The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction, By Henry Higgs
• Previous Editions, By Henry Higgs
• Essay On the Nature of Trade In General
• Part One
• Part I, Chapter I: Of Wealth
• Part I, Chapter II: Of Human Societies
• Part I, Chapter III: Of Villages
• Part I, Chapter IV: Of Market Towns
• Part I, Chapter V: Of Cities
• Part I, Chapter VI: Of Capital Cities
• Part I, Chapter VII: The Labour of the Husbandman Is of Less Value Than That of the Handicrafts-man
• Part I, Chapter VIII: Some Handicrafts-men Earn More, Others Less, According to the Different Cases and Circumstances
• Part I, Chapter IX: The Number of Labourers, Handicraftsmen and Others, Who Work In a State Is Naturally Proportioned to the Demand For Them
• Part I, Chapter X: The Price and Intrinsic Value of a Thing In General Is the Measure of the Land and Labour Which Enter Into Its Production
• Part I, Chapter XI: Of the Par Or Relation Between the Value of Land and Labour
• Part I, Chapter XII: All Classes and Individuals In a State Subsist Or Are Enriched At the Expense of the Proprietors of Land
• Part I, Chapter 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
• Part I, Chapter 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 In a State and Cause the Variations In the Market-prices of All Things
• Part I, Chapter 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
• Part I, Chapter XVI: The More Labour There Is In a State the More Naturally Rich the State Is Esteemed
• Part I, Chapter XVII: Of Metals and Money, and Especially of Gold and Silver
• Part Two
• Part Ii, Chapter I: Of Barter
• Part Ii, Chapter II: Of Market Prices
• Part Ii, Chapter III: Of the Circulation of Money
• Part Ii, Chapter IV: Of Further Reflection On the Rapidity Or Slowness of the Circulation of Money In Exchange
• Part Ii, Chapter V: Of the Inequality of the Circulation of Hard Money In a State
• Part Ii, Chapter VI: Of the Increase and Decrease In the Quantity of Hard Money In a State
• Part Ii, Chapter VII: Continuation of the Same Subject
• Part Ii, Chapter VIII: Further Reflection On the Same Subject
• Part Ii, Chapter IX: Of the Interest of Money and Its Causes
• Part Ii, Chapter X: Of the Causes of the Increase and Decrease of the Interest of Money In a State
• Part Three
• Part Iii, Chapter I: Of Foreign Trade
• Part Iii, Chapter II: Of the Exchanges and Their Nature
• Part Iii, Chapter III: Further Explanations of the Nature of the Exchanges
• Part Iii, Chapter IV: Of the Variations In the Proportion of Values With Regard to the Metals Which Serve As Money
• Part Iii, Chapter V: Of the Augmentation and Diminution of Coin In Denomination
• Part Iii, Chapter VI: Of Banks and Their Credit
• Part Iii, Chapter VII: Further Explanations and Enquiries As to the Utility of a National Bank
• Part Iii, Chapter 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

Part I, Chapter 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

The City consumes more than half the farmer's produce. He carries it to Market there or sells it in the Market of the nearest Town, or perhaps a few individuals set up as Carriers themselves. These bind themselves to pay the Farmer a fixed price for his produce, that of the market price of the day, to get in the City an uncertain price which should however defray the cost of carriage and leave them a profit. But the daily variation in the price of produce in the City, though not considerable, makes their profit uncertain.

The Undertaker or Merchant who carries the products of the Country to the City cannot stay there to sell them retail as they are consumed. No City family will burden itself with the purchase all at once of the produce it may need, each family being susceptible of increase or decrease in number and in consumption or at least varying in the choice of produce it will consume. Wine is almost the only article of consumption stocked in a family. In any case the majority of citizens who live from day to day and yet are the largest consumers cannot lay in a stock of country produce.

For this reason many people set up in a City as Merchants or Undertakers, to buy the country produce from those who bring it or to order it to be brought on their account. They pay a certain price following that of the place where they purchase it, to resell wholesale or retail at an uncertain price.

Such Undertakers are the wholesalers in Wool and Corn, Bakers, Butchers, Manufacturers and Merchants of all kinds who buy country produce and materials to work them up and resell them gradually as the Inhabitants require them.

These Undertakers can never know how great will be the demand in their City, nor how long their customers will buy of them since their rivals will try all sorts of means to attract customers from them. All this causes so much uncertainty among these Undertakers that every day one sees some of them become bankrupt.

The Manufacturer who has bought wool from the Merchant or direct from the Farmer cannot foretell the profit he will make in selling his cloths and stuffs to the Merchant Taylor. If the latter have not a reasonable sale he will not load himself with the cloths and stuffs of the Manufacturer, especially if those stuffs cease to be in the fashion.

The Draper is an Undertaker who buys cloths and stuffs from the Manufacturer at a certain price to sell them again at an uncertain price, because he cannot foresee the extent of the demand. He can of course fix a price and stand out against selling unless he gets it, but if his customers leave him to buy cheaper from another, he will be eaten up by expenses while waiting to sell at the price he demands, and that will ruin him as soon as or sooner than if he sold without profit.

Shopkeepers and retailers of every kind are Undertakers who buy at a certain price and sell in their Shops or the Markets at an uncertain price. What encourages and maintains these Undertakers in a State is that the Consumers who are their Customers prefer paying a little more to get what they want ready to hand in small quantities rather than lay in a stock and that most of them have not the means to lay in such a stock by buying at first hand.

All these Undertakers become consumers and customers one in regard to the other, the Draper of the Wine Merchant and vice versa. They proportion themselves in a State to the Customers or consumption. If there are too many Hatters in a City or in a street for the number of people who buy hats there, some who are least patronised must become bankrupt: if they be too few it will be a profitable Undertaking which will encourage new Hatters to open shops there and so it is that the Undertakers of all kinds adjust themselves to risks in a State.

All the other Undertakers like those who take charge of Mines, Theatres, Building, etc., the Merchants by sea and Land, etc., Cook-shop keepers, Pastry Cooks, Innkeepers, etc. as well as the Undertakers of their own labour who need no Capital to establish themselves, like Journeymen artisans, Copper-smiths, Needlewomen, Chimney Sweeps, Water Carriers, live at uncertainty and proportion themselves to their customers. Master Craftsmen like Shoemakers, Taylors, Carpenters, Wigmakers, etc. who employ Journeymen according to the work they have, live at the same uncertainty since their customers may foresake them from one day to another: the Undertakers of their own labour in Art and Science, like Painters, Physicians, Lawyers, etc. live in the like uncertainty. If one Attorney or Barrister earn 5000 pounds sterling yearly in the service of his Clients or in his practice and another earn only 500 they may be considered as having so much uncertain wages from those who employ them.

It may perhaps be urged that Undertakers seek to snatch all they can in their calling and to get the better of their customers, but this is outside my subject.

By all these inductions and many others which might be made in a topic relating to all the Inhabitants of a State, it may be laid down that expect the Prince and the Proprietors of Land, all the Inhabitants of a State are dependent; that they can be divided into two classes, Undertakers and Hired people; and that all the Undertakers are as it were on unfixed wages and the others on wages fixed so long as they receive them though their functions and ranks may be very unequal. The General who has his pay, the Courtier his pension and the Domestic servant who has wages all fall into this last class. All the rest are Undertakers, whether they set up with a capital to conduct their enterprise, or are Undertakers of their own labour without capital, and they may be regarded as living at uncertainty; the Beggars even and the Robbers are Undertakers of this class. Finally all the Inhabitants of a State derive their living and their advantages from the property of the Landowners and are dependent.

It is true, however, that if some person on high wages or some large Undertaker has saved capital or wealth, that is if he have stores of corn, wool, copper, gold, silver or some produce or merchandise in constant use or vent in a State, having an intrinsic or a real value, he may be justly considered independent so far as this capital goes. He may dispose of it to acquire a mortgage, and interest from Land and from Public loans secured upon Land: he may live still better than the small Landowners and even buy the Property of some of them.

But produce and merchandise, even gold and silver, are much more subject to accident and loss than the ownership of land; and however one may have gained or saved them they are always derived from the land of actual Proprietors either by gain or by saving of the wages destined for one's subsistence.

The number of Proprietors of money in a large State is often considerable enough; and though the value of all the money which circulates in the State barely exceeds the ninth or tenth part of the value of the produce drawn from the soil yet, as the Proprietors of money lend considerable amounts for which they receive interest either by mortgage or the produce and merchandise of the State, the sums due to them usually exceed all the money in the State, and they often become so powerful a body that they would in certain cases rival the Proprietors of Lands if these last were not often equally Proprietors of money, and if the owners of large sums of money did not always seek to become Landowners themselves.

It is nevertheless always true that all the sums gained or saved have been drawn from the Land of the actual Proprietors; but as many of these ruin themselves daily in a State and the others who acquire the property of their land take their place, the independence given by the ownership of Land applies only to those who keep the possession of it; and as all Land has always an actual Master or Owner, I presume that it is from their property that all the Inhabitants of the State derive their living and all their wealth. If these Proprietors confined themselves to living on their Rents it would be beyond question, and in that case it would be much more difficult for the other inhabitants to enrich themselves at their Expence.

I will then lay it down as a principle that the Proprietors of Land alone are naturally independent in a State: that all the other Classes are dependent whether Undertakers or hired, and that all the exchange and circulation of the State is conducted by the medium of these Undertakers.