The System or Theory of the Trade of the World - Isaac Gervaise (1720)

8/10/2019 The System or Theory of the Trade of the World - Isaac Gervaise (1720)

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The System or Theory of the Trade of the World

by Isaac Gervaise (1720)

The System or Theory of the Trade of the World. Treating Of the different Kinds of Value

Of the Ballances of Trade Of Exchange Of Manufactures Of Companies nd she!ing the"ernicious Conse#uences of Credit$ and that it destroys the "urpose of %ational Trade

&ondon$ "rinted 'y (. Woodfall) and Sold 'y *. +o'erts$ near the Oxford,rms in

War!ic-,&ane MCC// 0"rice Sixpence1

Preface Of Gold and Silver or !eal "enominator Of #ccidents that chan$e the Pro%ortion of Partic&lar "enominators of

'ations

Of redit and its ffects on Trade Of the *allance of Trade Of +chan$e and its ffects Of ,an&fact&res Of the Sit&ation and "is%osition of o&ntries With their Pro%ortions of

"enominator Of om%anies Of #lterin$ the "enomination of oin and its ffects

Preface

(a2ing$ for a long time since$ loo-ed upon 3old and Sil2er$ as the esign or End of

Commerce) 4 ne2er could reconcile myself$ to that generally recei2ed Opinion$ that theyincrease it$ and that 'y conse#uence$ Credit also does the li-e) for ho! to imagine the

End to 'e the Cause5 This Contradiction induced me to see- out the +eason or first

Cause$ that dri2es Man to trade6 nd as for 7ears past$ some %ations of Europe s!elltheir Credit to such a prodigious Bul-$ as though they stro2e to surpass one another$ and

as if Trade and Credit had not their 'ounds6 my esign$ 'y this Tract$ is to she! the ill

conse#uences of an unnatural 8se of Credit. 4 extend it no farther than 9ust !hat is

necessary to attain that End) and 4 entitle it$ The System or Theory of the Trade of theWorld$ 'ecause it contains such "rinciples$ as seem to me capa'le of ans!ering any

E2ent in Trade. 4 dra! those "rinciples from the natural Bent of Man) and the +emar-sand Conclusions 4 infer from them$ appear to me most natural. But as this System !illseem ne!$ and contrary to the %otions hitherto generally recei2ed$ and hath the ill :ate to

appear at a time$ !hen 4 myself could !ish it false) 4 'eg of my +eaders$ if possi'le$ to

reflect on it !ithout regard to those former %otions.
http://avalon.law.yale.edu/18th_century/trade1.asp#prehttp://avalon.law.yale.edu/18th_century/trade1.asp#goldhttp://avalon.law.yale.edu/18th_century/trade1.asp#acchttp://avalon.law.yale.edu/18th_century/trade1.asp#acchttp://avalon.law.yale.edu/18th_century/trade1.asp#credhttp://avalon.law.yale.edu/18th_century/trade1.asp#balhttp://avalon.law.yale.edu/18th_century/trade1.asp#exchttp://avalon.law.yale.edu/18th_century/trade1.asp#manhttp://avalon.law.yale.edu/18th_century/trade1.asp#sithttp://avalon.law.yale.edu/18th_century/trade1.asp#sithttp://avalon.law.yale.edu/18th_century/trade1.asp#comhttp://avalon.law.yale.edu/18th_century/trade1.asp#althttp://avalon.law.yale.edu/18th_century/trade1.asp#prehttp://avalon.law.yale.edu/18th_century/trade1.asp#goldhttp://avalon.law.yale.edu/18th_century/trade1.asp#acchttp://avalon.law.yale.edu/18th_century/trade1.asp#acchttp://avalon.law.yale.edu/18th_century/trade1.asp#credhttp://avalon.law.yale.edu/18th_century/trade1.asp#balhttp://avalon.law.yale.edu/18th_century/trade1.asp#exchttp://avalon.law.yale.edu/18th_century/trade1.asp#manhttp://avalon.law.yale.edu/18th_century/trade1.asp#sithttp://avalon.law.yale.edu/18th_century/trade1.asp#sithttp://avalon.law.yale.edu/18th_century/trade1.asp#comhttp://avalon.law.yale.edu/18th_century/trade1.asp#alt


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4 hope this :a2our !ill 'e granted$ together !ith that of excusing 'oth the Style and

Correction) my esign 'eing easily percei2ed$ and 4 expecting no pri2ate "rofit or

4nterest$ 'ut in the "u'lic- Welfare.

Of Gold and Silver or !eal "enominator

ll things$ either necessary or usefule to Man-ind$ ha2e 'esides a proper %ame to

distinguish one from the other$ another %ame$ that distinguishes or denotes !hat

"roportion they 'ear to 3old and Sil2er) and that "roportion is call;d Value.

The Value or "roportion of all things useful$ or necessary$ is to 3old and Sil2er$ in

proportion to the


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same End$ the &a'our of each %ation is continually opposed$ 'y all the &a'our of the rest

of the World.

Whene2er 4 mention the #uantity of 4nha'itants$ 4 al!ays suppose$ that regard !hichought to 'e had$ to the Situation$ and isposition$ of the different Countries of the World)

the same #uantity of inha'itants$ not producing the same Effect$ in all Countries$according as their ispositions differ6 !hich 4 shall she! hereafter.

Of #ccidents that chan$e the Pro%ortion of Partic&lar "enominators of 'ations and

their ffects

War and Mortality$ Etc. may alter the "roportion of pri2ate enominators) as !hen

se2eral %ations are at !ar together$ it may happen$ that other %ations may reap the

'enefit thereof6 Because War distur's and lessens the &a'our of those %ations that are at

!ar$ 'y ta-ing off their "oor from their usual &a'our$ and imploying them in the efenceof the State) so that those %ations not furnished unto the World their "roportion of

&a'our$ cannot retain their former "roportion of the grand enominator of the World) andthose %ations !hich are at peace$ and -eep at !or- their !hole "roportion of "oor$ dra!

from those that are at !ar$ 'esides their o!n "roportion$ such a part of the grand

enominator$ as is proportion;d to the num'er of Men imployed in the War.

When a %ation has attracted a greater "roportion of the grand enominator of the World$than its proper share) and the Cause of that ttraction ceases$ that %ation cannot retain

the O2erplus of its proper "roportion of the grand enominator$ 'ecause in that case$ the

"roportion of "oor and +ich of that %ation is 'ro-en) that is to say$ the num'er of +ich is

too great$ in proportion to the "oor$ so as that %ation cannot furnish unto the World thatshare of &a'our !hich is proportion;d to that part of the grand enominator it possesses6

in !hich case all the &a'our of the "oor !ill not 'allance the Expence of the +ich. Sothat there enters in that %ation$ more &a'our than goes out of it$ to 'allance its !ant of

"oor6 nd as the End of Trade is the attracting 3old and Sil2er$ all that difference of

&a'our is paid in 3old and Sil2er$ until the enominator 'e lessen;d$ in proportion to

other %ations) !hich also$ and at the same time$ proportions the num'er of "oor to that of+ich.

Thus as &a'our dra!s the enominator of the World$ also the enominator dra!s

&a'our from the World) so that if the particular enominator of any %ation$ 'e greater

than its 9ust "roportion$ it !ill dra! from the other %ations a "ortion of &a'our$proportion;d to its Excess) ad if its enominator 'e less than its 9ust "roportion$ it !ill

dra! a "ortion of 3old and Sil2er$ proportion;d to !hat it !ants of its 9ust "roportion.

+ich 3old and Sil2er Mines$ that 'elong to certain %ations$ and increase their +e2enues'eyond their natural "roportion act on those %ations$ as they had dra!n unto themsel2es

'y their &a'our$ a too great "ortion of the enominator of the World) and the Effects

thereof$ !ill last as long as the Mines$ and act more or less in proportion as they are rich.


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Of redit and its ffects on Trade

Man$ generally spea-ing$ 'eing eager and greedy of 3ain$ is impatient in Trade) so that

!hen he cannot ha2e the Value of things$ as soon as he !ould$ he chuses rather to allo!unto the Buyer$ more or less time$ at once to force the Vent$ and to pre2ent any other;s

supplanting him.

That Time !hich is allo!;d in Trade$ is call;d Credit) and as it proceeds from :ear and

esire$ and as all Men one !ith the other$ are e#ually su'9ect to the same "assions$ these2eral enominators of all the different %ations of the World$ are all e#ually increased

'y Credit$ in proportion to their #uantity of 4nha'itants.

Credit is to the enominator$ much as the Cypher is to rithmetic-) !hich of itself is of

no Value$ unless accompanied or mixed !ith %um'ers$ and loses that Value$ as those

%um'ers 2anish) in li-e manner$ Credit$ the Cypher of the grand enominator$ losing itsValue$ as 3old and Sil2er 2anish6 nd as in rithmetic-$ Cyphers increase the Value of

%um'ers) in li-e manner$ Credit increases the enomination of Value$ proportion;d to the4ncrease of the enominator 'y Credit. nd as that ddition$ or Credit$ proceeds from the

%ature of Man) 4 call the real enominator$ mixed !ith a natural "ortion of Credit$ the

grand %atural Measure or enominator of the World6 and that enomination !hichproceeds from it$ the %atural Value of things.

4f a %ation adds to its enominator$ such a "ortion of Credit$ as increases it 'eyond that

"roportion !hich 'y Trade naturally 'elongs to it$ that 4ncrease of Credit !ill act on that

%ation$ as if it had dra!n an e#ual Sum from a 3old or Sil2er Mine$ and !ill preser2e 'ut

its "roportion of that 4ncrease) so that the rest thereof !ill in time 'e dra!n off 'y the&a'our of other %ations$ in 3old or Sil2er. That %ation in that case 'eing una'le to

furnish unto the rest of the World$ the same #uantity of &a'our it furnish;d !hen itsenominator !as %atural$ and proportion;d to the %um'er of its 4nha'itants$ the +ich in

that case 'eing either richer than they !ere$ or in greater num'er$ consume more &a'our

than 'efore) so that less &a'our is exported from that %ation than !as$ 'efore the Excess

of its enominator6 nd the contrary happens$ !hen a %ation retrenches from itsenominator$ such a "ortion of Credit$ as lessens it 'eyond its natural "roportion) that

iminution 'rea-ing the "roportion$ 'et!een that and the other %ations$ !ill cause it in

time$ to dra! 3old and Sil2er proportionally from other %ations$ until its enominatorreco2ers its natural "roportion.

Of the *allance of Trade-

When a %ation exports more or less &a'our$ than is imported into it$ that difference

'et!een Exports and 4mports of &a'our$ is called Ballance of Trade.


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When the Ballance of Trade proceeds from the natural Excess$ or iminution of the

enominator 'y Trade only$ it neither is 2ery great$ nor lasts long) 'ecause as a

enominator$ till it hath attain;d its "roportion) also a enominator a'o2e its "roportion$dra!s the &a'our from other %ations$ till it 'e lessen;d to its "roportion6 so that Trade

causes a Vi'ration$ or continual E''ing and :lo!ing) !hich may 'e called the natural

Ballance of Trade.

Besides this natural Ballance$ another is sometimes felt$ !hich may 'e called the lastingBallance$ and happens !hen the enominator$ or yearly +e2enues$ exceed unnaturally.

To gi2e an 4dea of the manner 'y !hich this lasting Ballance is formed$ 4 shal suppose a

%ation composed of four Millions of Souls$ and that !ith a natural enominator$ the"roduce of the annual &a'our of that %ation$ amounts to ten "ounds Sterling a (ead$ one

!ith the other) !hich in all ma-es forty Millions a 7ear. 4 suppose also$ that this %ation$

in this natural State$ !ill dra! from the rest of the World$ for its %ecessities$

con2eniences$ or Superfluities$ ten Millions of la'our$ or foreign 3oods) and as 4 suppose

its enominator exactly natural$ it !ill export such an e#ual #uantity of &a'our$ as !ill'allance the ten Millions of 4mports6 'ut if to the natural enominator of this %ation$

there 'e added a "ortion of Credit) for example$ t!enty Millions$ 'earing an annual4ncome unto the "roprietors thereof$ after the rate of fi2e per cent there !ill 'e an

unnatural annual Million added to the +ich of that %ation$ !hich amounts to t!o and a

half per cent of all the &a'our of that %ation) so that the &a'our thereof must extend itselfin enomination of Value$ so as to ans!er the extraordinary emand of the +ich. nd as

4 suppose the Trade of that %ation to amount to ten Millions of 4mports$ it;s easy to

concei2e$ that after this Excess of enomination$ the ten M4llions of Exports !ill not

'allance the ten Millions of 4mports) so that the Ballance !ill run t!o and a half per centagainst this %ation6 conse#uently there !ill 'e =>? Thousand "ounds exported in Coin or

Bullion$ prefera'ly to any other Store of &a'our$ that 'eing not only the End of Trade$ 'utalso the only Store of &a'our$ that retains a real enomination$ 'y the strength of &a!that fixes Coin$ !hile all other &a'our recei2es an ddition of negati2e enomination.

nd thus in proportion to a greater Excess$ e2en !ith respect to the Store$ or Capital) for

example$ 4 suppose that to the !hole Value of the &ands$ and other Store of natural andreal &a'our$ there 'e a sudden$ unnatural$ and imaginary ddition of >?? Millions$ it;s

easy to concei2e$ that the "roprietors of those >?? Millions$ !ill dra! a "ortion of the

!hole Capital) and there 'eing no ugmentation of "oor$ &a'our must extend itself$ inproportion to the additional Stoc-6 So that if 4 suppose the enomination of all the

Capital$ or natural and real Store of &a'our of that %ation to amount to @??? Millions$

this unnatural and imaginary enomination$ !ill raise &a'our to fifty per cent of negati2e

or imaginary enomination$ and cause the Ballance to run against that %ation$ in li-e"roportion$ and so annually$ or therea'outs$ until its !hole enomination return$ into the

proportional E#uili'rium of the rest of the World.

What precedes$ supposes the real "art of the enominator$ of such a Bul-$ as if the

Ballance of Trade had reduced the enominator to its natural "roportion$ there shouldstill remain such a "art$ as could support that unnatural "ortion of Credit$ !hich had 'een

added to the enominator of that %ation6 But if the real "art of the enominator$ is found


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to 'e so small$ that 'eing !holly ta-en off$ the enominator !ould still exceed the

natural "roportion) in that case$ !hen the Ballance had reduced the real part of the

enominator$ so as to 'e 9ust sufficient to support the remaining Excess of theenominator$ that %ation !ould then 'e o'liged to li2e on its Store or Capital of

exporta'le la'our. fter !hich$ Credit !ould in time 'e forc;d to yield$ in proportion to

the remaining Excess of the enominator. Thus !ould the enominator ta-e its natural"roportion$ after !hich all things in time !ould enter into their natural "roportions$ and

enominations) so that all the "rofit a %ation gains$ 'y unnatural s!elling its

enominator$ consists only in the 4nha'itants li2ing for a time in proportion to thats!elling$ so as to ma-e a greater :igure than the rest of the World$ 'ut al!ays at the cost

of their Coin$ or of their Store of real and exporta'le &a'our. :or as the !hole Creation is

in a perpetual Motion$ and as 3od made Man for &a'our$ so not thing in this World is of

any solid or dura'le Worth$ 'ut !hat is the "roduce of &a'our) and !hate2er else 'ears aenomination of Value$ is only a Shado! !ithout Su'stance$ !hich must either 'e

!rought for$ or 2anish to its primiti2e %othing$ the greatest "o!er on Earth not 'eing

a'le to create any thing out of nothing. 4t may su'stitute the Shado! instead of the

Su'stance$ to the full proportion of Su'stance that 'elongs to that "o!er) 'ut then thatSu'stance should 'e dra!n off$ or !il in time disappear or slip a!ay of itself. :or all

Men ha2e a natural +ight to their "roportion of !hat is in the World) so that if !e seepri2ate Men en9oy a'o2e their "roportions$ it;s either 'y a greater 3o2ernment of

"assions$ or a superior Strength$ 3enius$ or some other ccident. But as %ations are

composed of all sorts of Men$ they all mo2e in the same e#ually mix;d manner$ and attainto the same End$ each in proportion to its num'er. Thus do %ations attract their

"roportions of !hat is in the World$ 'y the force of the natural right of their 4nha'itants)

conse#uently a %ation cannot retain more than its natural "roportion of !hat is in the

World$ and the Ballance of Trade must run against it.

Of +chan$e and its ffects-

The Excess of the enominator$ !ith respect to the 4ndies$ or other far distant Countries$

'et!een !hom is not Exchange$ and !here the Ballance is al!ays exported in Species or

Bullion$ is ne2er sensi'le$ 'ut !hen the real part of the enominator is so far reduced$ asnot to 'e a'le to support the remaining Excess of the denominator. But in Europe$ !here

Exchanges are made use of$ the Excess is felt 'y their difference$ !hich al!ays follo!s

the Excess of the enominator$ and is greater or lesser 'et!een one %ation and the rest$as the "roportion of their se2eral pri2ate enominators differ. :or as there happens an

O2erplus or ifference$ !hich cannot 'e paid in &a'our) those :oreigners that !ill not

run the haAard of transporting Coin$ and that cannot or !ill not stay till the Ballancereturn in its E#uili'rium$ allo! to those that are !illing to stay$ or run those ris-s$ a

certain Consideration great or small$ in proportion to the Ballance of Trade$ or according

as they can agree.

When 'y the Excess of the enominator$ the ifference of Exchange is considera'lyincreas;d against a %ation$ and Coin 'ecome scarce) :oreigners finding a great &oss 'y


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!ay of Exchange$ 'ecome more impatient of ha2ing their o!n transmitted to them$ and

chuse rather to imploy it in 3oods or &a'our$ to 'e transported for their ccount$ to those

Countries it !ill yield most$ in hopes 'y that means to pre2ent part of that &oss they!ould 'e oliged to 'ear 'y !ay of Exchange. This forces the &a'our of that %ation to rise

and extend itself in enomination of Value$ so as to ans!er that 4ncrease of emand6 But

as that 4ncrease is forced 'y the negati2e part of the enominator$ proceeding from itsExcess$ or from those e'ts that compose it$ all that 4ncrease is imaginary or negati2e. So

that !hen Merchants go a'out to con2ert else!here$ the &a'our of that %ation into 3old

or Sil2er$ they find themsel2es in that case o'liged to retrench all that forc;d 4ncrease)'ecause that &a'our of the rest of the World !hich interferes !ith it$ 'eing charged 'ut

!ith a natural enomination$ !ill force its Vent perfera'ly to that !hich is charged !ith a

greater enomination. Thus :oreigners finding also their ccount short this !ay$ cease to

credit this %ation$ 'y importing into it no more &a'our than they are sure to export out ofit. Thus !ill that %ation$ after ha2ing li2ed on its Coin$ 'e o'liged to li2e on its Store of

exporta'le &a'our$ until Credit yields) and in the mean !hile$ foreign Manufacturers$

!hose &a'our is not risen$ and conse#uently ha2ing more emand for it than 'efore$ find

themsel2es in a condition to imploy that %ation;s "roduce$ or Materials$ percei2ing theycan$ 'y the great ifference of Exchange$ allo! a great "rice for them6 this forces those

Materials to rise in enomination of Value$ e2en 'eyond the "roportion of Exchange$ andconse#uently 'eyond the "roportion of Manufactures. fter !hich$ the Manufacturer

finding neither the same emand$ nor "rofit as 'efore$ is o'liged to lessen the %um'er of

his Wor-men. Thus 'y degrees the Wor-men are o'liged to #uit their usual &a'our$ and'eta-e themsel2es to other$ 'eing forced out of the natural "roportion$ to fill up that$

!hich hath regard to the Excess of the enominator.

:rom !hat hath 'een said hitherto$ may 'e dra!n the follo!ing Conclusions.

@. That Credit is of pernicious conse#uence to that %ation$ that uses or encourages it'eyond %ature$ 'y reason it exists 'ut at the cost or exclusion of Coin$ !hichcomposes the real part of the enominator.

=. That !hat is properly call;d Value of things$ in a %ation !hose enominator

exceeds not its natural "roportion$ is a mix;d enomination$ compos;d of the +eal"art$ and of the %atural "ortion of Credit of the enominator.

. That !hat is call;d Value$ in a %ation !hose enominator exceeds the natural

"roportion$ is not only a mix;d enominator compos;d of the +eal "art$ and

%atural "ortion of Credit 'ut also of the Excess of the enominator) and that thatExcess of Value is negati2e$ and acts positi2ely against that %ation6 so that instead

of gaining 'y Trade$ it loses proportiona'ly to that Excess of enomination of

Value.

. That the enominator of the World 'eing unlimited$ and indefinite$ 'y reason ofthat indefinite Variation$ or 4ncrease$ it continually 'ears$ 'y a continual ddition

of 3old and Sil2er$ !hich is daily dra!n from the se2eral Mines of the World) it

follo!s$ that the pri2ate enominators of pri2ate %ations$ are also indefinite.


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>. That although the natural enominator of a %ation 'e indefinitely mo2ing$ it is

ho!e2er a certain "oint$ to !hich a %ation can naturally attain to$ 'y Trade.

D. That that "oint is e2er proportioned to the 'ul- of the general enominator of theWorld$ and to its num'er of 4nha'itants.

. That as &a'our is the :oundation of Trade$ that "oint cannot 'e attained to$ 'ut 'y

that "ortion of &a'our$ !hich is proportioned to the num'er of 4nha'itants that

compose a %ation) nor maintained$ !hen attained to$ 'ut 'y that same &a'our.

F. That !hen the Ballance of Trade runs$ and continues generally running$ against a%ation$ !e may conclude its enominator exceeds its natural "roportion.

G. That if Trade !as not cur'ed 'y &a!s$ or distur'ed 'y those ccidents that

happen in long Wars$ etc. !hich 'rea- the natural "roportion$ either of "eople$ or

of pri2ate enominators) Time !ould 'ring all trading %ations of the World into

that E#uili'rium$ !hich is proportioned$ and 'elongs to the num'er of their4nha'itants.

@?. That the +iches or Strength of a %ation consists in the %um'er of its 4nha'itants.

@@. &astly$ That as one State may 'e defended 'y another$ 'y means of 3old andSil2er$ as !as experienced in the last Wars) Trade is a'solutely necessary$ 'eing

the only means 'y !hich a %ation can attain to it "roportion of +iches.

Of ,an&fact&res

The Manufactures of the World may 'e reduced to t!o sorts) that is$ the %ecessary$ !hichconsist in all that is !rought for Man;s %ecessities or con2eniences) and the Superfluous$

!hich consist in all that is !rought$ and ser2es to gratify his Vanity or "leasures.

While the pri2ate enominator of a %ation is$ and lasts in its natural "roportions$ and fly

from that "roportion$ as it mo2es from it6 So that if the enominator 'e under its"roportion$ necessary Manufactures flourish$ and gain from the superfluous in li-e

"roportion) and !hen it is a'o2e its "roportion$ the superfluous flourish$ and gain also

from the necessary in li-e "roportion.

%ational "rofit happens only$ !hen necessary Manufactures are in their full "roportions$or 'eyond it) and national &oss$ !hen the superfluous exceed their "roportion.

Manufactures of pri2ate %ations may 'e considered three Ways. That is$ the %atural in a

'are "roportion$ !hich are those !hich are naturally 9ust sufficient to ans!er the intireemand of the 4nha'itants. The %atural in great "roportion$ !hich are those$ !hich

'esides the emand of the 4nha'itants$ furnish an O2erplus !hich is transported to the


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rest of the World. nd the %atural in small "roportion$ !hich are those that cannot

naturally 'e sufficient to ans!er the 4nha'itants Wants$ !ithout (elp from the rest of the

World.

E2ery %ation naturally possesses a Mixture of these three sorts of Manufactures) 'ut in

such a manner$ as the %atural in great "roportion$ exceed as much$ or more$ the emandof the 4nha'itants$ as those in small "roportion$ are short of that emand) so that they

'allance one another 'y Trade. %eigh'ouring %ations ha2e$ generally spea-ing$ a certainnatural "ortion$ either great or small$ of the same "roduce and Manufactures$ according

to their %um'er of 4nha'itants$ and as they are disposed and situated.

%o %ation can encourage or enlarge its "roportion of any pri2ate and naturalManufacture$ !ithout discouraging the rest) 'ecause !hether an llo!ance 'e gi2en$

either to the Manufacturer$ or Transporter$ that llo!ance ser2es$ and is employed to

attract the Wor-men from those other Manufactures$ !hich ha2e some li-eness to the

encouraged Manufacture6 So that !hat is transported of the encouraged Manufacture$

'eyond nature$ only 'allances the iminution of the others.

When the natural "roportion of one$ or more Manufactures$ although necessary$ is not

large enough to ans!er the intire emand of the 4nha'itants$ the 'est and safest Way is

freely to suffer their 4mportation from the rest of the World) Taxes on 4mports 'eing nomore than a egree of "rohi'ition$ and "rohi'ition only forcing those Manufactures to

extend themsel2es 'eyond their natural "roportions$ to the pre9udice of those$ !hich are$

according to the isposition of the country$ natural 'eyond the intire emand of the4nha'itants) !hich lessens or hinders their Exportation$ in proportion to the pre9udice

they recei2e 'y the 4ncrease of those Manufactures$ !hich are 'ut in part natural$ and

!hereof the 4mportation is prohi'ited.

This consider;d !e may conclude$ that Trade is ne2er in a 'etter condition$ than !hen it;snatural and free) the forcing it either 'y &a!s$ or Taxes$ 'eing al!ays dangerous6 'ecause

though the intended Benefit or d2antage 'e percei2ed$ it is difficult to percei2e its

Countrecoup) !hich e2er is at least in full proportion to the intended Benefit6 %ature notyielding at once$ sharpens those Countrecoups$ and commonly causes a greater E2il$ than

the intended Benefit can 'allance. Moreo2er$ Trade 'eing a tacit and natural greement$

to gi2e or furnish a "roportion of certain enominations of &a'our$ to 'e dra!n 'ac- inli-e "roportion$ in such other enominations$ as 'est suits %ecessity or :ancy) Man

naturally see-s$ and finds$ the most easy and natural Means of attaining his Ends$ and

cannot 'e di2erted from those Means$ 'ut 'y :orce$ and against his Will.

Of the Sit&ation and "is%osition of o&ntries .ith their Pro%ortions of

"enominator

The 'est Situations are those near the Sea$ !here the &a'our of the World may 'e

imported and exported !ith least Charges) and !hose ispositions are such$ as 'y means


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of +i2ers or Canals$ the &a'our of the 4nha'itants may 'e easily transported from one end

of the Country to the other$ at small Charge6 The 4nha'itants of such a Situation$ and

isposition$ 'earing a greater enominator$ than an inferiour Situation and ispositioncould$ though occupy;d 'y an e#ual num'er of 4nha'itants) 'ecause all the Charge in

transporting &a'our$ from the Extremitys to the Sea,"orts$ is properly a Waste$ or &oss$

of the 4nha'itants &a'our6 so that there !ill 'e more ays !or- re#uired$ to attract onefrom the Sea "orts$ according to the istance or isposition. :or example$ 4 suppose the

Charges of Transportation of &a'our from the Extremitys to the "orts$ increase it one half

e2ery hundred Miles$ and reciprocally from the "orts to the Extremitys) that is$ supposingone !ith another a ay;s !or- at t!o hundred Miles from the "ort$ is !orth or !ill

produce Eight,pence$ that this same ay;s Wor- transported !ithin a hundred Miles of

the "ort$ !ill produce T!el2e,pence 'y reason of the Charge of Transportation$ and that

for the same reason of the Charge of Transportation$ and that for the same reason it yieldsEighteen,"ence at the "ort$ it is plain one ay;s &a'our of the most distant 4nha'itants

can produce one at the "ort$ 'ut after Ten,"ence or fi2e


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occasion ser2es. So that considering the natural Bent of Man$ 4 concei2e pri2ate "ersons

!ill trade to 'etter ad2antage for the State$ than Companies can) 'esides the danger of

their extending their Credit 'eyond their "roportions to the pre9udice and exclusion ofCoin$ and di2iding annually more than they gain 'y Trade or &a'our$ to the pre9udice of

the "roprietors of the real annual +e2enues of the Kingdom$ 'y thrusting them out of

their natural "roportions of the Whole. :or if to the !hole "roperty there 'e added anunnatural and negati2e (alf$ that 'ears an annual +e2enue or ttraction of &a'our$ in

proportion to that (alf$ the "ossessors of the first and natural ll$ !ill not 'e a'le to

attract a'o2e t!o Thirds of all the annual &a'our. 4t is true$ they !ill still attempt thesame enomination of &a'our they did 'efore the ddition) 'ut as the added "ortion$ in

attracting its "ortion of &a'our$ !ould raise it >? per cent in enomination$ the

"roprietors of the first and natural ll$ ha2ing no more than their first annual

enomination$ !ill not 'e a'le to attract any more &a'our$ than t!o thirds of that theyattracted 'efore the ddition. Thus they are thrust out of one Third$ and are in effect

"roprietors 'ut of t!o Thirds$ instead of the Whole they !ere possessed of6 !hich is

properly only a Transfer of the "ropriety of &a'our$ from the real to the negati2e

possesors) the !hole annual &a'our of a %ation 'eing al!ays e#ual to all its annual+e2enues$ of !hat enomination soe2er they 'e.

Of #lterin$ the "enomination of oin and its ffects

When 'y some ccident or other$ the enominator or enomination of the Whole islarger than the State can 'ear$ the +emedys are$ either to proportion the "eople to the

enominator$ or the enominator to the "eople6 'ut as the first is most difficult$ and

almost impossi'le$ the proportioning the enominator to the "eople must 'e prefer;d.

Which may 'e done either 'y laying a Tax on the 4nha'itants$ to 'e employ;d in sin-ingthe e'ts of the %ation$ or 'e reser2ed against a future Exigency of the State) or 'y

raising the enomination of Coin$ in proportion to such a "ortion as !ould 'e thoughtnecessary to 'e cut off from a %ation. :or example$ 4 suppose$ that 'y reason of the

Excess of the enominator$ !hether it 'e to dra! more Coin into a %ation$ or only to

preser2e that already in it$ the enomination of Coin 'e dou'led) it is plain Credit then

!ould 'e reduced to one half$ !hilst the real "art of the enominator$ still 'eing the same"ortion of the grand enominator of the World$ it can express 'ut that selfsame "ortion$

and can retain 'ut that same Strength or Value$ !hich is proportioned to that "ortion$

!hether its enomination 'e high or lo!$ !hich is different as to Credit) it 'eing only aenomination of a certain %um'er of 8nities of the pri2ate enominator of a %ation$

that enomination alters in Value in li-e proportion$ as the 8nity is altered. nd as in this

case the 8nity !ould 'e reduced to half its former Value$ Credit !ould also 'e reduced tohalf its former Value$ and !ould express 'ut one half of that "ortion of the grand

enominator of the World$ it did express 'efore this Operation) and reciprocally$ the

lo!ering the enomination of Coin$ enlarge the enominator$ 'y enlarging Credit.

What precedes$ she!s !hat is feasi'le in case of extreme %ecessity) 'ut as such anOperation !ould 'e of great pre9udice to the "roprietors of &and$ %ations ought 'y all


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means to pre2ent$ either the Want of such a +emedy$ or %ecessity of such an 8nra2elling$

as !ould 'e the more pernicious$ the longer it had 'een a coming) and !hen the

isposition of natural Manufactures !ould 'e enlarged$ in proportion to the s!elling ofthe enominator and enomination6 'ecause supposing a %ation had enlarged its

enominator$ and enomination$ so as to !ant such a +eduction) that %ation ought first

to consider ho! long the E2il !as coming$ that the +emedy might 'e appliedaccordingly6 for !hen the E2il is ne! and sudden$ it may at once alter the natural

"roportion of +ich and "oor of that %ation) 'ut it cannot$ though e2er so great$ alter the

natural "roportion of necessary and superfluous Manufactures$ 'ut gradually$ and !ithtime. nd !hile necessary and superfluous &a'ours are in their natural "roportions$ the

enominator may 'e proportioned thereto$ !ithout exposing Trade to any sensi'le

Con2ulsions6 But !hen the E2il is of long standing$ the "roportion of necessary

Manufactures is then too small$ 'y reason as the enominator of a %ation increases$ theManufactures of Superfluities dra! from the necessary Manufactures their Wor-men$ the

Masters of the superfluous raising more pprentices than 'efore$ and those of the

necessary less in li-e proportion. So that if after se2eral 7ears unnatural 4ncrease of

enominator$ a %ation !ould suddenly cure the E2il$ 'y suddenly proportioning theenominator to the 4nha'itants$ the +emedy !ould pro2e too sharp) for in that case the

Wants of Superfluities !ould 'e much lessened$ and those of %ecessities much increased)and in such a manner as the necessary Manufactures could not at any rate ans!er the

extraordinary emand$ until they had attracted from the superfluous$ those Wor-men

they had lost$ !hile the enominator !as increasing) !hich is a Wor- of time.

s 4 suppose that %ation 4 ma-e use of for example in a natural State$ 4 do not suppose itloaded !ith a foreign e't) therefore 'efore 4 ma-e an end of this Tract$ 4 thin- proper to

ta-e notice$ that a %ation must loo- upon a foreign e't$ as part of its ll) !hich$ tough

negati2e$ acts positi2ely on that %ation$ and$ according to the +ules of this system$ as

long as 'oth the Confidence and :ear of Strangers -eep them in a 'allance. But !henthose t!o "assions fly from their E#uili'rium$ the e't acts 'eyond the +ules$ in

proportion to the istance of that E#uili'rium$ and to the &argeness of the e't. Thus is

an inde'ted %ation not only o'liged to -eep those strange Creditors out of its o!n&a'our$ 'ut also its Coin and Bullion are e2er su'9ect to their "assions and Occasions)

they ha2ing it in their po!er$ at !ill$ irregularly to turn the Ballance.

s 4 do not pretend to -no! the State of %ations) 4 ma-e no pplication$ 'ut lea2e it tothose$ !ho$ 'y their Station$ are 'est capa'le of it. 4 shall only add$ That in stating the

Case of %ations$ regard ought to 'e had$ either to the Empire o2er$ or Su'9ection to other

%ations) that$ in many cases$ altering the "roportion of the enominator. :or supposing

t!o e#ual %ations$ and that one hath such a "o!er or +ight o2er the other) as$ forexample$ one #uarter of the yearly "roduce of its &a'our 'e expended in the other6 in that

case the imperial %ation !ill support a enominator one #uarter a'o2e its natural

"roportion) and its "roportion of superfluous Manufactures$ !ill run a'o2e nature in li-e"roportion. 'ut then the su'9ected %ation !ill support 'ut three #uarters of its natural

enominator) and its "roportion of necessary Manufacturers !ill run a'o2e nature) and

as fast as the other #uarter is attracted from the World$ it !ill 'e dra!n off 'y the imperialone6 So that these t!o %ations must 'e loo-ed upon$ one as composed of more +ich 'y


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one #uarter than its natural "roportion$ and the other of less +ich in li-e proportion. nd

as the Excess of +ich in the one$ is supported 'y the 4nha'itants of the other$ it !ill -eep

its ground) 'ut 'oth ta-en together$ !ill still -eep 'ut their natural "roportion. So that!here a %ation is found to 'ear a greater "roportion of enominator$ and superfluous

Manufactures$ than its %um'er of 4nha'itants seem capa'le of naturally supporting$ it

!ill$ if loo-ed into$ appear$ That that 4ncrease is maintained 'y the &a'our of other%ations) !hich$ 'y some ccident or other$ are either su'9ected or inde'ted to it.

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The System or Theory of the Trade of the World - Isaac Gervaise (1720)

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