MERCANTILISM

Question 1

What is mercantalism?

Answer 1

Economic theory recommending a country export more than it import

*Intuitive logic: we want to be sellers and not buyers in the market

Question 2

What does mercantilism say about money?

Answer 2

*There is only so much money in the world, you either have it or someone else does

*Money and goods need to flow
*You must always be liquid in order for mercantilism to work

Question 3

What does the state do under mercantilism?

Answer 3

The state takes a stronger interest in economics and private business, sets economic policies
*Mercantilism is part of state centralization

Question 4

What was the Renaissance an era of?

Answer 4

economic innovation

Question 5

What were two economic inventions in the era?

Answer 5

1. Multi-branch banks with transferable balances & credit
2. Double entry book keeping
   (two columns
   debit= out account
   credit = in account)

Question 6

Why were the innovations made?

Answer 6

Innovations make it easier to track your exact exports and imports (credits and debits)

*Theory that the strongest economic theory is one in which you have more exports than imports

Question 7

How did the english crown initially interact with imports exports?

Answer 7

duties = every tun (cask) of wine imported and every pound of imported or exported merchandise

*This was the extent of the Crown’s involvement with trade, which was generally treated as a private business matter

Question 8

How did English crown interact with imports exports under mercantilism?

Answer 8

increasing English exports would hurt other colonial competitors, especially Spain

English colonial policy was to undermine other colonizers.

Question 9

Which english monarch adopts mercantilism? Why?

Answer 9

Queen Elizabeth I adopts mercantilism

Period of prejudice, didn’t like foreign merchants coming in and selling stuff, then leaving)

Question 10

How did Elizabeth 1 try to avoid immigrants / foregin trades people?

Answer 10

Merchant navy

her merchants (brititsh) will be protected
- Created navigation acts (protecting fishers)
- Meaning England cannot import things they already produce

Question 11

Important english export?

Important colonial exports?

Answer 11

Key English exports: textiles (especially wool)

Key colonial exports: tobacco, sugar, cotton, ginger, cocoa beans, indigo and other dye

Question 12

How was the dutch republic organized?

Answer 12

7 states, each had a regent

*Each of the states had its own interests and they sometimes compete

Republic was governed by the States General (an assembly), who voted for a single executive leader called the Stadtholder

Note: Netherlands does not have a king until 1815

Question 13

What was common ground in the dutch repoublic?

Answer 13

Economic policy as common ground = the most important people in the Dutch Republic were businesspeople who had funded the wars against Spain

*Expanding shipping capacity & domestic canals and roadways
*Mercantilist policy

*Rise of the stock exchange in Amsterdam = opportunity to invest in Dutch merchant companies and commodities

Question 14

Why was there a dutch golden age?

Answer 14

*Already the most productive agricultural region of Europe

*Economic policy

*Relative toleration (Attracts crypto-jews)

Question 15

What are Features of the Dutch Golden Age?

Answer 15

Economic strength meant more money in middle-class hands, which leads to a boom in art commissions and the rise of the Dutch Master
*Already a center of the Northern Renaissance

Question 16

What is the Dutch East India Company?

Answer 16

amalgamation of existing companies to compete with English monopoly companies

Question 17

Who was the Dutch East India Company ran by?

Answer 17

Run by the Lords Seventeen (Heeren XVII), major shareholders who represented the Dutch states
*Quasi-militarized: empowered to take military action, issued with uniforms and armaments,

Question 18

What does the the Spice Trade mean for the dutch?

Answer 18

Dutch expansion into the Indian Ocean (especially present-day Indonesia)

*Pushing the Portuguese out and taking over their forts and trading posts

*Forming alliances with local rulers (often Muslim) to liberate them from Portuguese rule and demanding spice harvests in return

Question 19

For the dutch exports (Building spice monopolies, especially in cloves, cinnamon, and nutmeg) where did they go?

Answer 19

*Most of what the Dutch transport out of the Indian Ocean is destined for other

European buyers = mercantilism in action

Question 20

What did the dutch use superiority in numbers of the Dutch fleet for?

Answer 20

run blockades, sabotage shipping lines, and otherwise dominate the region
*This includes resorting to violence against local populations who were uncooperative (e.g. the 1620 Banda Massacre)

Question 21

Did the french engage in mercantalism?

Answer 21

Mercantilism gradually grew in force from the 16th century onward, especially in terms of protectionism
*E.g. France bans imports of wool from Spain in 1539

Question 22

Which french monarch took an interest in mercantilism?

Answer 22

Louis XIV & Colbert

*The economy should serve the state = economic centralization

*Selling abroad, buying at home

*Competing with the Dutch economy with local production (implemented strict quality regulations)

*Stimulating trade and colonization by incentivising traders to form companies

Question 23

What is Colbertisme? (French)

Answer 23

Targets dutch economy

Centralizes French economy

French economy & productivity grew = most powerful European economy

But Dutch stays on top

Question 24

What did the french economy try do to keep exports up?

Answer 24

1. Strict quality controls
2. Imported craftsmen

Question 25

What is the idea behind the triangle trade?

Answer 25

Europeans take people from africa then transport them to americas, where they produce commodities that are sold in europe

Question 26

Why is the French and Dutch economies dominant in the 17th & 18th centuries?

Answer 26

they invest in overland infrastructure (canals and roads)

Question 27

What is the theory used in colonial policy?

Answer 27

Mercantilism

Question 28

What type of economy emerged?

Answer 28

Rise of the colonial extraction economy, which runs on enslaved labour

Question 29

What is a metropole?

What is a colony?

Answer 29

Metropole: Parent country (england)

Colony: ex. Canada

Question 30

How do metropoles exert control over colonies trade?

Answer 30

s limit who their colonies can trade with

*Metropole: the parent state of a colony (e.g. Virginia is the colony; England is the metropole)

*E.g. England requires that all colonial commodities be shipped either to England or to other English colonies (at that point they can be exported)

*The idea is to make sure the population in the metropole does not need foreign imports to obtain colonial commodities

Question 31

What two things are governments sanctioning? (what are they monopolizing)

Answer 31

geographic regions (e.g. Dutch East India Company)

and over individual commodities (e.g. Dutch spice trade)

Question 32

What game is mercantilism?

Answer 32

Mercantilism is a zero-sum game: either you are winning or your competitors are
*Every client state is a potential competiton

Question 33

What does the reliance on maritime trade lead to?

Answer 33

a naval arms race = who has the biggest fleet

Question 34

Which wars does the naval arms race start?

Answer 34

Anglo-Dutch Wars (1652 – 54, 1665 – 67, 1672 – 74, 1780 – 84)
*Causes: trade & overseas colonies (in the Indian Ocean & Caribbean)
- Fight over northern sea, England wants it and dutch wants to run it

*Franco-Dutch War (1672 – 78)
*Dutch attempt to conquer the Netherlands, ultimately unsuccessful although France makes significant territorial gains in the Peace Treaty
- Very destructive (destroying boats u spent years building)

Question 35

How did mercantilism decline?

Answer 35

Undermined by Enlightenment-thinkers in the late 17th and 18th centuries

Question 36

Criticism of mercantilism by John Locke?

Answer 36

Money isn’t fixed

You don’t have to fight over “a piece of the pie”

This fluxates

Question 37

Criticism of mercantilism by David Hume?

Answer 37

a constant influx of money (bullion) into a country will cause inflation and decrease the value of that money, making it less and less cost-effective to export goods (especially to countries where prices remain low)

Question 38

Criticism of mercantilism by Adam Smith?

Answer 38

Money (bullion) is just another commodity; when we export goods, we import a different good

(so money isn’t success, but another good)

Side note: Invisible hand guy and possibly invented capitalism