Essai sur la Nature du Commerce in Général (Essay on the Nature of Trade in General)
By Richard Cantillon
Intrigue, murder, posthumous plagiarism, citations by Adam Smith, rediscovery by William Stanley Jevons a century later, and a stunning work on entrepreneurial risk, money, foreign exchange, and banking from the 1700s–what more could one ask for from an 18th century economist? Richard Cantillon offers fascination for historians and economists as much in death as he did in life.Richard Cantillon, Irish born but living in Paris as a young man, from circumstances became a banker/broker there, and moved in influential, educated social circles. Enriched but embarrassed by speculation in John Law’s scheme, he removed to London (perhaps in flight or to protect his assets). Somewhere along the line he wrote this influential work,
Essai sur la Nature du Commerce in Général (
Essay on the Nature of Trade in General). Probably first written between 1730 and 1734, the first surviving copies are in French, from 1755-56. Whether it was first drafted or circulated in English or in French is unclear; also unclear is what Smith may have seen of it. That Smith was familiar with Cantillon in some form is documented in Smith’s own rare citations. Other contemporary economists were also familiar with the work, even to the point of plagiarizing from the unpublished version.Despite the multiple plagiarizations and the disappearance of early originals, there is general agreement now that Richard Cantillon did indeed write the work; and it did indeed influence Smith and many other contemporaneous economists–the very same the French and English economists whose work became the basis of modern economic thought. Beyond that, though, all we have are the extant 1755-56 French versions and a few translations, of which Higgs’s translation is the only thorough edition. Econlib is pleased to present the full translation of this remarkable work. We also bring you Higgs’s side-by-side French/English edition for download as a pdf file, as well as our formatted searchable online edition.Higgs’s book also contains these other recommended readings:1. William Stanley Jevons’s famous 1881 essay rediscovering Cantillon’s work,
“Richard Cantillon and the Nationality of Political Economy,” an article rich with warranted enthusiasm and detailed research. It also contains a heartwarming surprise ending–a final paragraph that will make you smile.
2. Higgs’s annotated bibliography
“The Life and Work of Richard Cantillon” at the end of the book, an excellent survey of developments following Jevons’s rediscovery.Additional recommendations and summaries:3. We’ve left Higgs’s translation intact; but note that his arcane translations of some words like “Undertaker” for “entrepreneur” obscured Cantillon’s apparent coining of the word “entrepreneur”–see Mark Casson’s article,
Entrepreneurship, in the
Concise Encyclopedia of Economics for more on this.
4. Friedrich A. Hayek,
“Richard Cantillon,” 1931; translated by Micheál Ó Súilleabháin for the
Journal of Libertarian Studies, vol. 7, no. 2, Fall 1985 (republished on Econlib with permission). Other interesting essays in that conference volume on Cantillon include those by Hebert (a discussion of economic ground held in common between Cantillon and the Austrians) and Liggio (a brief history of France and England before and during the period Cantillon was writing). The conference volume is available online in pdf format through the Mises Institute.
5. Joseph Spengler, “Richard Cantillon: First of the Moderns,”
Journal of Political Economy, LXII, August-October 1954.Lauren F. Landsburg
Editor, Library of Economics and Liberty
Henry Higgs, ed. and trans.
First Pub. Date
London: Frank Cass and Co., Ltd.
First extant partial edition is in French: 1755. Includes "Richard Cantillon and the Nationality of Political Economy," by W. Stanley Jevons (1881).
The text of this edition is copyright ©: 1959, Frank Cass and Co. Republished with permission. Originally published 1931 by Macmillan & Co., Ltd. For the Royal Economic Society.
- Introduction, by Henry Higgs
- Previous Editions, by Henry Higgs
- I.I Of Wealth
- I.II Of Human Societies
- I.III Of Villages
- I.IV Of Market Towns
- I.V Of Cities
- I.VI Of Capital Cities
- I.VII The Labour of the Husbandman is of less Value than that of the Handicrafts-Man
- I.VIII Some Handicrafts-Men earn more, others less, according to the different Cases and Circumstances
- I.IX The Number of Labourers, Handicraftsmen and others, who work in a State is naturally proportioned to the Demand for them
- I.X The Price and Intrinsic Value of a Thing in general is the measure of the Land and Labour which enter into its Production
- I.XI Of the Par or Relation between the Value of Land and Labour
- I.XII All Classes and Individuals in a State subsist or are enriched at the Expense of the Proprietors of Land
- I.XIII The circulation and exchange of goods and merchandise as well as their production are carried on in Europe by Undertakers, and at a risk
- I.XIV The Fancies, the Fashions, and the Modes of Living of the Prince, and especially of the Landowners, determine the use to which Land is put
- I.XV The Increase and Decrease of the Number of People in a State chiefly depend on the taste, the fashions, and the modes of living of the proprietors of land
- I.XVI The more Labour there is in a State the more naturally rich the State is esteemed
- I.XVII Of Metals and Money, and especially of Gold and Silver
- II.I Of Barter
- II.II Of Market Prices
- II.III Of the Circulation of Money
- II.IV Further Reflection on the Rapidity or Slowness of the Circulation of Money in Exchange
- II.V Of the inequality of the circulation of hard money in a State
- II.VI Of the increase and decrease in the quantity of hard money in a State
- II.VII Continuation of the same subject
- II.VIII Further Reflection on the same subject
- II.IX Of the Interest of Money and its Causes
- II.X Of the Causes of the Increase and Decrease of the Interest of Money in a State
- III.I Of Foreign Trade
- III.II Of the Exchanges and their Nature
- III.III Further explanations of the nature of the Exchanges
- III.IV Of the variations in the proportion of values with regard to the Metals which serve as Money
- III.V Of the augmentation and diminution of coin in denomination
- III.VI Of Banks and their Credit
- III.VII Further explanations and enquiries as to the utility of a National Bank
- III.VIII Of the Refinements of Credit of General Banks
- Richard Cantillon and the Nationality of Political Economy, by W. Stanley Jevons
- Life and Work of Richard Cantillon, by Henry Higgs
- Appendix A
- Appendix B, Bibliography
Of the Refinements of Credit of General Banks
Part III, Chapter VIII
The national Bank of London
*9 is composed of a large number of shareholders who make choice of Directors to govern its operations. Their primitive advantage consisted in making a yearly distribution of the profits made by interest on the money lent out of the Bank deposits. Later the public debt was incorporated with it, on which the State pays an annual interest.
In spite of such a solid foundation when the Bank had made large advances to the State and the holders of notes were apprehensive that the Bank was in difficulties, a run on the Bank has been seen and holders of notes went in crowds to the Bank to draw out money. The same thing happened on the collapse of the South Sea Company in 1720.
The refinements introduced to support the Bank and moderate its discredit were first to set up a number of clerks to count out the money to those bringing notes, to pay out large amounts in sixpences and shillings to gain time, to pay some part to individual holders who had been waiting whole days to take their turn; but the most considerable sums were paid to friends who took them away and brought them back secretly to the Bank to repeat the same manœuvre the next day. In this way the Bank saved its appearance and gained time until the panic should abate. But when that did not suffice the Bank opened a subscription engaging trusty and solvent people to join as guarantors of large amounts to maintain the credit and circulation of the Bank notes.
It was by this last refinement that the credit of the Bank was maintained in 1720 when the South Sea Company collapsed. As soon as it was publicly known that the subscription list was filled by wealthy and powerful people, the run on the Bank ceased and deposits were brought in as usual.
If a Minister of State in England, seeking to lower the rate of interest or for other reasons, forces up the price of public stock in London and if he has enough credit with the Directors of the Bank (under the obligation of indemnifying them in case of loss) to get them to issue a quantity of bank notes without backing, begging them to use these notes themselves to buy several blocks and capitals of the public stock, this stock will not fail to rise in price through these operations. And those who have sold stock, seeing the high price continue, will perhaps decide (so as not to leave their bank notes idle and thinking from the rumours spread about that the rate of interest will fall and the stock go up further in price) to buy it back at a higher price than they sold it for. If several people seeing the agents of the Banks buy this stock step in and do likewise thinking to profit like them, the public funds will increase in price to the point which the Minister wishes. And it may happen that the Bank will cleverly resell at a higher price all the stock it has purchased at the Minister’s request, and will not only make a large profit on it but will retire and cancel all the extraordinary banknotes which it had issued.
If the Bank alone raises the price of public stock by buying it, it will by so much depress it when it resells to cancel its excess issue of notes. But it always happens that many people wishing to follow the Agents of the Bank in their operations help to keep up the price. Some of them get caught for want of understanding these operations, in which there enter infinite refinements or rather trickery which lie outside my subject.
It is then undoubted that a Bank with the complicity of a Minister is able to raise and support the price of public stock and to lower the rate of interest in the State at the pleasure of this Minister when the steps are taken discreetly, and thus pay off the State debt. But these refinements which open the door to making large fortunes are rarely carried out for the sole advantage of the State, and those who take part in them are generally corrupted. The excess banknotes, made and issued on these occasions, do not upset the circulation, because being used for the buying and selling of stock they do not serve for household expenses and are not changed into silver. But if some panic or unforeseen crisis drove the holders to demand silver from the Bank the bomb would burst and it would be seen that these are dangerous operations.
Banque of Londres.
Jevons, “The Nationality of Political Economy”
Footnotes below are by Jevons except as noted.