The Economics of Colonization

Learning Target: I can explain how economic theories drove the colonization of America by European powers.

Do Now (Review):

  1. What is scarcity?
  2. Give an example of something that is scarce.
  3. What do you think is the most scarce resource on the planet?

Scarcity

Demand is greater than supply.

Scarce resources drive action.

Supply

  1. Gold! ↩

Demand

  1. The Storming of the Teocalli by Cortez and His Troops ↩

The Storming of the Teocalli by Cortez and His Troops

  1. What do we notice?
  2. What are the conquistadors after?
  3. Who are we supposed to root for? How can you tell?

The same artist (Emanuel Gottlieb Leutze) painted this:

Any doubt whom we're supposed to root for?

Mercantilism

Wealth is accumulated through “profitable balances.”

Mercantilism was the dominant European economic system between the 15th and 18th centuries. Mercantilist governments believed that wealth could only be measured in gold and silver. Since these two metals are in very short supply, it followed that one country’s gain was another’s loss. So, each nation tried to make more money on exports— goods sold to other countries—than it spent on imports—goods bought from other countries.

To accomplish this goal, governments actively interfered with the economy, using their power to support domestic industries, while discouraging the purchase of goods from other countries.

Under mercantilist regimes, colonies are moneymakers. They exist only to provide resources to the ruling country.

von Hornick's Rules

Philipp von Hornick was a German civil servant and a supporter of the economic theory of mercantilism
  1. To inspect the country's soil with the greatest care, and not to leave the agricultural possibilities of a single corner or clod of earth unconsidered...
  2. All commodities found in a country, which cannot be used in their natural state, should be worked up within the country...
  3. Attention should be given to the population, that it may be as large as the country can support...
  4. gold and silver once in the country are under no circumstances to be taken out for any purpose...
  5. The inhabitants should make every effort to get along with their domestic products...
  6. [Foreign commodities] should be obtained not for gold or silver, but in exchange for other domestic wares...
  7. ...and should be imported in unfinished form, and worked up within the country...
  8. Opportunities should be sought night and day for selling the country's superfluous goods to these foreigners in manufactured form...
  9. No importation should be allowed under any circumstances of which there is a sufficient supply of suitable quality at home."

The Economist

Try to translate these rules (which are already translated from 17th-century German) into 21st-century English.

What would mercantilism look like today? What would we not have?