INTERNATIONAL TRADE. 709 INTERNATIONAL TRADE. Largely to these considerations, as well as to the more showy character of foreign trade, its spectacular and romantic character, does this trade owe its prominence in economic discussion and in the attention of governments. Moreover, as such, trade came into early notice as a means of raising revenue for the State, it thus became a matter of public concern. It cannot Ijo claimed that the tontradictorv and vacillating practice of mediieval rulers de- veloped any well-defined thecuy of for^'ign trade. It is not until after the discovery of America and the commercial awakening that followed the influx of the American silver that the begin- nings of a theory of trade appear in the writ- ings of pamphleteers who have since been desig- nated as the mercantile school. Thomas Mun, in his work upon Enr/lnnd's Treasure hy Foreign Trade (MVA) . states in a few words the wisdom of his time. "The ordinary means to encrease our wealth and treasure is by Forraiffii Traile, wherein wee must ever observe this rule: to sell more to strangers yearly than wee consume of theirs in value. By such a course the balance must be paid in coin, and the country Enriched, while a contrary course would deplete its stock of the precious metals." The confusion of wealth and money is obvious, and characterizes the whole thought of the period. As we shall see, it led to some extraordinary governmental measures to promote the flow of gold and silver into the na- tion and to check its outflow. It distorted the economic policy of the nations for generations, and threw the entire public interest in foreign trade upon its capacity to attract specie. It carried with it the corollary that importations should be limited as far as possible, and caused vexatious restrictions, high import duties, and frequent prohibitions of the importation of for- eign commodities. Thus, in 1074 the total pro- hibitio.n of the importation of French brandy was ailvwatcd in England, not only to encourage the consumption of domestic ale and beer, but also because it was considered undesirable to in- crease the consumption of French goods. Writ- ings upon trade subjects are full of fears lest any nation should sell more to England than it bought from her. and the Government was re- peatedly urged to take measures against any nation which so offended against public policy. All writers did not. however, share this short- sighted view, and ilun stands out from his con- temporaries by his perception that what is ap- parently lost by trade with one nation may be the means of gain, since the goods imported from it may be disposed of at great profit to some other nation. He is none the less quite convinced that the aggregate of exports and imports should show a decided balance in favor of the former. Another characteristic of the time is the pref- erence given to trade in distant parts, as when Mun says: ".Xlso wee ought to esteem and cher- ish those trades which wee have in remote or far coimtreys, for besides the encrease of shipping and mariners thereby, the wares also sent thither and received from thence are far more profitable unto the kingdom than by our trades near at hand." The gieat profits secured by those States which came to be depots of the Indian trade doubtless led Mun to take this view. To these writers the entire advantage of for- eign trade lay in exportation. Importation was at best a necessarv evil. So far as individuals were concerned, it is true, the volume of business of both kinds was the measure of profitableness, and traders were prone to encourage all com- merce ; but from the standpoint of tiie kingdom as a whole that trade was regarded as profitable which resulted in an importation of specie. The Physiocrats (q.v.) riddled the pretensions of these writers, and held up this policy to deri- sion. Adam Smith demonstrateil still more con- clusivelj- the weakness of their doctrine. He did not feel it necessary to insist that money and wealth were not synonymous terms, that an in- crease in the former was not the sole goal of statecraft. In his day England's stock of the precious metals was adequate to its needs, and was therefore not a subject of peculiar .solici- tude for the statesman, as it had been in earlier times. Adam Smith states in the following terms the advantages to different countries of international trade: "It carries out that sur- plus part of the produce of their land and labor for which there is no demand among them, and brings back in return for it something else for which there is a demand. It gives a value to their superfluities, by exchanging them for some- thing else which may satisfy a part of their wants and increase their enjoyments. By means of it the narrowness of the home market does not hinder the division of labor in any particu- lar branch of art or manufacture from being carried to the highest perfection. By opening a more extensive market for whatever part of the produce of their labor may exceed the home consumption, it encourages them to improve its productive powers and to augment its annual produce to the utmost, and thereby to increase the real revenue and wealth of the society." Trade enables a nation not <mly to obtain what it cannot produce itself, but also to carry its own production to the highest degree of perfection by reason of this outside demand. The advantage of trade lies in its effect upon home indu.stry. and trade is represented as a mutual and not as a one-sided advantage. The home market is now recognized to be the most important, and for- eign trade as subsidiary to it, as significant only in so far as it promotes a better division of labor and more productive employment of capital at home. The emphasis is shifted from the purely mercantile side, and the question shown to be a much larger one than a mere increase or de- crease of specie. If the mercantilists insisted that the entire advantage of foreign trade lay in exportation, while Adam Smith deemed the advantage tiuitu- al, later writers — as, for instance, John Stuart ilill — have gone so far as to declare that the importance to the nation of its international trade was measured by its imports. This is not, of course, a mere reversal of the mercantilist at- titude, for the distinguished economist is far from contemplating the possibility of imports without corresponding exports. But to him the imports of a nation represent a s.aving of energy, time, labor, and capital in the acquisition of goods. While the same goods, or many of them, could doubtless be produced at home, it would be at far greater expenditure of effort than that involved in producing the goods exported to pay for them. In following the history of eco- nomic thought on the subject of trade, we have passed from the period of a crude but ultra pro- tectionism to one of free trade.
