WEBVTT NOTE 10. Mercantilism and Freedom in England from the Tudors to the Civil War 1 00:00:00.000 --> 00:00:08.000 10. Mercantilism and Freedom in England from the Tudors to the Civil War 2 00:00:08.000 --> 00:00:13.000 1. Tudor and Stuart Absolutism 3 00:00:13.000 --> 00:00:29.000 Dominant in English political thought from the early 16th to the early 17th century was a form of simplistic and militant absolutist thought that has been called the Correspondence Theory or the Political Theory of Order. 4 00:00:29.000 --> 00:00:36.040 This royalist doctrine was fashioned for the Tudor-Stewart age, in which the king struggled 5 00:00:36.040 --> 00:00:42.840 to establish his absolute power as against the international influence of the old religion, 6 00:00:42.840 --> 00:00:50.840 Catholicism, and over the Calvinist Puritans, who had definite republican and populist tendencies. 7 00:00:50.840 --> 00:00:56.880 In contrast, God was now supposed to be speaking through the English king, and therefore through 8 00:00:56.880 --> 00:01:00.080 through the head of the Anglican Church. 9 00:01:00.080 --> 00:01:06.800 The basic philosophic groundwork was the natural order, the great chain of being, which since 10 00:01:06.800 --> 00:01:13.400 the Middle Ages had been seen as strictly hierarchical, with God at the head and man 11 00:01:13.400 --> 00:01:16.920 as the highest of his material creatures. 12 00:01:16.920 --> 00:01:24.520 But then came the fundamental methodology, flimsy analogy or argument by correspondence. 13 00:01:24.520 --> 00:01:47.520 Just as God was sovereign and superior to various ranks of angels and, finally, to man and then other inferior earthly creatures in the macrocosm, so in the individual microcosm, within each person, the head must be sovereign over the body, and reason and will dominant over the appetites. 14 00:01:47.520 --> 00:01:53.960 Similarly, the father is sovereign over his family. More specifically and pointedly in 15 00:01:53.960 --> 00:01:59.560 the political realm, the king, the father of his people, must be sovereign over the 16 00:01:59.560 --> 00:02:02.280 body politic. 17 00:02:02.280 --> 00:02:08.640 This flimsy organicist analogy was pushed to great lengths. The head in the human body 18 00:02:08.640 --> 00:02:16.120 was the king in the body politic. Health in the former constituted social well-being in 19 00:02:16.120 --> 00:02:28.120 and the latter. The circulation of the blood was the same as circulation of money. Rule of the rational soul was royal sovereignty and so on. 20 00:02:28.120 --> 00:02:42.120 The only argument was correspondence, that the governmental and social ranking alleged to exist in the heavenly sphere must be duplicated in earthly government and in social life. 21 00:02:42.120 --> 00:02:47.940 One problem with the argument from correspondence is that freedom of the human will enters into 22 00:02:47.940 --> 00:02:55.540 politics and social life but does not do so elsewhere. It is rare for the liver to rebel 23 00:02:55.540 --> 00:03:02.240 against the head, and yet an important conclusion of this royalist political philosophy was 24 00:03:02.240 --> 00:03:10.800 that political rebellion is as evil and anti-natural as such rebellion by the liver. Similarly, 25 00:03:10.800 --> 00:03:17.920 Individual subjects must obey the divinely appointed monarch, else the divine order collapses 26 00:03:17.920 --> 00:03:25.680 into anarchy and disorder, and corruption and decay then rule in human life. 27 00:03:25.680 --> 00:03:32.260 While the liver has not often rebelled against the head, the royal absolutists did, of course, 28 00:03:32.260 --> 00:03:36.760 have an analogy to fall back on in heavenly government. 29 00:03:36.760 --> 00:03:40.760 Satan's Wicked Rebellion Against the Sovereignty of God. 30 00:03:40.760 --> 00:03:47.560 Similarly, the great fact of human history was Adam's fall, brought on by rebelliousness 31 00:03:47.560 --> 00:03:53.920 against divine authority and by overweening self-pride. 32 00:03:53.920 --> 00:04:02.180 God and the King, Satan, Adam and rebellious subjects, these were the analogies and correspondences 33 00:04:02.180 --> 00:04:09.660 The Royal Absolutists tried to drive home. Thus Anglican Church homilies on obedience 34 00:04:09.660 --> 00:04:19.020 in 1547 and 1570 called obedience to the sovereign the very root of all virtues, while a wicked 35 00:04:19.020 --> 00:04:26.420 boldness is the source of all sin and misery. As the homilies stated, all sins possible 36 00:04:26.420 --> 00:04:48.420 It is the absolute duty of all inferiors always and only to obey, just as the body obeys the soul and as the universe obeys God. 37 00:04:48.420 --> 00:04:55.900 In stark contrast to the scholastics, as well as to Calvinist or Lieger Monarcho-Mach thinkers, 38 00:04:55.900 --> 00:05:01.780 the Anglican preachers of order stressed time and again that the subjects must obey the 39 00:05:01.780 --> 00:05:09.020 king in any and all circumstances, whether or not the king or his actions were good or 40 00:05:09.020 --> 00:05:10.580 evil. 41 00:05:10.580 --> 00:05:15.700 There must be no resistance whatever, even to evil princes. 42 00:05:15.700 --> 00:05:24.100 The King is the divinely mandated representative of God on earth by hereditary right. To question, 43 00:05:24.100 --> 00:05:31.140 much less to disobey the King, therefore, was not only treason, but blasphemy. Disobeying 44 00:05:31.140 --> 00:05:38.340 the King is disobeying God. As the influential Mirror for Magistrates, which went through 45 00:05:38.340 --> 00:05:48.020 Through many editions from 1559 to 1587 maintained, God ordains all magistrates. Therefore, God 46 00:05:48.020 --> 00:05:55.040 ordains good when he favoreth the people, and evil when he will punish them. In short, 47 00:05:55.040 --> 00:06:01.260 good kings are a blessing sent to the people by God. Wicked kings are a punishment equally 48 00:06:01.260 --> 00:06:03.860 sent by the Divinity. 49 00:06:03.860 --> 00:06:10.500 In either case, the duty of the subject is absolute obedience to God's and the King's 50 00:06:10.500 --> 00:06:12.100 commands. 51 00:06:12.100 --> 00:06:19.040 And therefore, whosoever rebelleth against any ruler, either good or bad, rebelleth against 52 00:06:19.040 --> 00:06:24.200 God, and shall be sure of a wretched end. 53 00:06:24.200 --> 00:06:29.660 To the royalist thinkers, the rising claims of individual freedom and the natural rights 54 00:06:29.660 --> 00:06:36.500 of each individual only led to mischief and destruction of God's rational order. Thus 55 00:06:36.500 --> 00:06:45.020 Richard Hooker, circa 1554-1600, the leading Anglican theologian of the 16th century in 56 00:06:45.020 --> 00:06:55.900 his famous Laws of Ecclesiastical Polity, 1594-1597, lashed out at any notion of individualism. 57 00:06:55.900 --> 00:07:02.900 Although himself a moderate on royal absolutism, Hooker wrote that the idea of every man his 58 00:07:02.900 --> 00:07:09.660 own commander, shaketh universally the fabric of government, tendeth to anarchy and mere 59 00:07:09.660 --> 00:07:16.860 confusion, dissolveth families, dissipateth colleges, corporations, armies, overthroweth 60 00:07:16.860 --> 00:07:23.380 kingdoms, churches, and whatsoever is now, through the providence of God, by authority 61 00:07:23.380 --> 00:07:26.940 and Power Upheld 62 00:07:26.940 --> 00:07:33.340 One of the most extreme royal absolutists in the Tudor-Stewart era was Edward Fawcett, 63 00:07:33.340 --> 00:07:41.580 circa 1553 to 1630, a playwright, owner of the Manor of Tyburn, a Justice of the Peace 64 00:07:41.580 --> 00:07:48.540 and Member of Parliament. Fawcett's magnum opus was a comparative discourse of the body's 65 00:07:48.540 --> 00:07:56.280 His Natural and Political, 1606, whose very title reeks of the argument by correspondence 66 00:07:56.280 --> 00:07:59.820 and the political philosophy of order. 67 00:07:59.820 --> 00:08:06.800 At some points, Fawcett came close to saying that a monarch could never harm his people. 68 00:08:06.800 --> 00:08:13.300 In other words, however evil his deeds may seem, they must really be good, virtually 69 00:08:13.300 --> 00:08:14.860 by definition. 70 00:08:14.860 --> 00:08:24.860 Indeed, at one point, Fawcett came close to the justification of a king's acts by mystery and power, as in the book of Job. 71 00:08:24.860 --> 00:08:34.860 Thus, as Professor Greenleaf puts it in his discussion of Fawcett's doctrine, the seemingly evil acts of a ruler were only an appearance, 72 00:08:34.860 --> 00:08:40.860 the real nature of which was misconstrued by the fallible minds of the citizens. 73 00:08:40.860 --> 00:08:50.860 The strong implication, of course, is that the mind of the monarch, in contrast to that of the lowly citizen, is infallible. 74 00:08:50.860 --> 00:09:04.860 Probably the most intelligent and surely the most influential of the absolutist order theorists in 17th century England was Sir Robert Filmer, 1588-1653. 75 00:09:04.860 --> 00:09:16.860 Towards the end of his life, this obscure Kentish nobleman published a series of royal absolutist essays in the late 1640s and early 1650s. 76 00:09:16.860 --> 00:09:25.860 Then, three decades later, a filmer revival took place, his collected essays being published in 1679, 77 00:09:25.860 --> 00:09:32.580 and his most famous work, Patriarcha or The Natural Power of Kings, written in the late 78 00:09:32.580 --> 00:09:40.060 1630s or early 1640s, was printed for the first time the following year. 79 00:09:40.060 --> 00:09:46.180 Filmer immediately and posthumously became the leading defender of royal absolutism from 80 00:09:46.180 --> 00:09:50.260 the older perspective of order theory. 81 00:09:50.260 --> 00:09:59.060 Filmer angrily rejected the idea that by law of nature all men are born free as heathen doctrine. 82 00:09:59.060 --> 00:10:05.340 Linking individualism and self-direction to sinful rebellion against God, Filmer warned 83 00:10:05.340 --> 00:10:11.740 against the very desire for freedom which caused Adam's fall from grace. 84 00:10:11.740 --> 00:10:17.740 Most notable in Filmer was his searching critique of the rising contractarian doctrine, which 85 00:10:17.740 --> 00:10:25.740 which laid the foundation of, and therefore justified, the State in some original social contract. 86 00:10:25.740 --> 00:10:33.940 Thomas Hobbes, 1588 to 1679, had spent all his life in service as a tutor, companion 87 00:10:33.940 --> 00:10:40.740 and intellectual guide to the Cavendishes, who were related to the royal Stuart family. 88 00:10:40.740 --> 00:10:49.140 Hobbes had worked out a contractarian justification for royal absolutism during the 1640s. 89 00:10:49.140 --> 00:10:55.040 Filmer spotted crucial flaws in Hobbes' social contract theory, which were to apply just 90 00:10:55.040 --> 00:11:01.180 as fully to John Locke's libertarian version four decades later. 91 00:11:01.180 --> 00:11:07.820 Filmer asked how likely it was that all men would agree to a contract, as was necessary 92 00:11:07.820 --> 00:11:14.800 before it could become universally binding. He wanted to know how and why a contract should 93 00:11:14.800 --> 00:11:21.740 bind all subsequent generations. He suggested it was unreasonable to invoke the specious 94 00:11:21.740 --> 00:11:25.580 notion of tacit consent. 95 00:11:25.580 --> 00:11:31.660 Filmer also trenchantly criticized the growing classical liberal idea of grounding government 96 00:11:31.660 --> 00:11:33.900 in the Consent of the Governed. 97 00:11:33.900 --> 00:11:39.740 Governments, he pointed out, could not then be stable, for governments could sometimes 98 00:11:39.740 --> 00:11:43.660 find that consent to be withdrawn. 99 00:11:43.660 --> 00:11:49.800 Once concede the power of the people to consent as well as the natural law of equal freedom 100 00:11:49.800 --> 00:11:55.220 from subjection, and the logical consequence must be anarchism. 101 00:11:55.220 --> 00:12:01.540 For then, every petty company hath a right to make a kingdom by itself, and not only 102 00:12:01.540 --> 00:12:08.220 May every city, but every village, and every family, nay, every particular man, a liberty 103 00:12:08.220 --> 00:12:12.740 to choose himself to be his own king, if he please. 104 00:12:12.740 --> 00:12:18.500 And he were a madman that, being by nature free, would choose any man but himself to 105 00:12:18.500 --> 00:12:20.180 be his own governor. 106 00:12:20.180 --> 00:12:26.900 Thus, to avoid the having but of one king of the whole world, we shall run into a liberty 107 00:12:26.900 --> 00:12:33.100 of Having as Many Kings as There Be Men in the World, which upon the matter is to have 108 00:12:33.100 --> 00:12:39.380 no king at all, but to leave all men to their natural liberty. 109 00:12:39.380 --> 00:12:45.100 It should be noted that Filmer and other absolutists of the era found great inspiration in the 110 00:12:45.100 --> 00:12:50.940 French theorist Jean Baudin, who has been called the political writer most favorably 111 00:12:50.940 --> 00:13:11.940 The Honor, if that be the proper term, of being the first English mercantilist writer, 112 00:13:11.940 --> 00:13:19.940 should have gone for four centuries to Sir Thomas Smith the Elder, 1513-1577. 113 00:13:19.940 --> 00:13:45.940 Instead, his remarkable work, a discourse on the commonwealth of this realm of England, written in 1549 and published anonymously in 1581, was at first unidentified, and since its 1893 reprint has been incorrectly attributed to another Tudor official, John Hales, died 1571. 114 00:13:45.940 --> 00:13:51.940 Thomas Smith was born into a poor family of small shepherds in the county of Essex. 115 00:13:51.940 --> 00:13:59.940 Impoverished but brilliant, Smith managed to enter Cambridge, where his scholarly abilities were soon recognized. 116 00:13:59.940 --> 00:14:06.940 There he rose to become Regis Professor of Civil Law and then Vice Chancellor of the University. 117 00:14:06.940 --> 00:14:11.940 Smith was a notable orator and a learned and brilliant polymath, 118 00:14:11.940 --> 00:14:17.380 Smith, who wrote books on Greek pronunciation and English spelling and was deeply interested 119 00:14:17.380 --> 00:14:22.460 in mathematics, chemistry, linguistics and history. 120 00:14:22.460 --> 00:14:28.100 Smith embarked on a career as politician and bureaucrat by becoming a secretary under the 121 00:14:28.100 --> 00:14:34.180 protectorate of Lord Somerset from 1547 to 1549. 122 00:14:34.180 --> 00:14:39.620 Though an Anglican, Smith was a moderate who cared little for religious matters, so he 123 00:14:39.620 --> 00:14:45.180 He was able to serve as privy counselor under Catholic Queen Mary on the recommendation 124 00:14:45.180 --> 00:14:50.740 of his old Cambridge colleague, the Catholic Bishop Stephen Gardner. 125 00:14:50.740 --> 00:14:55.860 Under Queen Elizabeth, his influence continued through the powerful position at court of 126 00:14:55.860 --> 00:15:01.500 his old Cambridge student, Sir William Cecil, later Lord Burghley. 127 00:15:01.500 --> 00:15:08.220 Smith, however, was often out of power, a fate helped by his arrogant, boorish and feisty 128 00:15:08.220 --> 00:15:25.220 Thomas Smith was a bitter critic of debasement, and he therefore became a vocal opponent of his mentor, Lord Somerset's policy of repeated debasement in order to acquire increased revenue for the crown. 129 00:15:25.220 --> 00:15:33.220 Sent into exile from the court in 1549, Smith brooded and then did what was characteristic of him. 130 00:15:33.220 --> 00:15:48.220 This penetrating lively work was written in the form of a dialogue among several characters, with The Doctor being the spokesman for the author's own views. 131 00:15:48.220 --> 00:15:57.220 Later, Smith was to repeat the dialogue form in his book Dialogue on the Queen's Marriage, 1561. 132 00:15:57.220 --> 00:16:09.220 The former work was not meant for publication, Smith noting in the tract that it is dangerous to meddle in the king's matters, as indeed it was. 133 00:16:09.220 --> 00:16:20.220 The basic thrust of the discourse on the Commonwealth was an attack on debasement and its consequences in high prices, inflation and social unrest. 134 00:16:20.220 --> 00:16:28.220 Debasement, and not the arbitrary decision of farmers or merchants, is responsible for higher prices. 135 00:16:28.220 --> 00:16:33.220 The principal losers from this policy are people on fixed incomes. 136 00:16:33.220 --> 00:16:38.220 The discourse was published after Sir Thomas' death by his nephew William. 137 00:16:38.220 --> 00:16:44.220 Included are later passages, interpolated by Thomas during the 1570s, 138 00:16:44.220 --> 00:16:51.120 Studies, attributing the Elizabethan inflation of the later 16th century to another factor, 139 00:16:51.120 --> 00:16:56.260 the influx of newly mined species from the Western Hemisphere. 140 00:16:56.260 --> 00:17:03.220 It is not known whether Smith was familiar with the similar Navaras analysis of 1556, 141 00:17:03.220 --> 00:17:09.420 or the Baudin analysis of French inflation 12 years later, or whether this was Smith's 142 00:17:09.420 --> 00:17:17.180 Independent Discovery as Price Inflation Moved from Spain Northwards into Europe. 143 00:17:17.180 --> 00:17:24.880 In 1562, Smith returned to the debasement theme, in a lengthy work, still unpublished, 144 00:17:24.880 --> 00:17:31.240 The Wages of a Roman Foot Soldier, or A Treatise on the Money of the Romans. 145 00:17:31.240 --> 00:17:36.280 This treatise on Roman money and cleanage was written in answer to a question posed 146 00:17:36.280 --> 00:17:43.280 by his friend and colleague Cecil, at this point, Queen Elizabeth's principal secretary. 147 00:17:43.280 --> 00:17:53.280 Again, Smith returns to his attack on debasement as evidence of the decay of the state and as a cause of excessive prices. 148 00:17:53.280 --> 00:18:00.280 In both the Discourse and the Treatise, Smith took the convenient, if fallacious, position 149 00:18:00.280 --> 00:18:07.080 that the king himself is the greatest loser from the high prices caused by debasement. 150 00:18:07.080 --> 00:18:12.980 Since debasement adds to the king's revenue immediately and before prices have had a chance 151 00:18:12.980 --> 00:18:19.440 to rise, the king, on the contrary, is the prime beneficiary of debasement and other 152 00:18:19.440 --> 00:18:23.320 measures of monetary inflation. 153 00:18:23.320 --> 00:18:29.160 Smith's discourse is strikingly modern in frankly grounding its social analysis in the 154 00:18:29.160 --> 00:18:44.160 Self-interest, Smith declared, is a natural fact of human life, to be channeled by constructive policy rather than thwarted by repressive legislation. 155 00:18:44.160 --> 00:18:51.160 Not that Smith abandons nascent mercantilism for any sort of liberal or laissez-faire outlook. 156 00:18:51.160 --> 00:18:56.160 Self-interest is not to be left alone within a property rights framework. 157 00:18:56.160 --> 00:19:02.160 It is to be channeled and directed by government to a common goal set by the state. 158 00:19:02.160 --> 00:19:11.160 But at least Smith was wise enough to point out that it is better for men to be provoked with lucre towards proper goals 159 00:19:11.160 --> 00:19:15.160 than to have governments take this reward from them. 160 00:19:15.160 --> 00:19:23.160 In short, government should work in tandem with the powerful incentive provided by individual self-interest. 161 00:19:23.160 --> 00:19:31.840 Smith sees that economic incentives are always at work in the market to move economic resources 162 00:19:31.840 --> 00:19:39.440 out of less profitable and into more profitable uses, and governments should work with such 163 00:19:39.440 --> 00:19:43.360 incentives rather than against them. 164 00:19:43.360 --> 00:19:49.720 Smith however was assuredly a mercantilist, as seen by his desire to foster the manufacture 165 00:19:49.720 --> 00:20:05.700 John Hales came from a prominent Kentish family and was a friend and fellow tutor official 166 00:20:05.700 --> 00:20:14.380 of Smith. Yet his economic and social philosophy was very different. In 1549, for example, 167 00:20:14.380 --> 00:20:19.940 The year that Smith's discourse was written, and which included an attack on new taxes 168 00:20:19.940 --> 00:20:28.060 on manufactured cloth, Hales was the very person responsible for instituting the tax. 169 00:20:28.060 --> 00:20:34.380 Hales also disliked two favorite themes of the discourse, love for the civil law and 170 00:20:34.380 --> 00:20:36.860 admiration for sheep farming. 171 00:20:36.860 --> 00:20:42.980 Hales, furthermore, far from being indifferent to religion, was a deacon and a dedicated 172 00:20:42.980 --> 00:20:46.500 and organizer of Bible readings. 173 00:20:46.500 --> 00:20:52.700 Most important in any contrast between Hales and the author of the Discourse, Hales attributed 174 00:20:52.700 --> 00:21:00.360 the high prices not to debasement but to three very different supply-side factors, scarcity 175 00:21:00.360 --> 00:21:06.700 of cattle and poultry, speculation and excessively high taxes. 176 00:21:06.700 --> 00:21:12.740 None of these factors, in truth, can account for any general price increase. 177 00:21:12.740 --> 00:21:19.380 Finally, Hayles took the old-fashioned moral position of attributing all ills, including 178 00:21:19.380 --> 00:21:24.160 high prices, to man's all-pervasive greed. 179 00:21:24.160 --> 00:21:30.620 Why greed should have increased rapidly in recent years to account for high prices was, 180 00:21:30.620 --> 00:21:34.740 of course, a problem that was not even addressed. 181 00:21:34.740 --> 00:21:38.940 and the desire for profit were the great social evils. 182 00:21:38.940 --> 00:21:46.340 The only cure for all this, opined Hales, was to purge man of self-love, to remove the 183 00:21:46.340 --> 00:21:53.060 self-love that is in many men, to take away the inordinate desire of riches wherewith 184 00:21:53.060 --> 00:22:00.460 many be cumbered, to expel and quench the insatiable thirst of ungodly greediness wherewith 185 00:22:00.460 --> 00:22:26.980 Again, in his defense, written the same year as the discourse, John Hales expressly denies 186 00:22:26.980 --> 00:22:33.060 It is that self-love can be in any sense the foundation of the public good. 187 00:22:33.060 --> 00:22:39.100 It may not be lawful for every man to use his own as he listeth, but every man must 188 00:22:39.100 --> 00:22:43.580 use that he hath to the most benefit of his country. 189 00:22:43.580 --> 00:22:49.980 There must be something devised to quench the insatiable thirst of greediness of men. 190 00:22:49.980 --> 00:22:58.220 Pevatus-ness must be weeded out by the roots, for it is the destruction of all good things. 191 00:22:58.220 --> 00:23:07.180 Sir Thomas Smith was responsible, rather than his associates Sir Thomas Gresham, circa 1519-1579, 192 00:23:07.180 --> 00:23:13.580 for the first expression of Gresham's Law in England. Until recently it had been thought 193 00:23:13.580 --> 00:23:18.980 that the well-known and anonymous Memorandum for the Understanding of the Exchange had 194 00:23:18.980 --> 00:23:26.100 had been submitted by Gresham to Queen Elizabeth early in her reign in 1559. 195 00:23:26.100 --> 00:23:31.900 It now turns out, however, that the memorandum was written by Smith early in Queen Mary's 196 00:23:31.900 --> 00:23:35.100 reign in 1554. 197 00:23:35.100 --> 00:23:41.320 The memorandum was certainly not a free market tract, advocating, as it did, various state 198 00:23:41.320 --> 00:23:44.880 controls over the foreign exchange market. 199 00:23:44.880 --> 00:23:51.240 It did, however, not only denounce debasement and call for a high-valued currency, but it 200 00:23:51.240 --> 00:23:57.800 also enunciated Gresham's Law that the cause of a shortage of gold coin in England was 201 00:23:57.800 --> 00:24:01.720 the legal undervaluation of gold. 202 00:24:01.720 --> 00:24:08.940 Gresham, fiscal agent of the Crown in Antwerp, himself adhered to Gresham's Law, which was 203 00:24:08.940 --> 00:24:15.300 was set forth by the Royal Commission of 1560 that he heavily influenced. 204 00:24:15.300 --> 00:24:21.380 Gresham was also a full-fledged statist and architect of Tudor monopoly privilege. 205 00:24:21.380 --> 00:24:27.460 A member of the monopoly wool cloth export company, the Merchant Adventurers, Gresham 206 00:24:27.460 --> 00:24:35.300 was the chief architect of England's tightening of that monopoly during the 1550s and 1560s, 207 00:24:35.300 --> 00:24:41.700 preventing Hanseatic merchants from exporting English cloth, increasing tariffs on foreign 208 00:24:41.700 --> 00:24:48.260 cloth, and, finally, making the adventurers far more oligarchic and tightly controlled 209 00:24:48.260 --> 00:24:51.220 from the top. 210 00:24:51.220 --> 00:24:56.380 Influenced greatly by the memorandum, and echoing its Gresham's Law position, was the 211 00:24:56.380 --> 00:25:08.380 and the younger Sir Richard Martin, 1534-1617, goldsmith, warden and master of the mint during all of Queen Elizabeth's reign. 212 00:25:08.380 --> 00:25:16.380 Trained as a goldsmith from youth, Martin also served as prime warden of the worshipful company of goldsmiths, 213 00:25:16.380 --> 00:25:21.380 alderman of London for many years, and was twice Lord Mayor. 214 00:25:21.380 --> 00:25:30.380 In the Royal Commission of 1576 on Currency and the Exchanges, whose members were hand-picked by Sir Thomas Smith, 215 00:25:30.380 --> 00:25:38.380 then Principal Secretary to the Queen, Gresham and Martin as well as Cecil were all included. 216 00:25:38.380 --> 00:25:43.380 The Commission did not include Smith himself, who had fallen ill. 217 00:25:43.380 --> 00:25:50.380 Their backing of Gresham's law was echoed a generation later by the Royal Commission of 1600, 218 00:25:50.380 --> 00:25:57.380 in which Martin served and prepared the principal memoranda. 219 00:25:57.380 --> 00:26:03.220 3. The Economic Liberalism of Sir Edward Cook 220 00:26:03.220 --> 00:26:09.420 It used to be held that the famous anti-monopoly common law decisions of Chief Justice Sir 221 00:26:09.420 --> 00:26:18.420 Edward Cook, 1552-1634, the eminent early 17th century jurist, were an expression of 222 00:26:18.420 --> 00:26:24.660 and the alleged commitment of a rising class of Puritan merchants to economic liberalism 223 00:26:24.660 --> 00:26:31.320 and laissez-faire. A particularly prominent advocate of this thesis is the prolific English 224 00:26:31.320 --> 00:26:38.020 Marxist historian Christopher Hill, who needs this view to fit into the Marxian schema of 225 00:26:38.020 --> 00:26:40.700 the English Civil War. 226 00:26:40.700 --> 00:26:46.580 It turns out, however, that there are many grave flaws in this thesis. Cook himself was 227 00:26:46.580 --> 00:26:52.620 is a moderate Anglican and not particularly concerned with religious issues. He was also 228 00:26:52.620 --> 00:26:58.260 not in any sense a merchant or a spokesman for merchants. He was a country gentleman 229 00:26:58.260 --> 00:27:04.300 from Norfolk, who successively married two heiresses and spent most of his career as 230 00:27:04.300 --> 00:27:11.140 a government lawyer, successively attorney general and chief justice. Also, Cook showed 231 00:27:11.140 --> 00:27:17.140 had no interest whatever in the new juristic concerns of merchants, such new branches of 232 00:27:17.140 --> 00:27:23.940 the law as joint stock ownership, insurance bankruptcy, negotiable instruments and commercial 233 00:27:23.940 --> 00:27:25.700 contracts. 234 00:27:25.700 --> 00:27:31.500 More important, Cook never displayed any sympathy for laissez-faire. 235 00:27:31.500 --> 00:27:36.140 As a member of parliament, Cook supported many mercantilist measures. 236 00:27:36.140 --> 00:27:42.140 Furthermore, he had imbibed from his close associate, William Cecil, Lord Burghley, an 237 00:27:42.140 --> 00:27:47.620 admiration for the elaborate tutor structure of state controls. 238 00:27:47.620 --> 00:27:51.420 His approach to foreign trade was profoundly mercantilist. 239 00:27:51.420 --> 00:27:58.580 Thus, in the 1621 session of Parliament, after he had broken with the Crown, Cook deplored 240 00:27:58.580 --> 00:28:03.340 the economic effects of the alleged scarcity of coin. 241 00:28:03.340 --> 00:28:09.340 He attacked the unfavorable balance of trade, deplored the fact that the East India Company 242 00:28:09.340 --> 00:28:15.320 was allowed to export bullion, and attacked the import trade with France as introducing 243 00:28:15.320 --> 00:28:23.320 into England immoral luxury items such as wines and lace and such like trifles. 244 00:28:23.320 --> 00:28:29.520 Cook also called for outlawing the importation of tobacco from Spain. 245 00:28:29.520 --> 00:28:34.800 Sir Edward Cooke also tried his best to cripple the new practice of exporting unfinished cloth 246 00:28:34.800 --> 00:28:41.180 to the continent and then re-importing the finished cloth. He consistently advocated 247 00:28:41.180 --> 00:28:47.720 prohibiting the importation of foreign cloths as well as the export of unfinished cloth 248 00:28:47.720 --> 00:28:55.280 and also tried to outlaw the export of raw wool to be used by foreign manufacturers. 249 00:28:55.280 --> 00:29:00.880 In general, Sir Edward Cook had no quarrel with government regulation and control of 250 00:29:00.880 --> 00:29:05.000 trade, or with the creation of monopolies. 251 00:29:05.000 --> 00:29:13.100 What he objected to was the King doing the regulating or monopolizing rather than Parliament. 252 00:29:13.100 --> 00:29:19.460 Cook favored the detailed regulation and cartelization of industry, the wage controls 253 00:29:19.460 --> 00:29:27.740 and Compulsory Employment imposed by the Statute of Artificers of 1563. He supported the laws 254 00:29:27.740 --> 00:29:33.620 against forestalling and engrossing, which, under the guise of attacks on monopoly and 255 00:29:33.620 --> 00:29:40.940 high prices, were actually price-raising and cartellizing devices prohibiting speculation 256 00:29:40.940 --> 00:29:48.860 in food products and prohibiting sales outside officially designated local markets. Laws 257 00:29:48.860 --> 00:29:54.700 Those against forestalling were lobbied for by privileged owners of local markets trying 258 00:29:54.700 --> 00:30:00.460 to exclude competitors and to raise their own prices. 259 00:30:00.460 --> 00:30:06.300 Most important, Cook's well-known opposition to government-granted monopolies was merely 260 00:30:06.300 --> 00:30:11.820 an opposition to grants by the king rather than to grants by parliament. 261 00:30:11.820 --> 00:30:32.820 Thus, in the famous Statute of Monopolies, passed in 1623, and drafted largely by Cook, Parliament abolished royal grants of monopoly privilege, but explicitly reserved to itself the right to grant such privileges, which it soon proceeded to do. 262 00:30:32.820 --> 00:30:57.220 The statute also specifically exempted from abolition large categories of royal monopoly, including such industries as printing, gunpowder and saltpeter, the rights of corporations such as London to prevent non-Londoners from engaging in trade within the city limits, or monopoly corporations engaged in foreign trade. 263 00:30:57.220 --> 00:31:04.720 Furthermore, Cooke personally favored the monopoly Russia, Virginia and East India companies. 264 00:31:04.720 --> 00:31:12.720 Cooke's legal economic philosophy might be summed up in a phrase he used in Parliament in 1621, 265 00:31:12.720 --> 00:31:18.720 that no commodity can be banished but by act of Parliament. 266 00:31:18.720 --> 00:31:28.960 4. THE BULLYONIST ATTACK ON FOREIGN EXCHANGE AND ON THE EAST INDIA TRADE 267 00:31:28.960 --> 00:31:34.760 Having survived the assaults of ignorant moralists before the Reformation, the foreign exchange 268 00:31:34.760 --> 00:31:41.160 market was subjected, during the far more secular age of the late 16th century onwards, 269 00:31:41.160 --> 00:31:48.120 to the assaults of regulators on behalf of the nation-state. Writers who have been misnamed 270 00:31:48.120 --> 00:31:54.860 Bullionists adopted the ignorant view that an outflow of gold or silver bullion abroad 271 00:31:54.860 --> 00:32:00.560 was iniquitous, and that this calamity was brought about by the machinations of evil 272 00:32:00.560 --> 00:32:07.000 foreign exchange dealers who deliberately sought gain by depreciating the value of the 273 00:32:07.000 --> 00:32:09.280 nation's currency. 274 00:32:09.280 --> 00:32:15.380 Nowhere was there any insight that the outflow of bullion might have been performing an economic 275 00:32:15.380 --> 00:32:22.060 function, or was the result of underlying supply and demand forces. 276 00:32:22.060 --> 00:32:27.700 Despite their insights into Gresham's law and debasement, Thomas Smith and Gresham would 277 00:32:27.700 --> 00:32:31.300 have to be placed in the bullionist category. 278 00:32:31.300 --> 00:32:35.340 The policy conclusion of the bullionists was all too simple. 279 00:32:35.340 --> 00:32:42.020 The state should outlaw the export of bullion and should severely regulate or even nationalize 280 00:32:42.020 --> 00:32:45.180 the foreign exchange market. 281 00:32:45.180 --> 00:32:52.920 The exchange dealers battled back with sensible and powerful arguments. Thus, in 1576, they 282 00:32:52.920 --> 00:32:59.520 argued in a protest against the state control of exchange business that state intervention 283 00:32:59.520 --> 00:33:06.140 would cause a drying up of commerce. On the low value of the English pound, they replied 284 00:33:06.140 --> 00:33:12.520 that we can say nothing but that our exchanges are made with a mutual consent between merchant 285 00:33:12.520 --> 00:33:19.200 and Merchant, and that abundance of the deliveries or of the takers make the exchange rise and 286 00:33:19.200 --> 00:33:21.520 fall. 287 00:33:21.520 --> 00:33:29.040 One prominent bullionist of the early 17th century was Thomas Mills, circa 1550 to circa 288 00:33:29.040 --> 00:33:31.320 1627. 289 00:33:31.320 --> 00:33:39.880 In a series of tracts from 1601 to 1611, Mills advances the old bullionist position. 290 00:33:39.880 --> 00:33:44.200 In exchange transactions, Mills opined, were evil. 291 00:33:44.200 --> 00:33:49.640 They were institutions with which private merchants and bankers, covetous persons whose 292 00:33:49.640 --> 00:33:55.000 end is private gain, rule in the place of kings. 293 00:33:55.000 --> 00:33:57.760 Something new, however, had been added. 294 00:33:57.760 --> 00:34:04.280 For the powerful East India Company had been chartered in 1600 to monopolize all trade 295 00:34:04.280 --> 00:34:07.400 with the Far East and the Indies. 296 00:34:07.400 --> 00:34:13.540 The East India trade was unique in that Europeans purchased a great deal of valuable muslins 297 00:34:13.540 --> 00:34:21.820 and spices, but the Indies in turn bought very little from Europe except gold and silver. 298 00:34:21.820 --> 00:34:27.740 European nations, therefore, had an unfavorable balance of trade with the Far East, and the 299 00:34:27.740 --> 00:34:34.300 India trade therefore quickly became a favorite target for mercantilist writers. 300 00:34:34.300 --> 00:34:41.940 Not only were goods being imported from the East as against few exports, but specie, bullion, 301 00:34:41.940 --> 00:34:48.360 seemed to flow eternally eastwards. Mills therefore took up the bullionist cudgels by 302 00:34:48.360 --> 00:34:54.740 calling for restriction or prohibition of the Indies trade and attacking the activities 303 00:34:54.740 --> 00:35:01.580 of the East India Company. Mills was also eager to intensify regulations against the 304 00:35:01.580 --> 00:35:07.300 The Merchant Adventurers, The Governmentally Privileged Monopoly for the Export of Woolen 305 00:35:07.300 --> 00:35:14.820 Cloth to the Netherlands. Instead, he craved a return to the old privileged raw wool export 306 00:35:14.820 --> 00:35:21.780 monopoly of the merchant staple. In fact, Mills went so far as to call the old regulated 307 00:35:21.780 --> 00:35:28.700 staple trade the first step towards heaven. It is certainly likely that Mills' eagerness 308 00:35:28.700 --> 00:35:34.100 His choice to regulate and prohibit foreign trade and bullion flows was connected with 309 00:35:34.100 --> 00:35:37.580 his own occupation as customs official. 310 00:35:37.580 --> 00:35:43.220 The more regulation, the more work and power for Thomas Mills. 311 00:35:43.220 --> 00:35:52.260 Stung to the quick, the Secretary of the Merchant-Adventurers, John Wheeler, circa 1553 to 1611, replied 312 00:35:52.260 --> 00:35:58.380 to Mills' charges in his Treatise of Commerce in 1601. 313 00:35:58.380 --> 00:36:04.260 Miller upheld the orderly competition of the 3,500 merchant members joined together in 314 00:36:04.260 --> 00:36:11.980 the privileged monopoly as against the unorganized, dispersed, straggling and promiscuous trade 315 00:36:11.980 --> 00:36:14.380 of free competition. 316 00:36:14.380 --> 00:36:23.700 He also engaged in semantic trickery by asserting that monopoly by definition means only single-seller. 317 00:36:23.700 --> 00:36:29.820 Merchants linked together into a privileged export company were able, after all, to act 318 00:36:29.820 --> 00:36:33.500 virtually as one privileged firm. 319 00:36:33.500 --> 00:36:40.060 In Wheeler's own words, these merchants were united and held together by their good government, 320 00:36:40.060 --> 00:36:46.260 and by their politic and merchant-like orders, backed up, we must not forget, by the armed 321 00:36:46.260 --> 00:36:48.700 might of the State. 322 00:36:48.700 --> 00:36:54.900 Peering at the idea of free competition, Wheeler smugly opined that any merchant who loses 323 00:36:54.900 --> 00:37:00.460 a little liberty will be better off being restrained in that estate than if he were 324 00:37:00.460 --> 00:37:04.300 left to his own greedy appetite. 325 00:37:04.300 --> 00:37:11.700 When John Cale, over a decade later in The Trade's Increase, 1615, protested that the 326 00:37:11.700 --> 00:37:18.080 monopoly of the merchant adventurers would unjustly keep others out forever, his pamphlet 327 00:37:18.080 --> 00:37:24.920 was suppressed by the Archbishop of Canterbury and he earned a stint in jail for his pains. 328 00:37:24.920 --> 00:37:33.320 Later, in the 1650s, Thomas Violet had a Mills-type motive for special pleading in his call for 329 00:37:33.320 --> 00:37:39.740 prohibition of the export of bullion. Violet had been a professional searcher and government 330 00:37:39.740 --> 00:37:46.940 informer seeking out violations of the law prohibiting the export of bullion. Now, in 331 00:37:46.940 --> 00:37:54.100 A True Discovery to the Commons of England, 1651, he sought to reinstate that good old 332 00:37:54.100 --> 00:38:00.420 law, and he accompanied his call for reinstatement of bullion prohibition with a request that 333 00:38:00.420 --> 00:38:07.340 he himself be employed once again to seek out violators. To the embarrassing fact that 334 00:38:07.340 --> 00:38:14.740 he, Violet, had himself been convicted and punished for violating these very provisions, 335 00:38:14.740 --> 00:38:22.000 He countered with a ready quip. An old deersteler is the best keeper of a park. 336 00:38:22.000 --> 00:38:28.580 The most distinguished bullionist of the early seventeenth century was Gerard de Malin, died 337 00:38:28.580 --> 00:38:36.740 1641. Malin was a Fleming born in Antwerp to the prominent Van Mechelen family, probably 338 00:38:36.740 --> 00:38:43.660 changing his name to Malin when he emigrated to London in the 1580s, perhaps in response 339 00:38:43.660 --> 00:38:49.500 to the Spanish persecution of Protestants in the Netherlands in that era. 340 00:38:49.500 --> 00:38:54.760 Malin was listed as an alien in the records of that period and as a member of the Dutch 341 00:38:54.760 --> 00:38:56.840 Protestant Church. 342 00:38:56.840 --> 00:39:04.820 He is also depicted in the records as a merchant stranger, that is, as a merchant from abroad. 343 00:39:04.820 --> 00:39:11.100 Malin turned out to be a speculator and an unscrupulous, even crooked businessman, embezzling 344 00:39:11.100 --> 00:39:16.900 and Money from his Dutch business associates. He was often on the verge of bankruptcy, and 345 00:39:16.900 --> 00:39:23.820 his partner and father-in-law, the Antwerp-born Willem Vermeiden, died in debtor's prison. 346 00:39:23.820 --> 00:39:30.700 Malin, nonetheless, was a linguist and highly educated scholar, deeply interested in literature, 347 00:39:30.700 --> 00:39:37.120 the Latin language, mathematics and classical Greek philosophy. He was also well versed 348 00:39:37.120 --> 00:39:39.680 in Scholastic Doctrine. 349 00:39:39.680 --> 00:39:46.000 A member of a royal commission of 1600 to study economic problems, Moline began his 350 00:39:46.000 --> 00:39:53.960 bullionist writings in 1601, in particular, a treatise on the canker of England's Commonwealth, 351 00:39:53.960 --> 00:39:58.580 and published many tracts on into the 1620s. 352 00:39:58.580 --> 00:40:04.500 Like Gresham and the 16th century bullionists, Moline fulminated against the foreign exchange 353 00:40:04.500 --> 00:40:10.180 Exchange Dealers, asserting superficially and incorrectly that exchange rates were set 354 00:40:10.180 --> 00:40:14.860 by willful conspiracies of exchange dealers. 355 00:40:14.860 --> 00:40:18.500 Malin was more rigorous than previous bullionists. 356 00:40:18.500 --> 00:40:24.820 Instead of institutions to control exchange dealings, he advocated a government bank, 357 00:40:24.820 --> 00:40:30.820 which would enjoy a monopoly on all foreign exchange transactions. 358 00:40:30.820 --> 00:40:36.780 Intertwined with his star-crossed business career was Moline's service in government, 359 00:40:36.780 --> 00:40:42.060 becoming at various times a top bureaucrat at the royal mint and a financial adviser 360 00:40:42.060 --> 00:40:49.940 to the crown. Moline also had a personal stake in the revival of rigorous exchange control, 361 00:40:49.940 --> 00:40:56.700 for he himself eagerly anticipated filling the resurrected post of royal exchanger. 362 00:40:56.700 --> 00:41:03.620 To Malin, there was a just exchange rate at the legal par, and the government's task was 363 00:41:03.620 --> 00:41:06.060 to enforce it. 364 00:41:06.060 --> 00:41:14.100 In an earlier tract in 1601, St. George for England allegorically described, Malin, harking 365 00:41:14.100 --> 00:41:21.340 back to an old theme, denounced foreign exchange dealings as usury, and expressed the hope 366 00:41:21.340 --> 00:41:27.820 that by tight control this usury could die a gradual death. 367 00:41:27.820 --> 00:41:34.140 To advocate rigorous exchange control, Moline, of course, had to deny that the foreign exchange 368 00:41:34.140 --> 00:41:41.580 market could in any way equilibrate or regulate itself, or that exchange rates were set by 369 00:41:41.580 --> 00:41:44.740 supply and demand forces. 370 00:41:44.740 --> 00:41:50.660 To Moline goes the dubious credit for the emergence of the spurious and pernicious terms 371 00:41:50.660 --> 00:41:53.260 Terms of Trade Fallacy 372 00:41:53.260 --> 00:41:59.900 This doctrine argues that a balance of trade deficit and export of bullion will not regulate 373 00:41:59.900 --> 00:42:06.580 itself, for higher foreign exchange rates and cheaper domestic currency will not, as 374 00:42:06.580 --> 00:42:11.540 one might believe, spur exports and retard imports. 375 00:42:11.540 --> 00:42:18.980 Instead, the unfavorable terms of trade of, say, the pound in terms of foreign currency 376 00:42:18.980 --> 00:42:27.460 will lead to even more imports and fewer exports, thus driving more bullion out of the country. 377 00:42:27.460 --> 00:42:33.580 Even if a cheaper pound will bring in less foreign exchange revenue, a highly unlikely 378 00:42:33.580 --> 00:42:40.900 event seen more often in armchair speculation than in practice, one wonders where the English 379 00:42:40.900 --> 00:42:47.460 would continue to find either foreign currency or specie to pay for the higher-priced foreign 380 00:42:47.460 --> 00:42:55.020 and Products. Surely the specie would eventually run out, and for that reason alone, some market 381 00:42:55.020 --> 00:43:01.500 mechanism would have to come into play to restrict foreign imports or the export of 382 00:43:01.500 --> 00:43:08.740 specie. Thus, Moline managed to take the absurd position that whatever happens in the foreign 383 00:43:08.740 --> 00:43:15.680 exchange market, specie will keep flowing out of England. Flowing out if the pound should 384 00:43:15.680 --> 00:43:22.920 should be expensive since this will restrict exports and encourage imports, a correct insight, 385 00:43:22.920 --> 00:43:30.120 but also flowing out if the reverse happens because of the terms of trade argument. 386 00:43:30.120 --> 00:43:35.560 The specie outflow was therefore blamed on the metaphysical malevolence of the exchange 387 00:43:35.560 --> 00:43:42.280 dealers and it could only be cured by severe government control, including prohibition 388 00:43:42.280 --> 00:43:45.360 of the export of bullion. 389 00:43:45.360 --> 00:43:51.840 and also advocated control of the exchange rate at the legal mint par, which would mean 390 00:43:51.840 --> 00:44:00.120 in the context of the time a substantial appreciation or higher value of the pound sterling. 391 00:44:00.120 --> 00:44:06.880 Yet continuing in the faulty terms of trade mode, Moline saw no problem of specie outflow 392 00:44:06.880 --> 00:44:10.840 from such a marked appreciation of the currency. 393 00:44:10.840 --> 00:44:17.560 In fact, he hailed the higher domestic prices that would supposedly draw more specie into 394 00:44:17.560 --> 00:44:19.560 the country. 395 00:44:19.560 --> 00:44:25.920 In a similar bizarre twist, Malin, correctly noting that the inflationary influx of specie 396 00:44:25.920 --> 00:44:32.560 from the New World had hit the other countries of Western Europe before coming into England, 397 00:44:32.560 --> 00:44:37.040 yet concluded this was a terrible event for England. 398 00:44:37.040 --> 00:44:43.880 For instead of realizing that lower prices made English goods more competitive abroad, 399 00:44:43.880 --> 00:44:50.400 Moline concluded that these unfavorable terms of trade put England into a poor competitive 400 00:44:50.400 --> 00:44:56.060 position and led to a permanent outflow of specie. 401 00:44:56.060 --> 00:45:01.880 In view of his record in propounding tissues of egregious fallacies, it is curious that 402 00:45:01.880 --> 00:45:07.920 But Malin has had a good press among historians of economic thought, even among those who 403 00:45:07.920 --> 00:45:10.960 disagree with his basic outlook. 404 00:45:10.960 --> 00:45:16.680 They seem to laud him for recognizing that prices vary directly with the quantity of 405 00:45:16.680 --> 00:45:23.440 money, so that a country losing gold will find its prices falling, whereas a country 406 00:45:23.440 --> 00:45:27.980 accumulating gold will see its prices rise. 407 00:45:27.980 --> 00:45:34.260 But Malin, eager to indict the workings of international prices and exchanges, rather 408 00:45:34.260 --> 00:45:41.140 than explain how they work, was scarcely willing to develop the full implication of his occasional 409 00:45:41.140 --> 00:45:42.140 insights. 410 00:45:42.140 --> 00:45:48.260 Furthermore, considering that this quantity theory had long been known, and developed 411 00:45:48.260 --> 00:45:55.480 and integrated for centuries, by the Spanish scholastics, Baudin and others, Malin's achievements 412 00:45:55.480 --> 00:45:58.760 seem dubious at best. 413 00:45:58.760 --> 00:46:06.720 5. The East India Apologists Strike Back 414 00:46:06.720 --> 00:46:12.880 England suffered a severe recession in the early 1620s and Gerard Moline returned to 415 00:46:12.880 --> 00:46:18.920 the attack, publishing a series of tracts repeating his well-known views and calling 416 00:46:18.920 --> 00:46:25.680 for Stringent Measures to Curb the Merchant-Adventurers and especially the East India Company, as 417 00:46:25.680 --> 00:46:32.120 well as any other traders who dared to export bullion from the Kingdom. His influence was 418 00:46:32.120 --> 00:46:39.840 bolstered by having been a member of the Royal Commission on the Exchanges in 1621. 419 00:46:39.840 --> 00:46:46.160 Taking up the torch in defense of the Merchant-Adventurers was one of its members. Edward Misseldon 420 00:46:46.160 --> 00:46:56.320 died 1654. In a tract entitled Free Trade or the Means to Make Trade Flourish, 1622, 421 00:46:56.320 --> 00:47:02.320 following service on a Privy Council Committee of Inquiry on the Depression of Trade, Misseldon 422 00:47:02.320 --> 00:47:09.040 advanced somewhat beyond Moline's analysis. He acknowledged that bullion was exported 423 00:47:09.040 --> 00:47:15.400 from England, not due to the machinations of wicked exchange dealers, but from imports 424 00:47:15.400 --> 00:47:22.800 Exceeding Exports, from what would later be called an unfavorable balance of trade. 425 00:47:22.800 --> 00:47:29.240 Miseldon then was not concerned with regulating the exchanges, but he did want the state to 426 00:47:29.240 --> 00:47:37.120 force a favorable balance into being by subsidizing exports, restricting or prohibiting imports 427 00:47:37.120 --> 00:47:40.920 and cracking down on the export of bullion. 428 00:47:40.920 --> 00:47:46.280 In short, he called for the usual set of mercantilist measures. 429 00:47:46.280 --> 00:47:51.020 Misseldon was largely concerned to defend his merchant adventurers. 430 00:47:51.020 --> 00:47:57.480 Like Wheeler, a generation earlier, he maintained that his company was not at all a monopolist, 431 00:47:57.480 --> 00:48:02.040 but simply the organization of orderly and structured competition. 432 00:48:02.040 --> 00:48:09.120 Besides, wrote Misseldon, his merchant adventurers exported cloth to Europe and therefore fitted 433 00:48:09.120 --> 00:48:11.880 in with the interests of England. 434 00:48:11.880 --> 00:48:18.440 The truly evil firm was the privileged East India Company, which had a decidedly unfavorable 435 00:48:18.440 --> 00:48:26.800 balance of trade of its own with the Indies, and which continually exported bullion abroad. 436 00:48:26.800 --> 00:48:32.300 Misseldon now entered into a series of angry pamphlet debates with Moline, who replied 437 00:48:32.300 --> 00:48:36.680 in the same year with the maintenance of free trade. 438 00:48:36.680 --> 00:48:41.520 Neither party, of course, had the slightest interest in what would now be called free 439 00:48:41.520 --> 00:48:43.340 trade. 440 00:48:43.340 --> 00:48:50.520 In 1623, Misselden accepted a post as Deputy Governor of the Merchant Adventurers in Holland, 441 00:48:50.520 --> 00:48:56.280 perhaps as a reward for his stirring defense of the company and the public prince. 442 00:48:56.280 --> 00:49:02.640 But in addition, the East India Company, seeing in Misselden an effective champion and a troublesome 443 00:49:02.640 --> 00:49:09.560 and Faux, made him a member, and one of their commissioners in Holland during the same year. 444 00:49:09.560 --> 00:49:16.520 As a result, when his second pamphlet, The Circle of Commerce, was published in 1623, 445 00:49:16.520 --> 00:49:21.680 Misseldon displayed a miraculous change of heart, for the East India Company had been 446 00:49:21.680 --> 00:49:25.640 suddenly transformed from villain to hero. 447 00:49:25.640 --> 00:49:31.800 Misseldon, quite sensibly, now pointed out that while the East India Company did export 448 00:49:31.800 --> 00:49:47.980 The outstanding defender of the East India Company in the early 17th century was one 449 00:49:47.980 --> 00:49:55.140 of its prominent directors, Sir Thomas Munn, 1571-1641. 450 00:49:55.140 --> 00:50:00.480 Munn was early engaged as a merchant in the Mediterranean trade, especially with Italy 451 00:50:00.480 --> 00:50:07.880 and the Middle East. In 1615, Munn was elected a director of the East India Company, and 452 00:50:07.880 --> 00:50:14.620 after that he spent his life in actively promoting its interests. He entered the lists on behalf 453 00:50:14.620 --> 00:50:23.480 of the Company in 1621 with his tract, A Discourse of Trade from England unto the East Indies. 454 00:50:23.480 --> 00:50:28.360 The following year he and Misseldon were both members of the Privy Council Committee of 455 00:50:28.360 --> 00:50:30.120 of Inquiry. 456 00:50:30.120 --> 00:50:36.520 Munn's second and major work, England's Treasure by Foreign Trade or The Balance of Foreign 457 00:50:36.520 --> 00:50:42.620 Trade is the Rule of Our Treasure, taking a broader view of the economy, was written 458 00:50:42.620 --> 00:50:50.640 about 1630 and published posthumously by Munn's son John in 1664. 459 00:50:50.640 --> 00:50:55.920 When published it carried the stamp of approval of Henry Bennet, Secretary of State in the 460 00:50:55.920 --> 00:51:01.840 The Restoration Government, and also an architect of England's mercantilist policy against The 461 00:51:01.840 --> 00:51:03.360 Dutch. 462 00:51:03.360 --> 00:51:09.080 The pamphlet was highly influential and was reprinted in several editions, the last being 463 00:51:09.080 --> 00:51:12.520 published in 1986. 464 00:51:12.520 --> 00:51:17.680 Thomas Munn set forth what would become the standard mercantilist line. 465 00:51:17.680 --> 00:51:23.520 He pointed out that there was nothing particularly evil about the East India Company trade. 466 00:51:23.520 --> 00:51:31.320 The company imported valuable drugs, spices, dyes and cloth from the Indies, and it re-exported 467 00:51:31.320 --> 00:51:37.560 most of these products to other countries. Overall, in fact, the company had actually 468 00:51:37.560 --> 00:51:44.800 imported more specie than it had exported. In any case, the focus of English policy should 469 00:51:44.800 --> 00:51:51.680 not be on the specific trade of one company or with one country, but on the overall or 470 00:51:51.680 --> 00:51:58.260 for General Balance of Trade. There it must make sure that the country exports more than 471 00:51:58.260 --> 00:52:05.920 it purchases from abroad, thereby also increasing the wealth of the nation. As Munn succinctly 472 00:52:05.920 --> 00:52:11.800 put it at the beginning of England's treasure, the ordinary means to increase our wealth 473 00:52:11.800 --> 00:52:19.160 and treasure is by foreign trade, wherein we must ever observe this rule, to sell more 474 00:52:19.160 --> 00:52:24.520 were to strangers yearly than we consume of theirs in value. 475 00:52:24.520 --> 00:52:31.440 To that end, Munn advocated sumptuary laws banning consumption of imported goods, protective 476 00:52:31.440 --> 00:52:37.000 tariffs and subsidies and directives to consume domestic manufacturers. 477 00:52:37.000 --> 00:52:43.560 Munn, on the other hand, opposed any direct restrictions on the export of bullion, such 478 00:52:43.560 --> 00:52:47.720 as conducted by the East India Company. 479 00:52:47.720 --> 00:52:53.400 Men was wise enough in combating the fallacies of Moline and Misseldon. 480 00:52:53.400 --> 00:52:59.320 Against Moline he pointed out that the movements of the exchange rate reflect not the manipulations 481 00:52:59.320 --> 00:53:04.920 of bankers and dealers, but the supply and demand of currencies. 482 00:53:04.920 --> 00:53:12.080 That which causes an under or overvaluing of monies by exchange is the plenty or scarcity 483 00:53:12.080 --> 00:53:14.280 thereof. 484 00:53:14.280 --> 00:53:19.080 Misselden had advocated debasement of the currency as a means of increasing the price 485 00:53:19.080 --> 00:53:20.480 level. 486 00:53:20.480 --> 00:53:27.000 Such increase, Misselden had argued in pre-Keynesian fashion, will be abundantly recompensed unto 487 00:53:27.000 --> 00:53:33.520 all in the plenty of money and quickening of trade in every man's hand. 488 00:53:33.520 --> 00:53:38.880 As a leader of the merchant adventurers, Misselden was undoubtedly highly interested in the spur 489 00:53:38.880 --> 00:53:42.480 that debasement would give to exports. 490 00:53:42.480 --> 00:53:49.440 But Munn denounced debasement, first as bringing confusion by changing the measure of value, 491 00:53:49.440 --> 00:53:53.440 and second by increasing prices all around. 492 00:53:53.440 --> 00:54:00.440 If the common measure be changed, our lands, leases, wares both foreign and domestic must 493 00:54:00.440 --> 00:54:03.240 alter in proportion. 494 00:54:03.240 --> 00:54:08.760 Neither did Munn bend his energies towards an export surplus because he was enamored 495 00:54:08.760 --> 00:54:13.620 Part of the idea of accumulating specie in England. 496 00:54:13.620 --> 00:54:18.560 Adhering to the quantity theory of money, Munn realized that such accumulation would 497 00:54:18.560 --> 00:54:26.120 simply drive prices up, which would not only be to no avail, but would discourage exports. 498 00:54:26.120 --> 00:54:33.160 Munn wanted to accumulate specie not for its own sake, not to drive up prices at home, 499 00:54:33.160 --> 00:54:38.760 to drive trade, to increase foreign trade still further. 500 00:54:38.760 --> 00:54:45.600 An expansion of foreign trade per se seems to be Thomas Munn's main objective, and this 501 00:54:45.600 --> 00:54:51.960 overriding goal is not very puzzling from a leader of the great East India Company. 502 00:54:51.960 --> 00:54:58.960 Furthermore, foreign trade, for Thomas Munn fully as much as for Montaigne, increased 503 00:54:58.960 --> 00:55:06.600 the National Power as well as the power of English traders at the expense of other nations. 504 00:55:06.600 --> 00:55:12.500 England and her inhabitants only wax great at the expense of foreigners. 505 00:55:12.500 --> 00:55:19.980 As Munn put it succinctly, in trade, one man's necessity becomes another man's opportunity, 506 00:55:19.980 --> 00:55:23.680 and one man's loss is another man's gain. 507 00:55:23.680 --> 00:55:30.040 In an odd prefigurement of the Keynesian view that national debt held at home is immaterial 508 00:55:30.040 --> 00:55:36.760 because we only owe it to ourselves, Munn and his fellow mercantilists considered internal 509 00:55:36.760 --> 00:55:43.840 trade unimportant because there we only transfer wealth among ourselves. 510 00:55:43.840 --> 00:55:50.320 The export balance in foreign trade then becomes of crucial importance, so that the export 511 00:55:50.320 --> 00:55:56.960 Merchant becomes by far the most productive occupation in the economy. 512 00:55:56.960 --> 00:56:04.400 That Mun was far from being a primitive inflationist is seen by the scorn he properly and contemptuously 513 00:56:04.400 --> 00:56:11.280 heaped upon the common plea and favorite mercantilist complaint that business and the economy were 514 00:56:11.280 --> 00:56:15.000 suffering from a scarcity of money. 515 00:56:15.000 --> 00:56:21.080 The conclusion invariably drawn from such analysis is that the government was duty bound to do 516 00:56:21.080 --> 00:56:24.760 something quickly to augment the money stock. 517 00:56:24.760 --> 00:56:32.080 Munn wittily reposted in his Discourse of Trade, Concerning the evil or want of silver, 518 00:56:32.080 --> 00:56:38.400 I think it hath been and is a general disease of all nations, and so will continue until 519 00:56:38.400 --> 00:56:40.320 the end of the world. 520 00:56:40.320 --> 00:56:44.400 For poor and rich complain they never have enough. 521 00:56:44.400 --> 00:56:50.720 But it seems that the malady is grown mortal here with us, and therefore it cries out for 522 00:56:50.720 --> 00:56:51.720 remedy. 523 00:56:51.720 --> 00:57:00.160 Well, I hope it is but imagination maketh us sick when all our parts be sound and strong. 524 00:57:00.160 --> 00:57:05.560 Thomas Munn may have been the most prominent and sophisticated of the early seventeenth-century 525 00:57:05.560 --> 00:57:07.520 mercantilists in England. 526 00:57:07.520 --> 00:57:14.100 Yet, as Schumpeter points out, these were all pamphleteers, not particularly interested 527 00:57:14.100 --> 00:57:21.620 and Analysis of the Economy, Special Pleaders rather than Aspiring Scientists. 528 00:57:21.620 --> 00:57:27.740 Perhaps the best economic analyst of all in this period was Rice Vaughan, whose A Discourse 529 00:57:27.740 --> 00:57:34.620 of Coin and Coinage, though published in 1675, was written in the mid-1620s. 530 00:57:34.620 --> 00:57:40.780 Vaughan, in the first place, held that the disappearance of silver during this period 531 00:57:40.780 --> 00:57:47.620 Gold was the effect of what we now call Gresham's Law, the bimetallic undervaluation by the 532 00:57:47.620 --> 00:57:54.560 English government of silver as against gold. Since silver, rather than gold, was the money 533 00:57:54.560 --> 00:58:01.740 for most transactions, this undervaluation had a certain deflationary effect. In the 534 00:58:01.740 --> 00:58:07.660 course of his tract, von pointed out that an export surplus will not have the desired 535 00:58:07.660 --> 00:58:34.060 Von was also astute enough to recognize that prices do not all move together when the value 536 00:58:34.060 --> 00:58:44.060 The value of money changes. For example, that domestic prices usually lag behind the debasement or devaluation of money standards. 537 00:58:44.060 --> 00:58:58.060 Most importantly, Rice Vaughan remarkably harked back to the scholastic, continental, subjective utility and scarcity tradition in the determination of the values and prices of goods. 538 00:58:58.060 --> 00:59:08.060 Von concisely pointed out that the value of a good is dependent on its subjective utility, and hence demand by consumers. 539 00:59:08.060 --> 00:59:18.060 Use and delight, or the opinion of them, are the true causes why all things have a value and price set upon them. 540 00:59:18.060 --> 00:59:27.060 While the actual price is determined by the interaction of this subjective utility with the relative scarcity of the good, 541 00:59:27.060 --> 00:59:34.060 The proportion of that value and price is wholly governed by rarity and abundance.