5 - The mercantile system

Summary

The sovereign rights to control the standards of weights, measures, and coinage discussed in chapter 4 had traditionally been royal prerogatives. They had emerged at a time when the European economy was still predominantly rural, the idea of the nation-state, if it existed at all, was in its infancy, and notions such as representation of the community and constitutional monarchy had not appeared. All this was to change, and discussion about trade, merchants, and a set of ideas attached to the ‘mercantile system’ fitted firmly into the new climate of the commercial revolution, the development of national sovereign rights, and demands for participation and consent.

The term ‘the mercantile system’ was first used in England by Adam Smith in The Wealth of Nations (1776) to describe what he termed the ‘system of commerce’ as opposed to that of agriculture. This is the broad subject of this chapter, and although it is treated by scholastics, many of the ideas are found in secular sources, such as parliamentary legislation, merchants' manuals, and vernacular literature. ‘The mercantile system’ gradually became synonymous with a set of economic ideas enunciated in the seventeenth century in both France and England and later known as mercantilism. Its founding father was Thomas Mun (1571–1641), a director of the East India Company. Mercantilism is a blanket term and as such has given rise to exasperated controversy. This has increased because there was no definitive work about it, merely writings on particular aspects, and these contain diverse views.