In early modern Europe, governments sought to increase national wealth and maintain a favorable balance of trade through government intervention by advocating
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Mercantilism was the dominant economic philosophy in Europe between the sixteenth and eighteenth centuries, and most European countries adopted economic policies that could be described as mercantilist during this period. Mercantilists argued that the total amount of wealth circulating in the world economy is constant and that a country’s economic strength is directly proportional to the amount of precious metals controlled by its government and its merchants. Consequently, mercantilists argued that a country’s trade policies ought to be crafted in such a way as to always maintain a positive or “favorable” balance of precious metal flows. In other words, to ensure that the amount of gold and silver entering the economy as foreign payments for exports was always greater than the amount of gold and silver leaving the economy as domestic payments for imports.