Mercantilism shaped European economic policy and overseas expansion during the sixteenth and seventeenth centuries. This lesson introduces its central assumptions and explains why European governments sought to control trade.
Mercantilism was an economic theory that linked a nation’s power to the amount of gold and silver it possessed. In this view, precious metals helped a government pay for armies and navies and compete against rival states. Economic strength was therefore closely connected to military and political strength.
All flashcards
Mercantilism
An economic theory linking national power to wealth, especially gold and silver, and promoting exports and domestic production.
Favorable balance of trade
A trade situation in which a country's exports are worth more than its imports.
Colbert's mercantilist policies
French policies promoting manufacturing and exports through tariffs, royal industries, monopolies, and a merchant fleet.
English shipping laws
Rules requiring ships carrying goods to England to have English owners and mostly English crews.
Adam Smith's view of trade
Trade can benefit both countries when each specializes in goods it produces efficiently.
Quiz questions
Why did Jean-Baptiste Colbert build a French merchant marine?Answer: To carry French goods, retain transport earnings, and provide ships for wartime.
How did Spain restrict colonial trade under its mercantilist system?Answer: Trade was limited to a few colonial ports and Seville, with two annual fleets.
How did the Netherlands use exports to support its economy?Answer: It sold high-quality goods abroad and used the proceeds to buy raw materials.
According to Adam Smith, how could trade benefit both participating countries?Answer: Each country could specialize in goods it produced efficiently and trade for others.
What did David Hume argue could happen when more gold circulated in a country?Answer: Prices could rise, weakening the lasting advantage of accumulating precious metals.
Based on World History Volume 2, from 1400 by Ann Kordas, Ryan J. Lynch, Brooke Nelson, Julie Tatlock (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.