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Commentary on The Answer to the Question on Rural Trade

In 1775 a learned society in Gothenburg, Vetenskaps och Vitterhets Samhället i Göteborg,1 launched a contest for the best essay written on the topic of “whether rural trade is useful or harmful to a country”. Forbidden rural trade implied any trade occurring outside the towns or the annual fairs. The farmers were allowed to exchange products with each other, but in order to sell them to others they had to take them to town. Correspondingly, the merchants in the towns were not allowed to trade in the countryside.

The society had been established in 1773 in order to stimulate particularly the natural sciences. Like most other learned societies at this time it also focused on belles­lettres. An overarching aim was the diffusion of useful knowledge, and for this purpose publication series were inaugurated and prize essay competitions launched. Like other academies during this period, it was keen to have a royal patron, or at least one from the highest nobility. From 1775 the patron of the Gothenburg society was Count Carl Fredrik Scheffer, a member of Gustavus III’s council. As Virrankoski explains, it was to please Scheffer that the topic of rural trade was specifically picked out by the society.2 He was perhaps the only “real” Physiocrat in Sweden at the time – familiar as he was with François Quesnay and his little group from his time in Paris as ambassador in the 1740s.3 For the Physiocrats as well as for those who, in more general terms, proposed that agriculture was the most important sector of the economy, the development of rural trade was a cherished task. In France during the 1770s a discussion concerning Turgot’s4 initiative to make the corn trade free stirred up much controversy. Up to this time a general line of policy – in most countries, including France as well as the Swedish realm – had been to protect the population from the laws of supply and demand. A common view was that free trade in corn would inevitably lead to poor people starving in times of dearth and bad harvests, while corn­growers would be hurt by a fall in price when harvests were ample. In order to even out such cyclical effects, a system of regionally placed storehouses for corn was established in Sweden from the middle of the eighteenth century, and this system was still in operation during the first decades of the nineteenth century.5 This arrangement was criticized by Scheffer and others inspired by Turgot’s reforms and the Physiocratic doctrines. As we have seen, the critics included Chydenius (see Anders Chydenius’s life and work/Chydenius as an economist). According to the reformers, a free market for corn was superior in order to reach those who needed it most badly, for example when a bad harvest hit a certain region. Even more so, by creating individual incentives, free trade would stimulate increased production of corn, which would make dearths more unlikely in the future.6 When the Gothenburg society launched its competition for the best essay, it particularly wished to find arguments for the beneficial effects of a freer trade in agricultural products. It was no coincidence, of course, that Gustavus III’s finance minister, Johan Liljencrants, the very same year had issued a new ordinance that made much of the corn trade free in Finland (almost immediately after Gustavus had proudly sent the text of the law to Turgot, the latter was, ironically enough, sacked from his post as French minister of finance). However, Scheffer without doubt played a pivotal role in respect of the new ordinance. Consequently, the Gothenburg society took the opportunity to launch a prize competition in order to show its members’ warm support for the society’s protector.

Apparently Chydenius had met Scheffer in person, or at least communicated with him by letter. Most certainly he had also read Scheffer’s translation of some of the French Physiocratic texts, which had been published some years earlier, as well as the anonymous pamphlet written by him, A Letter from an Inhabitant of Savo to One of His Patriotic Friends in Stockholm7 (1775), in which he argued in favour of free trade, with regard to both foreign and domestic trade, as well as of free enterprise. On the other hand, Chydenius’s contribution to the prize competition repeats many of the standpoints from his older texts, especially voiced in the essay on the causes of emigration from Sweden written 13 years earlier, but also from texts written during the Diet of 1765–6. Most probably Chydenius reasoned that now, when the issue of freer trade again was on the agenda, it was the right moment to take the opportunity to intervene. It is not unlikely that he saw it as a possibility to return to the political scene.

In this essay he once again refers to natural liberty as a main argument in favour of free trade and enterprise. Moreover, as before, he points to the right that each citizen has under a free constitution to find the most suitable way to procure a living for himself and his family. As we can see, he does not restrict himself to talk about liberalizing the corn trade. Instead, his emphasis is on free trade and enterprise in general as a means to stimulate growth of rural and domestic industry. Such industry, most often referred to in the scholarly literature as “proto-industry”, was widespread in the Swedish realm during the second part of the eighteenth century. Before the industrial revolution, proto­industry appeared in Europe mainly in two different forms: either organized in the form of putting out, with merchants from cities placing orders with producers, delivering raw materials and afterwards taking the finished products to markets; or in the form of a so-called buying-up system, in which the peasant-producers had control of all the stages from a raw to a finished ware sold in the marketplace.8 Moreover, in the putting­out system the majority of workers were crofters or landless workers, many of them working as families. The second type of system production was more often organized within the household of landowning tenant farmers. Here the majority of the workforce was made up by members of the farmer’s family but also included servants, most often females. While both of these variants existed in the Swedish realm – not least, the rural wool industry situated in Sjuhäradsbygden in the county of Västergötland in south­west Sweden was organized according to the former type at the end of the eighteenth century and during the first half of the nineteenth century, with merchants from Borås and Gothenburg serving as putter­outers (Verlagers); the “buying-up” system was the most prevalent, especially in more remote areas such as, for example, Ostrobothnia in Finland.9 Hence, in such districts production of tar, rope, honey, tools made of wood and iron, boats and other items was carried out within the households of tenant farmers. To a large extent it was based upon natural resources more or less freely available in the locality (most of the woods were still common property), it was worked up by members of the household and put to market either by themselves or (illegally) with the help of neighbours or local pedlars who travelled to nearby towns or organized shipping to more distant ports. It was perhaps also the prohibition of such peasant shipping to Stockholm and other ports that had stimulated Chydenius to take part in the local discussion concerning the Swedish navigation laws before entering the Diet of 1765–6. His critical attitude towards city merchants is clearly spelled out in this text – even of merchants from the ports of Ostrobothnia, who had gained the lawful right to sell directly to foreigners only ten years previously. In relation to the peasant traders they were still monopolists suppressing the countryside, Chydenius insists.10

As in the case of his essay on the causes of emigration, Chydenius did not receive any prize. Perhaps – as Virrankoski supposes – its message was much too radical for the members of the learned society in Gothenburg. Although the society promised that the text would be printed in the future – with some unspecified “minor changes” – Chydenius chose to publish it himself. Since the mid­1760s Lars Salvius had died, and Chydenius’s new printer was less well known but certainly had a pompous name: the Royal Printing-Press. On the whole, the publication seems not to have made much political impact. This is not especially surprising: much of the lively debate on economic issues had in fact disappeared with the passing of the Age of Liberty. After Gustavus III’s coup in 1772 the discussion died out. While steps were taken in a more liberal direction by his government, the reform of a free trade in corn in 1775 was passed without any major public discussion of the kind that most probably would have taken place ten years earlier. Be that as it may, Chydenius did not contribute to Liljencrants’s ordinance on a free trade in corn, for the simple reason that it was published too late (and perhaps not widely read).

Lars Magnusson

  1. The society did not gain royal status until 1778. Since then the official name has been Kungliga Vetenskapsoch Vitterhetssamhället i Göteborg (the Royal Society of Arts and Sciences in Gothenburg).
  2. P. Virrankoski, Anders Chydenius: Demokratisk politiker i upplysningens tid, Stockholm: Timbro, 1995, p. 292.
  3. E.F. Heckscher, Sveriges ekonomiska historia från Gustav Vasa, II:2, Stockholm: Albert Bonniers förlag, 1949, p. 871f.; L. Magnusson, “Physiocracy in Sweden”, in B. Delmas, T. Demals and Ph. Steiner (eds), La Diffusion internationale de la Physiocratie, Grenoble: Presses Universitaires de Grenoble, 1995, p. 381f; L. Herlitz, Fysiokratismen i svensk tappning 1767–1770, Meddelanden från Ekonomisk-historiska institutionen vid Göteborgs universitet, nr 35, Gothenburg, 1974.
  4. About Turgot, see Answer to the Question on Rural Trade, § 3, note 2.
  5. B.Å. Berg, Volatility, Integration and Grain Banks: Studies in Harvests, Rye Prices and Institutional Development of the Parish Magasins in Sweden in the 18th and 19th Centuries, Stockholm: Economic Research Institute, Stockholm School of Economics (EFI), 2007, p. 79f.
  6. The standard work here is S.L. Kaplan, Bread, Politics and Political Economy in the Reign of Louis XV, 2 vols, The Hague: Nijhoff, 1976.
  7. Bref, ifrån en Sawolax­bo, til en des patriotiska wän i Stockholm, Stockholm, 1775.
  8. S.C. Ogilvie and M. Cerman (eds), European Proto­industrialization, Cambridge: Cambridge University Press, 1996, ch. 1.
  9. L. Magnusson,”Proto­industrialization in Sweden”, in Ogilvie and Cerman (eds), op. cit., p. 208f.
  10. Virrankoski, op. cit., p. 295f.