Mun, Thomas

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Mun, Thomas



Thomas Mun (1571–1641), English writer on economics, was the third son of a substantial London family. His grandfather was an officer of the mint and acquired a coat of arms, his uncle was also an officer of the mint, and his stepfather was a director of the newly formed East India Company. Nothing is known of his education, but it is presumed, since there were close links between the Indian and the Mediterranean trades, that he served his apprenticeship in the latter. In fact, he says in one of his books that he lived for some time in Italy. He became a prominent and rich member of the East India Company, married the daughter of a Bedfordshire gentleman, and inherited and bought land in the country. One of his daughters married a baronet, another a merchant. His son appears to have lived the life of a country gentleman.

Mun came into the public eye during the economic depression which began in 1620. The books for which he is famous sprang entirely from that depression. The gravest symptom of the depression was the shortage of money, and, indeed, many regarded this shortage as a cause of the depression. In 1621 Mun wrote and published A Discourse of Trade From England Unto the East-Indies to answer the charge that the East India Company, which financed its trade largely by the export of silver coin, was responsible for the depression. His argument was that East Indian goods, when reexported, earned more silver than that originally exported to pay for them.

Mun was one of the merchants consulted by the government about the causes of the depression and was a member of the great commission of trade set up in 1622 to make recommendations concerning economic policy. On the commission, he opposed successfully the advocates of two different policies, each based on a distinct theoretical analysis of the mechanism of foreign trade. One group of advocates held that the export of silver was caused by the undervaluation of silver coin in England and urged therefore that sterling be devalued: this view found articulate expression in Edward Misselden’s Free Trade (1622). A second group believed that excessive export was intrinsic in foreign exchanges and advocated exchange control with a fixed exchange rate: this view was, in turn, forcibly presented by Gerard de Malynes in The Maintenance of Free Trade (1622) and elsewhere. Mun composed, or helped to compose, a series of papers directed against both these views, and these papers formed the substance of a book which he completed between 1626 and 1628 and which his son published in 1664: England’s Treasure by Forraign Trade.

Mun was a practicing professional merchant, which his opponents for the most part were not, and the book is much more a handbook for merchants and statesmen than an essay in theoretical economics. From the theoretical standpoint, Mun’s criticism of de Malynes’s views was inadequate. His central thesis was a tautological statement that money flows into or out of the country as the value of exports exceeds or falls short of the value of imports. He recognized the existence of invisible exports but was not original in this respect. Far from questioning in what sense treasure (that is, in the last resort, silver) is synonymous with wealth, he accepted as axiomatic that the balance of payments is the “rule” or “touchstone” of national wealth. He ignored the possibly inflationary effects of an indefinite influx of silver, took no account of international lending, and stated that the “overplus” of the balance and no more ought to be drawn off in taxation—as if government spending were economically irrelevant.

Nevertheless, England’s Treasure remains a great book, even if it is not exactly a storehouse of the best economic ideas of the age and if its originality must be questioned at many points. It is an important book, first, because Mun’s ideas prevailed —devaluation and exchange control were not attempted—and second, because in a single (admittedly partial) analysis it embraced with unrivaled lucidity all the economic variables under discussion at that time. Mun insisted that foreign trade is governed by the demand for commodities, that the flow of goods rules the exchange rate, and that silver itself is merely another commodity. He advocated low export prices, efficient commercial procedures, full exploitation of native skills and resources, low duties on exports, encouragement of re-exports, and the like: in sum, an export drive. Perhaps his most notable contribution to economic theory was to recognize and to insist on the principle of elasticity of demand, estimating that a reduction of 25 per cent in the price of cloth (England’s chief export) would increase by 50 per cent the quantity sold. He dealt with the great but not insuperable difficulty of drawing up a balance of payments; such a balance was, in fact, established shortly after Mun’s book was published.

Mun’s originality lay in adjusting the conventional doctrine of the balance of trade (or rather of payments) to the new circumstances of rising foreign competition in the export market, especially of fierce economic rivalry with Holland, then the dominant commercial power; it is significant that the book was first published on the eve of the second Anglo-Dutch war. His practical liberalism, typical of the professional merchant of his day, commended him to later laissez-faire economists such as John R. McCulloch, who saw him as a tentative exponent of freedom of trade. He was, however, sharply divided from the laissez-faire economists and remained typically mercantilist in his reiterated distinction between the profit of the individual merchant and the general welfare of the national economy as a whole, as when he stated that the merchant’s gain can be the commonwealth’s loss and the merchant’s loss the commonwealth’s gain. His whole argument presupposes that a nation which gains by foreign trade does so at the expense of another.

R. W. K. Hinton

[For the historical context of Mun’s work, see Economic Thought, article on Mercantilist Thought; and the biography of Misselden.]


(1621) 1954 A Discourse of Trade From England Unto the East-Indies. Pages 1–47 in John R. McCulloch (editor), Early English Tracts on Commerce. Cambridge Univ. Press.

(1664) 1959 England’s Treasure by Forraign Trade. Oxford: Blackwell.


Gould, J. D. 1955 a The Date of England’s Treasure by Forraign Trade. Journal of Economic History 15:160–161.

Gould, J. D. 1955 b The Trade Crisis of the Early 1620’s and English Economic Thought. Journal of Economic History 15:121–133.

Hardy, Alfred L. 1894 Thomas Mun. Pages 1183–1186 in Dictionary of National Biography. London: Smith.

Hinton, R. W. K. 1955 The Mercantile System in the Time of Thomas Mun. Economic History Review Second Series 7:277–290.

Malynes, Gerard De 1622 The Maintenance of Free Trade. London: Sheffard.

Misselden, Edward 1622 Free Trade: Or, the Meanes to Make Trade Florish. London: Waterson.

Supple, Barry E. 1959 Commercial Crisis and Change in England, 1600–1642: A Study in the Instability of a Mercantile Economy. Cambridge Univ. Press.

Viner, Jacob 1937 Studies in the Theory of International Trade. New York: Harper.

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