role in the economy, by encouraging exports and discouraging imports, especially through the use of tariffs. Features Mercantilism is the economic doctrine that government control of foreign trade is of paramount importance for ensuring the military security of the country. In particular, it demands a positive balance of trade. High tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Other policies have included: Building a network of overseas colonies; Forbidding colonies to trade with other nations; Monopolizing markets with staple ports; Banning the export of gold and silver, even for payments; Forbidding trade to be carried in foreign ships; Export subsidies; Promoting manufacturing with research or direct subsidies; Limiting wages; Maximizing the use of domestic resources; Restricting domestic consumption with non-tariff barriers to trade. Principles Mercantilism contained many interlocking principles some of them as follows: 1. Precious metals, such as gold and silver, were deemed indispensable to a nation’s wealth. If a nation did not possess mines or have access to them, precious metals should be obtained by trade. It was believed that trade balances must be “favorable,” meaning an excess of exports over imports. Colonial possessions should serve as markets for exports and as suppliers of raw materials to the mother country. Manufacturing was forbidden in colonies, and all commerce between colony and mother country was held to be a monopoly of the mother country. 2. A strong nation, according to the theory, was to have a large population, for a large population would provide a supply of labor, a market, and soldiers. Human wants were to be minimized, especially for imported luxury goods, for they drained off precious foreign exchange. Sumptuary laws (affecting food and drugs) were to be passed to make sure that wants were held low. Influence Mercantilism as a whole cannot be considered a unified theory of economics because mercantilism has traditionally been driven more by the political and commercial interests of the State and security concerns than by abstract ideas. There were no mercantilist writers presenting an overarching scheme for the ideal economy, as Adam Smith would later do for classical (laissez-faire) economics. Some scholars thus reject the idea of mercantilism completely, arguing that it gives "a false unity to disparate events". Mercantilists viewed the economic system as a zero-sum game, in which any gain by one party required a loss by another. Thus, any system of policies that benefited one group would by definition harm the other, and there was no possibility of economics being used to maximize the "commonwealth", or common good. 4|Page