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.

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Bullionism is an economic theory that defines wealth by the amount of precious metals owned. Bullionism is an early or primitive form of mercantilism. It was derived, in the 16th century, from the observation that the English state possessed large amounts of gold and silver, in spite of the fact that there was no mining of precious metals on English soil, because of its large trade surplus.

Examples of bullionists

Thomas Milles (1550-1627) and others recommended increasing exports in order to get a trade surplus, converting it into precious metals and hindering the drain of money and precious metal to other countries. Although England practised the interdiction of exportation of £ or precious metals at about 1600, Milles desired to return to staple ports in order to force merchants from abroad to use their assets to buy English goods and to prevent them from transferring gold or silver from England homewards. But Milles was not viewed as one who had any valuable words to say on the subject, as one of his contemporaries wrote “…Milles was so much out of step with the time that his pamphlets had little influence...”

Gerard de Malynes (1586 - 1641), another bullionist, published a book, called A Treatise of the Canker of England's Common Wealth, in which he asserted that the exchange of foreign currency had been a trade of value rather than exchanging the weight of metals. Therefore the unfair exchanging of precious metals by bankers and money changers, would result in the deficit of English balance of trade. In order to ban the flow of exchange rates, he demanded the strict fixing of exchange rates for coins, only by the concentration of precious metals and weights and for strict regulation and monitoring of foreign trade. But de Malynes did not convince his contemporaries “…that the cambists were responsible for gold outflow or to elicit enthusiasm for a monopoly sale of exchange, par pro pari, by the royal exchanger…" But he succeeded in creating the first economic controversy: Edward Misselden opposed him 1623 in his book The Circle of Commerce: Or, the Balance of Trade.

See also

• Mercantilism
• Gold standard