Money is Power, and Power is Everything Mercantilism: Money is Power, and Power is Everything

WHAT IS MERCANTILISM? An idea formed by Europeans in the 17th and 18th centuries (1800s-1900s)

What is mercantilism Mercantilism – Idea that a nation’s existence depended on power, and power depended on wealth Wealth – money and assets (things worth money)

Get rich or die trying? To gain wealth, a country would capture colonies Colony – a territory that is controlled by a “parent” country

Money = Power =

colonies Raw Materials - An unprocessed natural product used to Manufacture Goods Manufactured Goods – a “final product” made from raw materials

Colonies Colonies were used to gather Raw Materials for the “parent country” Then, the “Parent Country” used these raw materials to make manufactured goods

Colonies The “parent country” then sold these manufactured goods back to the colonies The money made from the sale of manufactured goods went back to the “parent country”

For Example… Colonists in America may chop down trees and ship the lumber back to Britain In England, craftsman make “manufactured goods” (Wooden Furniture) The Manufactured Goods are then sent back to America to be sold to the colonists

Who did the colony benefit? Answer: The “Parent Country”

Balance of Trade Import – to bring goods into a country from another country Export – To sell goods from one country into another

Balance of Trade Buying goods and selling goods is like a see-saw Countries want to export more than they import (sell more than they buy)

Balance of trade Using the colonies for raw materials and then selling them goods helped England have a favorable trade balance This helped them gain great wealth EXPORTS IMPORTS

How does a country increase their wealth? Answer: Export more than it Imports

Balance of trade Mercantilism was seen as the only way to build economic (and military) power

Stacking the odds Achieving an uneven balance of trade is difficult Britain passed several laws to help them gain an unfair advantage in the world market

Stacking the odds The British created laws to prevent the colonies from trading directly with any other countries

Stacking the Odds For example, if France wanted to buy tobacco from America, the colony would have to send the tobacco to Britain first, and then the British would sell it to the French

This is what really happened…

Who makes the most money in this deal? Great Britain! Why?