United States History Student Edition

04

Competing for Colonies

Mercantilism and Colonies GUIDING QUESTION

READING STRATEGY Analyzing Key Ideas and Details As you study the lesson, use a diagram like this to list the explorers who tried to find a Northwest Passage. Why did they hope to find such a passage?

Why did nations compete to establish colonies in the Americas? Spain became immensely wealthy from its exploitation of peoples and resources in the Americas. Portugal, too, had a vast empire. In the 1500s and 1600s, other European countries developed trade policies and built trading empires that they believed would increase their wealth and power, as well. In the 1600s, the greatest increase in trade took place in the European countries bordering the Atlantic Ocean—Portugal, Spain, England, and the Netherlands—because they had the largest overseas empires. Europe’s trading nations based their policies on an economic theory known as mercantilism (MUHR•kuhn•tuh•lih•zuhm). This theory held that a nation became powerful by building up its supply of gold and silver, called bullion (BUL•yuhn). Most nations wanted to gain bullion through trade. They wanted to export more goods than they imported. If a nation sold more goods than it bought, more gold and silver flowed into the nation than went out. This growth in wealth meant greater national power and more influence in the world. Governments often helped businesses that produced goods for

Search for the Northwest Passage

export. They sold monopolies to leaders of certain key industries. This granted them total control of the industry, free of competition. They also set tariffs, or taxes on goods imported from other countries. This made imported goods more expensive and helped protect local industries from foreign competition. Colonies were an important part of the mercantilist system. A colony is a settlement of people living in a new territory controlled by the home country. Colonies provided the home country with gold and silver as well as raw materials such as lumber, iron, and cotton. The raw materials were used to make manufactured goods in the home country.

Mercantilism was based on the concept that the success of a nation depended on how much bullion— gold and silver—it had.

FLORIDA BENCHMARKS

• SS.8.A.1.2 • SS.8.A.2.1 • SS.8.E.1.1 • SS.8.E.2.2 • SS.8.E.3.1

mercantilism an economic theory that a nation’s power depends on its ability to increase wealth by accumulating precious metals export to sell goods to other countries colony a settlement of people living in a new territory controlled by the home country

Garry Gay/Alamy Stock Photo

49

Exploration and Colonization