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THE BRITISH MERCANTILE SYSTEM

THE BRITISH MERCANTILE SYSTEM. MERCANTILISM = 16 th – 18 th century political/economic philosophy. Wealth = Power Wealth is measured in gold and silver So…need to export more than import, known as “favorable balance of trade”. Role of American Colonies in British Mercantile System:.

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THE BRITISH MERCANTILE SYSTEM

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  1. THE BRITISH MERCANTILE SYSTEM

  2. MERCANTILISM = 16th – 18th century political/economic philosophy • Wealth = Power • Wealth is measured in gold and silver • So…need to export more than import, known as “favorable balance of trade”

  3. Role of American Colonies in British Mercantile System: • Provide raw materials, esp. for shipbuilding • Purchase finished goods • Grow products that would otherwise have to be purchased from other nations: e.g., tobacco, sugar, rice …

  4. NAVIGATION ACTS, begin in 1650s • Laws restricting colonial trade & manufacturing: • All commerce to & from colonies must be in British vessels • European goods destined to America must stop in British ports first • Certain enumerated goods can only be sent from the colonies through England … not directly to European markets • Certain goods (e.g., woolen cloth and beaver hats) forbidden from manufacture in colonies

  5. Benefits of Mercantilism: • SALUTARY NEGLECT • Laws only loosely enforced • Smuggling abounds – John Hancock is King of Smugglers (sugar) • Price supports for makers of naval goods • Ready markets for specific products • VA tobacco has monopoly on BR market • Tobacco growing in England/Ireland prohibited • Protection by British Navy without much taxation • Trickle Down Prosperity • Avg. American was better off than avg. Englishman

  6. The Downside of Mercantilism: • England begins enforcing policies more vigorously after 1763 • Stifles economic initiative • Americans not at liberty to buy, sell, ship or manufacture under conditions most profitable to them • Perpetual indebtedness to mother country • VA forced to sell in BR & thus at mercy of BR buyers, who drive price down • Perpetual debt cycle; planters mortgage future crops to pay for English goods • Resentment at being used for the benefit of the empire

  7. CURRENCY CRISIS: • Colonies buy more than they sell to England • Difference must be paid in currency • Drains hard currency from the Colonies • Not enough cash left to make everyday transactions in the colonies • Solutions: barter system & calls for paper $ • Paper money schemes restrained by Parliament

  8. ROYAL POWER: • THE PRIVY COUNCIL: • King’s advisors: • Can veto legislative acts that conflict with BR regulations or policy goals • Royal veto used sparingly (469 times in connection with 8,563 laws) but is still seen as symbol of BR authority

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