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The Tercentenary Of Henry
Martyn's Considerations
Upon The East-India Trade
Andrea Maneschi
Available online: 03 Aug 2010
To cite this article: Andrea Maneschi (2002): The Tercentenary Of Henry Martyn's
Considerations Upon The East-India Trade, Journal of the History of Economic
Thought, 24:2, 233-249
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Journal of the History of Economic Thought, Volume 24, Number 2, 2002
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THE TERCENTENARY OF
HENRY MARTYN’S
CONSIDERATIONS UPON THE
EAST-INDIA TRADE
BY
ANDREA MANESCHI
I. INTRODUCTION
Henry Martyn’s Consideration s Upon the East-India Trade, published anonymously in 1701, stands out as a major contribution to the ® eld of political economy
that took root in Britain in the eighteenth century, and to the demonstration of
the gains from free trade (Martyn 1701). Martyn provided one of the earliest
formulations (and by far the clearest) of what Jacob Viner termed the ``eighteenthcentury rule’ ’ for the gains from trade, that ``it pays to import commodities from
abroad whenever they can be obtained in exchange for exports at a smaller real
cost than their production at home would entail’ ’ (Viner 1937, p. 440). The
numerical examples that Martyn used to illustrate it went even beyond the case
for free trade advanced seventy-® ve years later by Adam Smith in The Wealth of
Nations. Martyn’s tract contains other remarkable insights that became important
features of classical political economy, such as the nature and advantages of the
division of labor, the dependence of the latter on the extent of the market, the
workings of a market economy, the role of money, and the impact of international
trade on resource allocation, on productivity, and on economic welfare.
After being forgotten for a century and a half, the Consideration s Upon the
East-India Trade was reprinted in 1856 by John R. McCulloch as one of eight
early English tracts on commerce dating from 1621 to 1701, which included
Dudley North’s celebrated Discourses upon Trade of 1691 (McCulloch 1856). In
the Preface, after commenting that ``notwithstanding the deference so justly due
to North, [the Considerations] probably also is the ablest and most profound’ ’ of
the tracts in his volume, McCulloch ventured the opinion that ``we have
sometimes been half inclined to suppose that it might have proceeded from the
pen of Mr. Henry Martin, who contributed some papers to the Spectator’ ’
(pp. xiii, xv). Martyn (whose name is alternatively spelled Martin) was a lawyer
Department of Economics, Vanderbilt University, Nashville, TN, USA. The author is grateful to
Tony Aspromourgos, Melvin Cross, and two anonymous referees for useful comments on an earlier
draft of this paper.
ISSN 1042-7716 print; ISSN 1469-9656 online/02/020233-1 7 © 2002 The History of Economics Society
DOI: 10.1080 /1042771022013438 5
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234
JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
and an able writer who in 1715 became Inspector-General of Exports and
Imports in a Whig government and died in 1721. 1
P. J. Thomas (1926) went further than McCulloch and argued convincingly
that ``on various grounds it seems highly probable that Henry Martyn was the
author of the tract.’ ’ According to him, ``the best exposition of the Free Trade
view during this period (and perhaps until the time of Adam Smith) is contained
in the Considerations . . . the ® rst work to tackle some of the fundamental
questions of economics in a scienti® c spirit. It is head and shoulders above the
economic writings of that age; and it doubtless deserves a place among the
masterpieces of English Political Economy’ ’ (Thomas 1926, pp. 89, 93± 94).
Viner (1937) mentioned ``the author of Consideration s on the East-India Trade’ ’
several times in his book, particularly in connection with the ``eighteenth-century
rule’’ for the gains from trade. In a paragrap h devoted to mercantilist writers
who presented free-trade arguments, he argued that ``it requires only mildly
generous interpretation to justify the conclusion that they approached more
closely than did Adam Smith the high point of free-trade reasoning, the statement
of the bene® t of regional specialization in terms of comparative advantage.’ ’ 2
These writers include the ``unknown author’ ’ of the Considerations, who ``reveals
almost no trace of the mercantilist or protectionist fallacies’’ (p. 104). After
quoting the passage of that tract formulating the eighteenth-century rule, Viner
noted that the tract ``does not appear to have exerted any in¯ uence on contemporary writers.’ ’ Both Thomas (1926, p. 94) and Viner (1937, p. 105) proved that
the attribution of the authorship of the Considerations by some writers to Dudley
North could not be correct.
While McCulloch, Thomas, and Viner lavished praise on Martyn, E. A. J.
Johnson (1937, p. 348) poured scorn on him by alleging that ``a great many ideas
and some of the language of the Considerations were copied directly from the
writings of Sir William Petty. This is what one would expect from a hired
journalist! Thomas failed to notice the plagiarism and has given undeserved
praise to the author of the Considerations for originality.’ ’ Johnson’s primary
interest in Martyn, however, was in his role as writer for The Spectator and for
The British Merchant, publications that asked him to argue the Whig viewpoint
against lowering Britain’s restrictions on trade with France. His apparent volteface with respect to the free trade views expressed in the Considerations can be
explained on political grounds (see section V). 3 A diVerent view was expressed
by Max Beer (1938, p. 217), who referred to Martyn as ``the most valued
contributor to the British Merchant . . . to whom some writers are inclined to
ascribe the authorship of the Consideration s on the East India Trade.’’ 4
1
For details of Martyn’s life, works, and likely authorship of the Considerations, see Thomas (1926,
Appendix B) and MacLeod (1983).
2 Several commentators besides Viner claim that Martyn came close to formulating (or actually
formulated) the Ricardian principle of comparative advantage. This claim is examined in section IV.
3 Both Thomas (1926, pp. 171± 73) and MacLeod (1983, p. 225) examine the issue of the consistency
of Martyn’s views. The separate issue of Martyn’s indebtedness to Petty and of his alleged plagiarism
is discussed in section III.
4 After comparing the rationales for free trade expressed by Martyn and Charles Davenant on the
one hand, and Dudley North on the other, Beer (p. 212) concluded that ``North gave only the ® nal
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CONSIDERATIONS UPON THE EAST-INDIA TRADE
235
In the past ® fty years, Martyn’s Considerations was evaluated at some length
by Marcus Arkin (1955), William J. Barber (1975), Christine MacLeod (1983),
Terence W. Hutchison (1988), and Douglas A. Irwin (1996). A unique perspective
is oVered in British Economic Thought and India 1600 ± 1858: A Study in the
History of Development Economics (Barber 1975), where an entire chapter is
devoted to Martyn’s Considerations. According to Barber, the latter was inspired
by the radically new ``master model’ ’ of economic development that took shape
in Britain in the 1690s, marking the transition from the commercial revolution
of the seventeenth century to the industrial revolution of the eighteenth. The
earlier vision of economic development re¯ ected in Thomas Mun’s tracts, where
the pro® ts earned in international trade were reinvested in working capital so as
to expand this trade even further, was becoming obsolete. The monopoly
exercised by the East India Company restricted this trade, and the Company
was increasingly importing into Britain textiles that competed with domestic
manufactures, rather than commodities such as spices designed for re-export to
other countries. 5 These changed conditions required a new vision expressed, ® rst
and foremost, in Martyn’s Considerations. Its focus shifted from the importance
of international trade to England, to the need to increase its domestic real
income. Trade had a strategic role to play since it allowed the import of products,
such as Indian textiles, that could be produced much more cheaply overseas,
thus releasing labor and capital for more productive uses. Free trade was thus
prized for its instrumental role in promoting economic development via an
appropriat e reallocation of resources.
Although the authorship of the Considerations was attributed to Martyn (with
varying degrees of certainty) by several of the above writers, Christine MacLeod
(1983) was the ® rst to provide incontrovertibl e evidence that Martyn was indeed
the author. 6 She examines inter alia how Martyn’s political associations colored
his writings, and why the Considerations failed to have a greater impact on the
burgeoning ® eld of political economy. The pioneering character of Martyn’s
Considerations has more recently been recognized by Hutchison (1988) and Irwin
(1996). On the tercentenary of the Considerations, it is ® tting to reconsider Henry
Martyn’s tract. Section II examines its structure, and section III notes its many
anticipations of classical economics as set out in Adam Smith’s The Wealth of
Nations. Section IV analyzes what may be Martyn’s chief claim to fame, his
formulation of the eighteenth-century rule for the gains from trade. Section V
attempts an overall evaluation of Martyn’s remarkable tract and explores the
reasons for its apparently small impact on the evolving science of political
economy.
results of his cogitations, without revealing the inductive material of his observations, nor the train
of reasoning that led up to them,’ ’ while Davenant and Martyn ``dealt with the main factors of their
doctrine.’ ’
5 The concerns of British textile weavers are epitomized in the title of John Pollexfen’s tract of 1697,
England and East India Inconsistent in Their Manufacture s, being an Answer to a Treatise Intituled
an Essay on the East-India Trade.
6 John Locke’s papers include a letter of 1701 from the publisher of the Considerations stating that
he was forwarding that tract on the instruction of Martyn, who wished to present it to him.
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II. STRUCTURE OF HENRY MARTYN’S CONSIDERATIONS
Henry Martyn’s Considerations consists of a preface, an extended table of
contents, and eighty-one pages of text divided into twenty-two chapters. In the
® rst chapter, Martyn articulated a panoply of objections that had been raised to
the East India trade, particularly that it resulted in (1) the export of bullion by
England to pay for Indian manufactures; (2) a higher unemployment in England
created by the diversion of demand to Indian imports; and (3) a decrease in
landholders’ rents due to a fall in demand for the produce of their estates.
The three alleged objections to the East India trade are sequentially rebutted
in chapters 2 through 17. Chapters 2 through 9 rebut the ® rst objection by
arguing that the exchange of bullion for Indian manufactures amounts to ``an
exchange of less for greater value,’’ despite the destruction of some English
manufactures. Martyn asserted that the export of bullion to India eventually
brought even more bullion to England thanks to re-exports, an argument already
made by Thomas Mun and others in the previous century. 7 The country was
enriched by the establishment of a second East India Company, replacing the
monopoly of the old Company. 8 This occurred despite a decline in the rate of
pro® t and despite the restrictions imposed by some governments on English reexports of Indian manufactures. Martyn argued that the idleness of the mint for
many years was more than oVset by an increase in paper money.
Chapters 10± 13 respond to the second objection related to the increased
unemployment and associated destruction of English manufactures caused by
the East India trade. Chapter 10 contains the formulation of the eighteenthcentury rule for the gains from trade quoted and examined below in section IV.
Martyn argued that no employment was lost that was worth keeping, and no
pro® table manufactures were destroyed by the East India trade. In fact the
latter generated more rather than less domestic employment, both in existing
manufactures, by reducing their prices and raising demand for them, and through
the creation of new industries. These industries were encouraged (p. 42) by the
technological change (``Arts, and Mills, and Engines, which save the labour of
Hands’ ’ ) stimulated by the East India trade (``the eVects of Necessity and
Emulation’ ’ ). Martyn stressed that although prices were reduced by free trade,
wages were not, so that labor was better oV than before. In describing the
introduction of ``more Order and Regularity into our English Manufactures,’’ he
devoted several pages of chapter 12 to describing the remarkable eVects of the
division of labor on productivity in the clothing, watch, and shipping industries
7 If Martyn really believed that the exchange of bullion for Indian manufactures was ``an exchange
of less for greater value,’ ’ why should he want to argue that the exported bullion would return to
England in greater quantities? His reasoning may have been politically motivated, to make the
argument for greater freedom of trade more palatable to his mercantilist audience. Even more
probable is the fact that Martyn, as evidenced by his later contributions to The British Merchant,
never gave up his bullionist tendencies.
8 After a decade of confused political events that followed the Glorious Revolution of 1688, a ``new’ ’
East India Company was created in 1698 by an Act of Parliament in order to deprive the ``old’ ’
Company of its former monopoly in the East India trade. On the momentous changes in the structure
and functions of the East India Company over the two and a half centuries of its existence, and the
political and economic events that shaped them, see Barber (1975) and Lawson (1993).
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CONSIDERATIONS UPON THE EAST-INDIA TRADE
237
(see section III). The East India trade is given pride of place for its role in
stimulating the development of skills and the invention of machines in these and
other industries.
Martyn admitted that trade also results in the displacement of labor from
industries that cannot compete with imports, but transformed this apparent
drawback into a virtue by observing that the displaced labor is thereby freed to
® nd more productive employment elsewhere in the economy. 9 He noted repeatedly that trade has eVects analogous to those of technical progress, which usually
also leads to an initial increase in unemployment. 1 0 To be consistent, opponents
of the East India trade should also advocate the destruction of all labor-saving
devices, and the return to methods of production abandoned long ago. Martyn
pushed his reductio ad absurdum even further by suggesting (pp. 32± 33) that such
people should also decline to accept gifts from abroad (or corn appearing like
manna from heaven), since the consumption of these goods may throw the
producers of similar commodities out of work.
Chapters 14± 17 answer the third objection against the East India tradeÐ that
it reduces land rents. Martyn used a primitive version of the quantity theory of
money to explain that the fall in prices leading to a fall in rents resulted from a
reduction in the money supply combined with an increase in the volume of
transactions, including those relating to imports. Even though a landholder loses
his monopoly, Martyn expected the demand for the produce of his estate to rise
more than the supply, leading to an increase in price. The labor force on the
estates would become more eYcient, leading to an increase in output that makes
landowners no worse oV than before.
One of pre-eminent issues that agitated English pamphleteers in the second
half of the seventeenth century was the economic success of the Dutch Republic
and the dominance of the Dutch in the ® shing industry. They sought to explain
the formula underlying this success, and to prescribe policies that would allow
Britain to catch up economically with Holland. 1 1 Chapters 18± 22 of the Considerations consist of a digression on the ® shing industry, which Martyn used as a
case study for the lessons he wished to draw from his tract. He argued that at
that time the ® shing trade was not as pro® table in England as the importation
of Irish cattle or Indian manufactures, and he criticized writers claiming that it
should be arti® cially encouraged on infant-industry grounds. Holland had
acquired an overwhelming advantage over England in the herring trade through
lower expenses in catching and curing ® sh, a more expeditious legal system, a
lower interest rate resulting from an abundant money supply, greater skills in the
construction and sailing of ships, a superior transportation infrastructure, a
skilled and disciplined work force, and the invention of appropriate ``Arts and
9
Marian Bowley (1973, p. 33) names this eVect of foreign trade the ``resource allocation thesis’’ of
mercantilist writers in the second half of the seventeenth century, and associates it with Dudley
North and ``still more clearly in relation to the export of bullion in 1701’’ with the Considerations.
1 0 Martyn thus anticipated economists such as David Ricardo (1817), who noted that trade and
technical progress have similar eVects since both cheapen commodities and cause labor to be
reallocated among sectors.
1 1 On the interpretations of the commercial and economic prowess of Holland by the English
pamphleteers, see Thomas (1926, pp. 85± 88) and Appleby (1978, chapter 4).
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
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Engines.’’ The only way for the English to compete would be to become more
like the Dutch, for example, by being content with the lower rates of pro® t and
interest found in Holland. 1 2 Martyn adroitly used the widespread popular desire
to acquire a competitive ® shing industry to drive home the conclusions he had
drawn in the preceding parts of his tract, such as the importance of promoting
``an universal Freedom of Trade’ ’ (p. 69). In the last chapter he went even further,
by proposing the establishment in England of a Free-Port allowing duty-free
imports and exports. Economies of agglomeration, such as having workers live
in close proximity to each other, would also reduce costs in the ® shing trade.
III. HENRY MARTYN’S ANTICIPATIONS OF ADAM SMITH’S
THE WEALTH OF NATIONS
The East India trade featured prominently in many of the numerous tracts
published in England in the seventeenth and eighteenth centuries. In The
Economic History of England, Ephraim Lipson noted that the economic issues
surrounding this trade ``played a leading role in the development of economic
thought prior to Adam Smith’s Wealth of Nations.’ ’ 1 3 In his survey of the
English theories of foreign trade before Adam Smith, Viner argued that ``if
Adam Smith had carefully surveyed the earlier English economic literature,
including, however, tracts apparently always obscure and already scarce by his
time, he would have been able to ® nd very nearly all the materials which he
actually used in his attack on the protectionist aspects of the mercantilist
doctrine.’’ While cautioning his readers that the extent to which free trade views
prevailed in the mercantilist literature has often been exaggerated , Viner listed
Martyn with four others as ``the only writers prior to Adam Smith whom I have
found who seem really to have been free traders’’ (1937, p. 92).
In this section I plan to trace the similarities between concepts found in
Martyn’s Considerations and in The Wealth of Nations, to gauge to what extent
Martyn can be regarded as an anticipator of Adam Smith. As any reader of
Hutchison (1988) knows, Smith had a legion of anticipators, among whom
Martyn was not pre-eminent. 1 4 Without claiming that Smith ever read Martyn’s
tract, it is nevertheless sobering to list and ponder over the numerous anticipations of The Wealth of Nations found in the Considerations. In certain respects,
as argued below, Martyn goes farther than Smith, and should not be regarded
as a mere anticipator. In other respects, he made use of concepts formulated
before him, and should rather be regarded as a connecting link in the ® liation
of economic ideas. For example, his indebtedness to William Petty is clear from
the ® rst sentence of the preface of the Considerations, where he warns the reader
that ``most of the things in these Papers are directly contrary to the receiv’d
Opinions . . . instead of using only comparative and superlative Words to amuse
1 2 Josiah Child and other writers preceded Martyn in attributing Dutch primacy to economic factors
such as low interest rates.
1 3 As cited by Barber (1975, p. 26).
1 4 A referee has pointed out that Smith was, after all, not such an original thinker!
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CONSIDERATIONS UPON THE EAST-INDIA TRADE
239
the Reader, the Author has endeavour’d after the manner of the Political
Arithmetick, to express himself in Terms of Number, Weight, and Measure.’ ’ 1 5
Martyn elaborates at great length on the division of labor, without using that
term. 1 6 He mentions all three of the main attributes of the division of labor
identi® ed by Smith: the increase in productivity due to the allocation of diVerent
tasks to diVerent workers, the advantages of technical innovations and machinery
(``Invention of Arts and Engines,’ ’ p. 39), and ``less loss of time and labour’ ’
(p. 45) when tasks are divided. 1 7 Martyn attributes these eVects to the East India
trade, whose justi® cation was his principal reason for writing the Considerations.
He anticipated what Myint (1958, p. 318) labeled Smith’s ``productivity’’ theory
of international trade, according to which the division of labor, which depends
on the extent of the market, is enhanced when an export market is added to the
domestic one. According to Martyn, once inventions are adopted, ``Necessity
and Emulation’’ lead to their diVusion to other producers, which highlights the
role of a competitive market economy in the promotion of economic development
(p. 42). Three paragraph s extending over two pages describe in detail how the
division of labor operates in clothing, watchmaking, and the shipping industry.
Indeed, within the shipping industry, labor is divided diVerently in producing
one hundred ton ships and ® ve hundred ton ships. With regard to watchmaking
and shipping, Martyn adds the important proviso to which Smith devoted
chapter 3 of Book One of The Wealth of Nations, that the division of labor is
limited by the extent of the market. 1 8
Smith concluded chapter 1 of Book One of The Wealth of Nations by
commenting on the ``many thousands’’ of laborers whose work contributes to
the clothing and household furniture used by ``the very meanest person in a
civilized country,’ ’ and to the tools used to make them. The result is that ``the
accommodation of an European prince does not always so much exceed that of
an industrious and frugal peasant, as the accommodation of the latter exceeds
that of many an African king, the absolute master of the lives and liberties of
ten thousand naked savages’’ (Smith 1776, pp. 23± 24). This can be compared to
Martyn’s statement that:
1 5 This statement, unaccompanied by any reference to Petty, may have led E. A. J. Johnson (1937)
to conclude that Martyn (as stated above) had plagiarized Petty’s writings in the Considerations.
Arkin (1955, p. 300) dismisses this allegation with an exclamation mark, and Tony Aspromourgos,
in private correspondence, also disagrees with it.
1 6 In the preface to his book, McCulloch (1856, p. xiv) argues that Martyn ``has set the powerful
in¯ uence of the division of labour in a very striking point of view, and has illustrated it with a skill
and felicity which even Smith has not surpassed, but by which he most probably pro® ted.’’ Similarly,
after citing the paragraph where Martyn describes in detail the division of labor in watchmaking,
Thomas (1926, p. 92) comments that ``one may compare this with similar passages of Adam Smith,
and yet may not ® nd much to the advantage of the latter.’’
17
Martyn denotes by ``Order and Regularity’’ a more eYcient allocation of labor to separate tasks,
and observes that when workers are displaced from occupations in which they are ``useless and
unpro® table,’’ they will enter ``others the most plain and easie, or to the single Parts of other
Manufactures of most variety; for plain and easie work is soonest learn’d, and Men are more perfect
and expeditious in it’’ (p. 42).
1 8 ``If the Demand of Watches shou’d become so very great as to ® nd constant imployment for as
many Persons as there are Parts in a Watch . . .’’ (p. 43) is the conditional statement preceding the
allocation of tasks in the watch industry, and a similar statement is used for shipping (p. 44).
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among the wild Indians of America, almost every thing is the Labourer’s, ninety
nine Parts of an hundred are to be put upon the account of Labour: In England,
perhaps the Labourer has not two thirds of all the conveniences of Life, but
then the plenty of these things is so much greater here, that a King of India is
not so well lodg’d, and fed, and cloath’d, as a Day-laboure r of England (Martyn
1701, pp. 45± 6). 1 9
It has become a commonplace to observe that the advantages of the division of
labor were analyzed by many writers before Adam Smith. The editors of the
Glasgow edition of The Wealth of Nations recognize William Petty for providing
in 1690 ``the ® rst considered exposition of the term division of labour by a
modern writer’ ’ (Smith 1776, p. 13). They note the later elaborations of the same
concept (after the Considerations had been published) by Bernard Mandeville,
Joseph Harris, and E. A. G. Turgot, but do not mention the Considerations itself.
Salim Rashid (1998) also identi® es Petty as a precursor of Smith, and observes
that the three examples that Petty used (clothing, shipping, and watchmaking)
appear as well in Martyn’s Considerations. 2 0
One of Smith’s principal messages in The Wealth of Nations is that wealth
consists of the ``consumable goods annually reproduced by the labour of the
society’ ’ (1776, p. 678), and not of precious metals as interpreted by mercantilist
writers. One of the best-known aphorisms in The Wealth of Nations is that
``consumption is the sole end and purpose of all production; and the interest of
the producer ought to be attended to, only so far as it may be necessary for
promoting that of the consumer’ ’ (p. 660). This is consistent with the way Martyn
de® ned a nation’s wealth:
The true and principal Riches, whether of private Persons, or of whole Nations,
are Meat, and Bread, and Cloaths, and Houses, the Convenience s as well as
Necessaries of Life; the several Re® nements and Improvements of these, the
secure Possession and Enjoyment of them. These for their own sakes, Money,
because `twill purchase these, are to be esteemed Riches; so that Bullion is only
secondary and dependant, Cloaths and Manufactures are real and principal
Riches (1701, p. 10).
While Martyn was not alone among the writers of that period who rede® ned wealth
as consisting of consumable goods, his description of bullion as ``secondary and
dependant’ ’ was a clear rejection of the mercantilist dogma of the primacy of precious metals among all forms of wealth, as explicit as many similar statements
made by Adam Smith. Martyn maintained that the export of bullion to the East
Indies in exchange for manufactures, as practiced by the East India company, was
a free act of exchange, and hence ``an Exchange of less for greater value’ ’ (p. 11).
1 9 The ® rst part of Martyn’s statement should be compared to Smith’s contention in chapter 6 of
Book One of The Wealth of Nations that in the ``early and rude state of society . . . the whole produce
of labour belongs to the labourer,’’ but that as soon as stock has accumulated and all the land has
been appropriated, the labourer is obliged to share part of the produce of his labour with the owner
of stock and with the landlord (Smith 1976, pp. 65± 68).
2 0 Rashid recognizes that Martyn went beyond Petty when he made the division of labor conditional
on the extent of the market. After referring to the example of pin-making which Smith appears to
have drawn from the French Encyclope die, he comments that ``Smith’s treatment of the division of
labor shows some de® nite improvement in formulation and clarity but is disappointing in its treatment of possible sources’ ’ (Rashid 1998, p. 18).
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CONSIDERATIONS UPON THE EAST-INDIA TRADE
241
In his discussio n of pro® ts in The Wealth of Nations, Smith observed that as
a colony develops, both the rate of pro® t and the rate of interest gradually
decline. However, ``the wages of labour do not sink with the pro® ts of stock.’ ’
The reason is that ``a great stock, though with small pro® ts, generally increases
faster than a small stock with great pro® ts’ ’ (1776, pp. 109± 10). Martyn employed
similar reasoning. Despite the fact that the competition between two East India
companies had lowered the pro® t rate, he claimed that the volume of pro® ts had
nonetheless risen: ``’tis better and more pro® table for the Kingdom, that 300l.
( 5 £300) should be imployed in Trade for the pro® t of 10 per Cent. than but
100l. for the pro® t of 20 per Cent. wherefore, less in proportion and more in
quantity, must be esteem’d as greater pro® t’’ (Martyn 1701, p. 13).
Martyn observes repeatedly that the invention of ``Arts and Engines’ ’ spurred
by the East India trade reduces the price of manufactures without reducing
wages. ``That this thing may not seem a Paradox,’’ he explains, ``the East-India
Trade may be the cause of doing things with less Labour, and then tho’ Wages
shou’d not, the price of Manufactures might be abated’ ’ (p. 41). 2 1 He states that
the ``price of Labour’’ has declined while leaving wages unchanged, using that
rather confusing term to denote the labor embodied in manufacturing output. 2 2
A similar point was made by Smith in The Wealth of Nations: ``there are many
commodities . . . which, in consequence of these improvements, come to be
produced by so much less labour than before, that the increase of its price is
more than compensated by the diminution of its quantity’’ (Smith 1776, p. 104).
In that sentence, of course, Smith used the term ``price,’ ’ referring to labor, as a
synonym for wage rather than in Martyn’s sense of that term. 2 3 Another
similarity between Martyn and Smith, and a point of diVerence between them
and many mercantilist writers, is that far from wanting to reduce wages to
enhance England’s competitiveness in world markets, both regarded an increase
in real wages as the economy develops as a natural (and, for Smith, an equitable)
outcome. 2 4 Whether this was suYcient, in Martyn’s case, to allay workers’ fears
concerning the impact of the East India trade on their welfare will be considered
in section V.
21
This is one of many examples in the Considerations where Martyn shows his adeptness in analyzing
comparative static changes. As Arkin (1955, p. 306) points out in relation to chapters 16± 17, throughout them ``runs a clear grasp of the interrelationships between supply, demand, and price.’ ’ This is
another respect in which Martyn can be said to have anticipated Smith.
2 2 Martyn argues that, ``Arts, and Mills, and Engines, which save the labour of Hands, are ways of
doing things with less labour, and consequently with labour of less price, tho’ the Wages of Men
imploy’d to do them shou’d not be abated’ ’ (p. 41, italics added).
2 3 Irwin (1996, pp. 158± 59) quotes a passage from the early draft of The Wealth of Nations which
shows an even greater analogy to Martyn’s: ``It is in this manner that in an opulent and commercial
society labour becomes dear and work cheap, and those two events, which vulgar prejudices and
super® cial re¯ ection are apt to consider as altogether incompatible, are found by experience to be
perfectly consistent’’ (Smith 1978, p. 567). Martyn’s word ``paradox’’ captures perfectly the spirit of
the second part of Smith’s sentence.
2 4 Joyce Appleby (1978, p. 173) also argues that North and Martyn, among other liberal Restoration
writers, ``were endorsing the upward striving of the poor and turning the enjoyment of a higher
standard of living into both the motive and the end of productivity.’’ I disagree with Arkin’s contrary
view that ``it is perhaps in (Martyn’s) attitude towards labour that the writer of this tract approaches
most closely to the mercantilist outlook’’ and that ``there is scant mention of the manner in which
the workers themselves can expect to share in the expanding prosperity’’ (1955, pp. 312± 33).
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
Chapter 10 of Book One of The Wealth of Nations discusses wage and pro® t
diVerentials in diVerent occupations, and is divided into two parts, the ® rst
analyzing the diVerentials arising from the nature of the employments themselves,
and the second those arising from the ``policy of Europe, which nowhere leaves
things at perfect liberty’’ (Smith 1776, p. 116). This policy prevented free
entry into certain occupations, stimulated arti® cially the entry into others,
and obstructed the mobility of labor and capital occupationally as well as
geographicall y. The eVects of such policies on the English economy of his day
were also deplored by Martyn. He noted with irony the measures adopted at the
instigation of the ``Gentlemen’ ’ from ``English Estates’ ’ to protect the woolen
textile industry from the import of East Indian manufactures: ``a poor Man
must not have leave to carry an old Sheet to his Grave; both the Living and the
Dead must be wrapt in Woollen’ ’ (1701, pp. 49± 50). Martyn was inclined to
reject such policies favoring particular sectors of the economy. In order to make
individuals content to earn a pro® t rate in the ® shing trade as low as that found
in Holland, he pleaded that ``all our Trades both foreign and domestick, might
be driven with the greatest freedom, Corporations and other Restraints might
be destroy’d . . . By such an universal Freedom of Trade, our Super¯ uities wou’d
be multiply’d, our exportations wou’d be enlarg’d, our Bullion wou’d be increas’d,
and the more Money wou’d be still imploy’d in Trade’’ (p. 69).
A famous aphorism from Smith’s The Wealth of Nations is that ``As defence
. . . is of much more importance than opulence, the act of navigation is, perhaps,
the wisest of all the commercial regulations of England.’ ’ While this view can be
justi® ed as expressing an important noneconomic goal, some commentators
interpret it as a sign that Smith had not succeeded in discarding all types of
mercantilist belief. He favored the Act of Navigation even though he recognized
that it ``is not favourable to foreign commerce, or to the growth of that opulence
which can arise from it’ ’ (1776, pp. 464± 65). Martyn showed no such qualms. To
enable England to catch up with Holland in the ® shing industry, he proposed to
have ships built in the ``plantations’’ where ``the Work might be perform’d by
Negroes.’ ’ His rationale was that ``the Strength of Negroes is as great (as that of
Dutch workmen); a way is shewn to make their Skill as great . . . Negroes may
build as good Ships with equal Expedition, for half the Wages that must be
given in Holland’’ (1701, pp. 72± 73). Martyn believed that the division of labor
practiced in shipbuilding would make these ships cheaper than Dutch ones, so
that they could be sold even to Holland. Moreover, ``This were the way for us
to become the Carriers of the World, to pro® t by all that others eat, and drink,
and wear: This were a surer way, and less odious to our Neighbours, than any
Act of Navigation for only English Bottoms to be imploy’d, in the Carriage of
Things to and from our own Country’’ (p. 76).
``Carriers of the world’ ’ is an interesting alternative way to envisage the
economic future of the country that was eventually to become the ``workshop of
the world.’ ’ This depiction was expressed by Martyn earlier in his tract in poetic
language:
For, why are we surrounded with the Sea? Surely that our Wants at home might
be supply’ d by our Navigation into other Countries, the least and easiest
Labour. By this we taste the Spices of Arabia, yet never feel the scorching Sun
CONSIDERATIONS UPON THE EAST-INDIA TRADE
243
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which brings them forth; we shine in Silks which our Hands have never wrought;
we drink of Vinyards which we never planted; the Treasures of those Mines are
ours, in which we have never digg’d; we only plough the Deep, and reap the
Harvest of every Country in the World (p. 37).
This passage occurs in the same chapter that contains Martyn’s formulation of
the ``eighteenth-century rule’ ’ for the gains from trade. This rule plays such a
strategic part in Martyn’s Considerations that the next section is devoted to it.
Martyn not only anticipated Smith in analyzing the gains from trade in this way,
but he went beyond him.
Given the three centuries that have elapsed since its publication, it would be
surprising if the Considerations was not marked by some conceptual ¯ aws that
must be balanced against the profound insights for which it should be primarily
remembered. One of these ¯ aws was pointed out by Joseph Schumpeter (1954),
who extended his critique to other enlightened writers of the mercantilist period
and to Adam Smith himself. Smith maintained that whatever makes individuals
wealthy automatically enriches the whole society. For example, his advocacy of
free trade depended on the assumption that:
It is the maxim of every prudent master of a family, never to attempt to make
at home what it will cost him more to make than to buy. What is prudence in
the conduct of every private family, can scarce be folly in that of a great
kingdom . If a foreign country can supply us with a commodity cheaper than
we ourselves can make it, better buy it of them with some part of the produce
of our own industry, employed in a way in which we have some advantag e
(Smith 1776, pp. 456± 57).
Martyn used the same logic when he asserted that ``the Riches of every individual
Man is part of the Riches of the whole Community. Wherefore, if to erect a
Free-Port is to increase the Riches of the Merchant, it must increase the Riches
of the Kingdom’’ (1701, p. 78) . 2 5 Schumpeter argued that both ``the anonymous
author’ ’ (Martyn) and Isaac Gervaise
were much too ready to arrive at conclusions agreeable to their free-trade
opinions . . . The case of the anonymou s author is still worse. He leans
heavily on the argument that, because internationa l trade consists of voluntar y
transactions, which therefore must necessarily be to the advantag e of both
contracting parties, nothing but advantag e to the nation as a whole can result
from it (1954, pp. 375± 76).
Schumpeter went on to tar Dudley North and Adam Smith with the same brush,
quoting the above sentence of Smith regarding ``what is prudence in the conduct
of every private family.’ ’ The fallacy of composition that Schumpeter alludes to
was identi® ed and criticized before him by Alexander Hamilton, John Rae,
2 5 Martyn made the conceptually related point that positive and negative changes in individuals’
incomes should be added algebraically to determine if a nation as a whole is better or worse oV:
``the increase of the Stock of a Part exceeding the diminution of that of the rest of the People, must
be esteem’d an increase of the Riches of the whole People’ ’ (p. 22). This is what is known in the
welfare economics literature as the Kaldor-Hicks criterion for an increase in social income, which
takes no account of the distribution of income.
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
Friedrich List, and other writers who argued in favor of a ``national system’’ of
political economy. 2 6
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IV. THE ``EIGHTEENTH-CENTURY RULE’’ FOR THE GAINS
FROM TRADE
Martyn is now perhaps best known for giving one of the clearest formulations,
accompanied by a numerical example, of the eighteenth-century rule according
to which ``it pays to import commodities from abroad whenever they can be
obtained in exchange for exports at a smaller real cost than their production at
home would entail’ ’ (Viner 1937, p. 440). Smith used this rule several times in
The Wealth of Nations to depict the gains from trade. As early as chapter 2 of
Book One, he noted that in a tribe of hunters or shepherds a person who excels
in making bows and arrows ``frequently exchanges them for cattle or for venison
with his companions; and he ® nds at last that he can in this manner get more
cattle and venison, than if he himself went to the ® eld to catch them’ ’ (1776,
p. 27). A similar view of the gains from trade is expressed in Book Three of The
Wealth of Nations in connection with the trade between town and countryside,
and in Book Four in connection with the gains from foreign trade (pp. 376, 457).
A country that imports commodities from abroad and pays for them with exports
incurs only a fraction of the costs required to produce them with its own
resources. Present-day trade economists describe the same rule when they argue
that trade is an indirect method of production.
The numerical example that Martyn presents in chapter 10 of the Considerations
to quantify the gains from trade via the eighteenth-century rule is the following: 2 7
If nine cannot produce above three Bushels of Wheat in England, if by equal
Labour they might procure nine Bushels from another Country, to imploy these
in agriculture at home, is to imploy nine to do no more work than might be
done as well by three; . . . is the loss of six Bushels of Wheat; is therefore the
loss of so much value (1701, p. 35).
Martyn’s measure of the gains from trade represented a major analytical advance
that Smith never referred to in numerical terms, though he clearly understood
the concept. This measure, and its implied case for free trade, was not improved
by other economists for over a century. It can readily be translated into a similar
measure used by present-day economists known as the equivalent variation of
the gains from trade, and depicted diagrammatically (Maneschi 1998).
Ricardo (1817, chapter 7) also appealed to the eighteenth-century rule to
describe the gains from trade. In his numerical example of wine and cloth traded
between England and Portugal, he argued that Portugal could obtain more cloth
2 6 These writers can be regarded as ``creators of comparative advantage ’’ (Maneschi 1998, chapter
5). Their intellectual descendant was John Stuart Mill, who formulated the argument for infant
industry protection (Mill 1848) and convinced his fellow economists of its soundness.
2 7 As shown in Maneschi (1998, p. 36), Martyn’s numbers imply that a unit of labor employed in
the export sector produces commodities that exchange for one bushel of wheat, while a unit of labor
directly employed in the wheat sector yields only 1/3 bushel. Hence trade results in a gain of 2/3
bushel of wheat per unit of labor employed.
245
CONSIDERATIONS UPON THE EAST-INDIA TRADE
by exchanging some of her wine for English cloth than by manufacturing the
cloth herself, even though her labor was more productive in cloth than English
labor. Viner himself held that Ricardo’s principle of comparative costs did not
go much further than the eighteenth-century rule:
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Such gain from trade is always possible when, and is only possible if, there are
comparative diVerences in costs between the countries concerned. The doctrine
of comparative costs is, indeed, but a statement of some of the implication s of
this rule, and adds nothing to it as a guide for policy . . . This explicit statement
that imports could be pro® table even though the commodity imported could
be produced at less cost at home than abroad was, it seems to me, the sole
addition of consequence which the doctrine of comparative costs made to the
eighteenth-century rule (1937, pp. 440± 41).
Several other commentators of Martyn’s Considerations have expressed the
opinion that it anticipated the principle of comparative advantage. According to
Thomas (1926, p. 77), the argument in the Considerations that ``it was a loss to
the kingdom to carry on manufactures which could be managed elsewhere with
the labour of fewer hands . . . foreshadowed the modern theory of comparative
costs.’ ’ Barber (1975, p. 61) went even further by claiming that ``in all its essential
particulars, the analysis the nineteenth century was to know as the theory of
comparative advantage can be found in the pages of an obscure tract produced
by a man who sought to unravel the mysteries of the East India trade in 1701.’ ’
Schumpeter took a much dimmer view of Martyn’s contribution. After
acknowledging that Martyn was one of only two English authors who achieved
``a technically superior formulation of the bene® ts from territorial division of
labor that went some way toward anticipating the most important element in
the nineteenth-century theory of international values,’ ’ he went on to critique his
treatment of ``international trade as a method of acquiring goods with an
amount of labor smaller than would be necessary to produce them at home. He
does not seem to have been aware of the relation of this to the principle of
comparative cost, but even so we have here a predecessor of Ricardo, though
possibly a quite unin¯ uential one’ ’ (1954, pp. 373± 74). Schumpeter’s contention
that Martyn’s numerical example does not relate to comparative costs is correct:
it does not contain the four numbers needed (that is, the productivitie s of labor
in two commodities in each of two countries) to deduce the direction of trade.
Martyn provided the labor coeYcients of country A while ignoring those of
country B, and short-circuited the determination of the trade equilibrium by
postulating given terms of trade. However, it is astonishing that Schumpeter
failed to give Martyn any credit for his formulation of the eighteenth-century
rule, and chose instead to fault him for not discovering the principle of comparative costs 116 years ahead of Ricardo!
V. VICISSITUDES OF
THREE CENTURIES
MARTYN’S
CONSIDERATIONS
OVER
Commentators on Martyn’s Considerations have praised it as a remarkable tract
advancin g concepts that later became important building blocks of classical
political economy. But they note its failure to have any signi® cant impact on the
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246
JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
evolution of the latter, as witnessed by the fact that it was hardly noticed until
it was resurrected by McCulloch a century and a half after its publication.
After discussing North and Martyn as important precursors of Adam Smith,
Hutchison (1988, p. 86) observes that ``at this point, at the start of the eighteenth
century, this movement [toward what he labels ``mercantilist liberalism ’ ’ ] received
a check, the reasons for which are somewhat obscure. North and Martyn had
no immediate successors developing the case for economic freedom along similar
lines, or in the same style.’ ’ For McCulloch, this seemingly paradoxica l neglect
``is wholly to be ascribed to the author being very far in advance of his age,’ ’ so
that much was required ``to dissipate the prejudices which swayed his contemporaries and their successors’ ’ (1856, p. xv). Barber comments similarly on the ``air
of puzzlement surrounding the appraisal s of this document oVered by latter-day
commentators. Considerations Upon the East-India Trade can thus appear to be
not of its time, but ahead of it.’ ’ He oVers some interesting re¯ ections on
``the suppression of intellectual innovation’ ’ such as that embodied in the
Considerations. The major organized interest groups in England, such as the
textile interests, the two existing East India companies, and other commercial
rivals desiring a share of the monopoly pro® ts in the East India trade, had able
writers at their disposal, and ``it was to the interest of none of them to draw
attention to this publication. The promotion of unbridled laissez-faire was not
their objective’’ (Barber 1975, pp. 64± 65).
According to MacLeod, ``what Martin was saying in 1701 demanded a great
leap of economic faith. Ostensibly reassuring , it implied in eVect a dislocation
of the economy that threatened many with ruin and all with social unrest. Henry
Martin’s prescription involved far too many risks for his contemporaries’ liking.
His arguments were far too radical.’ ’ She concludes that ``Dudley North’s
Discourses on Trade and Isaac Gervaise’s System or Theory of the Trade of the
World (1720) were virtually ignored’ ’ for the same reason, and that ``thoroughgoing free trade had to wait almost another century to be unashamedly appreciated’ ’ (1983, pp. 227± 29). Thomas (1926) and Joyce Appleby (1978) also explain
the genesis and subsequent neglect of Martyn’s Considerations and other liberal
writings of that time in terms of the underlying political events and ideological
currents. They provide a lively account of the controversy between protectionists
and free traders in England in the latter half of the seventeenth century,
and they trace the political, economic, and social reasons for the triumph of
protectionism in the eighteenth century. According to Appleby, political decisions
taken in the period 1696± 1713 caused England to follow a course of economic
development diVerent from that envisaged by the liberal pamphleteers. Power
shifted from merchants such as those engaged in the East India trade to
manufacturers and landowners who did not share their orientation toward laissez
faire and free trade. In the very year of publication of the Considerations, 1701,
``the campaign launched earlier by the clothiers against East Indian imports was
crowned with success . . . when the special duties of the 1690s were converted
into a complete prohibition’ ’ (Appleby 1978, p. 249). In fact, she dates to that time
``the ® rst appearance in England of anything that could be called mercantilism . . .
under the sponsorship of landlords and manufacturers rather than that of the
merchants from whom its name is derived’’ (pp. 250± 51).
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CONSIDERATIONS UPON THE EAST-INDIA TRADE
247
This ideological shift at the turn of the eighteenth century was accompanied
by a renewed importance attached to the balance of trade, a concept that had
increasingly been rejected as a guide to policy in the course of the seventeenth
century. Pamphleteers began to stress that a more positive balance of trade
associated with rising exports would lead to greater employment, whose level had
become an increasing preoccupation of policymakers. 2 8 In the Considerations, as
mentioned above, Martyn showed himself oblivious to the social problems
connected with unemployment resulting from the import of cheap textiles
from India, assuming that the displaced labor would readily ® nd employment
elsewhere. This attitude toward labor, and Martyn’s accompanying preference
for free trade and rejection of the balance of trade as a valid policy concern,
help to explain why the Considerations fell on deaf ears after its publication,
despite being republished in 1720 with a new title. Martyn himself was aVected
by the changed political and ideological climate, as evidenced by his becoming
in 1713 a leading contributor to The British Merchant, a journal vehemently
opposed to free trade with France.
How can one account for Martyn’s volte-face from being a radical free trader
in the Considerations to becoming not simply one of several contributors to The
British Merchant, but ``The Person to whom our Country is chie¯ y obliged for
these Papers, and who had the greatest Hand in them’’ (King 1721, p. xiv)?
Thomas (1926) and MacLeod (1983) oVer similar explanations, rooted in the
political and ideological currents that marked England at the turn of the
eighteenth century. As MacLeod observes, the Considerations and The British
Merchant, ``Although widely disparate in their styles of argument, were at least
consistent in their attack upon ostensibly tory interests’ ’ (p. 225). As a Whig,
Martyn denounced the monopoly of the old East India Company dominated by
the Tories and closely allied to the crown, and supported the claims of the rival
English East India Company Trading to the East Indies sponsored by Parliament
and incorporated in 1698. In chapter 3 of the Considerations he even went
beyond promoting the claims of the rival company, advocating the need to
``break both Companies.’ ’ Martyn wished to allow all merchants the freedom to
trade with East India not because he was enamored of the free trade ideal, as
shown by the conventional mercantilist arguments he later used in The British
Merchant, but because the promotion of freer trade to the East Indies seemed
the most promising way to prevent the old Tory East India Company from
reacquiring the monopoly of that trade (MacLeod 1983, p. 226).
Another reason for Martyn’s stance, identi® ed by both Thomas and MacLeod,
is the fact that his younger brother Richard was a linen-draper. The economic
interests of the linen-drapers (who were also Whigs) made them the most
vociferous partisans of free trade with the East Indies. 2 9 As Thomas points out,
28
Johnson (1937) devotes the last chapter of his book to ``The `Export of Work’ and `Foreign-Paid
Incomes’,’’ noting that from the latter part of the seventeenth century pamphleteers increasingly
viewed exports as providing ``foreign-paid incomes’ ’ for workers, and reinterpreted the balance of
trade goal accordingly. See also Magnusson (1994, pp. 134± 38).
2 9 A parliamentary act of 1700 forbidding the wearing of calicoes and silks after September 1701
gave added urgency to the publication of Martyn’s tract, and perhaps explains the hurried composition and ``unnecessary Repetitions’ ’ to which Martyn alludes in its preface, where he claims that he
did not have the time to correct or review his manuscript.
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
``Although the Considerations is apparently an impartial defence of a principle,
it need not be supposed that the author had no self-interest in maintaining such
a thesis. Almost every pamphlet on East Indian trade written in that periodÐ
especially from 1696 to 1700Ð was meant to promote the interests of party or
faction’ ’ (1926, p. 172). 3 0 Thus, an alternative interpretation of the lack of
in¯ uence of the Considerations on Martyn’s contemporaries is that the writers of
tracts were automatically regarded as spokesmen for special interests rather than
disinterested observers who speculated on the rationale for policies such as free
trade and how nations gain from it. Anonymous tracts such as the Considerations
could be expected to come under special suspicion. The tract’s strident stand in
favor of free trade, which ignored the possibility that free trade could harm even
temporarily the manufactures and labor force in import-competing sectors, was
hardly designed to win over adherents to its author’s views as scienti® cally based.
Martyn’s political proclivities also explain why he advocated the defeat of the
Treaty of Utrecht of 1713, by which the Tories hoped to liberaliz e trade with
France. Martyn was charged by the Whigs to respond in The British Merchant;
or, Commerce Preserv’d to the Tory arguments presented by Daniel Defoe (a
``Hireling Writer,’ ’ according to the Whigs) in the rival publication Mercator: or
Commerce Retrieved. As Thomas points out, ``It was not unusual in those days
even among honest men to stand for liberal trade relations with one country
while opposing the same in the case of another’ ’ (1926, p. 172). Martyn could
thus acquiesce in the fact that, while arguing against trade with France, The
British Merchant believed in freedom of trade with China and the East Indies
(King 1721, p. 30), as well as with other countries whose trade with England
was deemed to be advantageous.
The vicissitudes in the reception accorded to the Considerations after its
publication, and Martyn’s conditional attitude toward free trade depending on
which country was England’s trading partner, should not, of course, aVect our
view of its quality as an outstanding intellectual contribution to economics and
to the case for free trade that was, as McCulloch rightly stated, ``very far in
advance’ ’ of its author’s era. As argued above, Martyn’s tract contains a plethora
of anticipations of Adam Smith’s The Wealth of Nations, and in certain respects
such as the formulation of the eighteenth-century rule, went well beyond it.
Unfortunately, we will never know if Smith bene® ted from reading the Considerations when he composed The Wealth of Nations. But this is not as important as
recalling that Henry Martyn’s tract of 1701 contained insights that foreshadowed
many of the bene® ts that globalization is still able to deliver to trading nations
three hundred years later.
3 0 This self-interest was of course even clearer in the case of pamphleteers such as Josiah Child and
Charles Davenant. As employees of the East India company (and, in Child’s case, as its Governor),
their protestations on behalf of freedom of trade for a company that wielded monopoly power were
naturally suspect, regardless of the logic with which they articulated them.
CONSIDERATIONS UPON THE EAST-INDIA TRADE
249
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