How the Exchange is a Constraint on Despotic Power

by Montesquieu

Moscow would have descended from its despotic power, but could not.

The establishment of commerce depended on that of the exchange, and the transactions were inconsistent with all its laws.

In 1745, the Czarina made a law to expel the Jews, because they remitted overseas the coin of those who were banished into Siberia, as well as the coin of the foreigners in her service.

All the subjects of the empire are slaves. They can neither go abroad themselves, nor send away their effects without permission.

The exchange gives them the means to remit their coin from one country to another. It is therefore entirely incompatible with the laws of Moscow.

Commerce itself is inconsistent with the Russian laws.

Russia is composed only of:

• slaves employed in agriculture, [first estate] and
• slaves called ecclesiastics or the gentlemen lords of those slaves [second estate]

There is then nobody left for the third estate of mechanics and merchants.

Chapter 15: The Practice in Italy

THEY have made laws in some part of Italy to prevent subjects from selling their lands, in order to remove their coin into foreign countries.

These laws may be good, when the riches of a state are so connected with the country itself, that there would be great difficulty in transferring them to another.

But foreign exchange makes riches:

• independent of any particular state and
• easily conveyed from one country to another

It is a bad law because it:

• gives an advantage to moveable effects, in prejudice to the land
• deters foreigners from settling in the country and
• may be eluded.

Chapter 16: The Assistance a State may derive from Bankers

THE bankers business is to change, not to lend money.

If the prince makes use of them to exchange his coin, as he never does it but in great affairs, the least profit he can give for the remittance, becomes considerable.

If they demand large profits, we may be certain that there is a fault in the administration.

On the contrary, when they are employed to advance specie, their art consists in procuring the greatest profit for the use of it, without being liable to be charged with usury.