Mercantilism

Mercantilism is, in basic terms, trade within an empire, meaning no importing or exporting from foreign providers. The goal of such a system would be self-growth of the traders/companies within the empire.

Massachusettes was almost exclusively merchant driven. Trade goods and port cities were everywhere and it was a major hub between incoming and outgoing ships between the colonies and England.

Mercantilism was the economic philosophy underlying early European colonial policy. The object of mercantilism was to increase the wealth of the Mother Country (England) in gold and silver. To accomplish that goal, a favorable balance of trade was desired. That means that a nation would sell more than it would purchase, thus creating a surplus in the treasury. The name of the philosophy points out the importance of merchants in this policy. Merchants would sell products to foreign nations and purchased items to be sold within the nation. Theorists using this model tended to view the market as a pie that was up for grabs. Wealth was always gained at the expense of other nations. For some, the ideal was to become self-sufficient. The nation would produce everything its people needed and buy nothing from foreign nations -- thus the idea of the trade deficit. Since the ideal could not be accomplished in the real world of economics, the object of mercantilism was to minimize imports that cost money and maximize exports and the trade that brought money in to the nation.

Answer
Mercantilism is an economic system that requires two distinct political entities to exist. It requires a metropole, which is the main part of the country and where the leadership sits. It also requires colonies, which are distant regions with unique resources that can transfer these unique resources to the metropole.

In order to create this kind of relationship, leaders from the metropole must create colonies in distant lands in order to extract these resources. This is why mercantilism necessarily leads to colonialism. Note that this form of colonialism can exist within large empires as well. The Russian expansion into Siberia and Central Asia in the 1700s and 1800s mirrors the Western European creation of colonies in the Americas and this expansion was done with the purpose of extracting raw materials that were present in these territories.

Further Elaboration on the Metropole-Colony Relationship
Mercantilism is the economic policy that a metropole should have a number of colonies that provide it material wealth, unrefined resources, and a market for its goods. As a result, according to mercantilism, the colonies were required to engage in two general behaviors: (1) The colonies were locked into exclusive trade between the colonies and the metropole and were not allowed to trade with any other nation or colony. (2) No manufactures or complex goods could be made in the colonial territory. As a result the colonies would provide wealth to the metropole by trading their natural resources for less than they would be worth and by buying manufactures for much more money.

Capitalism is an economic system. Mercantilism is trading.

According to mercantilism, the colonies were required to engage in two general behaviors: (1) The colonies were locked into exclusive trade between the colonies and the metropole and were not allowed to trade with any other nation or colony. (2) No manufactures or complex goods could be made in the colonial territory. As a result the colonies would provide wealth to the metropole by trading their natural resources for less than they would be worth and by buying manufactures for much more money.

According to mercantilism, the metropole would require the colonies to engage in two general behaviors: (1) The colonies were locked into exclusive trade between themselves and metropole and were not allowed to trade with any other nation or colony. (2) No manufactures or complex goods could be made in the colonial territory. As a result the colonies would provide wealth to the metropole by trading their natural resources for less than they would be worth and by buying manufactures for much more money.

According to mercantilism, the colonies were required to engage in two general behaviors: (1) The colonies were locked into exclusive trade between the colonies and the metropole and were not allowed to trade with any other nation or colony. (2) No manufactures or complex goods could be made in the colonial territory. As a result the colonies would provide wealth to the metropole by trading their natural resources for less than they would be worth and by buying manufactures for much more money.

Mercantilism is based on economical regulation, while the free enterprise system is based on economic freedom

The British used Mercantilism in relation to their North American Colonies. The principle is that the mother country, in this case Britain, would take in raw materials and resources for a low cost, if any, to produce finished goods to sell and make a profit off of. This wasn't an ideal situation for the new colonies and is part of the reason for the revolution.

Mercantilism was the European way of life from the 1600s to the 1800s. The idea was to encourage a balance of trade and to economically challenge foreign powers. It was also a counter measure against absolutism. Although much of Europe was a monarchy, complete control of the people in terms of economics was discouraged. Most absolute monarchies were inherited.

First, we need to define British mercantilist policy. This policy required the colonies to engage in two general behaviors: (1) The colonies were locked into exclusive trade between the colonies and the metropole and were not allowed to trade with any other nation or colony. (2) No manufactures or complex goods could be made in the colonial territory. By and large, Americans reacted to British mercantilist policy, by blatantly violating it. The colonists engaged in large scale smuggling with their neighbors to acquire other materials and sell goods that were locally-produced. Conversely, several small manufacturing plants were built in the colonies to deal with the shortfall and high expense of British-produced manufactures.

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The Dutch at the time had the largest merchant fleet of all Europe and were the premier shippers of any bulk goods between any countries in Europe. England's Navigation act - activated solely to give a boost to English shipping and commerce - dictated that from now on, any goods shipped to or from England could only be transported by an English ship or by a ship of the other country concerned in producing or buying the goods in the ship.

Since no other European country (except for the Dutch) had a merchant fleet to speak of, this meant that any trade to and from England would effectively be serviced by only English ships. This again meant that the Dutch in one stroke lost a large part of their market: even if only part of a cargo was meant for England, the English claimed exclusivity for that trade, too.

The Navigation Act led first to massive lay-offs in the major (all harbor) cities of the Dutch Republic and to four consecutive wars between Holland and Britain which in sports terms led to two wins, one loss and a draw in favour of the British.

They began to smuggle goods into and out of the country

It helped civilizations gain wealth by how they judged it

Colonies were important in the mercantile economic systems because they were markets in which to buy products from the home country.

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New technologies led to new industries that were difficult for governments to regulate

Merchant related trade

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The long ago outdated Mercantile system placed laws on trade between a nations colonies and the homeland. One aspect of it was restrict how and by whom shipping of goods and products would be governed. In a capsule, it was an economic system "governed" by laws to such an extent it stifled economic progress.In contrast, a free enterprise system permits free trade and private production. Nation's do place certain restraints on a free market system, however, in comparison to the mercantile system, these restraints are very light.

Over time, free enterprise systems produce much more economic growth then the old mercantile system.