FOREIGN TRADE AND COLONIES
ENGLISH seventeenth-century economic theory about foreign trade was permeated by the belief that it was essential to have an excess of exports over imports. It is true that some writers were inclined to emphasize bullionism and others what has come to be called mercantilism. The former tended to magnify the importance of exchange transactions and of restrictions on the export of coin and bullion, and of regulation through supervision of individual transactions. James I and Charles I were both bullionists. For example a proclamation was issued ( 25 May 1627) that the exchange of money was a royal prerogative, and goldsmiths were forbidden to intermeddle with foreign money or bullion, or to melt current coin. More influential, however, was the theory that in the case of a country like England, with no gold or silver mines to speak of, the only way to increase its stock of precious metal was to export more of commodities than was imported. When this happy state of things was brought about, England enjoyed what much later was called a favourable balance of trade. The best-known of all the mercantilist treatises is Mun England's Treasure by Forraign Trade. Mun laid down as a maxim that 'the ordinary means therefore to encrease our wealth and treasure is by forraign trade, wherein wee must ever observe this rule; to sell more to strangers yearly than wee consume of theirs in value'. 1One reason why the mercantilists so strongly urged the accumulation of bullion was that they tended to confuse wealth and money. Although it would be unjust to state that they looked upon precious metals as the sole wealth of the country, their over-emphasis upon the accumulation of gold and silver often made them act as if they did.
It has been well said, however, that, so far as the abler mercantilists were concerned, more important 'than the absolute identification of wealth with gold and silver was the attribution to the precious metals of functions of such extreme importance to the nation's welfare as to make it proper to attach to them a____________________