Misplaced Pages

#859140

112-735: American School may refer to: Schools [ edit ] American School (economics) American School (Panama) American School (Yemen) American School of Correspondence American School of Bombay American School in Japan American Schools and Hospitals Abroad Corporación Educativa American School ASF Mexico (American School in Mexico City) Escuela Americana El Salvador (American School El Salvador) American School of Tegucigalpa American School for

224-479: A feature of mercantilist policy. Before it fell into decline, mercantilism was dominant in modernized parts of Europe and some areas in Africa from the 16th to the 19th centuries, a period of proto-industrialization . Some commentators argue that it is still practised in the economies of industrializing countries, in the form of economic interventionism . With the efforts of supranational organizations such as

336-706: A fiat currency, called United States Notes , or "greenbacks". Towards the end of the Civil War in March 1865, Henry C. Carey , Lincoln's economic advisor, published a series of letters to the Speaker of the House entitled "The Way to Outdo England Without Fighting Her." Carey called for the continuance of the greenback policy even after the War, while also raising the reserve requirements of the banks to 50%. This would have allowed

448-402: A form of wealth that made possible the development of bigger markets and armies . Opposite to mercantilism was the doctrine of physiocracy , which predicted that mankind would outgrow its resources. The idea of mercantilism was to protect the markets as well as maintain agriculture and those who were dependent upon it. Mercantilist ideas were the dominant economic ideology of all of Europe in

560-427: A little cheaper. Well, whether a thing is cheap or dear depends upon what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of

672-454: A maxim that is a thousand times better than that, and it is the protection maxim: 'Buy where you can pay the easiest.' And that spot of earth is where labor wins its highest rewards. The American System was important in the election politics for and against Grover Cleveland , the first Democrat elected after the Civil War, who, by reducing tariffs protecting American industries in 1893, began rolling back federal involvement in economic affairs,

784-409: A moneyed corporation". The two sides of the debate became even more starkly defined as a result of the actions of Second Bank President Nicholas Biddle and Henry Clay himself. Upon hearing of Jackson's distaste for his bank, Biddle immediately set about opening new branches of the bank in key political districts in hopes of manipulating Congressional opinion. Although this action indeed helped acquire

896-414: A new and wider significance, in which its aim and ideal became both national and imperialistic. The connection between communism and mercantilism has been explored by Marxist economist and sociologist Giovanni Arrighi , who analyzed mercantilism as having three components: "settler colonialism, capitalist slavery, and economic nationalism," and further noted that slavery was "partly a condition and partly

1008-475: A number of restrictions were imposed on the export of bullion. Over the rest of the 16th century, further protectionist measures were introduced. The height of French mercantilism is closely associated with Jean-Baptiste Colbert , finance minister for 22 years in the 17th century, to the extent that French mercantilism is sometimes called Colbertism . Under Colbert, the French government became deeply involved in

1120-496: A positive balance of trade , especially of finished goods . Historically, such policies might have contributed to war and motivated colonial expansion . Mercantilist theory varies in sophistication from one writer to another and has evolved over time. Mercantilism promotes government regulation of a nation's economy for the purpose of augmenting and bolstering state power at the expense of rival national powers. High tariffs , especially on manufactured goods, were almost universally

1232-530: A process that became dominant by the 1920s and continued until Herbert Hoover 's attempts to deal with the worsening Great Depression . As the United States entered the 20th century, the American School was the policy of the United States under such names as American Policy, economic nationalism , National System, Protective System, Protection Policy, and protectionism, which alludes only to

SECTION 10

#1732765530860

1344-558: A result of the success of settler colonialism." In France, the triangular trade method was integral in the continuation of mercantilism throughout the 17th and 18th centuries. In order to maximize exports and minimize imports, France worked on a strict Atlantic route: France, to Africa, to the Americas and then back to France. By bringing African slaves to labor in the New World, their labor value increased, and France capitalized upon

1456-439: A school of thought, from the competing theory of economics at the time, the "British System" represented by Adam Smith in his work Wealth of Nations . The American School included three cardinal policy points: Henry C. Carey , a leading American economist and adviser to Abraham Lincoln , in his book Harmony of Interests , displays two additional points of this American School economic philosophy that distinguishes it from

1568-539: A series of laws during the American Civil War , was able to fully implement what Hamilton , Clay , List , and Carey theorized, wrote about, and advocated. As soon as Lincoln took office, the old Whig coalition finally controlled the entire government. It immediately tripled the average tariff, began to subsidize the construction of a transcontinental railroad in California even though a desperate war

1680-710: A shift in focus from the capacity to carry on wars to promoting general prosperity. England began the first large-scale and integrative approach to mercantilism during the Elizabethan Era (1558–1603). An early statement on national balance of trade appeared in Discourse of the Common Wealth of this Realm of England , 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them." The period featured various but often disjointed efforts by

1792-479: A straightforward, common-sense system whose logical fallacies remained opaque to people at the time, as they simply lacked the required analytical tools. The second school, supported by scholars such as Robert B. Ekelund , portrays mercantilism not as a mistake, but rather as the best possible system for those who developed it. This school argues that rent-seeking merchants and governments developed and enforced mercantilist policies. Merchants benefited greatly from

1904-435: A view that has led some authors, especially Robert E. Ekelund and Robert D. Tollison, to call mercantilism "a rent-seeking society". To a certain extent, mercantilist doctrine itself made a general theory of economics impossible. Mercantilists viewed the economic system as a zero-sum game , in which any gain by one party required a loss by another. Thus, any system of policies that benefited one group would by definition harm

2016-421: A wide range of economic matters. The Austrian lawyer and scholar Philipp Wilhelm von Hornick , one of the pioneers of Cameralism , detailed a nine-point program of what he deemed effective national economy in his Austria Over All, If She Only Will of 1684, which comprehensively sums up the tenets of mercantilism: Other than Von Hornick, there were no mercantilist writers presenting an overarching scheme for

2128-424: Is bullionism , yet mercantilist writers emphasize the circulation of money and reject hoarding. Their emphasis on monetary metals accords with current ideas regarding the money supply, such as the stimulative effect of a growing money-supply . Fiat money and floating exchange rates have since rendered specie concerns irrelevant. In time, industrial policy supplanted the heavy emphasis on money, accompanied by

2240-426: Is a nationalist economic policy that is designed to maximize the exports and minimize the imports for an economy. In other words, it seeks to maximize the accumulation of resources within the country and use those resources for one-sided trade. The concept aims to reduce a possible current account deficit or reach a current account surplus, and it includes measures aimed at accumulating monetary reserves by

2352-559: Is different from Wikidata All article disambiguation pages All disambiguation pages American School (economics) It is the macroeconomic philosophy that dominated United States national policies from the time of the American Civil War until the mid-20th century. Closely related to mercantilism , it can be seen as contrary to classical economics . It consisted of these three core policies: The American School's key elements were promoted by John Quincy Adams and his National Republican Party , Henry Clay and

SECTION 20

#1732765530860

2464-557: The Constitutional Convention shows that direct government involvement in the economy was intended by the Founders. The goal, most forcefully articulated by Hamilton, was to ensure that dearly won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry and commerce,

2576-552: The Industrial Revolution , when tariff rates on manufactures peaked at 57%: For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. President William McKinley (1897–1901) stated at the time: [They say] if you had not had the Protective Tariff things would be

2688-492: The Whig Party and Abraham Lincoln through the early Republican Party which embraced, implemented and maintained this economic system. The American School of economics represented the legacy of Alexander Hamilton , who in his Report on Manufactures , argued that the U.S. could not become fully independent until it was self-sufficient in all necessary economic products. Hamilton rooted this economic system, in part, in

2800-562: The World Trade Organization to reduce tariffs globally, non-tariff barriers to trade have assumed a greater importance in neomercantilism . Mercantilism became the dominant school of economic thought in Europe throughout the late Renaissance and the early modern period (from the 15th to the 18th centuries). Evidence of mercantilistic practices appeared in early modern Venice , Genoa , and Pisa regarding control of

2912-623: The classical economists . French economic policy liberalized greatly under Napoleon (in power from 1799 to 1814/1815). The British Parliament's repeal of the Corn Laws under Robert Peel in 1846 symbolized the emergence of free trade as an alternative system. Most of the European economists who wrote between 1500 and 1750 are today generally described as mercantilists; this term was initially used solely by critics, such as Mirabeau and Smith, but historians proved quick to adopt it. Originally

3024-482: The "American System" because its plantation owners were heavily reliant on production of cotton for export, and the American System produced lower demand for their cotton and created higher costs for manufactured goods. After 1828 the United States kept tariffs low until the election of Abraham Lincoln in 1861. Opposition to the economic nationalism embodied by Henry Clay's American System came primarily from

3136-499: The 1824 Rivers and Harbors Act . Other developments included the various Army expeditions to the west, beginning with Lewis and Clark's Corps of Discovery in 1804 and continuing into the 1870s (see for example, the careers of Major Stephen Harriman Long and Major General John C. Frémont ), almost always under the direction of an officer from the Army Corps of Topographical Engineers , and which provided crucial information for

3248-447: The 18th century. In 1690, Locke argued that prices vary in proportion to the quantity of money. Locke's Second Treatise also points towards the heart of the anti-mercantilist critique: that the wealth of the world is not fixed, but is created by human labor (represented embryonically by Locke's labor theory of value ). Mercantilists failed to understand the notions of absolute advantage and comparative advantage (although this idea

3360-549: The American School through restoration of high tariffs. A subsequent further return was enacted as President Herbert Hoover responded to the 1929 crash and the subsequent bank failures and unemployment by signing the Smoot-Hawley Tariff Act , which some economists considered to have deepened the Great Depression , while others disagree. The New Deal continued infrastructure improvements through

3472-563: The American System proved one of the trickiest for Jacksonian presidents. Tariffs disproportionately benefited the industrial interests of the North while causing injury to the import-dependent agrarian South and West. As a result, the issue proved extremely divisive to the nation's unity, something Jacksonian presidents sought to protect at all costs. The Jacksonian presidents, particularly the southern-born Jackson, had to be extremely cautious when lowering tariffs in order to maintain their support in

American School - Misplaced Pages Continue

3584-455: The American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world. The government issue of fiat paper money has also been associated with the American School from the 1830s onwards. The policy has roots going back to the days of the American colonies, when such a type of currency called colonial scrip

3696-576: The Communauté des habitants in 1643. These were the first corporations to operate in what is now Canada. In England, mercantilism reached its peak during the Long Parliament government (1640–60). Mercantilist policies were also embraced throughout much of the Tudor and Stuart periods, with Robert Walpole being another major proponent. In Britain, government control over the domestic economy

3808-554: The Deaf Other [ edit ] The American School (novel) , a 1954 book by Nobuo Kojima See also [ edit ] [REDACTED] Search for "American School" on Misplaced Pages. All pages with titles beginning with American School All pages with titles containing American School Category:American international schools American International School (disambiguation) American Cooperative School (disambiguation) Education in

3920-602: The Democratic Party of Andrew Jackson, Martin van Buren, and James K. Polk. These three presidents styled themselves as the peoples' politicians, seeking to protect both the agrarian frontier culture and the strength of the Union. Jackson in particular, the founder of the movement, held an unflinching commitment to what he viewed as the sanctity of the majority opinion. In his first annual message to Congress, Jackson proclaimed that "the first principle of our system [is] that

4032-527: The Dutch from the Spanish Empire . The culmination of all of these policies led to Spain defaulting in 1557, 1575, and 1596. During the economic collapse of the 17th century, Spain had little coherent economic policy, but French mercantilist policies were imported by Philip V with some success. Ottoman Grand Vizier Kemankeş Kara Mustafa Pasha also followed some mercantilist financial policies during

4144-625: The Elizabethan system ( England's Treasure by Foreign Trade or the Balance of Foreign Trade is the Rule of Our Treasure ), which Josiah Child ( c.  1630/31 –1699) then developed further. Numerous French authors helped cement French policy around statist mercantilism in the 17th century, as King Louis XIV (reigned 1643–1715) followed the guidance of Jean Baptiste Colbert , his Controller-General of Finances from 1665 to 1683 who revised

4256-493: The German historical school from List, as well as followers of the American and British systems of free-trade, thus stretching the system into the 19th century. However, many British writers, including Mun and Misselden , were merchants, while many of the writers from other countries were public officials. Beyond mercantilism as a way of understanding the wealth and power of nations, Mun and Misselden are noted for their viewpoints on

4368-467: The Greenback! Let us continue on in the direction in which we now are moving, and we shall see ... not a re-establishment of the Union, but a complete and final disruption of it. Carey's plans did not come to fruition as Lincoln was assassinated the next month and new President Andrew Johnson supported the gold standard, and by 1879 the U.S. was fully back on the gold standard. The " American System "

4480-740: The Measures of Trade, but that the Spring and Original of it, in all nations is the Natural or Artificial Product of the Country; that is to say, what this Land or what this Labour and Industry Produces." The critique that mercantilism was a form of rent seeking has also seen criticism, as scholars such as Jacob Viner in the 1930s pointed out that merchant mercantilists such as Mun understood that they would not gain by higher prices for English wares abroad. The first school to completely reject mercantilism

4592-640: The Mediterranean trade in bullion . However, the empiricism of the Renaissance , which first began to quantify large-scale trade accurately, marked mercantilism's birth as a codified school of economic theories. The Italian economist and mercantilist Antonio Serra is considered to have written one of the first treatises on political economy with his 1613 work, A Short Treatise on the Wealth and Poverty of Nations . Mercantilism in its simplest form

American School - Misplaced Pages Continue

4704-403: The New World. Adam Smith , David Hume , Edward Gibbon , Voltaire and Jean-Jacques Rousseau were the founding fathers of anti-mercantilist thought. A number of scholars found important flaws with mercantilism long before Smith developed an ideology that could fully replace it. Critics like Hume, Dudley North and John Locke undermined much of mercantilism and it steadily lost favor during

4816-666: The North. However, the tariffs indeed represented an economic nationalism that primarily benefited the Northern States, while increasing the cost of European imports in the South. This ran strongly contrary to Jacksonian ideals. In the end, despite Northern objections, both President Jackson and President Polk lowered tariffs. Jackson reformed the Tariff of 1828 (also known as the Tariff of Abominations ) by radically reducing rates in

4928-479: The Second Bank of the United States and advocacy of protectionist tariffs, as serving moneyed or special interests rather than the majority of Americans. The Jacksonians opposed other elements of Clay's ideology, including support for internal infrastructural improvements, on the grounds that they represented governmental overstretch as well. Several key events, legislative conflicts, and presidential vetoes shaped

5040-499: The Tariff of 1832. This helped stave off the Southern nullification crisis , in which Southern states refused to enact the tariff, and threatened secession if faced with governmental coercion. The bill that reduced the Tariff of 1828 was co-authored by Henry Clay in a desperate attempt to maintain national unity. Polk, on the other hand, in his characteristically efficient way, managed to push through significant tariff reductions in

5152-480: The Treasury. Clay first used the term "American System" in 1824, although he had been working for its specifics for many years previously. Portions of the American System were enacted by Congress. The Second Bank of the United States was rechartered in 1816 for 20 years. High tariffs were maintained from the days of Hamilton until 1832. However, the national system of internal improvements was never adequately funded;

5264-468: The US to develop its economy independent of foreign capital (primarily British gold). Carey wrote: The most serious move in the retrograde direction is that one we find in the determination to prohibit the further issue of [United States Notes] ... To what have we been indebted for [the increased economic activity]? To protection and the " greenbacks"! What is it that we are now laboring to destroy? Protection and

5376-626: The United States List of international schools Topics referred to by the same term [REDACTED] This disambiguation page lists articles associated with the title American School . If an internal link led you here, you may wish to change the link to point directly to the intended article. Retrieved from " https://en.wikipedia.org/w/index.php?title=American_School&oldid=1124970116 " Categories : Disambiguation pages Educational institution disambiguation pages Hidden categories: Short description

5488-450: The United States further in the free market direction, and away from its American School economic system. Friedrich List 's influence among developing nations has been considerable. Japan has followed his model. It has also been argued that Deng Xiaoping 's post-Mao policies were inspired by List as well as recent policies in India. General: Mercantilism Mercantilism

5600-623: The West Indies), as well as becoming exclusive markets. European power spread around the globe, often under the aegis of companies with government-guaranteed monopolies in certain defined geographical regions, such as the Dutch East India Company or the Hudson's Bay Company (operating in present-day Canada ). With the establishment of overseas colonies by European powers early in the 17th century, mercantile theory gained

5712-454: The adoption of the very Machiavellian realpolitik and the primacy of the raison d'état in international relations . The mercantilist idea of all trade as a zero-sum game, in which each side was trying to best the other in a ruthless competition, was integrated into the works of Thomas Hobbes . This dark view of human nature also fit well with the Puritan view of the world, and some of

SECTION 50

#1732765530860

5824-492: The archetype or manifesto of the movement. Perhaps the last major mercantilist work was James Steuart 's Principles of Political Economy , published in 1767. Mercantilist literature also extended beyond England. Italy and France produced noted writers of mercantilist themes, including Italy's Giovanni Botero (1544–1617) and Antonio Serra (1580–?) and, in France, Jean Bodin and Colbert . Themes also existed in writers from

5936-462: The core of the mercantile system was the "popular folly of confusing wealth with money", that bullion was just the same as any other commodity, and that there was no reason to give it special treatment. More recently, scholars have discounted the accuracy of this critique. They believe Mun and Misselden were not making this mistake in the 1620s, and point to their followers Josiah Child and Charles Davenant , who in 1699 wrote, "Gold and Silver are indeed

6048-733: The court of Queen Elizabeth (r. 1558–1603) to develop a naval and merchant fleet capable of challenging the Spanish stranglehold on trade and of expanding the growth of bullion at home. Queen Elizabeth promoted the Trade and Navigation Acts in Parliament and issued orders to her navy for the protection and promotion of English shipping. Authors noted most for establishing the English mercantilist system include Gerard de Malynes ( fl. 1585–1641) and Thomas Mun (1571–1641), who first articulated

6160-482: The early modern period, and most states embraced it to a certain degree. Mercantilism was centred on England and France, and it was in these states that mercantilist policies were most often enacted. The policies have included: Mercantilism arose in France in the early 16th century soon after the monarchy had become the dominant force in French politics. In 1539, an important decree banned the import of woolen goods from Spain and some parts of Flanders . The next year,

6272-533: The economy grew considerably during this period, as France became the dominant European power. He was less successful in turning France into a major trading power, and Britain and the Dutch Republic remained supreme in this field. France imposed its mercantilist philosophy on its colonies in North America, especially New France . It sought to derive the maximum material benefit from the colony, for

6384-612: The economy in order to increase exports. Protectionist policies were enacted that limited imports and favored exports. Industries were organized into guilds and monopolies, and production was regulated by the state through a series of more than one thousand directives outlining how different products should be produced. To encourage industry, foreign artisans and craftsmen were imported. Colbert also worked to decrease internal barriers to trade, reducing internal tariffs and building an extensive network of roads and canals. Colbert's policies were quite successful, and France's industrial output and

6496-400: The economy, many mercantilists disagreed. The early modern era was one of letters patent and government-imposed monopolies ; some mercantilists supported these, but others acknowledged the corruption and inefficiency of such systems. Many mercantilists also realized that the inevitable results of quotas and price ceilings were black markets . One notion that mercantilists widely agreed upon

6608-446: The enforced monopolies, bans on foreign competition, and poverty of the workers. Governments benefited from the high tariffs and payments from the merchants. Whereas later economic ideas were often developed by academics and philosophers, almost all mercantilist writers were merchants or government officials. Monetarism offers a third explanation for mercantilism. European trade exported bullion to pay for goods from Asia, thus reducing

6720-453: The exclusion of other European powers. The government protected its merchants—and kept foreign ones out—through trade barriers, regulations, and subsidies to domestic industries in order to maximize exports from and minimize imports to the realm. The government had to fight smuggling, which became a favourite American technique in the 18th century to circumvent the restrictions on trading with the French, Spanish, or Dutch. The goal of mercantilism

6832-591: The failure to do so was due in part to sectional jealousies and constitutional scruples about such expenditures. Clay's plan became the leading tenet of the National Republican Party of John Quincy Adams and the Whig Party of himself and Daniel Webster. The "American System" was supported by New England and the Mid-Atlantic, which had a large manufacturing base. It protected their new factories from foreign competition. The South opposed

SECTION 60

#1732765530860

6944-729: The federal government undertaken in the period prior to the Civil War gave shape and substance to the American School. These programs included the establishment of the Patent Office in 1802, the creation of the Survey of the Coast (later renamed the United States Coast Survey and then the United States Coast and Geodetic Survey ) in 1807 and other measures to improve river and harbor navigation created by

7056-586: The financial centre of Europe by being its most efficient trader, had little interest in seeing trade restricted and adopted few mercantilist policies. Mercantilism became prominent in Central Europe and Scandinavia after the Thirty Years' War (1618–48), with Christina of Sweden , Jacob Kettler of Courland , and Christian IV of Denmark being notable proponents. The Habsburg Holy Roman Emperors had long been interested in mercantilist policies, but

7168-433: The first 18 months of his term. The final bastion of Jacksonian opposition to Clay's American System existed in relation to the use of government funds to conduct internal improvements. The Jacksonian presidents feared that government funding of such projects as roads and canals exceeded the mandate of the federal government and should not be undertaken. Van Buren believed very strongly that "[t]he central government, unlike

7280-412: The form of efforts to control trade. A wide array of regulations were put in place to encourage exports and discourage imports. Tariffs were placed on imports and bounties given for exports, and the export of some raw materials was banned completely. The Navigation Acts removed foreign merchants from being involved England's domestic trade. British policies in their American colonies led to friction with

7392-416: The great end of establishing a uniform and sound currency". He further attacked the proponents of renewing the bank's charter, scathingly referring to the "stockholders" seeking a renewal of their "privileges". This rhetoric, portraying the supporters of the bank as privileged individuals, and claiming the opposition of "a large portion of our fellow-citizens" crystallizes Jackson's majoritarian distaste for

7504-413: The high-price country to the low-price country, and the balance of trade would reverse. Mercantilists fundamentally misunderstood this, long arguing that an increase in the money supply simply meant that everyone gets richer. The importance placed on bullion was also a central target, even if many mercantilists had themselves begun to de-emphasize the importance of gold and silver. Adam Smith noted that at

7616-553: The homeland, with a minimum of colonial investment in the colony itself. The ideology was embodied in New France through the establishment under Royal Charter of a number of corporate trading monopolies including La Compagnie des Marchands, which operated from 1613 to 1621, and the Compagnie de Montmorency, from that date until 1627. It was in turn replaced by La Compagnie des Cent-Associés , created in 1627 by King Louis XIII, and

7728-496: The ideal economy, as Adam Smith would later do for classical economics. Rather, each mercantilist writer tended to focus on a single area of the economy. Only later did non-mercantilist scholars integrate these "diverse" ideas into what they called mercantilism. Some scholars thus reject the idea of mercantilism completely, arguing that it gives "a false unity to disparate events". Smith saw the mercantile system as an enormous conspiracy by manufacturers and merchants against consumers,

7840-582: The inhabitants of the Thirteen Colonies , and mercantilist policies (such as forbidding trade with other European powers and enforcing bans on smuggling) were a major irritant leading to the American Revolution . Mercantilism taught that trade was a zero-sum game, with one country's gain equivalent to a loss sustained by the trading partner. Overall, however, mercantilist policies had a positive impact on Britain, helping to transform

7952-413: The majority govern". This ideology governed Jackson's actions throughout his presidency, and heavily influenced his protégé Martin van Buren as well as the final Jacksonian president, James K. Polk. This commitment to the majority and to the voiceless came in direct conflict with many elements of the American System. The Jacksonian presidents saw key tenets of the American System, including the support for

8064-422: The market resources produced by slave labor. Mercantilism as a weapon has continued to be used by nations through the 21st century by way of modern tariffs as it puts smaller economies in a position to conform to the larger economies goals or risk economic ruin due to an imbalance in trade. Trade wars are often dependent on such tariffs and restrictions hurting the opposing economy. The term "mercantile system"

8176-527: The money supply and putting downward pressure on prices and economic activity. The evidence for this hypothesis is the lack of inflation in the British economy until the Revolutionary and Napoleonic Wars, when paper money came into vogue. A fourth explanation lies in the increasing professionalisation and technification of the wars of the era, which turned the maintenance of adequate reserve funds (in

8288-420: The most important economic work done in Europe was by the medieval scholastic theorists. The goal of these thinkers was to find an economic system compatible with Christian doctrines of piety and justice. They focused mainly on microeconomics and on local exchanges between individuals. Mercantilism was closely aligned with the other theories and ideas that began to replace the medieval worldview. This period saw

8400-600: The most stridently mercantilist legislation, such as the Navigation Ordinance of 1651, was enacted by the government of Oliver Cromwell . Jean-Baptiste Colbert 's work in 17th-century France came to exemplify classical mercantilism. In the English-speaking world, its ideas were criticized by Adam Smith with the publication of The Wealth of Nations in 1776 and later by David Ricardo with his explanation of comparative advantage . Mercantilism

8512-482: The nation into the world's dominant trading power and a global hegemon . One domestic policy that had a lasting impact was the conversion of "wastelands" to agricultural use. Mercantilists believed that to maximize a nation's power, all land and resources had to be used to their highest and best use , and this era thus saw projects like the draining of The Fens . The other nations of Europe also embraced mercantilism to varying degrees. The Netherlands, which had become

8624-531: The new world. In the long run, Spain's economy collapsed as it was unable to adjust to the inflation that came with the large influx of bullion. Heavy intervention from the crown put crippling laws for the protection of Spanish goods and services. Mercantilist protectionist policy in Spain caused the long-run failure of the Castilian textile industry as the efficiency severely dropped off with each passing year due to

8736-488: The normal tariff under this) through reciprocity , choosing to subsidize industry as a replacement. At the close of World War II, the United States now dominant in manufacturing with little competition, the era of free trade had begun. In 1973, when the "Kennedy" Round concluded under President Richard Nixon , who cut U.S. tariffs to all time lows, the New Deal orientation towards reciprocity and subsidy ended, which moved

8848-630: The numerous public works projects of the Works Progress Administration (WPA) as well as the creation of the Tennessee Valley Authority (TVA); brought massive reform to the banking system of the Federal Reserve while investing in various ways in industry to stimulate production and control speculation; but abandoned protective tariffs while embracing moderate tariff protection (revenue based 20–30%

8960-405: The other, and there was no possibility of economics being used to maximize the commonwealth, or common good. Mercantilists' writings were also generally created to rationalize particular practices rather than as investigations into the best policies. Mercantilist domestic policy was more fragmented than its trade policy. While Adam Smith portrayed mercantilism as supportive of strict controls over

9072-569: The overland pioneers that followed (see, for example, the career of Brigadier General Randolph B. Marcy ), the assignment of Army Engineer officers to assist or direct the surveying and construction of the early railroads and canals, and the establishment of the First Bank of the United States and Second Bank of the United States as well as various protectionist measures such as the Tariff of 1828 . Leading proponents were economists Friedrich List (1789–1846) and Henry Carey (1793–1879). List

9184-460: The production being held at a specific level. Spain's heavily protected industries led to famines as much of its agricultural land was required to be used for sheep instead of grain. Much of their grain was imported from the Baltic region of Europe which caused a shortage of food in the inner regions of Spain. Spain limiting the trade of their colonies is one of the causes that led to the separation of

9296-432: The prospect of war) into a more and more expensive and eventually competitive business. Mercantilism developed at a time of transition for the European economy. Isolated feudal estates were being replaced by centralized nation-states as the focus of power. Technological changes in shipping and the growth of urban centers led to a rapid increase in international trade. Mercantilism focused on how this trade could best aid

9408-438: The race of man. [It is said] that protection is immoral ... Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefitting mankind everywhere. Well, they say, 'Buy where you can buy the cheapest'...Of course, that applies to labor as to everything else. Let me give you

9520-471: The reign of Ibrahim I . Russia under Peter I (Peter the Great) attempted to pursue mercantilism, but had little success because of Russia's lack of a large merchant class or an industrial base. Mercantilism was the economic version of warfare using economics as a tool for warfare by other means backed up by the state apparatus and was well suited to an era of military warfare. Since the level of world trade

9632-452: The renewal bill through Congress, despite expecting Jackson's inevitable veto. Clay hoped that when Jackson vetoed the bill, it would more clearly differentiate the two sides of the debate which Clay then sought to use to his advantage in running for president. With battle lines set, Jackson's majoritarian opposition to the Second Bank of the United States helped him be elected to a second term. The question of protective tariffs championed by

9744-400: The rest of the world to his level; the other to raising the standard of man throughout the world to our level. One looks to pauperism, ignorance, depopulation, and barbarism; the other to increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call

9856-560: The special interest serving economic nationalism embodied in the American System. Jackson's Secretary of the Treasury Roger B. Taney effectively summed up Jackson's opposition to the Second Bank of the United States: ""It is a fixed principle of our political institutions to guard against the unnecessary accumulation of power over persons and property in any hands. And no hands are less worthy to be trusted with it than those of

9968-502: The standard English term was "mercantile system". The word "mercantilism" came into English from German in the early-19th century. The bulk of what is commonly called "mercantilist literature" appeared in the 1620s in Great Britain. Smith saw the English merchant Thomas Mun (1571–1641) as a major creator of the mercantile system, especially in his posthumously published Treasure by Foreign Trade (1664), which Smith considered

10080-682: The state with looking for ways to strengthen the economy and to weaken foreign adversaries. In Europe, academic belief in mercantilism began to fade in the late-18th century after the East India Company annexed the Mughal Bengal , a major trading nation, and the establishment of the British India through the activities of the East India Company, in light of the arguments of Adam Smith (1723–1790) and of

10192-457: The states", had no obligation to provide relief or promote the general welfare. This stance kept faith with the tenets of Jeffersonian republicanism, notably its agrarianism and strict constructionism, to which van Buren was heir". As heir to the legacy of Van Buren and Jackson, Polk was similarly hostile to internal improvement programs, and used his presidential veto to prevent such projects from reaching fruition. An extra session of congress

10304-472: The states. Another important change was the introduction of double-entry bookkeeping and modern accounting. This accounting made extremely clear the inflow and outflow of trade, contributing to the close scrutiny given to the balance of trade. New markets and new mines propelled foreign trade to previously inconceivable volumes, resulting in "the great upward movement in prices" and an increase in "the volume of merchant activity itself". Prior to mercantilism,

10416-483: The substantive opposition to the American System. The first and most well-known battle between Jacksonians and Clay focused on the struggle over renewing the charter of the Second Bank of the United States. In Andrew Jackson's first annual message to Congress in 1829, he declared that "[b]oth the constitutionality and the expediency of the law creating this bank are well questioned by a large portion of our fellow-citizens, and it must be admitted by all that it has failed in

10528-491: The successive regimes of Colbert 's France and Elizabeth I 's England , while rejecting the harsher aspects of mercantilism , such as seeking colonies for markets. As later defined by Senator Henry Clay who became known as the Father of the American System because of his impassioned support thereof, the American System was to unify the nation north to south, east to west, and city to farmer. Frank Bourgin's 1989 study of

10640-474: The systems of Adam Smith or Karl Marx : In a passage from his book, The Harmony of Interests , Carey wrote concerning the difference between the American System and British System of economics: Two systems are before the world; ... One looks to increasing the necessity for commerce; the other to increasing the power to maintain it. One looks to underworking the Hindoo ;[ sic ], and sinking

10752-688: The tariff policy of this system of economics. This continued until 1913 when the administration of Woodrow Wilson initiated his The New Freedom policy that replaced the National Bank System with the Federal Reserve System, and lowered tariffs to revenue-only levels with the Underwood Tariff. The election of Warren G. Harding and the Republican Party in 1920 represented a partial return to

10864-412: The tariff system and expanded industrial policy. Colbertism was based on the principle that the state should rule in the economic realm as it did in the diplomatic, and that the interests of the state as identified by the king were superior to those of merchants and of everyone else. Mercantilist economic policies aimed to build up the state, especially in an age of incessant warfare, and theorists charged

10976-471: The vast and decentralized nature of their empire made implementing such notions difficult. Some constituent states of the empire did embrace mercantilism, most notably Prussia , which under Frederick the Great had perhaps the most rigidly controlled economy in Europe. Spain benefited from mercantilism early on as it brought a large amount of precious metals such as gold and silver into their treasury by way of

11088-533: The votes necessary to pass the bill in Congress, it enraged Jackson. Jackson saw this manipulation as clear evidence of the penchant of a national bank to serve private, non-majoritarian interests. Henry Clay's American System supported the necessity for central institutions to "take an activist role in shaping and advancing the nation's economic development". The bank thus fit well into Clay's worldview, and he took advantage of Biddle's manipulation in order to pass

11200-435: Was a leading 19th Century German and American economist who called it the "National System" and developed it further in his book The National System of Political Economy Carey called this a Harmony of Interests in his book by the same name, a harmony between labor and management, and as well a harmony between agriculture , manufacturing , and merchants . The name "American System" was coined by Clay to distinguish it, as

11312-485: Was being waged, and on February 25, 1862, the Legal Tender Act empowered the secretary of the treasury to issue paper money ('greenbacks') that were not immediately redeemable in gold or silver. The United States continued these policies throughout the later half of the 19th century. President Ulysses S Grant acknowledged the perceived efficacy of tariff protection in reference to Britain's success during

11424-447: Was called in the summer of 1841 for a restoration of the American system. When the tariff question came up again in 1842, the compromise of 1833 was overthrown, and the protective system placed in the ascendant. Due to the dominance of the then Democratic Party of Van Buren , Polk , and Buchanan the American School was not embraced as the economic philosophy of the United States until the election of Abraham Lincoln in 1860, who, with

11536-545: Was far less extensive than on the Continent , limited by common law and the steadily increasing power of Parliament. Government-controlled monopolies were common, especially before the English Civil War , but were often controversial. With respect to its colonies, British mercantilism meant that the government and the merchants became partners with the goal of increasing political power and private wealth, to

11648-485: Was only fully fleshed out in 1817 by David Ricardo ) and the benefits of trade. Hume famously noted the impossibility of the mercantilists' goal of a constant positive balance of trade. As bullion flowed into one country, the supply would increase, and the value of bullion in that state would steadily decline relative to other goods. Conversely, in the state exporting bullion, its value would slowly rise. Eventually, it would no longer be cost-effective to export goods from

11760-410: Was rejected by Britain and France by the mid-19th century. The British Empire embraced free trade and used its power as the financial center of the world to promote the same. The Guyanese historian Walter Rodney describes mercantilism as the period of the worldwide development of European commerce, which began in the 15th century with the voyages of Portuguese and Spanish explorers to Africa, Asia, and

11872-538: Was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny. Jefferson and Madison strongly opposed Hamilton's program, but were forced to implement it by the exigencies of the embargo, begun in December 1807 under the Non-Intercourse Act, and the War of 1812 against Britain. A number of programs by

11984-405: Was the medium of exchange. As early as 1837, John C. Calhoun called for a debt-free currency issued and controlled by the government. Such a policy would reduce the profits of the banks, and in response to this, the banking institutions threw their support behind the British school, espousing the gold standard throughout the 1800s. In the Civil War, a shortage of specie led to the issue of such

12096-412: Was the name given by Henry Clay in a speech before Congress advocating an economic program based on the economic philosophy derived from Alexander Hamilton's economic theories . Clay's policies called for a high tariff to support internal improvements such as road-building, and a national bank to encourage productive enterprise and to form a national currency as Hamilton had advocated as Secretary of

12208-407: Was the need for economic oppression of the working population; laborers and farmers were to live at the "margins of subsistence ". The goal was to maximize production, with no concern for consumption . Extra money, free time, and education for the lower classes were seen to inevitably lead to vice and laziness, and would result in harm to the economy. The mercantilists saw a large population as

12320-585: Was to run trade surpluses to benefit the government. The government took its share through duties and taxes, with the remainder going to merchants in Britain. The government spent much of its revenue on the Royal Navy , which both protected the colonies of Britain but was vital in capturing the colonies of other European powers. British mercantilist writers were themselves divided on whether domestic controls were necessary. British mercantilism thus mainly took

12432-405: Was used by its foremost critic, Adam Smith , but Mirabeau (1715–1789) had used "mercantilism" earlier. Mercantilism functioned as the economic counterpart of the older version of political power : divine right of kings and absolute monarchy . Scholars debate over why mercantilism dominated economic ideology for 250 years. One group, represented by Jacob Viner , sees mercantilism as simply

12544-744: Was viewed as fixed, it followed that the only way to increase a nation's trade was to take it from another. A number of wars, most notably the Anglo-Dutch Wars and the Franco-Dutch Wars , can be linked directly to mercantilist theories. Most wars had other causes but they reinforced mercantilism by clearly defining the enemy, and justified damage to the enemy's economy. Mercantilism fueled the imperialism of this era, as many nations expended significant effort to conquer new colonies that would be sources of gold (as in Mexico) or sugar (as in

#859140