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6.3: Competing Mercantile Economies

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  • It is easy to imagine the colonial world of North America as sharing many common features, made up as it was of Europeans who had gone into self-imposed (or sometimes imposed) exile from their home countries. In fact, the colonies were each organized around very different cultural and economic principles. Even among the first English-speaking colonies there were significant differences. In some instances they were also complementary.

    Mercantilism and Colonialism

    One of the unifying features of the North American colonial world was mercantilism, an economic doctrine that held that a nation’s power depended on the value of its exports. The role of government in a mercantilist age is to control all foreign trade to achieve a highly positive balance of exports over imports. Under mercantilism, nations sought to establish colonies to produce goods over which the home economy had monopolistic control. Mercantilists believed that colonies existed not for the benefit of settlers, but for the benefit of the imperial centre. Britain and France embraced mercantilism, hoping to run trade surpluses, so that gold and silver would pour into London and Paris. Governments took their share through duties and taxes, with much of the remainder going to merchants.

    This accumulation of wealth enabled the building of remarkable navies and land armies. It led to a  level of ostentatious living that had not previously been witnessed, including building palaces for monarchs and ruling classes, evident in the grand manorial estates of the era. It also stimulated the growth of a class of merchants, or bourgeois, based in port towns and wherever manufacturers converted colonial raw materials into value-added products. These port towns with access to colonial materials became prosperous hubs of activity protected by the monarch. The loyalty to the Crown by the merchant class was to prove pivotal in the evolution of European absolutism in the 17th and 18th centuries. It allowed Louis XIV of France to neuter the political threat posed by a troublesome aristocracy while intensifying a network of national economic and military purpose. It also required the establishment of banking systems to both preserve and lend out the hard currency coming into the home countries. In the 18th century, these changes were key to the emergence of both modern capitalism and the beginnings of the Industrial Revolution.

    Colonial Self-Sufficiency

    For the colonies mercantilism had rather different consequences. Royal domination of New France from 1663 created a highly centralized and decisive colonial government, which was clearly an extension of Louis XIV’s absolute power. Under Jean-Baptiste Colbert, the first Minister of the Marine (a court position that placed him in charge of the French Navy and New France), efforts were made to maximize the profitability of Canada by reducing its demand for supplies from France. That meant, first and foremost, establishing a viable, modestly self-sufficient compact colony that could feed itself. At the same time, Colbert made sure that the manufacturing sector in New France remained dependent on French exports. The impressive iron forges at Saint-Maurice (built in the 1730s) were the exception that proved the rule: Canada was dependent on French manufacturers and was organized so that the principal economic activity was trading in fur, the staple product desired most from the colony by the French market. As a result, Canada developed a tightly governed economy under mercantilism with infrastructure that reflected its needs: docks and harbours, storehouses for furs, and a workforce just large enough to trade furs, fight local wars, and develop a farming sector that could meet subsistence needs. This was where colonial capital was spent, rather than on, say, wool or hemp production and mills (with skilled workers from France) that would turn raw materials into cloth or rope.


    Figure 6.1 The forges at Saint-Maurice, overlooking the St. Lawrence.

    British mercantilism was somewhat different, and it mainly took two forms. First, the English established chartered monopoly firms like the East India Company whose purpose was antithetical to settlement and self-sufficiency. Second, English (after union with Scotland in 1707, British) mercantilism regulated trade. The imperial government placed tariffs on imports and gave bounties for exports of processed goods, and it banned completely the export of some raw materials. The colonies were thus captive markets for English/British industry. English/British mercantilism meant that the government and the merchants became partners with the goal of increasing political power and private wealth, to the exclusion of other empires and the colonies.

    Throughout the 17th century, Parliament passed the Navigation Acts to increase the benefit England derived from its colonies.  The Navigation Acts required that any colonial imports or exports travel only on ships registered in England. The colonies could not import anything manufactured outside the British Isles unless the goods were first taken to British ports, where importers paid taxes. The plantation colonies were forbidden to export tobacco and sugar to any nation other than England. This policy continued through the 18th century as well.[1]

    Colonists in English/British and French America recognized the mercantilist limits placed on them. The prospect of free trade was held out repeatedly as a goal of entrepreneurial colonists. Illicit trade between colonists in Acadia and New England, Canada and New York, and the West Indies and Newfoundland was a thriving business and, essentially, free trade by other means. Colonial merchants and traders who eluded mercantilist restrictions were an important part of colonial life in the 18th century. Nevertheless, close economic regulation persisted in Canada long after the Conquest and it was an aggravating factor in the American Revolution. Most importantly, because Canada was not able to provide for itself, it was left wholly dependent on France for a great many manufactured products, especially military supplies. Mercantilism, then, was to prove a fatal miscalculation when it came to times of war.

    Key Points

    • Mercantilism was in place in both the French and English colonies.
    • Successes in the colonies led to wealth accumulation in the imperial centres, resulting in important economic, political, and social changes.
    • Legislation like the Navigation Acts favoured colonial exporters and shipbuilders but not colonial manufacturers.
    • Colonists worked within the mercantilist constraints, but looked for ways to circumvent them as well.


    Figure 6.1
    Maurice River by primaire is used under a CC-BY-SA 2.5 license.

    1. Kenneth Norrie and Doug Owram, A History of the Canadian Economy (Toronto: Harcourt Brace Jovanovich, 1991), 19-61.