What, then, were these difficulties? In the first place, nothing but the actual gold or silver coin was of any value in meeting the necessities of the State either for defence, aggression, or internal administration; and the difficulty consisted in laying hands on it when it was wanted. It could not be raised at a moment's notice as at the present time, by the issue of securities, exchequer bills, or what not, on the credit of the State, to be taken up by its own subjects or by foreigners. For at the time when the Mercantile System took its rise, neither credit nor security was anywhere to be found. To begin with, there was not, in the Northern nations at least, even the rudimentary beginnings of that organized system of banking and credits which to-day is spread like a web over all the nations, linking the commercial, industrial, and financial world together; and if there had been, there was no security that any of these credits would ever be redeemed. Indeed there was neither in the political, the religious, the social, nor the material conditions of the time the least assurance anywhere to be found that a single coin would pass from the hand that held it to the hand that might hold the credit against it.

On the contrary if left to themselves all these conditions seemed as by a kind of fatal unanimity to conspire together that it should not pass. To begin with, there was no way of knowing the financial or industrial assets of either governments or individuals, for the affairs of each in the darkness of these semi-barbarous times were as vague and uncertain as the movements of ships on midnight seas. There were neither financial storm signals to warn creditors of unseen dangers, nor fine weather ones to tempt them to put out to sea. There was neither security for movable goods against the rapacity of man, nor for the crops and harvests against the uncertainty of the seasons. With the nations always at war with each other, there was no code of international law, and certainly none for the payment of national debts, which if they could not be collected at the sword's point were repudiated. Debt collection of any kind in fact as a function of the central government was either unknown or was a fiction.

Even the king's writ would not run farther than his own domain, or to the borders of the estate of his nearest rebellious baron.

Nor could the Church afford any security or help to the creditor. For although she took good care by means of interdicts and excommunications to collect her own debts from unwilling kings, she turned her back on all bargains for interest on money given or received by individuals, as forbidden by the Canon Law; and only passively acquiesced in or winked at those loans to industrial concerns where profits could be plausibly represented as returns from a common enterprise. Nor was the transport either of money or goods any more secure than their possession or exchange. The seas were infested with pirates, and on land the feudal barons from their castles everywhere swooped down on the passing trader. The consequence of all this was that money or other valuable movables in small bulk had to find for themselves holes in the ground or up the chimneys; and if they were tempted to venture out on sound legitimate commercial enterprise, it had to be done with as much stealth, circumspection, and concealment, as if it were a midnight robbery that was on foot.

And the consequence of this again was that in all foreign trade and in most domestic, except between neighbours in the same village or municipality, the rule of the commercial road was, what it still is among retail tradesmen who do not know their customers; - 'Money down, or no deal.' And further, as sinews of war always available and easily accessible were as pressing a necessity of kings then as now, and as the actual coin or bullion, if it were to be got together at all, had to be collected from their own subjects, it was indispensable that these subjects in turn should have it in actual tangible possession. And it was in the manoeuvring to secure this that the Mercantile System took its rise.

The first plan devised by the Government for this end was to see that in every bargain between a native and a foreign trader more bullion was left in the country by the foreigner than was taken out of it by him. And as these bargains with foreigners were only to be made at certain specified places or markets, officers of the king were always present to see that the balance in gold on each transaction was on the side of their own countryman. Indeed it went so far that the foreigner was obliged to take up his lodgings at the house of one or other of these officials in order to make sure that the money he received for his goods should be spent, before he left, in the purchase of English goods in turn. As for the English exports, which at that time consisted mainly of wool, hides, lead, and tin, and on which duties had to be paid, certain towns only on the Continent were permitted to receive them. These were called 'staple towns,' and the corporation of English traders established at these towns and charged with the duty of collecting these dues, had to satisfy themselves that the price of the commodities (or enough of it at least to pay the dues) was received from the foreigner in money.