The Colonial Economy

Start Free Trial

Did the American colonial economy benefit or suffer from the British mercantilist colonial system?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

The colonies managed to prosper while Britain's mercantilistic policies were in force, but did so in spite of the policy rather than because of it. They violated British policy with abandon and thereby managed to prosper; otherwise they would have suffered severely.

Mercantilism was intended to provide a favorable balance of trade between the mother country and the colonies. British economists envisioned that the colonies would be a source of raw materials for Britain and also a market for manufactured goods. As a result the several Navigation Acts were passed which prohibited the colonies from trading with other countries or shipping on any ships other than those sailing the British flag. The Navigation Act of 1651 had been aimed at the Dutch who were England's rivals for the Atlantic trade. The problem for the colonists was that strict enforcement of the policy would result in an unfavorable balance of trade for them and a scarcity of hard money. The colonists ignored the law and conducted a lively and thriving trade with the Dutch and other countries. Among those who became quite wealthy from smuggling was John Hancock, of the famous signature. Several other Navigation Acts were subsequently passed, including the Staple Act and the Plantations Act which required all goods be landed in England and a duty paid before they could be shipped elsewhere. This Act, however, came in force during the English Civil War and the Protectorate when turmoil at home prevented the British from enforcing the policy.

Ultimately, customs agents were sent to the colonies to enforce the Acts, but they caused bitter resentment. The continued abuse of the Navigation Acts led to the cancellation of the Charter of the Massachusetts Bay Company. Subsequent attempts to enforce the acts came to naught, as colonial juries uniformly refused to find smugglers guilty.

Ultimately, with the ascension of George I and II to the throne, Parliament began a policy which Edmund Burke called "a wise and salutary neglect." British officials were busy protecting their own interests and the colonies were largely ignored. So the colonists prospered under mercantilism, but only because of their continuous and wilful violation of the policy.

Approved by eNotes Editorial Team
An illustration of the letter 'A' in a speech bubbles

The very nature of Mercantilism theory is that colonies should serve as a source of raw materials for the mother country, and also a market for manufactured goods from the mother country. It was based on the idea that there was a limited supply of precious metals in the world, and a country promoted it's economy by maintaining a positive cash flow. In this instance, Britain attempted to hold the colonies hostage by making them captive markets for British goods. Had it worked in practice, the colonies would have been devastated; as there was always a shortage of "hard money" in the colonies. Also, there was not the advantage of free market trade and pricing. The colonists got around this by smuggling to French and Dutch markets, under the "triangular trade" system, which the British attempted to shut down with the Navigation Acts and later by issuing Writs of Assistance to catch smugglers whenever possible. So bottom line, Mercantilism would be devastating for the colonies had the British been able to enforce it. As it was, the colonies managed to circumvent, and even flaunt Britain's Mercantilist policy, and profit thereby.

Last Updated by eNotes Editorial on
An illustration of the letter 'A' in a speech bubbles

Both -- they benefited and suffered.

The mercantilist system hurt the American colonists because it prevented them from trading wherever they wished.  It locked them into trading with England and did not allow them to trade with other partners where they might have gotten a better deal.

At the same time, however, it gave them privileged access to the most important market in the world at that time.  The colonies were part of the British Empire and were, therefore, allowed to trade with Britain more freely than they would have been able to if they were a different country.

So there were, from an economic point of view, benefits and down sides to mercantilism for the American colonists.

Last Updated by eNotes Editorial on
Soaring plane image

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial