From the 16th to 18th century, mercantilism was the primary economic system that operated in the European nations.  The rationale of this policy was to maximize the exports and minimize the imports through tariffs, thus having a trade surplus to build the nation’. The policy advocated for the accumulation of precious metals including gold and silver.

Within this time, England was the center of the British Empire, and it had significantly less natural resources. Therefore, in order to increase its wealth, it developed fiscal policies that included the Navigation Act and Sugar Act. These were intended to drive the colonists away from accessing the foreign products and generate another opportunity for buying the British goods. These efforts were anticipated to create a balance of trade which consequently would increase national wealth. Real to the expectations, Britain became the dominant nation in the international trade between the 1700s and 1800s. 

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The Sugar Act of 1764 imposed high tariffs for the importation of sugar and molasses from countries outside of the British territory. More so, the Navigation act of 1651 was put in place to restrict the foreign vessels/ships from engaging in trade along the coast of the Britain territory. The Acts also restricted the goods traded with the British colonies from being carried by other ships other than the British ships. Also, it ensured that colonial exports would pass through the control of the British before it was redistributed in other parts of Europe. This elicited strong competition for wealth between England and other nationalities such as the Portuguese, French and the Spanish. This had a huge impact on the Dutch trade since it pushed out the Dutch merchants from doing business. The phenomenon generated a chain of wars with the Dutch (the Anglo-Dutch Wars) which reduced the capacity of the Dutch to dominate in the international trade. The results of the acts saw the French and the Spanish navies being defeated in 1806 at the Battle of Trafalgar. This made the fleet belonging to the British merchants expand exponentially and become a major driving force in the world trade. During the 17th – 18th centuries, Britain’s colonial empire expanded to become the biggest empire in the entire world ruling over a quarter of the world’s population. 

Most of the modern nation-states started to take root during the 17th century. Majority of them adopted the mercantilism as their economic philosophy. These nations started to establish colonies and used metallic currencies. There was increased international trade mostly due to advances in the transportation and the accounting systems. Trade primarily involved getting raw materials from the colonies, then manufactured them into finished products in the homeland and later exported to the upcoming urban centers in the European nations. The mercantilism philosophy turned the international trade into an economic competition among the nation-states that resulted into numerous military conflicts as many countries competed for markets and gold bullions in their national treasuries.

In spite of the increased level of trade in and within the European nations, the markets were highly controlled and regulated and could not be categorized as “free trade.” In the early nineteenth century, there was a restriction of the exportation of wool, silk, rags, firewood, timber, and coal. Additionally, the mercantilist policies created import barriers to protect the indigenous domestic industries. The effect of the two policies strangled the trade and generated a diminishing economic condition. This elicited several voices to come up which advocated and was impactful for a change in favor of free trade, market, and commerce in the European countries.

In 1737, the first impact was realized. Grand Duke Francis lifted the ban on grain export form the Maremma region to Sienna.  During the Strain of famine in 1764, Tuscany permitted the importation of grain. The Tuscan government allowed the trade of grains throughout 1770 without any restriction. This was a novel achievement in the liberal economic systems after the mercantilist policies providing a breakthrough in the free trade development. 

The free trade narration gained momentum among the advocates and the policy makers, such that more of the European nations started to implement it. In France for instance, voices such as that of Bastian and Chevalier proved very impactful in championing for free trade. By 1828, after a commission of inquiry probed the import duties on the British iron, saw the government reducing tariffs on machinery, coal, horses, and iron. In the 1850s, various proposals were honored with reduced trade barriers and to classify 241 items free of duty, all quotas abolished and reduced tariffs on 19 categories of merchandise. In 1860, the commercial treaty dubbed “Cobden – Chevalier” was signed between France and Britain reducing the tariffs on imports between the two nations. This led to large industrial growth in France and led to the development of France’s industrial revolution..

After the British and the French engaged in free trade, other European nations followed suit. For instance, countries like Netherlands, Portugal, Netherlands, and Germany enacted policies on free trade. The Cobden-Chevalier Commercial treaty was very particular in paving the way for free trade policy development. Through free trade and industrialization, the economies of the Western Europe nations grew exponentially and reached its peak in 1873.


King Jr, Gene A. “The Development of Free Trade in Europe.” Hillsdale College. Web (2008).Pincus, Steve. “Rethinking mercantilism: political economy, the British empire, and the Atlantic world in the seventeenth and eighteenth centuries.” The William and Mary Quarterly 69, no. 1 (2012): 3-34.

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