrangement did not sit well

with the other major powers in with the other major powers in Europe.Europe.

One way to deal with the influx of One way to deal with the influx of new wealth was to tap the new-found new wealth was to tap the new-found Spanish wealth either through legal Spanish wealth either through legal or illegal means.or illegal means.

Drake

MercantilismMercantilism

The sixteenth century has often been The sixteenth century has often been called the “Golden Age” of Spain. called the “Golden Age” of Spain. The influence of the Spanish armies, The influence of the Spanish armies, Spanish Catholicism, and Spanish Spanish Catholicism, and Spanish wealth was felt all over Europe.wealth was felt all over Europe.

This greatness rested largely on the This greatness rested largely on the influx of precious metals from the influx of precious metals from the New World.New World.

MercantilismMercantilism To protect this treasure from French and To protect this treasure from French and

English pirates, armed convoys transported English pirates, armed convoys transported it each year to Spain. Between 1503 and it each year to Spain. Between 1503 and 1650, 16 million kilograms of silver and 1650, 16 million kilograms of silver and 185,000 kilograms of gold entered Spain.185,000 kilograms of gold entered Spain.

The Spanish Main

MercantilismMercantilism

Meanwhile, Spain was experiencing a Meanwhile, Spain was experiencing a steady population increase, creating steady population increase, creating a sharp rise in the demand for food a sharp rise in the demand for food and goods.and goods.

Spanish colonies in the Americas also Spanish colonies in the Americas also represented a demand for products.represented a demand for products.

Because Spain had expelled the Jews Because Spain had expelled the Jews and Muslims, they could not meet and Muslims, they could not meet the new demands. the new demands.

MercantilismMercantilism

Prices rose and with them, the costs of Prices rose and with them, the costs of manufacturing cloth and other goods. manufacturing cloth and other goods.

As a result, Spanish products could not As a result, Spanish products could not compete in the international market and compete in the international market and cheaper products made elsewhere.cheaper products made elsewhere.

Prices spiraled upward faster than the Prices spiraled upward faster than the government could levy taxes to dampen government could levy taxes to dampen the economy. Money flowed out of Spain the economy. Money flowed out of Spain to the rest of Europe through the to the rest of Europe through the increased demand for cheap products and increased demand for cheap products and the religious wars of Philip II. the religious wars of Philip II.

MercantilismMercantilism

Another way Europeans dealt with the Another way Europeans dealt with the newly discovered lands and their bounty newly discovered lands and their bounty was through competition. The discoveries was through competition. The discoveries has opened a global battleground for has opened a global battleground for traders and soldiers. Each country traders and soldiers. Each country developed economic policies to protect developed economic policies to protect themselves from foreign competition.themselves from foreign competition.

Mercantilism became the theory of trade Mercantilism became the theory of trade espoused by the major European powers espoused by the major European powers from roughly 1500 to 1800. from roughly 1500 to 1800.

MercantilismMercantilism

Mercantilism advocated that a nation Mercantilism advocated that a nation should export more than it imported should export more than it imported and accumulate bullion (especially and accumulate bullion (especially gold) to make up the difference. gold) to make up the difference.

The exportation of finished goods The exportation of finished goods was favored over extractive was favored over extractive industries like farming. Underlying industries like farming. Underlying this theory was the belief that wealth this theory was the belief that wealth was finite.was finite.

MercantilismMercantilism

If one nation hoped to grow richer, it had If one nation hoped to grow richer, it had to do so at the expense of some other to do so at the expense of some other nation. The development of colonies nation. The development of colonies became very attractive during the era.became very attractive during the era.

Wealth could be kept by a nation if its Wealth could be kept by a nation if its colonies provided raw materials to the colonies provided raw materials to the mother country and the mother country mother country and the mother country could sell finished goods to the colonies.could sell finished goods to the colonies.

MercantilismMercantilism

European merchants, with the support of their European merchants, with the support of their home governments, acted upon the home governments, acted upon the mercantilist theories often using force, mercantilist theories often using force, robbery, bribery, extortion, and government robbery, bribery, extortion, and government regulations. regulations.

In the 16In the 16thth century, the Portuguese won century, the Portuguese won dominance over the Asian trade routes from dominance over the Asian trade routes from India to the Spice Islands from the Arabs by India to the Spice Islands from the Arabs by fortifying bases at the entrance of to the Red fortifying bases at the entrance of to the Red Seas and the Persian Gulf. The Portuguese Seas and the Persian Gulf. The Portuguese treated any non-Christian ship as a lawful prizetreated any non-Christian ship as a lawful prize

Portuguese Empire at its height

Portuguese Empire in 1800

MercantilismMercantilism By the end of the 16By the end of the 16thth century, the century, the

Portuguese were being elbowed aside by Portuguese were being elbowed aside by the Dutch who set up the East India the Dutch who set up the East India Company with the aim of replacing the Company with the aim of replacing the Portuguese control of the spice trade to Portuguese control of the spice trade to Europe. Europe.

Through ruthlessness, and sometimes Through ruthlessness, and sometimes blood-shed, the Dutch pushed the blood-shed, the Dutch pushed the Portuguese aside and then fought to keep Portuguese aside and then fought to keep the English out of the Spice Islands as well.the English out of the Spice Islands as well.

Dutch dominance of Indonesia caused the Dutch dominance of Indonesia caused the British to focus on India and the Caribbean British to focus on India and the Caribbean Islands in the 17Islands in the 17thth century. century.

Dutch Empire

MercantilismMercantilism Despite its own civil war in the middle of the 17Despite its own civil war in the middle of the 17thth

century, the British tried to establish themselves century, the British tried to establish themselves as world merchants.as world merchants.

The result was the series of Anglo-Dutch wars The result was the series of Anglo-Dutch wars throughout the later half of the 17throughout the later half of the 17thth century in century in which England gained control of several overseas which England gained control of several overseas possessions from the Dutch, including New possessions from the Dutch, including New Amsterdam and many Caribbean Islands.Amsterdam and many Caribbean Islands.

By the 18By the 18thth century, the importance of overseas century, the importance of overseas possessions became more and more important in possessions became more and more important in European affairs leading to the first world war: European affairs leading to the first world war: The Seven Years’ War or the French and Indian The Seven Years’ War or the French and Indian War.War.

THE SLAVE TRADE, 1400–1860