Chapter 5-6 :Cities - Capital Cities An Essay on Economic Theory

5:Cities

Abstract: Cities form at sites where large property owners have decided to live. Specialization of labor expands to meet the demands of the wealthy. Cities grow even larger when manufacturing industries produce for export, and whose workers are essentially supported by the production of foreign lands. Cantillon placed a great deal of emphasis on transportation costs. He found that property owners who lived far from their lands would experience a reduction in income proportional to the cost of transporting their production to market. The pr oper ty owners who only have small estates usually reside in market towns and villages near their lands and farmers. The transportation of their production to distant cities would not enable them to live there comfortably. However, property owners that own several large estates have the means to live at a distance from them and enjoy a pleasant society with other property owners and nobility of the same species. If a prince or noble, who has received large grants of land at the time of a conquest or discovery of a country, fixes his residence in some pleasant spot, and several other lords come to live there to be within reach of each other and to enjoy a pleasant society, this place will become a city. Great houses will be built for the nobility in question, and many more will be built for the merchants, artisans, and people of all sorts of professions who will be attracted there. These noblemen will require bakers, butchers, brewers, wine merchants, and manufacturers of all kinds to service their needs. These entrepreneurs will, in turn, build houses in this location or 35 36 An Essay on Economic Theory will rent houses built by other entrepreneurs. There is no great nobleman whose expense upon his house, his retinue and servants, does not maintain merchants and artisans of all kinds, as may be seen from the detailed calculations that I had made for the supplement of this essay.5 All these artisans and entrepreneurs serve each other, as well as the nobility. The fact that their upkeep ultimately falls on property owners and nobles is often overlooked. It is not perceived that all the little houses in a city, such as we have described, depend upon and subsist at the expense of the great houses. However, it will be shown later that all the classes and inhabitants of a state live at the expense of the property owners.6 The city in question will grow larger if the king, or the government, establishes law courts to which the people of the market towns and villages of the province must have recourse. An increased number of entrepreneurs and artisans of every sort will be needed for the maintenance of the judges and lawyers. If in this same city workshops and factories are established to manufacture beyond home consumption, for export and sale abroad, the city will be large in proportion to the workmen and artisans who live there at the expense of foreigners. However, if we put aside these considerations, in order to not complicate our subject, we may say that the gathering of several rich property owners living in the same place suffices to form what is called a city. Many cities in Europe, mainly in the interior, owe the number of their inhabitants to this assemblage. In this case, the size of a city is naturally proportioned to the number of property owners living there, or rather to the production of the land which belongs to them, minus the cost of transportation to those whose lands are the furthest away, and the part that they are obliged to give to the king or the government, which is usually consumed in the capital. 5 This is the first mention of the supplement which has been lost. 6 Briefly put, all food and raw materials are produced on the land controlled by property owners. Property owners sustain farmers and laborers as well as artisans and manufacturing workers to the extent that raw materials are worked into fine goods. If the owners live in cities far from their lands, they also must support those (and their horses) who transport the products to the city.

6:Capital Cities

Abstract: Wherever a government establishes its capital, the city will grow in size because the additional spending attracts labor and businesses to service the government and its employees and thus, it becomes a commercial center for the nation as well. A capi tal ci ty is f ormed in the same way as a provincial city, with these differences: the largest property owners in the state reside in the capital; the king or supreme government is established in it and spends the government’s revenues there; the supreme courts of justice are located there; it is the center of the fashions, which all the provinces take as their model; and the property owners, who reside in the provinces, occasionally spend time in the capital, and they send their children there to be educated. Therefore, all the lands in the state contribute, more or less, to maintain those who dwell in the capital. If a sovereign leader leaves a city to establish residence in another, nobles will follow him and locate their residence with him in the new city, which will become great and important at the expense of the first. We have seen a recent example of this in the city of Petersburg to the disadvantage of Moscow,7 and one sees many old cities, which were important, fall into ruin and others spring from their ashes. G reat cities usually are built on the seacoast or on the banks of large rivers for the convenience of transportation. Water transportation of the products and merchandise necessary for the subsistence and comfort of the inhabitants is much cheaper than wagons and land transportation.8 7 Tsar Peter the G reat moved the capital of Russia to Petersburg in 1713. 8 Notice that Cantillon again mentions the importance of transportation costs. Four-wheel wagons were developed in 12th century but were mostly used by the wealthy until the late 18th century.

An
Essay on
Economic
Theory
An English translation of Richard Cantillon’s
Essai sur la Nature du Commerce en Général
Translated by Chantal Saucier
Edited by Mark Thornton

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