Mercantilism was the organizing principle of the entire British Empire. It was a philosophy whose sole purpose was to enrich the home country through the accumulation of precious metals. The three rules of mercantilism were these:
1. The home country must export more than it imported, so it could accumulate more gold and silver than its trading partners.
2. Manufacturing in the home country must be encouraged, since manufactured goods could fetch a higher price than the imported raw materials.
3. Foreign competitors must not be allowed to threaten domestic industries.
Basically, mercantilism meant that Britain developed colonies for the sole purpose of milking them dry. In the early 17th century, Virginia Company agents could buy tobacco in Virginia for 3 schillings a pound and sell it at home for 8 schillings. Codfish could be bought for 12 schillings per quintal and sold for 36 in Spain. Beaver pelts cost 12 schillings and fetched 45 in London.
At the same time, Americans were not allowed to sell their products (cotton, tobacco, timber, furs, fish, etc.) to anyone besides British merchants, and they were discouraged from starting their own manufacturing plants that might compete with British factories. They were only allowed to sell raw materials to Britain at low cost, then buy back manufactured goods at high prices.
Also available at artificially high prices were African slaves, which were purchased in West Africa and sold to Americans at a 300 percent markup.