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Mercantilism was the governing economic policy persued by Europem countries during the 17th and 18th cenuries. There was no great spokesman for mercantilism like Adam Smith fir capitalism (The Wealth of Nations) and Karl Marx for Comunism (Das Kapital). Mercantilism was esentially the attempt of pre-industrial European leaders to gain control over the increasingly complex ecomomies that emerged from the late-Medieval era. Other topics include the voyages of discovery, American gols and slver, the highland clearances, the potato, and slavery.
Mercantilism was the governing economic policy persued by Europem countries during the 17th and 18th cenuries. There was no great spokesman for mercantilism like Adam Smith fir capitalism (The Wealth of Nations) and Karl Marx for Comunism (Das Kapital). Mercantilism was esentially the attempt of pre-industrial European leaders to gain control over the increasingly complex ecomomies that emerged from the late-Medieval era. There were substantial variations in the Mercantalist policies persued in different countries. Mercantilist policies were developed as regulations to promote national prosperity.
A central tenant of mercantilism was bullionism. This was the view that the economic health of a nation was based on the quantity of precious metals (gold and silver) which could be amass. Mercantilist theory focused on bullion as a country's principal source of prosperity, prestige, and power. Accumulating bullion mean a favorable ballance of trade. As a resulted Mercantilists promoted exports and discouraged imports. Many countries imposed high tariffs on imported manufactured goods, but low tariffs on imported raw material for country's manufacturing. Nations attempted to become self-sufficient, sometimes in areas in which they had no competitive advantage. Mercantilists put a great emphasis on sea power, needed to protect a merchant fleet. Colonies were sought to obtain raw materials and guaranteed markets. Mercantilism required a high degree of state involvement to regulate the economy and enforce the many policies. It was the state involvement that Adam Smith would criticse in his Wealth of Nations as a destructive force.
The great European voyages of discovery of the 15th and 16th centuries were fundamenrally economic enterprises. They were conducted by the European countries of the Atlantic coasts to establish direct trade contacts with China and the Spice Islands (Indonesia) that was being blovked by Venice and the Arabs. At the time, trade in silk, porcelin, and spices from the East carried over the Silk Road had to pass through Turkish, Arab, Byzantine, and Italian middleman, making them enormously expensive. The crusaders failed to break the Islamic wall separating still primitive Europe from the riches of the East. Circumventing the land Silk Road and the sea Spice Route would have profound economic consequences for Europe and the world. The ballance of power would shift from Eastern to Western Europe and eventualkly to northern Europe. Two nations led the early explorarions in the 15th century--Spain and Portugal. These two countries pioneered the sea routes that would lead Europeans to Asia and the Americas, but the Dutch, English, and French were to follow in the 16th century.
Spanish Conquistadores conquered the Aztec and Inca Empires in the first half of the 16th century. The result of the booty and the working of existing as well as new mines was a a huge influx of gold and silver bullion flowing into Europe. The impact on the European economy was immense altering the course of history that still affect us today. Columbus and other early expolrers encountered small quantities of gold in the Caribbean, but fantastic accounts of a Kingdom of Gold began to circulate in Europe--the legendary El Dorado. He was a king who was so wealthy that he covered himself with gold dust every day and dove into a lake. Political factors also drove the European conquest. German Emperor and Spanish King Charles V desperately needed gold bullion. Charles had taken out large loans to bribes the electors that made him Holy Roman Emperor (1519). He also faced a costly war with the Turks. The Ottomons moving north took Belgrade (1521). Next they conquered Hungary (1526). Soon they had reached Vienna, the center of Hapsburg rule (1526). Charles not only faced the Turks, but the Protestant Reformation in Germany. This forced Charles to seek even more loans. One way in which Charles paid his loans is by granted licenses to pursue treasure in the Americas. Thus conquistadors financed by European banks descended upon the New World, scouring every corner for the legendary El Dorado. Hernan Cortez defeated the Aztec ruler Montezuma in Mexico (1520) and sent the first large shioment of gold objects back to Spain. Charles V immediately smelted them down to bullion. Francisco Pizarro demanded a ransom for Inca ruler Atahuallpa and obtained a vast treasure of gold and silver objects (1532). The Spanish first simply seized good and siklver objects from the native Americans, in effect looted the artistic trasures of entire civilizations. Historians estimate that about $140 million work of gold and silver objects were obtained from Peru alone between 1531 and 1540. [Hoopes] Then they used the indeginous people as slaves to produce more bullion from existing and new mines. The American treasure, however, quickly passed through Charles' treasury. It served to enable him to take out even more loans. Charles by 1551 had borrowed 14.4 million ducats at interests rates approaching 50 percent. [Hoopes] Charles army did stop the Ottomans from moving further into Christian Europe, but it could not cintain the Protesrant Revolution. But the impact of the gold is much larger. The American gold helped finance Renaissance art. As much of went into the pockets of bankers, it played an important role in the expanding European economy in the countries that had financed Charles. The gold also financed the illfated Spanish Armada unleashed on England by Charles's son Phillip II (1588). Some of the gold flowed into other European treasuries as other maritime powers (England, France, and the Netherlands) began preying upon Spanish treasure ships. Some of the gold can be seen in gold leaf and trasures of the churches across Europe. But much of the rest of the gold is difficult to trace with precission. What is known is that the American gold significantly increased the gold stock of Europe, resulting in both inflation and an expansion of economic activity.
Most histories of the Spanish and Portuguese conquest of the New World, after reporting on Columbus establishing contact, focus on Cortez and Pizarro and their conquest of the Aztecs and Incas. Chief among the accounts are those involving the Conquistadoes and gold. The new colonies brought emense quantities of gold and silver and helped make Spain the most powerful country in the world. In the long run, however, it may have been the humble potato that ws the most significant item brought back to Europe. Farmers could harvest much larger uantities of potatos per acre than any other crop. This meant that European countries could support much larger populations than eve before. The cultivation of the potato resulted in a population explosion.
The Native Americans were still in the stone age when the Europeans arrived, but they had developed two crops that would profoundly reshape European society. One was the potato. The other was corn. It was a crop developed in the Central Valley of Mexico sometime around 5,000 BC and spread thrrougout North and South America to be grown by most native American people. The Maya evebn called themselves the "Corn People". While the Spanish were after gold, these two crops have had an infintely greater economic impact. Corn became a staple in Western Europe and even more so in the United States. Americans have thought little about corn until the ethenol craze of the early 2000s, but in fact corn was the central crop of American agriculture. Not only were many foods made from corn, but corn was used as not only a feed stock for animal rearing, but a wide range of industrial products. One estimate suggest that American super markets stock about 45,000 different items and about 25 percent of those items contain corn in one form or another.
A new outlet for African slaves appeared in the 15th century. Portuguese explorers began voyages south along the Atlantic coast of Africa. The Portuguese were looking for a route to Asia, but as they moved south they began setting up trading posts. First the Portuguese established trading posts along the coast of West Africa, but gradually moved further south along the coast. Other European maritime powers followed suit. This was the beginning of the African slave trade. The Europeans differed from the Arabs in that they did not normally conduct raids themselves, but usually bougth slaves from Arab slave brokers and African chiefs. As the demand for slaves expanded, whole areas of Africa were depopulated. The European African slave trade began during the mercantalist era. It continued well into the industrial era. In fact because African slaves played a major role in the industrial revolution in Europe. The ememse profits from West Indian sugar islands helped to finance the industrial revolution. And the raw material for the first real modern industry, cotton textiles, was produced by slaves.
Hoopes, John. University of Kansas Lawrence campus.
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