Front Page Titles (by Subject) Chap. XIV.: The admirable feats supposed to be done by Bankers and the Merchants Exchange. - A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others
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Chap. XIV.: The admirable feats supposed to be done by Bankers and the Merchants Exchange. - John Ramsay McCulloch, A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others 
A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others, with a Preface and Index (London: Printed for the Political Economy Club, 1856).
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The admirable feats supposed to be done by Bankers and the Merchants Exchange.
ALthough I have already written something concerning the Merchants Exchange, and therein of the undervaluation of our money, and of the mere Exchanger, with their true causes and effects; Nevertheless it will not be impertinent to pursue this business yet a little further, and thereby not only to strengthen our former Arguments, but also to avoid some cunning delusions which might deceive the unskilful Reader of those books entituled, Lex Mercatoria, pag. 409. and The maintenance of free trade, pag. 16. wherein the Author Gerard Malynes setteth down the admirable feats (as he termeth them) which are to be done by Bankers and Exchangers, with the use and power of the Exchange: but how these wonders may be effected he altogether omitteth, leaving the Reader in a strange opinion of these dark mysteries, which I cannot think he did for want of knowledge, for I find him skilful in many things which he hath both written and collected concerning th’ affairs of Merchants, and in particular he discourses well of divers uses, forms and passages of the Exchange, in all which as he hath taken great pains for the good of others, so do his Works of this kind deserve much praise: but where he hath disguised his own knowledge with Sophistry to further some private ends by hurting the public good; there ought he to be discovered and prevented, unto which performance (in this discourse of treasure) I find my self obliged, and therefore I intend to effect it by shewing the true causes and means whereby these wonders are done, which Malines attributeth to the sole power of the Exchange. But first for order I think it fit to set down the particular feats as they stand in his said books.
The admirable feats to be done by Exchange.
1. To lay their mony with gain in any place of the world where any exchange lyeth.
2. To gain and wax rich, and never meddle with any Princes commodities.
3. To buy any Princes commodity, and never bring penny nor pennyworth into the Realm, but doe that with the Subjects mony.
4. To grow rich and live without adventure at Sea or travaile.
5. To do great feats having credit, and yet to be nought worth.
6. To understand whether in conjecture their mony employed on Exchange, or buying of wares, will be more profit.
7. To know certainly what the Merchants gain upon their wares they sell and buy.
8. To live and encrease upon every Princes subjects that continually take up mony by Exchange, and whether they gain or no.
9. To wind out every Princes treasure out of his ☜ Realm whose Subjects bring in more wares than they carry out of the Realm.
10. To make the Staple of money run thither where the rich Prince will have it to be brought, and pay for it.
11. To unfurnish the poor Prince of his provision of mony, that keeps his wares upon interest mony, if the enemy will seek it.
12. To furnish their need of mony that tarry the selling of their wares in any Contract untill they make them come to their price.
13. To take up mony to engross any commodity either new come or whereof they have some store, to bring the whole trade of that commodity into their own hands to sell both at their pleasure.
14. To hide their carrying away of any Princes mony.
15. To fetch away any Princes fine money with his own or any other Princes base money.
16. To take up Princes base mony and to turn into his fine mony, and to pay the deliverer with his own, and gain too.
17. To take upon credit into their hands for a time all the Merchants mony that will be delivered, and pay them with their own, and gain too.
☞ 18. To make the Realm gain of all other Realms whose Subjects live most by their own commodities, and sell yearly the overpluss into the world, and both occupie that encrease yearly, and also their old store of treasure upon exchange.
19. To undoe Realms and Princes that look not to their Commonwealth, when the Merchants wealth is such, that the great houses conspire together so to rule the Exchange, that when they will be deliverers, they will receive in another place above the Standard of the Mint of the Princes mony delivered: and when they will be takers, they will pay the same in another place under the Standard of the Mint of the Princes money taken up.
20. To get ready mony to buy any commodity that is offered cheap.
21. To compass ready mony to get any offered bargain out of another mans hands, and so by outbidding others oftentimes to raise the wares.
22. To get a part and sometimes all his gains that employeth mony taken up by Exchange in wares, and so make others travail for their gain.
23. To keep Princes for having any Customs, Subsidies or Taxes upon their mony, as they employ it not.
24. To value justly any Wares they carry into any Countrey by setting them at that value, as the mony that bought them was then at by Exchange in the Countrey whither they be carried.
If I had a desire to amplifie in the explanation of these wonders, they would afford me matter enough to make a large volume, but my intent is to do it as briefly as possibly I may without obscurity. And before I begin, I cannot chuse but laugh to think how a worthy Lawyer might be dejected in his laudable studies, when he should see more cunning in Lex Mercatoria by a little part of the Merchants profession, then in all the Law-cases of his learned Authors: for this Exchange goes beyond Conjuring; I think verily that neither Doctor Faustus nor Banks his Horse could ever do such admirable feats, although it is sure they had a Devil to help them; but wee Merchants deal not with such Spirits, we delight not to be thought the workers of lying wonders, and therefore I endeavour here to shew the plainness of our dealing (in these supposed feats) to be agreeable to the laudable course of Trade.
And first, To lay our Money with gaine to any place of the World where Exchange lieth. How can this be done (will some men say) for Amsterdam, when the losse by Exchange is sometimes eight or ten per cent. more or lesse for one moneths usance? The answer is, That here I must consider,The principal efficient cause of loss by Exchange. first, that the principal efficient cause of this loss, is a greater value in Wares brought from Amsterdam then we carry thither, which make more Deliverers then Takers here by Exchange, whereby the Money is undervalued to the benefit of the taker: hereupon the Deliverer, rather then he will lose by his Money, doth consider those Countreys, unto which we carry more Wares in value than we receive from them; as namely, Spain, Italy, and others; to which places he is sure (for the reasons aforesaid) that he shall ever deliver his money with profit. But now you will say, that the money is further from Amsterdam than before; How shall it be got together? yes, well enough; and the farther about will prove the nearest way home, if it come at last with good profit; the first part whereof being made (as we have supposed) in Spain, from thence I consider where to make my second gain, and finding that the Florentines send out a greater value in cloth of Gold and Silver, wrought Silks, and Rashes to Spain, than they receive in Fleece Woolls, West-India Hides, Sugar and Cochineal, I know I cannot miss of my purpose by delivering my money for Florence; where (still upon the same ground) I direct my course from thence to Venice, and there finde that my next benefit must be at Frankfort or Antwerp, untill at last I come to Amsterdam by a shorter or longer course, according to such occasions of advantage as the times and places shall afford me. And thus we see still, that the profit and loss upon the Exchange is guided and ruled by the over or under ballance of the several Trades which are Predominant and Active, making the price of Exchange high or low, which is therefore Passive, the contrary whereof is so often repeated by the said Malines.
To the second, fourth, fourteenth, and twenty-third, I say, that all these are the proper works of the meer Exchanger; and that his actions cannot work to the good or hurt of the Commonwealth, I have already sufficiently shewed in the last Chap. and therefore here I may spare that labour.
To the third. It is true, I can deliver one thousand pounds here by exchauge to receive the value in Spaine, where with this Spanish money I can buy and bring away so much Spanish wares. But all this doth not prove, but that in the end the English money or commodities must pay for the said wares: for if I deliver my thousand pounds here to an English-man, he must pay me in Spain, either by goods already sent or to be sent thither; or if I deliver it here to a Spaniard, he takes it of me, with intent to employ it in our wares; so that every way we must pay the Stranger for what we have from him: Is there any feats in all this worthy our admiration?
To the fifth, thirteenth, twentieth, and twenty first, I must answer these Wonders by heaps, where I finde them to be all one matter in divers formes, and such froth also, that every Idiot knowes them, and can say, that he who hath credit can contract, buy, sell, and take up much money by Exchange, which he may do as well also at Interest: yet in these courses they are not alwayes gainers, for sometimes they live by the losse, as well as they who have less credit.
To the sixth and seventh. Here is more poor stuff; for when I know the current price of my Wares, both here and beyond the Seas, I may easily conjecture whether the profit of the Exchange or the gain which I expect upon my Wares will be greater. And again, as every Merchant knows well what he gains upon the Wares he buyeth and selleth, so may any other man do the like that can tell how the said Merchant hath proceeded: But what is all this to make us admire the Exchange?
To the eighth and twelfth. As Bankers and Exchangers do furnish men with money for their occasions, so do they likewise who let out their money at interest with the same hopes and like advantage, which many times notwithstanding fails them, as well as the Borrowers often labour onely for the Lenders profit.
To the ninth and eighteenth. Here my Author hath some secret meaning, or being conscious of his own errours, doth mark these two Wonders with a ☞ in the Margin. For why should this great work of enriching or impoverishing of Kingdomes be attributed to the Exchange, which is done onely by those means that doe over or under-ballance our Forraign Trade, as I have already so often shewed, and as the very words of Malynes himself in these two places may intimate to a judicious Reader?
To the fifteenth and sixteenth, I confess that the Exchange may be used in turning base money into Gold or Silver, as when a stranger may coin and bring over a great quantity of Farthings, which in short time he may disperse or convert into good money, and then deliver the same here by exchange to receive the value in his own Countrey; or he may do this feat by carrying away the said good mony in specie without using the exchange at all, if he dare venture the penalty of the Law. The Spaniards know well who are the common Coiners of Christendome, that dare venture to bring them store of Copper money of the Spanish stamp, and carry away the value in good Ryals of Eight, wherein notwithstanding all their cunning devices, they are sometimes taken tardie.
To the 17. The Bankers are always ready to receive such sums of mony as are put into their hands by men of all degrees, who have no skill or good means themselves to manage the same upon the exchange to profit. It is likewise true that the Bankers do repay all men with their own, and yet reserve good gain to themselves, which they do as well deserve for their ordinary provision or allowance as those Factors do which buy or sell for Merchants by Commission: And is not this likewise both just and very common?
Lex Mercatoria, pag. 410. Maintenance of free trade p. 17.To the 11. I must confess that here is a wonder indeed, that a poor Prince should keep either his wars or wares (I take both together as the Author sets them down both ways differing in his said two books) upon interest mony; for what needs the Enemy of such a poor Prince deale with the Bankers to disapoint him or defeat him of his mony in time of want, when the interest it self will do this fast enough, and so I leave this poor stuff.
To the 19. I have lived long in Italy, where the greatest Banks and Bankers of Christendom do trade, yet could I never see nor hear, that they did, or were able to rule the price of Exchange by confederacie, but still the plenty or scarcity of mony in the course of trade did always overrule them and made the Exchanges to run at high or low rates.
Exchange hinders not Princes of their customs.To the 22. The Exchange by bills between Merchant and Merchant in the course of trade cannot hinder Princes of their Customs and Imposts: for the mony which one man delivereth, because he will not, or hath not occasion to employ it in wares, another man taketh, because he either will or hath already laid it out in Merchandize. But it is true, that when the wealth of a Kingdom consisteth much in ready mony, and that there is also good means and conveniencie in such a Kingdom to trade with the same into forraign parts, either by Sea or Land, or by both these ways; if then this trade be neglected, the King shall be defeated of those profits: and if the exchange be the cause thereof, then must we learn in what manner this is done; for we may exchange either amongst our selves, or with strangers; if amongst our selves, the Commonwealth cannot be enriched thereby; for the gain of one subject is the loss of another. And if we exchange with strangers, then our profit is the gain of the Commonwealth. Yet by none of these ways can the King receive any benefit in his customes. Let us therefore seek out the places where such exchanging is used, and set down the reasons why this practice is permitted; in search whereof we shall only find one place of note in all Christendome, which is Genoua, whereof I intend to say something as briefly as I can.
The present estate of the commonwealth of Genoua.The State of Genoua is small, and not very fertile, having little natural wealth or materials to employ the people, nor yet victuals sufficient to feed them; but nevertheless by their industry in former times by forraign trade into Ægypt, Soria, Constantinople, and all those Levant parts for Spices, Drugs, raw Silks and many other rich wares, with which they served the most places of Europe, they grew to an incredible wealth, which gave life unto the strength of their Cities, the pomp of their buildings, and other singular beauties. But after the foundation and encrease of that famous City of Venice, the said trades turned that way. And since likewise the greatest part thereof doth come into England, Spain, and the Low Countreys by navigation directly from the East Indies, which alterations in the traffique, hath forced them of Genoua to change their course of trading with wares, into exchanging of their mony; which for gain they spread not only into divers Countreys where the trade is performed with Merchandize, but more especially they do therewith serve the want of the Spaniards in Flanders and other places for their wars, whereby the private Merchants are much enriched, but the publique treasure by this course is not encreased, and the reasons why the Commonwealth of Genoua doth suffer this inconvenience, are these.
First and principally, they are forced to leave those trades which they cannot keep from other Nations, who have better means by situation, wares, Shipping, Munition and the like, to perform these affairs with more advantage than they are able to doe.
Secondly, they proceed like a wise State, who still retain as much trade as they can, although they are not able to procure the twentieth part of that which they had. For having few or no materials of their own to employ their people, yet they supply this want by the Fleece-wools of Spain, and raw Silks of Sicilia, working them into Velvets, Damasks, Sattens, Woollen-drapery, and other manufactures.
Thirdly, whereas they find no means in their own Countrey to employ and trade their great wealth to profit, they content themselves to do it in Spain and other places, either in Merchandize, or by exchanging their monies for gain to those Merchants who trade therewith in wares. And thus wheresoever they live abroad for a time circuiting the world for gain; yet in the end the Center of this profit is in their own Native Countrey.
Lastly, the government of Genoua being Aristocracie, they are assured that although the publique get little, yet if their private Merchants gain much from strangers, they shall doe well enough, because the richest and securest Treasure of a Free State, are the riches of the Nobility (who in Genoua are Merchants) which falleth not out so in a Monarchy, where between the comings in of a Prince, and the means of Private Men, there is this distinction of meum & tuum, but in the occasions and dangers of a Republick or Commonwealth, where Liberty and Government might be changed into Servitude, there the Proper substance of private men is the publique Treasure, ready to be spent with their lives in defence of their own Soveraignty.
To the 24. If a Merchant should buy wares here with intentions to send them for Venice, and then value them as the Exchange comes from thence to London, he may find himself far wide of his reckoning: for before his goods arrive at Venice, both the price of his Wares and the rate of the Exchange may alter very much. But if the meaning of the Author be, that this valuation may be made after the goods arrive, and are sold at Venice, and the money remitted hither by Exchange, or else the money which bought the said wares here may be valued as the Exchange passed at that time from hence to Venice; Is not all this very common and easie business, unworthy to be put into the number of Admirable feats?
To the tenth. Although a rich Prince hath great power, yet is there not power in every rich Prince to make the staple of Money run where he pleaseth: for the Staple of any thing is not where it may be had, but where the thing doth most of all abound. Whereupon we commonly say, that the Spaniard, in regard of his great treasure in the West Indies, hath the Fountain or Staple of money, which he moveth and causeth to run into Italy, Germany, the Low Countreys, or other places where his occasions doe require it, either for Peace or War. Neither is this effected by any singular Power of the Exchange, but by divers wayes and means fitting those places where the money is to be employed. For if the use thereof be upon the confines of France to maintain a War there, then may it be safely sent in specie on Carriages by Land; if in Italy, on Gallies by Sea; if in the Low Countreys, on Shipping by Sea also, but yet with more danger, in regard of his potent enemies in that passage. Wherefore in this occasion, although the Exchange is not absolutely necessary, yet is it very useful. And because the Spaniards want of Commodities from Germany and the Low Countreys is greater in value than the Spanish Wares which are carried into those parts, therefore the King of Spain cannot be furnished there from his own subjects with money by exchange, but is and hath been a long time enforc’d to carry a great part of his treasure in Gallies for Italy,How the Italians are enabled to furnish Spain with money in Flanders. where the Italians, and amongst them the Merchants of Genoua especially, do take the same, and repay the value thereof in Flanders, whereunto they are enabled by their great trade with many rich commodities which they send continually out of Italy into those countreys and the places thereabouts, from whence the Italians return no great value in wares, but deliver their money for the service of Spain, and receive the value by Exchange in Italy out of the Spanish Treasure, which is brought thither in Gallies, as is afore-written.
So that by this we plainly see, that it is not the power of Exchange that doth enforce treasure where the rich Prince will have it, but it is the money proceeding of wares in Forraigne trade that doth enforce the exchange, and rules the price thereof high or low, according to the plenty or scarcity of the said money; which in this discourse, upon all occasions, I think I have repeated neer as often as Malynes in his Books doth make the Exchange to be an essential part of trade, to be active, predominant, over-ruling the price of Wares and Moneys, life, spirit, and the worker of admirable feats. All which we have now briefly expounded; and let no man admire why he himself did not take this pains, for then he should not onely have taken away the great opinion which he laboured to maintain of the Exchange, but also by a true discovery of the right operation thereof, he should utterly have overthrown his par pro pari; which project (if it had prevailed) would have been a good business for the Dutch, and to the great hurt of this Common-wealth, as hath been sufficiently proved in the 12. chapter.
Now therefore let the learned Lawyer fall cheerfully to his books again, for the Merchant cannot put him down, if he have no more skill than is in his Exchange. Are these such admirable feats, when they may be so easily known and done in the course of trade? Well then, if by this discovery we have eased the Lawyers minde, and taken off the edge of his admiration, let him now play his part, and take out a Writ of Errour against the Par pro Pari; for this project hath misinformed many, and put us to trouble to expound these Riddles.
Nay, but stay awhile, can all this pass for current, to slight a business thus, which (the Author saith) hath been so seriously observed by that famous Council, and those worthy Merchants of Queen Elizabeth of blessed memory, and also condemned by those French Kings, Lewis the 9th.Philip the fair, and Philip de Valois, with confiscation of the Bankers goods? I must confess that all this requires an answer, which in part is already done by the Author himself. For he saith, that the wisdome of our State found out the evil, but they missed of the remedy; and yet what remedy this should be no man can tell; for there was none applyed, but all practise and use in Exchange stand still to this day in such manner and form as they did at the time when these Feats were discovered, for the State knew well that there needed no remedy where there was no disease.
Well then, how shall we be able to answer the proceedings of the French Kings who did absolutely condemn the Bankers, and confiscated their goods? Yes, well enough, for the Bankers might perhaps be condemned for something done in their exchanges against the Law, and yet their profession may still be lawful, as it is in Italy and France it self to this day. Nay we will grant likewise that the Banks were banished, when the Bankers were punished; yet all this proves nothing against Exchangers, for Kings and States enact many Statutes, and suddenly repeale them, they do and undo; Princes may err, or else Malynes is grossly mistaken,Maintenance of free trade, p. 76, 77, 78, and 79. where he setteth down 35. several Statutes and other ordinances enacted by this State in 350. years time to remedy the decay of Trade, and yet all are found defective; only his reformation of the Exchange, or Par pro pari, is effectual, if we would believe him; but we know better, and so we leave him.
I might here take occasion to say something against another project of the same brood that lately attended upon the success of this Par pro pari, as I have been credibly informed, which is, the changing and rechanging here within the Realm, of all the Plate, Bullion and Monies, Forraign or Sterling, to pass only by an office called, The Kings Royal Exchanger, or his Deputies, paying them a Peny upon the value of every Noble: which might raise much to their private good, and destroy more to the publique hurt. For it would decay the Kings Coinage, deprive the Kingdom of much Treasure, abridge the Subjects of their just liberty, and utterly overthrow the worthy trade of the Goldsmiths, all which being plain and easie to the weakest understandings, I will therefore omit to amplify upon these particulars.