A history of commerce

by Clive Day

193. Encouragement of exports, manufactures, and shipping.—In the second place, exports were encouraged, for they represented the credit items in a country’s trade, and might bring home a balance in cash. Even imports could be tolerated if they led to a more than corresponding increase in exports. The trade with East India was looked on with suspicion for some time because, as said above, it required the export of considerable bullion; but finally it established itself in public esteem, on the ground that a large part of the eastern wares was transshipped in England and exported to other European countries, so that the bullion was recovered from them. Altogether the best kind of imports, however, was held to be the raw materials of manufacture; if these could be worked up in England and exported, the country cleared not only the sum originally due for the imported material, but also the extra charge for the manufacture. Home industries were given various privileges by the government, because they either spared the importation or increased the exportation of the wares which they produced.

Shipping and the fisheries were regarded with special favor, not only because they helped to produce a favorable balance of trade, but also because they were feeders for the national navy, and thus augmented the strength of the country in war.

194. Failure of the mercantile system to affect the distribution of the precious metals.—Such were, in brief, the characteristics of commercial policy in the time of the mercantile system. The word “system” may give a false impression, for though the main ideas of mercantilism were generally accepted during the seventeenth and eighteenth centuries, they were greatly modified in their practical application, and were seldom carried to their logical conclusions. For example, though statesmen professed a desire to stimulate exports, yet export duties were generally retained in this period for the revenue that they returned, and they hurt in some cases, without question, the sale of wares abroad.

After this review of the characteristics of commercial policy the reader will naturally inquire what were its effects. On one point an answer can be given with considerable assurance; the policy had no important effect on the distribution of the precious metals. Gold and silver were brought from America, the chief source of supply, to Spain, and flowed from Spain to the countries where they were needed in business; it seemed as though all the people of the world were in an unconscious conspiracy to defeat the plans of statesmen for checking or directing the flow. It is noteworthy that Spain, the country which had the best chance apparently to accumulate treasure and which pursued a policy of exaggerated mercantilism, was always complaining of the dearth of gold and silver, while Oriental states, which had never heard of mercantilism, accumulated large stores of bullion. The attempts of European countries to rob other countries of their treasure by legislation present, from one point of view, an absurd spectacle, for they were all applying the same principles in much the same way, action and reaction were equal, and no amount of political straining affected the distribution due to economic demand.

195. Important effects of the mercantile system in other ways.—The commercial policy of the mercantilist period had effects in other directions, if it did miss the mark at which it aimed. It was important, considered merely as a policy of restriction, in checking the exchange of commodities between states. Just as manors and the districts centering around a city had aimed at self-sufficiency in an earlier period, so the states of this period were led by their dislike of imports to attempt the production of everything possible within their borders; and an international organization, in which each state would specialize in the products for which it was best fitted, and would depend on commerce with others for supplying deficiencies, was hindered from developing. The mercantile system furnished a natural basis for the system of national protection, which grew up from it, and which has not entirely outgrown even yet its mercantilist origins. One of the most obvious effects of mercantilist commercial policy can be traced in its influence on the foreign relations of states. It was not, as is often said, the chief cause of the many wars which vexed Europe at this period; their cause lay deeper than any theory of favorable or unfavorable balances of trade. The balance of trade theory did, however, affect the political grouping of countries to a considerable extent, and inclined statesmen to look for friends or foes in the countries with which the balance was favorable or unfavorable. England, for example, made herself the ally of Portugal through a large part of the modern period, because Portugal bought her manufactures, and sold in return wines and other commodities which could not be produced at home; and England kept alive the traditional hostility toward France because the trade with that country showed regularly an unfavorable balance.

196. Colonial policy.—Based on considerations like the preceding, the colonial policy of this period was marked by restrictions entirely opposed to modern ideas of commercial freedom. A government which permitted or encouraged the establishment of colonies in distant lands, considered it a duty to itself to see that other governments or the colonists themselves did not rob it of the rewards of success. The colonial policy of the period has sometimes been pictured as purely one-sided, selfishly sacrificing the colonists to the interests of the people at home. This view leaves out of account not only the generous help given by European governments to their dependencies, but also a great mass of legislation aiming to benefit the colonists by assuring them a market in the home country, and imposing sometimes serious restrictions on the inhabitants there. A government did no more than hold resolutely to the idea that emigrants, wherever they might be, were still citizens of their native state and bound to help maintain its power. The government tried ordinarily to frame its regulations so that mother country and dependency would devote themselves to different lines of production, and so supplement rather than compete with each other. It considered it only natural and proper that the colony should trade mainly or entirely with the mother country. As said above, this was a period of bitter conflict among the European states, and a country’s commerce was thought to be one of the mainstays of its military and naval power; it seemed, therefore, to be the plain duty of colonists to contribute by their commerce to the resources on which the independent existence of the whole nation was thought to depend.

QUESTIONS AND TOPICS

The student will do best, probably, to study carefully one of the references to manuals in the bibliography as a means to an understanding of the topics of this chapter.

1. An exercise requiring considerable time, and supposing some acquaintance with narrative history, but promising valuable results, is the following. Select one of the European states: England, France, Spain, the Netherlands. Make a chronological summary of its wars during the period 1500-1789, classifying the wars under one of the heads suggested, and aiming to get the total years spent in each kind of war and at peace. Estimate the gains and losses by war, and so reach a position to judge of the merits of the policy pursued.

2. Sections 181-2 cover, to some extent, the ground of chap. 15. Review that chapter, and, if possible, review the history of some state like France, to appreciate the significance of the political development. [Adams, French nation.]