came to e system. on when about an on the must be ing as it That is, fitable; it was on, the iticism reasure bullion bullion purable ported ich we So far ccombullion - must d that easure profit alance alance This s also othe pted reign ntry. the the tion of additional treasure into the kingdom. Mun gives example: "If we send one hundred pounds into the E Indies to buy pepper there and bring it hither, and fr hence send it to Italy or Turkey it must yield seven hund thousand pounds at least in those places in regard of t excessive charges which the merchant disburseth in th long voyages, in shipping, wages, victuals, insurance, intere customs, imposts and the like, all which notwithstandi the king and the kingdom gets." He draws an interesti analogy to this from the farmer's experience*: "If only behold the actions of the husbandman in the see time when he casteth away much good corn into the grou we will rather accompt him a madman than husbandma but when we consider his labour in the harvest which is t end of his endeavours we find the worth and plentiful increa of his actions." This analogy appealed to many, and grea helped to make Mun's conclusions widely accepted. Thus Mun's great argument was that although at t start England lost some treasure by the East India tra it ultimately brought in much more treasure from oth countries than was originally thrown away; and that t unfavourable balance in the particular trade was theref turned into a very favourable general balance for the ki dom. At about the same time, Edward Misseldon, w was also in the East India Company's employ, expound practically the same views in his Circle of Commerce (1623) Mun defended the Company's trade not only because resulted in an eventual influx of treasure, but also on ot grounds. He showed that the Indian trade had increased national wealth of the country, and strengthened its defen by promoting shipping, by training men for the naval servic by increasing the price of and export trade in wool a woollen cloth "which doth improve the landlord's ren and finally by serving as a counterpoise to the swelli greatness' of Holland and Spain. It was boldly argu * England's Treasure by Forraign Trade, p. 28. A year previously another work of Misseldon (Free Trade, or the Me to Make Trade Flourish) disapproved of the Company's bullion expo but he recanted these views in the Circle of Commerce, published next y 13 by him that the growth of English commerce and eve political greatness would rise or fall with the progre decay of the Indian trade. This brilliant defence h greatly to stave off the attack against the Compan The theory of the balance of trade in this new became a generally accepted doctrine, and continu for a long time. Not only merchants and writers statesmen became devoted adherents of it. Accordi Strafford, the overbalance of exports over imports w be regarded as “a certain sign that the Commonw gained upon their neighbours." Cromwell also gav assent to it, and emphatically stated it in his Act fo exportation of native commodities.* In 1665, Slin who was for some time Master of the Mint, informed Sa Pepys: "The old law of prohibiting bullion to be exp is and ever was a folly and an injury rather good."t Towards the close of the century, however, the soun of the theory was questioned. Sir Josia Child, Ch Davenant and other writers were indeed prepared to a that the general balance of trade was a more acc criterion of profit or loss from foreign trade tha particular balances; but they were not prepared to that the general balance itself was an absolutely sound Child, for instance, showed that the balance of trade ar at by the calculation merely of exports and imports bound to be inconclusive, owing to (i) the "difficulty impossibility of taking a true account as well of the qua as of the value of commodities exported and importe and (ii) "the many accidents that fall out as loss sea, bad markets, bankrupt (cy), also considerations, sie and arrests which fall out on several occasions." Dave also was suspicious of the value of the balance of theory. He wrote: He wrote: "He that would compute with good effect in matters relating to trade must contem the wealth, stock, product, consumption and ship * See Hewins, op. cit., p. xxx. † Quoted by W. R. Scott, Joint Stock Companies, Vol. I, p. 2 Discourse of Trade, pp. 135-140. TRADE I even her rogress or ce helped pany. new sense tinued so iters, but cording to ts was to monwealth gave his ct for the Slingsby, ed Samuel exported her than soundness , Charles losses at with any P. 267. whether of private persons or of whole nations ar and bread and cloaths and houses and the conve and the necessaries of life. These for the sakes money because it will purchase these are deemed riches; so that bullion is only secondary and dant; cloaths and manufactures are real and pr riches."* Nevertheless the old crude notions on bullionis the allied conception of money persisted for a long in the popular mind. They were appealed to in the against the French trade throughout the period from to 1713. In the matter of Indian trade, the bull did not make any virulent attack after the publicat Mun's books. Yet the preamble of the Act of 169 hibiting the importation of Indian silks and calicoes re the great detriment caused by the Indian trade to the tr of the kingdom. The discredited doctrine of the ba of trade finally fell under the attacks of Adam Smith its influence can be traced up to the middle of the ninet century, and perhaps even later. Nor should it g surprise us that such a doctrine should be generally in an age when the modern machinery of credit wa known, and when exports and imports were necessa better criterion of the profit and loss from foreign than they have subsequently become.† III The Struggle against the Company's Monopoly Throughout the seventeenth century, the protago of the East India Company convincingly argued tha trade was highly profitable to the kingdom. This can be generally admitted in England, but this admission di completely disarm the Company's opponents. On contrary, the enormous gains amassed by the Compa * See Chapter II. † See Hewins, op. cit., pp. 130-181. Also Marshall, Industry and P. 722. |