February 7, 2012 essays

Monopolies, Mercantilism, Illegal Buttons, and Saltpeter Men

A glance at some economic regulations from the past.

During the Renaissance, when King Louis XII asked an adviser what was needed for a successful conquest of Milan, he was told: “Most gracious king, three things are necessary: money, more money, and still more money.”

It was during the modern era of conquest and absolute monarchy that taxation became a permanent feature of the political landscape. But collecting taxes proved difficult for emerging nation-states, often meeting with violent resistance. Tax revolts were common in Europe throughout the sixteenth and seventeenth centuries. Indeed, tax revolts were so frequent in France during the seventeenth century that they became, in the words of a distinguished French historian, “almost an institution.”

In France the tax on salt was so unpopular that its name, gabelle, was applied to any unjust or excessive tax. The role of salt in food preservation made it indispensable, but legal salt was available only through licensed retailers who sold small quantities at a time. This imposed severe hardships on those living in remote districts who had to make several long trips just to purchase their quota of salt.

Draconian punishments, including death, were inflicted on anyone in a coastal region who tried to make salt from brine rather than pay exorbitant prices for the inferior monopoly salt. Moreover, some grades were more expensive than others, so consumers were tempted to purchase a cheaper coarse salt that was normally used in the tanning of leather. The French government, determined not to lose revenue, poisoned the coarser salt to render it useless in the kitchen. Thus when careless officials inadvertently mixed the different grades, some consumers paid with their lives.

The smuggling of salt was profitable but dangerous, so smugglers sometimes trained dogs to serve as carriers. When these dogs were apprehended, they were duly tried and executed by rule-bound officials.

The purpose of mercantilist policies was to unify economic activity under state control and thereby subordinate manufacturing and commerce to state interests. Mercantilism, in the words of a leading authority, “concentrated on the power of the state.” According to this approach, all economic activity should be subordinated to the state’s quest for power, especially the military power needed to compete with other states. To wage war successfully required enormous amounts of money, and this required an economic system capable of producing great wealth. Colbert, the seventeenth-century French minister who is sometimes called the father of mercantilism, put it well: “Trade is the source of finance and finance is the vital nerve of war.”

Mercantilist regulations severely retarded improvements and innovations. For example, when tailors in seventeenth-century France began to weave a new kind of cloth button into their garments, they were vigorously opposed by the button-makers guild, whose members branded this innovation a threat to the handicraft industry. The French government then imposed fines for the production, sale, or use of unauthorized buttons. When guild officials called for stronger enforcement, they were authorized to search houses and arrest any perpetrator who was enjoying an illegal button in the privacy of his own home.

If we laugh at the anti-button law and others like it, our mood will quickly change when we look at the enforcement of such laws. An absurd law, precisely because it is absurd, will generate widespread contempt and noncompliance among the people. This makes enforcement difficult for a government, which can impose its will only through draconian measures. Laws may be humorous, but their enforcement rarely is.

Consider the mercantilist effort to rid France of all printed calico cloth. When new technology produced a cloth that was printed rather than dyed, the new fabric was imported in great quantities, much to the delight of French consumers. French artisans, faced with intense competition from abroad, reacted differently. Rather than innovate and compete, these artisans continued to dye their fabrics. They claimed that printed calico cloth would destroy the French economy, and they called on government to dispose of irksome competitors.

The French government responded vigorously. Beginning in 1683 and for seventy-three years thereafter, the import, manufacture, and use of printed cotton fabrics (and eventually all kinds of printed cloth) were prohibited throughout France. This was no idle threat; thousands of violators — pushers and purveyors of calico — were severely punished. In Valence on one occasion, as a historian of mercantilism has written, “77 were sentenced to be hanged, 58 were to be broken upon the wheel, 631 were sent to the galleys, one was set free, and none were pardoned.” All in all, some 16,000 people were killed — either from executions or during armed resistance — during the seventy-year struggle to make France calico-free. Thus did a laughable project become a matter of state and a killer of men.

The nineteenth-century French libertarian Charles Dunoyer (1786-1862) gave this account of some other mercantilist regulations:

The State exercised over manufacturing industry the most unlimited and arbitrary jurisdiction. It disposed without scruple of the resources of manufacturers: it decided who should be allowed to work, what things it should be permitted to make, what materials should be employed, what processes followed, what forms should be given to productions. It was not enough to do well, to do better; it was necessary to do according to the rules. Everybody knows the regulation of 1670 which prescribed to seize and nail to the pillory, with the names of the makers, goods not conformable to the rules, and which, on a second repetition of the offense, directed that the manufacturers themselves should be attached also. Not the taste of the consumers, but the commands of the law must be attended to. Legions of inspectors, commissioners, controllers, jurymen, guardians, were charged with its execution. Machines were broken; products were burned when not conformable to the rules: improvements were punished; inventors were fined. There were different sets of rules for goods destined for home consumption and for those intended for exportation. An artisan could neither choose the place in which to establish himself, nor work at all seasons, nor work for all customers. There exists a decree of March 30, 1700, which limits to eighteen towns the number of places where stockings might be woven. A decree of June 18, 1723, enjoins the manufacturers at Rouen to suspend their works from the first of July to the 15th of September, in order to facilitate the harvest. Louis XIV, when he intended to construct the colonnade of the Louvre, forbade all private persons to employ workmen without his permission, under a penalty of 10,000 livres, and forbade workmen to work for private persons, on pain for the first offense, of imprisonment, and for the second, of the galleys.

Late in the eighteenth century, after most of these laws had been abolished, a French official gave this eyewitness account of the stupidity of the former laws.

I have seen eighty, ninety, a hundred pieces of cotton or woolen stuff cut up, and completely destroyed. I have witnessed similar scenes every week for a number of years. I have seen manufactured goods confiscated; heavy fines laid on the manufacturers; some pieces of fabric were burnt in public places, and at the hours of market: others were fixed to the pillory, with the name of the manufacturer inscribed upon them, and he himself was threatened with the pillory, in case of a second offense. All this was done under my eyes, at Rouen, in conformity with existing regulations, or ministerial orders. What crime deserved so cruel a punishment? Some defects in the materials employed, or in the texture of the fabric, or even in some of the threads of the warp.

I have frequently seen manufacturers visited by a band of satellites who put all in confusion in their establishments, spread terror in their families, cut the stuffs from their frames, tore off the warm from the looms, and carried them away as proof of infringement; the manufacturers were summoned, tried, and condemned; their goods confiscated; copies of their judgment of confiscation posted up in every public place; fortune, reputation, credit, all was lost and destroyed. And for what offense? Because they had made of worsted, a kind of cloth called shag, such as the English used to manufacture, and even sell in France, while the French regulations stated that that kind of cloth should be made with mohair. I have seen other manufacturers treated in the same way, because they had made camlets of a particular width, sued in England and Germany, for which there was a great demand from Spain, Portugal, and other countries, and from several parts of France, while the French regulations prescribed other widths for camlets.

England did not suffer from mercantilist regulations to the same degree as France, thanks largely to a tradition of common law that was hostile to government-granted monopolies and privileges; but England too had its share of commercial regulations, especially during the reigns of Elizabeth and the early Stuarts. The English government was especially concerned with industries that were regarded as essential to warfare. Gunpowder was one such commodity, and so was a key ingredient of gunpowder — saltpeter, which was produced from the excrement of humans, horses, and doves.

The English Crown granted monopolies and special privileges to the manufacturers of saltpeter. These “saltpeter men,” as they were called, jealously guarded their monopoly on heaps of excrement, known as “saltpeter mines,” by tracking down the illegal mines of would-be competitors. When common law judges undercut this monopoly by ruling that anyone could produce saltpeter on his own property, King Charles I came to the aid of his saltpeter men. He decreed that stables, privies, and similar sources of excrement must be covered with stones, boards, chalk, sand, or earth; this rendered such areas less useful as saltpeter mines. But the eternal quest of saltpeter men for illegal excrement was seriously undercut in 1656, when a parliament hostile to monarchical privileges passed a law that prohibited saltpeter men from trespassing on private property.