The Mercantile System

Colbert came later than Sully.

• He was the first to treat political economy as a science
• He reduced it to a body of doctrines as a uniform system of national wealth, probably suggested by merchants

• It was called the Mercantile System, also as Colbertism

The Mercantile System:

• was invented by merchants
• was adopted by all the ministers of absolute governments
• had errors, but its applications were very advantageous

Colbert followed it without reforming it.

After hating commerce for a long time, governments finally discovered that it was one of the most abundant sources of national wealth.

All the great fortunes in their states did not belong exclusively to merchants. But only the merchants could supply the states large sums during sudden necessity.

Proprietors of land might possess immense revenues, manufacturers might cause immense labours to be executed; but neither of them could dispose of any more than their actual income or produce.

In a case of need, merchants could offer their whole fortune to the government.

• Their capital was entirely in consumable commodities
• They could sell these at an hour’s warning and realise the required sum with smaller loss than any other class of citizens.

Merchants therefore found means to make themselves be listened to because they:

• could command all the money in the state
• nearly independent of authority

They could conceal property, transport it with their persons to a foreign country at a moment’s notice.

Governments would gladly increase the merchant’s profit on condition of obtaining a share of it.

Imagining that nothing more was necessary than to second each other’s views, they offered him force to support industry. and since the advantage of the merchant consists in selling dear and buying cheap, they thought it would be an effectual protection to commerce, if the means were afforded of selling still dearer and buying still cheaper.

The merchants whom they consulted eagerly accepted this proposal.

• Thus was founded the mercantile system.

The following rapacious inventors of so many monopolies had no other notion of political economy:

• Antonio de Leyva
• Fernando de Gonnzago
• the Duke of Alva, viceroys of Charles V and his descendants

A more honourable basis for such transactions were called for when:

• this methodical robbery of consumers was needed to be systematized
• Colbert consulted corporations
• the people finally perceived what was happening

It became necessary to study the advantage of financiers and merchants and the nation.

The calculations of self-interest cannot show themselves in open day. The first benefit of publicity is to impose silence on base sentiments.

Under these circumstances, the mercantile system was moulded into a plausible form.

Those earliest economists said that wealth is money.

• ‘Wealth’ and ‘money’ were used so universally as to be almost entirely synonymous.

For a century, the mercantile system was universally:

• adopted by cabinets
• favoured by traders and chambers of commerce
• expounded by writers