Essay on the Nature of Commerce in General

Essay on the Nature of Commerce in General


Then there will be too much corn and too little wool for the consumption of the inhabitants. Wool will therefore be dear, which will force the inhabitants to wear their clothes longer than usual, and there will be too much corn and a surplus for the next year. As we suppose that the landowner has stipulated for the payment in silver of the third of the produce of the farm to be paid to him, the farmers who have too much corn and too little wool, will not be able to pay him his rent. If he excuses them they will take care the next year to have less corn and more wool, for farmers always take care to use their land for the production of those things which they think will fetch the best price at market. If, however, next year they have too much wool and too little corn for the demand, they will not fail to change from year to year the use of the land till they arrive at proportioning their production pretty well to the consumption of the inhabitants. So a farmer who has arrived at about the proportion of consumption will have part of his farm in grass, for hay, another for corn, wool and so on, and he will not change his plan unless he sees some considerable change in the demand; but in this example we have supposed that all the people live in the same way as when the landowner cultivated the land for himself, and consequently the farmers will employ the land for the same purposes as before.

The owner, who has at his disposal the third of the produce of the land, is the principal agent in the changes which may occur in demand. Labourers and mechanics who live from day to day change their mode of living only from necessity. If a few farmers, master craftsmen or other undertakers in easy circumstances vary their expense and compensation they always take as their model the lords and owners of the land. They imitate them in their clothing, meals, and mode of life. If the landowners please to wear fine linen, silk, or lace, the demand for these merchandises will be greater than that of the proprietors for themselves.

If a lord or owner who has let out all his lands to farm, take the fancy to change considerably his mode of living; if for instance he decreases the number of his domestic servants and increases the number of his horses: not only will his servants be forced to leave the estate in question but also a proportionate number of artisans and of labourers who worked to maintain them.

The portion of land which was used to maintain these inhabitants will be laid down to grass for the new horses, and if all landowners in the state did the like they would soon increase the number of horses and diminish the number of men.

When a landowner has dismissed a great number of domestic servants, and increased the number of his horses, there will be too much corn for the needs of the inhabitants, and so the corn will be cheap and the hay dear. In consequence the farmers will increase their grass land and diminish their corn to proportion it to the demand. In this way the fancies or fashions of landowners determine the use of the land and bring about the variations of demand which cause the variations of market prices.

If all the landowners of a state cultivated their own estates they would use them to produce what they want; and as the variations of demand are chiefly caused by their mode of living the prices which they offer in the market decide the farmers to all the changes which they make in the employment and use of the land.

I do not consider here the variations in market prices which may arise from the good or bad harvest of the year, or the extraordinary consumption which may occur from foreign troops or other accidents, so as not to complicate my subject, considering only a state in its natural and uniform condition.