2. Definition: When a country like Britain (England) used its colonies to form a favorable balance of trade by exporting more than it imported.

3. Textiles $ 300 Lumber $ 500 Gold $ 200 England Exports textiles England Imports Lumber Does the money England receives from France for its Export of Textiles equal the cost of the Lumber they import from France? _______________ What does England have to give to France to purchase lumber? ___________ What is the result of the imbalance in trade cause in England? _______________ NO $200.00 Debt

4. Textiles $ 300 Gold $ 300 Lumber England imports lumber from its colonies Britain (England) can use the colonies to get the lumber they used to have to get from France England no longer needs French Lumber France still needs to import textiles from England. France now has to pay Britain to get the textiles it needs England sells manufactured goods to the colonists. England exports manufactured goods to the colonies England still exports textiles to France France now has to pay for textiles from England.

5. Other Notes Goal of Mercantilism: Create a favorable balance of trade. Colonies helped countries achieve this goal. – Example 1 England had a trade deficit. Why? » Imports cost more than exports = debt – Example 2 England created a favorable balance of trade. How? » England used its colonies to get the goods it once imported, but it still exported its textiles and sells manufactured good to the colonies. » Exports exceeded the cost of imports = profit Colonies are only allowed to import manufactured goods from the mother country. Colonies are only allowed to export natural resources to the mother country. England achieves a favorable balance of trade by exporting more than it imports

6. Definition: A hands off policy the British had towards its colonies which let the colonies develop on their own without strict governmental control. – Colonies learn to govern themselves – The colonies also smuggle goods in from other countries because of salutary neglect. This will lead to problems later as England tries to regain governmental control of the colonies and stop and/or tax previously smuggled goods.