1. The Colonies and Mercantilism
“To prohibit a great people, however, from making all that they can of every part of their own produce…is a manifest violation of the most sacred rights of mankind”
-Adam Smith, 1776

2. Mercantilism
Mercantilism: the economic theory that the strength of a nation is founded in the capital (specifically its money) of a nation
Within this system, strength is best achieved by having a positive trade balance (more exports than imports)
This system is largely contributed to Thomas Mun and his book Treasure by Foreign Trade, 1664.
These theories, most popular during the 17th and 18th centuries, created some of the first instances in which government intervened in economics in order to sustain a positive trade balance.
Tariffs and Subsidies.

3. The Colonies and Mercantilism
Britain made their relationship with the colonies most advantageous
The colonies were expected to supply raw materials like sugar, tobacco, timber for ships, furs, etc.
However, they were discouraged from taking these raw materials and manufacturing goods from them.
This would prevent the colonies from becoming economically self-sufficient
Also allowed British to have exclusive suppliers of their raw materials, as well as a guaranteed demand for their manufactured goods

4. British Mercantilism in Legal Action
Often when other countries tried to tap the vast resources of the American colonies, not to mention add some competition, Britain took stern action
Navigation Laws of 1650
The Dutch had attempted to get into the American transport business.
Navigation Laws stated that all goods from colonies were only to be transported on British/Colonial ships.
After disgruntled colonists wanted to sell to other countries, further laws stated that all American goods were to be first shipped through Britain, where the tariffs could be collected and then shipped elsewhere