The Development of Economics

CHAPTER XXI

“More than a decade passed after the publication of Menger’s Grundsätze before public evidence of any considerable support of the theories therein expounded appeared. The dominance of the Historical School in Germany was probably partly responsible for this tardy recognition. At any rate it was not until after the publication of Menger’s criticism of the Historical School in 1883 that books and monographs expounding, expanding, and developing these theories appeared. Among them the most important were Friedrich von Wieser’s Über den Ursprung und die Hauptzgesetze des wirtschaftlichen Werthes and Der natürliche Werth (1883), Eugen von Böhm-Bawerk’s Geschichte und Kritik der Kapitalzins-Theorien (1884), “Grundzüge der Theorie des wirthschaftlichen Güterwerths,” in Jahrbuch für Nationalökonomie and Statistik (1886), and Positive Theorie des Kapitals (1888); and Emil Sax’s Grundlegung der theoretischen Staat-swirthschaft (1887). In these works substantial additions were made to the body of doctrine contained in the Grundsätze.”

A. Valuation of Production Goods

“Von Wieser’s chief contributions concerned the valuation of cost and complementary goods and the application of these doctrines to the explanation of the distribution of wealth. Starting with the doctrine expounded by Menger that production goods derive their value from their products, he elaborated its corollary, namely, that of several products resulting from the same production good or goods, it is the marginal or least valuable one which transmits its value to the said goods, and he proceeds to point out the precise relation this doctrine bears to the doctrine of costs of the older economists. In this connection he developed the proposition that the value thus conferred upon production or cost goods is transmitted by them to their supramarginal products. The value of these products, therefore, in a sense, may be said to be determined by their costs, as the older economists claimed. The weakness of the treatment of this subject by these economists consisted in their apparent failure to recognize the necessity for an adequate explanation of the value of the cost goods themselves and in their failure to supply such an explanation.

“Von Wieser’s argument is identical with that employed by Menger in the demonstration of the proposition that the value of consumption goods, or goods of the first rank, is determined by their marginal utility. The essence of that argument is the dependence of certain kinds and amounts of satisfaction upon the possession of certain goods. Once this dependence is established, the reason for the valuation of those goods and the amount of value they possess are determined. In the case of cost or production goods this dependence can be established only through their marginal products, since it is only such products that depend for their existence upon the possession of specified amounts of the cost goods, economical action requiring that the loss resulting from the withdrawals of a portion of the supply of such goods be shifted to the least important point and that is always the least valuable of the products of such goods. The value of cost goods once being fixed, however, it becomes a determining factor in the supply of their supramarginal products, since such supplies will be increased until the marginal utilities of these goods are reduced to the point fixed by the value of said cost goods.

“This argument may be illustrated in the following manner: Suppose that the production of consumers’ goods X, Y, and Z, single units of which are valued respectively at 20, 18, and 16, constitute the possible uses of cost good A of which 6 units, and only 6, are available. Suppose, further, that 1 unit of A will produce a unit of X, Y, or Z, and that every unit added to the supply of X, Y, or Z will reduce its value 2 points. That is to say, if 2 units of X are put upon the market instead of 1, its value per unit will be 18 instead of 20, and if 3 units are marketed, its value will be 16 instead of 18, and so on.

“We have first to consider the most economical uses to which the 6 available units of A may be put. Obviously all of them may be used for the production of 6 units of either X, Y, Z, or some of them may be used for the production of one of these commodities and the remaining ones for the others. Of these possible alternative uses that will be most profitable which will result in the aggregate product having the highest value?

“If all 6 units are employed in the production of X, the total value of the product will be 60, since each unit of X in that case will be valued at 10. If all are used in the production of Y, the total value will be 48, and if all are used in the production of Z, the total value will be 36. It is clear, therefore, that if only one of these commodities is produced it will be X. By using 3 units of A in the production of 3 units of X, and 2 in the production of 2 units of Y, and 1 in the production of 1 unit of Z, however, a total product valued at 96 will result, since with a supply of each commodity of the amount indicated the value of the final unit of each will be 16, and there will be, all told, 6 units for sale.

“No other disposition could be made of the 6 units of A that would produce a result so valuable as this. If, for example, the 1 unit devoted to the production of Z should be withdrawn and applied to the production of an additional unit of either X or Y, a loss of value would result. If the additional unit produced were of Y, we should then have 3 units of X valued at 16 each, making a total of 48. The grand total is 48 plus 42 or 90, 6 less than when 1 unit of Z was produced. If the additional unit produced were of X instead of Y, the result would be 4 units of X valued at 14 each, or 56 and 2 units of Y valued at 16 each or 32, making a grand total of only 88.

“The most economical use of cost good A, then, will require the production of 1 unit of Z, the least important of the three consumers’ goods in the production of which it could be used, and, therefore, properly termed the marginal product. X and Y may be called A’s supramarginal products.

“Under these circumstances, the value of A will be 16, that is the value of its marginal product, since it is this product for the existence of which a single unit of A, added to a previous supply of 5 units, is indispensable. It is this valuation, however, that determines the number of units of X and Y that can profitably be produced, and hence their marginal utility and value. In this sense, therefore, the value of X and Y may be said to be determined by their costs, that is by the value of cost good A. It must not be forgotten, however, that the value which cost good A conferred upon its supramarginal products X and Y was itself derived from the value of its marginal product Z.”

B. Valuation of Complementary Goods

“ ‘Suppose three productive elements, employed in the most rational plan of production possible, promise in combination a product whose value amounts to 10 units of value. If the three elements were to be employed otherwise, in combination with other groups, they would certainly raise the return of these groups, but it is against our hypothesis—which is that of the most rational plan of production—that the return can be raised by 10 units; otherwise the first combination chosen would not after all have been the best. There is aways an infinite number of ways in which the elements in question can be grouped, but there is always one plan, and that the best, which should be carried out: if this be given up in favour of another, the result must be smaller, even if only to a trifling extent.

“ ‘Suppose, again, that the three elements are employed in some plan other than the best—which, be it remembered, demanded their being combined with one another in a distinct group. Say that, by being each separately employed in some other group, the return of each of these three groups is raised by 3 units, and the three elements accordingly now produce a return amounting to 9 units of value.

“ ‘How in this case will the value of each single item be reckoned according to Menger’s principle? By the decrease in return which ensues in the case of loss. In this case, the decrease amounts to 10 units—the full return of the best combination now broken up—of which, however, 6 can be recovered by the new employment of the two remaining elements. The loss, therefore, amounts finally to 4, and this is true indifferently of any of the three goods. Twelve, then, is the value of the three taken together. But this is impossible, since, when most profitably employed, they can give only a return of 10.’

“According to Von Wieser, Menger erred in his method of procedure, and he suggested another, namely, that of determining the exact contribution of each complementary good through a series of algebraic equations, each of which would exactly represent the character and results of each combination into which it enters. For example, suppose a, b, c enter as complementary goods in the following proportions into the production of three commodities X, Y, and Z, valued respectively at 145, 160, and 260: into X, 2a, 3b, and 4c; into Y, 3a, 6b, and 2c; and into Z, 7a, 2b, and 8c. Then the following algebraic equations may be formed: 2a + 3b + 4c = 145; 3a + 6b + 2c = 160; and 7a + 2b + 8c = 260. The solution of these equations yields the following results: a = 10; b = 15; and c = 20. Since complementary goods actually enter into a great number of different combinations in the processes of production all the time in progress, ordinary accounting methods enable business men to form the necessary number of equations and thus readily to impute to each productive good its contribution to the product, not, of course, its physical contribution, since that is inseparable from the physical contributions of the other cooperating factors, but its contribution in value.”

C. The Laws of the Imputation of Value

“In Der natürliche Werth Von Wieser developed the laws in accordance with which value is imputed to factors of production under different conditions of supply, demand, and quality. In the first place he showed that, in the case of production goods, which are available in stocks rather than individually, imputation follows the marginal law, that is, ‘to each single item or quantity is imputed the smallest contribution which, under the circumstances, can be economically aimed at by the employment of this particular item or quantity.’ Consequently an increase in the supply of a cost good will decrease the amount of value imputed to it, since it will lower its marginal product, and a decrease in its supply will have the opposite effect. Changes in the demand for such a good, through an increase or decrease in the number and kinds of productive combinations in which it is required, will in like manner change the value imputed to it. Goods of the same kind, but differing in quality, will have different values attributed to them according to their degrees of superiority, since a superior quality of good will bring an increased product to the combination of productive goods into which it enters, and such increase can only be imputed to its superiority.

“Applied to land, capital, and labor, these laws explain rent, gross profits, and wages. According to them, a share in the product must be imputed to land of any particular quality as soon as it becomes relatively scarce and to all lands as soon as they become relatively scarce. The amounts imputed to lands of different qualities will vary according to their degrees of superiority in substantial accord with the differential law expounded by Ricardo, but marginal lands will also yield rent as soon as they become relatively scarce. According to his view, therefore, the Ricardian doctrine that rent is due to monopoly is true only in the sense that wages and profits are also due to monopoly, i.e., in the sense that a share in the joint produce is imputed to any of the cooperating factors of production only when its supply is limited relatively to the demand for it. In the same manner the shares of labor and capital in the joint product of the three factors of production is determined by the laws of imputation as well as the differences in the wages of different classes of laborers. Through its influence on supply monopoly affects the imputation of value and thus the distribution of wealth.”

D. The Problem of Interest and Von Wieser’s Solution of It

“There remains, therefore, but one thing to ask—whether a share in this undoubted net return can be imputed to the factor capital. But the question cannot be put seriously. Why to capital alone should no such share be imputed? Once understood and granted that capital is one of the economic factors of production, to which, with the others, the productive return is ascribed, it is also understood and granted that to it belongs by right a share in the net return in which the productive return first embodies itself. Are we to suppose that capital is always in a position to produce only somewhat less than [enough to] replace itself? This would obviously be an arbitrary supposition. Are we, then, to suppose it capable only of replacing its own loss, however various the success of production may be? This supposition would clearly be no less arbitrary. Whoever denies net return to capital can only do so by denying it any return.”

E. Von Wieser’s Doctrine of Cost

The cost principle also holds for “capital goods,” that is, for the produced means of production. In the cases of these goods the return to be obtained from their use and the cost of their production stand in mutual relation to each other and tend toward equality.

“The greater the value of the return, the greater the costs that may be expended in producing it; and the greater will be the expenditure of costs, so far as is practicable and necessary; the smaller the requisite expenditure of costs, the smaller will finally be the value of the return, whether this results from the fact that production finally is correspondingly extended, or from the fact that the valuation of the utility is directly pressed down to the level of the costs. If a machine does very good work, that is a cause for valuing it highly; but if it can be cheaply produced, the machine itself, and, finally, its products also, will find a low value. The costs of producing capital transmit their effects right down to the fruits of the capital, however remote these may be, so long as they fall within the producer’s field of vision, and can be taken into consideration in the estimates of value.”

“Products which come under the law of costs do not, however, come under it in all circumstances. To do so they must come under consideration as products, i.e. as dependent upon the elements from which they are formed. If they are estimated independently, if they are valued in isolation and for themselves, their own utility alone—or their marginal utility—will determine their value, without their productive marginal utility being taken into consideration at all.”

The law of costs as thus explained is simply one of the ways, the most common way, in which the marginal utility principle works out in practice. The complicated character of its operation obscures in some degree its connection with this principle or renders this connection somewhat difficult to trace, but does not break or destroy it. Marginal utility remains the source of value, but in the case of cost goods and of their products the determining marginal utility in most cases is that of a product other than the one whose valuation is under consideration. In order to see the operation of the marginal utility law we must observe the valuation process of the entire group of commodities involved in the production process. In this group the cost goods will be so distributed as to secure the maximum of utility and the maximum of value. That is the goal always in view. Costs come into consideration in this distribution process when the relative advantages of the possible uses of the cost goods are weighed and the amount of what is lost or sacrificed by the employment of the goods in a particular way is calculated. When the entire series of actions and reactions is observed, this cost calculation is seen to be based upon the utility of the marginal product.

F. Other Cost Doctrines

Between Von Wieser’s doctrine and that of the entrepreneur, the accountant, and many economists there is no conflict. What he and other members of the Austrian School have done is to supplement the older theory by showing how cost goods are themselves valued, to give a more complete and detailed account and explanation of this particular valuation process, and to point out the limitations of the cost principle.

There are two other forms of the cost-of-production theory of value which require attention in this connection. At least one of them is in real conflict with the marginal utility theory. One of these forms reduces all costs to labor-time units and explains the value of these units by the cost of their production. The earliest form of this theory is commonly described as “the iron law of wages,” which is simply the cost-of-production theory rigidly applied to the valuation of labor. The cost of production of labor, so runs this theory, is the value of the food, clothing, shelter, and other essentials required to support the laborer in reasonable health and strength, to enable him to raise a family large enough and strong enough to take his place, and to maintain a constant and unchanging labor supply. The argument in support of this theory is identical with the cost-of-production argument as applied to commodities. The value of labor, it is argued, cannot fall below this point because, if it did, disease and death would reduce the supply of labor and thus raise its value to the subsistence point; and it cannot rise above this point because, if it did, the supply of labor would increase sufficiently to bring the wages down again to the subsistence level.

Observation of the fact that the wages of labor in most progressive countries had risen and were maintained above the subsistence point and that the wages of all laborers except those of the lowest class were regularly maintained above this point by a much wider margin than that which separates the wages of the lowest class from this point, resulted in the substitution of the “standard-of-life” doctrine for the “iron law.” According to this doctrine the point above which wages cannot rise and below which they cannot fall is the cost of production of those necessaries, comforts, and luxuries which the laborers themselves deem to be essential to their own maintenance and that of a family sufficient to maintain an unchanging supply of labor. Instead of an external force over which the laborer has no control, the determining element in his wages, according to this doctrine, is his own opinion or will, which, however, those who held this doctrine considered to be determined by custom.

Neither form of this labor-cost theory can escape the charge of circular reasoning, the value of labor being explained by the value of the commodities essential to its production and their value in turn by the value of labor.

A more formidable version of the cost-of-production theory of value explains the value of labor in terms of labor sacrifice instead of the value of goods essential to the laborer’s existence or his standard of life and, like the form of the labor theory just described, explains the value of other commodities in terms of labor costs. According to this theory, the idea or conception of value is associated with and derived from the obstacles to be overcome and the efforts to be put forth in production instead of the utility or satisfaction derived or expected to be derived from the goods when produced. In its most refined and best-elaborated form, the idea of the marginal sacrifice of labor is developed and made the source of value.

Von Wieser admitted that this form of the labor theory of value would be tenable in a condition of society very different from the actual one in which men live to-day, namely in one in which the supply of labor is so great that all wants could be supplied by a portion of it— in which, in other words, the supply of labor is in excess of the need for it. In such a society, he said, “Value would be the importance which goods would have in virtue of the interest every one would feel in securing exemption from the undesirable pain of labour. Wealth would be equivalent to great possessions of goods securing immunity from the pain of labour. The advantage of wealth would be rest. Poverty would not mean want, but only unrest, pain. By a little increase of exertion any advantage of prior possession could soon be overtaken.

Footnotes

1 Quotations in sections A-C are from the author’s chapter in Ingram’s History of Political Economy, New and Enlarged Ed., pp. 240-247. By permission of The Macmillan Company, publishers.

2 Der natürliche Werth, tr. Christian A. Malloch (London: Macmillan & Co., Ltd., 1893), P. 83.

3 Der natürliche Werth, pp. 126 and 127.

4 Der natürliche Werth. p. 108.

5 Ibid.

6 Ibid., p. 175.

7 Ibid., pp. 177 and 178.

8 Ibid., p. 179.

9 Der natürliche Werth, pp. 179-180.

10 Ch. XVIII, sec. C.

11 Der natürlichc Werth, pp. 195, 196.

12 Ibid., pp. 196, 197.

13 Der natürliche Werth, pp. 197-199.

14 Ibid., pp. 201, 202.

15 Ibid., see Chs. XI and XII, pp. 203-209.

• 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: