Although this is the common goal of all for-profit companies, mercantilism applied the concept to the nation as a whole. This led nations to practice exporting more than they imported. Most of the economics authors came from France and England in the seventeenth century.
They were practical people who wanted to spread their economic ideas and thereby increase their own businesses' profits. As the British colonized the Americas, mercantilist policies dominated political and business decisions. The British colonized Virginia specifically for the purpose of making money on tobacco crops, says Gary M. The crop became the monetary exchange for the region so that small businesses, such as "artisans, innkeepers and other non-farmers, often planted tobacco patches to raise extra cash," reports Pecquet.
Afer the mercantilist policies of limiting access to imports and controlling exports, a bill introduced in Parliament prohibited planting tobacco in England and importing tobacco from anywhere other than the British Indies and the Virginia Colony.
Why countries use mercantilist practices
Dana Griffin has written for a number of guides, trade and travel periodicals since She has also been published in "The Branson Insider" newspaper. Skip to main content. History In the 16th century feudal era, the main rationale for mercantilism was the consolidation of regional power. Policies The mercantilist policies rose from the special relationship between a country's government and its mercantile classes of small and large business owners.
In Praise of Mercantilism (or Why Economic History Isn't Boring) | HuffPost
Rationale Aside from the monetary requirements of war, colonization and conquest, the mercantile system grew out of the 18th century beliefs about the origin of profit and the nature of trade. Effects As the British colonized the Americas, mercantilist policies dominated political and business decisions. About the Author Dana Griffin has written for a number of guides, trade and travel periodicals since Photo Credits conus textile image by Stephen Mulligan from Fotolia. Accessed 27 June Griffin, Dana.
Confronting neo-mercantilism: why regulation is critical to global trade
After a costly war with France, the British Empire, hungry to replenish revenue, raised taxes on colonists, who rebelled by boycotting British products, consequently slashing imports by a full one-third. This was followed by the Boston Tea Party in , where Boston colonists disguised themselves as Indians, raided three British ships, and threw the contents of several hundred chests of tea into the harbor, to protest British taxes on tea and the monopoly granted to the East India Company.
To reinforce its mercantilist control, Great Britain pushed harder against the colonies, ultimately resulting in the Revolutionary War. Citizens could invest money in mercantilist corporations, in exchange for ownership and limited liability in their royal charters. These citizens were granted "shares" of the company profit, which were, in essence, the first traded corporate stocks. Mercantilism is considered by some scholars to be a precursor to capitalism since it rationalized economic activity such as profits and losses.
Where mercantilist governments manipulate a nation's economy to create favorable trade balances, imperialism uses a combination of military force and mass immigration to foist mercantilism on less-developed regions, in campaigns to make inhabitants follow the dominant countries' laws. One of the most powerful examples of the relationship between mercantilism and imperialism is Britain's establishment of the American colonies. In a free trade system, individuals benefit from a greater choice of affordable goods, while mercantilism restricts imports and reduces the choices available to consumers.
Fewer imports mean less competition and higher prices. While mercantilist countries were almost constantly engaged in warfare, battling over resources, nations operating under a free-trade system can prosper by engaging in mutually beneficial trade relations.
Today, mercantilism is deemed outdated. However, barriers to trade still exist to protect locally entrenched industries. For example, post World War II, the United States adopted a protectionist trade policy toward Japan and negotiated voluntary export restrictions with the Japanese government, which limited Japanese exports to the United States. Business Essentials.
Mercantilism: A Lesson for Our Times?
Financial Advice. Popular Courses. Login Advisor Login Newsletters. Table of Contents Expand. What Is Mercantilism? History of Mercantilism. Jean-Baptiste Colbert's Influence. British Colonial Mercantilism. American Revolution Mercantilism. Merchants and Mercantilism.
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Mercantilism vs. Free Trade vs. Mercantilism was based on the idea that a nation's wealth and power were best served by increasing exports and so involved increasing trade.
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The colonies provided rum, cotton, and other products demanded by African imperialists.
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