CHAPTER 12 Letter to l’Abbé Terray on the “Marque des Fers”

Limoges, 24 December, 1773

am honored to report to you on the state of the ironworks and mills in the Generality of Limoges which are engaged Urin the manufacture of iron articles.

You have requested this account of me several times; I would have liked to have been able to send it to you more promptly, and, above all, in a more finished state; but in spite of the trouble to which I went to obtain as detailed an account on each of the ironworks as you seem to require, you will observe that there still remains a great deal of uncertainty about the output of iron from these different works. You will also notice that this uncertainty derives largely from the purely physical circumstances which cause variations in the output, such as the shortage or abundance of water in the different factories. The variations in the market and in the wealth of the entrepreneurs also have an influence on the fluctuations in output, almost as great as the physical causes.

As for the observations you seem to require on the means of instilling more life into this branch of industry, or of restoring to it that which it is said to have lost, I have few to offer. I know of no means whatever of stimulating any trade or industry other than that of giving it the greatest freedom, and freeing it from all those burdens which the mistaken interest of the treasury has inordinately increased upon all kinds of commodities, and particularly upon the manufactures of iron.

I cannot conceal from you that one of the chief causes of my delay in responding to your inquiries, has been the rumor which is circulating to the effect that their object was the imposition of new duties, or the extension of old ones. The opinion, founded on too many precedents, that the investigations of the government have for their sole object the discovery of ways of extracting more money from the people, has given rise to a general distrust, and the majority of those to whom inquiries are directed do not reply, or seek to mislead by replies sometimes false and sometimes incomplete. I cannot believe, sir, that you would intend to impose new burdens on a trade which, to the contrary, you say you want to encourage. If I had thought this, I confess I would congratulate myself on the involuntary delay in my furnishing you with the information you have requested, and I would regret not being able to prolong the delay even more.

If, after complete liberty has been obtained by the relief from all taxes on the manufacturing, transportation, sale and consumption of commodities, anything remains to be done by the government to encourage a branch of trade, it can only be by means of education, that is, by encouraging the research of men of science and craftsmen who tend to perfect the craft, and, above all, by extending the knowledge of the practical processes which greed seeks to keep as so many secrets. It would be useful for the government to incur some expenses in sending young men to foreign countries in order to learn processes of manufacture unknown in France, and to publish the results of these researches. These means are good; but freedom of commerce and deliverance from taxes are much more efficient and much more necessary.

You appear, in the letters with which you have honored me on this subject, to believe that certain obstacles which might be placed on the importation of foreign iron would act as an encouragement to our national trade. You intimate even that you have received repeated representations from different provinces as regards the favor which these iron articles from abroad obtain, to the prejudice of the commerce and manufacture of native iron commodities. I believe, indeed, that iron masters, who know only about their own iron, imagine that they would earn more if they had fewer competitors. There is no merchant who would not like to be the sole seller of his commodity. There is no branch of trade in which those who are engaged in it do not seek to ward off competition, and do not find some sophisms to make people believe that it is in the State’s interest to prevent at least the competition from abroad, which they most easily represent as the enemy of the national commerce. If we listen to them, and we have listened to them but too often, all branches of commerce will be infected by this kind of monopoly. These fools do not see that this same monopoly which they practice, not, as they would have the government believe, against foreigners, but against their own fellow-citizens, consumers of the commodity, is returned to them by these fellow citizens, who are sellers in their turn, in all the other branches of commerce where the first in their turn become buyers. They do not see that all these associations of men engaged in a particular trade will not fail to arm themselves with the same pretexts in order to obtain from the misled government the same exclusion of foreigners; they do not see that in this balance of annoyance and injustice between all kinds of industry, in which the artisans and the merchants of each kind oppress each other as sellers, and are oppressed as buyers, there is no advantage to any party; but there is a real loss to the whole of national commerce, or rather, a loss to the State, which buying less from abroad, similarly will sell less to them. This forced increase in price for all buyers necessarily diminishes the sum total of enjoyment, the amount of disposable revenues, the wealth of the proprietors and of the sovereign, and the amount of wages to be distributed to the people. This loss is doubled again, because in this war of reciprocal oppression, in which the government lends its authority to all against all, the only sector of industry excepted, is that of the tilling of the soil, which is oppressed by everybody in concert through these national monopolies, and which, far from being able to oppress anyone, cannot even take advantage of the natural right to sell its commodity either to foreigners or to those of its fellow-citizens who would buy it, so that from all the classes of working citizens, only the small farmer suffers from monopoly as buyer, and at the same time as seller. He alone cannot freely buy from abroad any of the things he requires; he alone cannot freely sell abroad the commodity he produces, while the cloth merchant or any other, buys as much wheat as he wants from the foreigner and sells him as much as he can of his cloth. Whatever sophisms are collected by the self-interest of a few merchants, the truth is that all branches of commerce ought to be free, equally free, and entirely free; that the system of some modern politicians who fancy that they encourage national commerce by prohibiting the importation of foreign merchandise is plain delusion; that this system results only in setting all branches of commerce as enemies against one another, in nourishing among nations a germ of hatred and of war, of which even the lightest effects are a thousand times more costly to the people, more destructive of wealth, population and happiness, than all those paltry mercantile profits which people fancy they will ensure benefit the nations which allow themselves to be misled. The truth is that in wishing to hurt others, we only hurt ourselves, not only because the retaliation to these prohibitions is so easy to devise that other nations do not fail to think of it in their turn, but also because we deprive our own nation of the incalculable advantages of a free commerce; advantages so great that, if a great State like France were willing to experience them, the rapid advancement of her commerce and industry would soon compel the other nations to imitate her in order not to be impoverished by the total loss of their own commerce.

But supposing these principles not to be, as I am quite convinced they will be, clearly proven, supposing even that we admit the expediency of prohibition in some branches of commerce, then I would be so bold as to say that iron should be excepted for an incontrovertible reason, which is also peculiar to it.

This reason is that iron is not merely a consumption good useful for the different purposes of life: the iron used in household goods, in ornaments, in weapons, is not the largest part of the metal produced and sold. Above all, it is as an implement necessary in the execution of all crafts, without exception, that this metal is so important and so valuable in commerce. It is, in this respect, the raw material of all the crafts, manufactures, of agriculture even, to which it furnishes the greater part of its implements. For this reason it is a commodity of the first necessity. For this reason, even if we were to adopt the idea of encouraging manufactures by prohibitions, iron ought never to be subject to them, because these prohibitions, in the opinion even of those who support them, ought to be placed only on goods manufactured for consumption, and not on commodities used in manufacture, such as the raw materials and the implements required in production; since, according to this system, the buyer of iron implements used in his manufacture or in the cultivation of his land ought to enjoy all the advantages which the principles of this system give to the seller over the ordinary consumer.

To prohibit the importation of foreign iron, therefore, is to favor the iron master not only at the expense of the domestic consumers, as in the ordinary cases of prohibition, it is to favor them at the expense of all manufacturers, of all branches of industry, and at the expense of agriculture, and the production of all foodstuffs, in a special and even more direct manner than the effect of all other prohibitions by which, it must be admitted, it is still constrained.

I am persuaded that this thought, which no doubt has occurred to you, will prevent you from complying with the inconsiderate entreaties of the iron masters and of all those who can only consider this branch of commerce by itself and as isolated from all other branches with whom it has relations of the first necessity.

I will add here two further considerations which, in my opinion, deserve your full attention.

Firstly, many crafts not only need iron, but iron of various qualities, and adapted to the nature of each work. For some, relatively soft iron is needed, for others, more brittle iron. The most important manufactures employ steel, and steel again varies in quality; that of Germany is suited for certain purposes, that of England, which is more valuable, for others. Now there are certain kinds of iron which our Kingdom does not supply, and which must be obtained abroad. With regard to steel, it is well known that very little of it is produced in France, that this kind of production is only just in the experimental stage, and that, however successful the trials may have been, it may take half a century perhaps before enough steel can be produced in France to supply a reasonable part of the use made of it by manufactures, during which time it will be necessary to obtain from abroad ready made tools, because they cannot be made in France with the necessary precision, and because the products would lose too much of their value and price if they were made with imperfect instruments. Thus, to prohibit the importation of foreign types of iron would be to ruin our own manufacture; it would mean destroying those in which steel is employed, and all those which need special quality iron. To charge these types of iron with excessive duties would be to lead these manufactures to an inevitable decay, in time; it would mean sacrificing a large part of our national commerce to the very mistaken self-interest of the iron masters.

It seems to me that the first consideration proves that in the current state of trade in manufactures and the domestic iron industry, it would be imprudent to restrain the importation of foreign iron. What remains to be discussed will prove that this importation will never cease to be necessary, and that, on the contrary, the need for it will probably never cease to grow with the passing of time.

Indeed, it is sufficient to consider the tremendous quantity of charcoal which is consumed by the smelting of the ore and by its reduction into metal, and the equally large quantity which is consumed by the ironworks where the metal is refined, in order to be convinced that, however abundant the ore may be, it can only be developed to the extent that it is situated in the neighborhood of a very large quantity of cheap wood. However plentiful a forest situated near a river flowing to Paris may be, the establishment of an ironworks would certainly never be found expedient there, because the wood has a value there which could never be recovered from the sale of the iron which is manufactured with it. Moreover, the principal benefit expected from the establishment of an ironworks is that of giving a value and a market to forests which did not have any before. It follows from this that as the woods become scarce, as they acquire value through new markets, through the opening of roads and navigable canals, through the increase in agriculture and population, the smelting and production of iron articles must become less profitable and gradually decline. It follows from this that the longer nations have been developed, relative to the progress they have made toward wealth and prosperity, they must manufacture less iron, and obtain more from abroad. It is for this reason that England, which, of all nations in Europe, is the most advanced in this regard, obtains only a small amount of crude iron domestically, and buys a great deal of it in Germany and in the Baltic, which she increases in value by converting it into steel and hardware. The trade in iron is assigned by nature to new peoples, to people who possess vast virgin forests, far removed from all markets, where there is still profit in burning very large quantities of wood just for the sake of the value of the salts which are extracted by washing the ashes. This trade, declining in England, still quite flourishing in France, much more so in Germany, and in the Baltic countries, must, in the natural order of things, proceed to Russia, to Siberia, and to the American colonies, until these countries become populated in turn, and, all nations being more or less in balance in this regard, the increase in the price of iron will become sufficiently great for the advantage in manufacturing it to be restored even in the country where its production had been abandoned, for want of the ability to maintain a competitive position with the poor nations. If this decline of ironworks resulting from the increase in wealth, population and the multiplication of markets for trade generally was a misfortune, it would be an inevitable misfortune, which it would be useless to attempt to prevent. But it is not a misfortune at all if this trade declines only to be replaced by more profitable ones. It is necessary to reason about France relative to other nations, just as it is necessary to reason about the provinces supplying Paris with consumption goods relative to the provinces of the interior; the proprietors in the neighborhood of the Seine certainly do not regret that their woods have too high a value to enable the establishment of ironworks in that area, and they resign themselves quite happily to purchasing, with the revenue from their wood, the iron which other provinces sell to them.

To persist in opposing this necessary result, from a narrow-minded political viewpoint which thinks it is possible to grow everything at home, would be to act just like the proprietors of Brie who thought themselves thrifty by drinking the bad wine from their own vineyards, which really cost them more in the sacrifice of land suitable for good wheat, than they could have bought from the proceeds of their wheat. It would be to sacrifice a large profit in order to retain a smaller one.

Thus our policy should surrender itself to the course of nature, and the course of commerce, which is no less necessary and no less irresistible than the course of nature, without seeking to direct this course. For, in order to guide it without disturbing it, and without injuring ourselves, it would be necessary for us to be able to follow all the changes in the needs, the interests, and the industry of mankind. It would be necessary to know these in such detail as would be physically impossible to obtain, and in which even the most skilful, the most active and the most painstaking government will risk always to be wrong in half the cases, as is observed or acknowledged by Abbé Galiani in a work¹ in which he nevertheless vindicates with the greatest zeal the system of prohibitions just on the type of trade where they are most disastrous, to wit, the grain trade. I add that, even if we had for all these particulars the mass of knowledge which is impossible to gather, the result would only be to let things go precisely as they would have gone by themselves, by the simple action of the self-interest of man, enlivened and held in check by a free competition.

But, if we ought not to drive away the foreign iron which we need, it does not follow that we should burden our own iron with duties, or rather, taxes, on their manufacture, or on their transport. Quite the contrary, the manufacture and transport of French iron should be left perfectly free, in order that they may draw the greatest advantage from our mines and forests, as long as the entrepreneurs find it profitable, and that, by their competition, they may help to supply our agriculture and our crafts with the implements that they require at the lowest possible price.

For my own conscience’s sake, sir, I felt it my duty to communicate to you all the thoughts which were prompted by a fear that you might yield to proposals which I consider dangerous, and which would injure the trade which you desire to encourage. I know that you do not disapprove of the boldness with which I have openly expressed what I believe to be the truth.

I am, etc.

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Written 1773. Turgot’s letter on the “marque des fers” was written in response to a request by l’Abbé Terray in connection with a project to raise a new duty on iron, which he had apparently foreshadowed in 1771. The “marque des fers” or “le droit de marque des fers” was a duty on iron and iron commodities first established in the seventeenth century during the reign of Henry IV.

¹ L.e., Ferdinando Galiani, Dialogues sur le commerce des blés, (Paris: 1770).

Six Projects of Edicts

Turgot suggests six edicts to be enacted to the king that would result in comprehensive economic freedom for France. The arguments he gives for abolishing the corvée, compulsory labor to construct roads, are characteristic. Forced labor is inefficient, since workers who are not paid have no incentive to do good work. In addition, the compulsory laborers are taxed twice: not only do they receive no pay for their work, but they are prevented from doing productive work for pay during the term of their forced labor. Claims that forced labor allows more roads to be built at the same time than relying on the market fail because the roads are useless unless supplemented by other facilities provided by the market. Likewise, the guild system is inefficient and ought to be curtailed. It is a harmful restriction on free labor. Turgot’s other edicts propose eliminating other restrictions on the free market, such as taxes on grain and suet.