CHAPTER 23

Notes on Mercantilism , the Usury Laws, Stamped

Money and Theories of Under-consumption

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For some two hundred years both economic theoristsand practical men did not doubt that there is a peculiaradvantage to a country in a favourable balance of trade,and grave danger in an unfavourable balance, particularlyif it results in an efflux of the precious metals. But forthe past one hundred years there has been a remarkabledivergence of opinion. The majority of statesmen andpractical men in most countries, and nearly half of themeven in Great Britain , the home of the opposite view,have remained faithful to the ancient doctrine ; whereasalmost all economic theorists have held that anxietyconcerning such matters is absolutely groundless ex-cept on a very short view, since the mechanism of foreigntrade is self-adjusting and attempts to interfere -with itare not only futile, but greatly impoverish those whopractise them because they forfeit the advantages of theinternational division of labour. It will be convenient,in accordance with tradition, to designate the olderopinion as Mercantilism and the newer as Free Trade ,though these terms, since each of them has both abroader and a narrower signification, must be inter-preted with reference to the context.

Generally speaking, modern economists have main-tained not merely that there is, as a rule, a balance ofgain from the international division of labour sufficient

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