What is a detailed explanation of mercantilism?
There will be many points of analysis here. I think that the essence of mercantilism was the development of a naval strength that enabled the nation to develop colonies and be dependent upon them for their wealth. Mercantilism stressed the need to develop colonies in order to sustain a realm where a favorable trade balance, more export than import, could be present. The philosophy laid the groundwork for nations to explore and strengthen their own nations by creating these colonial realms where nations fell under the flag of another. It stressed that a nation's wealth lie in its encouraging imports and discouraging imports and building up its gold bullion reserve. In my mind, the nationalism that was a result of mercantilism is probably one of its lasting impacts. The emergence of colonization as a result of the economic policy is something quite powerful, and transformed the narrative of more than half the world. Nations in the Americas, Asia, and Africa were directly impacted through this economic philosophy.
The brief answer is that a nation seeks to export more than it imports. It wants to do so with merchandise, versus farm products. It led to imperialism and high tariffs.
Mercantilism was an economic system and practice in which a nation's government regulated its economic affairs to enrich its treasury, particularly by ensuring that its exports exceed imports. Mercantilists called this surplus of export over imports as favorable balance of trade. Such policies were followed by some European countries like England and France from early 1500's to late 1700's
Mercantilism is founded on two main principles. One is that a nation's wealth is judged by the stock of its gold and silver rather than by the general standard of living of its people. Second, the supply of wealth in the world is limited, and therefore one nation can grow rich only by reducing the riches of others. In line with these beliefs the mercantilists argued that a nation not having gold or silver mines must rely on foreign trade to become rich, as at that time, gold served as the chief means of financing unfavorable balance of trade. Thus a nation that exported more than it imported could receive the difference in gold from the importing countries.
The mercantilist governments imposed high tariffs and other restrictions on imports to maintain a favorable balance of trade. Also, they encouraged the growth of domestic industries. Many nations sought overseas colonies, which could serve as markets for exports and as sources of raw materials. To kill competition from colonies for supply of manufactured goods, the colonies were prevented from developing their shipping, and trading with other nations.
Mercantilist governments also favored population growth, as a means of increasing supply of labor and market for industrial products. To prevent depletion of the national stock of gold and metal some governments prohibited their sale to foreigners.
During 16th to 18th century Great Britain practiced an economic philosophy called Mercantilism in international trade. Great Britain, the mother country was the largest empire in history and, for over a century, was the foremost global power. Colonizing America and pursuing a policy of mercantilism greatly increased their power.Mercantilism is the idea that colonies existed for the benefit of the Mother Country and it states that nation becomes stronger by keeping strict control over its trade. Britain sought to increase its power by obtaining large amount of silver and gold and by establishing favorable trade with its thirteen colonies. Based on these ideas, Great Britain, the mother country made decisions that were more advantageous to themselves than they were to the colonies. There were many regulations that were passed to support this theory; Navigation Act of 1651, Act of 1660, and many laws as well. This definitely angered the colonists, but this didn’t really play a role in prompting Americans to rebel in 1776. There were far more other reasons for the Americans to rebel in 1776. Therefore, Mercantilism plays a small role in sparking the rebellion.
To begin with, the theory of Mercantilism represents the colonists as Britain’s tenants providing “rent” by supplying raw materials to England. In return, colonists had to buy the finished products back from Great Britain. To have to export more than you import is not beneficial. But to Britain it was more than beneficial. Britain wanted to accumulate as much hard money as possible, since colonial money was worthless in England. Hard money was the source of prosperity, prestige, and the strength for a nation.
Furthermore, Mercantilist economy is a managed economy, managed by the larger and stronger power. The mother country, Great Britain wanted to be self-sufficient, but for this to be successful, it needed laws and regulations to protect wealthy British merchants and industrialists at the expense of the colonists. The regulations that supported mercantilism was the Navigation Act of 1651 which stated that all imports or exports had to be carried in Great Britain ships. Act of 1660 required that European nations must sell products to the colonies by first stopping at English ports where they would have to pay a custom duty, taxes, which is a way for Britain gain more money. Exports from the colonies could only be shipped in British or colonial ships and had to be sent to England first. After that, the products would be taxed and was allowed to be sent to other countries in European nation. Colonial products could not be shipped directly to any foreign nation. These laws and regulations supported the theory of Mercantilism.
In addition, Mercantilism doesn’t play much of a factor in prompting Americans to rebel in 1776. As suppliers of raw goods only, the colonies could not compete with Britain in manufacturing. In fact English ships were favored. It’s being said that the relationship between Britain and the colonies in the mid-1700s were good. The colonies joined Britain to fight the French in the seven years’ war. During this time the British had to deal with the wars in Europe and really didn't enforce the Navigation Acts, due to their focus with the war. Colonists began to prosper on its own by trading with non-British colonies in the Caribbean. Britain once again tried to enforce these laws after the French and Indian War, but the colonists objected. Moreover, Britain had a lot of debt from the war and thought that the colonies in America should pay much of the debt so Britain imposed several acts such as the Stamp and Townsend act. Because of this, their relationship deteriorated, prompting Americans to rebel in 1776