MERCANTILISM:

Money is Power, and Power is

Everything

WHAT IS MERCANTILISM?

An idea formed by

Europeans in the 17th and

18th centuries (1800s-

1900s)

WHAT IS MERCANTILISM

Mercantilism – Idea that a

nation’s existence depended on

power, and power depended on

wealth

Wealth – money and assets (things

worth money)

GET RICH OR DIE TRYING?

To gain wealth, a country would

capture colonies

Colony – a territory that is

controlled by a “parent” country

MONEY = POWER

=

COLONIES

Raw Materials - An unprocessed

natural product used to

Manufacture Goods

Manufactured Goods – a “final

product” made from raw

materials

COLONIES

Colonies were used to gather

Raw Materials for the “parent

country”

Then, the “Parent Country” used

these raw materials to make

manufactured goods

COLONIES

The “parent country” then sold these

manufactured goods back to the colonies

The money made from the sale of

manufactured goods went back to the

“parent country”

FOR EXAMPLE…

Colonists in America may chop down trees

and ship the lumber back to Britain

In England, craftsman make

“manufactured goods” (Wooden Furniture)

The Manufactured Goods are then sent

back to America to be sold to the colonists

WHO DID THE COLONY BENEFIT?

Answer: The “Parent

Country”

BALANCE OF TRADE

Import – to bring goods into a

country from another country

Export – To sell goods from one

country into another

BALANCE OF TRADE

Buying goods and selling goods

is like a see-saw

Countries want to export more

than they import (sell more than

they buy)

BALANCE OF TRADE

Using the colonies for raw

materials and then selling them

goods helped England have a

favorable trade balance

This helped them gain great

wealth

EXPORTS IMPORTS

HOW DOES A COUNTRY INCREASE THEIR WEALTH?

Answer: Export more than it

Imports

BALANCE OF TRADE

Mercantilism was seen as

the only way to build

economic (and military)

power

STACKING THE ODDS

Achieving an uneven balance of

trade is difficult

Britain passed several laws to

help them gain an unfair

advantage in the world market

The British created laws to

prevent the colonies from

trading directly with any other

countries

STACKING THE ODDS

STACKING THE ODDS

For example, if France wanted

to buy tobacco from America,

the colony would have to send

the tobacco to Britain first, and

then the British would sell it to

the French

This is what really happened…

WHO MAKES THE MOST MONEY IN THIS DEAL?

Great Britain!

Why?