MERCANTILE term is applied to that mode of regulating, or attempting to regulate, the foreign commerce of a nation upon the principle that the exports should exceed the imports. The theory is that an excess of exports over imports creates a balance favourable to the exporting nation, resulting in an influx of money and a positive contribution to the national wealth. The maintenance and increase of such a balance should therefore maintain and increase the wealth and general well-being of the nation. The system has been practised as if international commerce were a very simple condition of circumstances. The more or less natural outflow of exports from a country has been accelerated by placing premiums and bounties upon appropriate commodities, and by granting drawbacks upon the re-exportation of imports ; and, on the other hand, the like influx of imports has been retarded by the imposition of prohibitive import duties, and the absolute prohibition of the importation of goods, such as wine, which may be expected to possess no positive value of their own that can be set off against the price paid for them. This system pervaded European commercial politics for centuries, eventually giving way to the policy of protection, and finally, in England, to the principle of laissez faire and its free trade application. But the bare principle of laissez faire is now no longer the accepted theoretical protagonist of mercantilism ; that position is now claimed in England by the modern theory of international trade : that it is not the equivalence of imports with exports that constitutes the stable condition of trade, but the equivalence in the sum of debts due to the country, and that of debts due by it. It is at once apparent that such a theory as this is much more com
plex and difficult of application than the simple one of the mercantile system. So complex is it, and so improbable is it that there can be any practical application thereof, that the only conclusion as to political conduct that can be drawn therefrom is a purely negative one. "Governments in their dealings with foreign trade," writes Professor Bastable, " should be guided by the much vilified maxim of laissez faire. To avoid misinterpretation, let it be remem bered that the precept rests on no theory of abstract right, or vague sentiment of cosmopolitanism, but on the well-founded belief that national interests arc thereby advanced, and that even if we benefit others by an enlightened policy, we are ourselves richly rewarded." Drinez faire is yet, therefore, the actual protagonist of mercantilism. It must, however, be understood that though the mercantile system contains all the elements of a policy of protection, yet a supporter of that policy is not by any means bound to this old well worn system ; he may readily accede to the modern theory of international trade, and most certainly he may believe in a policy of enlightened laissez faire. And it may at least be accepted as an undoubted fact that the principle of the system is not a wholly erroneous one. See PROTECTION.