Montesquieu

Charles Louis de Secondat, Baron de La Brede et de Montesquieu, wrote one of the most famous books in history, The Spirit of Laws (1748), in which he touched on the role of money in shaping laws.

Montesquieu’s book appears on every list of great books. The lessor-known full title of the book, almost rivaling Montesquieu’s modest name, was On the Spirit of Laws, or On the Relations Which Must Exist between the Laws and the Constitution of Each Government, the Manners, Climate, Religion, Commerce, etc. The book proposed to demonstrate that the character and tendency of laws (the spirit of laws) owed their origin first to climate and geography, and then to the physiology, economy, government, religion, morals, and manners of the people. The framers of the American Constitution copiously quoted The Spirit of Laws in their writings. Catherine the Great of Russia thought The Spirit of Laws should be “the breviary of sovereigns,” and expected those helping revise Russia’s laws to read extracts that she furnished.

Montesquieu briefly addressed the subject of money and how the evolution of money influences the civil laws of a people. His inquiry led him to these conclusions:

When a people have not the use of money, they are seldom acquainted with any other injustice than that which arises from violence; and the weak by uniting, defend themselves from its effects. They have nothing there but political regulations. But where money is established, they are subject to that injustice which proceeds from craft—an injustice that may be exercised in a thousand ways. Hence they are forced to have good civil laws, which spring up with the new practices of iniquity.

In countries where they have no specie, the robber takes only bare moveables, which have not

mutual resemblance. But where they make use of money, the robber takes the signs, and these always resemble each other. In the former nothing can be concealed, because the robber takes along with him the proofs of his conviction; but in the latter it is quite the contrary.

… The greatest security of the liberties of a people who do not cultivate the earth is their not knowing the use of money. What is gained by hunting, fishing, or keeping herds of cattle cannot be assembled in such great quantity, nor be sufficiently preserved, for one man to find himself in a condition to corrupt many others: but when, instead of this, a man has a sign of riches, he may obtain a large quantity of these signs, and distribute them as he pleases.

The people who have no money have but few wants; and these are supplied with ease, and in an equal manner. Equality is then unavoidable; and hence it proceeds that their chiefs are not despotic.

Unlike a modern monetary theorist, Montesquieu was concerned with the deeper social and anthropological significance of money, and suggests that the innovation of money contributes to social inequality, a theme that can be heard in the most ancient literature on the subject. He does not seem quite willing to give the innovation of money a ringing endorsement. In another section of his work, however, he says, “Should you ever happen to be cast by some adventure among an unknown people; Upon seeing a piece of money you may be assured that you have arrived in a civilized country. The culture of lands requires the use of money.”