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LETTERS OF MARQUE

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time of the Commonwealth a further reward was introduced in "gun-money", a payment to the officers and men on board H.M.'s ships of war of so much per gun on board enemy ships of war captured or destroyed. This was changed in 1693 to "headmoney", a payment of so much per head for every man who was on board the enemy warship at the beginning of the action in which the ship was taken. This rule still holds good, but the money so granted is called Prize Bounty.1

A distinction at one time existed between privateers and private ships furnished with letters of marque, the former only being entitled to gun or head money, but the distinction was abandoned by the time of the Napoleonic wars.2 East Indiamen commonly carried letters of marque authorising them to capture pirates who were still a scourge to navigation, and on one occasion commissions were issued to assist the East India Company in its war against the King of Bantam.3 The crews of these vessels thus became entitled to prize money and head money in case they captured their assailant.

Merchant ships were frequently armed in self-defence and this practice was a very old one. Pirates and privateers were likely to be met and merchant ships were forced to arm or to sail in convoys. An Order in Council of 4 December 1672 ordered masters of merchant vessels going on foreign voyages to sail in convoys and to keep together and mutually assist and defend each other and for this purpose to be well provided with "muskets, small-shots, hand grenades and other sorts of ammunition and military provisions". Such defensively-armed ships frequently took part in engagements, and this was the rule not only with British ships, but with ships of other nations. In the case of the capture of the San Domingo convoy on 20 June 1747, nearly all the merchant ships were armed, and in the battle off Cape Finisterre in the same year four armed French East India merchant ships took part.5 Captures which such non-commissioned ships made were condemned to the Crown, as in fact were all captures, but these captures were termed "Droits of Admiralty" and only portions of the proceeds of the prizes were given ex gratia to the private captors. On the other hand, the holders of letters of marque, the privateersmen, were entitled to the prizes they captured after condemnation, such prizes as well as those captured by ships of war being called "Droits of the Crown".

Naval operations during this period, especially those of privateers, were often characterised by brutality. Cruelty in the West Indies was not confined to the Spanish seamen. Rear-Admiral Stewart,

1 Higgins, A. Pearce, "Ships of War as Prize" in Studies in International Law and Relations, Pp. 205-8. 3 Marsden, п, 105.

a The Fanny, 1 Dods. Rep. 443.

Higgins, A. Pearce, Defensively-armed merchant ships" in Studies in International Law and Relations, p. 247. Beatson, R., Naval and Military Memoirs, 1, 341, 343.

writing to the Admiralty on 12 October 1731 in reference to orders he had received to make reprisals, said: "We have fifty trading ships to one of the Spaniards in these seas; so in this way of making reprisals we must in the end be losers. We are the aggressors by our illicit trade, carried on by armed sloops or with convoy, in defiance of law. The Spaniards retaliate by robbing such of ours as they can master. Our illicit traders are as cruel to the Spaniards, murdered seven or eight of them on their own shore".1 Smugglers, unlicensed traders and privateers were engaged in the work of plunder in various parts of the ocean, piracy was common and the exercise by vessels under letters of marque of the belligerent right of visit and search of neutral ships, in which a high degree of character and forbearance on the part of the visiting officers is of especial importance, was frequently carried out in such a manner as to produce serious complaints by neutral States.

1 Marsden, II, 278.

CHAPTER XX

MERCANTILISM AND THE COLONIES

MERCANTILISM was the economic expression of the militant nationalism which sprang out of the social and political changes of the sixteenth century. Its exponents assumed that it was the business of the State to promote the economic interests of the country. They also supposed that the normal way of doing so was to encourage foreign trade. Since they did not conceive of trade between one country and another as of mutual advantage, they were particularly concerned with measures calculated to secure a favourable balance for their own country. To this end it seemed vitally important that the value of exports should exceed the value of imports. "For as a pair of scales", says Misselden,1 "is an invention to show us the weight of things, whereby we may discern the heavy from the light... so is also this balance of trade an excellent and politique invention to show us the difference of weight in the commerce of one kingdom with another: that is, whether the native commodities exported, and all the foreign commodities imported do balance or over-balance one another in the scale of commerce.... If the native commodities exported do weigh down and exceed in value the foreign commodities imported, it is a rule that never fails that then the kingdom grows rich and prospers in estate and stock: because the overplus thereof must needs come in in treasure....But if the foreign commodities imported do exceed in value the native commodities exported, it is a manifest sign that the trade decayeth, and the stock of the kingdom wasteth apace; because the overplus must needs go out in treasure." This passage expresses very clearly the simple form of the theory. Only commodities, i.e. material things, are taken into consideration; it is assumed that their values can be ascertained; and a favourable balance is one that imposes on another country an obligation to send "treasure", by which is understood the precious metals in the form of coin or bullion. For the mercantilists attached great importance to the accumulation of gold and silver within the country. While they did not usually fall into the crude error of confusing money with wealth, they did believe that it was necessary to adopt measures to attract it into the country. Scarcity of money seemed to them to lead to stagnation of trade, and lack of treasure might in the event of war involve disaster; they were often not clear whether they wanted a large volume of active currency or a considerable hoard only to be used in an emergency. In the second half of the seventeenth century, when Louis XIV's minister, Colbert, was vigorously applying 1 Misselden, Edward, The Circle of Commerce (1623), pp. 116–17.

CHBE I

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mercantile principles in France, it was natural to put particular stress on the importance of the accumulating of money as the sinews of war. Public policy, therefore, should be directed to the maintaining of favourable balances, and to the extent it succeeded in doing so, national wealth was necessarily augmented and national safety guaranteed.

a

The practical conclusions which the mercantilists drew from the theory that foreign trade was the chief means of increasing national wealth and that a favourable balance was an essential condition are abundantly illustrated in the trade policy of the period. Since trade was understood to mean the exchange of commodities, their assumptions defined their attitude towards imports, exports and re-exports. All imports had to be carefully scrutinised. If they were luxuries they threatened to drain away treasure without affording any compensating advantage. Hence there was a presumption in favour of sumptuary legislation which would discourage the use of nonnecessaries. If they were manufactured goods, they were thought to prejudice the employment of labour at home. For this reason there was a growing tendency to restrict, or even to prohibit, the importation of such goods. If they were the necessary raw materials of native industries, they had to be admitted; but the consequent dependence on foreign countries for supplies was always regarded with some uneasiness. A good example is that of "naval stores", general term which covered such articles as masts, ship timber, tar, pitch, resin and hemp. In the seventeenth century England had to secure these from the Baltic countries.1 But it was considered highly unsatisfactory that she should have to rely on foreign countries for commodities indispensable for naval defence, and that the extent of the dependence should involve a constant unfavourable balance of trade with them. With regard to exports, it was thought desirable that they should as far as possible be manufactured goods, both because manufactured goods were of greater value than raw materials (it being supposed that labour had necessarily added to their value), and because the export of raw materials provided rivals with the means of competing in production. The export of "white", or unfinished, cloth was a subject of constant complaint against the Merchant Adventurers and the export of raw wool was actually prohibited. With the extension of trade to the East and West, tropical and sub-tropical products offered great possibilities for the profitable exploitation of re-exports. It was to eliminate the dependence on the Dutch for spices that certain London merchants sought a charter for a company to trade to the East. The early voyages of the East India Company were all directed to the Spice Islands. Since there was no considerable demand for English goods there, the Company was from its inception allowed to export a certain amount of silver, 1 See Albion, R. G., Forests and Sea Power, chap. iv.

THE BALANCE OF TRADE

563 a privilege which invited attack because it ran counter to the prevailing doctrine. The Company was accused of undermining the strength of the country and of being "enemies of Christendom", for "they carried away the treasure of Europe to enrich the heathen".1 It was to meet these criticisms that Thomas Mun developed the argument which he later incorporated in England's Treasure by Forraign Trade-long recognised as a classical exposition of mercantilism that it was quite permissible to export bullion if it was used to purchase commodities which could be subsequently re-exported and sold at a profit. This was a notable advance in the discussion of the mechanism of the balance of trade. Mercantilists had hitherto virtually confined their attention to the simple import and export relations between two given countries. The complexities of foreign trade were now somewhat grudgingly recognised, and the restrictions on the export of bullion were ultimately abandoned. Increasing importance was attached to re-exports, the mercantilists setting particular value on the entrepôt trade in such commodities as spices, sugar and tobacco.

By the end of the seventeenth century the stress had come to be laid on the promotion of employment within the country, rather than on the import of the precious metals, as the aim of mercantilist policy. It was held that a country was necessarily prosperous if it had a large population fully employed in the making of goods for foreign markets. Employment which did not lead to increased exports was not thought to be advantageous. "By what is consumed at home", Davenant asserts, "one loseth only what another gets, and the nation in general is not at all the richer; but all foreign consumption is a clear and certain profit."3 The desideratum was a population as large as possible, as fully occupied as possible, and living as near as possible to the margin of subsistence. Since output was not increased to any appreciable extent by the use of machinery or power, and since no particular stress was laid on the principle of the efficiency of labour, contemporaries were apt to regard the contribution of one worker to the total of national production as much the same as that of another. Consequently to increase the total production it seemed necessary to add to the number of the workers. Some writers speak as though mere size of population should be considered, but it was generally recognised that it was not purely a question of numbers; the people had to be properly employed. The general impression at the end of the seventeenth century was that England was underpopulated. It was computed that owing to lack of men the country was losing large sums annually. She was at a disadvantage, it was alleged, in competition with Holland and France, her chief 1 The Trades Increase (1615) in Harleian Miscellany (1809), IV, 223.

2 Published posthumously in 1664.

3 Davenant, Charles, Political and Commercial Works, collected by Sir Charles Whitworth (1771), I, 102.

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