The mercantilists wrongly assumed that gold and silver were the real wealth of a nation, not goods and services.
The Trade Deficit: Much Ado About Nothing, by Lawrence W. Reed.
[fee]
Mercantilism, which reached its height in the Europe of the seventeenth and eighteenth centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held that exports should be encouraged by the government and imports discouraged.
Murray Rothbard, "Mercantilism: A Lesson for Our Times" in his The Logic of Action II (Cheltenham, England: Edward Elgar, 1997), p. 43.
[rothbard]
Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state. Adam Smith coined the term "mercantile system" to describe the system of political economy that sought to enrich the country by restraining imports and encouraging exports. This system dominated western European economic thought and policies from the sixteenth to the late eighteenth century. The goal of these policies was, supposedly, to achieve a "favorable" balance of trade that would bring gold and silver into the country. In contrast to the agricultural system of the physiocrats, or the laissez-faire of the nineteenth and early twentieth centuries, the mercantile system served the interests of merchants and producers such as the British East India Company, whose activities were protected or encouraged by the state.
The Concise Encyclopedia of Economics
[econlib]