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158-474: 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 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

316-470: A centralised state governed from the capital. He sought to eliminate the remnants of feudalism persisting in parts of France; by compelling many members of the nobility to reside at his lavish Palace of Versailles , he succeeded in pacifying the aristocracy, many of whom had participated in the Fronde rebellions during his minority. He thus became one of the most powerful French monarchs and consolidated

474-602: 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 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

632-916: A "reckless fiscal policy or a consumption binge." China's financial system favors the accumulation of large surpluses while the United States carries "large and persistent current account deficits" which has created a trade imbalance. The authors note that, Moreover, in practice, private capital often flows from developing to advanced economies. The advanced economies, such as the United States ... run current account deficits, whereas developing countries and emerging market economies often run surpluses or near surpluses. Very poor countries typically run large current account deficits, in proportion to their gross domestic product (GDP), that are financed by official grants and loans. King Louis XIV of France Louis   XIV (Louis-Dieudonné; 5 September 1638 – 1 September 1715), also known as Louis

790-527: 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 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

948-479: A chief minister: "Up to this moment I have been pleased to entrust the government of my affairs to the late Cardinal. It is now time that I govern them myself. You [secretaries and ministers] will assist me with your counsels when I ask for them. I request and order you to seal no orders except by my command . . . I order you not to sign anything, not even a passport . . . without my command; to render account to me personally each day and to favor no one". Capitalizing on

1106-540: A common diplomatic front against France, leading to the Triple Alliance , between England, the Dutch and Sweden . The threat of an escalation and a secret treaty to divide Spanish possessions with Emperor Leopold , the other major claimant to the throne of Spain, led Louis to relinquish many of his gains in the 1668 Treaty of Aix-la-Chapelle . Louis placed little reliance on his agreement with Leopold and as it

1264-520: A counterweight against his domestic Orangist opponents. Louis provided support in the 1665-1667 Second Anglo-Dutch War but used the opportunity to launch the War of Devolution in 1667. This captured Franche-Comté and much of the Spanish Netherlands ; French expansion in this area was a direct threat to Dutch economic interests. The Dutch opened talks with Charles II of England on

1422-438: A country and entering abroad countries) or decreasing imports (goods coming from a foreign country into a country). Firstly, this is generally accomplished directly through import restrictions, quotas, or duties (though these may indirectly limit exports as well), or by promoting exports (through subsidies, custom duty exemptions etc.). Influencing the exchange rate to make exports cheaper for foreign buyers will indirectly increase

1580-569: A country's current account records the value of exports and imports of both goods and services and international transfers of capital . It is one of the two components of the balance of payments , the other being the capital account (also known as the financial account). Current account measures the nation's earnings and spendings abroad and it consists of the balance of trade , net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net unilateral transfers, that have taken place over

1738-461: A favoured few. Financial officials were required to keep regular accounts, revising inventories and removing unauthorized exemptions: up to 1661 only 10 per cent of income from the royal domain reached the king. Reform had to overcome vested interests: the taille was collected by officers of the Crown who had purchased their post at a high price, and punishment of abuses necessarily lowered the value of

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1896-404: A given period of time. A country is said to have a trade surplus if its exports exceed its imports, and a trade deficit if its imports exceed its exports. Positive net sales abroad generally contribute to a current account surplus ; negative net sales abroad generally contribute to a current account deficit . Because exports generate positive net sales, and because the trade balance is typically

2054-417: A given period of time. The current account balance is one of two major measures of a country's foreign trade (the other being the net capital outflow ). A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the period in question, and a current account deficit indicates that it shrank. Both government and private payments are included in

2212-495: 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 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

2370-412: 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

2528-715: A powerful but war-weary kingdom, in major debt after the War of the Spanish Succession that had raged on since 1701. Some of his other notable achievements include the construction of the Canal du Midi , the patronage of artists , and the founding of the French Academy of Sciences . Louis   XIV was born on 5 September 1638 in the Château de Saint-Germain-en-Laye , to Louis XIII and Anne of Austria . He

2686-738: A reduction in borrowing by the national government. A current account deficit is not always a problem. The Pitchford thesis states that a current account deficit does not matter if it is driven by the private sector. It is also known as the "consenting adults" view of the current account, as it holds that deficits are not a problem if they result from private sector agents engaging in mutually beneficial trade. A current account deficit creates an obligation of repayments of foreign capital, and that capital consists of many individual transactions. Pitchford asserts that since each of these transactions were individually considered financially sound when they were made, their aggregate effect (the current account deficit)

2844-620: A reference resource produced by the Central Intelligence Agency that collects data and publishes online open reports comparing the current account balance of countries . According to World Factbook , "[c]urrent account balance compares a country's net trade in goods and services, plus net earnings, and net transfer payments to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis." The top ten on their list of countries by current account balance in 2014 were: On

3002-555: 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

3160-412: A result, and Anne was forced, under intense pressure, to free Broussel. Moreover, on the night of 9–10 February 1651, when Louis was twelve, a mob of angry Parisians broke into the royal palace and demanded to see their king. Led into the royal bed-chamber, they gazed upon Louis, who was feigning sleep, were appeased, and then quietly departed. The threat to the royal family prompted Anne to flee Paris with

3318-578: A secret marriage to Queen Anne. However, Louis's coming-of-age and subsequent coronation deprived them of the Frondeurs ' pretext for revolt. The Fronde thus gradually lost steam and ended in 1653, when Mazarin returned triumphantly from exile. From that time until his death, Mazarin was in charge of foreign and financial policy without the daily supervision of Anne, who was no longer regent. During this period, Louis fell in love with Mazarin's niece Marie Mancini , but Anne and Mazarin ended

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3476-634: A significant influence on the trade balance, and by extension, on the current account. An overvalued currency makes imports cheaper and exports less competitive, thereby widening the current account deficit (or narrowing the surplus). An undervalued currency, on the other hand, boosts exports and makes imports more expensive, thus increasing the current account surplus (or narrowing the deficit). Nations with chronic current account deficits often come under increased investor scrutiny during periods of heightened uncertainty. The currencies of such nations often come under speculative attack during such times. This creates

3634-507: 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, a view that has led some authors, especially Robert E. Ekelund and Robert D. Tollison, to call mercantilism "a rent-seeking society". To

3792-479: 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

3950-489: A strong position and on the Spanish marriage. Additionally, Mazarin's relations with Marie Mancini were not good, and he did not trust her to support his position. All of Louis's tears and his supplications to his mother did not make her change her mind. The Spanish marriage would be very important both for its role in ending the war between France and Spain, because many of the claims and objectives of Louis's foreign policy for

4108-833: A system of absolute monarchy in France that endured until the French Revolution . Louis also enforced uniformity of religion under the Catholic Church . His revocation of the Edict of Nantes abolished the rights of the Huguenot Protestant minority and subjected them to a wave of dragonnades , effectively forcing Huguenots to emigrate or convert, virtually destroying the French Protestant community. During Louis's long reign, France emerged as

4266-486: A vicious circle where precious foreign exchange reserves are depleted to support the domestic currency, and this forex reserve depletion – combined with a deteriorating trade balance – puts further pressure on the currency. Embattled nations are often forced to take stringent measures to support the currency, such as raising interest rates and curbing currency outflows. Action to reduce a substantial current account deficit usually involves increasing exports (goods going out of

4424-522: Is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world. A current account surplus increases a nation's net foreign assets by the amount of the surplus, and a current account deficit decreases it by that amount. A country's balance of trade is the net or difference between the country's exports of goods and services and its imports of goods and services, excluding all financial transfers, investments and other components, over

4582-422: Is absorbing (absorption = domestic consumption + investment + government spending) more than that it is producing. This can only happen if some other economies are lending their savings to it (in the form of debt to or direct/ portfolio investment in the economy) or the economy is running down its foreign assets such as official foreign currency reserve. On the other hand, if an economy

4740-436: Is also sound. A deficit implies we import more goods and services than we export. The current account equals: The current account is essentially exports – imports (+net international investment balance) If one has a current account deficit, in a floating exchange rate this must be balanced by a surplus on the financial / capital account. The balance of payments (BOP) is the record of a country's monetary transactions with

4898-464: 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 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

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5056-413: Is driven by the desire of international investors to acquire US assets (see Ben Bernanke , William Poole links below). However, the main viewpoint undoubtedly remains that the causative factor is the current account and that the positive financial account reflects the need to finance the country's current account deficit. Current account surpluses are facing current account deficits of other countries,

5214-409: Is running a current account surplus it is absorbing less than that it is producing. This means it is saving. As the economy is open, this saving is being invested abroad and thus foreign assets are being created. Normally, the current account is calculated by adding up the 4 components of current account: goods, services, income and current transfers. A country's current account can be calculated by

5372-761: Is sometimes called Colbertism . Under Colbert, the French government became deeply involved in 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

5530-551: Is still practised in the economies of industrializing countries, in the form of economic interventionism . With the efforts of supranational organizations such as 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

5688-653: The Battle of Lens , Mazarin, on Queen Anne's insistence, arrested certain members in a show of force. The most important arrest, from Anne's point of view, concerned Pierre Broussel , one of the most important leaders in the Parlement de Paris . People in France were complaining about the expansion of royal authority, the high rate of taxation, and the reduction of the authority of the Parlement de Paris and other regional representative entities. Paris erupted in rioting as

5846-574: 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 the standard English term was "mercantile system". The word "mercantilism" came into English from German in

6004-485: The Duchess of Longueville ; dukes of legitimised royal descent, such as Henri, Duke of Longueville , and François, Duke of Beaufort ; so-called " foreign princes " such as Frédéric Maurice, Duke of Bouillon , his brother Marshal Turenne , and Marie de Rohan , Duchess of Chevreuse; and scions of France's oldest families, such as François de La Rochefoucauld . Queen Anne played the most important role in defeating

6162-627: The Duke of Beaufort and Marie de Rohan , who conspired against him in 1643. The best example of Anne's loyalty to France was her treatment of one of Richelieu's men, the Chancellor Pierre Séguier . Séguier had brusquely interrogated Anne in 1637 (like a "common criminal", as she recalled) following the discovery that she was giving military secrets to her father in Spain, and Anne was virtually under house arrest for years. By keeping

6320-613: The Electorate of Cologne . Rapid French advance led to a coup that toppled De Witt and brought William III to power. Leopold viewed French expansion into the Rhineland as an increasing threat, especially after they seized the strategic Duchy of Lorraine in 1670. The prospect of Dutch defeat led Leopold to an alliance with Brandenburg-Prussia on 23 June, followed by another with the Republic on 25th. Although Brandenburg

6478-590: The Euro crisis by many Keynesian economists, such as Yanis Varoufakis , Heiner Flassbeck , Paul Krugman and Joseph Stiglitz . Since 1989, the current account deficit of the US has been increasingly large, reaching close to 7% of the GDP in 2006. In 2011, it was the highest deficit in the world. New evidence, however, suggests that the US current account deficits are being mitigated by positive valuation effects . That is,

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6636-971: The Peace of Westphalia , which ended the Thirty Years' War . Its terms ensured Dutch independence from Spain , awarded some autonomy to the various German princes of the Holy Roman Empire , and granted Sweden seats on the Imperial Diet and territories controlling the mouths of the Oder , Elbe , and Weser Rivers . France, however, profited most from the settlement. Austria, ruled by the Habsburg Emperor Ferdinand III , ceded all Habsburg lands and claims in Alsace to France and acknowledged her de facto sovereignty over

6794-661: The Secretary of War , helped maintain large field armies that could be mobilised much more quickly, allowing them to mount offensives in early spring before their opponents were ready. The French were nevertheless forced to retreat from most of the Dutch Republic, which deeply shocked Louis; he retreated to St Germain for a time, where no one, except a few intimates, was allowed to disturb him. French military advantages allowed them however to hold their ground in Alsace and

6952-607: The Three Bishoprics of Metz , Verdun , and Toul . Moreover, many petty German states sought French protection, eager to emancipate themselves from Habsburg domination. This anticipated the formation of the 1658 League of the Rhine , which further diminished Imperial power. As the Thirty Years' War came to an end, a civil war known as the Fronde erupted in France. It effectively checked France's ability to exploit

7110-571: 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 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

7268-447: 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

7426-538: 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 a wide range of economic matters. The Austrian lawyer and scholar Philipp Wilhelm von Hornick , one of

7584-563: 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 the tariff system and expanded industrial policy. Colbertism

7742-467: 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 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

7900-576: 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

8058-474: 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

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8216-443: The French crown and nobility: the king might raise taxes on the nation without consent if only he exempted the nobility. Only the "unprivileged" classes paid direct taxes, which came to mean the peasants only, as most bourgeois finagled exemptions in one way or another. The system laid the whole burden of state expenses on the backs of the poor and powerless. After 1700, with the support of Louis's pious secret wife Madame de Maintenon ,

8374-490: The Fronde because she wanted to transfer absolute authority to her son. In addition, most of the princes refused to deal with Mazarin, who went into exile for a number of years. The Frondeurs claimed to act on Louis's behalf, and in his real interest, against his mother and Mazarin. Queen Anne had a very close relationship with the Cardinal, and many observers believed that Mazarin became Louis   XIV's stepfather by

8532-837: The Great ( Louis le Grand ) or the Sun King ( le Roi Soleil ), was King of France from 1643 until his death in 1715. His verified reign of 72 years and 110 days is the longest of any sovereign . An emblematic character of the Age of Absolutism in Europe, Louis XIV's legacy is widely characterized by French colonial expansion , the conclusion of Eighty Years' War involving the Habsburgs , and his architectural bequest , marked by commissioned works of art and buildings. His pageantry, opulent lifestyle and ornate cultivated image earned him enduring admiration. Louis   XIV raised France to be

8690-518: The King's authority, in a manner that was much more radical than the one proposed by Mazarin. The Cardinal depended totally on Anne's support and had to use all his influence on the Queen to temper some of her radical actions. Anne imprisoned any aristocrat or member of parliament who challenged her will; her main aim was to transfer to her son an absolute authority in the matters of finance and justice. One of

8848-738: 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

9006-403: 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

9164-520: The Peace of Westphalia. Anne and Mazarin had largely pursued the policies of Cardinal Richelieu, augmenting the Crown's power at the expense of the nobility and the Parlements . Anne was more concerned with internal policy than foreign affairs; she was a very proud queen who insisted on the divine rights of the King of France. All this led her to advocate a forceful policy in all matters relating to

9322-535: The Reunions . Warfare defined Louis's foreign policy, impelled by his personal ambition for glory and power: "a mix of commerce, revenge, and pique". His wars strained France's resources to the utmost, while in peacetime he concentrated on preparing for the next war. He taught his diplomats that their job was to create tactical and strategic advantages for the French military. Upon his death in 1715, Louis   XIV left his great-grandson and successor, Louis XV ,

9480-630: The Spanish Netherlands while retaking Franche-Comté. By 1678, mutual exhaustion led to the Treaty of Nijmegen , which was generally settled in France's favour and allowed Louis to intervene in the Scanian War . Despite the military defeat, his ally Sweden regained much of what it had lost under the 1679 treaties of Saint-Germain-en-Laye , Fontainebleau and Lund imposed on Denmark–Norway and Brandenburg. Yet Louis's two primary goals,

9638-485: The US assets overseas are gaining in value relative to the domestic assets held by foreign investors. The net foreign assets of the US are therefore not deteriorating one to one with the current account deficits. The most recent experience has reversed this positive valuation effect, however, with the US net foreign asset position deteriorating by more than two trillion dollars in 2008, down to less than $ 18 trillion, but has since risen to $ 25 trillion. This temporary decline

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9796-623: 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

9954-454: 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

10112-568: The aristocracy, this rebellion represented a protest for the reversal of their political demotion from vassals to courtiers . It was headed by the highest-ranking French nobles, among them Louis's uncle Gaston, Duke of Orléans and first cousin Anne Marie Louise d'Orléans, Duchess of Montpensier , known as la Grande Mademoiselle ; Princes of the Blood such as Condé, his brother Armand de Bourbon, Prince of Conti , and their sister

10270-439: The balance of payments. Also, currency wars , a phenomenon evident in post recessionary markets is a protectionist policy, whereby countries devalue their currencies to ensure export competitiveness. Secondly, adjusting government spending to favor domestic suppliers is also effective. Less obvious methods to reduce a current account deficit include measures that increase domestic savings (or reduced domestic borrowing), including

10428-446: The best policies. Mercantilist domestic policy was more fragmented than its trade policy. While Adam Smith portrayed mercantilism as supportive of strict controls over 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

10586-493: The boundaries of his kingdom. Contemporary treaties were intentionally phrased ambiguously. Louis established the Chambers of Reunion to determine the full extent of his rights and obligations under those treaties. Cities and territories, such as Luxembourg and Casale , were prized for their strategic positions on the frontier and access to important waterways. Louis also sought Strasbourg , an important strategic crossing on

10744-399: The calculation. It is called the current account because goods and services are generally consumed in the current period. The current account is an important indicator of an economy's speed. It is defined as the sum of the balance of trade (goods and services exports minus imports ), net income from abroad, and net current transfers. A positive current account balance indicates the nation

10902-479: The capital and the larger strategic picture, with the old military aristocracy ( noblesse d'épée , nobility of the sword) monopolizing senior military positions and the higher ranks. Louvois modernized the army and reorganised it into a professional, disciplined, well-trained force. He was devoted to the soldiers' material well-being and morale, and even tried to direct campaigns. Louis's legal reforms were enacted in his numerous Great Ordinances . Prior to that, France

11060-461: 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

11218-414: The creation of a coalition headed mainly by Marie de Rohan and the duchess of Longueville. This aristocratic coalition was strong enough to liberate the princes, exile Mazarin, and impose a condition of virtual house arrest on Queen Anne. All these events were witnessed by Louis and largely explained his later distrust of Paris and the higher aristocracy. "In one sense, Louis's childhood came to an end with

11376-403: The current account is the main causal factor, with capital and financial accounts simply reflecting financing of a deficit or investment of funds arising as a result of a surplus. However, more recently some observers have suggested that the opposite causal relationship may be important in some cases. In particular, it has controversially been suggested that the United States current account deficit

11534-565: The destruction of the Dutch Republic and the conquest of the Spanish Netherlands, had failed. Louis was at the height of his power, but at the cost of uniting his opponents; this increased as he continued his expansion. In 1679, he dismissed his foreign minister Simon Arnauld, marquis de Pomponne , because he was seen as having compromised too much with the allies. Louis maintained the strength of his army, but in his next series of territorial claims avoided using military force alone. Rather, he combined it with legal pretexts in his efforts to augment

11692-428: The different types of capital. The United States, for example, gleans a substantially larger rate of return from foreign capital than foreigners do from owning United States capital. In the traditional accounting of balance of payments, the current account equals the change in net foreign assets . A current account deficit implies a reduction of net foreign assets: If an economy is running a current account deficit, it

11850-417: The direction of religious policy strongly in hand until her son's majority in 1661. She appointed Cardinal Mazarin as chief minister, giving him the daily administration of policy. She continued the policies of her late husband and Cardinal Richelieu , despite their persecution of her, in order to win absolute authority in France and victory abroad for her son. Anne protected Mazarin by exiling her followers

12008-448: The dominant economic ideology of all of Europe in 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

12166-531: 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 the archetype or manifesto of the movement. Perhaps the last major mercantilist work

12324-468: 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

12482-410: The economy. The mercantilists saw a large population as 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

12640-528: The effective Séguier in his post, Anne sacrificed her own feelings for the interests of France and her son Louis. The Queen sought a lasting peace between Catholic nations, but only after a French victory over her native Spain. She also gave a partial Catholic orientation to French foreign policy. This was felt by the Netherlands, France's Protestant ally, which negotiated a separate peace with Spain in 1648. In 1648, Anne and Mazarin successfully negotiated

12798-445: 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

12956-453: 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

13114-428: The exemplar nation-state of the early modern period , and established a cultural prestige which lasted through the subsequent centuries until today. Louis began his personal rule of France in 1661, after the death of his chief minister Cardinal Mazarin , when the King famously declared that he would take over the job himself. An adherent of the divine right of kings , Louis continued his predecessors' work of creating

13272-406: The financial account, assets pertaining to international monetary flows of, for example, business or portfolio investments are noted. Absent changes in official reserves, the current account is the mirror image of the sum of the capital and financial accounts. One might then ask: Is the current account driven by the capital and financial accounts or is it vice versa? The traditional response is that

13430-526: 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

13588-444: The first knots which tied me to my mother. But attachments formed later by shared qualities of the spirit are far more difficult to break than those formed merely by blood." It was his mother who gave Louis his belief in the absolute and divine power of his monarchical rule. During his childhood, he was taken care of by the governesses Françoise de Lansac and Marie-Catherine de Senecey . In 1646, Nicolas V de Villeroy became

13746-420: The following formula: C A = ( X − M ) + N Y + N C T {\displaystyle CA=(X-M)+NY+NCT} Where CA is the current account, X and M are respectively the export and import of goods and services, NY the net income from abroad, and NCT the net current transfers. Better still a country can calculate its current account balance by simply adding

13904-412: 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

14062-480: The grandson of Louis   XIV and Maria Theresa. The War of Devolution did not focus on the payment of the dowry; rather, the lack of payment was what Louis   XIV used as a pretext for nullifying Maria Theresa's renunciation of her claims, allowing the land to "devolve" to him. In Brabant (the location of the land in dispute), children of first marriages traditionally were not disadvantaged by their parents' remarriages and still inherited property. Louis's wife

14220-589: 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 the Elizabethan system ( England's Treasure by Foreign Trade or

14378-412: 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

14536-553: 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

14694-409: The import of woolen goods from Spain and some parts of Flanders . The next year, 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

14852-446: The income account is negative, the country is paying more than it is taking in interest, dividends, etc. The various subcategories in the income account are linked to specific respective subcategories in the capital account, as income is often composed of factor payments from the ownership of capital (assets) or the negative capital (debts) abroad. From the capital account, economists and central banks determine implied rates of return on

15010-406: The indebtedness of which towards abroad therefore increases. According to Balances Mechanics by Wolfgang Stützel this is described as surplus of expenses over the revenues. Increasing imbalances in foreign trade are critically discussed as a possible cause of the financial crisis since 2007. The existing differences between the current accounts in the eurozone is considered to be the root cause of

15168-472: The inevitable results of quotas and price ceilings were black markets . One notion that mercantilists widely agreed upon 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

15326-580: 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

15484-498: The king and his courtiers. Shortly thereafter, the conclusion of the Peace of Westphalia allowed Condé's army to return to aid Louis and his court. Condé's family was close to Anne at that time, and he agreed to help her attempt to restore the king's authority. The queen's army, headed by Condé, attacked the rebels in Paris; the rebels were under the political control of Anne's old friend Marie de Rohan . Beaufort, who had escaped from

15642-525: The king at the opulent château of Vaux-le-Vicomte , flaunting a wealth which could hardly have accumulated except through embezzlement of government funds. Fouquet appeared eager to succeed Mazarin and Richelieu in power, and he indiscreetly purchased and privately fortified the remote island of Belle Île . These acts sealed his doom. Fouquet was charged with embezzlement; the Parlement found him guilty and sentenced him to exile; and finally Louis altered

15800-421: The king was persuaded to change his fiscal policy. Though willing enough to tax the nobles, Louis feared the political concessions which they would demand in return. Only towards the close of his reign under the extreme exigency of war, was he able, for the first time in French history, to impose direct taxes on the aristocracy. This was a step toward equality before the law and toward sound public finance, though it

15958-548: The king's infatuation by sending Mancini away from court to be married in Italy. While Mazarin might have been tempted for a short time to marry his niece to the King of France, Queen Anne was absolutely against this; she wanted to marry her son to the daughter of her brother, Philip IV of Spain , for both dynastic and political reasons. Mazarin soon supported the Queen's position because he knew that her support for his power and his foreign policy depended on making peace with Spain from

16116-501: The largest component of the current account, a current account surplus is usually associated with positive net exports. In the net factor income or income account, income payments are outflows, and income receipts are inflows. Income are receipts from investments made abroad (note: investments are recorded in the capital account but income from investments is recorded in the current account) and money sent by individuals working abroad, known as remittances , to their families back home. If

16274-680: 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 the classical economists . French economic policy liberalized greatly under Napoleon (in power from 1799 to 1814/1815). The British Parliament's repeal of

16432-483: The leaders of the Parlement of Paris, whom she had jailed, died in prison. The Frondeurs , political heirs of the disaffected feudal aristocracy, sought to protect their traditional feudal privileges from the increasingly centralized royal government. Furthermore, they believed their traditional influence and authority was being usurped by the recently ennobled bureaucrats (the Noblesse de Robe , or "nobility of

16590-529: The leading European power and regularly made war. A conflict with Spain marked his entire childhood, while during his personal rule, Louis fought three major continental conflicts, each against powerful foreign alliances: the Franco-Dutch War , the Nine Years' War , and the War of the Spanish Succession . In addition, France contested shorter wars such as the War of Devolution and the War of

16748-414: The left bank of the Rhine and theretofore a Free Imperial City of the Holy Roman Empire , annexing it and other territories in 1681. Although a part of Alsace, Strasbourg was not part of Habsburg-ruled Alsace and was thus not ceded to France in the Peace of Westphalia. Following these annexations, Spain declared war, precipitating the War of the Reunions . However, the Spanish were rapidly defeated because

16906-421: 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"

17064-527: 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

17222-420: 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

17380-599: 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

17538-480: 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

17696-433: The net outflow of precious metals from France. Louis instituted reforms in military administration through Michel le Tellier and his son François-Michel le Tellier , successive Marquis de Louvois. They helped to curb the independent spirit of the nobility, imposing order on them at court and in the army. Gone were the days when generals protracted war at the frontiers while bickering over precedence and ignoring orders from

17854-479: 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

18012-519: The next 50 years would be based upon this marriage, and because it was through this marriage that the Spanish throne would ultimately be delivered to the House of Bourbon. Louis XIV was declared to have reached the age of majority on the 7th of September 1651. On the death of Mazarin, in March 1661, Louis personally took the reins of government and astonished his court by declaring that he would rule without

18170-461: The outbreak of the Fronde. It was not only that life became insecure and unpleasant – a fate meted out to many children in all ages – but that Louis had to be taken into the confidence of his mother and Mazarin on political and military matters of which he could have no deep understanding". "The family home became at times a near-prison when Paris had to be abandoned, not in carefree outings to other chateaux but in humiliating flights". The royal family

18328-440: 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 the ideal economy, as Adam Smith would later do for classical economics. Rather, each mercantilist writer tended to focus on

18486-404: The practice by prohibiting the separation of families. Additionally, in the colonies, only Roman Catholics could own slaves, and these had to be baptised. Louis ruled through a number of councils: The death of Louis's maternal uncle King Philip IV of Spain in 1665 precipitated the War of Devolution . In 1660, Louis had married Philip   IV's eldest daughter, Maria Theresa , as one of

18644-437: The prison where Anne had incarcerated him five years before, was the military leader in Paris, under the nominal control of Conti. After a few battles, a political compromise was reached; the Peace of Rueil was signed, and the court returned to Paris. Unfortunately for Anne, her partial victory depended on Condé, who wanted to control the queen and destroy Mazarin's influence. It was Condé's sister who pushed him to turn against

18802-460: 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

18960-431: 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

19118-624: The provisions of the 1659 Treaty of the Pyrenees . The marriage treaty specified that Maria Theresa was to renounce all claims to Spanish territory for herself and all her descendants. Mazarin and Lionne , however, made the renunciation conditional on the full payment of a Spanish dowry of 500,000 écus . The dowry was never paid and would later play a part persuading his maternal first cousin Charles ;II of Spain to leave his empire to Philip, Duke of Anjou (later Philip V of Spain ),

19276-485: The purchase. Nevertheless, Colbert achieved excellent results, with the deficit of 1661 turning into a surplus by 1666, with interest on the debt decreasing from 52 million to 24 million livres. The taille was reduced to 42 million in 1661 and 35 million in 1665, while revenue from indirect taxation progressed from 26 million to 55 million. The revenues of the royal domain were raised from 80,000 livres in 1661 to 5.5 million in 1671. In 1661,

19434-411: The queen. After striking a deal with her old friend Marie de Rohan, who was able to impose the nomination of Charles de l'Aubespine, marquis de Châteauneuf as minister of justice, Anne arrested Condé, his brother Armand de Bourbon, Prince of Conti , and the husband of their sister Anne Genevieve de Bourbon, duchess of Longueville . This situation did not last long, and Mazarin's unpopularity led to

19592-402: The receipts were equivalent to 26 million British pounds, of which 10 million reached the treasury. The expenditure was around 18 million pounds, leaving a deficit of 8 million. In 1667, the net receipts had risen to 20 million pounds sterling , while expenditure had fallen to 11 million, leaving a surplus of 9 million pounds. Money was the essential support of

19750-470: 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

19908-489: The reorganized and enlarged army, the panoply of Versailles, and the growing civil administration. Finance had always been the weakness of the French monarchy: tax collection was costly and inefficient; direct taxes dwindled as they passed through the hands of many intermediate officials; and indirect taxes were collected by private contractors called tax farmers who made a handsome profit. The state coffers leaked at every joint. The main weakness arose from an old bargain between

20066-474: The rest of the world. Transactions are either marked as a credit or a debit. Within the BOP there are three separate categories under which different transactions are categorized: the current account, the capital account and the financial account. In the current account, goods, services, income and current transfers are recorded. In the capital account, physical assets such as a building or a factory are recorded. And in

20224-417: The robe"), who administered the kingdom and on whom the monarchy increasingly began to rely. This belief intensified the nobles' resentment. In 1648, Anne and Mazarin attempted to tax members of the Parlement de Paris . The members refused to comply and ordered all of the king's earlier financial edicts burned. Buoyed by the victory of Louis, duc d'Enghien (later known as le Grand Condé ) at

20382-551: The same list the bottom ten countries by current account balance in 2014 were In a 2012 article published by the International Monetary Fund (IMF) the authors argue that a current account deficit with higher investments and lower savings may indicate that the economy of a country is highly productive and growing. If there is an excess of imports over exports there may be problems in terms of competitiveness. Low savings and high investment can also be caused by

20540-402: The sentence to life imprisonment. Fouquet's downfall gave Colbert a free hand to reduce the national debt through more efficient taxation. The principal taxes included the aides and douanes (both customs duties ), the gabelle (salt tax), and the taille (land tax). The taille was reduced at first, and certain tax-collection contracts were auctioned instead of being sold privately to

20698-567: The sole regent of France, the king decreed that a regency council would rule on his son's behalf, with Anne at its head. Louis XIII died on 14 May 1643. On 18 May Queen Anne had her husband's will annulled by the Parlement de Paris , a judicial body of nobles and high clergymen, and she became sole regent. She exiled her husband's ministers Chavigny and Bouthilier and appointed the Count of Brienne as her minister of foreign affairs. Anne kept

20856-648: The state's registers, not the church's, and it strictly regulated the right of the Parlements to remonstrate. The Code Louis later became the basis for the Napoleonic code , which in turn inspired many modern legal codes. One of Louis's more infamous decrees was the Grande Ordonnance sur les Colonies of 1685, the Code Noir (black code). Although it sanctioned slavery, it attempted to humanise

21014-470: 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,

21172-451: The time. Contemporaries and eyewitnesses claimed that the Queen would spend all her time with Louis. Both were greatly interested in food and theatre, and it is highly likely that Louis developed these interests through his close relationship with his mother. This long-lasting and loving relationship can be evidenced by excerpts in Louis's journal entries, such as: "Nature was responsible for

21330-507: The trade balance (exports minus imports) is generally the biggest determinant of the current account surplus or deficit, the current account balance often displays a cyclical trend. During a strong economic expansion, import volumes typically surge; if exports are unable to grow at the same rate, the current account deficit will widen. Conversely, during a recession, the current account deficit will shrink if imports decline and exports increase to stronger economies. The currency exchange rate exerts

21488-411: The treasury verged on bankruptcy. To rectify the situation, Louis chose Jean-Baptiste Colbert as Controller-General of Finances in 1665. However, Louis first had to neutralize Nicolas Fouquet , the powerful Superintendent of Finances . Although Fouquet's financial indiscretions were not very different from Mazarin's before him or Colbert's after him, his ambition worried Louis. He lavishly entertained

21646-493: The value of the visible balance of trade to that of the invisible balance of trade. the visible balance of trade is the sum total of the differences of all the imports and export of all tangible goods while the invisible balance of trade is the total gotten from the difference between exports and imports of services. A nation's current account balance is influenced by numerous factors – its trade policies, exchange rate, competitiveness, forex reserves, inflation rate and others. Since

21804-419: 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

21962-453: The widespread public yearning for peace and order after decades of foreign and civil strife, the young king consolidated central political authority and at the expense of the feudal aristocracy. Praising his ability to choose and encourage men of talent, the historian Chateaubriand noted: "it is the voice of genius of all kinds which sounds from the tomb of Louis". Louis began his personal reign with administrative and fiscal reforms. In 1661,

22120-566: The world" – produces quarterly reports on its 34 member nations comparing statistics on balance of payments and international trade in terms of current account balance in billions of US dollars and as a percentage of GDP. For example, according to their report the current account balance in billions of US dollars of several countries can be compared, The report also compares countries on services balance, exports of services, import of services, goods balance, export of goods and imports of goods in billions of US dollars. The World Factbook ,

22278-502: The young king's tutor. Louis   XIV became friends with Villeroy's young children, particularly François de Villeroy , and divided his time between the Palais-Royal and the nearby Hotel de Villeroy. Sensing imminent death in the spring of 1643, King Louis XIII decided to put his affairs in order for his four-year-old son Louis   XIV. Not trusting the judgement of his Spanish wife Queen Anne, who would normally have become

22436-469: 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 the German historical school from List, as well as followers of

22594-619: Was Philip   IV's daughter by his first marriage, while the new king of Spain, Charles   II, was his son by a subsequent marriage. Thus, Brabant allegedly "devolved" to Maria Theresa, justifying France to attack the Spanish Netherlands . During the Eighty Years' War with Spain , France supported the Dutch Republic as part of a general policy of opposing Habsburg power. Johan de Witt , Dutch Grand Pensionary from 1653 to 1672, viewed this as crucial for Dutch security and

22752-507: Was a patchwork of legal systems, with as many traditional legal regimes as there were provinces, and two co-existing legal systems— customary law in the north and Roman civil law in the south. The Grande Ordonnance de Procédure Civile of 1667, the Code Louis , was a comprehensive legal code imposing a uniform regulation of civil procedure throughout the kingdom. Among other things, it prescribed baptismal, marriage and death records in

22910-504: 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 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

23068-653: Was driven out of Paris twice in this manner, and at one point Louis   XIV and Anne were held under virtual arrest in the royal palace in Paris. The Fronde years planted in Louis a hatred of Paris and a consequent determination to move out of the ancient capital as soon as possible, never to return. Just as the first Fronde (the Fronde parlementaire of 1648–1649) ended, a second one (the Fronde des princes of 1650–1653) began. Unlike that which preceded it, tales of sordid intrigue and half-hearted warfare characterized this second phase of upper-class insurrection. To

23226-437: Was due primarily to the relative under-performance of domestic ownership of foreign assets (largely foreign equities) compared to foreign ownership of domestic assets (largely US treasuries and bonds). The Organisation for Economic Co-operation and Development , OECD – an international economic organisation of 34 countries, founded in 1961 to "promote policies that will improve the economic and social well-being of people around

23384-543: 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

23542-852: Was forced out of the war by the June 1673 Treaty of Vossem , in August an anti-French alliance was formed by the Dutch, Spain , Emperor Leopold and the Duke of Lorraine . The French alliance was deeply unpopular in England, and only more so after the disappointing battles against Michiel de Ruyter 's fleet. Charles   II of England made peace with the Dutch in the February 1674 Treaty of Westminster . However, French armies held significant advantages over their opponents; an undivided command, talented generals like Turenne , Condé and Luxembourg and vastly superior logistics. Reforms introduced by Louvois ,

23700-478: Was named Louis Dieudonné (Louis the God-given) and bore the traditional title of French heirs apparent : Dauphin . At the time of his birth, his parents had been married for 23 years. His mother had experienced four stillbirths between 1619 and 1631. Leading contemporaries thus regarded him as a divine gift and his birth a miracle of God. Louis's relationship with his mother was uncommonly affectionate for

23858-522: Was now clear French and Dutch aims were in direct conflict, he decided to first defeat the Republic , then seize the Spanish Netherlands. This required breaking up the Triple Alliance; he paid Sweden to remain neutral and signed the 1670 Secret Treaty of Dover with Charles, an Anglo-French alliance against the Dutch Republic. In May 1672, France invaded the Republic , supported by Münster and

24016-482: 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

24174-711: Was predictably diminished by concessions and exemptions won by the insistent efforts of nobles and bourgeois. Louis and Colbert also had wide-ranging plans to grow French commerce and trade. Colbert's mercantilist administration established new industries and encouraged manufacturers and inventors, such as the Lyon silk manufacturers and the Gobelins tapestry manufactory . He invited manufacturers and artisans from all over Europe to France, such as Murano glassmakers, Swedish ironworkers, and Dutch shipbuilders. He aimed to decrease imports while increasing French exports, hence reducing

24332-410: 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

24490-580: Was the physiocrats, who developed their theories in France. Their theories also had several important problems, and the replacement of mercantilism did not come until Adam Smith published The Wealth of Nations in 1776. This book outlines the basics of what is today known as classical economics . Smith spent a considerable portion of the book rebutting the arguments of the mercantilists, though often these are simplified or exaggerated versions of mercantilist thought. Current account (balance of payments) In macroeconomics and international finance ,

24648-583: 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

24806-402: 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

24964-744: 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

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