Page:Encyclopædia Britannica, Ninth Edition, v. 19.djvu/373

Rh POLITICAL ECONOMY 357 state, with strict integrity in the quality of the coin, and the charge of a seigniorage sutlicient to cover the expenses of mintage. Antonio Serra is regarded by some as the creator of modern political economy. He was a native of Cosenza in Calabria. His Breve Trattato dclle cause che possono fare abbondare li regni d oro e d argento dove non sono miniere, 1613, was written during his imprisonment, which is believed to have been due to his having taken part in the conspiracy of Campanella for the liberation of Naples from the Spanish yoke and the establishment of a republican government. This work, long overlooked, was brought into notice in the following century by Galiani and others. Its title alone would sufficiently indicate that the author had adopted the principles of the mercantile system, and in fact in this treatise the essential doctrines of that system are expounded in a tolerably formal and consecutive manner. He strongly insists on the superiority of manufactures over agriculture as a source of national wealth, and uses in support of this view the prosperity of Genoa, Florence, and Venice, as contrasted with the depressed condition of Naples. With larger insight than many of the mercantilists exhibit, he points out the importance, towards the acquisition of wealth, not alone of favourable external conditions, but of energetic character and industrious habits in a population, as well as of a stable government and a good administration of the laws. The first systematic treatise on our science which proceeded from a French author was the Traite de I ficonomie Politiquc, published by Montchretien de Watteville in 1615. The use of the title, says Roscher, now for the first time given to the science, was in itself an important service, since even Bacon understood by &quot; Economia &quot; only the theory of domestic management. The general tendencies and aims of the period are seen in the fact that this treatise, notwithstanding the comprehensive name it bears, does not deal with agriculture at all, but only with the mechanical arts, navigation, commerce, and public finance. The author is filled with the then dominant enthusiasm for foreign trade and colonies. He advocates the control by princes of the industry of their subjects, and condemns the too great freedom, which, in his opinion to their own detriment, the Governments of Spain, Portugal, and Holland had given to trade. His book may be regarded as a formal exposition of the principles of the mercantile system for the use of Frenchmen. A similar office was performed in England by Thomas Mun. In his two works A Discourse of Trade from England unto the East Indies, 2d ed., 1621, and especially in England s Treasure by Foreign Trade, 1664 (posthumous), we have for the first time a clear and systematic statement of the theory of the balance of trade, as well as of the means by which, according to the author s view, a favour able balance could be secured for England. The great object of the economic policy of a state, according to him, should be so to manage its export of manufactures, its direct and carrying trade, and its customs duties as to attract to itself money from abroad. He was, however, opposed to the prohibition of the export of the precious metals in exchange for foreign wares, but on the ground, fully according with his general principles, that those wares might afterwards be re-exported and might then bring back more treasure than had been originally expended in their purchase ; the first export of money might be, as he said, the seed-time, of which the ultimate receipt of a larger amount would be the harvest. He saw, too, that it is inexpedient to have too much money circulating in a country, as this enhances the prices of commodities, and so makes them less saleable to foreigners, but he is favourable to the forma tion and maintenance of a state treasure. 1 One of the most remarkable of the moderate mercantilists was Sir Josiah Child (Brief Observations concerning Trade and the Interest of Money, 1668, and A New Discourse of Trade, 1668 and 1690). He was one of those who held up Holland as a model for the imitation of his fellow-countrymen. He is strongly impressed with the importance for national wealth and wellbeing of a low rate of interest, which he says is to commerce and agriculture what the soul is to the body, and which he held to be the &quot; causa causans of all the other causes of the riches of the Dutch people.&quot; Instead of regarding such low rate as dependent on determinate conditions, which should be allowed to evolve themselves spontaneously, he thinks it should be created and maintained by public authority. Child, whilst adhering to the doctrine of the balance of trade, observes that a people cannot always sell to foreigners without ever buying from them, and denies that the export of the precious metals is necessarily detrimental. He has the ordinary mercantilist partiality for a numerous population. He advocates the reservation by the mother country of the sole right of trade with her colonies, and, under certain limitations, the formation of privileged trading companies. As to the Navigation Act, he takes up a position not 1 Writers of less importance who followed the same direction were Sir Thomas Culpeper (A Tract against the High Rate of Usury, 1623, and Useful Remark on High Interest, 1641) ; Sir Dudley Diffges (Defence of Trade, 1615); G. Malynes (Consuetudo vel Lex Mercatoria, 1622) ; E. Misselden (Circle of Commerce, 1623); Samuel Fortrey (England s Interest and Improvement, 1663 and 1673) ; and John Pollezfen (England and India inconsistent in their Manufactures, 1697). unlike that afterwards occupied by Adam Smith, regarding that measure much more favourably from the political than from the economic point of view. It will be seen that he is somewhat eclectic in his opinions ; but he cannot properly be regarded, though some have attributed to him that character, as a precursor of the free- trade school of the 18th century. Two other eclectics may be here mentioned, in whom just views are mingled with mercantilist prejudices Sir William Sir W. Temple and Charles Davenant. The former in his Observations Temple. upon the United Provinces of the Netherlands, 1672, and his Essay on the Trade of Ireland, 1673, has many excellent remarks on fundamental economic principles, as on the functions of labour and of saving in the production of national wealth; but he is infected with the errors of the theory of the balance of trade. He follows the lead of Raleigh and Child in urging his fellow-countrymen to imitate the example of the Dutch in their economic policy advice which in his case was founded on his observations during a lengthened residence in Holland as ambassador to the States. Davenant, in his Essay on the East-India Trade, 1696-97, Essay Daven- on the Probable Ways of making the People Gainers in the Balance ant. of Trade, 1699, &c. , also takes up an eclectic position, combining some correct views on wealth and money with mercantilist notions on trade, and recommending Governmental restrictions on colonial commerce as strongly as he advocates freedom of exchange at home. Whilst the mercantile system represented the prevalent form of economic thought in the 17th century, and was alone dominant in the region of practical statesmanship, there was growing up, side by side with it, a body of opinion, different and indeed hostile in character, which Avas destined ultimately to drive it from the field. The new ideas were first developed in England, though it was in France that in the following century they took hold of the public mind, and became a power in politics. That they should first show themselves here, and afterwards be extended, applied, and propagated throughout Europe by French writers, belongs to the order of things according to which the general negative doctrine in morals and politics, undoubtedly of English origin, found its chief home in France, and was thence diffused in widening circles through the civilized world. In England this movement of economic thought took the shape mainly of individual criticism of the prevalent doctrines, founded on a truer analysis of facts and conceptions ; in France it was pene trated with a powerful social sentiment, furnished the creed of a party, and inspired a protest against institutions and an urgent demand for practical reform. Regarded from the theoretic side, the characteristic features of the new direction were the following. The view of at least the extreme mercantilists that national wealth depends on the accumulation of the precious metals is proved to be false, and the gifts of nature and the labour of man are shown to be its real sources. The exaggerated estimate of the importance of foreign com merce is reduced, and attention is once more turned to agriculture and the conditions of its successful prosecu tion. On the side of practical policy, a so-called favour able balance of trade is seen not to be the true object of a nation s or a statesman s efforts, but the procuring for the whole population in the fullest measure the enjoyment of the necessaries and conveniences of life. And what more than anything else contrasts the new system with the old the elaborate apparatus of prohibitions, protective duties, bounties, monopolies, and privileged corporations, which the European Governments had created in the sup posed interests of manufactures and trade, is denounced or deprecated as more an impediment than a furtherance, and the freedom of industry is insisted on as the one thing needful. This circle of ideas, of course, emerges only gradually, and its earliest representatives in economic literature in general apprehend it imperfectly and advocate it with reserve ; but it rises steadily in importance, being more and more favoured by the highest minds, and finding an increasing body of supporters amongst the intelligent public.