Mercantilism & The Colonial American Economy (AP U.S. History Exam Study Guide)



in colonial America when we were part of the British Empire our trade with the rest of the world was governed by mercantilist policies what was mercantilism mercantilism was the conception widely held in the 18th century that there is a finite amount of wealth in the world and because of that countries had to compete to acquire as much of that wealth as possible and to achieve this goal it was felt that government policy should regulate trade in such a way that a country exported as much as possible and imported as little as possible such policies usually included tariffs and other taxes on imports in the 17th and 18th centuries there was an intensive global Imperial rivalry in the new world this took the shape of the Spanish in Latin America mining gold and silver the British in North America planting tobacco and other staple commodities the French in Canada trapping furs and fishing and then the British and the French together in the Caribbean known as the West Indies planting and harvesting sugar colonies in the mercantilist era we're seen as a way of enriching the home country and their trade was regulated accordingly the mercantilist system functioned as follows colonies would sell raw materials to the home country where they would be manufactured and then sold back to the colonies as finished goods colonists were banned for competing with manufacturers in the home country the British colonists in what is now the United States exported a variety of raw materials such as tobacco rice and codfish to Great Britain in exchange for luxury items imported from London such as services for tea finer clothing eyeglasses and much else from the 1650s through the 1760s the British Parliament imposed a series of laws collectively called the navigation acts to regulate monopolize and American trade the laws included provisions requiring colonists to trade only with English ships to trade only from a list of approved goods this was to prevent the development of a colonial market for goods Britain might not be able to supply regularly and pass all goods traded with other countries through English ports to be taxed for example in 1733 the molasses Act was passed due to political pressure from British sugar producers the acts ought to ban New England merchants from buying French sugar to make rum but the Americans routinely evaded the law by smuggling goods another issue was that Britain was often at war with other potential trading partners of the American colonists the biggest of these was the French and Indian War of 1754 to 1763 which left Britain 132 million pounds in debt now making payments on this to had consumed 60% of the annual budget in the 1760s and 1770s Parliament dealt with this crisis by passing another series of navigation acts that included the Sugar Act the Stamp Act and the Townsend Acts all of these were new taxes and tariffs designed to help Britain collect the revenue it needed to pay the large cost of empire now aware that smuggling was becoming a colonial pastime Parliament sent royal customs officials to America to ensure the taxes were being collected and to try to stamp out illegal imports the Americans became fiercely opposed to this round of new taxes and regulatory measures insisting upon no taxation without representation and arguing that their natural commercial rights were being violated Americans mounted a stern resistance against what they felt were burdensome imperial economic dictates Adam Smith wrote The Wealth of Nations in the same year 1776 that the Declaration of Independence was written Smith attacked mercantilism and promoted free trade and markets guided not by government regulation and policy but by what he called an invisible hand supply and demand these two works the Declaration of Independence in Adam Smith's The Wealth of Nations told the story of the onset of the American Revolution and foretold the creation of a republic with both economic and political freedom the imperial taxes on Commerce and trade had led the American colonies to fight the American Revolution and declare their independence

5 Comments

  • Kristina Held

    April 13, 2019

    I hope I actually pass tomorrow

    Reply
  • Av 23

    April 13, 2019

    everyone stressing about this exam tomorrow

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  • inactive

    April 13, 2019

    RIP exam tomorrow

    Reply
  • Dylan Pollak

    April 13, 2019

    I AM SO APPRECIATIVE

    Reply
  • Dylan Pollak

    April 13, 2019

    THIS WAS BEYOND HELPFUL

    Reply

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