ABSTRACT

I. The principles of the MERCANTILE SYSTEM were not taught by any School ; there was no master, there · were no disciples. From one of its aspects it was a popular economics and not in the best sense of the term. Though Adam Smith turned to M un 1 when he looked for a discriminating statement of the Mercantile views, it is clear from his various criticisms on them in the 4th book of the Wealth of Nations that he does not regard them as a body of arguments and conclusions carefully worked out by thoughtful men from desire of truth, but rather as a scheme of commercial policy 2 which different governments had adopted on the advice of interested merchants and manufacturers. Its principles, so far as they were ever elaborated into a system, seem to him to be the maxims of practical

2 See W. of N., IV., Introd., p. 187 (MacCulloch's edition):- " Political Economy considend as a branch of the science of a statesman or legislator

men of business, who know how trade benefits themselves and have no concern how it benefits the nation at large. On the other hand, the motive of governments in adopting the Mercantile policy could hardly have been disinterestedly to benefit the merchants and manufacturers. The time of its first appearance and the time of its decline will help us to understand the matter. It is usually said to have begun with the Reformation and ended with the French Revolution; and this means that it began when foreign commerce was becoming a power in Europe and ended when governments were beginning to be constitutional and popular. The common notion of Mercantilism represents it as confusing wealth with money, or at least with the precious metals. The charge thus blankly stated is not strictly true ; but it is true that views were adopted and made the ground of political action for more than two centuries which might fairly be represented as logically involving the fallacy in question. The intelligible motive for adopting a policy which promised to multiply the precious metals in a country was clearly the desire of the rulers to have a full treasury for warlike and other purposes.1 There was also a belief that for general reasons (the reasons of the "merchants and manufacturers ") it was good for the country that as much of the precious metals as possible should be attracted into it. The measures adopted to secure this end were the prohibition to export gold and silver "forth of the kingdom," the careful watching of the balance of trade, to see that our exports should in value exceed the imports, in order that there might be a balance in money to come into the country, restraints (by duties or prohibitions) on importation from foreign countries, and encouragement (by bounties and drawbacks) of exportation, special encouragements of home manufacture and of the growth of a home population to labour on it, treaties of commerce to secure privileges for our exporters, and finally the foundation of Colonies and the retention there of our monopoly of trading.