England is small and contains relatively few natural resources. During Great Britain's mercantilist period, the prevailing economic wisdom suggested that the empire's many colonies could supply raw materials and resources to the mother country and subsequently be used as export markets for the finished products. The resulting favorable balance of trade was thought to increase national wealth. Great Britain was not alone in this line of thinking. The French, Spanish and Portuguese competed with the British for colonies; it was thought, no great nation could exist and be self-sufficient without colonial resources.
Controlled Production and Trade
During this time, there were many clear aggressions and human rights violations that were committed by imperial European empires on their colonies in Africa, Asia, and the Americas, though not all of these were directly rationalized by mercantilism. Mercantilism did, however, lead to the adoption of enormous trade restrictions, which stunted the growth and freedom of colonial business.
In the 1660s, for example, England passed the Navigation Acts, a series of laws designed to make American colonies more dependent on manufactured products from Great Britain. British authorities further enumerated a set of protected goods that could only be sold to British merchants, including sugar, tobacco, cotton, indigo, furs, and iron.
Trade, at this time, became triangulated between the British Empire, its colonies and foreign markets. This fostered the development of the slave trade in many colonies, including America. The colonies provided rum, cotton and other products heavily demanded by imperialists in Africa. In turn, slaves were returned to America or the West Indies and traded for sugar and molasses.
Inflation and Taxation
The British government also demanded trade in gold and silver bullion, ever seeking a positive balance of trade. The colonies often had insufficient bullion left over to circulate in their own markets, so they took to issuing paper currency instead. Mismanagement of printed currency resulted in periods of inflation. Additionally, Great Britain was in a near-constant state of war. Taxation was needed to prop up the army and navy. The combination of taxes and inflation caused great colonial discontent.