AP® European History review sheet from Aim for Five (aimforfive.com/euro/units/3/3-4)
Unit 3 · Topic 3.4
3.4 Economic Development and Mercantilism
Mercantilism was the economic policy most European states followed from the 1600s through the 1700s: build national wealth by exporting more than you import and use colonies to supply raw materials and buy finished goods. It drove colonial rivalry, expanded the Atlantic slave trade and helped create a consumer culture in Europe.
Key terms
- mercantilism
- favorable balance of trade
- Jean-Baptiste Colbert
- triangular trade
- Middle Passage
- consumer revolution
What mercantilism was
Mercantilists believed the world's wealth was limited, so one country's gain was another's loss. A state grew strong by gathering gold and silver, called bullion, and keeping a favorable balance of trade, meaning exporting more than it imported.
- Tariffs (taxes on imports) to protect home industries from foreign competition.
- Subsidies and monopolies for home manufacturers and trading companies.
- Colonies that supplied raw materials and bought the mother country's manufactured goods.
- Laws keeping colonial trade within the empire.
- A big navy and merchant fleet to protect trade.
Mercantilism in action
France: Jean-Baptiste Colbert, Louis XIV's finance minister from the 1660s until his death in 1683, raised tariffs, set up royal workshops for luxury goods like tapestries and mirrors, set strict quality rules, built roads and canals, founded a French East India Company (1664) and expanded the navy. France's economy grew, but Louis XIV's wars ate up much of the gain.
England: the Navigation Acts, starting in 1651, required that goods coming into England or its colonies travel on English ships or ships of the producing country. They targeted Dutch shipping and helped cause the Anglo-Dutch Wars. Colonies were expected to send sugar, tobacco and other raw goods to England.
Atlantic trade and slavery
Mercantilist empires depended on plantations worked by enslaved Africans. In the 1700s, the Atlantic slave trade reached its peak as British, French, Portuguese and Dutch ships carried millions of captives to the Caribbean and Brazil. In the triangular trade, European goods went to Africa, enslaved people crossed the Atlantic on the Middle Passage, and sugar, tobacco and later cotton came back to Europe. At the 1713 Treaty of Utrecht, Britain won the asiento, the contract to supply enslaved Africans to Spain's colonies.
Wars over colonies and trade, like the War of the Spanish Succession and the Seven Years' War (see 5.3), were in part mercantilist wars.
The consumer revolution
As colonial goods got cheaper, ordinary Europeans began buying things once reserved for the rich. Sugar, tea, coffee, tobacco, chocolate and Indian cotton cloth spread through society. London's first coffeehouse opened in the 1650s, and coffeehouses became centers of news and business. This consumer revolution tied European daily life to colonial plantations and enslaved labor.
Mercantilism had critics. In 1776 Adam Smith argued that free trade and competition, not tariffs and monopolies, created wealth (see 4.3).
Worked examples
Try each one yourself first, then open the solution.
- Example 1
Linking policy to outcome
Short-answer practice: Explain one way mercantilist policies contributed to conflict between European states in the period 1650 to 1750.
Show the solutionHide the solution
- Step 1: Name a specific mercantilist policy.
- Step 2: Show how it harmed a rival.
- Step 3: Name the conflict it fed into.
Answer: Model answer: England's Navigation Acts, beginning in 1651, required goods to be shipped on English vessels, cutting into the profits of Dutch merchants who dominated European shipping. Because mercantilists saw trade as a zero-sum contest, this policy helped spark the Anglo-Dutch Wars of 1652–1674.
Common mistakes
- Defining mercantilism as free trade. It was the opposite: heavy state control and protection.
- Leaving out slavery. Mercantilist profits from sugar and tobacco depended on enslaved labor.
- Calling Adam Smith a mercantilist. He was its best-known critic.
On the exam
- Know mercantilism well enough to contrast it with laissez-faire ideas in 4.3; exam questions pair them often.
- The consumer revolution connects economics to social history; use it in essays about daily life or commerce.
Connected topics
Videos
Check yourself
4 questions on 3.4 Economic Development and Mercantilism. Pick an answer to see if you got it, and why.
Although a Kingdom may be enriched by gifts received, or by purchase taken from some other Nations, yet these are things uncertain and of small consideration when they happen. The ordinary means therefore to encrease our wealth and treasure is by Forraign Trade, wherein wee must ever observe this rule; to sell more to strangers yearly than wee consume of theirs in value. For suppose that when this Kingdom is plentifully served with the Cloth, Lead, Tinn, Iron, Fish and other native commodities, we doe yearly export the overplus to forraign Countries to the value of twenty two hundred thousand pounds; by which means we are enabled beyond the Seas to buy and bring in forraign wares for our use and Consumption, to the value of twenty hundred thousand pounds . . . we may rest assured that the Kingdom shall be enriched yearly two hundred thousand pounds, which must be brought to us in so much Treasure.
Source: Thomas Mun, English merchant and director of the East India Company, England's Treasure by Forraign Trade, written around the 1620s and published by his son in 1664.
Mun's argument is most closely associated with which economic theory?
Which of the following government policies would Mun most likely have supported?
Rising European demand for sugar, tobacco and coffee in the 1600s and 1700s most directly led to
As Louis XIV's chief financial minister, Jean-Baptiste Colbert tried to strengthen France by
0 of 4 answered