Gervaise, Isaac

BIBLIOCRAPHY

Isaac Gervaise, merchant and writer on economics, was a French Huguenot born in Paris after the mid-seventeenth century. He became a natural ized British citizen. In 1691 his father helped to finance the Royal Lustring Company of England (manufacturers of a fine black silk), and shortly thereafter both father and son became officers of the company.

Gervaise is known for only one work, The System or Theory of the Trade of the World, which was published in 1720 but in effect rediscovered by Jacob Viner only in 1935 (see Foreword to Ger vaise [1720] 1954). It is a remarkable essay, formu lating the first general equilibrium treatment of the international mechanism of adjustment. Gervaise’s presentation marks a pioneer application of the “income” or “macroeconomic” approach to problems of international equilibrium and disequi librium. It analyzes the process that produces disequilibrium and shows under what conditions adjustment is restored or maladjustment persists. Gervaise drew a distinction between disturbances which may arise from fluctuations in trade per se and those which may arise from comparative stability in prices. His formulation embraces domestic and international equilibrium; credit, in flation, and their effects on trade; the role of exchange rates, monopoly, tariffs, and the determi nants of free trade.

Although Gervaise’s work deserves more attention for its masterly theorizing than for its policy recommendations, it is nevertheless notable as one of the very few unambiguous expressions of a free-trade position in the English economic literature before Adam Smith. Gervaise argued in uncom promising terms that monetary instability and monopoly must be held in strict control. In an age when most writings on economics consisted of special pleading, Gervaise’s scientifically objective work was a most unusual achievement. It is the more remarkable since Gervaise was an officer in a company that operated with special monopolistic privileges, and the public policy he advocated was in sharp conflict with his private interests. To be sure, it may have been easier and less noble for him to take an antimercantilist position in 1720, for in that year the Royal Lustring Company had lost its charter. Gervaise wrote in his preface: “…this System …hath the ill Fate to appear at a time, when I myself could wish it false” ([1720] 1954, p. 3). The statement seems to imply that while repeal was in the public interest it was in jurious to his private interests.

Gervaise had not only the advantage of practical experience but also the capacity for general inquiry. A man of his experience and training was in a singularly fortunate position to examine the then existing international mechanism of adjustment, and he examined it with realistic detail and penetrating insight. Every sentence reveals incisive first-hand knowledge of the phenomena he described. The economy of words, the deep insight into the motivations of men and nations, and the vigor of his analysis all contribute to making Ger-vaise’s book a profound study, the wisdom of which appears to grow with each reading.

John M. Letiche

[See alsointernational monetary economics; in ternational trade.]

BIBLIOCRAPHY

Gervaise, Isaac (1720) 1954 The System or Theory of the Trade of the World. With a Foreword by Jacob Viner and an Introduction by John M. Letiche. Balti more: Johns Hopkins Press.

Letiche, John M. 1952 Isaac Gervaise on the International Mechanism of Adjustment. Journal of Political Economy 60:34–43.

Letiche, John M. 1959 Balance of Payments and Economic Growth. New York: Harper.

Maintbieu, Jehan 1909 he traite d’Utrecht et les polémiques du commerce anglais. Paris: Pichon & Du-rand-Auzias.

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