Abstract
Students of international economics justly claim that their subject is the oldest branch of economics. Theorems, concepts and hypotheses still currently in use were developed during the infancy of the discipline. The concept of the balance of trade, the price-specie flow mechanism and comparative costs are examples of the ancient lineage of the concerns of international economics. In 1938 Samuelson observed: ‘Historically, the development of economic theory owes much to the theory of international trade.’1 More recently, in connection with a reference to Ohlin’s contribution to the theory of international trade, Samuelson repeated that ‘trade theory has always been the queen realm of economic theory’.2 The economic historian Donald McCloskey noted in 1980: ‘Since the inception of the discipline its best minds (many of them British) have put commercial policy at the centre of their thinking.’3 This is so, primarily because problems of international trade and finance have always been among the most momentous and controversial of issues in economic debate. It all started with the writers we call mercantilist airing their views on pressing contemporary problems that happened to be those connected with foreign trade: monetary problems, the foreign exchanges and the balance of payments. Although they often differed in their perceptions of the problems, they shared a common assumption: namely, the necessity for regulating foreign trade by the state in the interests of national power, wealth and aggrandisement.
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Notes and References
Paul A. Samuelson, ‘Welfare Economics and International Trade’, American Economic Review, vol. 28 (June 1938) p. 261.
Note also John Chipman’s observation (1984): The emergence of economic science in Great Britain in the seventeenth to nineteenth centuries was to some extent an offshoot of the development of the theory of adjustment of the balance of payments’: J. S. Chipman, ‘Balance of Payments Theory’, in J. Creedy and D. P. O’Brien (eds) Economic Analysis in Historical Perspective (London: Butterworths, 1984) p. 186.
Paul A. Samuelson, ‘Bertil Ohlin 1899–1979’, Journal of International Economics, vol. 11 (1981) p. 150.
Donald N. McCloskey, ‘Magnanimous Albion: Free Trade and British National Income, 1841–1881’, Explorations in Economic History, vol. 17, no. 3 (July 1980) p. 304.
Richard Jones, ‘Primitive Political Economy of England’ (1847), reprinted in W. Whewell (ed.) Literary Remains (London: John Murray, 1859) pp. 291–335.
J. M. Keyenes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936) ch. 23, pp. 333, 339.
K. Marx, Theories of Surplus Value (Moscow: Progress Publishers, 1975) vol. I, p. 174.
A. Serra, Brief Treatise on the Causes Which can Make Gold and Silver Plentiful in Kingdoms Where There are no Mines (Naples, 1613);
reprinted in A. E. Monroe (ed.) Early Economic Thought (Harvard U.P., 1924) pp. 143–67.
See D. M. Pallister, The Age of Elizabeth: England Under the Later Tudors 1547–1602 (New York: Longmans, 1983);
Quoted in H. W. Spiegel, The Growth of Economic Thought (Durham, N.C.: Duke U.P., 1971) p. 99.
For a good analytical discussion of the controversy, see Marian Boweley, ‘Some Seventeenth Century Contributions to the Theory of Value’, Economica, vol. 30 (May 1963) pp. 122–39.
See also B. E. Supple, Commercial Crisis and Change in England, 1600–1642 (Cambridge U.P., 1959) ch. 9, pp. 197–221, and
J. D. Gould, ‘The Trade Crisis of the early 1620s and English Economic Thought’, Journal of Economic History, vol. 15 (1955) pp. 121–33.
A useful supplement to Viner on the development of the balance-of-trade doctrine is Bruno Suviranta, The Theory of the Balance of Trade in England, A Study in Mercantilism (Helsingfors, 1923), reprinted and published by A. M. Kelley, N.Y., 1967.
See Murray N. Rothbard, ‘New Light on the Prehistory of the Austrian School’, in Edwin G. Dolan, The Foundations of Modern Austrian Economics (London: Sheed & Ward, 1976) pp. 55–7.
G. Malynes, A Treatise of the Canker of England’s Commonwealth (London, 1602).
Malynes, op. cit. pp. 97–8.
Malynes, The Maintenance of Free Trade (London, 1622) p. 62.
Ibid. pp. 84–5.
‘This overbalancing consisteth properly in the price of commodities and not in the quantity or quality’, Malynes, A Treatise of the Canker, op. cit. p. 12.
Schumpeter, op. cit. p. 344.
Viner, Studies, op cit. p. 76.
G. J. Kalamotousakis, ‘Exchange Rates and Prices’, Journal of International Economics, vol. 8 (1978) p. 163.
Malynes, A Treatise of the Canker, op. cit. p. 106.
William R. Allen, ‘Modern Defenders of Mercantilist Theory’, History of Political Economy, vol. 2 (Fall 1970) pp. 381–97.
See also Allen, ‘The Position of Mercantilism and the Early Development of International Trade Theory’, in Robert V. Eagly (ed.) Events, Ideology and Economic Theory (Detroit: Wayne U.P., 1968) pp. 65–106.
Allen adopts a position similar to that of Viner’s. For a critique of Allen’s interpretation of the mercantilist literature, see A. W. Coats, ‘The Interpretation of Mercantilist Economics: Some Historiographical Problems’, History of Political Economy, vol. 5 (1973) pp. 483–98.
Schumpeter, op. cit. p. 345; also J. D. Gould, op. cit. pp. 124–6, 128.
Rudolph C. Blitz, ‘Mercantilist Policies and the Pattern of World Trade 1500–1750’, Journal of Economic History, vol. 27 (Mar 1967) pp. 44–7 suggests that the inelasticity argument was behind the mercantilists’ rejection of the specie-flow mechanism.
See also the comments by Lynn Muchmore, ‘Gerrard de Malynes and Mercantile Economics’, History of Political Economy, vol. 1 (1969) pp. 344–5.
Supple, op. cit. p. 211.
Malynes, Maintenance of Free Trade, op. cit. p. 37.
B. Misselden, Free Trade: Or the Means to Make Trade Flourish (London: Waterson, 1622) p. 18.
Edward Misselden, The Circle of Commerce: Or, the Balance of Trade, in Defence of Free Trade (London: Dawson, 1623) p. 93.
Ibid. p. 29.
Ibid. p. 116.
Ibid. p. 129.
T. Mun, England’s Treasure by Forraign Trade (1664) (Oxford: Black-well, 1959) ch. 2.
Mun, England’s Treasure (1755 ed.) p. 76.
Mun, England’s Treasure pp. 218–19. Mun denied that there was any sort of conspiracy by exchange dealers to drain England of its bullion: ‘In Italy where the greatest Banks and Bankers of Christendom do trade, yet I could never see nor hear, that they did, or were able to rule the price of Exchange by confederacie, but still the plenty or scarcity of money in the course of trade did always overrule them ….’, p. 20.
Mun, op. cit. p. 52.
Ibid. p. 17.
Ibid. p. 51.
Ibid. p. 60.
Nun, The Petition and Remonstrance of the Governor and Company of Merchants of London trading to the East Indies (1628) p. 21.
Mun, England’s Treasure, p. 92.
Blaug, op. cit. p. 19.
See George W. Wilson, ‘Thomas Mun and Specie Flows’, Journal of Economic History, vol. 28 (Mar 1958) pp. 62–3;
David Hume, Writings on Economics, ed. Eugene Rotwein, (London: Nelson, 1955) pp. 39–40.
Mun, England’s Treasure, op. cit. 84.
Joyce Oldham Appleby, Economic Thought and Ideology in Seventeenth-Century England (Princeton U.P., 1978) p. 41.
William J. Barber, British Economic Thought and India 1600–1858: A Study in the History of Development Economics (Oxford U.P., 1975) p. 21.
Matthew Decker, Essay on the Causes of the Decline of the Foreign Trade (London, 1749) p. 7.
On Bodin’s mercantilism see C. W. Cole, French Mercantilist Doctrines before Colbert (Dallas, Texas: Taylor, 1931) pp. 47–62.
Bodin, Discours de Jean Bodin, etc. (Paris, 1568) p. 59.
B. de Laffemas, Source de plusiers abus, etc., p. 2. See pp. 63–112 in Cole, op. cit., on Laffemas.
Antoyne de Montchrétien, Traicté de l’oeconomie politique, dédié en 1615 au roy et la reyne mère du roy, with introduction and notes by Th. Funck-Brentano (Paris, 1889) p. 241. For selections on Montchrétien see Cole, op. cit. pp. 113–61.
For an interpretation of Montchrétien as an early theorist of economic development see M. P. Rudloff, ‘A. de Montchrétien et les problemes du developpement economique’, Revue d’Histoire économique et Sociale, vol. 11, no. 2 (1962) pp. 152–74.
For a different interpretation see A. D. Lublinskaya, French Absolutism: The Crucial Phase 1620–1629. trans. Brian Pearce (Cambridge U.P., 1968) pp. 104–37.
For good analyses of Spanish trade and monetary problems during the mercantilist period see E. J. Hamilton, Spanish Mercantilism before 1700, in A. H. Cole et al. (eds) Facts and Factors in Economic History (Harvard U.P., 1933);
José Larraz, La época del mercantilismo en Castilla, (Madrid: 1963);
R. Trevor Davies, Spain in Decline 1621–1700 (London: Macmillan, 1961, ch. v, pp. 92–108.
Luis Ortiz, Memorial Against the Flight of Money From These Realms (1588). See Larraz, op. cit. pp. 106–10.
Quoted in J. Perez, La Révolution des Comunidades de Castille (Bour-deaux, 1970) p. 103.
S. de Moncada, Restauracion Politica de Espana (1619) (Madrid, 1746).
For good commentaries see Andres V. Castillo, Spanish Mercantilism. Gerónimo de Uztáriz-Economist (New York: Columbia Univ. Studies, 1930), and
Earl J. Hamilton, ‘The Mercantilism of Gerónimo de Uztáriz: A Reexamination’, in Norman E. Himes (ed.) Economics, Sociology and the Modern World (Harvard U.P., 1935).
Giovanni Botero, The Reason of State (1589) book VII, p. 141.
Philipp W. von Hornick, Öesterreich über Alles, Wann Es Nur Will (1684) (Regensburg, 1717).
See selections from Hornick in Arthur E. Monroe, Early Economic Thought (Harvard U.P., 1924) pp. 221–44.
Sir Francis Brewster, New Essays on Trade (London, 1702), title of Essay V, p. 45.
Edward Misselden, The Circle of Commerce (1623) (New York: Kelley, 1968) p. 137.
Mun, England’s Treasure, op. cit. in J. R. McCulloch (ed.) Early English Tracts (1856) (Cambridge: Cambridge U.P., 1954) p. 132.
William D. Grampp, ‘The Liberal Elements in English Mercantilism’, Quarterly Journal of Economics (1952), reprinted in J. J. Spengler and W. R. Allen, Essays in Economic Thought (1960) pp. 61–91.
Quoted in E. A. J. Johnson, Predecessors of Adam Smith (Englewood Cliffs N.J.: Prentice-Hall, 1937) p. 308.
Quoted in Viner, Studies, op. cit. p. 54 n.
V. de Forbonnais, Eléments du Commerce, vol. I, p. 78.
Although the ‘infant-industry’ case for protection was known to mercantilists, they rarely invoked the argument. The argument, of course, is premised on production for the domestic market until the industry achieves such economies of scale and other ‘learning effects’ that it is able to withstand foreign competition in the open market without tariff support. Mercantilist writers rarely considered the potential of the home market, and perhaps this is why the argument was so little employed. Forbonnais was one writer who discussed it in the above sense, see Forbonnais, op. cit. p. 251.
Sir Josiah Child, A New Discourse of Trade (London, 1696);
Josiah Tucker, Four Tracts Together with Two Sermons on Political and Commercial Subjects (Gloucester, 1774), p. 12.
Richard Cantillon, Essai sur la Nature du Commerce en Général (1755) ed. H. Higgs (London: Macmillan, 1931);
Quoted in F. Braudel, Civilization and Capitalism 15th–18th Century, vol. 2 (London: Collins, 1982) p. 207.
W. Petty, Treatise of Taxes (1662) in C. H. Hull (ed.) The Economic Writings of Sir William Petty (Cambridge U.P. 1899) vol. 1 p. 41.
Mandeville, Fable of the Bees, vol. 1, p. 465.
Viner, Studies, op. cit. p. 55.
Edgar S. Furniss, The Position of the Laborer in a System of Nationalism (Boston, Mass.: Houghton Mifflin, 1930) p. 31.
[William Petyt], Britannia Languens (1680), op. cit. p. 291.
Viner, op. cit. pp. 51 f.
Misselden, Free Trade, op. cit. p. 118.
Quoted in Charles Wilson, Economic History and the Historian: Collected Essays (London: Weidenfeld & Nicolson, 1966) p. 77.
Daniel Defoe, A Plan of the English Commerce, op. cit. p. 60.
John Cary, Essay on the State of England (1695) op. cit. 145–6.
Some modern historians take a sympathetic view of this preoccupation with foreign trade as the generator of economic growth and employment — certainly for the early mercantilist period. Barry Supple, for instance, refers to the key role of overseas trade in an economy prone to instability and monetary crises. It touched on the prosperity of England’s largest industry and sharply affected the supply of cash and capital in the economy. See Supple, Commercial Crisis, op. cit. p. 14.
Certain Considerations Relating to the Royal African Company of England (London, 1680) p. 1.
Samuel Fortrey, England’s Interest and Improvement (Cambridge: Fiel J, 1663) p. 29.
D. C. Coleman, ‘Labour in the English Economy of the Seventeenth Century’, Economic History Review, 2nd series vol. 8 (1955–6).
[Humphrey Mackworth], England’s Glory (1694) pp. 20–1.
The History of the Reign of King Henry the Seventh, quoted in Heckscher, op. cit. vol. II, p. 16.
J. Viner, ‘Power versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries’, first published in World Politics, vol. 1 (1948) reprinted in Coleman (ed.) Revisions in Mercantilism, op. cit. p. 78.
Viner, ibid. p. 76.
R. Waddington, La Guerre de Sept Ans (Paris, 1899) vol. III, p. 445.
Malachy Postlethwayt, Great Britain’s Commercial Interest (London, 1759) vol. II, p. 551.
Francis Bacon, ‘Of Seditions and Troubles’, in Essays (Everyman ed., London, 1936) p. 45.
Adam Smith, Wealth of Nations, ed. Cannan (London, 1937) p. 579.
[Daniel Defoe], The Evident Approach of a War, 2nd ed. (London, 1729) pp. 13, 30.
In William Cobbett, The Parliamentary History of England (London: Hansard, 1812) vol. VI, col. 598.
The Petition and Remonstrance of the Governour and Company of Merchants trading to the East Indies (London, 1641) p. 16.
Andrew Yarrenton, England’s Improvement by Sea and Land (London, 1677) p. 1 The Epistle to the Reader’.
Nicholas Barbon, A Discourse of Trade (1690), ed. J. H. Hollander (Baltimore: Johns Hopkins U.P., 1905) p. 35.
D. C. Coleman, ‘Politics and Economics in the Age of Anne: the Case of the Anglo-French Trade Treaty of 1713’, in D. C. Coleman and A. H. John (eds) Trade, Government and the Economy in Pre-Industrial England (London: Weidenfeld & Nicolson, 1976) p. 206.
R. Edwards, ‘Economic Sophistication in Nineteenth-Century Congressional Tariff Debates’, Journal of Economic History (Dec 1970) p. 823.
D. M. Pallister describes how Tudor foreign policy (1490–1570) was ‘dictated more by the pattern of British cloth exports than by considerations of religion or the balance of power’. Pallister, The Age of Elizabeth, op. cit. p. 278.
for other merchants’ statements deploring peace with Spain and France in 1745 see Richard Pares, War and Trade in the West Indies 1739–63 (Oxford, 1936) pp. 62–3.
Cobbett, Parliamentary History, op. cit. vol. XV, col. 181.
The French ambassador in Madrid, the Duc de Duras, reported in 1756 that the English ‘have attracted the whole trade of Brazil and India; they have destroyed the manufactures … of Portugal and have bought all its produce in order to introduce their own goods.’ France, Archives Nationales, Archives de la Marine, B7, 400, ‘Mémoire sur Ie Portugal’ (1756).
British Library, Add. MS. 11.411, ff. 11–12.
See Thomas C. Barrow, Trade and Empire: The British Customs Service in Colonial America 1660–1775 (Cambridge U.P., 1967) pp. 134–7.
In regard to the colonies, Child stressed the need for mercantilist regulation of the trade: ‘All Colonies and foreign Plantations do endamage their Mother Kingdom, whereof the Trades of such Plantations are not confined to their said Mother Kingdom, by good Laws and severe Execution of those Laws.’ A New Discourse of Trade (London, 1693) p. 183.
See R. P. Thomas and D. N. McCloskey, ‘Overseas Trade and Empire 1700–1860’, in Donald McCloskey and Roderick Floud (eds) The Economic History of Britain Since 1700, vol. 1, 1700–1860 (Cambridge U.P., 1981) pp. 87–102.
Smith, Wealth of Nations, ed. Campbell and Skinner (Oxford: Clarendon Press, 1976) pp. 464–5, 518, 522–3.
See Viner, ‘Power versus Plenty’, op. cit. Note, however, Joyce Appleby’s observation (based on a detailed analysis of British economic thought and policy during the seventeenth century) that mercantilism in its public-policy aspects, emerged in England only at the beginning of the eighteenth century; and further, that it was only in the eighteenth century that national power was regularly evoked as one of the major benefits of trade — in the previous century, the emphasis was decidedly on 'plenty'. Landlords and manufacturers, in her opinion, not the merchants, were behind the shift in the later period. See Joyce Oldham Appleby, Economic Thought and Ideology in Seventeenth-Century England, op. cit. pp. 250–1.
Alexander Gerschenkron, ‘History of Economic Doctrines and Economic Thought’, American Economic Review, vol. 59 (1969) pp. 1–17; and
Europe in the Russian Mirror (Cambridge U.P., 1970) pp. 62–96 where he supports his proposition with a discussion of the Russian experience with mercantilism.
See K. Hinze, Die Arbeiterfrage zu Beginn des Modernen Kapitalismus in Brandenburg-Preussen, 2nd ed. (Berlin, 1963) p. 74.
Viner, ‘Power versus Plenty’, op. cit. p. 68.
B. Smith, Wealth of Nations, Modern Library ed. (New York: 1937, p. 441).
Quoted in Lewis Samuel Feuer, Spinoza and the Rise of Liberalism (Boston: Beacon Press, 1958) p. 275.
See M. A. M. Franken, ‘The General Tendencies and Structural Aspects of the Foreign Policy and Diplomacy of the Dutch Republic in the Latter Half of the 17th Century’, Acta Historiae Neerlandica, vol. III (1968) pp. 6–7.
Smith, Wealth of Nations, 4th ed. p. 220.
Quoted in Pieter Geyl, The Netherlands in the Seventeenth Century, vol. II: 1648–1715 (London: Benn, 1964) p. 85.
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Gomes, L. (1987). Mercantilist Thought on Foreign Trade. In: Foreign Trade and the National Economy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08992-5_2
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