Topic 1 - Mercantilism Flashcards
(28 cards)
Starting point for modern economic development
the renaissance
renaissance dates
1300-1700
important points of renaissance
focus on humanism, arts, particularly in italy in 14th and 15th century with growing trade between europe and asia
renaissance scientific revolution
revolution in discoveries and methods
increased focus on empirical evidence
when was printing press developed and by whom
1440 by German Goldsmith Gutenberg
Key world discoveries + dates
discovery of new world by columbus - 1492
discovery of east indies by vasco de gama - 1497-99
circumnavigation of globe by Magellan - 1519-1522
exploration and discovery - key dates
- First half of 15th Century: Portuguese navigated and charted the West African Coast
- Second half of 15th Century: Portuguese rounded the cape of Good Hope and East Africa onto India
- Following the discovery of the New World, Spanish and Portuguese charted the Atlantic and American East Coast
- 1513: Spaniard, Balboa, discovered the Pacific Ocean by navigating around South America
- 1521-22: Portuguese Magellan circumnavigated the world sailing west-to-east
spanish and portuguese conquest
Portuguese in 16th Century: taken control of Indian Ocean, establishing colonies along the West and East African Coasts, in East India, Ceylon, the East Indies, Macao in China and along the Brazilian coast of South America
Spanish: colonised the West Indies Islands, Southern and Central America and the West Coast of South America
major imports into europe in 16th century
Spices from the East and Bullion from the Americas
growth in slave trade
trade in 17th century
Triangular pattern of trade developed that would go on to form the basis of the British commercial revolution
o Luxuries from the East were mainly traded for bullion; slaves in West Africa purchased with European products were traded for bullion, sugar and other tropical goods from the Americas
navigational dominance
first dutch, then england
dutch: took control over Spice Islands of Indonesia with the Dutch East India Company and dominated spice trade with Europe
english: established trading posts in India and the North American colonies and seized islands in the West Indies from the Spanish
mercantilism
dominant policy of European powers from late 16th to the 18th century
key features of mercantilism
Consisted of strengthening the power of the state afforded by the revenue of expanding trade and colonisation which, in turn, would promote growth
European states sought to increase their government revenue to expand their naval and military capacity to further pursue colonial expansion
mercantilism as bullionism - dates and features
16th century
- Believed the essence of national wealth was stock of gold and silver reserves which enable the State to finance military/navy
- Advocated protectionist policies:
o Prohibit export of specie
o Exchange rate manipulation
o Use of barter in foreign trade - Ultimately failed as specie flowed out to more competitive European nations exporting their products
mature mercantilism
17th - 18th century
- Policy objective became accumulating a stock of specie reserves
- Thomas Mun – exemplar of Mercantilism
o Trade protectionist policies, entirely consistent with colonialism - Policy Approach: export manufactured products and import raw materials to ensure favourable terms of trade
Mun’s mercantilist policies
Summarises the strategic intent of the British Government in 17th and 18th Century
* High import duties except on raw materials which should be uninhibited and removal of any export duties
* Subsidies on manufactured exports
* Forbid export of raw materials
* Money wages low and keep low cost structure for export competitiveness
* Anti-competitive measures such as shipping monopoly (Navigation Act 1651) and granting monopolies to trading companies
British and dutch rivalry
- Dutch had superior navy for most of the century, but did not have the resources to expand their colonial possessions other than major trading posts
- Amsterdam was most important financial and trading city in Europe
years of anglo-dutch wars
o 1651-1654
o 1665-1667
o 1672-1674
how did anglo-dutch conflict end
- Glorious Revolution 1688 ended the conflict with Dutch Sovereign William of Orange placed on the English throne
mercantile dominance of Britain in 18C
English Navy was granted many privileges to ensure their loyalty and cooperation to oppose the French
* Any Anglo-Dutch fleet was under English command
* English Navy greatly expanded, but Dutch navy went into relative decline
* Dutch merchant houses began to use London, so it became the centre of merchant trade and finance in Europe
commercial revolution in Britain
occurred in 18th century
* Mercantile economy developed significantly laying the foundation for capitalist-based development in the latter part of the century
* Development of constitutional monarchy in 1689 ensured more rational system of taxation
significant developments of commercial revolution in Britain
- Better parliamentary government in which a liberal society emerged and public debated of policy thrived with dissenting opinion tolerated
- Creation of Bank of England in 1694
o Establishment of the funded debt
o Recoinage of the nations money
o Emergence of an organised London market for public and private securities
o Led to lower interest rates for public and private borrowing - National economic policy heavily influenced by merchant class thorugh parliament
- British naval dominance allowed them to enforce Navigation Acts of 1651 and 1660
o Promoted the English merchant marine and its maritime trade whose security led them to aggressively pursue foreign markets - Substantial growth in North American colonies
o Providing valuable products such as tobacco, rice, indigo and cotton
o Became markets for English products as population, income and wealth grew
when was bank of england created
1694
navigation acts years and purpose
1651 and 1660
o Promoted the English merchant marine and its maritime trade whose security led them to aggressively pursue foreign markets
