Front Page Titles (by Subject) IV - Richard Cantillon
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IV - Friedrich August von Hayek, “Richard Cantillon” 
“Richard Cantillon”, Journal of Libertarian Studies, vol. VII, No. 2, Fall 1985, pp. 217–247.
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We know as little about Cantillon's origins and person as we do about the fate of his writings. It is true that Jevons found the already cited accounts of his family in genealogical publications. However, on closer inspection their contents prove to be so much in conflict with established facts about Cantillon that it would be better to forego using them at all. The only thing certain is that the Cantillons were settled in Ireland for centuries and that several members of the family emigrated to France, at the latest in the company of James II, when, towards the end of the seventeenth century, the Stuarts were driven out of England. One Richard Cantillon, clearly not the economist but rather, according to the unreliable genealogy, his cousin, a wounded veteran of the Battle of the Boyne between the followers of James II and those of William of Orange in 1690, was established by at least 1705 as a banker in Paris and as such was a confidant of the large group of English Catholics who gathered there round the son of James II, the “Old Pretender.” Details of various business deals of this Richard Cantillon have been recounted by Higgs, in particular a not unproblematic case of a lottery run for the benefit of the emigrant Benedictines from Ireland.88
The first reference to our own Richard Cantillon followed upon the death of his cousin on August 5, 1717. The latter had contracted debts far in excess of his assets, so that some of his creditors had to be satisfied, at first with twenty-five percent of their claims. But in March 1720 “M. Cantillon, who in the lifetime of the chevalier Cantillon was known by the name of Richard Cantillon junior, graciously offered to pay all the creditors of the deceased the three-fourths which were wanting to their satisfaction in full, though he was himself one of the creditors for a large amount;... and carried his offer out... being impelled thereto by no reason known to us beyond that of doing honour to a person whose name he bore.”89 There are, however, some grounds for considering it likely that even prior to 1717 the real owner of the bank was not the invalid veteran but rather our own Richard Cantillon. We have the latter's testimony of 1719 that he had been engaged in banking in Paris for quite a number of years, while another source states that he set up business as a banker there in 1716. Now it is improbable that two firms of the same name would exist without there being any distinction drawn between them in these sources. In addition, as we shall see, Cantillon later set up a relative of the same name as a straw man in a firm which belonged entirely to him. It is certain, at any rate, that the Cantillon banking company's contacts with its clientele were kept intact after the death of the elder Richard Cantillon.
As early as 1715 the banker Cantillon in Paris, without being more specifically identified, was said to be the banker with whom the English there had been dealing for years. The number of English people who resided in Paris at that time was exceptionally large. The majority of them were Catholic emigrants, many of them, like Cantillon, being Irish. Some had been driven out with the Stuarts, others had come to Paris on their own. With some of the most famous of them, such as the statesman and philosopher Henry St. John Bolingbroke (1678–1751), who had also joined the “Old Pretender,” and James Fitzjames, natural son of James II, Duke of Berwick and Marshall of the French Army, Cantillon was intimately connected. In Bolingbroke's published correspondence we find confirmation of the contact already referred to in Fréron's account.90 In the case of Marshall Berwick, Cantillon was distantly related to him by marriage. Cantillon married, apparently in London, in 1722 (the deeds of marriage there are dated February 16, 1722) Mary Anne Mahony, the daughter of Daniel Mahony (or O’Mahony, which led the French to write Ommani), a rich Irish merchant from Paris, from his marriage with the widowed Lady Clare, née Charlotte Bulkeley.91 Her sister, Anne Bulkeley, was the wife of Marshall Berwick, while her brother, Francois Bulkeley, in either 1736 or 1737, following Cantillon's death, married the latter's widow, who was his own niece.92
These family relationships are of particular importance because both Berwick and Bulkeley had been close friends of Montesquieu since 1717 (or, in the latter case, at least since 1723) and accordingly it is at least very probable that Cantillon also knew Montesquieu. But even if Montesquieu did not know Cantillon personally, it can scarcely be doubted that he was aware of the manuscript left by the latter, since, as various letters show, he was on most friendly terms with Cantillon's widow between 1736 and the time of her death in 1749 or 1750, she then being the wife of Bulkeley.93 At this juncture it may be said that it was quite likely Francois Bulkeley who published Cantillon's Essai. He would have waited until after the death of his wife because of the family consideration touched upon by Mirabeau, while his own death shortly afterwards (January 14, 1756) would explain why his contemporaries never found out who saw the work through the press.
It is only in respect of the post-1720 period that we know somewhat more about Cantillon, who spent these years partly in London, having withdrawn there from Paris, and partly in travel. This information is based on the court cases, to which Mirabeau alluded, and their files which were tracked down by Higgs, following a clue from Jevons.94 It emerges that Cantillon, at the beginning of 1720, changed his Paris bank into a limited partnership under the name of “Cantillon and Hughes,” the Cantillon is question being not our author but a four-year-old nephew, the other partner being a certain John Hughes. Cantillon himself was the partner of limited liability; he supplied the entire capital and was entitled to two-thirds of the profits, the other third going to Hughes, more or less in his capacity as manager. The nephew was not entitled to anything. Shortly afterwards—at the peak of the Mississippi speculation—the firm engaged in those transactions which ended in the court cases. It advanced about £40,000 to a series of people, mostly English nobility, to finance the purchase of Mississippi shares, the price of which these people expected to rise. Cantillon, who foresaw the imminent collapse of Law's system, directed Hughes to sell immediately the shares which had been pledged, invest the proceeds in sterling claims and hold only such quantity of shares as he could be called upon to hand over on demand. Cantillon adopted the standpoint, as he later explained, that the shares had not been lodged by serial number with him and were not a deposit in the strict sense but rather an undifferentiated lodgment and hence that no client had a claim to specific shares. This action yielded an extraordinary profit for the firm, as the shares which it disposed of at high prices could be replenished after the price collapse and the funds involved, instead of being tied up, could meanwhile attract substantial interest in perfectly safe sterling deposits.
Cantillon, who had made some of the advances personally, now pressed the speculators, who had suffered heavy losses, for repayment of the loans and he ultimately applied for a court order against them. The borrowers, in turn, insisted that the profits made by Cantillon and his firm be offset in their favor. They sued Cantillon for fraud and usury in the courts of Paris and London, holding Cantillon personally responsible for the conduct of the affair on the evidence of letters they produced between him and his firm. After Hughes had died in 1723 and Cantillon liquidated the firm, Hughes's widow joined the opposition and backed her claims with the argument that Hughes had been not merely in name but also in fact a joint owner and as such was entitled to his share in the proceeds of the liquidation. It was some years before Cantillon could emerge victorious from the greater part of this litigation; one case indeed was still unresolved at the time of his death in 1734. Extensive documentation of these legal proceedings has been preserved, in particular letters from Cantillon to Hughes and to his attorney, which Higgs unearthed in the London Public Records Office and in the Bibliothéque Nationale in Paris. It is likely that even more have escaped detection through lack of adequate archival cataloging.95 The available documents, in conjunction with many of the biographical sources already mentioned show that, having left Paris in 1720, not to return for almost six years, Cantillon lived first in Amsterdam, then for several years in his home in London, but that he nevertheless travelled frequently on the continent. Thus, he declared in court in the spring of 1724 that he proposed to make a business trip with his wife to Naples and other Italian cities, but that one way or another he would return to London “where he had his house and family and, in the vicinity, his son who must have died young being cared for by a nurse.” In 1726 he did in fact set off on his travels with his wife; he wrote in April from Nampon near Abbeville, in May from Paris, in June from Rotterdam, and in December from Brussels and Cologne. It appears to have been similar in the following year; in April and May he wrote from Verona, apparently having visited Genoa in between, and then felt compelled by reports of the court case in Paris to return to that city. Between 1729 and 1733 he was frequently in Paris, in 1733 in Utrecht and Brussels, and in 1734 back in London, where he met his violent end, of which we already spoke. Higgs's account runs as follows:
On Monday, May 14, 1734, Richard Cantillon was driving about London to his friend Garvan in the Middle Temple, and to a house at Queen Square, Westminster, where he supped, and was set down at his door at ten at night. According to the evidence of a servant the next day, “for about three weeks last past his Master had taken the key of the Street-Door up into his Bed-Chamber; and (the Examinent) believes his reason for so doing was upon some Distaste he took to a servant discharg'd three weeks ago; but that last night he left the key, together with his Watch, below in the Parlour; and believes it was on account of this Examinant's being [ordered] to go early in the morning to take a Box for him in the Opera; because that he gave him Directions for that purpose... his Master last night... undrest himself in the Parlour as usual, took his Candle and Book, and went up to Bed soon after; and told this Examinant he would read. [This, it seems, was his usual practice.]
It was at first supposed that Cantillon fell asleep with his candle burning, and set fire to the house by accident. But facts soon transpired which left little doubt that the dismissed servant, Joseph Denier, alias Le Blanc, entered the house in the night with the complicity of the other servants (three men and two maids), and, having murdered and robbed his former master, set fire to the house.
To his wife and daughter, who were living in Paris, Cantillon bequeathed a considerable fortune, as one could hardly otherwise expect of a man who, according to his cashier, had within a short time drawn two and a half million (Livres Tournois?) out of his business. A rough inventory, which he sketched out shortly before his death, shows cash in banks in London, Amsterdam, Vienna, Cadiz, and Brussels, land and houses in England, Paris, Asnières, and Louisiana, as well as various annuities and claims. While trade claimed some of his attention in earlier years, he seems to have devoted himself predominantly to it in the latter years; we find him described occasionally as a silk or wine merchant and know that he took an interest in copper also. It is true that a servant once described him as a tyrant but, generally speaking, he was greatly trusted and was well liked by his friends. He was noted for his great candor and this brought him into conflict with Law, who took offence at his spontaneous criticism. His letters, in Higgs's opinion, show “Cantillon to have been a person of extreme ability and very great energy”; their “writer was possessed of great clearness and grasp, quick to penetrate ambiguity or weakness of argument, able at combination and calculation, and so thorough a master of the foreign exchanges that his speculations exhibit a scientific prevision amounting almost to certainty.” Apart from the letters there exists a memorandum (which we can at least with considerable certainty ascribe to Cantillon) printed with the file of the Paris law suit, in which he elucidates for the benefit of his attorney the distinction between usury and a profit made by foreign exchanges at current market rates; this resembles the corresponding passage in the Essai and apart from the other authors he mentions Dupuy and Savary in it.96
Economic Journal vol. 1, pp. 270–275.
H. Higgs Economic Journal, vol. 1:284 bases this account on a character reference found together with the records of the law suit Carol against Cantillon (Bibliotheque Nationale, Fm. 2740, 2838), to which we shall shortly refer. The details which follow are derived from Higgs.
Letters Historiques, Politiques, Philosophiques et Particulières de Henri Saint John Bolingbroke depuis 1710 jusqu'à 1736, edited by Grimoard, (Paris, 1808), vol. 2m:452 and 455, Letters to Abbe Alari (2 and 3 February 17–18).
This account is based partly on Higgs and partly on the articles on Bulkeley and Clare in the “Dictionaire généalogique, chronologique et histoirique... par M.D.L.C.D.B”. (Francois Alexandre Aubert de la Chesnay-Des-Bois) (Paris, 1757), vol. 1. According to the latter source Daniel Mahoni was “comte titulaire de Castilie, par dou du feu roi Philippe V. lieutenant-general des ses armées.”
If the account of the said “Dictionaire généalogique” is correct, Higgs assumes that the Francois Bulkeley, whom Cantillon's widow married, was her maternal cousin. Bearing in mind what shall be said in the text concerning Bulkeley, it is worth setting out what data I could collect about his life:
See Correspondance de Montesquieu publiee par Francois Gebalin et André Morize (Paris, 1914), two volumes. The first letter from Bulkeley to Montesquieu is dated September 10, 1723, the last September 20, 1751. Madame Bulkeley is mentioned for the first time by Montesquieu in a letter written in May or June 1740 and for the last time on July 22, 1749, when, in a letter to Bulkeley, he wrote that he had just spoken with Mme. Bulkeley. As early as July 18, 1736, however, Montesquieu wrote to Bulkeley: “Faites ma cour a Mme. de Cantillon.”
See the article in Economic Journal (1891), p. 277 ff.
See Higgs, Economic Journal (1891), pp. 276, 284.
See the two folio volumes in the bibliothèque nationale, Paris, fm 2740 and 2838, printed chez Andre Knapen (Paris, 1730). See Higgs, Economic Journal (1891), p. 284, and Quarterly Journal of Economics, vol, 6:438 (1892), p. 438.