Bullion and the Mercantile Republic

²⁸ Besides the three kinds of gold and silver mentioned above, there is a lot of bullion alternately imported and exported for foreign trade in all great commercial countries.

This bullion circulates among commercial countries in the same way as the national coin circulates in every country. This bullion is the money of the great mercantile republic.

The national coin receives its movement and direction from the commodities circulated within the country.

The mercantile republic’s bullion gets its movement from the circulation between countries.

Both are employed in facilitating exchanges.

The coin facilitates exchanges between individuals.

The bullion facilitates exchanges between nations.

• Part of the bullion of the great mercantile republic probably was employed in the recent war.

The movement and direction of bullion is different during wartime and during peacetime.

Bullion should circulate nearer to the seat of the war.

• It should be more employed to purchase the pay and provisions of the armies there and in the neighbouring countries.

This bullion of the mercantile republic was purchased by Great Britain with British or foreign commodities.

• This brings us back to commodities or the national annual produce, as the ultimate resources which enabled us to carry on the war.

It is natural to suppose that such a great annual expence must have been defrayed from a great annual produce.

For example, the expence of 1761 amounted to over £19 million.

• No accumulation of gold and silver could have supported such an expence. The gold and silver annually imported into Spain and Portugal does not exceed £6 million. This amount would not have been enough to even pay four month’s expence of the recent war.

²⁹ The best commodities for export to distant countries were the finer and more improved manufactures.

Those commodities could purchase there:

• the army’s pay and provisions, or
• the money which the mercantile republic used to buy those pay and provisions

Those commodities contain a great value in a small bulk.

They can be exported far away at little cost.

A country which has a big surplus of such fine manufactures may carry a very expensive foreign war for many years without exporting any gold and silver.

Most of this surplus must be exported without bringing back any returns to the country.

However, it brings back returns to the merchant.

The government buys the bills of the merchant on foreign countries to buy there the army’s pay and provisions.

Some of this surplus may still continue to bring back a return.

During the war, the manufacturers will have a double demand.

Those manufacturers will:

• create the goods sent abroad for paying the bills drawn on foreign countries for army’s pay and provisions
• create the goods for consumption in the country

In the midst of the most destructive foreign war, most manufactures may frequently flourish greatly.

They may:

• decline on the return of the peace
• flourish amidst the ruin of their country
• begin to decay on the return of their country’s prosperity

The different state of British manufactures during the recent war and after the peace is an example of this.

³⁰ No expensive or long foreign war could be conveniently carried on by exporting rude produce.

The cost of exporting the rude produce needed to buy an army’s pay and provisions would be too great. Few countries produce rude produce in excess of what their own people need. It is otherwise with the export of manufactures. The maintenance of people employed in manufacturing is kept at home.

Only the surplus part of their work is exported. Mr. Hume frequently notices the inability of the ancient English kings to sustain any long foreign war uninterrupted. In those days, the English had little means to buy the pay and provisions of their armies overseas.

They could only spend the rude produce or a few coarse manufactures.

• Much of the rude produce could not be spared from the home consumption.
• Their transportation was too expensive.

This inability to fund a long war was caused by the lack of the finer manufactures and not from the lack of money. Then as now, buying and selling in England was transacted by money.

The quantity of the circulating money then must have borne a bigger proportion to the number and value of exchanges then, different from its proportion today.

This is because there was then no paper which now performs the job of gold and silver.

Among nations with little commerce and manufactures, the sovereign can seldom draw any considerable aid from his subjects during war.

In such countries, accumulated treasure is the only resource against such emergencies.

He is thus naturally parsimonious.

In that simple state, the sovereign’s expences are directed in the bounty to his tenants and hospitality to his retainers.

• It is not directed by his vanity.
• But bounty and hospitality very seldom lead to extravagance.
• Vanity almost always leads to extravagance.

Every Russian chief has a treasure.

Ivan Mazepa was the chief of the Cossacks in the Ukraine

• He was the famous ally of Charles the 12th.
• He had a very great treasure.

The French kings of the Merovingian race all had treasures.

When they divided their kingdom among their children, they divided their treasure too. The Saxon princes and the first kings after the Conquest also accumulated treasures.

Seizing the treasure of the preceding king was the most essential measure for securing succession. It was the first exploit of every new reign.

The sovereigns of improved and commercial countries do not need to accumulate treasures. They can draw from their subjects extraordinary aid on extraordinary occasions.

Without the need for treasure, their expence becomes regulated by the same vanity which directs other great proprietors.

• The insignificant pageantry of their court becomes more brilliant everyday.
• Their expence prevents accumulation.
  • It frequently encroaches on more necessary funds.

Dercyllidas saw that the Persian court had many servants but few soldiers, much splendour but little strength. The same can be said of several European princes.