Essay on the Nature of Commerce

Richard Cantillon

[1755 / Part 1 of 7 (abridged)]

Chapter One

On 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, conveniencies, 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 Two

Of Human Societies

Which way soever a society of men is formed the ownership of the land they inhabit will necessarily belong to a small number among them. ...

In the 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 dependents, 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 pay 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 limited 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.

Chapter Three

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 Four

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. ...

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 Five

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.

Chapter Six

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 Seven

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. ...

Those who employ artisans or craftsmen must needs therefore pay for their labour at a higher rate than for that of a husbandman or common labourer; and their labour will necessarily be dear in proportion to the time lost in learning the trade and the cost and risk incurred in becoming proficient.

The craftsmen themselves do not make all their children learn their own mystery: there would be too many of them for the needs of a city or a state; many would not find enough work; the work, however, is naturally better paid than that of husbandmen.

Chapter Eight

Some Handicrafts Men earn more, others less, according to the different Cases and Circumstances

The crafts which require the most time in training or most ingenuity and industry must necessarily be the best paid. A skillful cabinet maker must receive a higher price for his work than an ordinary carpenter, and a good watchmaker more than a farrier. ... By these examples and a hundred others drawn from ordinary experience it is easily seen that the difference of price paid for daily work is based upon natural and obvious reasons.

Chapter Nine

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

If all the labourers in a village breed up several sons to the same work there will be too many labourers to cultivate the lands belonging to the village, and the surplus adults must go to seek a livelihood elsewhere, which they generally do in cities: if some remain with their fathers, as they will not all find sufficient employment they will live in great poverty and will not marry for lack of means to bring up children, or if they marry, the children who come will soon die of starvation with their parents, as we see every day in France.

Therefore if the village continue in the same situation as regards employment, and derives its living from cultivating the same portion of land, it will not increase in population in a thousand years. ...

By the same process of reasoning it is easy to conceive that the labourers, handicraftsmen and others who gain their living by work, must proportion themselves in number to the employment and demand for them in market towns and cities.

Chapter Ten

The Price and Instrinsic Value of a Thing in general is the measure of the Land and Labour which enter into its Production

One acre of land produces more corn or feeds more sheep than another. The work of one man is dearer than that of another, as I have already explained, according to the superior skill and occurrences of the times. If two acres of land are of equal goodness, one will feed as many sheep and produce as much wool as the other, supposing the labour to be the same, and the wool produced by one acre will be the same, and the wool produced by one acre will sell at the same price as that produced by the other.

If the wool of the one acre is made into a suit of coarse cloth and the wool of the other into a suit of fine cloth, as the latter will require more work and dearer workmanship it will be sometimes ten times dearer, though both contain the same quantity and quality of wool. The quantity of the produce of the land and the quantity as well as the quality of the labour, will of necessity enter into the price. ...

The price of a pitcher of Seine water is nothing, because there is an immense supply which does not dry up; but in the streets of Paris people give a sol for it -- the price or measure of the labour of the water carrier.

By these examples and inductions it will, I think, be understood that the price or intrinsic value of a thing is the measure of the quantity of land and of labour entering into its production, having regard to the fertility or produce of the land and to the quality of the labour.

But it often happens that many things which have actually this intrinsic value are not sold in the market according to that value: that will depend on the humours and fancies of men and on their consumption.

If a gentleman cuts canals and erects terraces in his garden, their intrinsic value will be proportionable to the land and labour; but the price in reality will not always follow this proportion. If he offers to sell the garden possibly no one will give him half the expense he has incurred. It is also possible that if several persons desire it he may be given double the intrinsic value, that is twice the value of the land and the expense he has incurred.

If the farmers in a state sow more corn than usual, much more than is needed for the year's consumption, the real and intrinsic value of the corn will correspond to the land and labour which enter into its production; but as there is too great an abundance of it and there are more sellers than buyers the market price of the corn will necessarily fall below the intrinsic price of value. If on the contrary the farmers sow less corn than is needed for consumption there will be more buyers than sellers and the market price of corn will rise above its intrinsic value.

There is never a variation in intrinsic values, but the impossibility of proportioning the production of merchandise and produce in a state to their consumption causes a daily variation, and a perpetual ebb and flow in market prices. However in well organized societies the market prices of articles whose consumption is tolerably constant and uniform do not vary much from the intrinsic value; and when there are no years of too scanty or too abundant production the magistrates of the city are able to fix the market prices of many things, like bread and meat, without any on having cause to complain.

Land is the matter and labour the form of all produce and merchandise, and as those who labour must subsist on the produce of the land it seems that some relation might be found between the value of labour and that of the produce of the land: this will form the subject of the next chapter.

Chapter Eleven

Of the Par or Relation between the Value of Land and Labour

It does not appear that Providence has given the right of the possession of land to one man preferably to another: the most ancient titles are founded on violence and conquest. The lands of Mexico now belong to the Spaniards and those at Jerusalem to the Turks. But howsoever people come to the property and possession of land we have already observed that it always falls into the hands of a few in proportion to the total inhabitants.

If the proprietor of a great estate keeps it in his own hands he will employ slaves or free men to work upon it. If he has many slaves he must have overseers to keep them at work: he must likewise have slave craftsmen to supply the needs and conveniencies of life for himself and his workers, and must have trades taught to others in order to carry on the work.

In this economy he must allow his labouring slaves their subsistence and wherewithal to bring up their children. The overseers must allow advantages proportionable to the confidence and authority which he gives them. The slaves who have been taught a craft must be maintained without any return during the time of their apprenticeship and the artisan slaves and their overseers who should be competent in the crafts must have a better subsistence than the labouring slaves, etc. since the loss of an artisan would be greater than that of a labourer and more care must be taken of him having regard to the expense of training another to take his place. ...

If the proprietor employ the labour of vassals or free peasants he will probably maintain them upon a better foot than slaves according to the custom of the place he lives in, yet in this case also the labour of a free labourer ought to correspond in value to double the produce of land needed for his maintenance. But it will always be more profitable to the proprietor to keep slaves than to keep free peasants, because when he has brought up a number too large for his requirements he can sell the surplus slaves as he does his cattle and obtain for them a price proportionable to what he has spent in rearing them to manhood or working age, except in cases of old age or infirmity. ...

For this reason I have not determined to how much land the labour of the meanest peasant corresponds in value when I laid down that it is worth double the produce of the land which serves to maintain him: because this varies according to the mode of living in different countries. In some provinces of France the peasant keeps himself on the produce of one acre and a half of land and the value of his labour may be reckoned equal to the product of three acres. But in the county of Middlesex the peasant usually spends the produce of 5 to 8 acres of land and his labour may be valued at twice as much as this.

In the country of the Iroquois where the inhabitants do not plough the land and live entirely by hunting, the meanest hunter may consume the produce of 50 acres of land since it probably requires so much to support the animals he eats in one year, especially as these savages have not the industry to grow grass by cutting down the trees but leave everything to nature. The labour of this hunter may then be reckoned equal in value to the product of 100 acres of land. In the southern provinces of China the land yields rice up to three crops in one year and a hundred times as much as is sown, owing to the great care which they have of agriculture and the fertility of the soil which is never fallow. The peasants who work there almost naked live only on rice and drink only rice water, and it appears that one acre will support there more than ten peasants. It is not surprising, therefore, that the population is prodigious in number. In any case it seems from these examples that nature is altogether indifferent whether that earth produce grass, trees, or grain, or maintains a large or small number of vegetables, animals, or men.

Farmers in Europe seem to correspond to overseers of labouring slaves in other countries, and the master tradesmen who employ several journeymen to the overseers of artisan slaves. These masters know pretty well how much work a jouneyman artisan can do in a day in each craft, and often pay them in proportion to the work they do, so that the journeymen work for their own interest as hard as they can without further inspection.

As the farmers and masters of crafts in Europe are all undertakers working at a risk, some get rich and gain more than a double subsistence, others are ruined and become bankrupt, as will be explained more in detail in treating of undertakers; but the majority support themselves and their families from day to day, and their labour or superintendence may be valued at about thrice the produce of the land which serves for their maintenance. ...

By these examples and others which might be added in the same sense, it is seen that the value of the day's work has a relation to the produce of the soil, and that the intrinsic value of any thing may be measured by the quantity of land used in its production and the quantity of labour which enters into it, in other words by the quantity of land of which the produce is allotted to those who have worked upon it; and as all the land belongs to the prince and the landowners all things which have this intrinsic value have it only at their expense.

The money or coin which finds the proportion of values in exchange is the most certain measure for judging of the par between land and labour and the relation of one to the other in different countries where this par varies according to the greater or less produce of the land allotted to those who labour.

If, for example, one man earn an ounce of silver every day by his work, and another in the same place earn only half an ounce, one can conclude that the first has as much again of the produce of the land to dispose of as the second.

Sir William Petty, in a little manuscript of the year 1685, considers this par, or equation between land and labour, as the most important consideration in political arithmetic, but the research which he has made into it in passing is fanciful and remote from natural laws, because he has attached himself not to causes and principles but only to effects, as Mr Locke, Mr Davenant and all the other English authors who have written on this subject have done after him.

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