§ 2. THE MISTAKE OF THE MERCANTILE THEORY--But unfortunately our capitalists made a great mistake in their policy. The commercial mind of England was dominated by what is known as the “Mercantile Theory.” It was a theory that had grown up naturally out of the spirit of Nationalism, of self-sustained and complete national life, that was our heritage from the Renaissance and the Reformation. It was not altogether wrong, for its object was national greatness, an object laudable and harmless enough. But the believers in the policy of increasing our national greatness also believed that it could only be attained in one way, and that was at the expense of our neighbours. In one form and another the theory frequently crops up even to-day, though we are supposed to have repudiated it. The measures adopted to attain this end were various and not always unsuccessful. True, {169} our commercial forefathers made the mistake--not uncommon even now--of believing that national wealth consisted chiefly in holding large stores of gold and silver, and hence they prohibited the export of bullion, till the East India Company demonstrated the futility of this scheme.[48] They endeavoured, too, to obtain a supply of the precious metals by prohibiting the purchase of foreign manufactures, and encouraging only the imports of raw material, that we might sell our own manufactures for foreign silver and gold. Hence proceeded wars of tariff, as for instance when we prohibited the import of gold-lace from Flanders, and the Flemish in revenge excluded our exports of wool. But the most famous of the restrictions imposed by this theory were the Navigation Acts of 1651, by which it was ordered that no goods from Asia, Africa, or America were to be imported into England or her colonies, except in ships belonging to English subjects, and no goods of any European country were to be imported except in English vessels, or ships belonging to the country from which the goods came. Of course these Acts resulted in collision with Dutch interests, for the Dutch were at that time the ocean carriers of the world. We were driven out of neutral ports, and lost the Russian and Baltic trade, because of the high charges of English ship-owners, to whom this protective scheme gave a monopoly of freights. But at the same time our shipping trade gained a great stimulus, and our commercial supremacy grew with it. Of course, however, this protective measure made the country at large pay a higher price for this privilege than was necessary, and we could probably have done better without it. Nevertheless these Acts, coupled with the development of our Indian and American trade, resulted in giving us a position of undoubted {170} commercial supremacy. Many other Protective measures, of a worse kind than this, were passed owing to the dictates of this theory, as for instance when in 1750 Parliament forbade the importation of pig and bar iron from our American colonies.