In the long period from 1500 to 1800, western European nation-states were all influenced by a set of ideas known as the mercantile system or mercantilism. Mercantilist doctrine and institutions were not created by a particular group of thinkers, nor were they ever set forth in systematic fashion by a “school” of economists, but the ideas were important because they were held by practical businesspeople and heads of state who—at different times in different countries—strongly influenced public policy and institutional change.
The primary aim of mercantilists was to achieve power and wealth for the state. Spain’s experience in the sixteenth century had led most observers to conclude that an inflow of gold and silver was potent in attaining needed goods and services and in prosecuting wars. To generate an inflow of gold or silver through trade, the value of exports should exceed the value of imports. The gold or silver paid for the differences between exports and imports. With such additions to amounts of money, called specie, domestic trade would be more brisk and tax revenues higher. It was further held that the state could attain great power only if political and economic unity became a fact. In a day when productivity depended so greatly on the skills and knowledge of workers, it was crucial to keep artisans at home. If all the materials necessary to foster domestic industry were not available, they could best be obtained by establishing colonies or friendly foreign trading posts from which such goods could be imported. A strong merchant marine could carry foreign goods, thereby helping to secure favorable trade balances, and merchant ships could be converted for war if the need arose.
Mercantilists believed that these means of achieving national power could be made effective by the passage and strict enforcement of legislation regulating economic life.
England had begun to pass such laws by the end of the fifteenth century, but its mercantilist efforts did not fully flower until after the British, together with the Dutch, had successfully turned back Spanish power. Indeed, it was largely a consequence of England’s desire to surpass Holland—a nation that had reached the zenith of its power during the first half of the seventeenth century—that British legislation was passed marking the beginning of an organized and consistent effort to regulate colonial trade.
Adherence to mercantilist principles was implicit in the colonizing activity that the English began in the early 1600s. Almost as soon as Virginia tobacco began to be shipped in commercial quantities to England, King James I levied a tax on it while agreeing to prohibit the growth of competing tobacco in England. Taxes, regulation, and subsidies were all used as mercantile policies, but the primary ones that affected the colonies were the Navigation Acts.
World History
