Case Study - Mercantilism
Schuler
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Mercantilism is an economic system that emerged in Europe during the Renaissance intended to protect the econcomic and military independence of European states. The rules of a mercanile system, as it was called, was first published by an Englishman named Thomas Mun. Governments implemented Mun's rules or slight variations of them to expand the economic develpment and eventually lead themselves into the industral revolution. The eleven essential rules for a successful mercantile system are as follows:
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English Merchant and Economist
Thomas Mun (6/17/1571 – 7/21/1641)
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Mercantilism: The Rise of the Engand, Fall of Spain
BackgroundThe year is 1558, and Queen Mary I has died passing the throne of England to her sister Queen Elizabeth. Mary's husband and former co-monarch of England is King Philip II if Spain, a roman catholic and heir to the Throne of England by marrage.
King Philip the Second
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Queen Elizabeth the First
Queen Elizabeth, a protestant, begins to support revolts in the Spanish
Netherlands which leads to the impromptu English-Spanish War lasting from 1588 to1605 and economic competition between England and Spain for the next three centuries. |
King Philip's Empire: A Mercantilists DreamThe empire that King Philip II inherited from his father, Charles V, was the
largest in Europe, included holdings on every continent known at the time, and had an all important route to China and the Spice Islands that Europe had searched for for a century. Philip had the groundwork for the greatest empire that world had seen. What would have led Philip's Spain to greatness was mercantilism. He had a network of overseas colonies. Spanish colonies only traded with Spain. Philip had monopolized trade in critical ports. But this is as far as Philip and Spain will go on the mercantile list. |
Empire of Philip the Second (1558)
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Route of Spanish trade and Sliver
Philip's Folly: Spain's DeclinePhilip's Spain had access to the richest silver mine in the world in Arequipa, Peru(1). The silver mined there was transported to Potosí, Lima, and Mexico City(2) where it is minted into the spanish piece of eight and then shipped to Manila(3). From Manila, spanish traders took silver coins and used them to purchase silks, spices and porcelain. This was possible because China's medium for exchange was silver. So vast are the silver mines in Arequipa that it currently produces 20% of the world silver annually, it depressed the chinese economy because of the devaluing of silver, and it caused the spanish piece of eight to become the first world standard currency. Goods from China were then transported around the horn of Africa to Spain(4) were they were bought and sold.
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Spanish Piece of Eight coin
This system sounds fine but when every other country in Europe that Spain was competing with was using a mercantilist doctrine, Spain could not afford not to follow those doctrines. Philip allowed the export spanish silver, he created a dependence on foreign imports instead of developing Spain's industry and economy. The lack of a strong mercantile system in Spain led caused to to go from discover of the Americas, most powerful empire in europe to in 1900 having no overseas empire and at the bottom of the Euopean barrel.
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Queen Elizabeth's England: The Toroise that caught the Hare
PrefaceSpain had every right to be the top dog in Europe during the fourteenth century. But after a eighteen year war with Spain, Queen Elizabeth was looking to beat Spain with her merchants and her trade, not her military. Queen Elizabeth set the precident for mercantilist doctrines for the next four hundred years of english history.
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Queen Elizabeth's England 1558
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Mercantilism: The Empire Builder of England
The ToroiseEngland in 1588 was far behind rival Spain in power and influence. On the mercantile scale Spain was three steps ahead of England, building a network of overseas colonies, forbidding colonies to trade with other nations, monopolizing markets with staple ports. As demostrated many times on this site trade is the key to the success of a nation or empire. So Elizabeth and her successors set up several coastal coloniees in the Americas, Africa and India. The intent of these colonies was that they would be able to facilitate trade routes as well as protect them. These colonies began to export natural resources back to England. England now has more natural resources and so its industries start to devlope to use these natural resources and produce finished products for sale and export. This is facilitated by the English government's mercantilist policies which are to export more than they inport and promote manufacturing.
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Englishmen start to move to the Americas and other colonies for religious freedom, economic prosperity, and to start new lives. These colonists not only increased the amount of raw materials that were exported but they also provided new and growing markets for english manufactured goods on other continents. This chicken and the egg scenario of the resources and market which pushes the industry more lead to the industrial revolution. It is at this point in history where English industries outstrip the resources of their coastal colonies. because of mercantilist doctrines the colonies expand inland instead of inporting the resources. The industral revolution, which led to advances in technology and medicine made the inland expansion possible, perpetuates its own growth. While the English were following mercantilism to over come Spain they as well as other european nations ended up building empires in the Americas, Africa, and Southeast Asia.
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Mercantilism is one of the things that changed the world. The American colonies, forbidden to trade with other countries, taxed and tarrifed without end as part of England's mercantilism, rebel and form the United states of America and forever change our world as well as billions of lives.
