Mercantilism was the dominant school of thought in economics between 1500 and 1750 throughout most of Europe. The main policies advocated by mercantilist thinkers were to retain as much hard currency (gold and silver) as possible within the country, to minimize foreign imports, and to maximize exports. These policies were to be achieved by the imposition of tariffs on foreign goods and the grant of subsidies for domestic goods, making domestic goods cheaper for both export and domestic consumption. Restrictions were placed on moving gold and silver overseas, and, when it was necessary to purchase foreign goods, the government encouraged payment in kind with domestic goods whenever possible.
Mercantilism has been described as a form of warfare using trade, and it is clear that if all countries adopt this strategy, as European countries did during the sixteenth and seventeenth centuries, not all will succeed and trade will be severely constrained. Mercantilism therefore led directly to imperialism, as European countries sought new markets, rather than trading with each other on terms of disadvantage.
Mercantilism remained influential in South American, Asian, and African colonies long after it had been generally abandoned in Europe in favor of classical economics of the type described by Adam Smith, who mounted a strong critique of what he called "the mercantile system" in The Wealth of Nations.