3. Encourage those industries which change raw materials into exportable
finished products.
4. Encourage a large population, for you will need workmen for your
factories and an agricultural community does not raise enough workmen.
5. Let the State watch this process and interfere whenever it is
necessary to do so.
Instead of regarding International Trade as something akin to a force of
nature which would always obey certain natural laws regardless of man's
interference, the people of the sixteenth and seventeenth centuries
tried to regulate their commerce by the help of official decrees and
royal laws and financial help on the part of the government.
In the sixteenth century Charles V adopted this Mercantile System
(which was then something entirely new) and introduced it into his many
possessions. Elizabeth of England flattered him by her imitation. The
Bourbons, especially King Louis XIV, were fanatical adherents of this
doctrine and Colbert, his great minister of finance, became the prophet
of Mercantilism to whom all Europe looked for guidance.
The entire foreign policy of Cromwell was a practical application of
the Mercantile System. It was invariably directed against the rich rival
Republic of Holland. For the Dutch shippers, as the common-carriers of
the merchandise of Europe, had certain leanings towards free-trade and
therefore had to be destroyed at all cost.
It will be easily understood how such a system must affect the colonies.
A colony under the Mercantile System became merely a reservoir of gold
and silver and spices, which was to be tapped for the benefit of the
home country. The Asiatic, American and African supply of precious
metals and the raw materials of these tropical countries became a
monopoly of the state which happened to own that particular colony.
No outsider was ever allowed within the precincts and no native was
permitted to trade with a merchant whose ship flew a foreign flag.
Undoubtedly the Mercantile System encouraged the development of
young industries in certain countries where there never had been any
manufacturing before. It built roads and dug canals and made for better
means of transportation. It demanded greater skill among the workmen and
gave the merchant a better social position, while it weakened the power
of the landed aristocracy.
On the other hand, it caused very great misery. It made the natives in
the colonies the victims of a most shameless exploitation. It exposed
the citizens of the home country to an even more terrible fate. It
helped in a great measure to turn every land into an armed camp and
divided the world into little bits of territory, each working for its
own direct benefit, while striving at all times to destroy the power of
its neighbours and get hold of their treasures. It laid so much stress
upon the importance of owning wealth that "being rich" came to be
regarded as the sole virtue of the average citizen. Economic systems
come and go like the fashions in surgery and in the clothes of women,
and during the nineteenth century the Mercantile System was discarded in
favor of a system of free and open competition. At least, so I have been
told.