Book III, Chapter IV, 2

As the personal spending of the great landowners gradually increased in this way, the number of their retainers could only gradually decline, until at last they were dismissed altogether. The same cause gradually led them to dismiss the tenants they did not need. Farms grew larger, and, despite complaints of depopulation, the number of people occupying the land fell to what was needed to cultivate it, given the imperfect state of cultivation and improvement at the time. By removing mouths they did not need to feed and demanding the full value of the farm from its tenant, landowners obtained a greater surplus—or, what amounts to the same thing, the price of a greater surplus—which merchants and manufacturers soon gave them a way to spend on themselves, just as they had spent the rest. As this cause continued to operate, landowners wanted to raise their rents beyond what their land, in its actual state of improvement, could yield. Their tenants could agree on only one condition: that their possession be secured for enough years to allow them to recover, with a profit, whatever they spent on further improving the land. The landlord’s costly vanity made him willing to accept this condition, and thus arose long leases.

Even a tenant at will who pays the full value of the land is not wholly dependent on the landlord. The financial benefits each receives from the other are mutual and equal, and such a tenant will risk neither life nor fortune in the landowner’s service. But if he holds a long lease, he is altogether independent; his landlord must not expect even the smallest service from him beyond what the lease expressly requires or the common and known law of the country imposes.

With tenants thus becoming independent and retainers dismissed, the great landowners could no longer obstruct the regular administration of justice or disturb the country’s peace. They had sold their birthright, not like Esau for a mess of pottage in a time of hunger and necessity, but amid the indulgence of plenty, for trinkets and baubles better suited to children’s play than to the serious pursuits of adults. They became no more influential than any prosperous townsman or tradesman in a city. Regular government took hold in the countryside as in the city, for no one had enough power to disrupt its operation in either place.

It may not belong to the present subject, but I cannot help observing that very old families—those that have held a considerable estate from father to son for many generations—are very rare in commercial countries. In countries with little commerce, such as Wales or the Highlands of Scotland, they are, by contrast, very common. Arabian histories seem full of genealogies; and a history written by a Tartar Khan and translated into several European languages contains scarcely anything else—evidence that ancient families are very common among those nations. In a country where a rich man can spend his revenue only by maintaining as many people as it will support, he is apt to exhaust it, and his benevolence, it seems, seldom goes so far as to support more people than he can afford. But where he can spend the greatest revenue on himself, he often sets no limit to his expenses, because he often sets no limit to his vanity or his attachment to himself. In commercial countries, then, riches very seldom remain long in the same family, despite the most forceful legal measures to prevent their dispersal. Among simpler nations they frequently do remain, without any legal measures; for among shepherd peoples such as the Tartars and Arabs, the consumable character of property makes all such measures impossible.

Thus two different classes of people, neither with the slightest intention of serving the public, brought about a revolution of the greatest importance to its well-being. The great landowners were moved solely by the wish to gratify the most childish vanity. The merchants and artisans, far less ridiculous, acted simply in their own interest, pursuing their peddler’s principle of making a penny wherever a penny could be made. Neither group had any knowledge or foresight of the great revolution that the folly of one and the industry of the other were gradually bringing about.

Thus, throughout most of Europe, the commerce and manufactures of the cities were not the result of the improvement and cultivation of the countryside, but their cause and occasion.

This order, however, runs counter to the natural course of things and is therefore necessarily slow and uncertain. Compare the slow progress of European countries whose wealth depends largely on commerce and manufactures with the rapid advances of our North American colonies, whose wealth rests wholly on agriculture. In most of Europe the population is not thought to double in less than five hundred years. In several of our North American colonies it has been found to double in twenty or five-and-twenty years. In Europe, the law of primogeniture and various forms of perpetuity prevent large estates from being divided, and thus hinder the growth in the number of small landowners. Yet a small landowner knows every part of his little territory, looks on it with all the affection that property, especially modest property, naturally inspires, and so takes pleasure not only in cultivating it but in making it beautiful. Of all those who improve land, he is generally the most industrious, the most discerning, and the most successful. Those same regulations also keep so much land off the market that there are always more capitals available to buy it than there is land for sale; what is sold therefore always commands a monopoly price. The rent never covers the interest on the purchase money and is also burdened by repairs and other occasional charges to which interest on money is not subject. Everywhere in Europe, buying land is a highly unprofitable use of a small capital. For the greater security it offers, to be sure, a man of moderate means retiring from business may sometimes choose to invest his little capital in land. A professional man whose revenue comes from another source, too, often likes to secure his savings in the same way. But a young man who used a capital of two or three thousand pounds to purchase and cultivate a small piece of land instead of entering trade or a profession might well expect a very happy and independent life. He would, however, have to abandon forever any hope of a great fortune or great distinction, which he would have as much chance of attaining as anyone else if he employed his stock differently. Such a man, though he cannot hope to be an owner, will often disdain to be a tenant farmer. The small amount of land brought to market, and the high price of what does come to market, therefore keep a great many capitals out of cultivation and improvement that would otherwise flow into them. In North America, by contrast, fifty or sixty pounds often provides enough stock to start a plantation. There, buying and improving uncultivated land is the most profitable use of the smallest as well as the largest capitals, and the surest route to all the fortune and distinction one can desire in that country. Such land can indeed be had in North America almost for nothing, or at a price far below the value of its natural produce—a thing impossible in Europe or, indeed, anywhere that all land has long been privately owned. If, however, an owner who left many children had his landed estate divided equally among them at his death, the estate would generally be sold. So much land would come onto the market that it could no longer command a monopoly price. The land’s unrestricted rent would come no closer to covering the interest on its purchase price, and a small capital could be employed as profitably in buying land as in any other way.

England, with its naturally fertile soil, its long coastline relative to its total area, and its many navigable rivers affording water transport even to some of its most inland parts, is perhaps as well suited by nature as any large European country to foreign commerce, manufactures for distant markets, and all the improvements they can bring. Since the beginning of Elizabeth’s reign, moreover, the English legislature has paid particular attention to the interests of commerce and manufactures; in fact, there is no European country, not even Holland, whose laws are on the whole more favorable to this kind of industry. Commerce and manufactures have accordingly advanced continuously throughout this period. Cultivation and improvement of the countryside have doubtless advanced gradually too, but seem to have followed at a slow pace and a considerable distance behind the more rapid progress of commerce and manufactures. Most of the countryside was probably cultivated before Elizabeth’s reign; yet a very large part of it remains uncultivated, and the cultivation of by far the greater part falls well below what it might be. English law nevertheless favors agriculture not only indirectly, by protecting commerce, but through several direct incentives. Except in times of scarcity, corn exports are not merely permitted but encouraged with a bounty. When supplies are moderately plentiful, foreign corn imports bear duties that amount to a ban. Imports of live cattle, except from Ireland, are prohibited at all times, and it is only recently that imports from Ireland have been allowed. Those who cultivate the land thus enjoy a monopoly over their fellow countrymen in the two greatest and most important products of the land, bread and butcher’s meat. Though these incentives may, as I shall try to show later, prove entirely illusory at bottom, they at least amply demonstrate the legislature’s good intention toward agriculture. Far more important than all of them, however, the yeomanry of England enjoy as much security, independence, and respectability as law can give them. No country in which primogeniture prevails, tithes are paid, and perpetuities are allowed in some cases despite being contrary to the spirit of the law can encourage agriculture more than England does. Yet this is the state of its cultivation. What would it have been if the law had offered agriculture no direct encouragement beyond that arising indirectly from the progress of commerce, and had left the yeomanry in the condition they face in most other European countries? More than two hundred years have now passed since the beginning of Elizabeth’s reign—as long a period as human prosperity commonly lasts.

France seems to have had a substantial share of foreign commerce nearly a century before England became known as a commercial country. Even before the expedition of Charles VIII. to Naples, France’s navy was considerable by the standards of the time. Yet France’s cultivation and improvement are on the whole inferior to England’s. Its laws have never offered agriculture the same direct encouragement.

Spain and Portugal carry on considerable foreign commerce with the rest of Europe, though chiefly in foreign ships. Their commerce with their colonies is carried on in their own ships and is far greater because of the great wealth and extent of those colonies. Yet foreign commerce has never brought any considerable manufacturing for distant markets into either country, and most of both countries remains uncultivated. Portugal’s foreign commerce goes back further than that of any other large European country except Italy.

Italy is the only large European country that seems to have been cultivated and improved everywhere through foreign commerce and manufactures for distant markets. Before the invasion of Charles VIII., according to Guicciardini, even Italy’s most mountainous and barren districts were cultivated no less than its flattest and most fertile. The country’s favorable location and the large number of independent states then existing within it probably contributed substantially to this widespread cultivation. Still, despite this general statement by one of the most judicious and cautious of modern historians, it is possible that Italy at that time was no better cultivated than England is now.

The capital a country acquires through commerce and manufactures is, however, always a precarious and uncertain possession until some part of it has been secured and embodied in cultivating and improving its land. It has been rightly said that a merchant is not necessarily a citizen of any particular country. For the most part it matters little to him where he conducts his trade; a very slight grievance may induce him to move his capital, and with it all the industry it supports, from one country to another. None of that capital can be said to belong to a particular country until it has been spread, so to speak, over the country’s surface, in buildings or lasting improvements to its land. Nothing remains now of the great wealth said to have belonged to most of the Hanse Towns except accounts in obscure histories of the thirteenth and fourteenth centuries. Even the locations of some are uncertain, as is which European towns bear some of the Latin names given them. But although Italy’s misfortunes at the end of the fifteenth and beginning of the sixteenth centuries greatly reduced commerce and manufactures in the cities of Lombardy and Tuscany, those regions remain among Europe’s most populous and best cultivated. The civil wars in Flanders and the Spanish government that followed drove away the great commerce of Antwerp, Ghent, and Bruges. Yet Flanders remains one of Europe’s richest, best cultivated, and most populous provinces. The ordinary upheavals of war and government readily dry up sources of wealth arising from commerce alone. Wealth arising from the more substantial improvements of agriculture endures much longer. It can be destroyed only by more violent convulsions, caused by hostile and barbarous nations plundering for a century or two in succession, like those that took place for some time before and after the fall of the Roman empire in Europe’s western provinces.

As great landowners gradually spent more on themselves, they had to reduce the number of people they kept in their households, until they dismissed them all. For the same reason, they gradually dismissed tenants they did not need. They enlarged farms and reduced the number of people occupying the land to the number needed to farm it, despite complaints that the countryside was losing people. This was the number needed under the limited farming methods and improvements of the time. By removing people they no longer needed to feed and charging farmers the full value of their farms, owners obtained a larger surplus, or the price of a larger surplus. Merchants and manufacturers soon gave them ways to spend it on themselves, just as they had spent the rest. As this process continued, owners wanted to raise rents beyond what their land could yield in its current condition. Their tenants could agree only if they were guaranteed possession for enough years to recover the cost of further improvements, with a profit. The landlords’ expensive vanity made them willing to accept this condition. This is how long leases began.

Even a tenant who can be dismissed at will, and who pays the full value of the land, is not entirely dependent on the landlord. Each receives an equal financial benefit from the other. Such a tenant will not risk his life or fortune in the owner’s service. With a long lease, he is entirely independent. His landlord cannot expect even the smallest service from him beyond what the lease expressly requires or what the country’s generally known law imposes.

Once tenants had become independent and the household followers had been dismissed, great landowners could no longer interfere with the regular administration of justice or disturb the country’s peace. They had sold their birthright, but not like Esau, who sold his for a bowl of food because he was hungry and in need. Surrounded by plenty, they sold theirs for little ornaments and toys more suitable for children than for grown men to pursue seriously. They became no more powerful than a prosperous city resident or tradesman. Regular government took hold in the countryside as well as in the cities, because no one had enough power to disrupt it in either place.

This may not be relevant to the present subject, but I cannot help pointing out that families which have held a substantial estate from father to son for many generations are very rare in commercial countries. They are very common in places with little commerce, such as Wales and the Highlands of Scotland. Arabian histories seem full of family lineages. A history written by a Tartar Khan, translated into several European languages, contains hardly anything else. That suggests old families are very common among these peoples. Where a rich man can spend his revenue only by supporting as many people as it will support, he tends to use it all up. His generosity, it seems, is rarely strong enough to make him try to support more people than he can afford. But where he can spend the greatest revenue on himself, his spending often knows no limit, because his vanity and love of himself often know none. In commercial countries, then, wealth rarely stays long in the same family, despite the strongest laws meant to prevent its dispersal. Among simpler peoples it often stays in the family without any such laws. For shepherding peoples such as the Tartars and Arabs, property consists of consumable things, which makes such laws impossible.

In this way, two groups of people brought about a change of immense importance to public well-being without the slightest intention of serving the public. The great landowners’ only motive was to satisfy the most childish vanity. The merchants and craftspeople were much less ridiculous: they simply pursued their own interests, following the peddler’s rule of making a penny wherever they could. Neither group understood or foresaw the great change that one group’s foolishness and the other’s industry were gradually bringing about.

Thus, in most of Europe, trade and manufacturing in cities did not result from improvements to farming and the countryside. Instead, they caused those improvements.

Because this order of development goes against the natural course of things, it is necessarily slow and uncertain. Compare the slow progress of European countries that depend heavily on trade and manufacturing for their wealth with the rapid growth of our North American colonies, whose wealth is based entirely on agriculture. In most of Europe, the population is thought to take at least five hundred years to double. In several of our North American colonies, it doubles in twenty or five-and-twenty years. In Europe, the law of primogeniture and various forms of perpetual restriction on estates prevent large estates from being divided and keep small landowners from multiplying. A small landowner knows every part of his little property and feels the affection that ownership, especially of a small property, naturally inspires. He enjoys not only farming it but making it beautiful. Such owners are generally the hardest-working, most knowledgeable and most successful improvers of land. Those same rules also keep so much land off the market that there is always more capital looking to buy land than land for sale. Land that does sell therefore commands a monopoly price. Its rent never covers the interest on the purchase price, and the owner must also pay for repairs and other occasional expenses that do not apply to money lent at interest. Everywhere in Europe, buying land is a very unprofitable use of a small capital. Someone of moderate means may choose to invest his small capital in land on retiring from business because it is safer. A professional who earns his revenue elsewhere may also like to safeguard his savings in land. But a young man who uses a capital of two or three thousand pounds to buy and farm a small plot, instead of going into trade or a profession, can expect a happy, independent life. He must, however, give up any hope of the great fortune or distinction he might have had an equal chance of gaining by using his stock differently. Although such a person cannot hope to own land, he will often feel that becoming a tenant farmer is beneath him. Thus, because so little land is for sale and what is available costs so much, a great deal of capital is not invested in farming and improving land as it otherwise would be. In North America, by contrast, fifty or sixty pounds is often enough stock to start a plantation. Buying and improving uncultivated land there is the most profitable use of both small and large capitals, and the surest path to all the wealth and distinction anyone there might want. Such land in North America costs almost nothing, or much less than the value of what it naturally produces. This is impossible in Europe, or anywhere else where all land has long been privately owned. But if an owner with many children left his land to them in equal shares at his death, the estate would generally be sold. So much land would come onto the market that it could no longer command a monopoly price. The unrestricted rent from land would come closer to covering interest on the purchase price, and buying land could become as profitable a use of a small capital as any other.

England’s naturally fertile soil, long coastline compared with its total area, and many navigable rivers offer water transport deep inland. These features make it perhaps as well suited as any large European country to foreign trade, manufacturing for distant markets, and the improvements they can bring. From the beginning of Elizabeth’s reign, the English legislature has paid particular attention to trade and manufacturing. In fact, taken as a whole, the law of no European country, not even Holland, favors these activities more. Trade and manufacturing have advanced continuously during this period. Farming and improvement of the countryside have also advanced gradually, but seem to have followed far behind their faster progress. Most of England was probably farmed before Elizabeth’s reign. Yet a very large part remains uncultivated, and the farming of by far the greater part falls far short of what it could be. English law nevertheless favors agriculture, not just indirectly by protecting trade, but with several direct incentives. Except in times of scarcity, exporting grain is not only permitted but rewarded with a bounty. In times of moderate abundance, duties on imported foreign grain are so high that they effectively prohibit it. Importing live cattle is always forbidden except from Ireland, and imports from there were allowed only recently. Farmers therefore hold a monopoly against their fellow citizens over the two largest and most important kinds of farm produce: bread and meat. These incentives may, as I will try to show later, be entirely ineffective at heart. But they at least show that the legislature means well toward agriculture. More important than any of them, English yeomen have as much security, independence, and respectability as law can give them. No country with primogeniture, tithes, and, in some cases, perpetual restrictions on estates despite their conflict with the spirit of the law could encourage agriculture more than England does. Yet this is the state of its farming. What would it have been if the law had given farming no direct encouragement beyond what trade indirectly provides, and had left yeomen in the same position as in most other European countries? More than two hundred years have now passed since Elizabeth’s reign began, a period about as long as human prosperity usually lasts.

France seems to have had a substantial amount of foreign trade almost a century before England became known as a trading country. By the standards of the time, France had a sizable navy before Charles VIII’s expedition to Naples. Yet overall its farming and improvement lag behind England’s. French law has never given agriculture the same direct encouragement.

Spain and Portugal carry on a great deal of foreign trade with the rest of Europe, though mainly in foreign ships. Their trade with their colonies is conducted in their own ships and is much larger because those colonies are so rich and extensive. But this trade has never brought much manufacturing for distant markets to either country, and most of both countries remains uncultivated. Portugal has engaged in foreign trade longer than any other large European country except Italy.

Italy is the only large European country that seems to have been farmed and improved everywhere through foreign trade and manufacturing for distant markets. According to Guicciardini, before Charles VIII’s invasion, its most mountainous and barren districts were farmed as thoroughly as its flattest and most fertile areas. Its favorable location and the many independent states that existed there at the time probably contributed considerably to such widespread farming. Still, despite this broad statement by one of the most careful and restrained modern historians, Italy might not then have been better farmed than England is now.

Yet capital brought into a country by trade and manufacturing remains a highly insecure and uncertain possession until some of it is firmly invested in farming and improving its land. It has rightly been said that a merchant does not necessarily belong to any particular country. Where he conducts his business matters little to him. Even a minor annoyance may cause him to move his capital, and all the work it supports, from one country to another. None of that capital can truly be said to belong to a country until it has been spread across the country in buildings or lasting improvements to land. Apart from obscure histories of the thirteenth and fourteenth centuries, no trace remains of the great wealth once said to belong to most of the Hanse Towns. We do not even know for certain where some stood or which European towns some of their Latin names refer to. But although the disasters that struck Italy in the late fifteenth and early sixteenth centuries greatly reduced trade and manufacturing in the cities of Lombardy and Tuscany, these regions remain among Europe’s most populous and best farmed. Civil wars in Flanders, followed by Spanish rule, drove away the thriving trade of Antwerp, Ghent, and Bruges. Yet Flanders remains one of Europe’s richest, best-farmed and most populous provinces. Ordinary changes in war and government can easily dry up the sources of wealth based only on trade. Wealth based on substantial improvements in agriculture lasts much longer. Only more violent upheavals, caused by hostile and barbarous peoples plundering for a century or two, can destroy it. Such upheavals occurred in the western provinces of Europe for some time before and after the fall of the Roman empire.