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CHAPTER 5 Harmony and the “Balance of Trade” In the ‹rst third of the seventeenth century, merchants routinely accepted that one nation’s gain must come at another nation’s loss. How could it be otherwise in a world of ‹nite resources anchoring a closed universe? And, as usual, the personal formed the model for the political. “Covetousness,” as St. Thomas Aquinas explained, was “a sin directly against one’s neighbor ”: one person could not “overabound in external riches, without another . . . lacking them,” because “temporal goods” could not “be possessed by many at the same time.”1 Here, as Jacob Viner noted, Aquinas was simply following “St. Jerome’s dictum that one man’s gain must be another man’s loss.”2 From that dictum would come the century’s primary economic model: balance of trade theory, or the idea that a country’s economic health depended upon its exporting goods valued in excess of those imported, because imports created bullion out›ows while exports brought in bullion from abroad. Thomas Mun believed this rule was as important for Spain’s silver-rich empire as it was for countries like England that lacked a native source of bullion, because negative trade balances eventually would drain dry even the most generous supply.3 St. Jerome’s dictum was an economic truism long before the seventeenth century dawned,4 though Gerard de Malynes may have been the ‹rst to link the word “balance” to it when he argued that to allow imports to exceed exports was an “overballancing of commodities” resulting in “the decrease of our wealth.”5 He accepted the theory as axiomatic,6 but rejected any dogged devotion to annual calculations of it as both exceedingly dif‹cult to do7 and, even when done, as merely indicating the magnitude of the problem without solving it.8 For Gerard de Malynes, solving it always involved ‹xing the exchange at par pro pari (the “Marchandising exchange” making English goods too expensive to sell abroad).9 Sir Francis Bacon is usually credited with giving the theory its actual name, in a private memorandum of “Advice to Villiers” (1616): 89 Let the foundations of a pro‹table Trade be thus laid, that the exportation of home commodities be more in value than the exportation of foreign , so we shall be sure that the stocks of the Kingdom shall increase, for then the balance of trade must be returned in money or bullion.10 Since the third edition of Bacon’s Essays, in which a slightly different version (“well-balancing of trade”) appeared, did not see print until 1625, Misselden holds the honor of having sprung the term, if not the idea, on the reading public, with The Circle of Commerce or The Ballance of Trade (1623). Balance was a term borrowed from the Italian invention of doubleentry bookkeeping as both its advocates and enemies well knew. Misselden explained to his readers that A Merchant when hee will informe himselfe how his estate standeth, is said to take a Ballance of Accompt . . . Which is wherefore in Merchants and Accomptants termes, so called a Ballance of Accompt, or a Ballance of Trade.11 Whether they argued for or against, these works were actually popularizing a new meaning of the word balance, because what they wished to see was actually a permanent imbalance in which exports exceeded imports. Traditionally, balance (derived from the image of balance scales) was consonant with the Aristotelian sense of harmony and of the mean between two extremes. Malynes used the term in this sense when he explored the issue of the proper relationship between “natural” and “arti‹cial” commodities: we ought to ballance the value of things upon this beame, laying the lands on the one side, and the money of things mony-worth in value on the other side, to ‹nd out this inequality.12 James I’s instructions to the Commission on Trade in October 1622 con›ated the older idea with the new by proposing that the commission work on policies that would promote a greater “equality” between imports and exports: That to prevent an apparent consumption and confusion, which cannot other wise be avoided, ye diligently observe the true balance of the trade of this kingdom, lest the importation of merchandize from foreign ports exceed the exportation of our own native commodities, and consider of some ‹tting courses to reduce the same to more equality, and to think upon the gain or loss that comes to our kingdom...

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