Mercantilism and Protectionism
The policy of Mercantilism is often coupled with the policy of Protectionism - the ruling government plays a Protectionist role in the economy. Protectionism is another economic policy which restrains trade between countries by applying taxes and quotas that encouraged exports but discouraged imports. A policy of Protectionism is designed to protect workers and businesses within a country by regulating or restricting trade with a foreign country. Great Britain adopted the policy of Protectionism with Colonial America. The colonists were not to compete with industries in England or or take jobs away - for additional info about industries refer to Colonial Times.
Mercantilism and the Policy of Salutary Neglect
The Navigation Acts stated that Colonial exports had to be transported in English ships and that all Colonial imports had to first pass through English ports. The goods from the American colonies were subject to heavy duties (taxes) when shipped to England. However, England adopted a Policy of Salutary Neglect in the colonies which basically allowed the colonists to flout, or violate, the laws associated with trade.
Mercantilism - The British reverse the Policy of Salutary Neglect
The end of the French and Indian War (Seven years War) left the British with a massive war debt which prompted the British government to reverse the policy of Salutary Neglect. To pay the war debt, the British ended their policy of Salutary Neglect in the colonies and applied the full force of Mercantilism and ending illegal trading.
The British belief in Mercantilism was enforced by a series of Acts, the most important were:
Mercantilism - New Taxes in the Colonies
The British started to enforce the laws of the Navigation Acts and looked for ways of imposing new duties (taxes) in the colonies. The new taxes passed as law in the British Parliament were the Stamp Act, Townshend Acts and the Tea Act. These measures infuriated the American colonists and gave rise to insurrection and rebellion which led to the American Revolution and the Declaration of Independence.
The End of the Mercantilism
The end of Mercantilism came with the development of capitalism as the basic concepts of mercantilism ceased to correspond to changing economic conditions. Mercantilism gave way to free enterprise.