The Development of Economics

CHAPTER III

THE REACTION AGAINST MERCANTILISM IN FRANCE

While well adapted in many ways to the development of the European states at the stage in their history described in the preceding chapter, at a later period the mercantile policy became a hindrance and an obstacle. This stage was reached in the last half of the eighteenth century and was accompanied by criticism, both of the mercantilistic policy and of the theories and arguments by which it was supported, and by new systems of thought. The conditions which were responsible for this new stage of development were not everywhere identical and may therefore be best considered separately, at least in the cases of France and England, the two countries which, during the period under consideration, produced systems of thought which influenced the development of the science of political economy.

During the later years of the reign of Louis XIV in France conditions developed which resulted in a storm of criticism against the economic policy which he had pursued under the leadership of Colbert. These conditions are vividly described by Taine in his Ancien Regime.

About the time of the Revolution, Taine tells us, the total population of France was about 27,000,000, of which one one-hundredth or 270,000 belonged to the privileged classes, that is the nobles and the clergy, numbering respectively about 140,000 and 130,000. Of the nobles there were from 25,000 to 30,000 families, and the clergy included about 23,000 monks in 2,500 monasteries, 37,000 nuns in about 1,500 convents and 60,000 cures and vicars in as many churches and chapels. According to this calculation the higher orders of the clergy numbered about 10,000. That portion of the population which was not privileged consisted of the middle class, or the bourgeoisie as the French call it, and the people. Taine does not venture a guess regarding the relative numbers of these two classes. In the former he included merchants, manufacturers, shopkeepers, teachers, lawyers, physicians, officials of all kinds, brokers, and employees. The people, so-called, were mostly peasants, menial servants, and the lower ranks of laborers.

Beside the ownership of the largest share of the property of the country, the privileges of the privileged classes included exemption from the most important taxes and from compulsory military service; the right to exact contributions and services of various kinds from the people who lived upon their estates or in their parishes, a relic of the feudal system, many of the features of which had disappeared; a monopoly of a large number of lucrative sinecures in the civil service, and no small share in the actual functions of local government; and access to the court and the favor of the king, with all the social privileges and financial emoluments that involved.

The middle class stood next to the privileged classes in the matter of the ownership of wealth, and some members of it were equal and sometimes superior in wealth to the great nobles and ecclesiastics. On account of their wealth the members of this class too had been able to buy exemption from the most burdensome taxes and other exactions levied upon the common people. The industry and commerce of the country were in their hands, and in the period of decline which began in the latter part of the reign of Louis XIV and extended to the Revolution the richer and more ambitious members of this class acquired large landed estates.

The agriculture of the country was carried on under the organization imposed by the manorial system. Every industry was organized into a gild and subjected to the minutest regulations, and commerce was in the hands of minutely regulated companies.

The government of the country was a monarchy of the most absolute kind. Louis XIV’s motto, “L’état, c’est moi,” well expresses its spirit. Connected with it was a court of great size and magnificence which included the greater nobles and clergy who, in order to comply with its demands, were obliged to leave their estates and take up their residences in the place of the king’s abode.

For a period of more than half a century this nation thus organized was used by Louis XIV for the maintenance of this court in a state of the greatest splendor and magnificence and in the waging of almost continuous warfare on his neighbors. Louis regarded himself as the grand monarch, the king of all kings, and was ambitious to force the world so to regard him. To the accomplishment of this end he was lavish in the expenditure of the lives and the wealth of his people.

The support of a regime such as has been described required an income the raising of which would have been a heavy burden on the nation under the best of conditions. With the methods of taxation actually employed and the production and distribution of wealth in the state in which they actually were in France of the eighteenth century, it was too heavy for the shoulders upon which it was placed.

This picture of the old regime painted in such vivid colors by Taine and others concerns the student of the history of political economy on account of the light it throws on the operation of economic forces and their interpretation by contemporaries. Regarding the economic conditions of the country two facts stood out with such prominence that they could not escape the attention of even casual observers. They were the degradation and decrease in the numbers of the common people and the neglect and decline of agriculture. These conditions became so serious that the entire state was impoverished, king and nobles included. In the latter part of the eighteenth century ruin threatened. Taxation had reached the highest possible maximum. No new device in the form of new varieties of taxes or new methods of levying them could bring an additional sou out of the people. Previous to the Revolution borrowing to cover deficits had been resorted to to such extent that the credit of the government was practically destroyed. Many members of the nobility were utterly unable to make both ends meet and had nearly or quite ruined themselves by excessive borrowing.

B. The Revolution in the Realm of Thought

While these conditions were in process of development, little short of a revolution in the realms of thought was in progress. This took the form of the development of the modern sciences of nature and society and of a philosophy based upon the doctrine of the universal sway of natural law.

Beginning with the publications of Newton’s Philosophiæ naturalis principia in 1687, there developed in rapid succession the sciences of physics, chemistry, astronomy, and biology. These revealed the presence of laws in the physical, plant, and animal worlds the operation of which depended in no way upon the human will or upon human initiative, laws to which indeed human beings were as completely subject as were the physical universe, the plants, and the other animals, and the result of which was a universe, complex in structure, in which each part is marvelously adapted to every other and which is constantly changing into something more complex, more wonderfully constructed, more marvelous, and more beautiful.

In this universe man appeared to be a mere atom, and since his body was demonstrably subject to the control of the universal laws of nature, why should not his mind and his moral nature be also? An affirmative answer to this question was natural and was given by the eighteenth century pioneers in the mental, moral, and social sciences. For them observation was the proper method for the discovery of truth in the social sciences, and the purpose of such sciences was conceived to be the discovery of the natural laws in accordance with which human societies function and develop. That there were such laws there appeared to be no doubt, and as little doubt could there be that such laws, once discovered, would supply the guides for right social action or for the solution of the ills of human society.

Among these pioneers of the social sciences belong Montesquieu, Voltaire, and Rousseau of world-wide fame, and many other less well-known names. In this latter group were three men who were the spiritual predecessors of the Physiocrats. These men were genuine products of the intellectual, social, and political conditions of the period and were thorough-going critics of the old regime.

C. The Spiritual Predecessors of the Physiocrats

1. Boisguillebert.

Pierre de Boisguillebert, the member of this trio first to demand our attention, belonged to a family of Rouen who in the eighteenth century rose from the bourgeoisie to the ranks of the nobility. He was a younger son; was educated at the College of Jesuits at Rouen and at the Port Royal and the École de Droit at Paris; and became an avocat. He seems not to have followed his profession, however, at least to any great extent, for at an early period in his career he engaged in literary pursuits and in 1668 entered the civil service of his district as Vicompte de Montiviliers. This latter position made him judge in a court of first resort of cases which arose between peasants.

His official position not bringing in sufficient income for his support, he also engaged in business as agriculturist, merchant, and banker, thereby accumulating a moderate fortune, a portion of which he expended in buying a higher and more lucrative office, namely, that of président au bailliage et siége présidial de Rouen. This position made him an important member of the hierarchy of officials which had in charge the government of France, including the raising of funds for the support of the king and his court.

Experience in these two official positions made him familiar on the one hand with the financial and administrative system of the country and on the other with the condition of the masses of the people. He became convinced that there was a vital connection between the two, that the misery he saw about him, as well as the inadequacy of the royal revenues, were due to bad financial and administrative methods. He voiced this belief in a publication of the year 1697 entitled Le détail de la France. This book finding few readers and creating little or no impression, he prepared a more elaborate statement of his case which he entitled Factum de la France, ou Moyens très faciles de rétablir les finances de l’État, which, however, he did not publish until 1707. In the meantime, however, he published three other pamphlets worthy of note, namely, Traité de la nature, culture, commerce et interêt des grains; Causes de la rareté de l’argent, et éclaircissements des mauvais raisonnement du public à cet égard; and Dissertation sur la nature des richesse, de Vargent et des tributs ou l’on découvre la fausse idée qui règne dans le monde à l’égard de ces trois articles.

The publication of the Factum in 1707 seems to have been caused by his despair over the failure of his previous writings to accomplish anything in the way of reform and by the increasing poverty and misery of the people. It was listened to by Chamillart, the Comptroller-General of the Finances, who was himself inclined to be liberal in his views, but the execution of the suggestions therein contained was considered impracticable at the time. This condition of affairs spurred him to the publication of what he called a Supplement au “Detail de la France.” His persistence, however, brought him into conflict with his superiors, and the Factum was proscribed by a decree of the Council of State March 14, 1717. Boisguillebert himself was deprived of his offices and sent into exile to Auvergne.

Though not immediately successful in the accomplishment of the purposes of his life, the ideas which Boisguillebert expressed in his various writings bore fruit in the lives and thought of his successors. He was one of the spiritual and intellectual fathers of the physiocratic system which in time helped to produce the Revolution. We shall now describe those ideas of his which were thus pregnant with influence.

Since 1660, he adds, the basic products of France have diminished in quantity one-half and from that he concludes that other products have decreased in still greater proportion. By way of illustration he calculates that a diminution of 500 livres in the production of basic goods would cause one of more than 3,000 livres in other goods.

In Chapter IV of his dissertation on the nature of riches he gives a more elaborate exposition of this fundamental proposition by tracing the dependence upon agriculture of the 200 different professions practised in France, and connects the fall in the value of the annual products of agriculture with most other social ills.

In further proof of this fundamental proposition he discusses the nature and functions of money and combats certain notions on that subject. This discussion in one form or another appears in all his writings, but, as previously noted, he devoted an independent pamphlet to it.

“It may be said that the richer a country is, the more it is in a condition to dispense with specie, since there are more people who can use representatives of it, i.e., mere pieces of paper called bills of exchange.”

“From these principles it follows that, with regard to a nation’s riches, which are nothing except the power to procure the necessaries and comforts of life, money is only the means, while useful commodities are the end, and that a country can be rich without much money while one which has only money can be very miserable if it can only with difficulty exchange it for other commodities.”

The relation he saw between biens fonds and biens de revenue d’industrie and between money and other goods suggested other forms of equilibria. He begins the Traité by classifying goods into products of the earth and products of industry and, on the basis of their ownership, into the property of the proprietor and farmer, that of the owners of houses in cities, of owners of rents, offices, silver and bills, and of manual laborers, and of wholesale and retail merchants. The chief fruits of the earth, he says, are grain, liquors such as wine, cider, and alcohol, animals, and cloth. He then proceeds to say that the laborer can continue to produce all these things only in case the other categories of people buy his products at a price which will prevent loss and render the advantages mutual. It is also necessary, he says, that the members of the 200 professions should traffic with each other and that the entire product of their efforts should be “on a level with the fruits of the earth, especially with grain, to which they all owe their birth.” He lays emphasis upon the necessity that all should profit by this traffic. The ruin of one injures all, he says.

“There must be a police in order to bring about the observance of harmony and the laws of justice among so great a number of men who seek only to destroy these and to deceive and surprise each other from morning until night, and who continually aspire to found their opulence upon the ruin of their neighbors. But it is to nature alone that we must look for the establishment of this order and for the maintenance of peace here. Every other authority spoils everything by wishing to mix in these matters, however well intentioned it may be. But nature, jealous of her operations immediately avenges herself by a general disconcertment the moment she sees that by outside interference the wisdom of her operations has been defied. Her first intention is that all men shall live comfortably from their own work or from that of their ancestors. In a word it is established that each trade must nourish its master or that he must close his shop and procure another. For it cannot be that she loves men less than the beasts, not a single one of whom does she bring into the world without at the same time assuring it of its pittance. In like manner she acts towards men everywhere so that they put themselves into proper relations with her.”

2. Vauban.

Vauban was born May 14, 1633. His parents having died when he was ten years of age, he was placed in the care of Abbe Fontaine, who supervised his training as a military engineer. In this capacity he served his king during the greater part of his life, taking part in the more important sieges undertaken in the course of Louis XIV’s numerous wars and planning and building fortifications, roads, and bridges.

Unlike many people of that time connected with the military profession or the administration of the government, Vauban had a tender heart and genuine sympathy for the common people, of whose wretched condition his travels and observation gave him an accurate knowledge. Long before he began to write on the subject he had also noted the discrepancy between the possible and the actual productivity of the country.

Reflections upon these matters convinced him that the key to the explanation was to be found partly in the amount of the taxes but chiefly in their distribution and the manner of their collection, and that the remedy for the ills of the state was a radical reform in the taxation system. To the devising of such a reform, therefore, he gave much anxious thought during the later years of his life with the result that he addressed a memoir on the subject to M. Le Pelletier in 1694 and by 1699 had prepared his Dîme Royale, which, however, was not published until 1707.

1. Not to exceed a tenth of the product of real estate (biens fonds), to be collected in kind.

2. Not to exceed a tenth of the income from houses in villages and cities, from mills, from industry, from rents, salaries, pensions, and similar incomes.

3. A tax on salt.

4. Not to exceed a tenth of all other incomes, a composite lot grouped together because of their varying characteristics.

The manuscript of the Dîme Royale was completed in 1699, but was not published until 1707. It was placed upon the list of proscribed books by the King’s Royal Council and the reform it recommended was condemned, a proceeding which is said to have been responsible in part at least for the author’s death, which occurred on April 16 of the year in which these events took place.

3. Cantillon.

A period of nearly half a century intervened between the publications of Boisguillebert and Vauban and the appearance of Cantillon’s Essai sur le commerce en général. During this period the reactionary influences which had suppressed the Factum and the Dîme Royale closed the mouths and restrained the pens of reformers of the Boisguillebert and Vauban type, but about the middle of the eighteenth century the suppressed intellectual forces of the nation broke their bonds and noteworthy writings on economic subjects were produced, among them Cantillon’s essay. It was originally written in English and was published in England between 1730 and 1734. The essay, or a portion of it, was subsequently translated by the author himself for the use of a French friend, and in 1755 it was published in its French form.

A significant part of the title of Cantillon’s essay is the phrase en général. He proposed to treat of the nature of commerce not in the aspect in which it was exhibited in a particular country at a particular stage in its history, but “in general.” The subjects which he treats are the nature of wealth; the methods of its production; its circulation among the different classes of people within a nation and between different nations, including an account of how these different classes are formed; the distribution of income, including an explanation of the different rates of wages of different classes of laborers; prices; money; credit; banks; and foreign exchange.

Some of the interesting conclusions at which he arrives are the following: “Land is the source or material from which wealth is extracted,” but “human labor is the force which produces it.” “Wealth is . . . the sustenance, the conveniences and the comforts of life: in all forms of society the ownership of land necessarily belongs to a small number of persons and the surplus at the disposition of landowners and their method of consuming this surplus determine the character of the national production; the cost of acquiring skill explains the difference between the wages of skilled and unskilled laborers, and cost of production regulates the prices of all services and commodities; the number of laborers in the different occupations adjusts itself to the demand for them.”

In Chapter XII he develops in the following words his arguments regarding the relation of land and of the expenditures of land owners to the economic life of a nation.

“If the princes and the proprietors of lands should enclose them, and if they should not allow any one to work them, it is clear that there would be neither nourishment nor clothing for any of the inhabitants of the state. Consequently, all the inhabitants of the state not only subsist from the product of the land which is cultivated for the proprietors, but also at the expense of these same proprietors from whose land they procure everything they have.

“Cultivators receive ordinarily two-thirds of the product of the land, one-third for their expenses and the maintenance of their subsistence, and the other one-third for the profits of their enterprise. From these two-thirds the cultivator supports generally, directly or indirectly, all those who live in the country and also many artisans and entrepreneurs who live in the city, because of the merchandise of the city which is consumed in the country.

“Ordinarily the proprietor has one-third of the product of the land, and from this one-third he supports the artisans and other people whom he employs in the city and often people who transport produce from the country to the village.

“It is generally supposed that one-half of the inhabitants of the state live in the cities and the other half in the country. That being the case, the cultivator who has two-thirds or four-fifths of the product of the land gives directly or indirectly one-fifth of it to the inhabitants of the city in exchange for produce which he receives from them. This, together with the one-third or two-fifths which the proprietor expends in the city makes three-fifths or one-half of the product of the soil. This calculation is made only for the purpose of giving a general idea of proportions.

“Whenever one examines into the means by which a person lives, he always finds in going back to their source that they come from the property of the proprietors of land, and that they consist either in the two-thirds of the product which is given to the cultivator or the one-third which remains with the proprietor.

“If the proprietor has only the quantity of land necessary for a single cultivator, this cultivator will derive from it a better subsistence than he. But the seigneurs and proprietors of great estates who live in the villages have sometimes many hundreds of cultivators, and in any state these bear a very small proportion to the total number of inhabitants.

“It is true that there are often found in large cities many entrepreneurs and artisans who subsist on foreign commerce, and in consequence at the expense of proprietors of lands in foreign countries, but I am considering at present only those who live and get their subsistence out of the lands of a single state, in order not to embarrass my subject with accidental considerations.

“The property in the soil belongs to the proprietors, but this property becomes useless if one does not cultivate the land, and the more one cultivates it, all other things being equal, the more produce he gets, and the more one transforms or works over this produce, all other things being equal, the more merchandise is made from it, and the greater its value. From this it is evident that the proprietors have need of the other inhabitants as well as that these have need of the proprietors; but in this economy it is to the proprietors, who have the disposition and the direction of the property, that is assigned the duty of giving direction and movement to all of these matters. In a state everything depends upon the tastes and customs and methods of living of the proprietors of the land, as I will attempt to show later on in this essay.”

The resemblance of this argument to that subsequently employed by the Physiocrats is so striking that one can hardly avoid the conclusion that the later one was derived from or at least greatly influenced by the earlier. This conclusion is supported by the fact that founders of the physiocratic school studied Cantillon’s essay before publishing their characteristic doctrines and that one of them, at least, admitted having been greatly influenced by it.

Footnotes

1 H. Taine, Les origines de la France contemporaine (Paris: Librairie Hachettc ct Cie, 1899), Vols. I and II.

2 op. cit., I, 21-25.

3 ibid., I, 135, 137.

4 See Henry Higgs, The Physiocrats (London: Macmillan & Co., Ltd., 1897), Ch. I.

5 Op. cit., I, 25, 26.

6 Quotations are from Économistes financiers du XVIIe Siècle.

7 Loc. cit., p. 173.

8 Ibid., p. 178.

9 Ibid., pp. 209 and 210.

10 Ibid., p. 398.

11 See Dissertation, Ch. V, and the Factum, Chs. I-III.

12 Loc. cit., pp. 408 and 409.

13 La Dîme Royale (Petite Bibliotheque feconomique), p. 3.

14 Ibid., Michel’s Introduction, p. xxiv.

15 lbid., p. xxv.

16 For these and other facts concerning Cantillon’s life and his essay, see Introduction to the edition of the Essai published by Harvard University in 1892.

• 1Professor Schmoller found the key to the explanation of this aspect of the system in the development of the national economies of the various European states. These succeeded (in order of time) territorial, municipal, tribal, and family economies, each representative of a certain stage in the history of European civilization, and each produced by the struggle of contending forces, a higher and broader organization in each case subordinating to itself lower and narrower ones. “The essence of this system,” he says, “lies not in some doctrine of money, or of the balance of trade; not in tariff barriers, protective duties, or navigation laws, but in something far greater, namely, in the total transformation of society and its organization, as well as of the state and its institutions, in the replacing of a local and territorial economic policy by that of the national state.” More specifically he says, “The whole internal history of the seventeenth and eighteenth centuries, not only in Germany but everywhere else, is summed up in the opposition of the economic policy of the state to that of the town, the district, and the several estates; the whole foreign history is summed up in the opposition to one another of the separate interests of the newly rising states, each of which sought to obtain and retain its place in the circle of European nations, and in that foreign trade which now included America and India. What was at stake was the creation of real political economies as unified organisms, the center of which should be, not merely a state policy reaching out in all directions, but rather the living heart-beat of a united sentiment.”
• 2Professor Schmoller found the key to the explanation of this aspect of the system in the development of the national economies of the various European states. These succeeded (in order of time) territorial, municipal, tribal, and family economies, each representative of a certain stage in the history of European civilization, and each produced by the struggle of contending forces, a higher and broader organization in each case subordinating to itself lower and narrower ones. “The essence of this system,” he says, “lies not in some doctrine of money, or of the balance of trade; not in tariff barriers, protective duties, or navigation laws, but in something far greater, namely, in the total transformation of society and its organization, as well as of the state and its institutions, in the replacing of a local and territorial economic policy by that of the national state.” More specifically he says, “The whole internal history of the seventeenth and eighteenth centuries, not only in Germany but everywhere else, is summed up in the opposition of the economic policy of the state to that of the town, the district, and the several estates; the whole foreign history is summed up in the opposition to one another of the separate interests of the newly rising states, each of which sought to obtain and retain its place in the circle of European nations, and in that foreign trade which now included America and India. What was at stake was the creation of real political economies as unified organisms, the center of which should be, not merely a state policy reaching out in all directions, but rather the living heart-beat of a united sentiment.”
• 3The industrial organization of the towns was also gradually weakened by conflicts of interest between townsmen themselves and the oppression of the weaker trades by the stronger, and by the growth of domestic industries. Increasing interference of the central government in town affairs was invited by these conditions, and the power of resistance to it was weakened. The growth of a merchant class in London and some of the other large towns also contributed to the same result. The interests of this class extended beyond the boundaries of the town in which they lived and were promoted by the breaking-down of local trade barriers. The power of this class grew rapidly in and after the sixteenth century.
• 4By the seventeenth century a national commercial and industrial organization had developed, the chief organs of which were middlemen who intervened between producers and consumers and between different classes of producers. Among those of chief importance were the wool-staplers, the clothiers, the drapers, and the foreign trading companies. The wool-staplers purchased the farmers’ wool, their most important staple, and sold it to manufacturers or foreign merchants. The clothiers acted as middlemen between the carders, spinners, weavers, and other handicraftsmen engaged in transforming the wool into cloth. They purchased the wool from the staplers, delivered it to the carders and spinners, distributed the yarn among the weavers to be woven into cloth, and then placed the cloth in the hands of the “fuller,” “walker,” or “tucker” to be fulled and cleansed. The spinners, carders, weavers, and fullers were scattered throughout the hamlets and villages as well as the cities of the country, in many, perhaps most cases, doing agricultural work as a main or a side occupation. The drapers purchased the cloth and sold it to consumers or to foreign merchants; some of them were themselves connected with one of the trading companies. Foreign commerce was chiefly carried on by these latter organizations, to each of which a charter had been granted conferring the exclusive right to trade in a specified part of the world. The Eastland Company, for example, had the exclusive right to trade with Scandinavia and the Baltic region; the Russian Company, with Russia; the Merchant Adventurers, with the Netherlands; the Levant Company, with the Mediterranean region; the Guinea or African Company, with Africa; the East India Company, with the countries of Asia; and several other companies with portions of the American field. At the beginning of the seventeenth century France, Spain, and Portugal were the only countries with which trade could be carried on by an Englishman not a member of one of the companies.
• 5The literary remains of Colbert are of the same general character as those of Sully in that they consist of letters, instructions, and memoirs. They differ from Sully’s, however, in the extent to which they reflect mercantile doctrines. Colbert was the chief executor of the mercantile policy of France, and among his letters, instructions, and other papers may be found expositions and defense of nearly every feature of it. Much more completely than the English writers he reflected the doctrines of nationalism and of the entrepreneur relation of the state to industry. To a greater extent than in any other country these doctrines were realized in the practices of France during the reign of Louis XIV, and for this fact Colbert was largely responsible. Louis XIV aspired to be not only absolute sovereign in France but the dictator of Europe, and he fully realized that foreign commerce and command of the world’s supply of the precious metals would assist in the accomplishment of his purposes.
• 6Becher was at one time a court physician and professor of medicine in Mainz, whence he went to Wurzburg, and later to Vienna. At the two latter places, he was connected with the carneræ of the reigning sovereigns. He wrote on natural science as well as Kameralwissenschaft, his chief work in the latter field appearing at Frankfurt in 1668 under the title Politische Discurs von den eigentlichen Ursachen des Auf- und Abnehmens der Städte, Lander und Republiken, in specie, wie ein Land Volkreich und Nahrhaft zu machen und in rechte Societaten civilen zu bringen. In this book he defines a city as eine volkreiche, nahrhafte Gemeine and defends the following fundamental propositions: The more populous a city, the more powerful it is; but in order to be populous, it must be supplied with an abundance of nourishment; the membership of a community consists of (a) those who serve it and are supported by it, for example, government officers, clergy, learned men, physicians, apothecaries, soldiers, etc.; and (b) those who really constitute it, namely, peasants, handicraftsmen, and merchants. These three classes are essential each to the other. In explaining their mutual relations, however, he makes the following argument: “Consumption is the soul of the three classes, the only bond which holds them together and enables them to live by each other. It is on account of consumption that the merchant class is so necessary in a community, however large the peasant class may be. . . . Since the nourishing of a community can only be accomplished through the trading [Verhandlung] and turning into money [Versilberung] of goods . . . everything which hinders these operations hinders and weakens the populousness which results from it.”
• 7Wilhelm Freiherr von Schroder was in the service of Austria as conductor of a factory according to plans outlined by Becher. He wrote several books, the most noteworthy of which was entitled Fürst-liche Schatz und Rentkammer, which was published in 1686. He was a strong advocate of absolute monarchy and admirably set forth the mercantilistic view of the relation of a sovereign to his people, in the following passage: “A Prince is like a housefather. Now a housefather must fertilize and plough his fields if he would reap a harvest therefrom. He must well stock his pond if he would have fish. He must feed his cattle if he would slaughter them, and well fodder his cows if he desires them to give much milk. Thus a Prince must first help his subjects to a good living, if he wishes to take anything from them.”
• 8In the Détail he gives a discussion of the relation between money and wealth in which he says: “As gold and silver are not and never have been wealth in themselves and are valued only in relation to other things necessary to life,—to which things they serve only as a guarantee and a measure of value,—it is a matter of indifference whether we have much or little of them, provided the same results are produced.” That the same results are produced by much or little he attempts to prove by the following: “Thus we learn from the old accounts that in 1250 a laborer in Paris, who to-day earns 40 or 50 sous a day, earned only 4 pennies a day, 12 one-hundredths part of what he earns now. Nevertheless he then lived with as much comfort as now because all things were in proportion. He satisfied his wants with his four pennies as well as one of the same trade now does with his 50 sous. It follows that a man who at that time had a thousand livres of rent was as rich as one who at present has one hundred thousand.”
• 9In other connections he says: “It is very certain that it [money] is not a good in itself and that the quantity of it does nothing for the opulence of a country in general provided there is enough of it to sustain the prices of the goods necessary to life.”
• 10Silver and gold, he says, have as competitors copper, leather, shells, and “a simple piece of paper which costs nothing but nevertheless performs all the functions of money to the amount of millions by passing from hand to hand an infinite number of times.” By way of illustration he refers to the Lyons fair in the following manner: “In a commerce consisting of purchases and sales to the amount of more than eighty millions not a ‘sou marque’ of money is seen. Everything is done by bills of exchange which after passing through an infinite number of hands, finally return to the original drawer.”
• 11In other connections he emphasized the need of an equilibrium between purchases and sales and the importance of proper adjustments of prices, especially of the prices of raw produce and manufactures.
• 12In order to secure these and other needed adjustments, he affirmed that reliance can be placed only on nature. The following words of his taken from Chapter V of the Dissertation present this doctrine clearly:
• 13In this book he refers with approval to Boisguillebert’s description of conditions, including his criticisms of the system of taxation. His own studies, he says, have revealed “conditions which correspond perfectly to what was written concerning them by the author of the Detail de la France, who developed and brought to the light of day very naturally the abuses and malpractices which are practiced in the imposition and the levy of the Tailles, the Aides and the Provincial tariffs.” In his memoir to Le Pelletier he also said: “Let his Majesty have the goodness to remember that the grandeur of kings can only be measured by the number of their subjects, that upon that depends all their grandeur, their power and their riches, and that without that they have only vain titles which are burdens to themselves and to everybody else and nothing more.” In his book he stresses the doctrine “that persons of all conditions should contribute to the public expenses in proportion to their revenue and their industry without privilege or exemption; that taxes ought to be easily collected in such a manner as not to give rise to contests or to vexations on the part of the fiscal agents; and that so far as possible the contributor should be able to pay all his taxes at one time.” The reform he proposed was the levy of what he called a dîme royale or royal tithe, which in substance was a tax to be derived from four different sources:
• 14In this book he refers with approval to Boisguillebert’s description of conditions, including his criticisms of the system of taxation. His own studies, he says, have revealed “conditions which correspond perfectly to what was written concerning them by the author of the Detail de la France, who developed and brought to the light of day very naturally the abuses and malpractices which are practiced in the imposition and the levy of the Tailles, the Aides and the Provincial tariffs.” In his memoir to Le Pelletier he also said: “Let his Majesty have the goodness to remember that the grandeur of kings can only be measured by the number of their subjects, that upon that depends all their grandeur, their power and their riches, and that without that they have only vain titles which are burdens to themselves and to everybody else and nothing more.” In his book he stresses the doctrine “that persons of all conditions should contribute to the public expenses in proportion to their revenue and their industry without privilege or exemption; that taxes ought to be easily collected in such a manner as not to give rise to contests or to vexations on the part of the fiscal agents; and that so far as possible the contributor should be able to pay all his taxes at one time.” The reform he proposed was the levy of what he called a dîme royale or royal tithe, which in substance was a tax to be derived from four different sources:
• 15In this book he refers with approval to Boisguillebert’s description of conditions, including his criticisms of the system of taxation. His own studies, he says, have revealed “conditions which correspond perfectly to what was written concerning them by the author of the Detail de la France, who developed and brought to the light of day very naturally the abuses and malpractices which are practiced in the imposition and the levy of the Tailles, the Aides and the Provincial tariffs.” In his memoir to Le Pelletier he also said: “Let his Majesty have the goodness to remember that the grandeur of kings can only be measured by the number of their subjects, that upon that depends all their grandeur, their power and their riches, and that without that they have only vain titles which are burdens to themselves and to everybody else and nothing more.” In his book he stresses the doctrine “that persons of all conditions should contribute to the public expenses in proportion to their revenue and their industry without privilege or exemption; that taxes ought to be easily collected in such a manner as not to give rise to contests or to vexations on the part of the fiscal agents; and that so far as possible the contributor should be able to pay all his taxes at one time.” The reform he proposed was the levy of what he called a dîme royale or royal tithe, which in substance was a tax to be derived from four different sources:
• 16The author, Richard Cantillon, was born in Ireland between 1650 and 1690. Soon after the death of Louis XIV he removed to Paris and engaged in the business of banking during the period in which John Law flourished. Being confident of the ultimate failure of the Mississippi scheme, Cantillon speculated on the bear side of the market and made a fortune, but incurred the enmity of Law and was obliged to leave France. He was murdered in London on May 16, 1734, by a discharged man-servant, who set fire to his house and stole some of his papers.