10th February 2024
Overview of Anders Chydenius: https://www.acton.org/pub/religion-liberty/volume-16-number-3/anders-chydenius
A transalation of this work is available at: https://www.panarchy.org/chydenius/nationalgain.html
I’ve OCRd below, for annotated study, the translation provided in the book Anticipating The Wealth of Nations: The Selected Works of Anders Chydenius, 1729–1803
The National Gain
Respectfully presented to
The Honourable Estates of the Realm By one of Their Members
Stockholm, published by Director Lars Salvius, 1765. Imprimatur Niclas von Oelreich
That every individual nation pursues profit as the chief aim of its economic and political regulations is incontrovertible, but if we consider the means that each has adopted to achieve that, we observe an incredible variety.
All compete with each other to be first, but they shape different courses and carry quite different sets of sails, although they are all subject to virtually the same wind.
They fight each other for the windward position and use particular nautical tactics to run foul of each other, even though they have enough room and depth to sail abreast. It looks as if sometimes one ship and sometimes another were sailing without pilot or helmsman.
They are undeniably depending on different factors here. Either their compasses are misleading or else their charts are faulty.
A new indicator is presented to the reader here. It is quite small, so that anyone can carry it in his pocket. It is also new, I would say, for it scarcely agrees with any other in Europe. I also believe that it is accurate, as I have tried to construct it on the basis of reason and experience. Let us first agree on our terms.
A nation is a multitude of people who have combined in order, under the protection of the Sovereign Power and with the aid of officials, to pursue their own well-being and that of their descendants.
Human beings feel well when they possess their necessities and comforts, which are referred to in common parlance as goods. It is nature that generates these, but they never become useful to us without labour.
The needs are manifold, and no one has ever been able, without the help of others, to acquire the minimum of necessities, while there is hardly a nation that has no need of another. The Almighty Himself has made our species such that we ought to cooperate. Should such mutual assistance be obstructed within or beyond a nation, it is contrary to nature.
When we exchange these commodities among ourselves it is termed commerce, and the kinds of commodities that are generally desired and received are gold and silver, of which larger or smaller stamped portions are called money, which becomes the measure of the value of other commodities.
No commodity is such that it cannot be converted through trade into these metals, nor can any be obtained without them in the absence of other commodities desired by the vendor; and the amount of money that must be paid for the commodity is called its value. [Sanjeev: This seems to suggest that value is SUBJECTIVE, a rather advanced proposition for his time]
The amount by which the value of exported commodities exceeds that of imported ones is rightly called the profit of the nation, and the amount by which the value of the imported ones surpasses that of those that are exported always constitutes its loss. But a smaller loss compared with a larger one is, relatively speaking, called its profit, and in the same way a lesser profit obtained when a larger one is possible is termed a loss. [Sanjeev: Here is he very wrong. A nation doesn’t have any profit. The per capita GDP of a nation is a function of its productivity.]
If the statement were in all respects true that Sweden during the past year of 1764 exported commodities for approximately 72 million daler kmt but the imported ones amounted to no more than 66 million, then our national profit for that year would be six million daler.
Of the total sum of our exports, the value of iron constitutes almost two-thirds, but let us suppose that within a century the export of iron will have been reduced by half, owing to a reduction in forest or for some other reasons, and would thus constitute no more than one-third of our exports, while others, such as grain, provisions and timber, were exported in place of the one-third lost in the iron trade. My question, assuming all other exported and imported commodities to be of the same value as now, is whether the national profit would not then remain at the same level? Or, should the iron exports at a certain time be reduced in value by six million daler but the ten million paid to foreigners for grain last year instead be retained in the kingdom, would the nation not after all have gained four million by that change?
If we imagine a state that possessed neither agriculture nor a mining industry, neither cattle-raising nor shipping, but only produced a large quantity of earthen or clay vessels that were in demand throughout Europe and would thereby not only be supplied with all its necessities but also annually receive two million in gold and silver, would those two million then not undeniably constitute a profit for that nation?
However, if one-third of the same nation, following the example of others, were to abandon this industry of theirs and become farmers, with the intention of obtaining bread for themselves and their fellow citizens by that means, in the belief that they would gain more thereby, but the grain were to be worth 1 million less than the former output of that third, then it is clear that it has earned the nation 1 million less in profit, or, in other words, incurred a loss of the same magnitude.
This makes it obvious that a nation does not gain by being employed in many kinds of trades but by engaging in those industries that are most profitable, that is, where the smallest number of people can produce commodities of the highest value. [Sanjeev: This is correct, it is any early statement of the law of comparative advantage]
The wealth of a people thus consists of the quantity of its products, or rather in their value, but the quantity of products depends on two main factors, namely, the number of workers and their diligence. Nature will produce both if it is allowed to operate without artificial constraints.
Should the great Master, who adorns the vale with flowers and clothes the very mountain peak in grass and moss, expose such a great flaw in human beings, His masterpiece, as that they should be unable to populate the globe with as many inhabitants as it can feed? It would be base of a pagan to think so but godless of a Christian, in view of the command of the Almighty: “Be ye fruitful, and multiply; bring forth abundantly in the earth, and multiply therein.” [Sanjeev: An attack on Malthusian ideas which had not yet arisen]
For fallen humanity it was a punishment that they should live by the sweat of their brows, yet it was so arranged that nature itself imposed it, as they were obliged by necessity to do so, having nothing to rely on for their needs but their own hands; and the toil was lightened by covetousness, as they realized that they could acquire what they needed thereby.
Should either of these be lacking, the fault ought to be looked for in the laws of the nation, though not actually in any defect in those, but in the obstacles that are placed in nature’s way.
If these laws render citizens incapable of feeding themselves and their children, they and their offspring must either die or abandon their native country. The more opportunities that the laws provide for some to live on the toil of others and the more obstacles that are placed in the way of others’ ability to support themselves by their labour, the more will industriousness be stifled, and the nation cannot but reflect the mould in which it is cast.
If that is the case, I intend to base the following hypothesis on it, namely, that each individual will of his own accord gravitate towards the locality and the enterprise where he will most effectively increase the national profit, provided that the laws do not prevent him from doing so.
Each individual pursues his own advantage. That inclination is so natural and necessary that every society in the world is based on it: otherwise laws, penalties and rewards would not even exist and the whole human race would perish completely within a short space of time. That work is always best rewarded that is of the greatest value and that most sought after that is best rewarded.
As long as I can produce commodities for 6 daler each day in one industry, I am most unwilling to engage in one that brings in 4. In the former the profit both to the nation and to myself is one-third larger than in the latter.
When anyone is thus either obliged or induced by public subsidies to work in some other industry than where he earns the highest reward – for it will not happen otherwise, any more than a merchant will sell his commodity below its current price – that will inevitably incur a loss to the nation.
If the person whose work someone else is obliged to perform earns as much as the worker has lost, it is not profitable to the nation; but should he earn more, only the difference will constitute a profit to the nation, although obtained by the oppression of citizens.
It thus becomes obvious that when someone conducts an enterprise with the labour of others but neither pays nor, without suffering a loss, is able to pay as much as the workers can earn in some other line of business, the deficit in their daily wages must constitute a loss to the nation.
For example, if an ironworks producing 2,000 skeppund of wrought iron per year should have a hundred farmers subordinate to it, each contracted to perform 50 days of labour annually for the works but for 1 daler kmt less than they could earn working either for themselves or elsewhere, in order that the export com- modity could be sold abroad with some advantage, it is clear that each farmer thus loses 50 daler kmt a year or, in other words, produces goods to a value of 50 daler less than by other work, which will constitute a loss to the nation of 5,000 daler.
If the same ironworks should also have a few hundred farmers subordinate to it who were obliged to supply it with the charcoal required for its operations, for example 3,500 stigar, either for a sum of daler agreed to at some earlier time or else for whatever the proprietor of the works is willing to pay, for example 6 daler kmt less for each stig than they could have earned in other ways during the same time – even granted that the proprietor of the works is unable to pay more for this commodity if he is to be able to sell the iron abroad at some profit – but the farmers had nevertheless been able, during the time that they have spent pro- ducing the charcoal, to make up the loss that they incur on every stig of charcoal, namely by producing goods for 21,000 daler kmt more in farming, crafts and weaving or some other line of business, it will be obvious that the loss to the nation will thereby be increased by the same amount. If, in addition, we add the almost irreplaceable loss of the best forests in the kingdom, which after some time could have supplied us with all kinds of woodworking materials and timber, allowing ten loads of fire-logs for every large stig of charcoal, then 35,000 loads of wood are required for these 2,000 skeppund of bar iron from when the ore is extracted from the mine until the iron is hammered out into bars, which, reck- oned at only 16 öre per load, will increase the loss by 17,500 daler, thus creating an overall loss of 43,500 daler kmt.
If those 2,000 skeppund were to be sold at an average price of 6 riksdaler banco per skeppund, excluding freight, and, at an 80-mark exchange rate, brought in 240,000 copper daler, then it is clear that rather more than a fifth of that sum will constitute a loss to the nation, even if the entire amount is sold to foreigners.
Gold and silver are indeed the most precious metals but do not therefore by any means always increase the national profit, as they have to be extracted from the ground. All mercantile goods can be exchanged for the amount of these metals that corresponds to their value. Nor is a ducat ever so red that it cannot buy some bread, as our forefathers used to say.
Would it not perhaps be necessary to consider whether the 38 marker and 4 lod of gold and 5,464 marker and ½ lod of silver that have been produced between the beginning of 1760 and the end of 1764 equal the expenditure and labour employed for that, together with the land-rent of several parishes allocated to it and other things, or whether many times more gold and silver could not have been imported at the highest exchange rate, whether such patriotism and love for Swedish gold and silver really has increased the national profit, or whether they only have to be subsidized in the hope of a higher yield in the future?
May it not also be that the discontents and the poverty of the workers and the country people living at and around the ironworks, when they are forced to work there, are evidence of a loss to the nation and of their wish to use their time and energies on what would be more useful to themselves and to the kingdom?
I am not referring here to those ironworks that exist without creating any problems for the country people and the workers; they are assets just as valuable to the kingdom as its agriculture, commerce and manufactures.
It follows from this as a matter of course that it will be unnecessary for the Sovereign Power to use legislation to transfer workers from one occupation to another.
How many politicians have nonetheless occupied themselves with this? Almost the whole of Europe is engaged in removing people from their former occupations by compulsion or inducements and transferring them to others. They take credit for producing a profit to the nation equivalent to the value of the new production and usually forget that the workers employed for that purpose would, had they been free, have produced commodities of equal or greater value in their former occupation, so that in the first case there was no gain and in the other an actual loss to the nation.
If ten men in one trade produce commodities to a value of 100 daler a day but in another to no more than 80, it is clear that the work of the ten men in the latter causes the nation a loss of 20 daler every day. Whether these ten men are
allowed to sell their products freely or else without compulsion hire themselves out for a daily wage to those who conduct that trade, the difference in their daily wage will always be proportionately the same, and they will then infallibly enter the former, as being more profitable both to themselves and to the nation.
But if the same workers are compelled to remain in the other trade for 20 per cent less, then that 20 per cent is a loss to the nation and to themselves. How unnecessary do the laws then not seem to be in such cases?
Neither production bounties nor premiums for exports stand the test that they increase or promote the national profit in any way.
These are widely used throughout most of Europe but especially in England, yet everywhere they infallibly increase their actual loss. The production bounties are harmful in a straightforward way but those for exports in two ways.
If there are enough workers in a trade and production bounties are nevertheless provided, too many people will be drawn from other trades, it will become less profitable, owing to a surplus of commodities, and the bounties will cause a shortage of workers in other profitable branches of business, and the state is bur- dened by enriching particular citizens. If people will not engage in an established trade without subsidies, it is obvious that it is less profitable than the others where there is no shortage of workers.
If the state compensates for the losses caused to the workers and the nation in that trade by providing subsidies, there will of course be those who will engage in it, but their labour will be wanting in a more profitable trade. The amount by which the values of the respective products differ will unquestionably constitute a loss to the nation.
Export bounties have not only the above-mentioned disadvantages, however, but also far more serious ones: citizens are here taxed twice the amount of the bounty that is paid and hand over a large proportion of that to foreigners, which cannot but concern anyone who has any sense of patriotism.
The vendor always seeks the highest price for his commodity. The owner agrees to sell it to a foreigner at 6 riksdaler, for instance, but receives 2 riksdaler as a subsidy for it and thus earns 8 riksdaler for his commodity.
If a Swede should wish to purchase the same commodity, he will indubitably have to pay the vendor the same that he earns from what he has sold to a foreigner, namely 8 riksdaler, or else the vendor will regard himself as having lost on the transaction.
The foreigner thus enjoys a purchase price that is 2 riksdaler lower due to the export bounties, while a local man is doubly taxed, namely 2 riksdaler to the fund to reduce the cost of purchase to the foreigner and 2 riksdaler to indemnify the vendor.
This must also enable the foreigner to conduct a very advantageous trade in our products among ourselves. I shall extend the simple example above: The Swedish manufactures that were sold to the foreigner for 6 riksdaler can immediately be sold by him, at a profit of 25 per cent, for 7½ riksdaler to a Swede, who will then be able to buy them for ½ a riksdaler, or 8⅓ per cent less1 than from the manufacturer’s retail shop, so that there will never be a lack of buyers.
If one then adds the 33⅓ per cent advantage on the foreigner’s purchase price to the 25 per cent gained on his sales, it will produce a profit of 58⅓ per cent for him,2 due merely to the export bounties, which would never otherwise have arisen or been possible. Nor is that simply a theoretically demonstrated truth, as it has also been proved in practice many times over.
I would be able to reveal a little business plan that could earn Sweden several thousand from some foreign export bounties if I did not fear to awaken others from their slumbers, when they might seek to close some of the loopholes that at present, without showing up in the trade figures, actually reduce our deficit.
I therefore hope quite sincerely that the English and other nations will not only retain their export bounties but also that they may be significantly increased on all those commodities that can be sold to us, while our own country will, on the contrary, get rid of them, together with the fetters that prevent us from freely and actively exploiting our neighbours.
I now dare go further and assert that regulations that direct people into particular occupations are harmful to the nation and to its profit: I feel obliged to do so for what in my view are four supremely important reasons.
In the whole of Europe there is not as yet any fixed principle to follow in this matter of distributing workers, for such regulations are sometimes adopted in order to promote a new craft or technology, sometimes in order to provide employment for more of the population and sometimes to give the owner of some manufacturing works a higher income by means of lower wages.
In one case it is done in order to make our products exportable, in another case to fulfil one or other of our requirements within the kingdom. At times the purpose of such a measure is that local shipowners should gain from carrying our commodities and native workers from their wages, at other times to obtain gold and silver within the country. Sometimes they are designed to prevent people from emigrating, sometimes in order to curtail luxury. On one occasion it is deemed to be necessary to maintain proper order among the trades, on another it is required to prevent craftsmen from working in more than one art, with innumerable other reasons.
Is there not a lack of a proper system in all this? And must not a house that is constructed from so many blueprints acquire a strange appearance and lack the necessary stability?
The second reason is this: that no politician is yet in a position to state positively which industry can produce the greatest national profit for us, so that the legislator is bound to remain in a quandary as to where he is to direct our workers by regulatory means.
Who, some might think, is so ignorant as not to know that? I assure you that it is not as simple as people think. Many who have thought seriously about these matters have indeed created their own system and ranked each industry in a certain order, but if we compare their ranking with those of others, we are struck by the differences that exist between them.
I believe that my system is the best, but when I realize that everyone has the same faith in his own system, I must as a rational being remain in doubt about the entire matter until it has been fully examined.
- maintains that agriculture is best, E.S. that handicrafts deserve that honour; O.R. proves that it is commerce, A.G. that the kingdom must be sustained by our mining industry as the source of the main exports of the kingdom, etc.3 Who of all these is right?
All of them are enlightened and conscientious men and, moreover, enjoy the confidence of their fellow citizens, and it will be a long time before this controversy is resolved. In the meanwhile, which of these industries should the Sovereign Power regard as being of the greatest utility, and to which of them should it attract more people to the profit of the kingdom? And how can mistakes be avoided under these circumstances?
Even if this controversy were to be fully settled, however, and a system be based on it that would direct the mass of people to the most profitable industry, would the legislator be able to say how many thousand people should then work in it to the profit of the nation as well as that such a regulation would have the desired effect within so and so many years? It might all too easily happen that people would be drawn away from other industries and produce a surplus of commodities in this one, which would thus lose their value abroad, causing a significant loss to the nation.
Even if they were capable of possessing all the knowledge required for that, however, which is quite impossible, it could nonetheless happen that those who deal with this matter might not have good intentions, which I regard as the third reason.
It might easily be the case that they could have a personal interest in moving the people into one particular branch of industry or another and would therefore argue in favour of that. What else would then happen but that a most useful industry would be drained of people, to the irreparable loss of the kingdom?
Lastly, if we imagine that we have overcome all these obstacles and adopted regulations that are ideally suited to the purpose, some unexpected events could undermine the whole of this elaborate system and turn the most useful regulations into thoroughly harmful ones for the nation, which appears to constitute the fourth of the reasons against them.
What changes in commodities, what fluctuations in value do we not experience daily? Providence quite unexpectedly opens up a source of wealth for a nation that lasts for a time but then abruptly ceases and is soon replaced by a second or third one on which the national profit chiefly depends. The law, even if optimal, will therefore, among the thousand possible eventualities, not be suited to more than a single context, namely the one for which it was designed, and be prejudicial in all others.
And these are the real reasons why our regulations, although themselves good (as regards their intention), have had such a deleterious effect.
The time may now have come to examine more closely what kind of regulations transfer people from one occupation to another.
Among them are all those that directly or indirectly offer certain advantages in one occupation rather than another. That is done directly when the terms of the regulation expressly include them but indirectly when it becomes a necessary consequence of carrying the regulation into effect.
They thus include all economic privileges, not only the exclusive ones but also any others that offer some specific advantage to a tradesman, namely, all classifications of occupations that are established by law; for nature produces its own classification, which is the most reliable one, but as soon as anything is legally added to or subtracted from it, distortions arise that favour certain people but hinder others in the conduct of their business. Also included among them are all bounties on production and exports as well as all limitations on the freedom of residence and trade in the towns and rural regions.
What else are these but dams that concentrate the people in certain places, removing them from one place and moving them to another, without it being possible to say in which place they will be most useful and increase or reduce the national profit, as has been demonstrated above?
When the stream is allowed to run evenly, every drop of water is in motion. When there are no obstacles in the way, every worker competes for his livelihood and thereby increases the profit to the nation. By means of regulations, people are concentrated in certain groups, the opportunities to move into industry are reduced and a small number of people within each group rise above the majority, whose well-being is presented as evidence of the prosperity of the whole kingdom.
These are the same dams that prevent the increase in the number of Swedish workers, although, as was shown in § 4, that is the main foundation of a national profit.
In a dam, the weight of the upper layers of water rests on that which lies closest to the bottom, so that the structure must be many times stronger and more watertight furthest down; for it is known from experience that the lower water gushes out through the slightest aperture at a faster rate than the other.
The same applies to our own population. We may consider any given occupation and the number of people employed in it.
If we consider farmers, we shall scarcely find a single example of anyone possessing a large manor who wishes to flee the country, although those who expect to inherit that estate from him would willingly pay for his travel; but can one be equally sure about the crofters on that estate or their children?
I have often asked them where their children are but have received a pitiful answer from most of them: what are we to do with them now at home? We can only feed ourselves in this place with the greatest difficulty as long as the Lord permits. Our eldest son sailed on the Holland route for a few years but then stayed there and is said to be doing well now. Our second son sails between here and England, but when we last saw him he took farewell for ever, intending to settle down there. Our third son went with the army to Pomerania; he was captured by the King of Prussia, but when God gave us peace he was unwilling to come back; he is now in Prussian service and has married there. Our fourth son is still a child, and God knows where he will go or what may become of him.
Why does a yeoman farmer4 in our kingdom not run away? Because he has a right of residence. But why is a labourer more likely to do so? The answer is obvious: because the regulations have not allowed him to settle down anywhere.
If we consider our craft associations and the number of our people who belong to them, we observe a small number of prosperous masters who no longer need to personally sit in their workshops but live a life of leisure, dress themselves and their families according to the latest fashion, keep a decent table during the week, make and receive visits much of the time, and have ten or 12 workers in their workshop, of whom six work for their food and the rest for a few daler a week. My question is whether such a man would abscond from the country. As long as the guild is able to provide him with workers and ensure that the number of masters does not become excessively large, so that he will inevitably be approached for work and is thus able to set his own price, it will certainly not happen.
But how his journeymen and apprentices are faring is a more sensitive ques- tion. I have sometimes heard their swansong, and a general complaint in the kingdom that they go abroad to Prussia and Russia, for there everyone who wishes to can become a master straight away.
Just think how helpful our guilds are, which do not debar a poor man’s children from filling some of the vacancies thus created for no pay!
If we look at our mining industry we will soon see that not many of the owners of our metalworks wish to abandon Sweden; but the complaints of a number of poor owners of metalworks about the lack of capital with which to run the enterprise, sluggish sales and fixed prices, as well as the poverty that threatens them, are quite a different matter.
What do smiths and foundry workers complain about? Why do those who are brought in from abroad not remain for long, while those who are born locally seldom marry and generally end up as paupers? And how does it happen that trading in grain and provisions becomes hardly less profitable for the foundry proprietor than the production of iron itself? And why is it that the farmers sub- ordinate to the estate get cinders on their fields [A farmer subordinate to an estate is said to get cinders on his field when he is working so hard at the metalworks that he neglects his own fields and cultivation, which leads to a failure of the crops.] and tell the same sort of per- sonal stories about their children as the crofter mentioned above.
The manufacturer certainly goes as well clothed in his own products as anyone else, but the workers in the spinning-mill often sit half-naked and others go badly dressed on the street and beg, saying that they are foreigners brought in from abroad who now wish they were back home again instead of standing outside other people’s doors in Sweden, ultimately dying in poverty.
Among those who move away from the towns, the desire to escape rarely affects the affluent and the magistrates but very often the poor and the humbler townspeople.
I believe it is almost unheard of for sea captains and mates to abscond, unless for offences committed in a foreign port, but I dare not assert the same of a sailor or the cook’s boy.
Dear reader! do you not now see why our labour force cannot increase, and with it our national profit? It will never, in my opinion, be possible to prevent this attrition unless the dams are opened.
The less the pressure, the more easily is the water retained, but the shorter the column of water, the less the pressure, and it will always be lowest when the sluice-gate is opened.
The second mainstay of the national profit is the industriousness of the workers, that is, when the smallest number of people produce commodities of the greatest possible value.
Many who look only at our nation might easily get the impression that it lacks nothing in industriousness, but I have to admit that I have been hurt to hear the reproach made against us by foreigners that the Swedish nation is lazy compared to the others.
A merchant in Holland sits in his office every morning from 5 or 6 o’clock managing all his business affairs; he dresses simply and his table is not over- loaded with sumptuous meals, he makes good use of every hour of the day to accomplish something; and he ridicules French fops and haughty airs.
An Englishman is hardened and indefatigable in his work. A carpenter in an English shipyard works with such energy and speed that one can barely see the mallet in his hand while he works, and he completes a warship in as many days as the state shipyards in Sweden tend to take weeks.
What is the cause of all this? The wilfulness of our workers, some may opine, as they are not strictly supervised. Vagrants, it is said, are living in indolence everywhere in our rural regions. Journeymen and apprentices are not what they used to be. Farmhands and maids will not lift a hand unless the master himself accompanies them.
I do not know whether there are more overseers anywhere than among us, but who is to exercise supervision when they themselves sleep until 10 o’clock in the morning? I have heard a number of proposals to the effect that if a tenant farmer will not work hard on his holding, he should be flogged, or at least evicted from the holding. It has indeed already happened that some have been punished because they could not immediately abandon an ancient livelihood, without which they would at first have been at least half-starving.
Such people will infallibly recognize our form of liberty. Flogging and liberty combined: what a strange notion!
Let us not blame our nation and its particular character for its inertia; let us not lay the blame on corrupted manners. That would indeed be the easiest thing to do, but it is of little use to the country. The source of this evil is to be found elsewhere.
The more opportunities there are in a society for some to live on the toil of others and the less others are allowed to enjoy the fruits of their labour, the more will industriousness be destroyed; the former become overweening and the latter desperate, while both become neglectful.
That basic proposition is so well founded and so thoroughly confirmed by knowledge of human nature and daily experience that I challenge anyone to rationally disprove it.
Industriousness and diligence require a cheerful disposition and constant competition if they are not soon to slacken off. They never exist under oppression, but when they are encouraged by liberty, a rapid turnover of products and individual profit, that natural sluggishness will be overcome which can never be permanently removed by violent means.
Commodities are never produced unless they are needed and in demand. The needs reveal themselves; they are manifold and thus automatically bring into being occupations and products that are then sold to those who require them. If those who need to buy a commodity are prevented from doing so, it remains in the hands of its producer, becomes a burden to him, and is branded with a black stamp that reads: Wasted sweat and toil.
That deals a blow to industriousness. This is the cord that ties the worker’s hands behind his back and the potion that produces bad and somnolent citizens.
No nation can be industrious as long as that stamp remains on its products, and it can never be removed until the commodity may be produced by whom- ever so wishes and be sold to whomever needs it.
I will not cite as proof of this the example of other states: my own fatherland is an irrefutable witness to it, which I invoke all the more boldly as its condition is most familiar and no one is likely to be able to consider it without lamenting its misfortunes.
Swedish industriousness resembles a crop on a badly tended field. Here and there a few lush stands grow, but most of it has withered away and will barely replace the seedcorn.
In Västergötland,5 handicrafts and weaving are diligently pursued: there an old man is not ashamed to sit at a spinning-wheel; knives, bowls, plates, ribbons, bells, scissors and other wares are available there at more favourable prices than elsewhere. What is the cause of that? Inhabitants of that province have the right to travel wherever they wish to sell their wares. There the town of Borås has for a long time past been permitted to practise peddling throughout the kingdom. That means freedom to go from farm to farm, buying goods and selling one’s own to others.
As no other province in the kingdom has possessed such a liberty, I also doubt that any other can display such industriousness as exists among its inhabit- ants. It is thus clear that here either industriousness has created liberty or liberty industriousness.
A few years ago, large quantities of chairs and spinning-wheels were produced in Västerbotten, Hälsingland and Västernorrland,6 of which the former were sold for between 9 and 12 daler a dozen, the latter for between 6 and 9 daler each. Now these manufactures have largely ceased, owing to certain prohibitions against their sale, and it looks as if the inhabitants will soon have to buy them from others.
Along the coast of Ostrobothnia, people are active during both winter and summer; but 30 or 40 mil inland, where there are no towns, the occupation of the majority during the winter is to sleep and to cut as many splinter torches as they need for lighting. As there are no buyers for those wares, none are made for sale.
Around Pori (Björneborg), Rauma (Raumo) and Uusikaupunki, the country people are almost indefatigable in woodworking. The worker is already hard at work by one or two in the morning producing all kinds of wooden vessels throughout the winter and is therefore able to dispose of them at a more reason- able price than anyone else in Finland, although many others have not only better access to forests along the coast but also workers skilled in this craft. Let us establish the reason for this. It is quite impossible that such industriousness could have arisen and been maintained without the freedom to export.
The above-mentioned towns have for a long time past enjoyed the right to sail round the Baltic Sea with spars, laths and wooden vessels. The staple towns have often sought to deprive them of that privilege of theirs, although they have not succeeded so far; these towns now supply not only several foreign places with such goods at a moderate price but even to a degree Stockholm itself, and in such a manner that they undercut almost everyone else.
Had the ban succeeded, however, sales would inevitably have been reduced, and consequently, to the same extent, production. Reduced production inevitably produces unemployment and dear commodities, and should it ever become possible for other towns to prevent those sales or for these towns7 to deprive workers of the freedom to produce, it is as certain as that two and two make four that Stockholm would have to pay more for wooden vessels than before, that these towns would reduce their business and the country its population and income, and that the kingdom would be deprived of its profit.
Look! Here is the key to industriousness and profit. If the door to profit is opened by free enterprise and sales, every man will be fully employed within a few years; if that does not happen, however, the nation will inevitably, regardless of all other measures, become as drowsy as it was before and inclined to be sleepy in broad daylight.
Certainly there should be freedom, the reader will think, but not without order. One must carefully distinguish between urban and rural trades and not allow farmers to engage in other activities, thus causing agriculture to be neglected. Well said, truly in the fashion of our age! I would only, with the greatest respect, stipulate one thing, namely, that whoever assumes this despotic guardianship of the farmer and ties him exclusively to the soil will also, like a true father, take paternal care to see that he does not perish from hunger when agriculture fails to feed him and his children. If that is not feasible, I think it is more advisable to put the beast of burden out to pasture to seek its own food than to tie it to a post and leave it standing there unattended for a few weeks, for it is too late to learn a handicraft when there is no more food.
To restrain trades in the countryside is to prevent the growth of the population and all rural improvement, and to ban handicrafts and commerce is to inhibit the enterprise of old towns and the development of new ones.
A skilled tanner settled in the country many mil from the nearest town and served the country people and persons of rank by expert leather-dressing; he was banned by the nearest market town from practising that handicraft there and was therefore ordered to move to the town. The system was fine, but he who was doing well in the country became a pauper in the town, and more than a thou- sand hides must therefore now be spoiled every year by bad treatment. That is hardly the way to increase the national profit.
That part of our laws that concerns rural trade deserves our special attention.8 A merchant is not allowed to travel around the country and sell his wares, nor the farmer to buy up anything from his neighbours and take it to market in town or to provide them with any goods from the town in return.
Unless a neighbour is willing to become his agent, he must personally under- take a journey of two or three days to the town, often for a lighting flint or a twist of tobacco, perhaps during the busiest period of harvest time. Who, then, is to pay for his journey? Had his neighbour been allowed to conduct a little trade in the most necessary wares, he would have avoided this waste of time, but, as that has been banned, I can only attribute this waste to the regulation itself.
I must regret that it has not been scrupulously obeyed, but I also believe, out of deepest conviction, that such law-breaking has saved at least a quarter of the nation from a wasted existence.
To discuss such an important matter fully is not possible here. I simply wish to encourage the reader to give some thought to it.
The whole of Savo (Savolax), Häme (Tavastland) and Karelia9 lie far from any towns. Grain and provisions are their products, in exchange for which they obtain salt and other necessities from the towns. The more affluent buy them up from their neighbours, who do not have horses or cannot take these goods to the town themselves, and in return provide them with their necessities.
No one undertakes to act as an agent for poor people, nor is anyone able to deal with 50 or 60 individuals. If this rural trade had not been conducted, the country would therefore be deprived of their products and the poor would waste their lives in hunger and idleness. If there is no demand for the commodity, pro- duction will come to a complete standstill, and what happens then to the national profit?
I know a farmer who lives some 5 mil from the nearest market town and who, among other kinds of rural trade that he conducts, purchases fatstock in the autumn within a radius of many mil around him and annually drives three or four herds of cattle to the town, each with 20 or 30 animals.
By law, no other townsmen than the butcher is permitted to travel around the country to buy them up, but every individual is obliged to drive his animals to
town himself. Few of them have more than one or two to dispose of, which have to be driven by two or three persons, as many as the rural trader needs for his entire drove.
These two or three persons lose four or five days each on this journey to town during a busy threshing time, so that the trek to the town costs eight to ten days’ work, often for the sake of a single small head of beef cattle, thus reducing the profit by 4 or 5 plåtar and causing essential work on the farms to be neglected. Nothing could therefore be more certain than that a farmer would rather eat his own ox than consume half its worth in travel costs.
If the regulations concerning rural trade were obeyed, the town would thus also lose 50 or 60 fat cattle a year from this rural trader alone, and hardly ten oxen out of his several droves would arrive in the town, nor would his neigh- bours be inclined to increase their stock. Who knows whether these and other such regulations, which are regarded by most people as trivial, are the basic cause of the shortage of grain and provisions complained of in the kingdom?
I am certainly not advocating that a farmer should be kept from his farm work by trading. I would prefer to see that the burghers, who in most places have plenty of time to do so, especially during the winters, would themselves under- take the task of serving the countryside around the towns, at the same time benefiting themselves.
As our towns do not do so, however, it seems to me that they wish to be regarded as the fathers of the country who tell all the children to gather round their chairs to put food in their mouths one by one. O hard times! when the off- spring has begun to order its mother about and the child wishes to take its father’s place.
A merchant who enjoys freedom of trade extends his concerns far and wide; he is continually occupied in marketing his commodities advantageously. If one should attempt to make excessive gains, he will attract competitors who will take a share of the profit and protect citizens from arbitrary extortion. Each one must then be content with a smaller profit on each commodity and instead depend for his livelihood on turning them over all the more rapidly.
Interest rates will then fall; people will then also engage in the minor trades that cannot be considered or pursued when interest rates are high, as they are less profitable. In a word, monopolies, bill-jobbery and a national deficit can never arise unless they are protected by the laws but may well be maintained once they have been established.
Owing to a peculiar distinction between staple and non-staple towns, foreigners are prevented from obtaining commodities and paying for them in cash in a large number of ports. These have to be offered to the inhabitants of the staple towns; if they will not pay for them, there is no market for them. Industriousness loses much of its incentives, production is reduced and the money begins to flow out. A great profit for the nation!
The Commodity Ordinance prevented foreigners from obtaining any advantage by visiting the smaller staple towns, as they could not dispose of whole cargoes of their own products in them and were not allowed to carry assortments of other goods. Few of these towns were able to freight an entire ship with their own exports, so that they had to be sold in the larger staple towns. The Dutch and the English were no longer permitted to supply them with salt, nor was it worth sailing in ballast to Portugal for that, but it, too, had to be purchased from the larger staple towns.
Is it not remarkable how commerce retreated to a few localities from the rest of the kingdom? The name staple towns was indeed retained, but for most of them the advantage had really been lost.
Our commerce would nevertheless have prospered reasonably well if the foreigners had been allowed to conduct trade freely in the largest towns and to challenge the vested interests in the country through competition. But they have not profited much from that since they were totally excluded from the salt trade, which was then concentrated in the hands of a few citizens who were able to decide whether or not to supply the kingdom with that commodity and at what- ever price they wished.
The number of purchasers of our exports was thus reduced. The products remained in the hands of the producers or were sold to the exporters at a loss. The loss forced many owners from their properties, which inevitably fell into the hands of the exporters or made the former tributary to the latter.
In order to redress that evil, the Ironmasters’ Association was founded, which was to advance loans to poor owners of ironworks when the price of iron fell; but as to whether this benefited the poorer or the more affluent ones is common knowledge.
When bank transfer notes began to be issued, ready money began to pour into the Bank. Imports could not then be paid for in money nor any ready money be exported to pay for them, but everything had to be done by means of bills of exchange in return for exports that, to cover the entire commerce of the Crown and the kingdom, were only available from a few individuals, who therefore had complete control over the bills of exchange. Freedom of trade was thus stifled, and I am not sure that one should simply blame individuals for that. Matters were so arranged that freedom would be lost.10
“If Caesar and Pompey”, says Montesquieu, “had thought like Cato, others would no doubt on the contrary have thought like Caesar and Pompey.” And elsewhere he says: “[W]hen one grants titles of honour one knows exactly what one is giving away; but if one also adds power to that, one never knows how far it may be extended.”11
Laws, prohibitions, regulations and classifications could then be procured to ratify that power. The attention of other traders would be limited to certain commodities, certain localities and certain times, and otherwise impoverish them and deprive them of their livelihood, and they the countryside around them.
It is strange that one should wish to disassociate the Commodity Ordinance from such inevitable consequences. Did the Estate of Burghers not predict that it would lead to shortages and high prices? The prediction was fulfilled, and when general distress arose, the remedy was seen to lie in suspending it; and yet it is said: the nation profits from the Commodity Ordinance.
We wish to develop a water-powered process; we have seen that it begins to operate when the dam is opened, yet we assert that it works best when it is closed. Is not the destruction of industry and immiseration of the citizens a hard way to earn a profit for the nation?
We moan about the consequences but will not go to the source from which they flow. As soon as anyone mentions free trade, the response is: we must not confuse such private matters with the general and national ones. I am not sure what to say: either we read nothing or we think very little.
Is not our unhealthy obsession with bills of exchange the greatest restraint of trade that could possibly exist? Is there, then, any other conceivable remedy than to establish free trade?
There are two major means, in particular, towards that end: the first is to break the power of those who have exercised the tyranny of the bills of exchange, without respect of persons, so as to render them incapable of doing anything more. If it is too late to do so, it is obvious that the state has given away too much and is obliged to tremble before the weapons that it has itself placed in their hands. Once power has been lost, one is obliged to behave submissively.
The second is to repeal those regulations that in any way inhibit trade and destroy industry. If everyone had the right and opportunity to trade personally with foreigners, not so many would need to pay tribute to the exporters in order to purchase bills of exchange; and to oblige them by laws and oaths to charge a reasonable price in the hope of thereby bringing relief to the country is, in my view, to build castles in the air.
Both of these measures are indispensable. The latter will be useless unless it is preceded by the former, and the former will be of no avail if the regulations remain in force, for others will then inevitably take the place of the previous ones, and it will scarcely make any difference to the nation whether the man exercising arbitrary power is named Caesar or Octavius. It will be bad enough once liberty has been lost!
As simple as these remedies for an unstable exchange rate may seem, they are the sole and only effective ones, without which no relief may be expected.
All agree that increasing the country’s exports and increasing the amount of currency in circulation serves to lower the rate of exchange. The former can never be done without freedom of trade and I know of no other method of creating wealth than by foreign trade. If that is in the hands of a few individuals, they will necessarily continue to maintain the same kind of Exchange Bill Offices,12 though under different names from the former ones, which is bound to have the same effect on the rate of exchange.
All domestic transactions and even the most subtle financial operations that do not also expand foreign trade are, in my view, as useless as abstract theories about a perpetuum mobile or a water-powered contraption that is to keep itself in motion inside a well.
The inventor of these may develop them as far as he wishes. They must nevertheless eventually come to a stop. And even he who has made the most subtle calculations will finally see, when his proposal is carried into effect, that the entire operation amounts to nothing more than transferring something from one hand to another.
Whenever a new industry has been established in which people can be employed, it is believed that their output constitutes a profit for the nation, irrespective of whether that industry pays its workers adequately.
We consider that the people who are recruited to work there have not previously earned or been able to earn anything, even if someone who unfailingly made a living for himself and his family in his previous occupation, without begging or stealing, earned more than he does in the new one, where his income is barely sufficient for him alone, while his wife and children must roam the streets and live on the earnings of others.
It is quite advantageous for a people to conceive of new industries, as there may by chance be one among them that is more profitable than any of the earlier ones and that consequently increases the profit to the nation. But to keep an enterprise afloat by means of bounties or constraints on other citizens will always infallibly produce a loss to the nation.
The argument that more people can be supported if the trades multiply is quite inapplicable here, for it is in no way their number that increases the profit to the nation but solely the value of their output, even if it were only in a single trade. As long as land lies fallow, the ironworks lack workers and our workshops stand empty, efforts to establish even more trades are, in my view, superfluous.
This reminds me of the moral of Aesop’s fable13 about the dog that saw the reflection of a piece of meat in the water while it swam and lurched towards it, only to immediately lose the piece it had found in the butcher’s shop. By gaping to excess, he implies, one ends up with less.
Nor do I regard it as a valid argument that the work is often undertaken by people recruited from abroad. For if they have been attracted at a heavy public cost to work in a less profitable occupation, thousands of them would have come without the slightest expense to the state had they simply been freely allowed to support themselves as best they could, that is, to pursue the trade in which they would most increase the real profit to the nation.
Once foreigners have arrived, a sound polity demands that the best possible use should be made of their labour, and that infallibly happens in the trade that provides the greatest rewards for its practitioners but certainly not in those places where they have to be fed at the expense of the state and of the public. They spontaneously seek out the former but do not voluntarily remain in the latter except under coercion, and in the end their reward for immigrating will be poverty.
This concept of the national profit, as critical as it may seem of our new arrangements, is really in itself the most innocuous and simple one.
It provides freedom for all lawful occupations, though not at the expense of others. It protects the very weakest trade against oppression and promotes industriousness and unhampered enterprise.
It weighs them all in the same scales, making profit the true yardstick for deciding which of them should be preferred.
It spares the Sovereign Power a thousand bothersome concerns, regulations and supervisory duties when private and national profit merge into a single interest, and the injurious self-interest, which always tries to conceal itself behind one regulation or another, can then most effectively be controlled by mutual competition.
It guarantees a Swede the enjoyment of his most precious and greatest natural right, granted to him as a human being by the Almighty, namely, to earn his living by the sweat of his brow in the best way he can.
It removes the bolster of indolence from those who are now, because of their privileges, able to sleep away two-thirds of their time. All means of living without working are blocked, and none but the diligent is able to prosper.
It will effect a desirable reduction in our lawsuits. The many regulations, their expositions, exemptions and applications, which in any way inhibit trades, will then become pointless and fade away, and once a law has been repealed it can no longer be infringed.
I know that these novelties will appeal to only a minority of my readers. However, they have entertained me so much that I feel it is also my duty to offer them to the public, among whom I have no doubt that there will be some who will honestly share in this pleasure of mine.
Uncertainty about how best to help our country has led me to think about this subject, and as a free Swedish citizen it was my obligation to understand the laws of my fatherland. I compared them with each other but failed to find in them the aspect that tends to emerge from the instructions of a prudent master, namely that they should have a purpose.
I hear complaints about emigration and also observe many measures that bring it about. We may wish to promote industry, yet we place obstacles in the
way of the industrious man being able to support himself. While asserting that the prosperity of the country needs to be promoted, we forbid a whole province to buy bread for itself, merely on the pretext of preventing smuggling. Obedience to the government’s orders is demanded, yet there are so many of them given during the past several centuries that even lawyers are able to find them only with great difficulty, and they include some that could hardly be observed without causing misery.
We complain about a trade deficit yet prevent each other as far as possible from selling our commodities to foreigners. We wish to expand trade yet attempt to restrict it to 15 or 20 individuals. We are squeezed dry by a high rate of exchange yet seek by all means to restrict buyers of bills of exchange to the fewest possible sellers of bills, who already exercise absolute control over the exchange rate.
We strive to increase the national profit, yet we employ our people in work that can barely earn them bread and water from day to day. We plan to shorten lawsuits and increase compliance with the law, yet we daily multiply our laws, so that even a judge can only with great difficulty find them in the register, and barely one in a hundred is aware of his obligations. Tell me, then, benevolent reader, what will all of this ultimately lead to?
For my part I can only echo the cynic Lisidor:
From everything I hear, my thoughts are in a jumble: Despite so many lights, along the road I stumble.
The noise and arguments but make me more confused; And though I Swedish know, it leaves me now bemused.
I have tried in every way to analyse a single small branch of industry and men- tally draft the regulations that ought to be applied to it, but everywhere I have met with insuperable obstacles, when I have not been misled by personal bias, and have thus been unable to make headway, in particular for the reasons out- lined in § 11 and the following paragraphs.
On consulting historical precedents, I soon observed that the greater the amount of freedom that has been allowed to exist in any trade, the more rapid has its growth always been and vice versa, and the more equitably that freedom has been distributed, the more naturally have the trades achieved a mutual equilibrium.
The manner in which other states deal with the trades likewise taught me that freedom always turned out to be the measure of their level of development. Wherever I looked, however, I saw self-interest so entrenched in the regulations that it was everywhere difficult and in most places quite impossible to eradicate it.
The more closely I began to measure our trades by the amount of liberty they enjoy, the more I seemed to see the possibility of reviving them; I was liberated
from my anxious perplexity about the relative advantages of the trades and the many regulations governing them, a problem, I am quite convinced, that far sur- passes the wit of man yet which nature itself so easily resolves.
A single measure, namely that of being able to reduce the number of our regulations, has ever since then become an absorbing subject of research for me, which I would most highly recommend as the principal and most significant one to consider before any new ones are now promulgated.
To find a few collaborators in this effort is the essential purpose of this little treatise. Adversaries worry me not in the slightest. The truth that I have sought is so agreeable that I am pleased merely to have been able to describe it to my fellow citizens: it is immutable and fearless even when the waves drench it in their spray. It can withstand being buried by self-interest in the gravel with which the angry breakers cover it, yet despite all that it remains unshakeable and unalterable.
Truth, O truth, your bright rays shining Penetrate the hardest stone:
Virtue pure is thine alone; Man’s duplicity declining, All defining,
Each of us you grant his own.
A Circumstantial Response to the Circumstantial Refutation of the Treatise called The Source of Our Country’s Weakness, published by the Royal Printing- Press, will appear at the earliest opportunity.