The document discusses the rise and evolution of mercantilism as an economic philosophy focused on a nation's acquisition of wealth through exports and limiting imports. It traces how mercantilism developed in ancient Rome and spread through European empires in the 14th-19th centuries as they sought to control trade and colonize other regions. While countries like England and France aggressively pursued mercantilist policies to build their empires, the philosophy began declining in the late 18th century due to enlightenment thinkers challenging it and nations gaining independence from European rule. The United States eventually replaced Britain as the world's dominant economic power in the 20th century.

1. “Path to Empire”
(The Rise of Mercantilism in World Trade)
Glenn L. Alpaugh
The quest for wealth has driven Man to the farthest reaches of the world. Empires
have risen and toppled through the ages because of this unrelenting hunger for riches. Just
as the walls of Athens fell to the Spartan phalanx, and Hannibal’s Carthage to the iron
legions of Rome, so has each civilization, in its turn, fallen prey to the weapons and
strategies of shrewder or more powerful opponents. The maturing of civilization has seen a
sophistication come to the weaponry used in the struggle to attain wealth, and the power
associated with it. Although not as overt as the sword or lance, the establishment and
refinement of economic trade has proven that it can be wielded as deftly, and with as
devastating a result, as any weapon crafted in the fiery forge of Mars. Chief among the
predatory trade practices established over the centuries is that of the mercantilist
philosophy. Those agents of government and industry who mastered its concepts and
tactics waged war on a level above that of martial endeavors, but for the same prize. Both
philosophies - mastery through economic or military machinations, led their practitioners
down the perilous path to empire - a common thread woven into the living fabric of
history.

2. The mercantilist philosophy of trade focuses on the acquisition of wealth through
export of goods and services, while limiting imports via strict controls administered by the
government or ruling class of a nation. The ancient Roman Empire is one of the earliest
examples of such a nation. Its expanding control over its neighbors and allies
complimented an ideology focused on delivering the riches of the world to its capital
(Hooker, 1).
The collapse of Rome brought with it a corresponding contraction of mercantilism. By
the 6th
century A.D., the demise of Roman power led to isolationism as the fragmented
trade of Europe tended towards the safer and smaller markets of localization, eventually
drifting into feudal economies. This primitive, small-scale trade activity emphasized
agricultural production, with an effective economic interaction of approximately 20 miles
(Mercantilism, The Nature Of Feudal Economies, 1).
Characterized by a lord – vassal relationship, feudal economies contained five primary
groups and an authority based on landholding. The money and security of this economic
state were controlled by a sovereign, while agriculture was controlled by nobles.
Merchants were in control of trade, while priests policed behavior. The labor force was
composed of serfs, who controlled nothing in the feudal economy (Mercantilism, The
Nature Of Feudal Economies, 1).
This system met its demise through the conjunction of several occurrences - a decrease
in the labor supply brought about as a result of the Black Death, the increase of trade
possibilities due to travel, and the development of a belief that property could be privately
owned, an idea standing in direct conflict to the feudal system of sovereignty

3. (Mercantilism, The Nature Of Feudal Economies, 1). The increasing void created by the
collapsing feudal economic system set the stage for inroads to be made by an emerging
economic force in Islam.
Living on the trade routes of the Egyptian, Persian, and Byzantium empires, Arabic
culture had developed a long history of mercantilism. This system grew in strength from
the 7th
century onward, as the religion of Islam made steady inroads across the lands of
North Africa, Spain, the Middle East, and Asia, entrenching Arabic mercantilism firmly
into the economic systems of these territories. Medieval Europe also gleaned much of its
mercantilist education from the spread of Islam, learning such economic terms as tariffs
and traffic – both derived from the Arabic language (Hooker, 1).
Beginning in the 14th
century, the nations of Europe pushed back against Arabic
economic inroads by expanding their own mercantilist practices, in an effort to compete.
This expansion in trade resulted in an explosion in social mobility in European culture, and
drove the exploration of distant lands, culminating in the voyages of discovery (Hooker,
1).
The expansionist policies of the European nations continued into the 16th
century,
following the economic rationale of large competitive nation-states to consolidate regional
power centers of the defunct feudal era. Contributing factors included establishing colonies
outside of Europe, the growth of European commerce and industry relative to agriculture,
and the use of metallic monetary systems relative to barter transactions (LaHaye, 1). This
period witnessed the beginning of three centuries of religious and commercial wars
between the rising European nation-states, requiring a constant flow of revenues to

4. maintain full-time professional forces and to pay for the growing costs of civil government
(Mercantilism, 1).
It became the primary economic objective of each government to command sufficient
currency to support the military now necessary to deter attacks by other economic powers,
while aiding its own territorial expansion (LaHaye, 1). These supporting funds were paid
in large, to the nation-states by the mercantilist classes in the form of levies and taxes. In
exchange, governments would enact protectionist policies in favor of the mercantilist
classes and against foreign competition. Such policies as providing capital to new
industries, guild rule and tax exemptions, establishing monopolies over local and colonial
markets, and the granting of pensions to successful producers were commonplace in this
process of quid pro quo (LaHaye, 2). During this expansionist period, treaties were enacted
in the quest to obtain exclusive trading privileges – usually exploiting the commerce of
colonies while benefiting the mother countries (Mercantilism, 1).
The movement of New World gold to Europe caused shipping to grow crucial to the
great powers pursuing the perilous sea-lanes of empire, with dominance over the oceans
becoming a logical and vital concern. To address this issue, governments developed strong
and capable merchant marines, valuable commodities - since the vessels of these great
fleets could be used for both merchant and military purposes. Several European nations
sought additional nautical advantages, with varying methods and degrees of success.
England enacted the Navigation Laws of 1650 and 1651, which “prohibited foreign
vessels from engaging in coastal trade in England and required that all goods imported
from the continent of Europe be carried on either an English vessel or a vessel registered in

5. the country of origin of the goods,” (LaHaye, 2). In addition, all colonial trade with the
English mother country was restricted to transport via English or colonial vessels. In a
move to further control the flow of commerce, England targeted Holland – the dominant
commercial sea power of the time - with activation of the Staple Act of 1663. This
maritime law was an extension of the Navigation Act, and required all colonial exports to
be landed in England before re-exportation to Europe (LaHaye, 2). Notable English
supporters of these mercantilist policies included Henry VIII, Elizabeth I, and Oliver
Cromwell.
From 1661 to 1663, French minister of finance Jean-Baptiste Colbert (under Louis
XIV) embraced the mercantilist philosophy of economic regulation completely, providing
bounties to French shipbuilders and increasing port duties on foreign ships in an effort to
leverage an advantage in trade (LaHaye, 2). Later, in his capacity as chief minister of
France, Colbert insisted that purchase of raw materials be confined exclusively to French
or French colonial sources, and bolstered the merchant marine of his nation to nearly three
hundred vessels. The fervor with which the French minister used his regulations to chain
the economic system of his country to national power has lent a comparison of his policies
with those of latter-day fascism (Rempel, 2).
The empire of Spain maintained tight control of its trade policies, both in Europe and
in its New World territories. Desiring more than a monopoly over trade with its colonies,
Spain also sought to deny England the colonial expansion it was attempting to obtain in the
new lands to the West. The Spanish Empire feared that any successful English colonies
could be used as bases for penetration of its own colonial territory. This suspicion carried

6. over from the English position that, although providing a minimal participation in
exploration, its occupation of new lands provided legitimate claim to title. This belief
conflicted with the contention of Spain, that discovery equated to claim to title (Rempel,
3).
Spain used three mercantilist devices to protect its New World interests - a prohibition
on foreign ships entering its colonial ports - suppression of manufacturing in specific
colonies to allow for a more open import market (from its other colonies) - and the
channeling of all Spanish colonial trade through a single port. As with the other world
powers of the time, the health of Spain’s colonies was subordinate to the accumulation of
wealth for the mother country (Rempel, 5).
In Germany during this time, primary concern of the mercantilists was the use of
internal regulation to increase economic power. Such internal controls foreshadowed the
economic nationalism of a future planned society in the Fatherland. The fervent drive to
increase national revenue provided the German mercantilists with the label of cameralists,
which alluded to Kammer - the German royal treasury (Rempel, 2).
The 18th
and 19th
centuries saw a consolidation of colonial mercantilist policies,
followed by a weakening of resolve and inability to maintain them in some instances. The
economic expansion of the British Empire stretched across the world. England controlled
trade from the American colonies to the East India Company, which had transitioned from
a privately owned monopoly to a governing body in India controlled by English
Parliament; this as a result of the Regulating Act of 1773 (Manas, 1).

7. The extreme mercantilist regulation of the Spanish colonies had become so hamstrung
by an administration imposed by the mother country, that an inability to enforce its own
policies caused Spain to gradually relax its iron grip on a system acknowledged by its
creators to be outmoded. This easing of restrictions took place in spite of the fact that
Spain was the leading colonial power through the first decade of the 19th
century (Rempel,
5).
Mismanagement and abuse of colonial territories resulted in a series of political and
military defeats for the European powers during the late 18th
to mid-19th
centuries. The
British colonies in America, chafing at the mercantilist controls forced upon them by a
seemingly uncaring Crown and Parliament, fomented a general uprising that grew to a
revolution in 1776. The year was auspicious in the fact that, not only was formal
independence declared by the English colonies of America through the eloquently crafted
Declaration of Independence, but so too was enlightenment attained in the form of “The
Wealth of Nations.” This treatise by Adam Smith espoused the economic benefits of free
trade over conventionally accepted and predatory mercantilist philosophies, while directly
correlating those economic benefits to the potential for social and moral improvement of
humankind (Smith, 1). Smith’s work is considered by many to mark the end of the
mercantilist era, while others see tenets of mercantilism still being practiced in
contemporary economic policies around the world.
To the East, after two and a half centuries of plundering and scandalous mercantilist
mismanagement by the East India Company, Indian troops rebelled in the Sepoy Mutiny of

8. 1857. This led to the dissolution of the East India Company in 1858, and caused India to be
directly administered by the British Crown (Manas, 2).
In 1864, the failure of Napoleon III of France to successfully establish a Mexican
empire through the appointment of Ferdinand Maximilian as its emperor, continued the
decline of French economic influence in the Americas (Maximilian, 1). So too, did the
glory of Spain fade from the New World, as its territories were systematically annexed by
former colonies now standing as independent nations – hungry to establish their
dominance in a new, industrialized world. Successive military setbacks cost the weakening
Spanish Empire its interests in South America, Cuba, and the Philippine Islands.
With Great Britain in decline and non-European states such as China wallowing in
economic weakness, overseas trade and investment by a youthful and growing United
States led the new nation to give more thought to its strategic position in the world as it,
too, gazed down the path of empire. The need for deliberate analysis became even more
apparent with the 1890 publishing of “The Influence of Sea Power on History 1660 –
1783,” a brilliant work by US Navy Rear Admiral Alfred Thayer Mahan. Mahan’s treatise
is greatly acknowledged as “the most important work of strategic thought ever written by
an American,” and provides an intellectual basis for thought on the American acquisition
of more bases and territories in the Pacific (Mead, 1).
As the United States matured into an economic and military power, influential forces
began steering the energetic nation into an imperialist movement. The most influential of
these forces were men of wealth and political power – such American giants as John Hay,

9. Elihu Root, Theodore Roosevelt, Henry Cabot lodge and the previously mentioned Rear
Admiral Alfred Mahu (Mead, 1).
John Hay served as the confidential assistant of President Abraham Lincoln,
ambassador to Britain, and secretary of state. His "Open Door" policy toward China, with
British support, ended the attempted division of the Chinese empire by other powers such
as Russia, Germany, and Japan – a fate suffered by Africa at the hands of European powers
(Mead, 1).
Elihu Root succeeded Hays as secretary of state. He was a corporate law specialist
from New York, and the acknowledged leader of the American Bar. Root helped establish
the Carnegie Endowment and the Council on Foreign Relations. Serving as Secretary of
War from 1898 to 1904, he “reorganized the administrative system of the War Department,
established new procedures for promotion, founded the War College, enlarged West Point,
opened schools for special branches of the service, created a general staff, strengthened
control over the National Guard,” all indicative of a desire to increase the power of the US
in the event that future conflicts would arise as American international interests expanded
(Haberman, 1).
Theodore Roosevelt served with distinction in the Spanish American War, was elected
Governor of New York in 1898, and at the age of 43, served as the American nation’s
youngest president. His belief in the manifest destiny of the United States was apparent in
the Roosevelt Corollary, which stated that “even if a country had a legal contract
agreement with a smaller, uncivilized country of the Western Hemisphere, the US could
step in and interrupt that contract if the US thought the deal was not in the best interest of

10. the smaller countries,” (Lubragge, 1). The newfound economic wealth of the United States
allowed Roosevelt to construct the physical manifestation of his “Big Stick” diplomacy -
the Great White Fleet. This impressive and formidable naval force consisted of sixteen
American battleships of the Atlantic Fleet that traveled the world on a goodwill tour –
although the amount of goodwill generated by the appearance of such an intimidating
flotilla in another country’s harbor is highly suspect.
Henry Cabot Lodge kept America out of the League of Nations by blocking Senate
ratification of the Treaty of Versailles. He did so based on a belief that the covenant of the
league threatened American sovereignty. Such actions led him to be regarded as an
isolationist. He eventually rose to be a national leader of the American imperialist
movement (Mead, 1).
In the first decades of the 20th
century, English economic interests had transitioned
from a mercantilist philosophy to one of free trade. Supplanting the aging British lion in
economic supremacy was the powerful and energetic American eagle. Joining the other
global powers in the race down the path to empire, the US found itself in a position of
dominance as many European nations followed the example of England in abandoning the
economic philosophy of mercantilism. Not all followed suit, however. The nations of
Russia, Germany, and Japan followed the example of industrial America, seeking colonies,
protectorates, and territories to expand the domain of their economic controls. In the 20th
century, these nations collided on the path to empire, as two great wars enveloped the
world. The outcome of the final conflict brought an end to mercantilism as a grand scheme
of economic dominance. With the world economy in disarray, the era of free trade was

11. ushered in as one-time enemy nations aided each other to rebuild. The coming of the
United Nations, and such economic aid institutions as the International Monetary Fund and
World Bank, helped to ensure the burial of the dead predatory trade philosophy. The
General Agreement on Trade and Tariff (GATT) was another economic tool created to
ensure that the new free trade multilateralism would remain as the dominant world
economic philosophy (Williams, 2).
As the preeminent economic power of the world, the United States has supplanted
Britain - economically, politically, and militarily. This, in essence, fulfills the destiny
sought by Theodore Roosevelt and the other leaders of the American imperialist
movement. American power has filled the vacuum created by the decline of Britain (Mead,
3).
It would be a very easy thing indeed, for the United States to slip back onto the
predatory path that drove the economy of the world for so many centuries. Once again, the
questions of national strategy and American interests are debated, as the potential
implementation of restrictive trade policies are re-evaluated for effectiveness in the
manipulation of world economies (Mead, 3). As other nations court the fringe of
mercantilism by adjusting imports and exports in efforts to punish trading partners for
political slights and offenses, the United States seeks to steer clear of this perilous path. To
tread its length once more would be to invite victory to the isolationists and imperialists,
those who believe in the right to impose their ideal of civilization or religious propriety on
other nations of the world. Through war or trade, the path to empire is perilous. It must be

12. traveled with a caution that comes of knowing the destination past travelers have found,
while seeking the enlightened route of what might be attained.

13. Works Cited
Haberman, Frederick “Nobel Lectures, Peace 1901-1925” Elsevier Publishing Company,
Amsterdam, 1972
16 Aug 2004 <http://www.nobel.se/peace/laureates/1912/root-bio.html>
Hooker, Richard “The European Enlightenment”
16 Aug 2004 <http://www.wsu.edu:8080/~dee/GLOSSARY/CAPITAL.HTM>
Lubragge, Michael “From Revolution To Reconstruction - The Many Shades of Manifest
Destiny”
16 Aug 2004 <http://odur.let.rug.nl/~usa/E/manifest/manif5.htm>
LeHaye, Laura “Mercantilism” The Concise Encyclopedia of Economics
16 Aug 2004 <http://www.econlib.org/library/Enc/Mercantilism.html>
“Manas: History And Politics, East India Company”
16 Aug 2004 <http://www.sscnet.ucla.edu/southasia/History/British/EAco.html>
“Maximilian, 1832–67, Emperor Of Mexico” Bartleby.com
16 Aug 2004 <http://www.bartleby.com/65/ma/MaxiMex.html>
Mead, Walter Russell “The Forefathers of Imperialism” Council On Foreign Relations,
16 Aug 2004
<http://www.cfr.org/pub5360/walter_russell_mead/the_forefathers_of_imperialism.p
hp>

14. “Mercantilism” The Columbia Encyclopedia, Sixth Edition. 2001 Bartleby.com
16 Aug 2004 <http://www.bartleby.com/65/me/mercanti.html>
“Mercantilism, The Nature Of Feudal Economies”
16 Aug 2004 <http://www.mtholyoke.edu/acad/intrel/mercantilism.htm>
Rempel, Gerhard “Mercantilism” Western New England College
16 Aug 2004
<http://mars.acnet.wnec.edu/~grempel/courses/wc2/lectures/mercantilism.html>
Smith, Adam “An Inquiry Into The Nature And Causes Of The Wealth Of Nations”
Preface By Dr Eamonn Butler, Adam Smith Institute 2001
16 Aug 2004 <http://www.adamsmith.org/smith/won-intro.htm>
Williams, Mariama W. “A Brief History of GATT and NAFTA”
31 Jul. 2004 <http://www.greens.org/s-r/06/06-15.html>