Chapter 3 - Economic problems and royal finance Flashcards
What was Louis XVI’s biggest problem in 1774?
Money = monarchy was heavily in debt due to costs of foreign wars.
When was the War of Austrian succession and what was its estimated cost?
1740-48
Around 1 billion livres
When was the Seven Years’ War and what was its estimated cost?
1756-63
Around 1.8 billion livres
What was Louis’ main problemo?
Louis could not pay off the debts he was in.
What were the problems of royal income?
Even in peacetime, royal income wasn’t enough to cover expenditure because of size of interest payments.
What did the lack of royal income mean in the short term and long term?
Short term:
The Crown borrowed from International banks
Long term:
Just made things worse as still couldn’t repay
Where did the majority of royal income come from?
Taxation
Why was royal income from taxation a problem?
3 points
- nobles (king’s richest subjects) exempt from most taxes
- tax collection was chaotic and incomplete because of all the regional differences
- tax farming reduced Crown income. Farmers-General paid an agreed sum in advance for the right to collect certain taxes. What they collected above that sum was their profit
What did Louis try to do to resolve his economic problems and who was responsible for this?
Louis tried to follow a policy of reform to improve royal finances.
Controller General was minister responsible.
When was Turgot appointed?
1776
Who was Turgot influenced by?
Ideas of the physiocrats.
What did Turgot do?
Removed price controls, abolished guilds and proposed a new property tax.
How did people respond to Turgot’s reforms?
Reforms and way he went about them aroused great hostility from people whose interests were threatened.
How did Louis respond to Turgot’s reforms?
Louis dismissed him
When was Necker appointed?
1776
What did Necker do?
Necker tried to cut venal offices to increase royal finance.
How did people respond to Necker’s reforms?
Necker received much hostility, particularly from nobles who held the venal offices.
What was Necker’s key mistake?
Necker advised Louis that France could afford to enter the American War of Independance when it couldn’t. This cost around 1.3 billion livres so increased royal debt.
How did Necker try to defend his position and when?
1781
Issued the first public report on royal finances to show that he believed them to be in good order.
What was the response to Necker’s public finance report?
Some of the minor details were seized upon by enemies of the monarchy as examples of extravagant royal spending.
What happened to Necker?
The hostility and anger over his public finance report lost Necker the support of the court and he resigned.
When was Calonne appointed?
1783
How did Calonne manage royal finance?
Selling offices and by lavish spending.
How did Calonne’s measures help?
Spending maintained confidence in the monarchy which meant it could raise loans
What were the problems with Calonne’s measures?
Was not a long term solution and could not continue indefinitely = needed further reform
When did Calonne hope reform would happen?
1787 when a number of taxes were due for renewal
What happened to Calonne?
Unsuccessful in raising loans 1785 - 1786
Had to tell Louis that government was close to bankruptcy in Aug 1786
