Chapter 38 of 38 · An Essay on Economic Theory by Richard Cantillon
Index
A
Artisans. See Skilled workers
B
Balance of payments
bills of exchange, 195–201
price-specie flow mechanism, 150–153
prices and foreign trade, 143
Banking, fractional-reserve banking, 227–230
Barter, and the circular flow of money, 134
Bills of exchange
about, 195–201
use of, 185–193
Business cycle, 241–243
C
Cantillon effects, 155–157
Cantillon, Richard, 13
Capital. See Wealth
Capital cities, size, location and economic geography, 39
Capitalists. See Money owners
Cash, need for, 124
Casuists, usury, 173
Catholic church, effect on resource available to sustain the people, 101
Central banks, fractional-reserve banking, 227–230, 233–238
Children, cost and value of raising, 60, 61
China
par value, 63
productivity and population, 86
Circular flow economy
diagram of, 66
foreign trade, 188
inequality of in a state, 139–144
interest rate, 177
Tiberius Julius Caesar Augustus, 236
Cities. See also Capital cities
circulation of money, 125, 136, 139–144
size, location and economic geography, 35
Closed economy, about, 79–82
Coin. See Money
Communal lands, establishment of society, 25
Compensating differentials, theory of, 45
Consumers, entrepreneurs as, 75
Consumption, food as a measure of, 135
Copper
prices and foreign trade, 209–216
in Roman Empire, 166
use of, 109
D
Davenant, Charles, population growth, 92
Debasing money, effects of, 110
Default, risk of and interest rates, 169–175
Deficit spending, results of, 164
Diamonds, use of, 108
Division of labor
capital cities, 39
cities, 35
determination of, 97–101
equilibrium in a closed economy, 79–82
between laborers and skilled workers, 49–51
market towns, 31
mutual interdependence, 69–71
villages, 27
E
Economic geography
capital cities, 39
cities, 35
location of factories and circulation of money, 139–144
market towns, 31
villages, 27
England
barriers to trade and quantity of money, 156
foreign navigation, 192
English Navigation Acts, 185–193
Entrepreneurs
about, 73–77
loans and interest rates, 171–175
market towns, 31
Equilibrium, in a closed economy, 79–82
Europe
par value, 63
productivity and population, 87
Exchange rates
foreign trade, 203–207
quantity theory of money, 220
F
Factors of production. See also
Labor; Land; Skilled workers;
Unskilled labor
intrinsic value versus market prices, 53–56
Farming, rents from, 124
Financial speculation
exchange rates, 204
Mississippi Bubble, 16
price inflation, 238
results of, 164
South Sea scheme, 178
Food, as a measure of consumption, 135
Foreign trade, 185–224
balance of payments and prices, 143
bills of exchange, 185–193, 195–201
circulation of money, 128–130, 179
exchange rates, 203–207
gold and silver prices, 209–216
luxuries and population, 89
money supply, 149
money supply, prices and balance of trade, 159–167
quantity theory of money, 219–224
regulations and quantity of money, 155–157
rents and trade barriers, 153
role in alleviating a shortage of money, 164
role in paying of national debt, 177–181
role of importing gold and silver, 99
Fractional-reserve banking, 227–230, 233–238
Free peasants, par value, 61
Free trade, effects of, 185–193
G
Gold. See also Price-specie flow mechanism
exchange rates, 204
importing, 99
as money, 103–110
prices and foreign trade, 209–216
properties of, 98
in Roman Empire, 166
Government. See also National banks
capital cities, 39
Gresham’s Law, 209–216
H
Hired workers, compared to entrepreneurs, 76
Hobbesian dilemma, 5
Holland, population, 93
I
Importing gold and silver, 99
Income, division of, 69
Indians. See also Iroquois productivity and population, 87
Inflation. See Monetary inflation;
Price inflation
Interest
about, 169–175
increase and decrease of, 177–181
monetary inflation and business cycle, 242
Intrinsic value
determination of versus market prices, 53–56
“Invisible hand”
in a closed economy, 79–82
circular-flow model, 69–71
Iroquois, par value, 63
J
Japan, silver, 212
Job training, effect of subsidizing, 49–51
King, Gregory, population growth, 92
L
Labor. See also Division of labor; Skilled workers; Unskilled labor
as a measure of a state’s wealth, 97–101
intrinsic value versus market prices, 53–56
par value, 59–66
Land. See also Property owners
distribution of ownership of, 23
intrinsic value versus market prices, 53–56
land, leases and rents as indicators of abundance or scarcity of money in circulation, 161
market price of and interest rates, 181
par value, 59–66
rents and use of, 24
Laws
foreign navigation, 192
interest rates, 177–181
Lead, use of, 108
Location theory
capital cities, 39
cities, 35
location of factories and circulation of money, 139–144
market towns, 31
villages, 27
Luxuries
effects on state of, 160
foreign trade and population, 89
M
Market prices
and intrinsic value, 53–56
metals, 104
ratio of gold to silver, 213
setting of in market towns, 32
transportation costs, 89
Market towns, size, location and economic geography, 31
Merchants. See Entrepreneurs
Mesopotamia, value of silver, 104
Metals. See also Price-specie flow mechanism
as money, 116
Mississippi Bubble, Cantillon’s participation, 16
Monetary inflation
business cycle, 241–243
fractional-reserve banking, 234
quantity of money, 147–153
Money, 115–181. See also Monetary inflation
about, 103–110
barter and quantity theory of money, 115
circulation of, 123–144
foreign trade, 189–191
interest, 169–181
and market prices, 119
measuring par value, 64
power of owners of, 77
quantity of in a state, 147–167
Money owners, power of, 77
National banks
fractional-reserve banking, 227–230, 233–238
monetary inflation and business cycle, 241–243
National debt, interest rates, 177–181
Nobility. See Property owners
O
Opportunity cost
intrinsic value, 53–56
skilled workers and wage rates, 41
Outputs, determination of, 79–82
Ownership. See Property rights
P
Par value, measurement of, 59–66
Petty, William
circulation of money, 127
population growth, 92
Population
capital cities, 39
cities, 35
determination of, 85–94
foreign trade and luxuries, 89
market towns, 32
villages, 27
Precious stones, use of, 108
Price inflation
financial speculation, 238
quantity of money, 147–153
quantity theory of money, 220
Price-specie flow mechanism
exchange rates, 203
inflation and money supply, 147–153, 159–167
Prices. See also Market prices
foreign trade and balance of payments, 143
money supply and balance of trade, 159–167
quantity theory of money, 115
relative prices and changes in the quantity of money, 155–157
and transportation, 140
Productivity, by country, 86–88
Professionals. See Skilled workers
Profits, and interest, 169–175
Property owners determination of division of labor, 97–101
determination of outputs and prices, 79–82
determination of population, 85–94
economic significance of, 73–77
living on the rent from land, 77
residence of, 35
Property rights, as the basis of human societies, 23–25
Protestant churches, effect on resource available to sustain the people, 101
Public borrowing, results of, 163
Q
Quantity theory of money
barter and prices of goods, 115
foreign trade, 219–224
increase and decrease in quantity of hard money, 147–167
R
Redistribution effect, by inflation, 149
Rents
Cantillon’s three rents, 66
and circular flow of money, 123–130
land, 24
and transportation costs, 142
Risk, and wage rates, 45
Roman Catholic church, effect on resource available to sustain the people, 101
Romans
copper, 109
decline of empire, 165–167
distribution of land ownership, 24
gold, 104
interest rates, 180
productivity and population, 88
S
Savages. See Indians
Savings
importance of, 97–101
interest rates, 177–181
Silver. See also Price-specie flow mechanism
importing, 99
as money, 103–110
prices and foreign trade, 209–216
properties of, 98
in Roman Empire, 166
Skilled workers
division of labor with laborers, 49–51
opportunity cost and wage rates, 41
par value, 63
theory of compensating differentials, 45
Slaves, valuation of, 60
South Sea scheme
interest rate, 178
monetary inflation and business cycle, 242
Specie. See Price-specie flow mechanism
Subsidies, for job training, 49–51
T
Tailors. See Skilled workers
Taxes, ease of raising where money is plentiful, 163
Terms of trade, quantity of money, 189–191
Theory of compensating differentials, 45
Tiberius Julius Caesar Augustus, circulation of money, 236
Tickets, as money, 134
Time preferences, and interest rates, 169–175
Tin, use of, 108
Towns. See Market towns
Trade. See Foreign trade
Transportation costs
income and market prices, 89
location, size and income of cities, 35
location of capital cities, 39
location of factories and circulation of money, 139–144
and rents, 142
U
Unskilled labor
division of labor with skilled workers, 49–51
par value, 62
Usury
Casuists, 173
laws on interest rates, 177–181
V
Vassals, par value, 61
Velocity of money
price level, 148
rent payments and the circular flow of money, 123–130
speed of, 133–137
Villages
relationship to market towns, 32
size, location and economic geography, 27
W
Wage rates
skilled workers and opportunity cost, 41
skilled workers and the theory of compensation differentials, 45
War, economic effects of, 179
Wealth
defined, 21
living off of, 76
as measured by the amount of labor in a state, 97–101
quantities of money, 160
Wholesaling, role of, 74
Women
childbearing, 91
economic contribution of, 49, 62
An Essay on Economic Theory
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