Reflections on the Formation
and Distribution of Wealth

Anne Robert Jacques Turgot

[1776 / Part 3 of 5]

  • 41. Different matters are able to serve and have served for current money.

    Many nations have adopted in their language and in. their trade, as a common measure of value, different matters more or less precious. There are at this day, some barbarous nations, who make use of a species of little shells, called cowries. I remember to have seen when at college, some apricot stones exchanged and passed as a species of money among the scholars, who made use of them at certain games. I have already spoken of a valuation by heads of cattle; some of these are to be found in the vestiges of the laws of the ancient German nations, who over-ran the Roman empire. The first Romans, or at least the Latins, their ancestors, made use of them also. It is pretended that the first money they struck in brass, represented the value of a sheep, and bore the image of that animal, and that the name of Pecunia has obtained from pecus. This conjecture carries with it a great probability.

  • 42. Metals, and particularly gold and silver, are the most proper for that purpose, and why.

    We are now arrived at the introduction of the precious metals into trade. All metals, as they have been discovered, have been admitted into exchange, on account of their real utility. Their splendor has caused them to be sought for, to serve as ornaments; their ductility and their solidity have rendered them proper for utensils, more durable and lighter than those of clay. But these substances cannot be brought into commerce without becoming almost immediately a universal money. A piece of any metal, of whatever sort, has exactly the same qualities as another piece of the same metal provided they are both equally pure. Now the ease with which we can separate, by different chemical operations, a metal from other metals with which it is incorporated, enables us to bring it to a degree of purity, or, as they call it, to what standard we please; then the value of metal differs only as to its weight. In expressing, therefore, the value of any merchandize by the weight of metal which may be had in exchange, we shall then have the clearest, the most commodious, and most precise expression of value; and hence it is impossible but it must be preferred in practice to all other things. Nor are metals less proper than other merchandize for becoming the universal token of all value that can be measured: as they are susceptible of all imaginable divisions, there is not any object of commerce, great or small, whose value cannot be exactly paid by a certain quantity of metal. To this advantage of accommodating itself to every species of division, they join that of being unalterable, and those which are scarce, as gold and silver, have a great value, although of a weight and size little considerable.

    These two metals are then, of all merchandize, the most easy to ascertain their quality, to divide their quantity, and to convey to all places at the easiest expence. Every one, therefore, who has a superfluity, and who is not at the time in want of another useful commodity, will hasten to exchange it for silver, with which he is more certain, than with any thing else, to procure himself the commodity he shall wish for at the time he is in want.

  • 43. Gold and silver are constituted, by the nature of things, money, and universal money, independent of all convention, and of all laws.

    Here then is gold and silver constituted money, and universal money, and that without any arbitrary agreement among men, without the intervention of any law, but only by the nature of things. They are not, as many people imagine, signs of value; they have an intrinsic value in themselves, if they are capable of being the measure and the token of other values. This property they have in common with all other commodities which have a value in commerce. They only differ in being at the same time more divisible, more unchangeable, and of more easy conveyance than other merchandize, by which they are more commodiously employed to measure and represent the value of others.

  • 44. Other metals are only employed for these uses, in a secondary manner.

    All metals are capable of being employed as money. But those which are too common have too little value in a large bulk to be employed in the current uses of commerce. Copper, silver, and gold, are the only ones which have been brought into constant use. And even copper, except among people to whom neither mines nor commerce have supplied a sufficient quantity of gold or silver, has never been used but in exchanges of small value.

  • 45. The use of gold and silver, as money, has augmented their value as materials.

    It is not possible, but the eagerness with which every one has sought to exchange their superfluous commodities for gold and silver, rather than for any other commodity, must have augmented the value of these two materials in commerce. These are only thereby rendered more commodious for their employment as tokens, or common measure.

  • 46. Variations in the value of gold and silver, compared with the other objects of commerce, and with each other.

    This value is susceptible of change, and in truth is continually changing; so that the same quantity of metal which answered to a certain quantity of such or such a commodity, becomes no longer equal thereto, and it requires a greater or less quantity of silver to represent the same commodity. When it requires more, it is said the commodity is dearer. when it requires less, that it is become cheaper; but they may as well say, that the silver is in the first case become cheaper, and in the latter dearer. Silver and gold not only vary in price, compared with all other commodities, but they vary also with each other, in proportion as they are more or less abundant. It is notorious, that we now give in Europe from fourteen to fifteen ounces of silver for one ounce of gold; and that in former times we gave only ten or eleven ounces.

    Again, that at present in China, they do not give more than twelve ounces of silver for one ounce of gold, so that there is a very great advantage in carrying silver to China, to exchange for gold, to bring back to Europe. It is visible, that, in process of time, this commerce will make gold more common in Europe, and less common in China, and that the value of these two materials must finally come in both places to the same proportion.

    A thousand different causes concur, to fix and to change incessantly the comparative value of commodities, either with respect to each other, or with respect to silver. The same causes conspire to fix and vary the comparative value, whether in respect to the value of each commodity in particular, or with respect to the totality of the other values which are actually in commerce. It is not possible to investigate these different causes, or to unfold their effects, without entering into very extensive and very difficult details, which I shall decline in this discussion.

  • 47. The use of payments in money, has given room for the distinction of seller and buyer.

    In proportion as mankind became familiarized to the custom of valuing all things in silver, of exchanging all their superfluous commodities for silver, and of not parting with that money but for things which are useful or agreeable to them at the moment, they become accustomed to consider the exchanges of commerce in a different point of view. They have made a distinction of two persons, the buyer and the seller: the seller is him who gives commodities for money; and the buyer is him who gives money for commodities.

  • 48. The use of money has much facilitated the separation of different labours among the different orders of society.

    The more money becomes a universal medium, the more every one is enabled, by devoting himself solely to that species of cultivation and industry, of which he has made choice, to divest himself entirely of every thought for his other wants, and only to think of providing the most money he can, by the sale of his fruits or his labour, being sure with that money to possess all the rest. It is thus, that the use of money has prodigiously hastened the progress of society.

  • 49. Of the excess of annual produce accumulated to form capitals.

    As soon as men are found, whose property in land assures them an annual revenue more than sufficient to satisfy all their wants, among them there are some, who, either uneasy respecting the future, or, perhaps, only provident, lay by a portion of what they gather every year, either with a view to guard against possible accidents, or to augment their enjoyments. When the commodities they have gathered are difficult to preserve, they ought to procure themselves in exchange, such objects of a more durable nature, and such as will not decrease in their value by time, or those that may be employed in such a manner, as to procure such profits as will make good the decrease with advantage.

  • 50. Personal property, accumulation of money.

    This species of possession, resulting from the accumulation of annual produce, not consumed, is known by the name of personal property. Household goods, houses, merchandize in store, utensils of trade, and cattle are under this denomination. It is evident men must have toiled hard to procure themselves as much as they could of this kind of wealth, before they became acquainted, but it is not less evident that, as with the use of money, soon as it was known, that it was the least liable to alteration of all the objects of commerce, and the most easy to preserve without trouble, it would be principally sought after by whoever wished to accumulate. It was not the proprietors of land only who thus accumulated their superfluity. Although the profits of industry are not, like the revenue of lands, a gift of nature; and the industrious man draws from his labour only the price which is given him by the persons who pay him his wages; although the latter is as frugal as he can of his salary, and that a competition obliges an industrious man to content himself with a less price than he otherwise would do, it is yet certain that these competitions have neither been so numerous or strong in any species of labour, but that a man more expert, more active, and who practises more oeconomy than others in his personal expences, has been able, at all times, to gain a little more than sufficient to support him and his family, and reserve his surplus to form a little hoard.

  • 51. Circulating wealth is an indispensible requisite for all lucrative works.

    It is even necessary, that in every trade the workmen, or those who employ them, possess a certain quantity of circulating wealth, collected before-hand. We here again are obliged to go back to a retrospect of many things which have been as yet only hinted at, after we have spoken of the division of different professions, and of the different methods by which the proprietors of capitals may render them of value; because, otherwise, we should not be able to explain them properly, without interrupting the connection of our ideas.

  • 52. Necessity of advances for cultivation.

    Every species of labour, of cultivation, of industry, or of commerce, require advances. When people cultivate the ground, it is necessary to sow before they can reap; they must also support themselves until after the harvest. The more cultivation is brought to perfection and enlivened, the more considerable these advances are. Cattle, utensils for farming, buildings to hold the cattle, to store the productions, a number of persons, in proportion to the extent of the undertaking, must be paid and subsisted until the harvest. It is only by means of considerable advances, that we obtain rich harvests, and that lands produce a large revenue. In whatever business they engage, the workman must be provided with tools, must have a sufficient quantity of such materials as the object of his labour requires: and he must subsist until the sale of his goods.

  • 53. First advance furnished by the land although uncultivated.

    The earth was ever the first and the only source of all riches: it is that which by cultivation produces all revenue; it is that which has afforded the first fund for advances, anterior to all cultivation. The first cultivator has taken the grain he has sown from such productions as the land had spontaneously produced; while waiting for the harvest, he has supported himself by hunting, by fishing, or upon wild fruits. His tools have been the branches of trees, procured in the forests, and cut with stones sharpened upon other stones; the animals wandering in the woods he has taken in the chace, caught them in his traps, or has subdued them unawares. At first he has made use of them for food, afterwards to help him in his labours. These first funds or capital have increased by degrees. Cattle were in early times the most sought after of all circulating property; and were also the easiest to accumulate; they perish, but they also breed, and this sort of riches is in some respects unperishable. This capital augments by generation alone, and affords an annual produce, either in milk, wool, leather, and other materials, which, with wood taken in the forest, have effected the first foundations for works of industry.

  • 54. Cattle a circulating wealth, even before the cultivation of the earth.

    In times when there was yet a large quantity of uncultivated land, and which did not belong to any individual, cattle might be maintained without having a property in land. It is even probable, that mankind have almost every where began to collect flocks and herds, and to live on what they produced, before they employed themselves in the more laborious occupation of cultivating the ground. It seems that those nations who first cultivated the earth, are those who found in their country such sorts of animals as were the most susceptible of being tamed, and that they have by this been drawn from the wandering and restless life of hunters and fishers, to the more tranquil enjoyment of pastoral pursuits. Pastoral life requires a longer residence in the same place, affords more leisure, more opportunities to study the difference of lands, to observe the ways of nature in the productions of such plants as serve for the support of cattle. Perhaps it is for this reason, that the Asiatic nations have first cultivated the earth, and that. the inhabitants of America have remained so long in a savage state.

  • 55. Another species of circulating wealth, and advances necessary for cultivation, slaves.

    The slaves were another kind of personal property, which at first were procured by violence, and afterwards by way of commerce and exchange. Those that had many, employed them not only in the culture of land, but in various other channels of labour. The facility of accumulating, almost without measure, those two sources of riches, and of making use of them abstractedly from the land, caused the land itself to be estimated, and the value compared to moveable riches.

  • 56. Personal property has an exchangeable value, even for land itself.

    A man that would have been possessed of a quantity of lands without cattle or slaves, would undoubtedly have made an advantageous bargain, in yielding a part of his land, to a person that would have offered him in exchange, cattle and slaves to cultivate the rest. It is chiefly by this principle that property in land entered likewise into commerce, and had a comparative value with that of all the other goods. If four bushels of corn, the net produce of an acre of land, was worth six sheep, the acre itself that feeds them could have been given for a certain value, greater indeed, but always easy to settle by the same way, as the price of other wares. Namely, at first by debates among the two contractors, next, by the current price established by the agreement of those who exchange land for cattle, or the contrary. It is by the scale of this current specie that lands are appraised, when a debtor is prosecuted by his creditor, and is constrained to yield up his property.

  • 57. Valuations of lands by the proportion of their revenue, with the sum of personal property, or the value for which they are exchanged: this proportion is called the price of lands.
    It is evident, that if land, which produces a revenue equivalent to six sheep, can be sold for a certain value, which may always be expressed by a number of sheep equivalent to that value; this number will bear a fixed proportion with that of six, and will contain it a certain number of times. Thus the price of an estate is nothing else but its revenue multiplied a certain number of times; twenty times if the price is a hundred and twenty sheep; thirty times if one hundred and eighty sheep. And so the current price of land is reckoned by the proportion of the value of the revenue; and the number of times, that the price of the sale contains that of the revenue, is called so many years purchase of the land. They are sold at the price of twenty, thirty, or forty years purchase, when on purchasing them we pay twenty, thirty, or forty times. their revenue. It is also not less evident, that this price must vary according to the number of purchasers, or sellers of land, in the same manner as other goods vary in a ratio to the different proportion between the offer and the demand.

  • 58. All capital in money, and all amounts of value, are equivalent to land producing a revenue equal to some portion of that capital or value. First employment of capitals. Purchase of lands.

    Let us now go back to the time after the introduction of money. The facility of accumulating it has soon rendered it the most desirable part of personal property, and has afforded the means of augmenting, by economy, the quantity of it without limits. Whoever, either by the revenue of his land. or by the salary of his labour or industry, receives every year a higher income than he needs to spend, may lay up the residue and accumulate it: these accumulated values are what we name a capital. The pusillanimous miser, that keeps his money with the mere view of soothing his imagination against apprehension of distress in the uncertainty of futurity, keeps his money in a hoard. If the dangers he had foreseen should eventually take place, and he in his poverty be reduced to live every year upon the treasure, or a prodigal successor lavish it by degrees, this treasure would soon be exhausted, and the capital totally lost to the possessor. The latter can draw a far greater advantage from it; for an estate in land of a certain revenue, being but an equivalent of a sum of value equal to the revenue, taken a certain number of times, it follows, that any sum whatsoever of value is equivalent to an estate in land, producing a revenue equal to a fixed proportion of that sum. It is perfectly the same whether the amount of this capital consists in a mass of metal, or any other matter, since money represents all kinds of value. as well as all kinds of value represent money. By these means the possessor of a capital may at first employ it in the purchase of lands; but he is not without other resources.

  • 59. Another employment for money in advances for enterprises of manufacture or industry.

    I have already observed, that all kinds of labour, either of cultivation or industry, required advances. And I have shewn how the earth, by the fruits and herbages it spontaneously produces for the nourishment of men and animals, and by the trees, of which man has first formed his utensils, had furnished the first advances for cultivation; and even of the first manual works a man can perform for his own service. For instance, it is the earth that provides the stone, clay, and wood, of which the first houses were built; and, before the division of professions, when the same man that cultivated the earth provided also for his other wants by his own labour, there was no need of other advances. But when a great part of society began to have no resource but in their hands, it was necessary that those who lived thus upon salaries, should have somewhat before hand, that they might either procure themselves the materials on which they laboured, or subsist during the time they were waiting for their salary.

  • 60. Explanation of the use of the advances of capitals in enterprises of industry; on their returns and the profits they ought to produce.

    In early times, he that employed labouring people under him, furnished the materials himself, and paid from day to day the salaries of the workmen. It was the cultivator or the owner himself that gave to the spinner the hemp he had gathered, and he maintained her during the time of her working. Thence he passed the yarn to a weaver, to whom he gave every day the salary agreed upon. But those slight daily advances can only take place in the coarsest works. A vast number of arts, and even of those arts indispensable for the use of the most indigent members of society, require that the same materials should pass through many different hands, and undergo, during a considerable space of time, difficult and various operations. I have already mentioned the preparation of leather, of which shoes are made. Whoever has seen the workhouse of a tanner, cannot help feeling the absolute impossibility of one, or even several indigent persons providing themselves with leather, lime, tan, utensils, &c. and causing the requisite buildings to be erected to put the tan house to work, and of their living during a certain space of time, till their leather can be sold. In this art, and many others, must not those that work on it have learned the craft before they presume to touch the materials, lest they should waste them in their first trials? Here then is another absolute necessity of advances. Who shall now collect the materials for the manufactory, the ingredients, the requisite utensils for their preparation? Who is to construct canals, markets, and buildings of every denomination? How shall that multitude of workmen subsist till the time of their leather being sold, and of whom none individually would be able to prepare a single skin; and where the emolument of the sale of a single skin could not afford subsistence to any one of them? Who shall defray the expences for the instruction of the pupils and apprentices? Who shall maintain them until they are sufficiently instructed, guiding them gradually from an easy labour proportionate to their age, to works that demand more vigour and ability? It must then be one of those proprietors of capitals, or moveable accumulated property that must employ them, supplying them with advances in part for the construction and purchase of materials, and partly for the daily salaries of the workmen that are preparing them. It is he that must expect the sale of the leather, which is to return him not only his advances, but also an emolument sufficient to indemnify him for what his money would have procured him, had he turned it to the acquisition of lands, and moreover of the salary due to his troubles and care, to his risque, and even to his skill; for surely, upon equal profits, he would have preferred living without solicitude, on the revenue of land, which he could have purchased with the same capital. In proportion as this capital returns to him by the sale of his works, he employs it in new purchases for supporting his family and maintaining his manufactory; by this continual circulation, he lives on his profits, and lays by in store what he can spare to increase his stock, and to advance his enterprize by augmenting the mass of his capital, in order proportionably to augment his profits.