Front Page Titles (by Subject) 11: The Origin of Towns - Commerce and Government Considered in their Mutual Relationship
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11: The Origin of Towns - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship 
Commerce and Government Considered in their Mutual Relationship, translated by Shelagh Eltis, with an Introduction to His Life and Contribution to Economics by Shelagh Eltis and Walter Eltis (Indianapolis: Liberty Fund, 2008).
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This book was originally published by Edward Elgar Publishing in 1997, copyright 1997 by Shelagh Eltis and Walter Eltis. Reprinted by permission of Edward Elgar Publishing.
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The Origin of Towns
We have marked out three classes of citizens in our tribe: farmers, artisans and merchants.
I assume that until now the first class has had the ownership of all the land. It will not keep it, at least not entirely; and there will come a time when the farmers will cultivate most of the land for a small number of citizens who will have appropriated it.
If we consider that, from generation to generation, a father’s lands are divided among his children, we will reckon that they are often divided to the point where the different portions are no longer adequate for the subsistence of those who have inherited them. The owners of these portions will be obliged to sell them, and they will plan to earn their living in some other way.
Thousands of other faster-working forces will bring about this revolution. Sometimes a lazy or wasteful farmer will be forced to sell his fields to a more careful or less wasteful farmer, who will go on making acquisitions.
On other occasions, a rich owner who has no children will leave all his possessions to another owner who is as rich or richer than him.
Finally merchants who have become wealthy by business and saving will, in all probability, gradually buy up a part of the land; and one can say the same for those artisans who have made large gains and considerable savings. But it is pointless to go into further detail on this subject.
The great owners will manage their estates themselves, or have them managed.
In the first case they will take some of the work upon themselves; they will at least keep an eye on the cultivators, and they will find in the gains they make the price or wage for their work.
In the second case they must give up this wage to the manager, and they will give up part of their income. That is what they will do whenever they have more land than they can cultivate themselves.
[1798 addition: This manager will account to the owner for income as for expenditure. But, because this method of exploitation has great drawbacks for absent or distant owners, they will sooner or later give it up, and entrust their lands to cultivators, who are in a position to make the advances and see to the expenses of cultivation, and will guarantee the proprietors a definite income.]
This manager is a farmer who takes a plot on a lease. He is owed a wage which is regulated like any other. He needs his subsistence, his family’s, something for a rainy day, and a gain he can put aside to improve his condition. He will fix his own wage according to custom. He will hardly ever come to demand more than that; and he will be satisfied whenever his condition is no worse than other farmers’. That sort of person is more fairminded than people think: and they would be even more so if they were less harassed, and besides competition forces integrity upon them.
Experience teaches this farmer the quantity and quality of the products on which he may reasonably count in normal years, and he estimates these according to the markets’ current prices. He takes from this product all the advances he is obliged to make annually, the taxes due to the state, his wage; and, for the surplus, he promises to give the owner a certain number of ounces of silver.*
As this custom becomes established, the landowners who have farmed out their lands gradually move further from them, to gather near the markets, where they are better placed to satisfy their needs. This assemblage attracts artisans and merchants of every kind to settle in this place, and a town forms. The rest of the countryside is sown with farms: at intervals there are villages, peopled by farmers whose lands are adjacent; by the day-labourers who work for them for a wage, and by the artisans whom the ploughman needs daily: farriers, wheelwrights, etc. If our tribe is prolific, and occupies an extensive and fertile country, it can form towns, or at least boroughs, wherever it holds markets. There will then be a transformation in the way of living.
When the tribe lived on its fields, each one lived on his own products, or on those which his neighbours gave him in exchange; and it was unusual for anyone to think of going far to find another type of product.
It is not the same when the owners, gathered in towns, inform each other of the products of the different cantons where they have lived. Then it is natural for them all to want to enjoy all these products. It follows that they establish new needs for themselves, and they consume more than they did before.
The agreeable nature of this way of living will increase affluence in the towns. Consumption will grow proportionately; and it will happen that the farmers, more confident of selling their crops, will take greater pains with agriculture. There will therefore be less fallow land, and products will multiply.
[1798 addition: However we must note that the towns will not help to make agriculture flourish except in so far as they exist, at certain intervals, throughout the land which our tribe occupies. We shall see elsewhere that large towns cause the ruin of remote provinces.]
When the product of the lands has increased, the landowners will increase their incomes at the renewal of the leases. As they become richer, they will seek to obtain new commodities. Their consumption, at the same time greater and more varied, will stimulate industry on a larger scale; and, it follows that agriculture, the arts and commerce will flourish all the more, as the new needs created will offer fresh gains to the ploughman, the artisan and the merchant.
During this transformation, production and consumption will balance themselves continuously; and, depending on the proportion between them, they will cause the price of everything to rise and fall in turn. If consumption is greater, everything will become more expensive; if on the other hand production is greater, all will be cheaper. But these fluctuations will have few drawbacks; because the complete freedom trade enjoys will soon bring production and consumption into line, and will give each thing the price that it ought to have. You may already be persuaded by what I have said on competition; and I shall give fresh proof when I deal with the true price of things.
[* ]Footnote added in 1798 : Sharecroppers [métayers] are farmers who do not make the same advances. But these distinctions are useless for my purpose. For me it is enough that there are farmers.