Spread of Mercantilism

 Mercantilism

Mercantilism in practice is traceable to the beginning of the seventeenth century. It was one of the most important and widely accepted economic theory before the nineteenth century. Its use was closely linked with the rise and emergence of national states.

Mercantilism implies regulation by government of trade and industry and was known by different names in different places e. g . Colbertism in France and Cameralism in Germany. However , it must be remembered that its basic features were the same. 

Many motives and ambitions both public and private which emerged in the minds of men had given rise to the policy known as mercantilism and this had manifested itself in the Navigation Laws. In order to understand their purpose one has to appreciate the growing importance of colonise. As a result of these acts the whole trade between England and the colonise was enclosed and protected and canalized. An emphasis had thus been placed on the so called concept of the Balance of Trade which operated within the framework of Mercantilist thought and policy.

Throughout the 17th century the pressure of the merchant class on government grew and to this extent the form of polity to be found in the country certainly seemed to have been of lesser importance than generally assumed. There was thus an alliance or partnership in mercantilism. The king and governments visualized in the anticipated expansion of mercantile, prosperity, the possibilities of larger revenues for themselves and of a prosperous and happy population over which to govern. On the other hand he merchants looked to the state as a helping hand and to protect their trading in far off countries , required the active assistance of royal embassies and the inevitable support and backing of government prestige. 

The mercantilism system thus comprised of various devices- legislative, administrative  and regulatory by - means of which predominantly agrarian societies sought to transform themselves into trading and industrial societies. Catherine the Great regarded the English as "first and always traders" whereas Sir Josiah Child asserted that "profit and power ought jointly to be considered ". To Hobbes is attributed the statement "wealth is power and power is wealth". The years in which mercantilism developed was really an age when the pursuit of economic enterprise demanded and fact needed the backing of a strong political force. This was also an age of economic expansion and this often led to plunder, violence  and even warfare and this unnecessary pursuit for economic gains and the acquisition of wealth probably accounts for the rapid material progress of the west.

Mercantilists held that the wealth of a nation was measured in precious metals. As Locke once put it "Riches do not consist in having more gold and silver but in having more in proportion than the rest of the world or than one's neighbours - who sharing the gold and silver of the world in less proportion want the means of plenty and power and so are the poorer." As a consequence the rulers in Europe intentionally launched policies aimed at increasing wealth by means of Mercantilism. Not only this it implied  that there ought to be a favourable balance of trade and that colonies existed only to provide raw materials as also markets for the Mother country. The direct corollary was that restriction on trade and manufactures in the colonies were imposed to prevent them from becoming potential rivals to the commercial activities of the Mother country. These countries by following the policy of Mercantilism made their own states largely self sufficing and forced other states to be economically dependent on them. 

The Mercantilists perforce had to lay stress on a favourable balance of trade since there were inadequate credit facilities and paper currencies.  The government needed bullion for domestic trade and for purchases made abroad. What is significant is that the relative importance attached by mercantilists to foreign trade, industry and agriculture was different at different times and even from country to country. Heckscher in his book "Mercantilism" praises the noble profession of the merchant who deserves all favour as being the best most profitable member of the common wealth.'' "Commerce", it was said in France during the reign of Louis XIV, ''provides the riches of towns and state''. 

To what extent the mercantilists succeeded in promoting economic development is a  debatable matter. One thing is clear that Colbert during his lifetime had ensured the maintenance of a large army and navy in France domination became real. Heckscher termed French mercantilism a failure when judged by British standards. The British attributed their success to the comparative freedom from government control and the unnecessary regulations and incessant government interference which was a feature of continental mercantilism. 

Mercantilism certainly involved state planning. during the heyday of mercantilism in central Europe the Hapsburgs built up a standing army larger than the French. Frederick the Great of Prussia was able to repair the damage before his death caused to his state by the seven years war. To Frederick it seemed the means by which Prussia in his own words was life  "out of the dust".

The Hohenzollern and Hapsburg rules believed that mercantilism though it stood for state control, never meant state ownership and as a result encouraged the development of initiative within the domain of state policies as laid down by them.

Mercantilism or Commercialism Central Europe was different from its French counterpart because the study of its doctrines constituted an academic discipline which was obligatory for all the holders of administrative posts and its rules were its most receptive.