Mercantilism – An Appraisal of a Battle Against Medieval Thinking and Behaviour

Tarun Pratap Yadav North-East Frontier Technical University, Arunachal Pradesh, INDIA

Abstract Feudalism that emerged after the decline of Roman Empire put a check over the aggressions of savage tribes. But owing to mutual feudal wars, the process of commercial rebirth could not be accelerated. Circumstances changed gradually by the eleventh century and the European economy did show signs of change. Agriculture and trade extended and Europe established commercial links with the east. Despite all this, the medieval trade and commerce was very limited.. The economic concept could not develop freely. Religion greatly influenced the life of the people. By and by, conditions changed during the post-medieval and the beginning of modern age.

KEYWWORDS: Roman Empire, Modern Age, Feudal Wars, Mercantilism Introduction control came in the hands of a national ruler During the transition period between the instead of classes2. Mercantilism comprised medieval and modern age, there were so many of promoting the import and frustrating the causes which constructed Europe as a family export of precious metals, fixing higher rates of centralized states. Certain circumstances of export goods in contrast to import goods, attached a new prestige to property and now securing security of national industries by man could acquire it without a feeling of levying protective duties on the imports and shame and state also found the secret of pow- promoting national savings3. er in property. These conditions gave birth to In seventeenth century, the people of mercantilism and developed it. Mercantilism Western Europe doubted that the theory that which prevailed for 250 years (1500 A.D -1750 agriculture is an essential industry for a coun- A.D) in European countries was a great revo- try. Contrary to this, it was stressed that a lution in the field of economic ideology dur- nation should be self-dependent and accumu- ing the times when medieval feudalism and lates money through profitably-run native in- episcopalism were dominant. dustries and maximum export of indigenous Mercantilism signifies the economic theory goods4. It follows from this theory that the which was prevalent in Europe, particularly scope of agriculture has a limit beyond which in England, France and Germany during the production cannot be raised, while industries first six decades of sixteenth, seventeenth and carry limitless possibilities. The fundamental eighteenth centuries1. It denotes the govern- principle of commercialization or vocational- ment regulation and control of economic af- ism is that the wealth is garnered in form fairs, particularly in the field of business and of precious metals. As the fixed quantity of industry. It is not true that nobody had ever 2. Cole, G.D.H., British Trade & Industry, The exercised monopoly over trade and commerce— Macmillan and Company, New York, 1932, pp. 287- it had been so for centuries and was practised 288. by different sections of the city connected with 3. Haney, L.H., History of Economic Thought, Penguin, business and craft but in sixteenth century the New York, 1911, pp. 421. 4. Magnusson, L., Mercantilism: The Shaping of an 1. Hayes, J.H., Modern Europe to 1870, The Macmillan Economic Language, Taylor & Francis, London, Company, New York, 1959, pp. 67-68. 2002, pp. 95. 48 Mercantilism – An Appraisal of a Battle Against Medieval Thinking and Behaviour gold and silver is always in circulation, it is with non-European countries required a large beneficial for every country to keep a plen- stock 39 of gold and silver, and (iii) gold and tiful stock of gold and silver. It is deduced silver rendered more security to them9. from this reasoning that a nation thrives on Ceaseless wars increased the uncertainties wealth of foreigners and for that an aggres- of commercial activities and maintenance of sion was treated as a constructive and legal favourable balance of bullion was felt neces- step to some extent5. It is because the direct sary. It is true that the bills of exchange were victory brings in profits in plenty in a country widely used to conduct inter-regional busi- at the cost of seizure of enemy’s property and ness transactions in the end of 17th century. valuables. Hence, from this point of view, com- Amsterdam emerged as an important clear- mercialism was defensive, but it could have ance house for multinational European trade. become aggressive because it laid emphasis But despite all these factors, commercial ob- in competitive elements in the economic rela- stacles arising from wars might diminish the tions of states6. value of letters of credit for people and they The entrepreneurs comprising of profi- might be inclined to hold up bullion. Further, cient businessmen, administrators and kings businesses were not developed in real sense as well as princes having interest in business and depended more on import and reexport preferred foreign trade and commerce for the and less on variety. It can be clarified from the purpose of attaining dominance over national example that during the last twenty five years economy. The mercantilists laid too much im- of sixteenth century the plantation colonies of portance on securing gold and silver in plen- serfs situated in West Indies, North America ty7. Consequently, mercantilism assumed the and Brazil started export of sugar, tobacco, coff- shape of a project earmarked for collecting pre- fee and cotton to Europe and from there those cious metals. For this reason, some writers ap- things were re-exported to other distant parts plied the term ‘bullionism’ for ‘mercantilism’8. of Europe. Thus, world business had its own The concept of bullionism is analyzed here limitations at that time and suffered from the in order to clarify the aims of mercantilism. problem of industrial backwardness. Various For e.g. the fast growing overseas trade as business establishments still depended upon well as inter-regional coastal business, raised archaic domestic technology for the production the demand of gold and silver. The countries of exportable indigenous handicraft articles. which lacked exportable goods were in great Under such critical circumstances, bullion was need of precious metals which can be seen the only most suitable means to overcome when England had to invest excessive gold these shortcomings10. and silver in Baltic region and India while dealing with Asia because in the case of lat- Mercantilism v. Bullionism ter, the woolen goods produced by England Both concepts gave too much emphasis were not in great demand due to hot climate. on money and wanted to make their country Then again, the Asian traders preferred gold prosperous by increasing wealth. Among diff- and silver in exchange for their goods for ob- ferent types of wealth, money is most accept- vious reasons, such as (i) they did not need able form because anything can be purchased European exportable goods, (ii) the business with it and it is lasting also. Hence, national policy was aimed at amassing money. First, 5. Ibid. Spain endeavoured to become prosperous by 6. Ibid. 9. Roll, E., A History of Economic Thought, London, 7. Haney, L.H., opcit, pp. 245. 1953, pp. 61-62. 8. Cunnigham, W., Growth of English Industries and 10. Bacon, F., History of the Reign of King Henry, the Commerce, Cambridge University Press, London, Seventh, Cambridge University Press, London, 1882, pp. 76. 1622, pp. 98-99. 49 Mercantilism – An Appraisal of a Battle Against Medieval Thinking and Behaviour accumulating gold and silver and then other The idea of establishing a powerful state countries followed him. Despite the aforesaid became indispensable in order to eliminate similarity there is a great difference between those medieval traditions. Business, industry, two concepts. The latter envisages strict con- salary and consumption of things necessitated trol over the exports of gold and silver, which state regulations in the country in order to was considered as a prerequisite for a prosper- get success in the field of trade and to imple- ous nation. Following this, England and other ment the idea of a favourable balance of trade. countries banned the export of gold and silver The idea of excessive exports necessitated the and stopped import of luxuries under the force establishment of colonies in foreign countries. of law. A Royal Exchange was established to These tasks could be performed by a powerful look after the business of money exchange11. state. Thus it will not be wrong to say that But at the same time Bullionism could not mercantilism is a concept as well as policy of survive for a long time because of an increase state integration in the economic field13. in international trade and commerce. Owing Modern capitalism was also founded in to tremendous growth in business, state failed this period. Foreign trade was carried on a to control it12. The bullionistic thinkers like large scale for the first time under mercantil- Miseldon and Mann maintained that if they ism14. It will be proper to say that history of manage more export than import, there would international trade originates with mercan- be a great flow of money in the country even tilism. Trade combined with other factors to if some gold and silver were spent to increase give birth to colonial system. An important the foreign trade. Mann held that on the offshoot of mercantilism or commercial revo- strength of progress made by banks, foreign lution was the origin of industrial revolution trade could be run successfully without hav- which started in first leg of eighteenth century ing enough stock of gold and silver. We can in Europe. A zeal for maximizing production develop our business not by amassing gold but actuated European artisans to develop and by raising demand for our goods in foreign apply new techniques of production. Because countries. Keeping excessive store of gold in a of commercial revolution, the population and country is wrong because it causes an increase strength of bourgeoisie increased immense- in prices of goods and hence loss to the coun- ly. They grabbed the golden opportunity of try. He further held that only those things becoming rich by means of trade and com- should be produced and manufactured in the merce15. The reformation also strengthened country which is available in a little quantity the power of middle class. The middle class in foreign countries. In a nutshell, it can be purchased a major portion of Church-estates stated that whereas the bullionists supported and consolidated their status. It is not neces- a strict control over the export of precious sary to remind that the spirit of self-esteem metals in order to increase the quantity of and identity manifested itself in French revo- gold and silver in a country, the mercantilists lution. Hence the importance of mercantilism encouraged an increase in wealth by means cannot be denied and neglected. It was the of foreign trade and business, so they were ban on imports which supported development against banning the export of gold and silver. of industries in England and helped her in They craved for more export and less import reaping enormous profits. It was the impact so that they might hoard gold and silver and add to prosperity of the nation. 13. Keynes, J.M., The General Theory of Employment, Interest and Money, Palgrave Macmillan, London, 1936, pp. 234-235. 14. Grey, A., The Development of Economic Doctrines: 11. Mun, T., England’s Treasure by Foreign Trade, An Introductory Survey, Longmans, Green, and Co., Macmillan & Co., New York, 1630, pp. 206-207. New York, 1934, pp. 123-124. 12. Ibid. 15. Ibid. 50 Mercantilism – An Appraisal of a Battle Against Medieval Thinking and Behaviour of mercantilism the great stated like England, great importance to a particular country at France and Germany came into prominence the cost of causing loss and disgrace to other and Europe got extended. As a result of mer- countries. In the age of mercantilism foreign cantilist policies, state matters were given trade became the symbol of enmity in place priority over the interests of the individual, of international fraternity and hence did not class and religion. Scientific development of spare any room for the welfare of people17. economies became possible on the strength There also existed a powerful and rich coun- of significant economic factors analyzed by try but majority of people suffered from priva- the mercantilists in their Articles16. Hence it tions. Agriculture was utterly neglected and proved out to be a boon for two centuries and more emphasis was given on gold and silver. provided a platform for a new economic theory, Because of undue interference of state in eco- destined to rule mankind in the days to come. nomic field, moral and ethical values were dis- But all and all mercantilism was based on the carded and even trade and commerce did not principle of narrow nationalism and envisages thrive properly.

16. Ibid. 17. Smith, A., An Enquiry into the Nature and Causes of Wealth of Nations, W. Strahan and T. Cadell, London, 1776, pp. 167-168.

ABOUT THE AUTHOR Dr. Tarun Pratap Yadav is HoI, Dept. of History, North-East Frontier Technical University. He is a reliable and dependable person and often seeks new responsibilities within a wide range of employment areas. He, not only has more than 11 years of teaching experience in Vinayak Mission University, Meerut College, Meerut, Amity University etc but also a member of various national and international organizations. In addition to Research Guide, he is a regular contributor to International Journal of Historical Studies and an enthusiastic Real Madrid fan. He recently collaborated a manuscript titled ‘Vedic Rituals: An Anamoly’ with Dr. Vighnesh Kumar (HoI, Dept. of History, Meerut College, Meerut) in which he highlighted the positive impact of Yajnas and Rituals on environment and its socio-economic relevance.

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