SYSTEM OF EXCHANGE IN EUROPE DURING THE 15TH CENTURY
MERCANTILISM 1500 – 1750 AD
Mercantilism refers to an economic system of conducting trade over sea searching for gold and silver which led to the commercial revolution which was characterized with expansion of trading activities. Mercantilism was based on primitive accumulation of capital. The major participants in mercantile activities were Portugal, Spain, Britain and Holland.
Features of mercantilism
1. Bullionism.
The policy of mercantilism was based on attracting large amounts of precious metals, gold and silver. The Portuguese and the Spanish made voyages to Africa and America simply searching for gold and silver that were needed in Europe.
2. Expansionism
Mercantilism was based on the belief of conducting commerce overseas so as to acquire gold and silver. It was this policy of expansionism which led to discovering of America by Spanish and Africa by the Portuguese.
3. Protectionism.
It was adopted so as to protect countries‟ markets through navigation acts. The acts were implemented in the late 17th century to protect home market and ensure enough supply of raw materials.
Any country which wanted to sell its goods to Britain or her colonies overseas, had to use British ships were they had to pay the fee. This was to discourage other countries from trading with her.
4. Militarism and national rivalry.
Mercantilism was based on primitive accumulation of capital by using methods such as piracy and plundering. These activities forced Europeans countries to create strong armies to protect the merchants from being robbed.
Mercantilism was also characterized by national rivalry, whereby countries went to war searching for gold and silver. Example the French fought with the British over the control of Canada.
5. Formation of national states or national unification.
Mercantilism forced European countries to form national states. It led to the rise of strong monarchical states that would be able to compete effectively with other European nations. Britain united with Wales, Scotland and Ireland to form the United Kingdom.
6. Unequal exchange
Mercantilism was based on unequal exchange; the European countries took valuable items of trade such as gold, ivory and slaves from Africa and bought back inferior items such as beads and looking mirrors.