Mercantilism Timeline

An early statement on national balance of trade appeared in Discourse of the Common Wealth of this Realm of England: "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."

England began the first large-scale and integrative approach to mercantilism during the Elizabethan Era (1558–1603), with various but often disjointed efforts by the court of Queen Elizabeth I to develop a naval and merchant fleet capable of challenging the Spanish stranglehold on trade and expanding bullion at home.

Image source: Elizabethan era

Thomas Mun (1571–1641) and Edward Misselden first articulated the Elizabethan system, with Mun's England's Treasure by Foreign Trade or the Balance of Foreign Trade is the Rule of Our Treasure, which Josiah Child later developed further.

In England, mercantilism reached its peak during the Long Parliament government (1640–60), a period of intense legislative activity around trade regulation.

Image source: Long Parliament

The first Navigation Acts regulating trade were passed by Parliament in 1651 and 1652, during the English Commonwealth. The Navigation Ordinance of 1651 was enacted by the government of Oliver Cromwell, reflecting the Puritan view of the world.

Image source: Navigation Acts

A number of wars can be linked directly to mercantilist theories, most notably the four Anglo-Dutch Wars (from 1652 to 1784), fought over trade dominance between England and the Dutch Republic.

Image source: Anglo-Dutch Wars

Adam Smith praised England's Navigation Acts of 1660 to 1760, as they greatly fostered the expansion of the British merchant fleet and played a central role in turning Britain into the world's naval and economic superpower from the 18th century onward.

The British government had to fight smuggling, which became a favourite American technique in the 18th century to circumvent restrictions on trading with the French, Spanish, or Dutch.

In 1690, Locke argued that prices vary in proportion to the quantity of money, contributing to critiques by Hume, Dudley North and John Locke that undermined much of mercantilism, which steadily lost favor during the 18th century.

Image source: John Locke

Followers of Mun such as Josiah Child and Charles Davenant showed deeper understanding of trade; Davenant wrote in 1699, "Gold and Silver are indeed the Measures of Trade, but that the Spring and Original of it, in all nations is the Natural or Artificial Product of the Country."

Image source: Charles Davenant

Academic belief in mercantilism began to fade in the late 18th century after the East India Company annexed Mughal Bengal, a major trading nation, and established British India through its activities.

Image source: East India Company

Perhaps the last major mercantilist work was James Steuart's Principles of Political Economy, published in 1767, marking the culmination of the mercantilist tradition of economic writing.

Image source: James Steuart (economist)

In the English-speaking world, mercantilist ideas were criticized by Adam Smith with the publication of The Wealth of Nations in 1776. Smith used the term "mercantile system" for his foremost critique, though Mirabeau had used "mercantilism" earlier. The replacement of mercantilism did not come until Smith's publication.

Image source: The Wealth of Nations

The word "mercantilism" came into English from German in the early-19th century. It was initially used solely by critics, such as Mirabeau and Smith, but historians proved quick to adopt it.

Mercantilists failed to understand the notions of absolute advantage and comparative advantage, an idea only fully fleshed out in 1817 by David Ricardo, who later criticized mercantilist ideas along with Adam Smith.

The British Parliament's repeal of the Corn Laws under Robert Peel in 1846 symbolized the emergence of free trade as an alternative system to mercantilism.

Image source: Corn Laws

Mercantilism was rejected by Britain and France by the mid-19th century, as both nations fully embraced free trade and classical liberal economics.

In Germany, mercantilism remained an important ideology in the 19th and early 20th centuries, when the historical school of economics was paramount. Themes also existed in writers from List onward, stretching the system into the 19th century.

Image source: Historical school of economics

The American School of economics dominated United States national policies from the time of the American Civil War until the mid-20th century, protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–1970).

In the 20th century, John Maynard Keynes affirmed that motivating the production process was as significant as encouraging consumption, which benefited the new mercantilism. Keynes and other economists also realized that the balance of payments is an important concern.

Image source: John Maynard Keynes

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, criticizing the view of mercantilism as mere rent seeking.

Image source: Jacob Viner

Samuelson in 2007 wrote that China was pursuing an essentially neo-mercantilist trade-policy that threatened to undermine the post–World War II international economic structure.

Image source: Paul Samuelson

As of 2010, the word "mercantilism" remained a pejorative term, often used to attack various forms of protectionism. Mercantilism as a weapon has continued to be used by countries through the 21st century by way of modern tariffs.

After the re-election of Donald Trump as president of the United States in 2024, Serbian-American economist Branko Milanović described Trump's policies of implementing tariffs on imports, trade blocs, and other barriers against China as "neo-mercantilism", stating that it "marks a symbolic end to global neoliberalism".

Image source: Branko Milanović