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friend who had tried to help him。 Thereupon as part of his
punishment； the young prince was sent to a little fortress
somewhere in the provinces to be taught the details of his future
business of being a king。 It proved a blessing in disguise。
When Frederick came to the throne in 1740； he knew how his
country was managed from the birth certificate of a pauper's
son to the minutest detail of a complicated annual Budget。
As an author； especially in his book called the ‘‘Anti…
Macchiavelli；'' Frederick had expressed his contempt for the
political creed of the ancient Florentine historian； who had
advised his princely pupils to lie and cheat whenever it was
necessary to do so for the benefit of their country。 The ideal
ruler in Frederick's volume was the first servant of his people；
the enlightened despot after the example of Louis XIV。 In
practice； however； Frederick； while working for his people
twenty hours a day； tolerated no one to be near him as a
counsellor。 His ministers were superior clerks。 Prussia was his
private possession； to be treated according to his own wishes。
And nothing was allowed to interfere with the interest of the
state。
In the year 1740 the Emperor Charles VI； of Austria；
died。 He had tried to make the position of his only daughter；
Maria Theresa； secure through a solemn treaty； written black
on white； upon a large piece of parchment。 But no sooner had
the old emperor been deposited in the ancestral crypt of the
Habsburg family； than the armies of Frederick were marching
towards the Austrian frontier to occupy that part of Silesia for
which （together with almost everything else in central Europe）
Prussia clamored； on account of some ancient and very
doubtful rights of claim。 In a number of wars； Frederick
conquered all of Silesia； and although he was often very near
defeat； he maintained himself in his newly acquired territories
against all Austrian counter…attacks。
Europe took due notice of this sudden appearance of a
very powerful new state。 In the eighteenth century； the Germans
were a people who had been ruined by the great religious
wars and who were not held in high esteem by any one。 Frederick；
by an effort as sudden and quite as terrific as that of
Peter of Russia； changed this attitude of contempt into one
of fear。 The internal affairs of Prussia were arranged so
skillfully that the subjects had less reason for complaint than
elsewhere。 The treasury showed an annual surplus instead of a
deficit。 Torture was abolished。 The judiciary system was
improved。 Good roads and good schools and good universities；
together with a scrupulously honest administration； made the
people feel that whatever services were demanded of them；
they （to speak the vernacular） got their money's worth。
After having been for several centuries the battle field of
the French and the Austrians and the Swedes and the Danes
and the Poles； Germany； encouraged by the example of Prussia；
began to regain self…confidence。 And this was the work of
the little old man； with his hook…nose and his old uniforms covered
with snuff； who said very funny but very unpleasant things
about his neighbours； and who played the scandalous game of
eighteenth century diplomacy without any regard for the truth；
provided he could gain something by his lies。 This in spite of
his book； ‘‘Anti…Macchiavelli。'' In the year 1786 the end
came。 His friends were all gone。 Children he had never had。
He died alone； tended by a single servant and his faithful
dogs； whom he loved better than human beings because； as he
said； they were never ungrateful and remained true to their
friends。
THE MERCANTILE SYSTEM
HOW THE NEWLY FOUNDED NATIONAL OR
DYNASTIC STATES OF EUROPE TRIED TO
MAKE THEMSELVES RICH AND WHAT WAS
MEANT BY THE MERCANTILE SYSTEM
WE have seen how； during the sixteenth and the seventeenth
centuries； the states of our modern world began to take shape。
Their origins were different in almost every case。 Some had
been the result of the deliberate effort of a single king。 Others
had happened by chance。 Still others had been the result of
favourable natural geographic boundaries。 But once they had
been founded； they had all of them tried to strengthen their
internal administration and to exert the greatest possible influence
upon foreign affairs。 All this of course had cost a great
deal of money。 The mediaeval state with its lack of centralised
power did not depend upon a rich treasury。 The king got his
revenues from the crown domains and his civil service paid for
itself。 The modern centralised state was a more complicated
affair。 The old knights disappeared and hired government
officials or bureaucrats took their place。 Army； navy； and
internal administration demanded millions。 The question then
became where was this money to be found？
Gold and silver had been a rare commodity in the middle
ages。 The average man； as I have told you； never saw a gold
piece as long as he lived。 Only the inhabitants of the large
cities were familiar with silver coin。 The discovery of America
and the exploitation of the Peruvian mines changed all this。
The centre of trade was transferred from the Mediterranean to
the Atlantic seaboard。 The old ‘‘commercial cities'' of Italy lost
their financial importance。 New ‘‘commercial nations'' took
their place and gold and silver were no longer a curiosity。
Through Spain and Portugal and Holland and England；
precious metals began to find their way to Europe The sixteenth
century had its own writers on the subject of political
economy and they evolved a theory of national wealth which
seemed to them entirely sound and of the greatest possible
benefit to their respective countries。 They reasoned that both
gold and silver were actual wealth。 Therefore they believed
that the country with the largest supply of actual cash in the
vaults of its treasury and its banks was at the same time the
richest country。 And since money meant armies； it followed
that the richest country was also the most powerful and could
rule the rest of the world。
We call this system the ‘‘mercantile system；'' and it was
accepted with the same unquestioning faith with which the
early Christians believed in Miracles and many of the present…
day American business men believe in the Tariff。 In practice；
the Mercantile system worked out as follows： To get the
largest surplus of precious metals a country must have a
favourable balance of export trade。 If you can export more to
your neighbour than he exports to your own country； he will
owe you money and will be obliged to send you some of his
gold。 Hence you gain and he loses。 As a result of this creed；
the economic program of almost every seventeenth century
state was as follows：
1。 Try to get possession of as many precious metals
as you can。
2。 Encourage foreign trade in preference to domestic
trade。
3。 Encourage t