But this statement of the doctrine,though current in the text-books,does not represent correctly the views of all who mustbe classed as belonging to the Mercantile school.Many of the members of that school were much too clear-sighted toentertain the belief,which the modern student feels difficulty in supposing any class of thinkers to have professed,thatwealth consists exclusively of gold and silver.The mercantilists may be best described,as Roscher (3)has remarked,not byany definite economic theorem which they held in common,but by a set of theoretic tendencies,commonly found incombination,though severally prevailing in different degrees in different minds.These tendencies may be enumerated asfollows:(1)Towards over-estimating the importance of possessing a large amount of the precious metals;(2)towards anundue exaltation (a)of foreign trade over domestic,and (b)of the industry which works up materials over that whichprovides them;(3)towards attaching too high a value to a dense population as an element of national strength;and (4)towards invoking the action of the state in furthering artificially the attainment of the several ends thus proposed asdesirable.
If we consider the contemporary position of affairs in Western Europe,we shall have no difficulty in understanding howthese tendencies would inevitably arise.The discoveries in the New World had led to a large development of the Europeancurrencies.The old feudal economy founded principally on dealings in kind,had given way before the new "moneyeconomy,"and the dimensions of the latter were everywhere expanding.Circulation was becoming more rapid,distantcommunications more frequent,city life and movable property more important.The mercantilists were impressed by the factthat money is wealth sui generis,that it is at all times in universal demand,and that it puts into the hands of its possessor thepower of acquiring all other commodities.The period,again,was marked by the formation of great states,with powerfulGovernments at their head.These Governments required men and money for the maintenance of permanent armies,which,especially for the religious and Italian wars,were kept up on a great scale,Court expenses,too,were more lavish than everbefore,and a larger number of civil officials was employed.The royal domains and dues were insufficient to meet theserequirements,and taxation grew with the demands of the monarchies.Statesmen saw that for their own political endsindustry must flourish.But manufactures make possible a denser population and a higher total value of exports thanagriculture;they open a less limited and more promptly extensible field to enterprise.Hence they became the object ofspecial Governmental favour and patronage,whilst agriculture fell comparatively into the background.The growth ofmanufactures reacted on commerce,to which a new and mighty arena had been opened by the establishment of colonies.
These were viewed simply as estates to be worked for the advantage of the mother countries,and the aim of statesmen wasto make the colonial trade a new source of public revenue.Each nation,as a whole,working for its own power,and thegreater ones for predominance,they entered into a competitive struggle in the economic no less than in the political field,success in the former being indeed,by the rulers,regarded as instrumental to pre-eminence in the latter.A national economicinterest came to exist,of which the Government made itself the representative head.States became a sort of artificialhothouses for the rearing of urban industries.Production was subjected to systematic regulation with the object of securingthe goodness and cheapness of the exported articles,and so maintaining the place of the nation in foreign markets.Theindustrial control was exercised,in part directly by the State,but largely also through privileged corporations and tradingcompanies.High duties on imports were resorted to,at first perhaps mainly for revenue,but afterwards in the interest ofnational production.,Commercial treaties were a principal object of diplomacy,the end in view being to exclude thecompetition of other nations in foreign markets,whilst in the home market as little room as possible was given for theintroduction of anything but raw materials from abroad.The colonies were prohibited from trading with other Europeannations than the parent country,to which they supplied either the precious metals or raw produce purchased with homemanufactures.It is evident that what is known as the Mercantile doctrine was essentially the theoretic counterpart of thepractical activities of the time,and that nations and Governments were led to it,not by any form of scientific thought,but bythe force of outward circumstance,and the observation of facts which lay on the surface.
