As Europeans expanded their market reach into the colonial sphere, they devised a new economic policy to ensure the colonies’ profitability. The philosophy of mercantilism shaped European perceptions of wealth from the 1500s to the late 1700s. Mercantilism held that only a limited amount of wealth, as measured in gold and silver bullion, existed in the world. In order to gain power, nations had to amass wealth by mining these precious raw materials from their colonial possessions. Mercantilists did not believe in free trade, arguing instead that the nation should control trade to create wealth and to enhance state power. In this view, colonies existed to strengthen the colonizing nation.
Colonial mercantilism, a set of protectionist policies designed to benefit the colonizing nation, relied on several factors:
Colonies rich in raw materials
Cheap labor
Colonial loyalty to the home government
Control of the shipping trade
