The economic philosophy of mercantilism shaped European perceptions of wealth from the 1500s to the late 1700s. Mercantilism held that only a limited amount of wealth, as measured in gold and silver bullion, existed in the world. In order to gain power, nations had to amass wealth by mining these precious raw materials from their colonial possessions. During the age of European exploration, nations employed conquest, colonization, and trade as ways to increase their share of the bounty of the New World. Mercantilists did not believe in free trade, arguing instead that the nation should control trade to create wealth. In this view, colonies existed to strengthen the colonizing nation. Mercantilists argued against allowing their nations to trade freely with other nations.
Source: Corbett, P.S., Janssen V., Lund, J., Pfannestiel, T., Vickery, P., & Waskiewicz, S. U.S. History. OpenStax. 30 December 2014.
Exploration and Mercantilism
Spanish Mercantilism
Spain’s mercantilist ideas guided its economic policy. Every year, slaves or native workers loaded shipments of gold and silver aboard Spanish treasure fleets that sailed from Cuba for Spain. These ships groaned under the sheer weight of bullion, for the Spanish had found huge caches of silver and gold in the New World. In South America, for example, Spaniards discovered rich veins of silver ore in the mountain called Potosí and founded a settlement of the same name there. Throughout the sixteenth century, Potosí was a boom town, attracting settlers from many nations as well as native people from many different cultures.
Colonial mercantilism, which was basically a set of protectionist policies designed to benefit the nation, relied on several factors: colonies rich in raw materials, cheap labor, colonial loyalty to the home government, and control of the shipping trade. Under this system, the colonies sent their raw materials, harvested by slaves or native workers, back to their mother country. The mother country sent back finished materials of all sorts: textiles, tools, clothing. The colonists could purchase these goods only from their mother country; trade with other countries was forbidden.
The 1500s and early 1600s also introduced the process of commodification to the New World. American silver, tobacco, and other items, which were used by native peoples for ritual purposes, became European commodities with a monetary value that could be bought and sold. Commodification thus recast native economies and spurred the process of early commercial capitalism. New World resources, from plants to animal pelts, held the promise of wealth for European imperial powers.
Source: Corbett, P.S., Janssen V., Lund, J., Pfannestiel, T., Vickery, P., & Waskiewicz, S. U.S. History. OpenStax. 30 December 2014.
English Mercantilism
Spain had a one-hundred year head start on New World colonization and a jealous England eyed the enormous wealth that Spain gleaned. The Protestant Reformation had shaken England but Elizabeth I assumed the English crown in 1558. Elizabeth oversaw England’s so-called “golden age” that included the expansion of trade and exploration. English mercantilism, a state-assisted manufacturing and trading system, created and maintained markets. The markets provided a steady supply of consumers and laborers, stimulated economic expansion, and increased English wealth.
However, wrenching social and economic changes unsettled the English population. The island’s population increased from fewer than three million in 1500 to over five million by the middle of the seventeenth century. The skyrocketing cost of land coincided with plummeting farming income. Rents and prices rose but wages stagnated. Moreover, movements to enclose public land–sparked by the transition of English landholders from agriculture to livestock-raising–evicted tenants from the land and created hordes of landless, jobless peasants that haunted the cities and countryside. One-quarter to one-half of the population lived in extreme poverty.
New World colonization won support in England amid a time of rising English fortunes among the wealthy, a tense Spanish rivalry, and mounting internal social unrest. But supporters of English colonization always touted more than economic gains and mere national self-interest. They claimed to be doing God’s work. Many claimed that colonization would glorify God, England, and Protestantism by Christianizing the New World’s pagan peoples. Advocates such as Richard Hakluyt drew upon The History of the Kings of Britain, and its mythical account of King Arthur’s conquest and Christianization of pagan lands to justify American conquest. Moreover, promoters promised that the conversion of New World Indians would satisfy God and glorify England’s “Virgin Queen,” Elizabeth I, who was seen as nearly divine by some in England. The English—and other European Protestant colonizers—imagined themselves superior to the Spanish, who still bore the Black Legend of inhuman cruelty. English colonization, supporters argued, would prove that superiority.
In his 1584 “Discourse on Western Planting,” Richard Hakluyt amassed the supposed religious, moral, and exceptional economic benefits of colonization. He repeated the “Black Legend” of Spanish New World terrorism and attacked the sins of Catholic Spain. He promised that English colonization could strike a blow against Spanish heresy and bring Protestant religion to the New World. English interference, Hakluyt suggested, may provide the only salvation from Catholic rule in the New World. The New World, too, he said, offered obvious economic advantages. Trade and resource extraction would enrich the English treasury. England, for instance, could find plentiful materials to outfit a world-class navy. Moreover, he said, the New World could provide an escape for England’s vast armies of landless “vagabonds.” Expanded trade, he argued, would not only bring profit, but also provide work for England’s jobless poor. A Christian enterprise, a blow against Spain, an economic stimulus, and a social safety valve all beckoned the English toward a commitment to colonization.
This noble rhetoric veiled the coarse economic motives that brought England to the New World. New economic structures and a new merchant class paved the way for colonization. England’s merchants lacked estates but they had new plans to build wealth. By collaborating with new government-sponsored trading monopolies and employing financial innovations such as joint-stock companies, England’s merchants sought to improve on the Dutch economic system. Spain was extracting enormous material wealth from the New World; why shouldn’t England? Joint-stock companies, the ancestors of the modern corporations, became the initial instruments of colonization. With government monopolies, shared profits, and managed risks, these money-making ventures could attract and manage the vast capital needed for colonization. In 1606 James I approved the formation of the Virginia Company (named after Elizabeth, the “Virgin Queen”).
Rather than formal colonization, however, the most successful early English ventures in the New World were a form of state-sponsored piracy known as privateering. Queen Elizabeth sponsored sailors, or “Sea Dogges,” such as John Hawkins and Francis Drake, to plunder Spanish ships and towns in the Americas. Privateers earned a substantial profit both for themselves and for the English crown. England practiced piracy on a scale, one historian wrote, “that transforms crime into politics.” Francis Drake harried Spanish ships throughout the Western Hemisphere and raided Spanish caravans as far away as the coast of Peru on the Pacific Ocean. In 1580 Elizabeth rewarded her skilled pirate with knighthood. But Elizabeth walked a fine line. With Protestant-Catholic tensions already running high, English privateering provoked Spain. Tensions worsened after the execution of Mary, Queen of Scots, a Catholic. In 1588, King Philip II of Spain unleashed the fabled Armada. With 130 Ships, 8,000 sailors, and 18,000 soldiers, Spain launched the largest invasion in history to destroy the British navy and depose Elizabeth.
An island nation, England depended upon a robust navy for trade and territorial expansion. England had fewer ships than Spain but they were smaller and swifter. They successfully harassed the Armada, forcing it to retreat to the Netherlands for reinforcements. But then a fluke storm, celebrated in England as the “divine wind,” annihilated the remainder of the fleet. The destruction of the Armada changed the course of world history. It not only saved England and secured English Protestantism, but it also opened the seas to English expansion and paved the way for England’s colonial future. By 1600, England stood ready to embark upon its dominance over North America.
English colonization would look very different from Spanish or French colonization. England had long been trying to conquer Catholic Ireland. Rather than integrating with the Irish and trying to convert them to Protestantism, England more often simply seized land through violence and pushed out the former inhabitants, leaving them to move elsewhere or to die. These same tactics would later be deployed in North American invasions.
English colonization, however, began haltingly. Sir Humphrey Gilbert labored throughout the late-sixteenth century to establish a colony in Newfoundland but failed. In 1587, with a predominantly male cohort of 150 English colonizers, John White reestablished an abandoned settlement on North Carolina’s Roanoke Island. Supply shortages prompted White to return to England for additional support but the Spanish Armada and the mobilization of British naval efforts stranded him in Britain for several years. When he finally returned to Roanoke, he found the colony abandoned. What befell the failed colony? White found the word “Croatan” carved into a tree or a post in the abandoned colony. Historians presume the colonists, short of food, may have fled for a nearby island of that name and encountered its settled native population. Others offer violence as an explanation. Regardless, the English colonists were never heard from again. When Queen Elizabeth died in 1603, no Englishmen had yet established a permanent North American colony.
After King James made peace with Spain in 1604, privateering no longer held out the promise of cheap wealth. Colonization assumed a new urgency. The Virginia Company, established in 1606, drew inspiration from Cortes and the Spanish conquests. It hoped to find gold and silver as well as other valuable trading commodities in the New World: glass, iron, furs, pitch, tar, and anything else the country could supply. The Company planned to identify a navigable river with a deep harbor, away from the eyes of the Spanish. There they would find an Indian trading network and extract a fortune from the New World.
Source: The American Yawp. A Free and Online, Collaboratively Built American History Textbook, 2017-2018 Edition.
Exploration and Mercantilism – Video
Nilsen, S. Exploration and Mercantilism. (2012, November 8). [Video File]. Retrieved from https://www.youtube.com/watch?v=yqyCKtyvP-8
Summary
Mercantilism is an economic theory. European nations embraced mercantilism in the fifteenth century, sixteenth century, and seventeenth century. Under mercantilism, European nations sought to establish positive trade balance and accumulate vast quantities of gold and silver. Nations such as Portugal, Spain, England, and France established colonial empires in the Americas as a means of accumulating wealth. Spain was the first European nation to establish a colonial empire in the Americas. Spain extracted a tremendous amount of gold and silver from its colonies in the Americas. European nations mandated that their colonies conduct trade only with them, not with any foreign nation. Europe benefited greatly from mercantilism, while many peoples in the Americas, Africa, and Asia suffered from the policy.
