Superphysics Superphysics
Chapter 4

Selling Our Money in the Merchandise Trade increases our Wealth

by Mun
4 minutes  • 672 words
Table of contents

Our annual consumption of foreign goods is £2,000,000. Our sales are £200,000. If we add £300,000 in money to our sales, how can we earn more money?

The Carrying Trade

We can earn more money by bringing in more foreign goods to be re-sold overseas, since we would not need them locally.

  • If we send £100,000 money to Amsterdam to buy Pepper then send it to Italy, it must yield £200,000, doubling the money.
  • If we send the £100,000 to India to buy Pepper and sell it to Italy, we can earn £700,000 gross.

But if the voyages are short & the supply plentiful, the profit will be far less.

If we send another £100,000 to buy raw silks from Turkey to be sold to France, the merchant shall get £150,000. On the average of all these trades, the money will be more than tripled. People might object that the value will be returned in goods and not money.

I answer that if our consumption of foreign goods stays the same and our exports increased, the overbalance must return as money or foreign goods and increase our revenue more.

The national stock is the same as a private estate. People do not exchange money for money (this is ridiculous). They exchange their money for goods [buying]. By exchanging goods into money [selling], people multiply their money.

Likewise, money is not the Life of Trade because we could trade by barter. The Italians and other nations used bills of debt and bank credit for big amounts. They only used metal money for ordinary expences. Those credits were based on the Mass Treasure as merchandise for foreign trade.

Global production and consumption and sales are caused by=

  • the need for our goods overseas, and
  • our want of foreign goods

Is our trade improved if we keep our money confined to our nation?

No, because our having a lot money makes our native commodities=

  • dearer,
  • more profitable for a few, and
  • thus disadvantageous to the public.

The high price will discourage consumption, as shown in Chapter 3 on cloth. We lose money by not trading our money.

Ferdinando I was the great Duke of Tuscanie. He was very rich in money. He tried to enlarge his trade by lending a lot of money to his Merchants for very small profit.

I had 40,000 crowns from him free for a whole year. He knew that I would use it to buy goods from Turkey for his country and it would return ‘with a Duck in the mouth’. By his care and diligence to favour Merchants in their affairs, he increased this practice. All nobility who do foreign trade do it with partnership with others.

Within these 30 years, the trade to his little poor port of Leghorn is so much increased. It has become a strong city and one of the most famous places for trade in all Christendom.

The many ships and goods which arrive from England, the Low Countries, and other places, transact only in ready money. The Duke and his people are much enriched by the continual great concourse of merchants from all the neighbouring states. Thus, the current of merchandise which carries away their money, becomes a flowing stream to fill them again with more money.

There are weak objections to this. If we buy foreign commodities with our money instead of our goods, then we shall issue out less goods. Our customers can then use our money in the place of those goods, which is absurd.

Or the Merchant would rather not carry our goods if there were some gains to be expected. He will instead export money without any increase.

On the contrary, there are many countries which we profit from our trade in money and not our goods, such as India in the beginning.

Some have alleged that those countries which permit money to be carried out, do it because they have few goods to trade. But we have many commodities, and therefore we should not follow their action.

Any Comments? Post them below!