Mercantilism's features include the fullest possible use of a nation's natural and human resources, prohibition against gold and silver export, and prohibition against foreign imports if they can be made in sufficient supply and quality at home. This closed-market economic philosophy helped fuel colonialism and imperialism.Continue Reading
Mercantilism is an economic system designed to harvest raw materials and turn out finished goods within a single nation or empire, minimizing trade deficits. This system was prevalent during the 16th through 18th centuries, when European countries were colonizing much of the world. It led to a number of triangular-trade systems, in which colonies could only sell to and buy from their ruling nation, and it was one of the major reasons the American colonies revolted against Britain. Mercantilism's need for raw materials strongly encouraged the establishment of new colonies or territories that could be tightly controlled by the mercantile country, and these raw materials in turn fueled the Industrial Revolution.
Mercantilism also depended heavily upon a close partnership between merchants and governments. The British East India Company is an example of this system. Initially a monopolistic trading organization chartered by the government and invested in by wealthy, well-connected and well-born British citizens, it was allowed to dominate British trade throughout the Pacific and Indian Oceans. Ultimately, it was divested of these powers because of abuses that precipitated the Opium Wars and Indian Mutiny.Learn more about Economics