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THE LAST JUDGMENT

By Michael Angelo, 1475 1564. In the Sistine Chapel, Rome.

SEVENTEENTH CENTURY POLITICAL
ECONOMY

UNTIL the last century political economy-the science of wealthwas discussed hand in hand with political science-the science of government-but for convenience we note elsewhere the growth of governmental ideas. Political economy proper had little consideration in ancient times. The economic decay of the Roman state gave rise to arguments against slave labor and interest on loans, and to measures for the increase of the free population, but economics as a science can hardly be recognized to have existed. All large economic activity ceased during the dark ages, but the subsequent growth of the cities and their trade gave rise to what Adam Smith calls the mercantile theory of economics.

Jean Bodin in the latter half of the sixteenth century made a great step in economic science by explaining the ten-fold rise in prices to the importation of gold from the New World. He distinguished money from wealth, but otherwise was a mercantilist in approving the interference of government in trade, high taxes on manufactured imports, and low taxes on imported raw materials and food. In 1581 W. S. (William Stafford) defended the exclusion of all foreign wares in England. Antonio Serra, an Italian, writing in 1613 in prison, argued in favor of the superior profit to the nation of manufactures and for their protection. Monchrétien de Watteville in 1615 gave an exposition in French of the restrictive ideas. He believed in government control of all industries in the home state and in colonies. Thomas Mun (15711641) was the greatest English advocate of this system. He maintained that the great object of governmental economics should be to main

tain the balance of trade, that is, the excess of exports over imports, and that trade restrictions and tariffs should be formulated with this end in view. Josiah. Child in 1668 and 1690 favored a low rate of interest maintained by government authority and exclusive control of the colonial trade. He believed, like the rest of the mercantilists, in a large and growing population. This, it will be remembered, was in direct opposition to the old Greek idea.

The mercantile theory had been put into practical use by most nations, and everywhere there were fast-bound restrictions on industry. This at length caused a reaction that later led, in what are called the physiocrats, to the opposite extreme.

Sir William Petty (1623-1687) was a precursor of the new school. He founded the value of an article on the labor required to produce it, argued for a single money standard, against a fixed rate of interest, and in general did not believe in government control. Sir Dudley North (1691) was also an opponent of the restrictive theory. He believed in home as well as foreign trade, and in non-interference by the government. John Locke based all property on labor-a theory that implied great political consequences.

These reactionary ideas took root in France and developed rapidly. Pierre Boisguillebert in the first of the eighteenth century, vainly struggled against government restrictions for the sake of manufactures, and lauded agriculture. Restrictions between nations he thought as harmful as between individuals. He brought forward the idea of a tax on incomes. But his words fell on deaf ears and had little influence. Vaubon in 1707 took up the same line of thought and urged more consideration for the laboring and agricultural class.

The great names, however, of the physiocrat school proper belong to the eighteenth century, and were Quesnay (1684-1774) and Gournay (1712-1759). They took for granted the doctrine of the natural rights and equality of man, of the social contract as the basis of the state. They thought that labor is the basis of property, but the soil the source of all wealth. They argued that agriculture, mining, fishing, etc., are the only truly productive occupations; that manufacturies and commerce increase values only by the amount of labor put in them, and that this labor is not really productive because the sum of raw materials is not increased. "Laissez faire," non-intervention, should be the policy of governments. Turgot tried to carry out their ideas in France, but he

was unsustained by Louis XVI., and the government plunged on blindly to the Revolution.

In England David Hume brought his keen insight to bear against the balance of trade theory, and the identification of money and wealth. He was a friend of and unquestionably influenced, Adam Smith, but Smith's Wealth of Nations is beyond doubt the beginning of modern political economy.

THOMAS MUN

THOMAS MUN was born in London 1571. His father and uncle were both connected with the mint. Mun was early a successful merchant engaged mostly in Turkish trade. In July, 1615, he was elected a director of the East India Company. His first book was a defence of the transactions of that company. His second book, "England's Treasure by Forraign Trade, or the Ballance of our Forraign Trade is the Rule of our Treasure," was probably written about 1630, but not published until 1664, twenty-three years after his death. The book gives the best early expression to the views of the prevailing political economy of the time. It is important, as the influence of the protective theory which it represents has been enormous.

MUN'S "MERCANTILE THEORY"

THE MEANS TO ENRICH THE KINGDOM, AND TO ENCREASE OUR TREASURE

Although a Kingdom may be enriched by gifts received, or by purchase taken from some other nations, yet these are things uncertain and of small consideration when they happen. The ordinary means therefore to encrease our wealth and treasure is by Forraign Trade, wherein wee must ever observe this rule: to sell more to strangers yearly than wee consume of theirs in value. For suppose that when this Kingdom is plentifully served with the Cloth, Lead, Tinn, Iron, Fish, and other native commodities, we doe yearly export the overplus to forraign Countries to the value of twenty two hundred thousand

pounds; by which means we are enabled beyond the Seas to buy and bring in forraign wares for our use and consumptions, to the value of twenty hundred thousand pounds. By this order duly kept in our trading, we may rest assured that the Kingdom shall be enriched yearly two hundred thousand pounds, which must be brought to us in so much Treasure; because that part of our stock which is not returned to us in wares must necessarily be brought home in treasure.

For in this case it cometh to pass in the stock of a Kingdom, as in the estate of a private man; who is supposed to have one thousand pounds yearly revenue and two thousand pounds of ready money in his Chest: If such a man through excess shall spend one thousand five hundred pounds per annum, all his ready money will be doubled if he takes a Frugal course to spend but five hundred pounds per annum; which rule never faileth likewise in the Commonwealth, but in some cases (of no great moment) which I will hereafter declare, when I shall shew by whom and in what manner this ballance of the Kingdom's account ought to be drawn up yearly, or so often as it shall please the State to discover how much we gain or lose by trade with forraign Nations. But first I will say something concerning those ways and means which will encrease our exportations and diminish our importations of wares; which being done, I will then set down some other arguments both affirmative and negative to strengthen that which is here declared, and thereby to shew that all the other means which are commonly supposed to enrich the Kingdom with Treasure are altogether insufficient and meer fallacies.

The particular ways and means to encrease the exportation of our Commodities, and to decrease our Consumption of forraign wares.

The revenue or stock of a Kingdom by which it is provided of forraign wares is either Natural or Artificial. The Natural wealth is so much only as can be spared from our own use and necessities to be exported unto strangers. The Artificial consists in our manufactures and industries trading with forraign commodities, concerning which I will set down such particulars as may serve for the cause we have in hand.

I. First, although this Realm be already exceeding rich by nature, yet might it be much encreased by laying the waste grounds (which are infinite) into such employments as should no way hinder the present revenues of other manured lands, but hereby to supply our selves and

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