MERCANTILISM: Money is Power, and Power is Everything.
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Transcript of MERCANTILISM: Money is Power, and Power is Everything.
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MERCANTILISM:
Money is Power, and Power is
Everything
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WHAT IS MERCANTILISM?
An idea formed by
Europeans in the 17th and
18th centuries (1800s-
1900s)
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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)
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GET RICH OR DIE TRYING?
To gain wealth, a country would
capture colonies
Colony – a territory that is
controlled by a “parent” country
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MONEY = POWER
=
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COLONIES
Raw Materials - An unprocessed
natural product used to
Manufacture Goods
Manufactured Goods – a “final
product” made from raw
materials
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COLONIES
Colonies were used to gather
Raw Materials for the “parent
country”
Then, the “Parent Country” used
these raw materials to make
manufactured goods
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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”
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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
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WHO DID THE COLONY BENEFIT?
Answer: The “Parent
Country”
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BALANCE OF TRADE
Import – to bring goods into a
country from another country
Export – To sell goods from one
country into another
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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)
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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
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HOW DOES A COUNTRY INCREASE THEIR WEALTH?
Answer: Export more than it
Imports
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BALANCE OF TRADE
Mercantilism was seen as
the only way to build
economic (and military)
power
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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
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The British created laws to
prevent the colonies from
trading directly with any other
countries
STACKING THE ODDS
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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
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This is what really happened…
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WHO MAKES THE MOST MONEY IN THIS DEAL?
Great Britain!
Why?