Second Half Of The 18th Century example essay topic

The religious wars of the 17th century have left Europe in a turmoil. Many regions economically had suffered from decades of warfare, from destruction, disease, emigration. Governments had to turn their focus from religious to economic affairs. The DUTCH, after having conquered the wealthier of the Portuguese colonies, dominated overseas trade and enjoyed a huge trade surplus with almost any country in Europe.

This as a mere trading nation, which did not produce most of the commodities they sold. Other, larger states were not willing to accept this trade surplus. Frenchman COLBERT developed a set of political steps undertaken by the French state to challenge it: attract new businesses by encouraging the immigration of people with know-how. This is encouraged by granting privileges such as tax-free status for the first 7 years, freedom from military service for sons and sons's ons etc. reduce the flow of money out of the country by raising import tariffs exclude unwelcome competition by administrative trickery, such as by the NAVIGATION ACT (Britain, Sweden) if you can't produce a product in your country, try to encourage your merchants to produce it elsewhere under the French flag (i.e. in colonies: sugar in the Caribbean) extend the land under intensive cultivation by turning pasture into farmland, drain swamps and lakes, regulate rivers improve the infrastructure by building roads and canals promote research with the aim to develop new technologies (porcelain) The success was almost immediate.

France restored old branches of industry and attracted new ones. Success invites imitation. Both absolutist and non-absolutist governments tried to stimulate the growth of their economies. Thus, increased state interference in the economy became ubiquitous The object of mercantilism was to increase the state revenue. The effect of giving the economy incentives to grow was a means to achieve increased state revenues, not the goal of mercantilist policy. Here is another instrument of mercantilism, less positive on the development of the state economy: (h) organize state lotteries, with a certain percentage of the ticket fees dealt out as winnings, the large remainder filling the state coffers.

The governments began to look at the economy as a science. They regarded their populace as a source of revenue and as a pool from which their armies were to be replenished; hence a large population was an asset. STATISTICAL BUREAUS were founded and began to take censuses. The land was systematically surveyed.

While many of the policies mentioned above were improvements, the policy to hand out MONOPOLIES to raise government revenue was detrimental, as the monopolies, because of lacking competition, had no incentive to rationalize and modernize and were often ineffective. Another obstacle to free competition within the country were the privileges of the gilds. In absolutist states, however, monopolies could easily be withdrawn and privileges cancelled. This was but one of the reasons, why early enlightenment philosophers such as VOLTAIRE looked positively at absolute monarchy. Mercantilism, for the next 130 years (1660-1790) was one of the leading economic philosophies.

Only in the second half of the 18th century did it come in disrepute, when long-term monopolies had resulted in inefficiency and high prices and ADAM SMITH, in his Wealth of Nations attacked state interference in the economy ( = Mercantilism). Decline of the Mercantilist Economy In the second half of the 17th century, Mercantilism had proved an immense success. States like France and England, by strongly reducing the share of Dutch trade, were able to secure a much larger share of the market for their domestic businesses. New businesses were introduced; the French, for instance, could secure a huge share in the world market for sugar and coffee; Europe's population expanded. A hundred years later, in the second half of the 18th century, mercantilist policy was an old hat. The policy had been adapted by numerous European states, even the smaller ones implementing some of it's policies.

The Dutch market share had successfully been reduced and there was limited room for growth. Worse, the basis of mercantilist economy - lots of privileges and a number of monopolies - now proved detrimental to the economic development. Mills, for instance, in most cases owned privileges forcing all farmers in the respective district to bring their corn there. Late in the 18th century, many privileged mills used outdated technology, and were often run down; the farmers, by law, were prevented from bringing their corn to a modern mill erected closer to their farm. In the cities, GUILDS owned privileges securing the market - for their specific product or service - exclusively for them; they made sure that outsiders hardly had a chance to enter their ranks, and they limited the competition amongst themselves by limiting the number of shops (they simply would not permit additional apprentices to pass the master craftsman's examination).

Companies enjoying a monopoly had little incentive to invest in improving their facilities. Iceland's long economic decline is partially due to the fact that a Helsingborg trading company had a monopoly on the Iceland trade, and thus could charge high prices. The various European colonial companies all had charters granting them a monopoly. During the 17th century, companies such as the V.O.C. (Dutch East India Company), W.I.C. (Dutch West India Company). later the E.I.C. (English East India Company) were economic giants, ran Empires by themselves. By the end of the 18th century, many such companies were heading for bankruptcy. Symptoms for the economic crisis was a rising willingness to disregard the law.

The larger part of the tea imported by the Danish and Swedish East India Companies was smuggled into England (violating the privilege the E.I.C. enjoyed, circumventing the Navigation Act and English taxation on tea). The modern mill mentioned above could not have existed if the farmers obeyed the mill privilege. In addition, the production process underwent a change. Production shifted more and more from the craftsmen's shops to FACTORIES where goods were produced by a combination of MANUFACTURE and water-powered machinery. Many of these factories were built were water power was available, outside of the old centers of production, and often outside of the old system of privileges. Economic competition thus was a fact (although, to a great extent, illegal under the valid law of those days) and the structure of the old economy in a great need of change, when ADAM SMITH wrote his famous book "The Wealth of Nations" (1776), in which he proposed to abolish privileges altogether and permit market forces to function; the market would regulate the economy in everybody's best interest..