HOW THE NEWLY FOUNDED NATIONAL OR DYNASTIC STATES OF EUROPE TRIED
TO MAKE THEMSELVES RICH AND WHAT WAS MEANT BY THE MERCANTILE SYSTEM
We have seen how, during the sixteenth and the seventeenth centuries,
the states of our modern world began to take shape. Their origins
were different in almost every case. Some had been the result of the
deliberate effort of a single king. Others had happened by chance.
Still others had been the result of favourable natural geographic
boundaries. But once they had been founded, they had all of them tried
to strengthen their internal administration and to exert the greatest
possible influence upon foreign affairs. All this of course had cost a
great deal of money. The mediæval state with its lack of centralised
power did not depend upon a rich treasury. The king got his revenues
from the crown domains and his civil service paid for itself. The
modern centralised state was a more complicated affair. The old knights
disappeared and hired government officials or bureaucrats took their
place. Army, navy, and internal administration demanded millions. The
question then became—where was this money to be found?
[Illustration: THE VOYAGE OF THE PILGRIMS]
Gold and silver had been a rare commodity in the middle ages. The
average man, as I have told you, never saw a gold piece as long as he
lived. Only the inhabitants of the large cities were familiar with
silver coin. The discovery of America and the exploitation of the
Peruvian mines changed all this. The centre of trade was transferred
from the Mediterranean to the Atlantic seaboard. The old “commercial
cities” of Italy lost their financial importance. New “commercial
nations” took their place and gold and silver were no longer a
curiosity.
Through Spain and Portugal and Holland and England, precious metals
began to find their way to Europe. The sixteenth century had its own
writers on the subject of political economy and they evolved a theory
of national wealth which seemed to them entirely sound and of the
greatest possible benefit to their respective countries. They reasoned
that both gold and silver were actual wealth. Therefore they believed
that the country with the largest supply of actual cash in the vaults
of its treasury and its banks was at the same time the richest country.
And since money meant armies, it followed that the richest country was
also the most powerful and could rule the rest of the world.
We call this system the “mercantile system,” and it was accepted with
the same unquestioning faith with which the early Christians believed
in Miracles and many of the present-day American business men believe
in the Tariff. In practice, the Mercantile system worked out as
follows: To get the largest surplus of precious metals a country must
have a favourable balance of export trade. If you can export more to
your neighbour than he exports to your own country, he will owe you
money and will be obliged to send you some of his gold. Hence you gain
and he loses. As a result of this creed, the economic program of almost
every seventeenth century state was as follows: