THE ORIGINS OF MERCANTILISM

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THE ORIGINS OF MERCANTILISM
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Mercantilism

• Discovery and conquest left their marks on the
  economy and politics of Europe.
• Without consulting anyone else in Europe, the
  rulers of Portugal and Spain, the first two
  economics powers in world trade, quickly divided
  any new lands to be found in any part of the
  world between them.

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Mercantilism

• After the Treaty of Tordesillas of 1494, another
  treaty, in 1529, drew a line east of the Moluccas
  which allocated everything on its pacific side to
  the Spanish, and Africa, the Indian Ocean and the
  Spice Islands to the Portuguese.

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Red/pink Spanish territory Blue/light blue
Portuguese territory
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Mercantilism

• This arrangement did not sit well with the other
  major powers in Europe.
• One way to deal with the influx of new wealth was
  to tap the new-found Spanish wealth either
  through legal or illegal means.

Drake
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Mercantilism

• The sixteenth century has often been called the
  Golden Age of Spain. The influence of the
  Spanish armies, Spanish Catholicism, and Spanish
  wealth was felt all over Europe.
• This greatness rested largely on the influx of
  precious metals from the New World.

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Mercantilism

• To protect this treasure from French and English
  pirates, armed convoys transported it each year
  to Spain. Between 1503 and 1650, 16 million
  kilograms of silver and 185,000 kilograms of gold
  entered Spain.

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The Spanish Main
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Mercantilism

• Meanwhile, Spain was experiencing a steady
  population increase, creating a sharp rise in the
  demand for food and goods.
• Spanish colonies in the Americas also represented
  a demand for products.
• Because Spain had expelled the Jews and Muslims,
  they could not meet the new demands.

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Mercantilism

• Prices rose and with them, the costs of
  manufacturing cloth and other goods.
• As a result, Spanish products could not compete
  in the international market and cheaper products
  made elsewhere.
• Prices spiraled upward faster than the government
  could levy taxes to dampen the economy. Money
  flowed out of Spain to the rest of Europe through
  the increased demand for cheap products and the
  religious wars of Philip II.

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Mercantilism

• Another way Europeans dealt with the newly
  discovered lands and their bounty was through
  competition. The discoveries has opened a global
  battleground for traders and soldiers. Each
  country developed economic policies to protect
  themselves from foreign competition.
• Mercantilism became the theory of trade espoused
  by the major European powers from roughly 1500 to
  1800.

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Mercantilism

• Mercantilism advocated that a nation should
  export more than it imported and accumulate
  bullion (especially gold) to make up the
  difference.
• The exportation of finished goods was favored
  over extractive industries like farming.
  Underlying this theory was the belief that wealth
  was finite.

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Mercantilism

• If one nation hoped to grow richer, it had to do
  so at the expense of some other nation. The
  development of colonies became very attractive
  during the era.
• Wealth could be kept by a nation if its colonies
  provided raw materials to the mother country and
  the mother country could sell finished goods to
  the colonies.

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Mercantilism

• European merchants, with the support of their
  home governments, acted upon the mercantilist
  theories often using force, robbery, bribery,
  extortion, and government regulations.
• In the 16th century, the Portuguese won dominance
  over the Asian trade routes from India to the
  Spice Islands from the Arabs by fortifying bases
  at the entrance of to the Red Seas and the
  Persian Gulf. The Portuguese treated any
  non-Christian ship as a lawful prize

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Portuguese Empire at its height
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Portuguese Empire in 1800
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Mercantilism

• By the end of the 16th century, the Portuguese
  were being elbowed aside by the Dutch who set up
  the East India Company with the aim of replacing
  the Portuguese control of the spice trade to
  Europe.
• Through ruthlessness, and sometimes blood-shed,
  the Dutch pushed the Portuguese aside and then
  fought to keep the English out of the Spice
  Islands as well.
• Dutch dominance of Indonesia caused the British
  to focus on India and the Caribbean Islands in
  the 17th century.

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Dutch Empire
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Mercantilism

• Despite its own civil war in the middle of the
  17th century, the British tried to establish
  themselves as world merchants.
• The result was the series of Anglo-Dutch wars
  throughout the later half of the 17th century in
  which England gained control of several overseas
  possessions from the Dutch, including New
  Amsterdam and many Caribbean Islands.
• By the 18th century, the importance of overseas
  possessions became more and more important in
  European affairs leading to the first world war
  The Seven Years War or the French and Indian War.

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THE SLAVE TRADE, 14001860