"Trade has some relation to forms of government. In a monarchy, it is generally founded on luxury; and though it be also founded on real wants, yet the principal view with which it is carried on is to procure everything that can contribute to the pride, the pleasure, and the capricious whims of the nation. In republics, it is commonly founded on economy. Their merchants, having an eye to all the nations of the earth, bring from one what is wanted by another. . . . This kind of traffic [trade] can hardly be carried on by a people swallowed up in luxury, who spend much, and see nothing but objects of grandeur."

The statement is describing the usual difference in trade policy that exists between monarchies and republics.

Explanation:

The excerpt comes from the Spirit of the Laws, by Montesquieu, who was a French philosopher who promoted republicanism and liberalism.

In the text, Montesqueiu is explaining than in monarchies, trade is very restricted, and is usually only allowed for luxury goods like perfums, spices, or silk clothes, because these goods are used by the nobility as a symbol of their power and status.

In monarchies, for the rest of the population, trade is restricted. The common people therefore cannot access goods from abroad, or can only do so at a very high cost.

In republics, Montesquieu says, trade tends to be more open. Merchants become the ones who do most of the trade, guided by their economic ideas. The merchants therefore obtain many goods from abroad, that both the nobility and the commoner can acquire for a lower price.

In conclusion, Montesquieu is using the argument for trade as another reason to support republics over monarchies.