The late 17th century was a difficult period for Scotland, as it was for much of Europe; the years 1695-97 saw catastrophic famine in present-day Estonia, Finland, Latvia, Norway and Sweden plus an estimated two million deaths in France and Northern Italy.  Scotland's economy was relatively small, its range of exports very limited and it was in a weak position in relation to England, its powerful neighbour . In an era of economic rivalry in Europe, Scotland was incapable of protecting itself from the effects of English competition and legislation. The kingdom had no reciprocal export trade and its once thriving industries such as shipbuilding were in deep decline; goods that were in demand had to be bought from England for sterling. Moreover, the Navigation Acts further increased economic dependence on England by limiting Scotland's shipping, and the Royal Scots Navy was relatively small. A series of domestic conflicts, including the 1639-51 Wars of the Three Kingdoms and unrest related to religious differences between 1670-1690 exhausted the people and diminished their resources. The so-called "seven ill years" of the 1690s saw widespread crop failures and famine, while Scotland's deteriorating economic position led to calls for a political or customs union with England. However, the stronger feeling among Scots was that the country should become a great mercantile and colonial power like England. In response a number of solutions were enacted by the Parliament of Scotland: in 1695the Bank of Scotland was established; the Act for the Settling of Schools created a parish-based system of public education throughout Scotland; and the Company of Scotland was chartered with capital to be raised by public subscription to trade with "Africa and the Indies".

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