In mercantilist theory, a country that exports more than it imports will have an overall greater profit margin in what we would call "cash supply." In the mercantilist era, they conceived of precious metals (gold and silver) as the only true "cash" supply and the true definition of wealth. If you imported less than you exported, you'd have to pay for those added imports with bullion (blocks of gold or silver), which would thus deplete your supply of precious metals in the national treasury. By exporting more than you imported, you could amass more bullion in your own treasury.
"Mercantilism" is a term we get from Scottish philosopher Adam Smith (1723-1790). Smith criticized what he called the "mercantile system" because it restricted trade and thus restricted economic growth. The mercantile system believed the wealth of the world was a fixed amount, measured primarily in gold and silver accumulated. The system promoted a nation selling its products abroad but not needing to buy from others, or imposing heavy tariffs if importing anything. Colonies were created to provide raw materials and resources to the mother country and a market for the mother country's products. Commerce was heavily controlled by the government through charters granted to specific trading companies.
Adam Smith countered by advocating a free market -- the opportunity for all nations to increase their wealth by exchanging goods freely with one another according to what would become known as capitalist principles.
<span> It is the Mercantilist theory,which states that a country’s power is directly proportional to the amount of gold and silver that can be amassed in its treasury.</span>
As capitalists began to dominate the economies of many countries during the Industrial Revolution, the rapid growth of businesses and their tremendous profitability gave some owners the capital they needed to create enormous corporations that could monopolize an entire industry.
The end of the Gilded Age coincided with the Panic of 1893, a deep depression, which lasted until 1897 and marked a major political realignment in the election of 1896. This productive but divisive era was followed by the Progressive Era.
