1648 - Rise of the Fiscal State Flashcards
What does the military revolution of 15th-18th century refer to?
Refers to developments across 15th 18th century that experienced a underlying dynamic of military competition.
EU fragmented into states and are forced to innovate to survive otherwise they’d be swallowed by better neighbor.
It was driven my the need for states to compete.
How did did the military change?
Previously monarchs had a personal following. They did not have a central army/administration, monarchs were forced to negotiate personally.
The was a transition from a personal feudal service to commercialisation of warfare.
Professionalisation of warfare – private contractors.
What happened in the mid 15th century artillery revolution?
Charles VII and the French invasion of italy 1494-5.
The medieval fortification/castles could not compete with new artillery
from 1520 develop of bastion defences –
There was a period of seige warfare and mass infantry armies, long term sieges months on end.
Previously could requisition on land and survive but now with massive armies that was not possible.
What was the primary task of the fiscal states?
Waging war.
Warfare rarely settled by victory on the battlefield but through financial exhaustion, the strongest would survive long term.
Warfare states ability reflected there ability to marshall its own resources.
What did Tilly say?
War made the state and the state made the war.
Where did the money come from to fund the military?
Sell public assets – to sell privileges/ titles of nobility/ roles in public office. It was a short term expedience to raise money quickly but long term issues, may lead to control issues in administration.
Manipulate money supply – short term money for government but led to economic issues inflation.
Raise taxes – not good in emergencies as it is a slow process, negotiation and revolt, mid to long term essential to repay loans gov took out. Raising taxes lead to heavy political consequences as seen in Naples 1647 where there was a rebellion as the people refused to pay taxes.
How did public debt help fund the military`?
Public debt – raises money quick as interest rates relate to prospects and reputation.
Dutch republic 17thc - paid interest in time so investors were confident in them, interest rates low at 3%
Spanish monarch – long history of not paying interest, not payback, investors don’t like this so Spain had to pay more to borrow money 8%.
What does indirect taxation refer to?
Duties on trade : customs(tax imports/exports), excises (tax on internal transactions – easy to collect, customs are easy to control (regulate what comes in out/ evade through smugglers).
Regression form of taxation as effects entire population, hit poor/middle group not the rich, usually focused on luxury goods
What does direct taxation refer to?
It is often difficult to measure income/assets/ wealth), so they focus on landed property as it difficult to conceal.
But landowning elites had great political influence so it was a major challenge/ needed lots of negotiation.
Elites lend money to government and got interest. This had a political function as elites were now stakeholder in government and tied investment to survival of sate. This led to aristocratic favouritism and the advantages that derived from pol influence.
This hit general population harder
What happened in France in terms of military expansion
Had great military power but leads to revolution.
Finance was the “sinews of the state”
Composite state structure 5thc : strong regional estates pays d’e’tats, sense of separateness . They had to negotiate to raise taxes and this normally meant less tax as it was hard to negotiate.
Tensions erupt from religious divisions following the French wars of religion c1562-98, Fronde (series of civil wars) 1648-53.
Weak national assembly (estates in general) – did not meet between 1614-1789.
Sale of public office – especially tax farms. The monarchy is desperate for money.
Long term, French government looses control of own administration and control of privatization of office – this meant it was difficult to reform administration as there was lots of corruption, e.g backhanders were common.
Nobody was dedicated to the public service but they were interested in making money to recover the cost for investing in office.
What did John Law do in 1720?
Paper currency and centralised fiscal reform.
He didn’t establish a central bank. The Mississippi company experienced a boom and bust- disaster experiment
France and debt?
France fixed term loans (higher interest rates, repaying principle as well as interest).
Compared to Britain, France’s public debt in the c18 was smaller, but debt servicing accounted for higher proportion of tax revenues.
France’s debt continued even in peace time 1783-9,.
The debt servicing reached half of the total government spending in 1788.
There was a refusal assembly of nobles to contemplate tax reform. this led to a decision to summon estates general in 1789 which led to explosion of demands that led to revolution.
What about absolutist states?
Non absolutist powers: Britain and Dutch republic
Absolutist states were not necessarily the most powerful, represent government can achieve higher fiscal yield and lower interest.
Trust was key to fiscal and military performance: achieved through legitimacy, legality and participation.
What was the barrier to reforming the system in France?
Officials could not be disciplined and they bought themselves out so they owned it.
This was serious with regard to tax collection, the government sold taxation rights to private contractors so they could collect tax themselves (a system of tax farming).
As a result, people lost trust in public administration as they regarded it as unfair because the people who collected it could be bribed and tax unfairly.
