Mercantilist System

The mercantilist system is a practice that was used by some colonial powers to regulate trade with an aim of increasing wealth. They carried out such policy by ensuring that a positive balance of payments is achieved through limiting imports and encouraging exports (Hansen, 2001).They exploited the resources endowed to the colonies to manufacture various items which they exported to other nations and other colonies. It also included the building of a network of overseas colonies, banning the colonies from trade with other nations, monopolizing markets by having staple ports, promotion of accumulation of gold and silver, offering subsidies to export expansion, maximizing the use of local resources and disallowing trade done on foreign ships.

The effects of the system on the colonies included the extraction of the resources without adequate compensation. Resources, which the colonial powers desired for their own purposes, were often acquired and imported to the mother countries where they were used. The colonialists also used forced labor in the countries they occupied (Elise, 2003). It led to the suffering of the local inhabitants who were forced to work for meager wages. Therefore, the promotion of the western powers’ economy resulted in the increase of the poverty levels of such people. The initial colonial reaction towards the system was positive since the colonies thought that they would benefit from goods offered by their colonists (Robert, 1997). The colonialists were first portraying themselves as individuals with an aim of helping and civilizing the colonies but the ultimate aim was to exploit colonies’ resources and create a market for their production. Therefore, they were aimed at increasing the wealth of their mother nations. The colonies were gullible to accept the colonists, therefore, giving them grounds to establish their territories.