The basic concept defining the trade relationship between a colony and its home country was the mercantile system.

The mercantile system was communal to all the colonial powers of Europe. The mercantile system did not encourage the colonies to become economically self sufficient.The theory of the mercantile system is to keep the home country strong and the colonies dependent upon their home country. Under the mercantile system, the colony provides raw materials for the home country and the home country provides manufactured goods for the colony. Then home country thus makes certain that its own population is well employed by providing the manufactered goods to the colony.

They also ensured that the profits of manufacturing stay within the home country. The colony remains beneficial by providing the home country with the raw materials. An example of the process of trade in the mercantile system is the triangular trade, set up by the English. Ships would leave from the English ports full of manufactured goods like guns and fabrics. Along the way, they would trade their goods for raw materials such as slaves from the West African ports and indigo dye from the Carribbean. At each stop, manufactured goods would flow from the home country to the colony and raw materials from the colony to the home country.

The mercantile system was the solution for certain economic problems for the colonies. Since the colony was a separate addition to the home country, they had to solve their own economic problems to stay successful. The mercantile system seemed to regulate trade for home countries and their colonies successfully until it became a conflict between colonies and their home countries by the middle and latter parts of the eighteenth century.