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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.

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", a 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." 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 2 Published posthumously in 1664. The Trades Increase (1615) in Harleian Miscellany (1809), IV, 223.

worth (1771), 1, 102.

Commercial Works, collected by Sir Charles Whit

commercial rivals, for they had a greater output at lower costs because they were well populated.

But to invade foreign markets it was necessary to undersell competitors, and to undersell competitors low costs of production were essential. The best way of obtaining low costs, it was generally assumed, was by paying low wages, and this a large population tended to ensure. The population-large and industrious was to remain, therefore, at the bare level of subsistence to gain advantage in the foreign market and thereby promote national prosperity. Any factor which contributed to the increase of the working population, e.g. the immigration of workers from the continent, was to be welcomed. The labouring classes were sometimes spoken of as the wealth of the country, their value being computed as equivalent to the difference between the price of the raw materials on which they worked plus the wages they were paid and the price obtained for the finished articles when exported. This difference was also regarded by the mercantilists as an addition to national wealth-as indeed the only addition worth troubling about—and, therefore, size of population, its employment and the export of manufactured articles, were of fundamental importance in their system.

The economic problems involved in colonisation were approached by the statesmen of the late seventeenth century in the light of these general principles. Obviously the planting of colonies was a drain on the population of the mother country. This was a matter of much concern after the Revolution of 1688. Popular ideas on the question of population are always empirical. During the social dislocation of the sixteenth century the impression had grown that England was overpopulated, and that it would be good policy to find new homes for the surplus in Plantations in Ireland or the New World.1 This view, however, gave place about the middle of the seventeenth century to the belief that the country was underpopulated. The losses of the Civil War and the growing intensity of commercial rivalry in Europe aroused alarm. Sir William Petty thought it would be as well if the inhabitants of New England would return.2 Roger Coke alleged that it was because so many had emigrated to America that the Dutch had been able to compete with us in the trade with Russia and the Levant. The essential condition of colonisation-emigration from the mother country-therefore ran counter to the principle that national interest demanded a large population at home.

But just as Mun found arguments in favour of the export of bullion when such export was required by circumstances, so mercantilists had to consider whether emigration could be justified when it was an accomplished fact. The attitude of Sir Josiah Child is instructive.

1 Vide supra, p. 69.

2 Economic Writings of Sir William Petty, ed. Hull, 1, 301; cf. Coke, Roger, A Discourse of Trade (1670), pp. 7-9.

IMPORTANCE OF A LARGE POPULATION

565

He has to accept the proposition that "whatever tends to the depopulating of a kingdom tends to the impoverishment of it".1 But he denies that emigration to the American Plantations has had any marked effect on the population of the mother country. In this view he admits that he was in a minority of possibly one in a thousand.2 That many had gone to the colonies, he submits, is not a proof that they would have stayed in the country had there been no colonies to go to. The "sort of people called Puritans" had gone to New England; but if that way had not been opened up to them they would probably have gone to Holland or Germany. The "sort of loose vagrant people" who had gone to Virginia and Barbados would have been hanged or would have died of starvation or disease had they stayed at home. These considerations seemed to him greatly to minimise the damage done to the mother country. Still, loss of people is a loss even if it is inevitable. But their departure to the colonies need not involve the complete loss which their settlement in a foreign country would. If the colonists were forced to confine their trade to the mother country, they would create a demand for home manufactures and therefore promote employment. In consideration of the initial loss and in order to secure ultimate compensation, the trade of the colonies, therefore, should be "confined by severe laws, and good execution of those laws, to the mother-kingdom".4

It may be admitted that if trade relations between the colonies and the mother country were controlled, a new market for manufactured goods would be created, and the demand would stimulate employment. Sir Josiah Child adduces the case of the West Indies where he says "one Englishman with the ten blacks that work with him, accounting what they eat, use and wear, would make employment for four men in England". But it may be asked, granted the country was underpopulated, how could such an increased demand be met? Emigration would seem to accentuate the difficulty. Child's answer is "such as our employment is for people, so many will our people be". If there is abundant employment, wages will rise and aliens will be encouraged to settle in the country. Davenant definitely suggests that aliens should be attracted so that immigration should compensate for emigration." This view is insisted upon by William Wood, who as late as 1718 repeats Davenant's contention that “a country, which takes no care to encourage an accession of strangers, in the course of time will find Plantations of pernicious consequence". 8 A Bristol merchant, John Cary, sums up the discussion very well. Against the Plantations, he says, may be set the fact that "they have drained us of multitudes of our people who might have been serviceable at home and advanced improvements in husbandry and 1 Child, Sir Josiah, A New Discourse of Trade (1693), p. 165. 2 Ibid. p. 169. 3 Ibid. p. 170. • Ibid. p. 174.

7 Davenant, II, 187.

4 Ibid. p. 183.

8 Wood, William, A Survey of Trade (1718), p. 134.

Ibid. p. 179.

manufactures".1 But while "people are the wealth of a nation" they can only be so "where we find employment for them, otherwise they must be a burthen to it". He concludes that the Plantations are an advantage "tho' not all alike, but every one more or less, as they take off our product and manufactures, supply us with commodities which may either be wrought up here or exported again, or prevent fetching things of the same nature from other places for our home consumption, employ our poor and encourage our navigation".2

The practical conclusion drawn by contemporaries, whether they were impressed by the supposed loss inflicted on the country by emigration or by the opportunities for increasing home employment afforded by the colonies, was that every consideration of prudence and policy required that their trade should be restricted to the mother country. To allow foreign countries free access to the colonies or the colonies free access to foreign countries was out of the question. The problem for the mercantilists was to find how the colonies could be used as a means of strengthening national power. They were in the making and should be so fashioned that they would be of service to the mother country in her contest with her formidable commercial rivals. It took time to explore the possible ways in which the colonies could be made economic assets. Under the stress of competition, first with the Dutch and then with the French, England developed a system within which the colonies were to play an important part. The broad foundations were laid in the reign of Charles II. During the Commonwealth the Navigation Act of 16513 had attempted to set restrictions on the carrying-trade which were designed to damage the Dutch. At the Restoration influences were brought to bear to induce the Government to continue this measure. The Navigation Act of 1660* confined the trade of England and her possessions in Asia, Africa and America to vessels belonging "to the people of England or Ireland" or to those built in and belonging to the Plantations. The master and three-quarters of the crew had to be English, i.e. subjects of the English Crown. One obvious effect of these regulations was to limit the amount of shipping available for colonial trade and consequently to raise the freights. But this restriction was an encouragement to the building of ships in such Plantations as were favourably placed for the development of the industry. There is no doubt that it did stimulate shipbuilding in the New England colonies. Contemporaries regarded the Navigation Acts as justified because they increased English shipping, and they vied with one another in praising the wisdom which inspired the legislation. The multiplication of shipping and the training of a large number of sailors were ends which mercantilists considered of such importance that they were willing to 1 Cary, John, An Essay towards Regulating the Trade and Employing the Poor of this Kingdom (1717), p. 47. 2 Ibid. p. 48.

Acts and Ordinances of the Interregnum, п1, 559-62.

4 12 Car. II, cap. 18. For the details of this and subsequent legislation see chapter IX.

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