A TRADE

and is so all its ports tion," wrote

elled of any ppiness and ne but fools hird writer, nost potent xander and This growing expression serted that Le world"; n"; that

that the he people," ary writer, language e proudest wer classes

political, munity of niversally ic policy f Edward s reduced Burleigh nvolved, stry and the local national

- benefit

licy was

looked to the State, not only for protection against foreign competition, but also for the regulation of conflicting commercial and industrial interests at home. Accordingly Government actively interfered in the details of economic life. The outflow of bullion was carefully regulated. Home industries were encouraged by providing for the importation of raw materials and by restraining the importation of finished products. The State also laid down from time to time the conditions of labour and employment in the various industries of the country. Nor were the interests of foreign trade neglected. Trading companies were incorporated under royal charter, and such companies received various privileges, including the monopoly of trade with distant territories. Trade was also fostered by navigation laws calculated to increase shipping, by the discouragement of harmful trades, and by a series of minute regulations in which the paternal State expressed itself.

For a long time the king kept the strings of economic policy in his own hands, but his authority was generally exercised under the advice of committees of experts set up from time to time. James I contemplated the creation of a Council of Trade, and Charles I actually instituted a Committee for Trade in 1626, on a more or less permanent basis, with instructions "to advance home commodities" and regulate trade and bullion.* This Committee did useful work till it was disorganised by the Civil War. It was revived by Cromwell, and was put on stable foundations by Charles II. In 1660, two bodies of experts were created for promoting the interests of trade and plantations respectively. These committees included prominent representatives of the trading companies as well as members of the Privy Council, and seem to have been very assiduous in promoting the economic interests of the nation. The functions of these two committees overlapped, and they were amalgamated in 1672 into a single body called the Lords Commissioners of Trade and Plantations. The Earl of Shaftesbury was the first chairman, and his “guide,

*

Cunningham, Growth of English Industry and Commerce (Modern Times), 1907, PP. 175-6; also pp. 900-904.

TRADE

inst foreign conflicting Accordingly f economic

ed. Home

he imporortation of m time to he various

of foreign corporated d various h distant Zion laws ement of ations in

economic generally perts set creation

ituted a rmanent odities"

d useful

It was dations Is were tations

minent

embers

siduous

The d they ed the

The

guide,

Modern

MERCANTILISM IN THE SEVENTEENTH CENTURY

philosopher and friend," John Locke, was secretary.* This board was composed of fourteen members, of whom six were unofficial paid members. The Commission's sphere of duties was very comprehensive, but concerned specially with currency, hindrances to trade, and employment of the poor. As a state agency for fostering trade and industry this body deserves unstinted praise. One cannot turn from even a cursory glance at their records without forming the highest opinions of their ubiquitous activity and their anxiety about even the minutest details of commerce and manufactures. Perhaps their policy was not always the wisest, but in everything they did the interests of the kingdom were consulted first and foremost.

Although the monarchical regulation of trade and industry was on the whole successful, Parliament became increasingly impatient; and, from 1660, it asserted its right to wield an effective control over industrial and commercial matters. In 1689 the power of Parliament became practically complete, and the whole mercantile policy came to be wielded by it. There was necessarily a conflict of interests between Crown and Parliament, at any rate in foreign trade regulation. Kings used to impose customs duties on exports and imports, but this was primarily for the sake of revenue; and naturally they were averse from imposing a high tariff lest it should diminish the volume of trade. But Parliament wanted to make use of the tariff to protect English industries, and even proceeded to prohibit some imports altogether. The king also was interested in protecting home industries, but was reluctant to pursue methods which entailed the reduction of his revenue.† During Charles II's reign Parliament enforced its will repeatedly in the matter, and, after 1689, tariff policy came to be wielded mainly for protectionist purposes. [

In the seventeenth century, the most active interference of the state was exerted in the sphere of foreign trade. There

* Cunningham, op. cit., pp. 199-200; also pp. 913-921; see also Dict. Pol. Econ., Vol. I, p. 158.

† See, e.g., Charles II's opening speech in Parliament in 1679, Parl. History, IV, 1086.

5

was a strong tendency at the time to exalt foreig over domestic; and the aim of Government was to the course of trade in such a way as to enrich the and foster its industries. All lines of foreign tra judged good or bad according to the nature of their and imports. There were two distinct sets of form judging the profit and loss from foreign trade. imports from a foreign country were greater in val the exports to that country from England, this create an "overbalance" against England and in of that foreign country; treasure would therefore fl that country and impoverish England. If, on the co England exported to that country more than she im from it, trade would be favourable to England, b treasure would flow in to pay the balance, and would the country. This was the gospel of Bullionism seventeenth century.

The other criterion concerned the nature of the and imports rather than their quantity or value. If involved the import of raw materials and export of factured goods, it was beneficial, because there wo more employment for the people. If, on the con manufactured goods were imported and raw ma exported, employment would therefore be taken away the people, and the country would be impoverished. is the kernel of the protectionist view.

Of all lines of foreign trade, the East Indian the one which caused the most acrimonious discus in the seventeenth century. First, more commo were imported from India than were exported to that co from England, and this caused that most dreaded of sequences an unfavourable balance of trade. Seco the imports from India were increasingly of the natu manufactured products which sooner or later were b to displace home products and discourage home indu Thirdly, the Company which carried on this trade u royal charter had a monopoly of the whole trade extensive territories in the East, and by virtue of monopoly excluded others from trading with those count

MERCANTILISM IN THE SEVENTEENTH CENTURY

There were also other minor charges against the East India Company. It brought into the country spices and other luxuries which caused great waste of national resources. Coffee, one of its imports, “served neither for nourishment nor for debauchery." The ship-building activity of the company caused a parricide of woods," and made timber scarce in England. Many seamen died in its voyages to distant countries, and a multitude of widows and orphans were thus left by them. English ships, they said, could be employed more profitably in the coasting trade. The Company's organisation as a joint-stock concern was also severely criticised by other companies and by outside merchants. Questionable practices like stock-jobbing were from time to time laid at the Company's door. It was, besides, accused of artificially raising the prices and injuring the interests of both the tradesmen and the consumers.*

All these various charges against the Company and its trade produced heated controversies in the seventeenth and eighteenth centuries, and owing to the essentially economic character of these controversies, they became intimately connected with the main currents of economic policy and theory at the time. At least in the seventeenth century, foreign trade was the predominant concern of economic writers; and the important position and unique character of the Indian trade was calculated to make it the main focus of economic thought as well as the vital concern of state policy. The pamphlet literature of the period under survey gives eloquent testimony to this fact.

Three principal controversies of the seventeenth century clustered round the three main charges against the Company enumerated above. The first two related to the nature of the Indian trade-i.e., the commodities imported into England; while the third was concerned with the form of organisation of the Company. The first gave rise to the important discussion on bullion and the balance of trade, and directly led to the evolution of more correct economic notions on money and wealth, and on the nature of foreign * These grievances are detailed in Britannia Languens (1680).

7