Encyclopedic Liberty. Jean Le Rond d'Alembert
up by a man lacking either prudence or sincerity. (4) An excellent commercial operation is one in which, following the ordinary course of events, capital runs no risk. (5) The gains from trade are almost always proportional to the uncertainty of success; the operation is good if this proportion is very clear. (6) The selection of individuals who should be assigned the conduct of the enterprise is the most essential item in its success. The one who is capable of taking in a broad overview of things and of directing each particular operation to the common benefit will do quite poorly on the details; aptitude for the latter indicates talent, but often only that. Without understanding commerce, one can be enriched by its means. If the laws were not burdened with formalities, a skillful merchant would surely be a good judge; he would in every case be a great financier. But just because a man knows the laws, just because he has administered the public revenues well or has profited much in one type of trade, it does not follow that his judgment ought to prevail in all commercial deliberations.
There have never been so many plans and projects of this kind since the return of peace,1 and it is noteworthy that virtually everyone has turned his sights toward Cadiz, Martinique, and St. Domingue.2 That did not require much skill, and however little discussion one may have wanted to engage in, it was easy to predict the fate that the stakeholders have experienced. The result is that much more capital has left this trade than has entered into it as surplus.
If one had been busy discovering new mines or establishing solid factories in lesser-known cities such as Naples or Hamburg; if companies had employed a great deal of capital, wisely managed, in the trade of Louisiana
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or the North; if they had set up enterprises in our Antilles (which are conducive to them), as in Guadeloupe and Cayenne,3 they would soon have recognized that there are even bigger and more solid fortunes to be made in the branches of commerce that are not open than have been made up to now. Means of subsistence for the people and wherewithal for families would have doubled in less than ten years.
These details would perhaps not be suitable for an ordinary dictionary, but the purpose of the Encyclopédie is to instruct, and it is important to absolve commerce of the faults of those who have engaged in it.
Privileged companies or guilds are those that have received from the state special favors or rights for certain enterprises, to the exclusion of other subjects. They began in times of barbarism and ignorance, when the seas were covered with pirates, the art of navigation was crude and uncertain, and the use of insurance was not well known. At that time, it was necessary for those who tried their luck in the midst of so many perils to diminish these by sharing them, to engage in mutual support, and to band together in political bodies. The advantage that states derived from them led states to grant encouragements and special protection to these bodies; afterward, the needs of those states and the merchants’ greed imperceptibly perpetuated these privileges, under the pretext that trade could not be carried on otherwise.
This prejudice has not entirely dissipated as people have become more civilized and the human sciences more perfected, because it is easier to imitate than to reason. And even today, many people think that it is useful to restrict competition in certain cases.
One of these special cases that people cite is that of an enterprise that is new, risky, or costly. Everyone will no doubt agree that cases of this type require the special favor and encouragement of the state.
If these favors and encouragements are fiscal exemptions, it is clear that the state loses nothing from the fact that a larger number of subjects will profit from them, since it is a new industry that it is favoring. If it is outlays, bonuses, whatever is more certain and even indispensable, it is clear that three infallible consequences result from competition. First, a greater number
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of men are enriched; the state’s investment brings returns more surely and promptly. Second, the establishment will be brought to its perfection (which is the purpose of the outlays) to the extent that greater efforts contribute to it. Third, the outlays will cease sooner.
The reader will be better instructed on this matter if I place before him the opinions of one of England’s most skillful men of commerce. I speak of Mr. Josiah Child, ch. iii of one of his treatises entitled, Trade, and interest of money considered.4
No one is justified in flattering himself that he thinks any better; and what I will say, when supported by such an authority, will be less open to criticism. It is good to observe that the author was writing in 1669, and that many things have changed since then, but virtually all of them in extension of his principles.5
Companies of Merchants [says Mr. Child] are of two sorts, viz., Companies in joynt Stock, such as the East-India-Company, the Morea-Company (which is a Branch of the Turkey-Company) and the Greenland-Company, which is a Branch of the Muscovia-Company; the other sort are Companies who trade not by a joynt Stock, but only are under a Government and Regulation, such are the Hambrough-Company, the Turkey-Company, the Eastland-Company, the Muscovia-Company.
It hath for many Years been a moote case, whether any Encorporating of Merchants, be for publik Good or not.
For my own part I am of Opinion:
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I. That for Countries with which his Majesty hath no Allieance, nor can have any by reason of their distance, or Barbarity, or non-Communication with the Princes of Christendom, &c., where there is a necessity of Maintaining Forces and Forts (such as East-India and Guinia), Companies of Merchants are absolute necessary.
II. It seems evident to me that the greatest part of these two Trades ought for publick Good, to be managed by joynt Stock.
[Since that time the English have found the secret of reconciling the liberty and protection of commerce on the coast of Africa. See GRANDE BRETAGNE, its commerce.6]
III. It’s questionable to me, whether any other Company of Merchants are for publick good or hurt.
IV. I conclude however, that all restrictions of Trade are naught, and consequently that no Company whatsoever, whether they Trade in a Joynt Stock or under Regulation, can be for publick Good, except it may be easie for all, or any of his Majesty’s Subjects to be admitted into all, or any of the said Companies, at any time for a very inconsiderable Fine, and that if the Fine exceed 20 l. including all Charges of admission, it is too much, and that for these Reasons.
1. Because the Dutch who thrive best by Trade, and have the surest rules to thrive by, admit not only any of their own People, but even Jews and all kind of Aliens, to be Free of any of their Societies of Merchants, or any of their Cities or Towns Corporate.
2. Nothing in the World can enable us to coape with the Dutch in any Trade, but encrease of Hands and Stock, which a general admission will do; many Hands and much Stock being as necessary to the Prosperity of any Trade, as Men and Money to warfare.
3. There is no pretence of any good to the Nation by Companies, but only Order and Regulation of Trade; and if that be preserved (which the admission of all that will come in and submit to the Regulation, will not prejudice) all the good to the Nation that can be hoped for by Companies, is obtained.
4. The Eastland, besides our Native Commodities, spend great quantities of Italian, Spanish, Portugal, and French Commodities, viz. Oyle,
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Wine, Fruit, Sugar, Succads, Shoomack, &c. Now, in regard our East-Country Merchants of England are few, compared with the Dutch, and intend principally that one Trade out and home, and consequently are not so conversant in the aforesaid Commodities, nor forward to adventure upon them, and seeing that by the Companies Charter our Italian, Spanish, Portugal and French Merchants, who understand those Commodities perfectly well, are excluded those Trades, or at least, if the Company will give them leave to send out those Goods, are not permitted to bring in the Returns; it follows, that the Dutch must supply Denmark, Sweeden, and all parts of the Baltique, with most of those Commodities, and so it is in fact.
5. The Dutch who have no Eastland-Companies, yet have