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NAME: _____________________________
PERIOD: _____
DATE: ________ HANDOUT # _____
MERCANTILISM & TAXATION
The economic policy of ​
mercantilism​
holds that a nation’s power is
directly related to its wealth. According to the theory of ​
mercantilism
maintained by British colonists before the American Revolution,
colonies existed solely for the economic benefit of the mother country.
From the English perspective, taxing the colonies was a good way to
make money. After all, profit was one of England’s major incentives
for establishing colonies in America. The American colonies were
valuable to England because the colonists could supply raw materials
and could buy English goods. That would achieve another goal of
mercantilism, a favorable ​
BALANCE OF TRADE​
. Balance of trade is the
relationship between a country’s imports and exports. A country with
a favorable balance of trade makes money by exporting more
products than it imports.
Following the French and Indian War, England found themselves deep in debt. The British expected the colonists to
help pay off the debt. Therefore, the British government began to create new acts and laws that required the
colonists to pay taxes.
QUESTIONS TO CONSIDER
1. ​
In your own words​
, describe the policy of mercantilism.
2. What is the connection between mercantilism and the British colonies?
3. In your own words, describe how a country with a ​
favorable​
balance of trade makes money.
4. Predict how colonists may react to paying taxes that will be used to pay off British war debt from
the French and Indian War. Be sure to defend your prediction.
THE NAVIGATION ACTS
Beginning in 1651, the English government passed several laws to control colonial trade and ensure the colonies
remained profitable – for England. Together, these laws are called the Navigation Acts.
The Navigation Acts, 1651, 1660, 1663, 1673
The Navigation Acts had mixed results for both England and its colonies. For England, the laws increased
revenues, but at the same time it increased the costs of law enforcement in America. For the colonists, the
Navigation Acts meant more English involvement in colonial affairs. Most colonists resented the Navigation
Acts. Some colonists began smuggling goods and refusing to pay their taxes.
Questions to Consider
1. Who did the Navigation Acts benefit? Explain why. ___________________________________________
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2. How did the colonists react to the Navigation Acts? ___________________________________________
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3. Describe how the Navigation Acts are an example of mercantilism in action. _____________________
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