Mercantilism+Reading


 * Unit 2 Readings New Monarchs and the Rise of Nation States**

pp.532-533 McKay text on Mercantilism

1. Who was appointed by Louis XIV to oversee his country’s fiancés?

2. In the 17th and 18th century it was assumed that a country’s power was dependent on its supply of gold. What were four mercantilistic policies that a country could pursue that would allow it to become wealthy and powerful?

3. What were the two most costly expenditures of the French state that undermined all the successful mercantilist policies after Colbert’s death?

**Here is the special reading assignment on mercantilism:**
**Mercantilism Reading**

As new monarchs consolidated power in their countries over the church and fractious nobles, they also took control over the countries’ finances. They standardized weights, measures, and money and they also developed more efficient bureaucracies to collect taxes. All of these things promoted economic growth. When inflation drove up prices in the 16th century and costly wars drove up their debts, the kings and their advisors developed schemes to raise more money. They wanted as much gold and silver (“specie” or “bullion”) to flow into their countries as possible. These economic strategies became the basis of mercantilism which tries to make a country as economically strong and independent as possible.

Under mercantilism, it was desirable to increase the export of finished goods and to reduce the export of unprocessed raw materials that could be used in manufacturing. Their new policies tried to block the importation of manufactured goods from other countries by using high tariffs (import taxes) to make those goods too expensive. However, they were eager to import cheap raw materials such as cotton. All of these moves were designed to create a favorable balance of trade so other countries would have to pay their debts in gold and silver. Colonies therefore became very important because they could provide raw materials, markets for the mother country’s manufactured goods and (ideally) a source of gold and silver. No other countries were allowed to trade with those colonies.

In a sense, the new monarch or country that ended up with the most gold and silver would win the game of international power. This system of mercantilism was carried out by laws, regulations and bureaucracies set up by the New Monarchs to regulate their national economy. This new system made the kings and middle class merchants rich at the expense of the nobles who had traditionally controlled feudal society. Towns and seaports replaced medieval manors as the economic centers during this commercial revolution in the 16th and 17th centuries.

**Some mercantilist policies:**


 * 1) Guilds were weakened because they wouldn’t allow goods to be sold or traded that were not made by members of that local guild. (In France they were kept to tax.)


 * 1) New manufacturing ventures like silk were introduced to put the poor to work.


 * 1) Laws were passed to discourage begging. Poor people were put to work. The Poor Law in England created work houses instead of giving them charity. They had to go back to the villages where they were born to get public assistance.


 * 1) Merchants who employed lots of poor people or exported many goods received special favors from the government.


 * 1) Parliament and royal advisors began to regulate the economy instead of local towns and guilds.


 * 1) Governments tried to steal skilled workers from other countries while prohibiting their own skilled workers from leaving the country.


 * 1) Governments helped to create national markets by eliminating local tariffs, building better roads and canals and by controlling bandits and brigands.


 * 1) In addition governments helped to create national markets by standardizing weights & measures and creating a national currency.


 * 1) Governments negotiated international treaties to get trading rights. Merchants who were backed by the power of a whole country with a navy were able to negotiate better deals. Henry VII promoted England’s overseas trade by sending out explorers and signing a commercial treaty with Dutch merchants in Flanders.


 * 1) Navies were built up to protect the trade routes used by the country’s merchants.

11. Overseas companies were chartered by the king to organize the country’s trade with specific areas. These companies were granted monopolies, were allowed to arm their ships, and gained the right to negotiate commercial treaties in the region they were chartered to control. For example, in 1600 England’s East India Company was given exclusive English trading rights with English colonies in India.