III. The Encouragement of Commerce and Trade

2 Sublato commercio societas inter homines peri bit et ad solitudinem cuncti mortales rediR"entur. De Rege, Lib. III, cap. 12, p. 311. 3 Sic fiet ut quibus rebus abundat provincia, cum iis mutentur, quarum penuria existit, apud alios major copia: qui est verus mercaturae usus et finis, quo tota ea ars referri debet. Ibid., Lib. III, cap. 9, p. 279. 93 MARIANA:-POUTICAL ECONOMY and nothing must he allowed to interfere with it. This is so much the more the case because commerce is a most delicate process which is greatly affected by the slightest disturbance. It is like milk, which is spoiled by the slightest breeze. 1 High tariffs are, above all, harmful to foreign trade, for the burden of them is shifted to the buyer, with a resultant increase in the prices. Consequently, tariffs on the neces saries of life must be moderate so as to encourage and facili tate imports from abroad. Mariana thus opposes high rev enue tariffs, at least in so far as necessaries are concerned.

Merchants should enjoy the special protection of the law because their traffic is so nec~ssary for the welfare of the State. Adulterated money is another great drawback to both domestic and foreign commerce. Foreigners will be dis couraged from bringing their goods to Spain if they receive in return nothing but cheap coin. Debasing the coinage will result in higher prices. If the king should try to fix a lower price no one would sell and a general disturbance of trade would follow. Thus Mariana though not an out and out free trader was far in advance of his age which believed in high tariffs as a means of enriching one's own country at the expense of foreigners. If our author advocated a high tax on luxuries this was primarily for the reason that they destroy the good old simplicity of living. If the consumers will not listen to reason, they should at least be compelled to pay a high price and so benefit the treasury. Our author also enters a blanket objection against all trade carried on by foreigners in Spain on the ground that they will introduce their vices and bad 1 Sic commercium impedietur, quod instar lactis aurae tenuissimo affiatu corrumpitur, usque adeo delicata res est. De Monetae Mutatione, cap. ii, p. 214.

94 COMMERCE AND TRADE customs into his beloved country, thus rendering the Spaniards unfit for war. Mariana as a hullionist strictly adheres to the Spanish law which forbade the export of precious metals. Such prohihitions had heen issued throughout all Europe during the later Middle Ages on account of scarcity of these metals. 1 Even after Spain had received enormous supplies of silver and gold from the new world, she still persisted in her old prohihition. Whereas the real and valid reason for the prohibition of precious metal had been scarcity of gold and silver, there arose in the course of time the strange opinion that a country is rich in as far as it has an abundance of "precious metal. This opinion still prevailed during Mari ,ana's time hut was soon afterwards replaced hy the fallacy ,of a favorable balance of trade, which notion was not alto 'gether unknown to our author. On the other hand, he can scarcely he called an orthodox believer in the Spanish pro hihition against export of silver and gold. He sees that foreigners will get the Spanish silver anyway, simply be ,cause they need it, and believes that they will find ways and means of obtaining it. It is interesting that he also 'knows the real basis of this very true observation, namely, Spain's unfavorable trade balance.

Protectionism, which plays so important a role in modern commercial policy, was not unknown to Mariana. To him it meant, however, not 80 much the protection of native industry already in existence but rather a means of creating new industries in Spain. He remarks that every year a great quantity of Spanish money is going abroad for the purchase of frippery and luxuries. 2 Why not produce these 1 J. W. Horrocks, A Short History of Mercantilism. "Atque eam rationem praesertim in scrutis servari volo, quae ex aliis provineiis venient. magno imposito vectigali vendantur. Sic pecuniae minus deferetur ad exteros: multi earum rerum artifices spe quaestus in Hispaniam confluent, quo civium multitudo augeatur: 95.

MARIANA:-POLITICAL ECONOMY goods in Spain? The advantages would be many. First of all, there would he a greater supply of those things which serve to embellish life. Spain would preserve for herself much of her supply of precious metal which must other wise flow abroad and he lost to Spain. Why should not Spaniards instead of foreigners make the enormous profit on such goods? If Spain lacks skilled workmen, such as silversmiths, em hroiderers and carpet makers, they must he hrought into the country from ahroad. If their trades do well in Spain, these artisans will he attracted to the country, with many favorable consequences. The population will he increased, which means greater prosperity and higher tax returns. If the native industry is prospering, very few Spaniards will he tempted to emigrate,-again a great advantage. Here Mariana follows the reasoning of orthodox Mercantilism. We find still another very modern and also a very heauti fuI idea in our author's discussion of commerce. The dis covery of America and of the passage to the East Indies had hrought ahout an enormous incre~se in international trade. Goods were exchanged between the most distant countries, and it seemed almost as i£ distance had heen annihilated. This growing commercial intercourse seems to Mariana a symbol of growing charity and a means of uniting the various nations of the world in the honds of friendship.1 And yet, if we look hack over the time hetween the publication of De Morte et lmmortalitate and the pres ent, we can hardly say that international friendship has grown to any great extent. The opposite is rather the case.

Qua re nihil est commodius ad augendas opes tum Principis tum provinciae. De Rege, Lib. III, cap. 7, p. 266. 1 Mutuae inter homines amicitiae praecipuum a commercio vinculum. Sic factum ut nulla regio bonis omnibus abundaret, nulla sua dote careret, in remotissimas nationes et solis ardoribus exustas gemmas, aurum, aromata relegavit. quae cupidissime peterent gentes aliae. De Marte et Immortalitate, Lib. II, cap. 9, p. 404. 96 COMMERCE AND TRADE The political and economic life of Europe, from the moment feudalism was overthrown and replaced hy strong national monarchies, followed the narrow lines of nationalism rather than that of mediaeval universalism. The division of the one universal Church caused by the Reformation was an other obstacle to mutual understanding and friendship he tween nations. It destroyed even national solidarity in countries like Germany and France, and hrought about fierce religious conflicts, especially the Thirty Years War. When religious intolerance later gave way to a liberal attitude, nationalism had grown to such an appalling degree that it could precipitate the World War. If Mariana had lived 300 years later, he might not have ventured to make his remark about an ever growing friendship among nations.

It seems as if the Great War has at last convinced the human race that all men are members of one great family and that they need each other, economically at all events. The League of Nations may he considered a new attempt to promote amity among peoples, and the ever growing com mercial and economic solidarity of the nations may some day realize Mariana's heautiful vision of one great family of nations united in charity and friendship. Mariana is an ardent defender of State intervention, which we should call State paternalism rather than State Social ism. As a moralist he holds with the other scholastics that a "just price" must he the hasis of husiness transactions. This just price was fixed in mediaeval days hy the govern ment, and it was considered wrong to demand more than the legally fixed amount. Mariana sees, however, that in practice it is not always possihle to determine prices in a satisfactory way, and that if they do not agree with the common popular estimate they cannot he enforced. To he fair a price must not he fixed once and forever, hut must 97 MARIANA:-POLITICAL ECONOMY take into account various conditions which change with the demand and supply of the articles in question. Prices must therefore he revised from time to time.

1 As we have seen~ 2 Mariana contended that poor tenant farmers should he exempted from the legal price for their crops. We do not learn, however, just ~ow this plan can he carried out. The very fact that such an exemption is rec ommended shows that Mariana no longer quite believes in State intervention, to regulate prices. The unreasonable ness of such intervention is clearly shown in the case of adulterated coinage, or as we should say today, inflation. If the face value of a coin is more than its metal value, merchants will naturally demand a price up to the amount of the difference. Even if the king were to insist that they sell for the old price, he would not succeed in enforcing his edict, since the price would be patently unfair. If the government should insist on the law, the result would simply be that nobody would he willing to sell and a general con fusion would result. Mariana proves his assertion from the history of Spain. Every time the Spanish kings adul terated the coinage, there followed a general rise in prices, and all government interference proved futile.

8 Mariana also maintains that it is practically impossible to fix prices for everything. Here, then, we see that our author applies the very im portant economic principle that prices regulate themselves according to the demand and supply of goods and the amount 1 Quod si ea lex non in omne tempus feratur, neque toti provinciae serviat, ubi tanta varietas est, sed singulis annis atque in singulis urbibus pro rerum ubertate pretia rebus, frumentoque constituantur, uti in aliis pr"ovinciis fieri scimus, multo melius rebus communibus consultum erit. Quid enim, an lacis uberrimis atque indigentibus, variis temparibus et discrepantibus multum annonae copia, idem praescribatur? De Rege, Lib. III, cap. 9, p. 281-82. 1I Page 90. S Porro ad merces alias extendetur procul dubio •.•ut crescant eorum pretia, quantum de monetae bonitate fuerit detractum, aut valor manetae crescet: perinde enim est. • • • Sic factum quoties moneta pejor effecta est. De Monetae Mutatione, cap. 10, p. 210.

98 COMMERCE AND TRADE of money in circulation. If the coinage is genuine and scarce, prices will he lower; if it is dehased and plentiful prices will necessarily rise. 1 This is an application of the quantity theory of money which is the underlying principle in Irving Fisher's scheme for stabilizing the money unit. 2 Mariana also shows himself an enemy of monopolies which raise prices heyond reason. They are another form of taxation; and since the king cannot impose a· new tax without the consent of his subjects, monopolies not ap proved of by the people are unjust. Repeated sales of the same commodities for the sake of raising their prices are likewise condemned hy our author. The State should pre vent merchants; fro~ such manipulations, because these hurden the people unjustly and without necessity. The prohlem of unemployment is not unknown to Mari ana. When he encourages public improvements calculated to heautify life and promote trade, he has also a secondary end in view. Unemployed people will find in this wayan opportunity to earn their daily bread, and the community will he relieved of the duty to render charitahle assistance.

Summing up, we may say that Mariana saw the importance of commerce and trade and advocated their encouragement by the authorities: that he realized the impossibility of fix ing prices, although he apparently adopted the idea: that he knew that prices regulate themselves according to the laws of demand and supply with regard to both commod ities and currency. He helieves, though not to an un reasonable extent, in Mercantilism as a whole. Tariffs on necessaries must not, he holds, be so high as to discourage importation: superfluous and harmful luxuries should hy 1 Neque est dubium in novam monetam conspirare: quae singula mercium caritatem afferunt, nempe multitudo ejus immensa earn reddere vilem, uti in aliis mercibus continiit copia vilescere. Ibid. 1I Irving Fisher, The Purchasing Power of Money, Stabilizing the Dollar. 99 MARIANA:-IlOUT1CAL ECO~OMY all means be kept to a minimum, or else be made to yield a high revenue to the State. Home production of useful articles must be encouraged to increase national prosperity and to secure a favorable trade balance. All artificial manip ulations for raising prices are harmful and must be stopped by the authorities. The government has the obligation and also the power to create employment by undertaking public improvements during times of husiness depression. More generally, the king should spare no endeavor to encourage commerce and to make trade remunerative.

If trade and commerce are to prosper, it is necessary that the means of transportation he kept in good condition. Spain's roads must have heen in a miserable state, for Mariana tells us of the merchants' carts stuck in the mud. It should, therefore, (he asserts) be tpe endeavor of the king to keep the old Roman highways in good repair and to build new roads for the improvement of transportation. Bridges also must he repaired in due time if commerce is not to suffer. 1 Solid fortifications and a strong army will prove necessary for the protection of commerce. Some had proposed to make the Spanish rivers navigable, and so create new and cheaper means of transportation. Mariana opposed this scheme. His arguments are that these rivers are too rapid and that too much water power is tied up by mills. For his chief argument he relies upon history. Considering the Romans the great masters of national econ omy, he was convinced hy the fact that they did not try out the proposed scheme and that it would not pay.

2 And 1 Ac primummuniendae viae Romanorum instituto, ne luto viatores impediantur, quam enim turpe id est? reficiendi pontes multis locis, magno via torum incommodo collapsi. De Rege, Lib. III, cap. 10, p. 285. 2 Postrema consideratio occurrebat: an flumina Hispaniae navigabilia ut sint, ingenio efficere e republica futurum sit. De quo alii majori prudentia majorique usu statuent, et multa in utramque partem dici possent. Illudere Principis opibus quidam contendunt, et tentare per artem quod est a natura negatum. Neque dubium est in aliis provinciis ea facultate multum annonam juvari, vehencH res necessarias parvo, ex locis quamvis distantibus opportunitate magna. Verum in Hispania, aspera regione, praecipitibus fluviorum alveis, 100 COMMERCE AND TRADE public improvements must he economically sound, if they are to serve the common good. It might he questioned whether all those arguments could stand a critical test, or whether there may not be other deciding factors, for ex ample, the meagre water-power furnished by Spanish rivers.

As a matter of fact, the project has never been carried out, a fact which shows that in the main Mariana must have heen right in opposing it. p.raeterea ex o~n.i .parte oCCUpa!IS. molis frUl?el1~ariis, fo,rtassis nihil expediat novare quod nsum moveat, Irntl conatus vestlgia ad postentatls memonam maneant. certe plus incommodi ea moliti? quam utilitatis afferat: pertinaci contentione si ad exitum perducatur .... Quod a Romal1ls ea potentia atque usu, quo . . . tempore rerum in Hispania potiebantur factum non est, ..• vix quisquam possit praestare. De Rege, Lib. III, cap. 9, p. 283.' 101 Chapter IV The Fostering of Social Well-Being I T has heen said repeatedly that Mariana advocated puhlic improvements for the benefit of commerce and trade. This is not the only reason why he would have them pro moted. Some of them may (he holds) at the same time serve to embellish life and to give recreation to the people, the result of which will he that they will resume their work more willingly and do it more efficiently.