Theory of MercantilismThe theory of mercantilism attributed and measures the wealth of a nation by the size of itsaccumulated treasures. Accumulated wealth is traditionally measured in terms of gold, as earliergold and silver were considered the currency of international trade. Nations should accumulatefinancial wealth in the form of gold by encouraging exports and discouraging imports. Thetheory of mercantilism aims at creating trade surplus, which in turn contributes to theaccumulation of a nation’s wealth.The colonial powers primarily engaged in international trade for the benefit of their respectivemother countries, which treated their colonies as exploitable resources. The first ship of the EastIndia Company arrived at the port of Surat in 1609 to carry out trade with India and takeadvantage of its rich resources of spices, cotton, finest muslin cloths, etc. Other Europeannations- such as Germany, France, Portugal, Spain, Italy – and the East Asian nation of Japanalso actively set up colonies to exploit the natural and human resources.