The Effect of Mercantilism on the American Revolution

Introduction

From the birth of the nation, America has had a complex history regarding its independence from the British government. American mercantilism generally refers to the idea that the American colonies exist to support the wealth of Britain¹. Therefore, the British government decided to impose strict trade regulations on American colonies to export as many profitable goods as possible². This idea was prominent in the minds of the European colonizers and led to mercantilism policies in America. Ultimately, the increasing cost of American mercantilism worsened the relationship between the colonies and Britain, becoming one of the reasons for the American revolution.

The historical context of the problem derives from the colonization of North America by European colonizers. Namely, the British government insisted to ship all exports from the colonies through Britain, making it more challenging for colonial traders to gain profits³. Mercantilism was supposed to help the British government accumulate more wealth. According to most specialists in the 17th-18th century, the capital was a finite resource, forcing Britain to impose strict trade regulations⁴. However, some of the prominent economists of the time, such as Adam Smith and David Ricardo, criticized the idea of mercantilism and considered it ineffective.

American mercantilism was an ineffective trading policy that fueled tension between American colonies and the British government, resulting in the American revolution.

Supporting Arguments

The first argument which supports the thesis statement is the inaccurate representation of the mercantilism economy. The British government believed that “a nation’s wealth is tied to its stocks of money, particularly the acquisition of precious metals”⁵. As a result, it imposed strict trade regulations in an attempt to exploit the American colonies and create more wealth. This approach had several advantages, including the improvement of national defense, but it inevitably led to a tenser relationship between the colonies and Britain⁶. On the other hand, Adam Smith had a different perspective on the economy and stated that “the cause of the wealth of nations is not the acquisition of precious metals but the division of labor”⁷. He also believed that mercantilism was detrimental to the wealth of both Britain and the American colonies, resulting in growing hatred.

The second reason was the continually increasing demand for taxes and exports from Britain. In particular, the Sugar Act of 1764, the Stamp Act of 1765, and the Tea Act of 1773 were unacceptable policies for the American people⁸. The regulations significantly raised taxes to boost the British economy after the Seven Years War, but it was a heavy burden for American citizens⁹. At this time, the tension was growing consistently, demonstrating that mercantilism was one of the primary reasons for the American revolution.

Lastly, the third reason concerns the restrictions of the regulated economy. Smith believed that the government should only focus on national defense and a judicial system, advocating for free trade¹⁰. This approach would have improved the relationship between the colonies and the British government, while also maximizing the profits¹¹. As a result of exploitation, American citizens felt discriminated against compared to the Englishmen in Britain¹². However, the British government was blind to these outrages because of the belief in mercantilism and a regulated economy. The difference in perspectives about the trade eventually led to the escalation of the conflict and the American revolution. Ultimately, the three examined reasons confirm the thesis statement, demonstrating that Adam Smith was correct in his analysis of mercantilism.

Bibliography

Boudreaux, Donald. “Adam Smith and Mercantilism.” Medium, 2021.

Kelly, Martin. “Mercantilism and its Effect on Colonial America.” ThoughtCo, 2019.

Kiger, Patrick. “7 Events that Enraged Colonists and Led to the American Revolution.” History, 2020.

Rust, Randal. “Mercantilism.” American History Central, 2022.

Scott, Carole. “Mercantilism and the American Revolution.” Freepages, 1997.

Triber, Jayne. “Britain Begins Taxing the Colonies: The Sugar & Stamp Acts.” Boston National Historical Park, 2022.

Footnotes

1. Martin Kelly, “Mercantilism and its Effect on Colonial America.” ThoughtCo. Web.
2. Kelly, “Mercantilism and its Effect on Colonial America.”
3. Carole Scott, “Mercantilism and the American Revolution.” Freepages, 1997. Web.
4. Scott, “Mercantilism and the American Revolution.”
5. Donald Boudreaux, “Adam Smith and Mercantilism.” Medium. Web.
6. Boudreaux, “Adam Smith and Mercantilism.”
7. Boudreaux, “Adam Smith and Mercantilism.”
8. Patric Kiger, “7 Events that Enraged Colonists and Led to the American Revolution.” History. Web.
9. Jayne Triber, “Britain Begins Taxing the Colonies: The Sugar & Stamp Acts.” Boston National Historical Park. Web.
10. Scott, “Mercantilism and the American Revolution.”
11. Randal Rust, “Mercantilism.” American History Central. Web.
12. Rust, “Mercantilism.”