This present book builds upon and expands our initial treatment of
historical mercantilism. We seek, in general terms, to place our ideas on
mercantile institutions within the nexus of a neoclassical-neoinstitutional
framework of analysis. Our first effort was clearly a part of that literature, as
its reception has suggested. In the present work we make that connection
more explicit and, in the process, provide a critique of older and more
modern approaches to a theory of institutional development. Our view,
which again focuses on orthodox traditions in propers rights, rent seek-
ing, and interest group analysis, is stubbornly neoclassical. This method-
ological orientation is developed throughout our study.

We adopt a two-step approach to the study of mercantile institutions.
Chapters 3, 4, and 5 deal with mercantile institutions (primarily) within the
economies of England, France, and Spain. Then, in chapters 6 and 7, these
economy-wide studies are embellished with two chapters on a particular
key institution of the period--the early companies. Our analysis of both
England and France focuses on internal developments in institutions as a
response to interest group and other pressures. The role of Sir Edward
Coke in institutional change in England is now given full discussion in
chapter 3. One source of the architecture of Spanish mercantilism is also
addressed. Rent seeking through the mobile shepherding industry is the
primary topic of chapter 5 on Spanish mercantilism, although other impor-
tant factors which led to the stultification of Spain in the premodern and
early modern worlds are discussed as well.

In chapters 6 and 7 we project our neoclassical-neoinstitutional analysis
to the regulation of mercantilist foreign trade. Here we analyze the general
economic organization of the mercantile companies and then focus on the
economic inner workings of the East India Company. Some insight is thus
obtained into the origins of the modern corporation and the effects of
regulatory forms on the types of business organization that emerged to
engage in foreign trade.

Both this work and our previous studies have greatly benefited from
the comments of critics and friends. Those who have had less sympathy
with our approach have been almost as valuable as supporters in provoking
the present work. Among the latter, we must thank Professors Don
Boudreaux, James Buchanan, Tyler Cowen, David Gay, Robin Grier, Rob-
ert Hebert, John Jackson, David Kaserman, David Laband, William Mitchell,
Parth Shah, John Sophocleus, Mark Thornton, and Gordon Tullock who
read and commented upon earlier draft portions of the manuscript. In par-

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