MERCANTILISM
Subject Area
American Studies
Unit/Topic and OC3
Mercantilism 1.1
CC Literacy Standard
Reading Standard: A. Key Ideas and Details
CC Literacy Objective
1. Cite specific textual evidence to support analysis of primary and
secondary sources, attending to such features as the date and origin
of the information.
2. Determine the central ideas or information of a primary or secondary
source; provide an accurate summary of how key events or ideas
develop over the course of the text.
Source(s): Documents, Images
Instructional Strategies
12
Reading: Mercantilism within the Colonial Era (below)
Newspaper Articles (individual selections)
Objective One: Six-Step Paired Note-Taking
Objective Two: Wrap Up/Free Write
Lesson Ideas Using Instructional Strategies:
1. Give every student a copy of the reading. Students are paired with a partner.
2. Using the six-step note-taking strategy, students are to pair read the following 4 segments:
Mercantilism System of Trade, Restrictions, Frictions under Mercantilism, Salutary Neglect and
Trouble Ahead.
3.
The partners will find a newspaper article illustrating this concept of mercantilism today--policies
that benefit the government instead of the people.
Examples: bailouts, pipeline, healthcare for the small business owner and individuals.
4. In a wrap up of previously learned information, students will do a five minute free write answering
the following questions.
A. Is this policy beneficial to the people?
B. How is this policy representative of the social contract theory?
C. How could citizens that disapprove of this government policy responsibility react?
Mercantilism within the Colonial Era
In 1763 Great Britain’s steadily growing empire included 33 different colonies. Only thirteen
were located along the Atlantic seaboard of North American. The others were scattered
throughout the world.
Why were British as well as other European leaders so eager to win colonies? To answer this
question one must understand what historians and economists have called “mercantilism.”
The Mercantilism System of Trade
Mercantilism, briefly, is an economic and political policy whereby a country tries to gain
greater wealth and power than its rivals. The mercantilism of the 1600s and 1700s aimed at building
a powerful, self-sufficient empire in a world divided by religious wars and bitter commercial rivalry.
Under mercantilism, a country’s government tried to gain greater power than its rivals by building a
larger army and navy. To build greater military power, the country needed money. To get money, a
nation tried to sell to other countries more goods than it bought from them. It tried, in other
words, to build a favorable balance of trade. A nation gains a favorable balance of trade when it
exports, or sells abroad, more products than it imports, or buys from other countries.
If a country secured a highly favorable balance of trade, it could 1) become self-sufficient,
2) become wealthy, and 3) build a powerful army and navy. Colonies were essential part of the plan.
The British, for example, thought that colonies would strengthen Great Britain in three ways.
First, colonies would provide the raw materials essential to a small island kingdom with a
growing population. Second, colonies would provide markets for goods produced in Great Britain,
particularly manufactured goods. Third, the colonies would help to make Great Britain powerful.
They would encourage the growth of a strong merchant fleet, which would serve as a training school
for the Royal Navy. Colonies would also provide bases from which the Royal Navy would operate.
Restrictions on Manufacturing
To apply the mercantile theory of trade, the British Parliament passed many laws. One series
of laws restricted nearly all the manufacturing of the British Empire to the British island itself. A
1699 law, for example, forbade the colonists to export any wool or woolen cloth—even to a
neighboring colony. Later laws forbade the colonists to manufacture beaver hats or iron products.
The British government also tried to prevent skilled workers from leaving Great Britain, fearing that
they would help the colonists start their own manufacturing plants.
At first, the American colonists did not find manufacturing restrictions a burden, since they
had neither the money nor the skilled labor to establish industries.
Restrictions on Shipping
Beginning in 1651, another series of laws, the Navigation Acts, restricted all trade within the
empire to British ships. Only British ships could carry goods imported from Africa, Asia, and the
non-British colonies of the American continents into any port of the British Empire.
Encouraged by the Navigation Acts, a powerful British fleet was soon sailing the seas
between the colonies and the mother country. The American colonists, being British citizens, could
build, operate, and sail their own vessels. Thus, they benefited greatly from the Navigation Acts.
By the early 1770s, colonial shipyards were building one-third of all merchant vessels sailing under
the British flag; many American colonial were becoming wealthy.
Restrictions on Selling
The Navigation Act of 1660 listed, or “enumerated”, specific colonial products that could be
shipped only to Great Britain. These enumerated goods included such important products as
tobacco, cotton, and sugar. The colonists could not sell these products to other European countries,
where they might have secured higher prices.
However, by the 1700s the British government was paying bounties on some enumerated
goods. Bounties are payments made to stimulate production of certain goods. The British paid
bounties on tar, resin, turpentine, and hemp to stimulate colonial production of these so-called naval
stores, needed by the merchant fleet and the Royal Navy.
Restrictions on Buying
In 1663 parliament passed a new Navigation Act, requiring the colonists to buy most of their
manufactured goods from the British island itself. Furthermore, all European goods headed for the
colonies had to be sent first to Great Britain, where the British unloaded the goods and collected an
import duty, a tax collected on imports or exports often called a tariff, on them. Then they
reloaded the products on a British vessel and sent them across the Atlantic. These requirements
enabled the Royal Navy to protect merchant shipping between Great Britain and its American
colonies from enemy ships and pirates. They also protected British manufacturers from the
competition of their European rivals.
Frictions under Mercantilism
By passing many laws, the British government applied its policy of mercantilism. Since other
European countries with overseas colonies followed similar practices, mercantilism caused deepening
rivalries between countries. This competition was a basic cause of the long years of war between
Great Britain and France.
The mercantile system of trade also created friction within the British Empire itself,
arousing jealousy even between colonial merchants. Colonial merchants with close family ties or
other sources of influence, in Great Britain received favors and privileges denied to other
merchants. Mercantile policies created friction especially between Great Britain and some of its
colonies in North America.
At first mercantilism seemed to threaten the prosperity of New England and the Middle
Colonies. The colonies produced goods similar to those produced in Great Britain—grain, lumber,
fish, cloth, iron, and other products. Great Britain did not want nor did it need these colonial
products, and actually passed laws barring them from being imported to Great Britain.
Fortunately, the New England and Middle Colonies soon established new markets for their
goods. As a result, the mercantile laws did not seriously disturb them.
Evading the Mercantile Laws
Most of this trade was perfectly legal. But some of it directly violated British laws. One of
the laws most violated was the Molasses Act of 1733.
Planters in the British West Indies had pushed the Molasses Act through Parliament, hoping
to force the American colonists to buy all of the their sugar and molasses from the British West
Indies. The Molasses Act thus provided that the colonists could buy similar supplies from the
French, Dutch, or Spanish islands only by paying a very high duty. Since the British West Indies
could supply only about one-eighth of the molasses needed by the colonists, the colonial merchants
felt compelled to evade the law.
A Policy of Salutary Neglect
If the British government had enforced the Molasses Act, many colonial merchants and
businesses would have been ruined, most rum distilleries would have been closed, and many workers
would have lost their jobs.
But for a long time Great Britain did not seriously attempt to enforce the Molasses Act.
Indeed, the British government did not seriously attempt to enforce most of its mercantile laws.
Instead, the British followed a policy of salutary neglect, which means that they deliberately failed
to enforce the laws.
Trouble Ahead
In 1763, however, the British government needed money to pay its war debt. It needed
money pay for the defense of its large and growing empire. It needed money to pay the officials
required to govern the scattered colonies.
How could the British government obtain this money? One way was to adopt a new colonial
policy. The earlier mercantile laws had regulated trade. The major purpose of the new laws would
be to raise revenue.
When the British government began, after 1763, to develop this new policy, it ran into
trouble. The conflict did not end until the thirteen colonies fought for and won their independence
from Great Britain.