Richard Cantillon (; 1680s – ) was an Irish-French economist and author of Essai Sur La Nature Du Commerce En Général (Essay on the Nature of Trade in General), a book considered by William Stanley Jevons to be the "cradle of political economy". Although little information exists on Cantillon's life, it is known that he became a successful banker and merchant at an early age. His success was largely derived from the political and business connections he made through his family and through an early employer, James Brydges. During the late 1710s and early 1720s, Cantillon speculated in, and later helped fund, John Law's Mississippi Company, from which he acquired great wealth. However, his success came at a cost to his debtors, who pursued him with lawsuits, criminal charges, and even murder plots until his death in 1734.
Essai remains Cantillon's only surviving contribution to economics. It was written around 1730 and circulated widely in manuscript form, but was not published until 1755. His work was translated into Spanish by Gaspar Melchor de Jovellanos, probably in the late 1770s, and considered essential reading for political economy. Despite having much influence on the early development of the physiocrat and classical schools of thought, Essai was largely forgotten until its rediscovery by Jevons in the late 19th century. Cantillon was influenced by his experiences as a banker, and especially by the speculative bubble of John Law's Mississippi Company. He was also heavily influenced by prior economists, especially William Petty.
Essai is considered the first complete treatise on economics, with numerous contributions to the science. These contributions include: his cause and effect methodology, monetary theories, his conception of the entrepreneur as a risk-bearer, and the development of spatial economics. Cantillon's Essai had significant influence on the early development of political economy, including the works of Adam Smith, Anne Turgot, Jean-Baptiste Say, Frédéric Bastiat and François Quesnay.
Early life While details regarding Richard Cantillon's early life are limited,Spengler , p. 283; writes Spengler, "Much of the life of Richard Cantillon, author of the Essai, remains enveloped in mystery." it is estimated that he was born between 1680 and 1690 in Ballyronan, Ballyheigue, Ireland, according to Cantillon biographer C.J Woods.Brewer 1992, p. 2; Brewer notes two suggested dates of birth, but puts greater weight on the validity of Antoine Murphy's estimate, "Murphy thinks that Cantillon was probably born in the 1680s, at Ballyronan in County Kerry, Ireland; Walsh says that he was born in 1697 (which is hard to square with the fact that he was in a position of responsibility in 1711)". Spengler , p. 283; Spengler cites Hone and mentions the same uncertainty in Cantillon's date as birth, "He was born in Ireland, in , according to Hone, and some seven to seventeen years earlier according to others."Woods, C. J. “Cantillon, Richard.” Dictionary of Irish Biography. Royal Irish Academy. October 2009. He was the second son of Richard Cantillon, a farmer descended from a Catholic landed family whose estates at Ballyheigue had been confiscated during the Cromwellian confiscations, and his wife Brigid Cantillon.Higgs 1891, p. 270; Higgs cites the so-called Burke's Heraldic Illustrations, 1845, plate 51.Antoin E. Murphy, Richard Cantillon: Entrepreneur and Economist (Oxford: Clarendon Press/Oxford University Press, 1986), ch. 2, “Richard Cantillon’s Background,” pp. 10–23.
Cantillon's parents were close enough kin, through David Cantillon of Limerick, and his wife Jane Cantillon (née Arthur); whose brother was the noted banker Sir Daniel Arthur, that their marriage required a dispensation for consanguinity from the Catholic Church.O’Connor, Priscilla. “Arthur, Sir Daniel (d. 1705).” Dictionary of Irish Biography. Royal Irish Academy. October 2009
Career
Cantillon had moved from Ireland to France by 1708 where he attained French citizenship.Brewer 1992, p. 2; Higgs 1891, pp. 271–272Antoin E. Murphy, Richard Cantillon: Entrepreneur and Economist (Oxford: Clarendon Press, 1986), chap. 4, “Cantillon’s Début as a Banker in Paris, 1714–1717,” 42–64. By 1711, Cantillon found himself in the employment of British Paymaster General James Brydges, in Spain, where he organised payments to British prisoners of war during the War of Spanish Succession.Brewer 1992, p. 2 Cantillon remained in Spain until 1714, cultivating a number of business and political connections, before returning to Paris.Finegold ; "Paymaster General James Brydges was a very wealthy man with much influence, which allowed Cantillon to make political and business connections before again leaving for France in 1714." Cantillon then became involved in the banking industry working for a cousin, who at that time was lead-correspondent of the Parisian branch of a family bank.Brewer 1992, p. 4; Finegold ; Rothbard 1995, p. 345 Two years later, thanks in large part to financial backing by James Brydges, Cantillon bought his cousin out and attained ownership of the bank.Brewer 1992, p. 4; Finegold Given the financial and political connections Cantillon was able to attain both through his familyRothbard 1995, p. 345; writes Rothbard, "Moreover, Richard's mother's uncle, Sir Daniel Arthur, was a prominent banker in London and Paris ..." and through James Brydges, Cantillon proved a fairly successful banker, specialising in money transfers between Paris and London.Brewer 1992, pp. 4–5
At this time, Cantillon became involved with British mercantilist John Law through the Mississippi Company.Rothbard 1995, pp. 345–346; Brewer 1992, p. 5 Based on the monetary theory proposed by William Potter in his 1650 tract The Key of Wealth, John Law posited that increases in the money supply would lead to the employment of unused land and labour, leading to higher productivity.Rothbard 1995, pp. 327–330; Finegold In 1716, the French government granted him both permission to found the Banque Générale and virtual monopoly over the right to develop French territories in North America, named the Mississippi Company. In return, Law promised the French government to finance its debt at low rates of interest.Brewer 1992, pp. 5–6; Finegold Law began a financial speculative bubble by selling shares of the Mississippi Company, using the Banque Générales virtual monopoly on the issue of bank notes to finance his investors.Brewer 1992, p. 6; Finegold ; Rothbard 1995, pp. 329, 345–346
Richard Cantillon amassed a great fortune from his speculation, buying Mississippi Company shares early and selling them later at higher prices, even though he had stated he believed Law's "scheme was unsound and was bound to fail."Brewer 1992, p. 6; writes Brewer, "He was introduced to Law at an early stage ... Most important, he bought shares early and sold at a large profit, thinking that the scheme was unsound and was bound to fail." Brewer also notes that Cantillon was acting as John Law's personal banker, at the time. Cantillon's financial success and growing influence caused friction in his relationship with John Law, and sometime thereafter Law threatened to imprison Cantillon if the latter did not leave France within twenty-four hours.Higgs 1891, 276; Cantillon's reply is according to Higgs, who records Law as follows: "His great credit during the Regency aroused the jealousy of John Law, who held blunt language with him: 'I can send you to the Bastille to-night if you don't give me your word to quit the kingdom in four and twenty hours! Cantillon replied: "I shall not go away; but I will make your system succeed." To that end, in 1718 Law, Cantillon, and wealthy speculator Joseph Gage formed a private company centred on financing further speculation in North American real estate.Finegold ; Rothbard 1995, p. 346
In 1719, Cantillon left Paris for Amsterdam, returning briefly in early 1720. Lending in Paris, Cantillon had outlying debt repaid to him in London and Amsterdam.Brewer 1992, p. 7; Brewer suggests that Cantillon stored his wealth in London to avoid high French taxes levied on those who had profited from the speculative bubble. Hyse 1971, p. 815; Hyse writes that profits were remitted both to London and Amsterdam, "The English records indicate that Cantillon remitted his speculative profits from Paris to Amsterdam and London." With the collapse of the "Mississippi bubble", Cantillon was able to collect on debt accruing high rates of interest.Rothbard 1995, p. 346; Rothbard notes that these high interest rates incorporated an inflation premium. Most of his debtors had suffered financial damage in the bubble collapse and blamed Cantillon—until his death, Cantillon was involved in countless lawsuits filed by his debtors, leading to a number of murder plots and criminal accusations.Brewer 1992, pp. 7–8; Rothbard 1995, pp. 346–347
Contributions to economics Although there is evidence that Richard Cantillon wrote a wide variety of manuscripts, only his Essai Sur La Nature Du Commerce En Général (abbreviated Essai) survives.Brewer 1992, p. 9 Written in 1730,Cantillon 2010, p. 13; In the introduction to the Ludwig von Mises Institute's 2010 edition of Essai, Mark Thornton and Chantal Saucier write, "Based on the book itself and other evidence, we are now reasonably confident that Cantillon completed the manuscript in 1730." Brewer, p. 9 it was published in French in 1755,Spengler , p. 61; Essai was published roughly twenty-one years after Cantillon's death. and was translated into English by Henry Higgs in 1932.Hone 1994, p. 96 Evidence suggests that Essai had tremendous influence on the early development of economic science. However, Cantillon's treatise was largely neglected during the 19th century.Cantillon 2010, p. 15 In the late 19th century it was "rediscovered" by William Stanley Jevons, who considered it the "cradle of political economy".Jevons 1881, p. 342; writes Jevons, "Cantillon's essay is, more emphatically than any other single work, 'the cradle of political economy.'" Cantillon 2010, p. 15; Editors Mark Thornton and Chantal Saucier write, "The influence of Cantillon's manuscript was largely unknown and the book had fallen so far into neglect that William Stanley Jevons was said to have "rediscovered" it in the late 19th century." Since then, Cantillon's Essai has received growing attention. Essai is considered the first complete treatise on economic theory,Jevons 1881, pp. 341–343; writes Jevons, "The Essai is far more than a mere essay or even collection of disconnected essays like those of Hume. It is a systematic and connected treatise, going over in a concise manner nearly the whole field of economics, with the exception of taxation." Rothbard 1995, p. 345; Cantillon 2010, p. 13; Brewer 1992, p. 11 and Cantillon has been called the "father of enterprise economics".Cantillon 2010, p. 5