Mercantilism

Definition of Mercantilism

• Mercantilism is an economic theory stating that colonies exist to benefit the parent country

How does mercantilism work?

• In the system of mercantilism, the colony provides raw materials (like fur, lumber, mineral ores) to the parent country

• The parent country manufactures goods from those raw materials and sells the manufactured goods to the colony.

A. Colonies provide RAW MATERIALS (like LUMBER, FURS, ORES) that the parent country use to produce MANUFACTURED GOODS (like FURNITURE & TOOLS)

B. The parent country sells the MANUFACTURED GOODS back to the colonists. (The colonies provide a market for the goods.)

Mercantilism is exclusive.• The colony must trade

only with the parent country.

• If the colony can get goods only from another country, the goods must be shipped to the parent country and then sent to the colony.

C. Colonies are not supposed to develop any industry/manufacturing because they are supposed to get those products from the PARENT country. However, due to the distance between England and her colonies, colonies soon begin industries.

D. SHIPBUILDING becomes an

important NEW ENGLAND industry, because colonial trade can be conducted on colonial-built SHIPS

E.The parent country gets rich! It has a monopoly on trade, so English colonies can only trade with England. Any trade with another country is illegal - SMUGGLING

F.For about 100 years, the English colonists do what they want (manufacturing, trading with other countries) because England is too far away to police the situation.

G. The NAVIGATION LAWS were a series of laws regulating trade between England and her colonies.

The government is involved.

• Under the system of mercantilism, the government regulates the economy for the good of the empire.

• The good of the individual is not considered.

TRIANGULAR TRADE ROUTES

• TRIANGULAR TRADE ROUTES - trade routes moving raw materials and manufactured goods between Europe, Africa and the colonies.

• MIDDLE PASSAGE - the most INHUMANE leg of the triangular trade routes in which African SLAVES were brought to the New World