Essay on the Nature of Commerce in General

Richard Cantillon

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351311502
• Edition: 1
• Topic: Économie
• Subtopic: Histoire économique

Richard Cantillon is one of the key figures in the early history of economics. He was certainly not the first to think about economic problems, but he was the first to have clear insight into the way the economy functions as a system. He was arguably the first to structure a theory of how the economy works. In this sense he could be called the first real economist. Today, his ideas on population, determination of prices, wages and interest, the role of the entrepreneur, banking, and the influence of money supply on the economy are increasingly quoted and appreciated.This is a translation of the Éssai sur la nature du commerce en general his only surviving work. It was circulated in manuscript form for many years after his death and was extremely influential, albeit not well known, at least throughout the eighteenth century. Essays on the Nature of Commerce in General shaped the development of economics through its formative influence on Franþois Quesnay and Adam Smith. It is a cornerstone upon which all subsequent economic theory has been built.Transaction is proud to breathe new life into this classic work as part of its distinguished series in economic theory and history. In his new introduction, Anthony Brewer showcases Cantillon, the prophetic thinker, for a new generation of readers. This volume's broad-based appeal and great cultural import can no longer afford to be overlooked. Students of economic theory, intellectual historians, and sociologists will find this volume indispensable.

Table of Contents

PART I

Chap. I. Of Wealth

Chap. II. Of Human Societies

Chap. III. Of Villages

Chap. IV. Of Market Towns

Chap. V. Of Cities

Chap. VI. Of Capital Cities

Chap. VII. The Labour of the Husbandman is of less Value than that of the Handicrafts-Man

Chap. VIII. Some Handicraftsmen earn more, others less, according to the different Cases and Circumstances

Chap. IX. The Number of Labourers, Handicraftsmen and others, who work in a State is naturally proportioned to the Demand for them

Chap. X. The Price and Intrinsic Value of a Thing, in general, is the measure of the Land and Labour which enter into its Production

Chap. XI. Of the Par or Relation between the Value of Land and Labour

Chap. XII. All Classes and Individuals in a State subsist or are enriched at the Expense of the Proprietors of Land

Chap. XIII. The Circulation and Exchange of Goods and Merchandise as well as their Production arc carried on in Europe by Undertakers, and at a risk

Chap. XIV. The Fancies, the Fashions, and the Modes of Living of the Prince, and especially of the Landowners, determine the use to which Land is put in a State and cause the variations in the Market-prices of all things

Chap. XV The Increase and Decrease of the Number of People in a State chiefly depend on the Taste, the Fashions, and Modes of Living of the Proprietors of Land

Chap. XVI. The more Labour there is in a State the more naturally rich the State is esteemed

Chap. XVII. Of Metals and Money, and especially of Gold and Silver

PART II

Chap. I. Of Barter

Chap. II. Of Market Prices

Chap. III. Of the Circulation of Money

Chap. IV. Further Reflection on the Rapidity or Slowness of the Circulation of Money in Exchange

Chap. V. Of the inequality of the circulation of hard money in a State

Chap. VI. Of the increase and decrease in the quantity of Hard Money in a State

Chap. VII. Continuation of the same subject

Chap. VIII. Further Reflection on the same subject

Chap. IX. Of the Interest of Money and its Causes

Chap. X and Last. Of the Causes of the Increase and Decrease of the Interest of Money in a State

PART III

Chap. I. Of Foreign Trade

Chap. II. Of the Exchanges and their Nature

Chap. III. Further explanations of the nature of the Exchanges

Chap. IV. Of the variations in the proportion of values with regard to the Metals which serve as Money

Chap. V. Of the aumentation and diminution of Coin in denomination

Chap. VI. Of Banks and their Credit

Chap. VII. Further explanations and enquiries as to the utility of a National Bank

Chap. VIII. Of the refinements of Credit of General Banks

Essay on the Nature of Trade in General

PART ONE

CHAPTER I

Of Wealth

The Land is the Source or Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Con-veniencies, and Superfluities of Life.

Land produces Herbage, Roots, Corn, Flax, Cotton, Hemp, Shrubs and Timber of several kinds, with divers sorts of Fruits, Bark, and Foliage like that of the Mulberry-tree for Silkworms; it supplies Mines and Minerals. To all this the Labour of man gives the form of Wealth.

Rivers and Seas supply Fish for the food of man, and many other things for his enjoyment. But these Seas and Rivers belong to the adjacent Lands or are common to all, and the Labour of man extracts from them the Fish and other advantages.

CHAPTER II

Of Human Societies

Which way soever as Society of Men is formed the ownership of the Land they inhabit will necessarily belong to a small number among them.

In wandering Societies like Hordes of Tartars and Camps of Indians who go from one place to another with their Animals and Families, it is necessary that the Captain or King who is their Leader should fix the boundaries of each Head of a Family and the Quarters of an Individual around the Camp. Otherwise there would always be disputes over the Quarters or Conveniencies, Woods, Herbage, Water, etc. but when the Quarters and Boundaries of each man are settled it is as good as ownership while they stay in that place.

In more settled Societies: if a Prince at the head of an Army has conquered a Country, he will distribute the Lands among his Officers or Favourites according to their Merit or his Pleasure (as was originally the case in France): he will then establish laws to vest the property in them and their Descendants: or he will reserve to himself the ownership of the Land and employ his Officers or Favourites to cultivate it: or will grant the Land to them on condition that they pay for it an annual Quit Rent or Due: or he will grant it to them while reserving his freedom to tax them every year according to his needs and their capacity. In all these cases these Officers or Favourites, whether absolute Owners or Dependants, whether Stewards or Bailiffs of the produce of the Land, will be few in number in proportion to all the Inhabitants.

Even if the Prince distribute the Land equally among all the Inhabitants it will ultimately be divided among a small number. One man will have several Children and cannot leave to each of them a portion of Land equal to his own; another will die without Children, and will leave his portion to some one who has Land already rather than to one who has none; a third will be lazy, prodigal, or sickly, and be obliged to sell his portion to another who is frugal and industrious, who will continually add to his Estate by new purchases and will employ upon it the Labour of those who having no Land of their own are compelled to offer him their Labour in order to live.

At the first settlement of Rome each Citizen had two Journaux* of Land allotted to him. Yet there was soon after as great an inequality in the estates as that which we see today in all the countries of Europe. The Land was divided among a few owners.

Supposing then that the Land of a new country belongs to a small number of persons, each Owner will manage his Land himself or let it to one or more Farmers: in this case it is essential that the Farmers and Labourers should have a living whether they cultivate the Land for the Owner or for the Farmer. The overplus of the Land is at the disposition of the Owner: he pays part of it to the Prince or the Government, or else the Farmer does so directly at the Owner's expense.

As for the use to which the Land should be put, the first necessity is to employ part of it for the Maintenance and Food of those who work upon it and make it productive: the rest depends principally upon the Humour and Fashion of Living of the Prince, the Lords, and the Owner: if these are fond of drink, vines must be cultivated; if they are fond of silks, mulberry-trees must be planted and silkworms raised, and moreover part of the Land must be employed to support those needed for these labours; if they delight in horses, pasture is needed, and so on.

If however we suppose that the Land belongs to no one in particular, it is not easy to conceive how a Society of men can be formed there: we see, for example, in the Village Commons a limit fixed to the number of animals that each of the Commoners may put upon them; and if the Land were left to the first occupier in a new conquest or discovery of a country it would always be necessary to fall back upon a law to settle Ownership in order to establish a Society, whether the law rested upon Force or upon Policy.

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* See Essai, p. 33. Postlethwayt and P. Cantillon have “2 acres"

CHAPTER III

Of Villages

To whatever cultivation Land is put, whether Pasture, Corn, Vines, etc. the Farmers or Labourers who carry on the work must live near at hand; otherwise the time taken in going to their Fields and returning to their Houses would take up too much of the day. Hence the necessity for Villages established in all the country and cultivated land, where there must also be enough Farriers and Wheelwrights for the Instruments, Ploughs, and Carts which are needed; especially when the Village is at a distance from the Towns. The size of a Village is naturally proportioned in number of inhabitants to what the Land dependent on it requires for daily work, and to the Artisans who find enough employment there in the service of the Farmers and Labourers: but these Artisans are not quite so necessary in the neighbourhood of Towns to which the Labourers can resort without much loss of time.

If one or more of the owners of the Land dependent on the Village reside there the number of inhabitants will be greater in proportion to the domestic servants and artisans drawn thither, and the Inns which will be established there for the convenience of the domestic servants and workmen who are maintained by the Landlords.

If the Lands are only proper for maintaining Sheep, as in the sandy districts and moorlands, the Villages will be fewer and smaller since only a few Shepherds are required on the land.

If the Lands only produce Woods in sandy soils where there is no grass for beasts, and if they are distant from Towns and Rivers which makes the timber useless for consumption as one sees in many cases in Germany, there will be only so many Houses and Villages as are needed to gather Acorns and feed Pigs in season: but if the Lands are altogether barren there will be neither Villages nor Inhabitants.

CHAPTER IV

Of Market Towns

There are some Villages where Markets have been established by the Interest of some Proprietor or Gentleman at Court. These Markets, held once or twice a week, encourage several little Undertakers and Merchants to set themselves up there. They buy in the Market the products brought from the surrounding Villages in order to carry them to the large Towns for sale. In the large Towns they exchange these for Iron, Salt, Sugar and other merchandise which they sell on market-days to the Villagers. Many small Artisans also, like Locksmiths, Cabinet makers and others, settle down for the service of the Villagers who have none in their Villages, and at length these Villages become Market Towns. A Market Town being placed in the centre of the Villages whose people come to market, it is more natural and easy that the Villagers should bring their products thither for sale on market-days and buy the articles they need, than that the Merchants and Factors should transport them to the Villages in exchange for their products. (1) For the Merchants to go round the Villages would unnecessarily increase the cost of carriage. (2) The Merchants would perhaps be obliged to go to several Villages before finding the quality and quantity of produce which they wished to buy. (3) The Villagers would generally be in their fields when the Merchants arrived and not knowing what produce these needed would have nothing prepared and fit for sale. (4) It would be almost impossible to fix the price of the produce and the merchandise in the Villages, between the Merchants and the Villagers. In one Village the Merchant would refuse the price asked for produce, hoping to find it cheaper in another Village, and the Villager would refuse the price offered for his merchandise in the hope that another Merchant would come along and take it on better terms.

All these difficulties are avoided when the Villagers come to Town on Market-Days to sell their produce and to buy the things they need. Prices are fixed by the proportion between the produce exposed for sale and the money offered for it; this takes place in the same spot, under the eyes of all the Villagers of different Villages and of the Merchants or Undertakers of the Town. When the price has been settled between a few the others follow without difficulty and so the Market-price of the day is determined. The peasant goes back to his Village and resumes his work.

The size of the Market Town is naturally proportioned to the number of Farmers and Labourers needed to cultivate the Lands dependent on it, and to the number of Artisans and small Merchants that the Villages bordering on the Market Town employ with their assistants and horses, and finally to the number of persons whom the Landowners resident there support.

When the Villages belonging to a Market Town (i.e. whose people ordinarily bring their produce to market there) are considerable and have a large output the Market Town will become considerable and large in proportion; but when the neighbouring Villages have little produce the Market Town also is poor and insignificant.

CHAPTER V

Of Cities

The Landlords who have only small estates usually reside in Market Towns and Villages near their Land and Farmers. The transport of the produce they derive from them into distant Cities would not enable them to live comfortably there. But the Landlords who have several large estates have the means to go and live at a distance from them to enjoy agreeable society with other Landowners and Gentlemen of the same condition.

If a Prince or Nobleman who has received large grants of Land on the conquest or discovery of a country fixes his residence in some pleasant spot, and several other Noblemen come to live there to be within reach of seeing each other frequently and enjoying agreeable society, this place will become a City. Great houses will be built there for the Noblemen in question, and an infinity of others for the Merchants, Artisans, and people of all sorts of professions whom the residence of these Noblemen will attract thither. For the service of these Noblemen, Bakers, Butchers, Brewers, Wine Merchants, Manufacturers of all kinds, will be needed. These will build houses in the locality or will rent houses built by others. There is no great Nobleman whose expense upon his House, his retinue and Servants, does not maintain Merchants and Artisans of all kinds, as may be seen from the detailed calculations which I have caused to be made in the Supplement* of this Essay.

As all these Artisans and Undertakers serve each other as well as the Nobility it is overlooked that the upkeep of them all falls ultimately on the Nobles and Landowners. It is not perceived that all the little houses in a City such as we have described depend upon and subsist at the expense of the great houses. It will, however, be shown later that all the classes and inhabitants of a State live at the expense of the Proprietors of Land. The City in question will increase still further if the King or the Government establish in it Law Courts to which the people of the Market Towns and Villages of the province must have recourse. An increase of Undertakers and Artisans of every sort will be needed for the service of the legal officials and Lawyers.

If in this same City workshops and manufactories be set up apart from home consumption for export and sale abroad, the City will be large in proportion to the Workmen and Artisans who live there at the expense of the foreigner.

But if we put aside these considerations so as not to complicate our subject, we may say that the assemblage of several rich Landowners living together in the same place suffices to form what is called a City, and that many Cities in Europe, in the interior of the Country, owe the number of their inhabitants to this assemblage: in which case the size of a City is naturally proportioned to the number of Landlords who live there, or rather to the produce of the Land which belongs to them after deduction of the cost of carriage to those whose Land is the furthest removed, and the part which they are obliged to furnish to the King or the Government, which is usually consumed in the Capital.

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* The Supplement is missing. See p. 153.

CHAPTER VI

Of Capital Cities

A Capital City is formed in the same way as a Provincial City with this difference that the largest Landowners in all the State reside in the Capital, that the king or supreme Government is fixed in it and spends there the government revenue, that the Supreme Courts of Justice are fixed there, that it is the centre of the fashions which all the provinces take for a model, that the Landowners who reside in the provinces do not fail to come occasionally to pass some time in the Capital and to send their children thither to be polished. Thus all the Lands in the State contribute more or less to maintain those who dwell in the Capital.

If a Sovereign quits a City to take up his abode in another the Nobility will not fail to follow him and to make its residence with him in the new City which will become great and important at the expense of the first. We have seen quite a recent example of this in the City of Petersburg to the disadvantage of Moscow, and one sees many old Cities which were important fall into ruin and others spring from their ashes. Great Cities are usually built on the seacoast or on the banks of large Rivers for the convenience of transport; because water-carriage of the produce and merchandise necessary for the subsistence and comfort of the inhabitants is much cheaper than Carriages and Land Transport.

CHAPTER VII

The Labour of the Husbandman is of less Value than that of the Handicrafts-Man

A Labourer's Son at seven or twelve years of age begins to help his Father either in keeping the Flocks, digging the ground, or in other sorts of Country Labour which require no Art or Skill.

If his Father puts him to a Trade he loses his Assistance during the Time of his Apprenticeship and is necessitated to cloath him and to pay the expenses of his Apprenticeship for some years. The Son is thus an expense to his Father and his Labour brings in no advantage till the end of some years. The [working] Life of a Man is estimated but at 10 or 12 years, and as several are lost in learning a Trade most of which in England require 7 years of Apprenticeship, a Husbandman would never be willing to have a Trade taught to his Son if the Mechanics did not earn more than the Husbandmen.

Those who employ Artisans or Craftsmen must needs therefore pay for their labour at a higher rate than fo...