Wk. 3 Primary Source Thomas Mun, England’s Treasure by Forraign Trade (1622)

Question 1

Thomas Mun, England’s Treasure by Forraign Trade (1622)

Answer 1

Thomas Mun, England’s Treasure by Forraign Trade (1622) – was an English merchant and one of the Directors of the East India Company. It was highly influential on 17th-century economic thinking in Europe.

Mun clearly believed that trade was the source of wealth, but what specific kind of trade did he think was valuable?

• “…supply our selves and prevent the importations of Hemp, Flax, Cordage, Tobacco, and divers other things which now we fetch from strangers to our great impoverishing.” – wanted to us their land to grow these things rather than import them at great cost.
• “…Natural wealth is so much only as can be spared from our own use and necessities to be exported unto strangers. The Artificial consists in our manufactures…” – So manufactured goods seemed favorable for trade since those could be manufactured to unlimited supply, while only the surplus of ‘natural’ items could be sold.
• And fishing – “Our Fishing plantations likewise in New England, Virginia, Greenland, the Summer Isles, and the Newfoundland, are of the like nature, affording much wealth and employments to maintain a great number of poor, and to encrease our decaying trade.”

What was the business strategy of the East India Company?

• Sell to foreign countries more than they bought – “…we do yearly export the overplus to forraign Countries to the value of £2,200,000, by which means we are enabled beyond the Seas to buy and bring in forraign wares for our use and Consumptions, to the value of £2,000,000, which must be brought in to us in so much Treasure…” – making a 200,000-pound profit.
• Value of the same item in different places had a different value. Better to sell the items where he could get the most payment for it and import goods from the places where the goods cost least. – “…we transport yearly unto divers other Nations to be sold at a higher price; whereby it is plain, that we make a far greater stock by gain upon these Indian Commodities, than those Nations do where they grow…”
• Also, make your own deliveries and pickups – “The value of our exportations likewise may be much advanced when we perform it our selves in our own Ships, for then we get only not the price of our wares as they are worth here, but also the Merchants gains, the charges of insurance, and freight to carry them beyond the seas.”

Why did he think Spain had become poor?

• Two things were exhausting Spain’s wealth – 1) their need to trade for the many goods they do not have available as a natural resource in Spain, and 2) their ongoing and widespread war of dominance – “…besides the disability of the Spaniards by their native commodities to provide forraign wares for their necessities (whereby they are forced to supply the want with money) they have likewise the canker of war, which doth infinitely exhaust their treasure, and disperse it… …whereby we often see that Gold and Silver is so scant in Spain, that they are forced to use base copper money.”

What country do you think he believed was England’s greatest rival?

• He saw Spain as a dominant figure, not only in Europe, but also in the New World. He sees Spain as benefitting greatly from its dominion over the West Indies and also the continued enlargement of its kingdom – “…so great value as those of the West Indies which are now in the possession of the King of Spain; who thereby is enabled not onely to keep in subjection many goodly States and Provinces in Italy and elsewhere, but also by a continual war taking his advantages doth still enlarge his Dominions, ambitiously aiming at a Monarchy (by the power of his Moneys, which are the very sinews of his strength) that lies so far dispersed into so many Countries.”

Given his understanding of the relationship between trade and wealth, did he think it was possible to have mutually beneficial trade?

• Sort of, he believed in getting the products to the countries that needed it most (for the highest price), but in the end, he demanded to sell to other countries more than he bought from them. In that respect. He would always be the net winner.