British Mercantilism

Economic ideas and systems come and go. Many systems have failed and many have succeeded. The British system of mercannot

ilism was actually quite a good system for England. They raked in profits from their colonies. The only problem was that they did not give enough economic freedom to their colonies. At almost every turn, the British tried to restrict what their colonies could do and whom they could trade with. In hindsight, I believe that the British may have been a bit more lenient on their restrictions because the constant prohibitions eventually lead to revolution…

England did not directly control its colonies. Instead, they let joint-stock companies control and provide funds and foodstuffs for the colonies. Modern day corporations find their roots in these Joint-stock companies. The joint-stock companies were comprised of a group of entrepreneurs who provided the funds for all the voyages and supplies. The people funding the company usually controlled the colony as well.

The Dominion of New England was set up by English officials to unite the colonies into one defense against the Native Americans. It was run by a man named Andros, who began to levy taxes on all the colonists without first getting input from the various assemblies from the colonies. The Dominion of New England was eventually overrun. Andros was being searched for because of the failings of this Dominion, so he took cover and tried to escape the colonies by dressing like a woman. However, his boots gave him away.

The colonists were growing more and more displeased by the economic system the British were forcing on them, and then the Molasses Act came. This Act placed high tariffs on sugar, molasses and rum imported into New England in a effort to prevent colonial trade with the French West Indies sugar islands of Martinique and Guadeloupe. British sugar merchants on the islands of Barbados, Antigua and Jamaica had complained to Parliament. The law was enacted to restrict non-British trade and to further enforce the concept that trade was to be done only on British owned ships. In response to this Act, the colonists began to smuggle goods into the colonies.

Parliament also passed a series of Navigation Laws, which further restricted trade from the colonies. Cromwell passed the original Navigation Law in 1651. The law stated that no goods grown or manufactured in Asia, Africa, or America should be transported to England except in English vessels, and that the goods of any European country imported into England must be brought in British vessels, or in vessels of the country producing them. The law was directed against the Dutch maritime trade, which was very great at that time. But it was nowhere strictly enforced, and in New England scarcely at all.

In 1660 the second of these laws was passed, greatly resembling first and adding much to it. This act forbade the importing into or the exporting from the British colonies of any goods except in English or colonial ships and it forbade certain enumerated articles--tobacco, sugar, cotton, wool, dyeing woods, et cetera--to he shipped to any country, except to England or some English plantations. However, this was also not as strictly enforced. If it would have been, however, the colonies that produced the "enumerated" products would have certainly went belly up.

The third act, The Navigation Act of 1663, enforced the laws of trade even more. The colonists had not been so closely governed since they had settled in the New World and were not used to the idea. Many people became even more disgusted with the passing of this new act. This act had even more restrictions. Now products that were coming from Europe had to stop in Great Britain and then transferred to English ships. Then finally the ships would bring the goods to the colonies. Through all these exchanges, the prices of the European goods become very expensive. Colonists could scarcely find European products probably because the Europeans did not want to hassle with stopping at England.

England was a land that was fairly barren of raw materials and saw that the colonies had lots of raw materials. Why wouldn't they exploit this? The British decided to make an act against manufacturing. One of these acts, the Hat Act, prohibited Americans from manufacturing hats from the various pelts and furs they collected. They had to sell the pelts to England for about a dollar, and then the English would manufacture a hat, and sell it back to the colonies for about one hundred dollars.

Adam Smith is a very key figure in the development of our current economic system. He was educated in Oxford and wrote a book entitled An Inquiry into the Nature and Causes of the Wealth of Nations. Adam Smith believed in laissez-faire. This meant that the government should have absolutely no effect on the economics