Jean-Baptiste Colbert (1619-1683): Memorandum on Trade, 1664
Colbert from 1661 was for more than twenty years of responsible for the finances of France. He believed that material prosperity would raise the yield of taxes but that this prosperity would grow only with a managed economy: that is, with the mercantilist encouragement of native industries and exports and the discouragement of imports from abroad. His memorandum to Louis XIV on trade (1664) summarized two generations of similar advice, using even statistics from pamphlet literature published fifty years earlier. Colbert's memorandum also shows how any practical application depended entirely on the support of the king.
Sire, it pleases Your Majesty to give some hours of his attention to the establishment, or rather the re-establishment of trade in his kingdom. This is a matter that purely concerns the welfare of his subjects but that cannot procure Your Majesty any advantage except for the future, after it has brought abundance and riches among his people. On the contrary, [the subject of trade] being unattractive in itself, Your Majesty will find it disagreeable to hear it discussed often, and, moreover, [efforts to re-establish) it will even lead to a decrease in current revenues. [For all these reasons] it is certain, Sire, that through Your Majesty's sacrifice of two things so dear and important to kings-one, the time that [Your Majesty] could use for his amusements or other pleasanter matters, the other, his revenue-[Your Majesty] by these unexampled proofs of his love for his people will infinitely increase the veneration and respect of his subjects and the admiration of foreigners.
Having discussed the reasons for and against the King's making efforts to reestablish trade, it will be well to examine in detail the condition to which trade was reduced when His Majesty took the government into his own hands [ 166 1 J.
As for internal trade and trade between [French] ports:
The manufacture of cloths and serges and other textiles of this kind, paper goods, ironware, silks, linens, soaps, and generally all other manufactures were and are almost entirely ruined.
The Dutch have inhibited them all and bring us these same manufactures, drawing from us in exchange the commodities they want for their own consumption and re-export. If these manufactures were well re-established, not only would we have enough for our own needs, so that the Dutch would have to pay us in cash for the commodities they desire, but we would even have enough to send abroad, which would also bring us returns in money-and that, in one word, is the only aim of trade and the sole means of increasing the greatness and power of this State.
As for trade by sea, whether among French ports or with foreign countries, it is certain that, even for the former, since in all French ports together only two hundred to three hundred ships belong to the subjects of the King, the Dutch draw from the kingdom every year, according to an exact accounting that has been made, four million UvresI for this carrying trade, which they take away in commodities. Since they absolutely need these commodities, they would be obliged to pay us this money in cash if we had enough ships for our own carrying trade.
As for foreign trade:
It is certain that except for a few ships from Marseilles that go to the Levant [the eastern Mediterranean], maritime trade in the kingdom does not exist, to the point that for the French West Indies one-hundred-fifty Dutch vessels take care of all the trade, carry there the foodstuffs that grow in Germany and the goods manufactured by themselves, and carry back sugar, tobacco, dyestuffs, which they [the Dutch] take home, where they pay customs duty on entry, have [the commodities] processed, pay export duties, and bring them back to us; and 'the value of these goods amounts to two million Uvres every year, in return for which they take away what they need of our manufactures. Instead, if we ran our own West Indies trade, they would be obliged to bring us these two million in hard cash.
Having summarized the condition of domestic and foreign trade, it will perhaps not be inappropriate to say a few words about the advantages of trade.
I believe everyone will easily agree to this principle, that only the abundance of money in a State makes the difference in its greatness and power.
Aside from the advantages that the entry of a greater quantity of cash into the kingdom will produce, it is certain that, thanks to the manufactures, a million people who now languish in idleness will be able to earn a living. An equally considerable number will earn their living by navigation and in the seaports.
The almost infinite increase in the number of [French] ships will multiply to the same degree the greatness and power of the State.
These, in my opinion, are the goals that should be the aim of the King's efforts and of his goodness and love for his people.
The means proposed for reaching these goals are:
To make His Majesty's resolution known to all by a decree of the Council of Commerce meeting in the presence of His Majesty, publicized by circular letters.
To revive all the regulations in the kingdom for the re-establishment of manufactures.
To examine all import and export duties, and exempt raw materials and [domestic] manufactures ....
Annually to spend a considerable sum for the re-establishment of manufactures and for the good of trade, according to resolutions that will be taken in Council.
Similarly for navigation, to pay rewards to all those persons who buy or build new ships or who undertake long-distance voyages.
The Commercial Policy of Colbert: As Shown in Louis XIV's Letter to the Town Officers and People of Marseilles (August 26, 1664)
Considering how advantageous it would be to this realm to reestablish its foreign and domestic commerce, . . . we have resolved to establish a council particularly devoted to commerce, to be held every fortnight in our presence, in which all the interests of merchants and the means conducive to the revival of commerce shall be considered and determined upon, as well as all that which concerns manufactures.
We also inform you that we are setting apart, in the expenses of our state, a million livres each year for the encouragement of manufactures and the increase of navigation, to say nothing of the considerable sums which we cause to be raised to supply the companies of the East and West Indies;
That we are working constantly to abolish all the tolls which are collected on the navigable rivers;
That there has already been expended more than a million livres for the repair of the public highways, to which we shall also devote our constant attention; (280)
That we will assist by money from our royal treasury all those who wish to reestablish old manufactures or to undertake new ones ;
That we are giving orders to all our ambassadors or residents at the courts of the princes, our allies, to make, in our name, all proper efforts to cause justice to be rendered in all cases involving our merchants, and to assure for them entire commercial freedom;
That we will comfortably lodge at our court each and every merchant who has business there during all the time that he shall be obliged to remain there, having given orders to the grand marshal of our palace to indicate a proper place for that purpose, which shall be called the House of Commerce; . . .
That all the merchants and traders by sea who purchase vessels, or who build new ones, for traffic or commerce shall receive from us subsidies for each ton of merchandise which they export or import on the said voyages.
We desire, in this present letter, not only to inform you concerning all these things, but to require you, as soon as you have received it, to cause to be assembled all the merchants and traders of your town of Marseilles, and explain to them very particularly our intentions in all matters mentioned above, in order that, being informed of the favorable treatment which we desire to give them, they may be the more desirous of applying themselves to commerce. Let them understand that for everything that concerns the welfare and advantage of the same they are to address themselves to Sieur Colbert. . . .
Charter of the Dutch West India Company : 1621
JUNE 3, 1621
The States-General of the United Netherlands, to all who shall see these Presents, or hear them read, Greeting.
Be it known, that we knowing the prosperity of these countries1, and the welfare of their inhabitants depends principally on navigation and trade, which in all former times by the said Countries were carried on happily, and with a great blessing to all countries and kingdoms; and desiring that the aforesaid inhabitants should not only be preserved in their former navigation, traffic, and trade, but also that their trade may be encreased as much as possible in special conformity to the treaties, alliances, leagues and covenants for traffic and navigation formerly made with other princes, republics and people, which we give them to understand must be in. all parts punctually kept and adhered to: And we find by experience, that without the common help, assistance, and interposition of a General Company, the people designed from hence for those parts cannot be profitably protected and mantained in their great risque from pirates, extortion and otherwise, which will happen in so very long a voyage. We have, therefore, and for several other important reasons and considerations as thereunto moving, with mature deliberation of counsel, and for highly necessary causes, found it good, that the navigation, trade, and commerce, in the parts of the West-Indies, and Africa, and other places hereafter described, should not henceforth be carried on any otherwise than by the common united strength of the merchants and inhabitants of these countries; and for that end there shall be erected one General Company, which we out of special regard to their common well-being, and to keep and preserve the inhabitants of those places in good trade and welfare, will maintain and strengthen with our Help, Favour and assistance as far as the present state and condition of this Country will admit: and moreover furnish them with a proper Charter, and with the following Priveleges and Exemptions, to wit, That for the Term of four and twenty Years, none of the Natives or Inhabitants of these countries shall be permitted to sail to or from the said lands, or to traffic on the coast and countries of Africa from the Tropic of Cancer to the Cape of Good Hope, nor in the countries of America, or the West-Indies, beginning at the fourth end of Terra Nova, by the streights of Magellan, La Maire, or any other streights and passages situated thereabouts to the straights of Anian, as well on the north sea as the south sea, nor on any islands situated on the one side or the other, or between both; nor in the western or southern countries reaching, lying, and between both the meridians, from the Cape of Good Hope, in the East, to the east end of New Guinea, in the West, inclusive, but in the Name of this United Company of these United Netherlands. And whoever shall presume without the consent of this Company, to sail or to traffic in any of the Places within the aforesaid Limits granted to this Company, he shall forfeit the ships and the goods which shall be found for sale upon the aforesaid coasts and lands; the which being actually seized by the aforesaid Company, shall be by them kept for their own Benefit and Behoof. And in case such ships or goods shall be sold either in other countries or havens they may touch at, the owners and partners must be fined for the value of those ships and goods: Except only, that they who before the date of this charter, shall have sailed or been sent out of these or any other countries, to any of the aforesaid coasts, shall be able to continue their trade for the sale of their goods, and cosine back again, or otherwise, until the expiration of this charter, if they have had any before, and not longer: Provided, that after the first of July sixteen hundred and twenty one, the day and time of this charters commencing, no person shall be able to send any ships or goods to the places comprehended in this charter, although that before the date hereof, this Company was not finally incorporated: But shall provide therein as is becoming, against those who knowingly by fraud endeavour to frustrate our intention herein for the public good: Provided that the salt trade at Ponte del Re may be continued according to the conditions and instructions by us already given, or that may be given respecting it, any thing in this charter to the contrary notwithstanding.
Austria Over All If She Only Will: Mercantilism by Philipp W. von Hornick
EDITOR’S NOTE: Mercantilism, a loose set of economic ideas and corresponding government policies, was a common component of political absolutism during the seventeenth century. Typical mercantilist goals were the acquisition of bullion, a positive balance of trade, and economic self-sufficiency. An unusually clear and influential statement of mercantilist policies was published in 1684 by Philipp Wilhelm von Hornick. A lawyer and later a government official, Hornick set down what he considered to be the nine principal rules for a proper economic policy. These are excerpted here.
Consider: The political and military purposes served by encouraging mercantilist policies; the foreign policy decisions such economic policies would support; the political and economic circumstances that would make it easiest for a country to adhere to and benefit from mercantilist policies.
NINE PRINCIPAL RULES OF NATIONAL ECONOMY
If the might and eminence of a country consist in its surplus of gold, silver, and all other things necessary or convenient for its subsistence, derived, so far as possible, from its own resources, without dependence upon other countries, and in the proper fostering, use, and application of these, then it follows that a general national economy (Landes¬Oeconomie) should consider how such a surplus, fostering, and enjoyment can be brought about, without dependence upon others, or where this is not feasible in every respect; with as little dependence as possible upon foreign countries, and sparing use of the country's own cash. For this purpose the following nine rules are especially serviceable.
First, to inspect the country's soil with the greatest care, and not to leave the agricultural possibilities or a single comer or clod of earth unconsidered. Every useful form of plant under the sun should be experimented with, to see whether it is adapted to the country, for the distance or nearness of the sun is not all that counts. Above all, no trouble or expense should be spared to discover gold and silver.
Second, all commodities found in a country, which cannot be used in their natural state, should be worked up within the country; since the payment for manufacturing generally exceeds the value of the raw material by two, three, ten, twenty, and even a hundred fold, and the neglect of this is an abomination to prudent managers.
Third, for carrying out the above two rules, there will be need of people, both for producing and cultivating the raw materials and for working them up. Therefore, attention should be given to the population, that it may be as large as the country can support, this being a well-ordered state's most important concern, but, unfortunately, one that is often neglected. And the people should be turned by all possible means from idleness to remunerative professions; instructed and encouraged in all kinds of inventions, arts, and trades; and, if necessary, instructors should be brought in from foreign countries for this.
Fourth, gold and silver once in the country, whether from its own mines or obtained by industry from foreign countries, are under no circumstances to be taken out for any purpose, so far as possible, or allowed to be buried in chests or coffers, but must always remain in circulation; nor should much be permitted in uses where they are at once destroyed and cannot be utili7i d again. For under these conditions, it will be impossible for a country that has once acquired a considerable supply of cash, especially one that possesses gold and silver mines, ever to sink into poverty; indeed, it is impossible that it should not continually increase in wealth and property Therefore,
Fifth, the inhabitants of the country should make every effort to get along with their domestic products, to confine their luxury to these alone, and to do without foreign products as far as possible (except where great need leaves no alternative, or if not need, wide-spread, unavoidable abuse, of which Indian spices are an example). And so on.
Sixth, in case the said purchases were indispensable because of necessity or irremediable abuse, they should be obtained from these foreigners at first hand, so far as possible, and not for gold or silver, but in exchange for other domestic wares.
Seventh, such foreign commodities should in this case be imported in unfinished form, and worked up within the country, thus earning the wages of manufacture there.
Eighth, opportunities should be sought night and day for selling the country's superfluous goods to these foreigners in manufactured form, so far as this is necessary, and for gold and silver; and to this end, consumption, so to speak, must be sought in the farthest ends of the earth, and developed in every possible way.
Ninth, except for important considerations, no importation should be allowed under any circumstances of commodities of which there is sufficient supply of suitable quality at home; and in this matter neither sympathy nor compassion should be shown foreigners, be they friends, kinsfolk, allies, or enemies. For all friendship ceases, when it involves my own weakness and ruin. And this holds good, even if the domestic commodities are of poorer quality, or even higher priced. For it would be better to pay for an article two dollars which remain in the country than only one which goes out, however strange this may seem to the ill-informed.
Mercantilism Document Activity
1) What is Colbert doing in the first paragraph of his Memorandum?
2) Colbert’s goal was to better the financial and political situation of France. What were his three main steps to accomplish that goal?
3) Why did Colbert exempt raw materials from import duties?
4) What role did subsidies play in Colbert’s plans?
5) According to Colbert, what are the three advantages to building up France’s fleet?
6) Colbert’s main idea is that the economy and trade are too important to leave to the people. What does he mean by this and why does he think it?
7) How does Louis’s letter reinforce Colbert’s financial policies?
8) What are some of the rules the Charter sets forth for traders? Why are these important?
9) What is the tone of the Charter?
10) In one sentence each, put each of Hornick’s 9 rules in your own words.
11) Which of Hornick’s rules do you feel is the most important? Why?
12) Why are farmers so important to mercantilism?
13) What, in your opinion, is the single most crucial aspect of mercantilism and its success? Why?
14) Was mercantilism a necessary step between feudalism and capitalism? Why or why not?