Richard Cantillon

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.^[5] 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.^[6]

Biography[edit]

While details regarding Richard Cantillon's life are scarce,^[7] it is thought that he was born sometime during the 1680s in County Kerry, Ireland.^[1][6] He was son to land-owner Richard Cantillon of Ballyheigue.^[8] Sometime in the middle of the first decade of the 18th century Cantillon moved to France, where he attained French citizenship.^[9] 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.^[10] Cantillon remained in Spain until 1714, cultivating a number of business and political connections, before returning to Paris.^[11] 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.^[12] Two years later, thanks in large part to financial backing by James Brydges, Cantillon bought his cousin out and attained ownership of the bank.^[13] Given the financial and political connections Cantillon was able to attain both through his family^[14] and through James Brydges, Cantillon proved a fairly successful banker, specialising in money transfers between Paris and London.^[15]


At this time, Cantillon became involved with British mercantilist John Law through the Mississippi Company.^[16] Based on the monetary theory proposed by William Potter in his 1650 tract The Key of Wealth,^[17] John Law posited that increases in the money supply would lead to the employment of unused land and labour, leading to higher productivity.^[18] 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.^[19] Law began a financial speculative bubble by selling shares of the Mississippi Company, using the Banque Générale's virtual monopoly on the issue of bank notes to finance his investors.^[20]


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."^[21] 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.^[22] Cantillon replied: "I shall not go away; but I will make your system succeed."^[22] 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.^[23]


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.^[24] With the collapse of the "Mississippi bubble", Cantillon was able to collect on debt accruing high rates of interest.^[25] 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.^[26]


On 16 February 1722, Cantillon married Mary Mahony, daughter of Count Daniel O'Mahony—a wealthy merchant and former Irish general—spending much of the remainder of the 1720s travelling throughout Europe with his wife.^[27] Cantillon and Mary had two children, a son who died at an early age and a daughter, Henrietta,^[28] wife successively of the 3rd Earl of Stafford and the 1st Earl of Farnham. Although he frequently returned to Paris between 1729 and 1733, his permanent residence was in London.^[29] In May 1734, his residence in London was burned to the ground, and it is generally assumed that Cantillon died in the fire.^[2] While the fire's causes are unclear, the most widely accepted theory is that Cantillon was murdered.^[30] One of Cantillon's biographers, Antoine Murphy, has advanced the alternative theory that Cantillon staged his own death to escape the harassment of his debtors, appearing in Suriname under the name Chevalier de Louvigny.^[31]