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13: Blows Directed Against Commerce: The Policing of the Internal Circulation of Grain - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

Edition used:

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).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


13

Blows Directed Against Commerce: The Policing of the Internal Circulation of Grain

If import and export had always enjoyed complete and full freedom, the government would never have been in the position of interfering in the internal circulation of cereals. It would not have felt the need, because within each state cereals would have circulated themselves just as from one state to another.

But when it had once been disturbed in a part of its course, circulation could no longer carry on anywhere regularly; and we have just seen the disturbance wrought in our four monarchies by regulations that people felt obliged to make on export and import.

If governments had seen that these regulations were the prime cause of these disturbances they would have spared themselves a lot of trouble: they did not see it. So, to cure the ills they had produced, they placed themselves in need to make fresh ones, by making regulations on the internal circulation of grain.

In our four monarchies, the various regulations on export and import have had the same effect as exclusive privileges given to native merchants: hence the excessive price.

With this excessive price, dearth might merely appear to be there. But often it must have been real, because, when export was allowed, people hurried to send out the corn; and, when import was allowed, people were not in such haste to bring it back.

But since foreigners did not bring it, whether the dearth was real or merely in appearance made little difference; all the government could do was to busy itself with ways of getting it to arrive. So there you have it forced to become a corn merchant.

It caused corn to come in at great cost, and it sold none. However, the price fell: the fact is there merely appeared to be a dearth. Up to that point the merchants had held back from putting it on sale because they hoped for a greater increase in price. But when they saw that corn was coming, they hurried to carry theirs to market, to profit from the time when the price was still high.

Since the government had not sold its corn, on another occasion it caused less to arrive, and it sold that. It had assumed that the dearth was never more than in appearance. But this one was found to be genuine. So there was not enough corn, and the dearth continued.

As it was still persuaded that the dearth was only in appearance, the government had the granaries opened, and compelled several merchants to sell their corn at the price it set. But authority could not strike everywhere at the same time. People concealed corn to keep it away from coercion. So while corn was cheap, or below the true price in one place, it was dear or above in another. Soon the dearth was dreadful and widespread.

Then, as it had been convinced that dearths are sometimes genuine, the government feared they were always so. It had not caused enough corn to arrive, and not to fall into the same trap on another occasion it had corn brought, and sold it in such a huge amount that everywhere it fell to a dirt-cheap price.

So it made nothing but mistakes. It had been wrong to place itself in the position of itself having to provide for the people’s subsistence; and it made a second, even greater mistake, a consequence of the first, that of forcing open the granaries and claiming to fix the price of grain.

It did not know either the population, the production or the consumption. So it did not have the slightest idea in what ratio the quantity of corn stood with regard to the need. The disproportion could be stronger or weaker. There was such a province where on occasion it could be huge: sometimes too it could be almost negligible everywhere. What rule should one follow to assess the exact amount of corn one needed?

But should the government have known the relationship between the quantity and need, had it calculated all the costs of cultivation, of storage, of transport to require the cultivators and the merchants to give up the corn at the price fixed?

Forced to commit unjust actions to put right its mistakes, the government thought by these acts of authority to set right the disturbance it had caused, and it caused even greater ones.

It ordered all those who had corn to declare its amount. Therefore it felt that it needed to know this. But it should have begun by winning trust; and that order alone would have caused trust to be lost, if it was not already. For why should it want to know the amount of corn that each person was keeping in his barns unless it was intending to dispose of it by fiat? People made unreliable declarations.

False declarations are not always made with impunity. Often people were betrayed, and often the accusations themselves were false. The government ordered searches; but the force with which they were made caused such great disturbances that it reckoned it had better at least suspend them. So it remained in its ignorance, and each individual hid his corn.

When trade is perfectly free, the quantity and the need are apparent in all the markets. Then goods put themselves at their true price, and plenty spreads equally everywhere. That is what we have proved sufficiently.

But when one has once taken all freedom from trade, it is no longer possible to judge, either if there is really an imbalance between the quantity and the need, or what it is. If it were slight, it grows from day to day, through the people’s fear and the monopolists’ greed. Then circulation is constantly suspended by the obstacles it finds in its path; and it can happen that all the provinces have shortages at the same time, or at least that they experience scarcity one after the other.

It is true that the government redoubled its efforts in these circumstances. But its operations, always slow, could not bring help equally everywhere, as a crowd of merchants spread out on every side would have been able to do. Yet it found itself compelled to all the greater expenditure as the purchases on its behalf were made lavishly and sometimes dishonestly.

It was making useless attempts to settle the disorders. Its first regulations had produced them: its last regulations were bound to perpetuate them, or even to make them grow more.

It persuaded itself that the high price or dearth resulted from a residue of freedom. Consequently, It was forbidden to all persons to undertake trade in grain without having obtained permission for it from officials appointed for that purpose.

It was forbidden to all others, farmers or landowners to interfere directly or indirectly in carrying out this trade.

Any association between grain merchants was forbidden unless it had been authorised.

It was forbidden to pay a deposit on corn or to buy corn unripe, standing, before the harvest.

It was forbidden to sell corn other than in the markets.

It was forbidden to make hoards of grain.

It was forbidden to let it move from one province into another without having obtained permission.

There you have what in an abuse of language was called police regulations, as if order could have emerged from these regulations.

Yet the farmer could only sell to licensed merchants, who alone had permission to undertake the grain trade.

He was forced to sell his corn within the year; because the prohibition on amassing it did not allow him to place one crop upon another.

On the other hand, however much he needed money, he could not sell before he had harvested. So he only had a limited time for selling; and he saw himself placed in the power of a small number of merchants.

The prohibition on selling anywhere except in the markets caused him to have to leave the cultivation of his fields at intervals. He could have sold his corn to his neighbour; but his neighbour was obliged to go to the market to buy it. So they were both forced to expenses they could have been spared.

If he wanted to pay a debt or the wages of his day-labourers with his grain, he was accused of having sold elsewhere than in the market. He was treated with the same injustice if he advanced grain to a ploughman who did not have enough for sowing. This generous action was a fictitious sale, a fraud, in the jargon of the officers of the grain police.

Even the freedom given to merchants was limited. They needed leave to form an association, that is to say, to get together on the ways to provision the state. Without this leave it was left to each of them to carry on this trade individually, and as best they could.

Finally, a province suffering from dearth could not draw grain from a neighbouring province where there was a surplus. If permission was never refused, even if it was given the moment it was possible, it always came too late because it had to be awaited. The disorder was all the greater when, in order to cause a fresh price rise, permission was deliberately delayed. That is what happened on occasion.

On the one hand, the prohibitions removed all freedom from trade: on the other, the prohibitions authorised monopoly. Normally the officials from whom permission had to be sought did not give it for nothing, and you can judge why people bought it from them.

In this disorder the townspeople could not be assured of subsistence. So it was down to the government to provide it, and it created privileged companies to provision the towns, especially the capital. They alone might buy in the countryside what was set aside for this provisioning: or at least, you could only sell to others after they had made their purchases; and because you could only sell to them, you had to hand over the corn at the price they wished to pay. This final regulation, which was always fatal for the countryside, was sometimes so for the towns themselves, in whose favourit had been made. However much care was taken that bread should not become dearer in the capital, it could not always be prevented because the privileged companies introduced high prices in succession everywhere.