CHAPTER 6 Observations on a Paper by Saint-Péravey on the Subject of Indirect Taxation

he author assumes firstly, that the proprietors spend half their income on purchases from the productive class and the other half on purchases from the industrial class; secondly, that the productive class spends only a quarter¹ of its income on manufactured goods.

These two propositions are to be regarded as hypotheses only, which contain some degree of realism, and which may be used in mathematical formulae, but from which completely precise conclusions can never be drawn. The proportion between the various expenditures of each class is too variable to permit of accurate calculation. Assumptions of this type may only be usefully employed to give a clearer idea of the circulation.

The author argues and calculates later on the basis of an assumption which he has already put forward as a principle, that the proportion between the annual advances in agricultural production, and its total product is as two is to five. The dubiousness of this assumption does not weaken what has previously been said to demonstrate that the indirect tax falls entirely on the proprietors, because this truth results purely from the impossibility of encroaching upon the advances and the wages of the agricultural and the industrial classes without ruining them. These classes can only pay at the expense of the proprietors, who are the only ones to receive the disposable portion of the crop, that gratuitous portion which the soil yields over and above the cost of working it. But since, in the subsequent estimation of the excess burden of the indirect tax by the effect which the decrease of the advances must cause, the starting point of the calculations is this assumed proportion between the annual advances and the total product of two to five, it is necessary to examine this assumption.

I would grant that this proportion has been established on the basis of exact calculations of the advances and the products of some farms en grande culture in a fertile region, which the author, or those who furnished him with the facts, visited in order to reassure themselves. But this procedure does not confer the right to draw from this particular calculation any general results; it takes little thought to realize that there can be no constant proportion between the advances and the product. Advances, which are only a form of expenditure, are not in themselves productive; they do not even have the productivity which the current rate of interest gives to loan money. If 20,000 livres put to interest return 1,000 francs, it can be concluded that 40,000 will return 2,000 francs. But from the fact that 2,000 livres of annual advances applied to a farm will return 5,000 francs worth of product, it cannot be concluded that another 2,000 livres employed on another plot of ground would also yield 5,000 francs, nor that 4,000 employed on the same land would yield 10,000. The expenses of agriculture consist in giving the soil such preparation as is most likely to make it fruitful. Now, the outcome of these preparations, which determines the product, is by no means proportioned to the expenditure: the knowledge of the cultivator renders the same amount of expenditure more or less productive, depending on the extent to which his method of applying it is appropriate to the nature of the soil and all the seasonal factors. If as much ploughing is bestowed on a light soil as on a heavy soil, the cost may be higher while the return may be lower. If Tull’s system contains some truth,² production may be increased while economizing on the seed. Then the annual advances will diminish and the total product will increase. Production implies advances, but equal advances on soils of different fertility would yield very different total products, and this in itself would be sufficient to prove that product is not entirely proportional to advances. Even if applied to the same field it is not proportional, and it can never be assumed that double the advances will yield double the product. The earth certainly has a limited fertility, and assuming it to have been ploughed, manured, marled, ditched, watered, weeded, as far as it can be, it is obvious that all further expenditure would be useless, and that such increases could even become detrimental. In this case, the advances would be increased without increasing the product. There is therefore a maximum point of production which it is impossible to pass, and when this point has been reached, advances will not only cease producing 250 for 100, but will produce absolutely nothing.

While it may be granted to the author that, in the case of ordinary good cultivation, the annual advances return 250 for 100, it is more than likely that as the advances are increased gradually past this point up to the point where they return nothing, each increase would be less and less productive. The fruitfulness of the soil may be compared in this case with a spring which is compressed by loading it successively with equal weights. If the weights are light and the spring is rather stiff, the effect of the first few weights may be almost negligible. When the total weight is heavy enough to overcome the initial resistance, the spring will yield visibly and will compress; but when it has been compressed to a certain point, it will offer more resistance to the force which compresses it, and such weights as would have compressed it an inch, can compress it no more than a fraction of an inch. The effect will thus diminish increasingly. This comparison is not entirely accurate, but it is sufficient to show how, as the soil approaches the point where it yields as much as it can produce, a very large outlay can only increase the product slightly.

If, instead of increasing the advances by equal degrees beyond the point at which they yield most, the farmer diminishes them, the same change in the proportion would be found. It is not just conceivable, but it is certain that very small advances yield a smaller profit than very large ones, and that the ratio between the profits is higher than that between the advances. If 2,000 livres yield 5,000, 1,000 may not even yield 1,500, and 500 will not yield 600.

Seed thrown on a soil which is naturally fertile, but has not been prepared at all, would be virtually a waste of expenditure. If the soil were tilled once, the produce would be greater; tilling it a second or a third time would not just double or triple, but quadruple or decuple the produce, which will thus increase in a much larger proportion than the expenditure, and this would be the case up to a certain point, at which the produce would be as large as possible relative to the advances.

Past this point, if the advances are still further increased, the product will still increase, but less so, and continuously less and less until an addition to the advances would add nothing further to the produce, because the fertility of the soil is exhausted and art cannot increase the product any further.

I will mention that it would be mistaken to imagine that the point at which the advances yield the most is the most advantageous one which the cultivator can attain, for, although further increments in advances do not yield as much as the preceding increments, if they yield enough to increase the net product of the soil, there is an advantage in making them, and it will still be a good investment. If it is assumed, for example, as it is by the author, that the annual advances in good cultivation yield 250 per cent, an increment which yields 225 per cent would still be exceedingly profitable. For, since the interest on fixed capital and the return of the first dose of annual advances has already been deducted from the 250 per cent, and since this deduction still leaves a very adequate net product, if from the product of the next dose of annual advances 100 is deducted for its replacement and 10 for the interest on the first dose, which becomes an addition to the fixed capital, of which the advances of the first year are always a part; if then, 110 per cent is deducted from the 225 produced by the new advances, a net product of 115 per cent would be obtained from the new advances, which would be added to the 250 per cent from the first advances, etc.

I have dwelt extensively on this point, because it is important not to surrender too easily to the hope of estimating with complete accuracy the decrease in total product caused by a decrease in annual advances when indirect taxation has broken into the latter. Here the author’s calculations seem to be based on a fallacy, since he assumes that production is always in a proportion of five to two to the annual advances, and calculates the diminutions in the total product at this rate. It is evident from the above that the harmful effect of the diminution of the annual advances would be less when cultivation is already beyond the point at which the advances yield as much as possible. If, on the contrary, this diminution begins only when the annual advances yield the greatest product, the decrease must be greater; but below this, there must also be a point where the decrease in annual advances diminishes production in a still smaller proportion. In short, the decrease of advances must diminish the production in the same proportion as the gradual increase of advances had augmented it.

The fundamental principle of the paper, that the renewal of the cultivator’s capital may not be impaired, and that he cannot decrease his advances without decreasing production, is beyond doubt; but the exact extent of this decrease does not appear to be susceptible to precise determination.

The rentier is a merchant of money. Interest is the price of capital. Since the capital yields nothing by itself, but only by virtue of the agreement of the contracting parties, a tax on interest is exactly like any other tax on commodities. If part of the price of any commodity whatsoever is taken away, obviously this price is prevented from falling to the buyer’s advantage by the whole of what is demanded from the seller. It is thus the buyer, who in the final analysis in this case is the proprietor of the property, who pays the tax on interest. This reasoning appears at first glance to be contradicted at times when applied to the facts, through the influence which the authority of the law regulating interest exerts in this matter. But it must be noted that the effect of the law on interest is always to maintain it at a higher rate than would be the case in the absence of a law. This law, just like all other legal fixation of commodities, always raises the price, or interrupts commerce.

When the sovereign taxes interest, the whole impact of the law falls on the existing arrangements, and as the lender cannot demand reimbursement, he has no means at all of recouping his loss. As for new contracts, made after the passing of the Edict, if the lenders submit to the law of the tax, it is proof that the legal rate of interest was above the natural rate, for if the legal rate was too low, the lenders would evade the law by private arrangements, or else they would cease to lend.

If natural order, complete liberty and the competition which results from these existed in the trade in money, the reasoning put forward by the author would be as true in practice as it is in theory.

It is certain that houses do not produce any revenue which may be regarded as additional revenue for the State. Their rent is obviously a pure expense which, like all others, is paid from the produce of the soil. I believe, however, that houses should be taxed, not because of the value of the building, but because of the value of the land which they occupy and which is only used for building because in this way it yields more than in any other way.

It is physically impossible for the taxes on consumption to be graded on the basis of the disproportion between luxuries and necessities. The tax on consumption goods has a maximum which cannot be exceeded, and this maximum is determined by the relative ease of smuggling. The risks of smuggling are estimated like those of the sea, and it is a known fact that contraband can be insured. If the tax on a commodity is 15 per cent, and if the risk of smuggling is only 10 per cent, obviously nearly all supplies would be smuggled in, and the tax would produce so much the less for the government. Now the more precious the commodities are, the more value they have for their bulk, the easier it is to smuggle them. It is easier to hide 20,000 livres worth of lace work than twenty francs worth of corn; the duty must thus be diminished in proportion to the value of the commodities, and the expenditures of the rich are exactly those that are charged least. All excessive duties can be levied only by way of state monopoly; but the evils of this type of tax are innumerable, and the effects it produces, by disturbing trade and reversing all moral values in the minds of the people, are even more fatal than those it produces in its quality as an indirect tax, and which it has in common with all other taxes on consumption.³

It is certainly an evil that a very great part of private expenditure is made in the capital, but this disadvantage is not peculiar to the profit from the General-Farm. That of the Receiver-General, which arises out of direct taxation, that of the creditors, and pensioners of the government, the revenue of all great proprietors, are all spent in the capital. It is a great evil, but it derives from the general system of government rather than from the nature of the indirect tax.

It seems that the author here envisages as an evil that part of the profits of the Farmers-General are set apart to create capitals, and that the money which they have gathered is not immediately returned to the circulation. We may leave the Farmers-General, for the advantage, and what the author believes to be the disadvantage, of saving from profits, holds as much for any other profits as for theirs. Consider the question in general.

The author, and the majority of economic writers, seem to assume that the whole of the revenue must necessarily be returned directly to the circulation, without any part of it being set aside for the formation of a monetary capital, and that, if it were otherwise, the reproduction would suffer by it. This assumption is far from true; it is sufficient, in order to see its falsity, to reflect on the importance of capitals in all the profitable enterprises of agriculture, of industry and of trade, and on the utter necessity of advances for all these enterprises.

What are these advances, and where lies their origin, if not in the savings from the revenue? The only true wealth is the produce of the soil; the advances can thus grow only by the setting aside of part of what the soil produces, and part of what is not absolutely necessary for the reproduction. It makes no difference whether this part is put aside by the entrepreneurs of the industrious classes, or by the proprietors. In the first case, the entrepreneurs retain part of their profits and accumulate capitals which they use to expand their enterprises; but for this it is necessary that their profits are a little higher than what is strictly required for the reproduction on the following year. This may occur in two ways; firstly, because besides the current return and replacement of their advances, besides the salary for their work and subsistence, they have a right to an interest on their advances equal to what the same capital would yield them in any other way without effort on their part, be it in the acquisition of landed property, or in lending at interest. Thus they need only a certain amount of capital to start with for the interest on this capital, accumulating with it, to swell it at quite a rapid rate, because their right to a subsistence in return for their work is independent of their right to profits from their capital. Secondly, because the absence of competition for some enterprises puts the entrepreneurs in the position of making profits which are higher than what is required for the continuation of those enterprises, and from which they can save a great deal each year. These profits are a portion of the net product which the entrepreneur appropriates over and above the returns which are necessarily due to him, and at the expense of the proprietors. The immediate result of this thrift is the accumulation of movable capitals, and these capitals are only accumulated for the purpose of obtaining a revenue or annual profit, which can only be done by employing this capital. The effect of this accumulation is to lower the interest of loan money; to increase the exchange value of landed property; to diminish the necessary returns of the entrepreneurs in all industry and the costs of all enterprises; to make profitable, and consequently possible, enterprises which were not so previously; to increase proportionately the total number of enterprises and the total output.

Of all the employments of money, that which requires the least effort on the part of the capitalists, is lending at interest; the second in order of ease is the acquisition of land; but the latter is first in order of security. Only the expectation of making a greater profit could urge the owner of a money capital to employ it in uncertain and laborious enterprises. The rate of interest of money is thus the first established standard, the parameter (if I may call it this) on the basis of which the exchange value of landed property and the profits of the advances in agricultural, industrial and commercial enterprises are established. It is useless to declaim against the public stocks and their useless owners; as long as this use of money, that is to say, as long as this need for borrowing money, will exist, it will be preferred, because it is in the nature of things that it should be. Only what is left over can be used to call into existence, by way of advances, enterprises which take trouble. It is like the bed of the Nile, which must necessarily be filled before the flood is diffused over the fields to fertilize them. There should be no complaining over the water flowing into this bed, for the law of gravity inevitably directs it there. There is even less call for complaint about the fact that the water accumulates, for without this accumulation the fields would not be irrigated. The true evil is that the bed is hollowed out so much that it absorbs the greater part of the water; the evil is that the government, through its numerous borrowings, continually presents money with a use which the owner finds advantageous and which is sterile as far as the State is concerned; the evil is that by this ruinous transaction it competes with the luxuries of private citizens to maintain the rate of interest at a level which is high in itself, and higher than that in foreign nations. But once this evil exists, it is no less beneficial that the owners of, or those who share in, the revenue of the State do not spend it in its entirety, and put part of it aside each year to convert it into capitals, since a low interest of money, and all its advantageous consequences result from the quantity of capitals offered by the lenders relative to the quantity demanded by the borrowers. If the whole of the net product had been spent each year without any accumulation, the stock of advances, of, I won’t say la grande culture, but of the poorest cultivation, could never have been formed, and never could these advances grow. The whole thing is quite obvious.

But it is said, since the money does not return to the circulation, it diminishes the exchange values, and consequently the returns of the farmers who, when they sell more cheaply than they expected, pay the price of their lease by encroaching upon the renewal of their advances.

Four things may be said in reply to this.

Firstly, this argument would prove too much, for it would prove that the whole of the money collected by the proprietors as revenue must always return immediately into the hands of the cultivators, and that is completely untrue. The followers of the Philosophie rurale⁴ themselves agree to this when they maintain so strongly the utter unimportance of what is called the balance of trade settled in money. For certainly, if, by the settlement of the balance of trade, part of of the specie circulating as money in the State flows abroad, the whole of this specie will not come back to match the commodities produced by the cultivator in the circulation; and, according to the thinking of the author, goods will fall in price. Yet, the author is persuaded that nothing is of less importance than the manner in which this monetary settlement takes place.

Secondly, each year the mass of gold and silver circulating in the world increases by the continual working of the mines. The silver which the mines yield is spread first through the State where the mines are situated. It must either remain there in circulation, or be accumulated by the entrepreneurs, or leave the country to be exchanged for commodities. In fact the silver which is accumulated does not take long to return to circulation, and it is in the nature of things that the silver from the mines should leave the countries of origin in order to be exchanged for foreign commodities; for if it remained in the home countries, commodities would increase in price so stupendously, and silver would depreciate so strongly, that, on the one hand, part of the mines would cease to yield a profit to their entrepreneurs sufficient to meet the costs of exploitation, and the national production, being worthless, would cease; while, on the other hand, the difference in price between foreign goods and domestic goods would soon be so large that, in spite of all prohibitions by the government, the interest of all citizen-consumers would combine with that of the foreign sellers to break all the barriers with which the prejudiced administration would oppose the exportation of silver.

The silver which the States with mines draw from the bowels of the earth enters, through the monetary settlement of the balance of trade, into the States which sell their commodities to the owners of the mines. This silver, carried into the trading nation through commerce, has similar effects as that drawn directly from the mines in the State in which they are situated. Silver, having become plentiful, raises the price of commodities; soon they can no longer be given at the same price to the nation which settles (its balance) in silver, and nations in which silver is scarcer obtain the preference. The nation which had acquired the surplus of silver is itself compelled to draw part of its consumption goods from nations by virtue of their greater or smaller proximity to the country with mines, and by virtue of the stage in history during which they began to enter the system, or, if you wish, the great society of civilized and commercial nations; finally, by virtue of the extent to which their constitution and their domestic laws are favorable to the growth of production and to commercial activity. From Peru and Brazil, gold and silver pass into Spain and Portugal, from there to France, England and Holland, then to Germany and the Scandinavian countries. It is well known that gold and silver are still sufficiently scarce in Sweden for copper to be used as money there, as in the early days of the Roman Republic, when the word aes signified what the word silver money signifies today in the common usage of commerce and civil life.

As the mines do not cease to furnish a new increase of the stock of precious metals each year, the result is that, from the countries where these mines are exploited down to the last regions which share at the final stage and to the least extent in their annual distribution through trade, there is not one which, in the natural order of things, and disregarding the disturbances which may be occasioned by excessive expenditures abroad, war, and defaulting governments, does not experience every year an increase in the stock of its circulating medium.

In the type of scale which ranks these States by their relative wealth of silver, those which are the most fortunate and which approach most nearly a state of complete prosperity, are those where the abundance and the value of money are at the intermediate level to which perfect equilibrium would bring them if it were possible, over time, for the silver to be distributed over the earth in proportion to the total annual output of each district. The natural circulation of money in trade approaches this universal level; but it can never be reached as long as the mines are not exhausted, that is to say, as long as they yield in sufficient abundance to cover the expenses of production with a sufficient profit to encourage the entrepreneurs to make advances; for this determines the limit of their exploitation, and not their physical exhaustion.

This state of affairs would reduce the trade between all nations to the exchange of commodities, and there would be no real balance. The nations which are at present in this intermediate stage which have neither an abundance nor a deficiency of gold or silver, are almost in the same position, and they have no settlement in bullion of the balance of trade because they deliver as much of it to nations which have less bullion as they receive from those nations that have more.

Let us return to the question of the need to restore to the cultivator all the money he has paid out: I say that, if the quantity of money withdrawn from immediate circulation by saving is less, or even, if it is no more than the quantity of money introduced each year into the circulation by way of trade, the commodities will maintain their exchange value, the cultivators will use as much money for the reproduction as in the preceding year, and there will be no decline in wealth; the saving, therefore, will not be prejudicial to either the reproduction, or the revenue. Not only will it not be prejudicial, but in fact it will increase them, since in the final analysis its effect is always to increase the stock of capitals and the total advances, and to lower the rate of interest. If it really withdrew from the circulation the money put aside, it would prevent the increase in the price of commodities which results from the increase in money, it would maintain the nation’s ability to sell her superfluous commodities to foreign owners of silver, it would reduce the need to buy from less wealthy foreigners things necessary for her consumption, which her own artisans could no longer furnish at such a low price. Even when the effect of saving is not to withdraw money from the circulation, it would make up, through the low price of labor caused by the increase in the exchange value of commodities. It removes all disadvantages from the superfluity of money and leaves only the advantages. Is there any one who does not know that in Holland wages are so high that they could destroy commerce if the low interest of money, and the resultant activity, did not compensate for this factor?

Thirdly, I assume for the moment that the immediate effect of saving is to withdraw money from circulation, and to lower the exchange value, to the detriment of the cultivator. I say that if the consequence of this saving is an increase in the advances, it will also cause a greater production, or, if you like, a decrease in the costs; so that the decrease in the exchange value resulting from the small amount of money withdrawn from circulation, is more than compensated by the number of articles sold, or by a smaller fundamental value⁵ of each article sold; thus there is a real advantage in putting money aside. Now, it is most likely that the increase in the advances does more good than the harm done by the small decrease in the exchange value caused by saving. For this decrease will always be extremely small if unrestricted exportation continues to let our output share in the prices of the general market. Perhaps the increase in output caused by the introduction of new advances would bring about even more efficiently the decrease in exchange values. But the remedy for this disadvantage lies in this same communication with the general market; in the variety of output which the soil can produce, from amongst which the cultivator can choose those whose sale yields the highest profits, and prefer thistles to wheat if he finds this to his advantage; finally, in the increase of the population which follows naturally from the abundance of output.

Fourthly, it is assumed without any grounds that savings decrease the exchange values by withdrawing the sums put aside from the circulation. They almost all return to it immediately, and to be convinced of this, it is but necessary to reflect on the use which is made of the money saved; either it is used in the purchase of land, or it is lent at interest, or used as advances in agricultural, industrial, or commercial enterprises. It is obvious that this third type of use returns the capitals immediately to the circulation and exchanges them for equipment, beasts of burden, raw materials, wages of labor, and the purchase of goods which are the object of commerce. The same is true of the other two uses. The money of the acquirer of landed property goes to the seller; the latter usually sells in order to obtain a more useful acquisition, or to pay debts, and it is always to this last object that the price of the sale goes; for if the first seller buys other land, it will be the seller of this land, or if you wish, a third, who sells only to redeem his debts; and if the debts are pressing, the money is spent again immediately and put back into circulation. If the debts bear interest, the reimbursed creditor has nothing more urgent to do than to lend his money once again. Let us therefore see what happens to the money lent, what the borrower does with it.

Dissipating young gentlemen, and governments, borrow in order to spend, and what they spend returns immediately to the circulation. When they are wiser, they borrow to put their affairs in order, to pay outstanding debts and redeem debts which carry an excessive rate of interest. Some people borrow in order to make up the purchase price of land which they wish to acquire; and to this type of borrowing applies what I said above about the acquisition of land, to wit, that the money, at second or third hand, returns to the circulation, redistributing itself through trade. As for the loans of entrepreneurs, manufacturers, and merchants, it is well known that they are immediately poured into their enterprises and spent on advances of all sorts.

It follows of course from this analysis that money which is saved, accumulated, put aside for the formation of capitals, is not lost to the circulation, and that the sum of monetary values which are counterbalanced in the transactions of commerce with the other values to settle their price, neither decreases nor increases by it.

In a nation where agriculture, industry and commerce flourish, and where the interest of money is low, the stock of capitals is immense, and yet it is well known that the quantity of money placed in hoards is quite negligible; almost all the existing capitals are represented by paper which is equivalent to money because the assets which are responsible for their soundness are equivalent to money. But there really is no money in the tills other than what is required to meet the daily payments necessary for the flow of trade. Sometimes transfers involving several millions take place without a single sou in silver changing hands. The quantity of this money, which so to speak circulates in large stocks, is thus very limited, always proportioned to the intensity of commercial activity, and to the fluctuations which it gives to money, which are always about the same.

I believe to have shown two things: the one, that if saving withdrew money from circulation, it would not for this alone be a bad thing; the other, that in fact saving does not really withdraw from circulation the money it puts aside.

The outcome of this long note is that the reserves and the stock of money accumulated by the farmers of the indirect tax, are not a bad thing in themselves, and should not be counted among the drawbacks of this type of taxation. The excessive profits are undoubtedly an evil, because they are grasped from the people and because, as they never enter the coffers of the prince, they force the latter to raise the tax. It is an evil that these profits are spent in Paris, just as it is an evil that the large landowners spend their revenue in Paris. But it is a good thing that the Farmers-General spend only gradually part of them.

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Written 1767 in discussion of Mémoire sur les effets de l’impôt indirect, by Saint Péravy.

¹ Turgot’s “quarter” should be “a third.”

² Presumably a reference to Tull’s The New Horse-Houghing Husbandry, or, an Essay on the Principles of Tillage and Vegetation, Dublin, 1731.

³ A paragraph has been omitted at this point by du Pont. This paragraph reads in translation: “I am not sure if it is absolutely impossible for a government to ascertain the product of a farm exactly. In a vast, and consequently complicated administration, where so many interested parties are entitled to have an account of the profits in which they share rendered to them, it is impossible that the farmers do not have their account books very much in order so that the government can always have them produced.”

⁴ I.e., Quesnay and the other leading Physiocrats.

⁵ Two types of value may be distinguished: fundamental value and exchange value. The fundamental value is what the thing costs to him who sells it, that is, the raw material cost, the interest of the advances, the wages of labor and industry. The exchange value is the price which the buyer agrees upon with the seller. The fundamental value is fairly stable and changes less frequently than the exchange value. The latter is ruled by supply and demand, it varies with needs, and often a single event suffices to produce very considerable and very sudden fluctuations. It is not in any essential proportion to the fundamental value, but it has a tendency to approach it continually, and can never move far away from it permanently. It is obvious that it cannot remain below it for a long time; for, as soon as a commodity can be sold only at a loss, its production is discontinued until the resulting scarcity has again raised it to a price above its fundamental value. The price can similarly not be much above the fundamental value for any length of time, for this high price, implying high profits, would call forth the commodity and generate lively competition among the sellers. Now the natural effect of this competition would be to lower the price until it again approaches the fundamental value. (Note by Turgot.)

Observations on the Paper by Graslin in
Favour of the Indirect Tax, to which the
Royal Agricultural Society of Limoges
has Given an Honorable Mention

Turgot defends the view, derived from the Physiocrats, that taxes must ultimately fall on the proprietors of agricultural land. In doing so, he anticipates important arguments by later arguments in defense of economic freedom. Against those who fear that free trade will lead to foreign countries’ gaining control of all raw materials and ruining French industry, Turgot is dismissive. He compares this fear to the fear that freedom to export grain will lead to starvation of the exporting country. He also defends free competition as essential to just wages. Competition among workers prevents workers from taking advantage of a small labor supply; likewise, competition among employers impedes them from taking advantage of workers.