Chapter 14

The Bankers and Merchants Exchange

January 20, 2020

The Author Gerard Malynes writes of the admirable feats done by Bankers and Exchangers in using the power of the Exchange.

But he has disguised his own knowledge with sophistry to further some private ends by hurting the public good. He should be discovered and prevented.

The admirable feats to be done by Exchange=

  1. To invest their money wherever in the world there is a gain in exchange
  2. To get rich but never meddle with any Prince’s commodities
  3. To buy any Prince’s commodity using public funds instead of their private money
  4. To grow rich and live safely at sea.
  5. To do great feats through credit, and yet to be worth nothing.
  6. To understand whether their money should be employed on Exchange [money market] or in buying of goods.
  7. To know certainly the profits in selling and buying goods.
  8. To live off and prosper from the public which enters the Exchange, whether they gain or not.
  9. To take every Prince’s treasure out of his Realm through his Subjects who import more than they export.
  10. To bring money to where the rich Prince wants it, and pay for it.
  11. To safeguard the poor Prince’s money, with interest, if the enemy seeks it.
  12. To furnish their need of money that tarry the selling of their wares in any contract until they make them come to their price.
  13. To take up money to engross any commodity either new come or whereof they have some store to bring the whole trade of that commodity into their own hands to sell both at their pleasure.
  14. To hide their carrying away of any Prince’s money.
  15. To get any Prince’s fine coin with his own coin or that of any other prince.
  16. To take up Prince’s base coin and turn it into his fine coin and pay the deliverer with his own coin, and gain too.
  17. To take upon credit into their hands for a time all the Merchants’ coin that will be delivered, and pay them with their own, and gain too.
  18. To make the nation gain from other nations whose Subjects live from their own commodities, and sell our excess production into the world and keep in increasing yearly while keeping their old store of treasure upon exchange.
  19. To undo nations that do not look to their Commonwealth, when the Merchants become so wealthy that the great houses conspire to rule the Exchange.
  20. That when they will be deliverers, they will receive in another place above the Standard of the Mint of the Princes money delivered.
  21. When they will be takers, they will pay the same in another place under the Standard of the Mint of the Princes money taken up.
  22. To get ready money to buy any commodity that is offered cheap.
  23. To compass ready money to get any offered bargain out of another mans hands, and so by outbidding others oftentimes to raise the wares.
  24. To get a part and sometimes all his gains that employ money taken up by Exchange in wares, and so make others travail for their gain.
  25. To keep Princes for having any Customs, Subsidies or Taxes upon their money, as they employ it not.
  26. To value justly any goods they carry into any country by setting them at that value, as the money that bought them was then at by Exchange in the country whither they be carried.

If I wanted to further explain these wonders, it would take a large volume. But I want to do it as briefly and as clearly as possible.

But we Merchants do not deal with such Spirits. We do not delight to be thought of as liars.

Therefore I show here the plainness of our dealing (in these supposed feats) to be agreeable to the laudable course of Trade.

1= To invest their money wherever in the world there is a gain in exchange

How can this be done for Amsterdam, when the losses by Exchange is sometimes 8% or 10% for one month’s use?

The answer is that the principal cause of this loss is a greater value in goods imported from Amsterdam than we export to it. This leads to more importers than exporters by Exchange in London. This makes our coin undervalued to the benefit of the exporter.

The importer will lose by his Money, doth consider those Countries, unto which we carry more Wares in value than we receive from them; as namely, Spain, Italy, etc. to which places he is sure (for the reasons aforesaid) that he shall ever deliver his money with profit.

But now the coin is farther from Amsterdam than before. How shall it be got together?

The farther also brings in more profit.

The first part of this profit is made in Spain. From there I think where to make my second gain. I find that the Florentines export more cloth, wrought Silks, and Rashes to Spain than they import of Spanish Wools, West-India Hides, Sugar and Cochineal.

So I send my money to Florence and from there to Venice where I find that my next gain is at Frankfurt or Antwerp. Finally, I return to Amsterdam according to the advantages as the times and place shall afford me.

Thus, the profit and loss on the Exchange is guided by the over or under balance of the Predominant and Active Trades. This makes the price of Exchange high or low. In my example, it is Passive, contrary to what is repeated by Malynes.

2, 4, 14, 23=

These are done by the mere Exchanger. His actions cannot work to the good or hurt of the Commonwealth, as I have said in Chapter 13.


I can import £1,000 goods to London by exchange to receive the value in Spain in Spanish money which I can use to buy Spanish goods. But this does not prove that, in the end, that the English coins or commodities must pay for the Spanish goods.

If I export £1,000 worth of Spanish goods to London for an English-man, he must pay me English goods in Spain. If I import English goods for a Spaniard, he takes it from me and uses it to add value to Spanish goods.

In these ways, we must pay foreigners for what we buy. Is this feat admirable at all?

5, 13, 20, 21=

Every Idiot knows these. He who has credit can contract, buy, sell, and borrow money by Exchange. Yet they are not alwayes gainers, for sometimes they live by loss.

6, 7=

When I know the current prices of my goods, both here and overseas, I may easily estimate whether the profit of the Exchange or the gain on my sales will be greater. Every Merchant knows well what he gains from the purchase or sale of his goods. But this does not make the Exchange admirable.

8, 12

Bankers and Exchangers do furnish men with money for their occasions, so do they likewise who let out their money at interest with the same hopes and like advantage, which many times notwithstanding fails them, as well as the Borroweres often labour onely for the Lenders profit.

9, 18

Here Malynes has some secret meaning. He probably knows his own errors, so he marks these two Wonders. Why would this great work of enriching or impoverishing Kingdoms be attributed to the Exchange, which is done only by the over or under-balance of our Foreign Trade?

15, 16

The Exchange may be used to exchange copper coin for gold or silver coins. A foreigner can have copper minted into copper farthing coins in London and then exchange them for silver coins in his own Country using the Exchange. Or he can melt down the silver coins to get silver without using the exchange at all, if he dare venture the penalty of the Law.

The Spaniards know who are the common Coiners of Christendom who dare bring in Spanish Copper money and exchange them for good silver Rials of Eight to be sent overseas.


The Bankers are always ready to receive money from men who have no skill to exchange them for profit. The Bankers do repay them with their own money, and yet reserve good gain for themselves. This is after they pay the allowance for those Factors who buy or sell for Merchants by Commission. This is common and not admirable.


I must confess that here is a wonder indeed, that a poor Prince should keep either his wars or wares (I take both together as the Author sets them down both ways differing in his said two books) upon interest mony;

for what needs the Enemy of such a poor Prince deale with the Bankers to disapoint him or defeat him of his mony in time of want, when the interest it self will do this fast enough, and so I leave this poor stuff.


I have lived long in Italy, where the greatest Banks and Bankers of Christendom trade. But I could never see nor hear that they ruled the price of Exchange by confederacy. How can there be a monopoly when the money supply always overruled them and made the Exchanges to run at high or low rates.


The Exchange by bills between Merchant and Merchant in the course of trade cannot hinder Princes of their Customs revenues. This is because the money which one man delivers because he will not, or hath not occasion to employ it in wares, another man taketh, because he either will or hath already laid it out in Merchandize.

But it is true, that if the Kingdom has a lot of ready money, the King will miss out on the profits of using it for foreign trade if foreign trade is neglected.

If this neglect is caused by the exchange, then must fix it. We can exchange money=

  • amongst ourselves or
    • The Commonwealth cannot be enriched this way because the gain of one subject is the loss of another.
  • with foreigners
    • Our profit here is the gain of the Commonwealth.

But the King cannot tax revenue from these two ways. We can find the benefits of exchange in Genoa.

The State of Genoa is small, not very fertile, having little natural wealth. Nevertheless, by their industry in former times, they imported from Egypt, Constantinople, and the Levant Spices, Drugs, raw Silks and many other rich goods. They then sold them to Europe which gave them incredible wealth.

But after the foundation and encrease of Venice, the said good came instead from England, Spain, and the Netherlands by navigation directly from the East Indies. This forced Genoa to change from trading goods into exchanging money. To gain from this, they spread onto the foreign trading countries, especially with the Spaniards in Flanders and elsewhere for their wars. These enrich the private Merchants but not the public treasure of Genoa.

  1. Principally, they are forced to leave those trades which they cannot keep from other Nations, who have better means by situation, wares, Shipping, Munition and the like, to perform these affairs with more advantage than they are able to doe.

  2. They only had 20% of their previous trade volume. They replaced their supply with the Fleece-wools of Spain, and raw Silks or Sicilia, working them into Velvets, Damasks, Sattens, Woollendrapery, and other manufactures.

  3. They can only use their great wealth profitably in Spain and other places, either in Merchandize, or by doing trade financing. Thus, they live abroad circuiting the world for gain. Yet in the end, the Center of this profit is in their own Genoa.

Lastly, the government of Genoa is an Aristocracy and the nobility are Merchants. Even if the public gets little, yet if their private Merchants gain much from foreigners, they shall be alright. This is because their state’s Treasure are the riches of the Merchant Nobility. Their citizens are ready to defend the noblity for their own sakes as a Republic or Commonwealth, and not as a Monarchy.


If a Merchant buys goods in London to send to Venice, and then value them as the Exchange comes from Venice to London, then he might see a big discrepancy. Before his goods arrive at Venice, both the price of his goods and the rate of the Exchange may alter very much.

But if Malynes means that this valuation is made after the goods arrive and are sold at Venice, and the money remitted to London by Exchange, then these are all very common and easy business, not an admirable feat.


A rich Prince hath great power, yet is there not power in every rich Prince to make the staple of Money run where he pleaseth= for the Staple of any thing is not where it may he pleaseth=

for the Staple of any thing is not where it may be had, but where the thing doth most of all abound.

The Spaniard, in regard of his great treasure in the West Indies, said that he moved his Fountain of money into Italy, Germany, and the Netherlands, or anywhere it is required, either for Peace or War.

This is not accomplised by any singular Power of the Exchange, but by diverse ways and means fitting those places where the money is to be employed.

  • If the money is used only within France to maintain a War there, then may it be safely sent in bullion by land.
  • If in Italy, on Galleys by Sea.
  • If in the Netherlands, on Shipping by Sea also, but yet with more danger. In this case, the Exchange is very useful though not absolutely necessary.

The Spaniards import from Germany and the Netherlands a greater value than they export. The King of Spain cannot be furnished there from his own subjects with money by exchange. Instead, he for a long time had to send his money in Gallies for Italy. The Italians, especially the Genoans, use the money to buy from Flanders and export them out of Italy in the service of Spain, and receive the value by Exchange in Italy out of the Spanish Treasure.

Thus, it is not the power of Exchange that enforces treasure where the rich Prince will have it. Instead, it is the money from the goods in Foreign trade that=

  • enforces the exchange, and
  • rules the price high or low, according to the money supply. I have said many times, like Malynes, that this money supply makes the Exchange an essential part of trade. It is the active, predominant, ruler of the price of goods and moneys, life, spirit, and the worker of admirable feats.

The Merchant cannot put down the learned Lawyer if the lawyer has less skill in his Exchange.

Nay, but stay awhile, can all this pass for current, to slight a business thus, which

Malynes said that mercantilism has been=

  • so seriously observed by that famous Council and those worthy Merchants of Queen Elizabeth
  • condemned by those French Kings, Lewis the 9th, Philip the fair, and Philip de Valois, with confiscation of the Bankers goods.

Is the slighting of mercantilism the norm nowadays?

Malynes said that the wisdom of our State found out the evil, but they missed of the remedy. Yet no one can say what the remedy should be, for there was none applied. All practises in the Exchange still stand to this day, the same as they did when those feats were discovered. This is because the State knew well that there needed no remedy where there was no disease.

So how can we answer the French Kings who condemned the Bankers and confiscated their goods?

The Bankers might have gone against the law in their exchanges. But their profession is still lawful, as it is in Italy and France to this day. Even if the banks were banished and the bankers were punished. Yet this proves nothing against Exchangers, for Kings and States enact many Statutes, and suddenly repeal them. They do and undo. This proves that Princes may err.

Malynes sets 35 Statutes enacted in England in 350 years time to remedy the decay of Trade, and yet all are found defective. Only his reformation of the Exchange, or Par pro Pari, would be effective. But we know better, and so we leave him.

The Kings Royal Exchanger was an office that regulated and exchanged all of the Plate, Bullion and Monies, Foreign or Sterling. This office would pay them a penny upon the value of every Noble. It might raise the coin much to their private good, and destroy it more to the publique hurt. Such an office would=

  • decay the Kings Coinage,
  • deprive the Kingdom of much Treasure,
  • deprive the Subjects of their liberty, and
  • overthrow the worthy trade of the Goldsmiths,

All of these are plain and easy to the weakest understandings, I will therefore omit to amplify upon these particulars.