bullionism

bullionism

Monetary policy of mercantilism, which called for national regulation of transactions in foreign currency and precious metals (bullion) in order to maintain a favourable balance in the home country. Bullionism is most closely associated with 16th- and 17th-century Spain, which was thought to owe its prosperity and military might to the gold and silver of its New World colonies. This view gave rise to the theory that a favourable balance of trade would increase the nation's supply of precious metals. Spain's abundant treasure led it to buy goods and services abroad at the neglect of domestic industry, causing it to experience an economic decline.