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Thomas Mun (1571 – 1641) was a successful and wealthy merchant. He was a director of the East India Company and of the standing commission on trade. His role as a businessman and merchant greatly influenced his economic thought. His pamphlet, England’s Treasure by Forraign Trade, “has been almost universally accepted among economists as the epitome of seventeenth-century mercantile doctrine.” (Muchmore, 1970)Mercantilism is where we first see self interest driving economic thought.For those who wish to understand mercantilism, his work “gave perfect expression to the spirit of the age for which it was written, an age possessed by desire for economic expansion and political power and often identifying the two.” (Spiegel, 107) This period appears to mark the beginning of capitalism. The trade crisis of the early 1620’s significantly influenced Mun’s thoughts on economics. The trade crisis was that imports into England exceeded exports, which resulted outflows of specie. The result was a perceived shortage of silver. In 1621 Mun published A Discourse of Trade from England unto the East Indies, this work was written in defense of the East India’s exports of large amounts of silver. Mun wrote England’s Treasure by Forraign Trade around 1630. However, it wasn’t published until 1664—posthumously by his son. (Oser, 22) This work “was devoted to a point-by-point refutation of the arguments of Malynes and his school: Instead of commercial operations affecting foreign exchange rates, Malynes believed that rates were manipulated by bankers operating for their own gain. The remedy he proposed was to eliminate fluctuations of exchange rates by pegging the rates at mint parity, combined with a comprehensive system of exchange control.” (Spiegel, 103)The theme of England’s Treasure was “that the only answer to the crisis was a pronounced improvement in the balance of trade.” (Muchmore, 1970) The shortage of silver was not a monetary problem; therefore, there was no need to impose exchange controls to prevent the outflow of silver. In other words, the solution to the crisis was for England to export more than it imported. The surplus would be returned to the kingdom in the form of treasure.As a side note, despite Malynes’ fanatic belief in conspiracy theories, he was quite the visionary thinker. Malynes comes close to articulating a theory of what determines imports and exports: “The rise in the foreign exchange rate ‘causes our monies to be transported and makes scarcity thereof, which abates the price of our home commodities, and on the contrary advances the price of the foreign commodities beyond the seas, where our money concurring with the monies of other countries causes plenty, whereby the price of foreign commodities is advanced.’” As Spiegel points out, he never fully develops this thought, however. (Spiegel, 103)
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