Chapter 3 - Economic problems and royal finance

Question 1

What was Louis XVI’s biggest problem in 1774?

Answer 1

Money = monarchy was heavily in debt due to costs of foreign wars.

Question 2

When was the War of Austrian succession and what was its estimated cost?

Answer 2

1740-48

Around 1 billion livres

Question 3

When was the Seven Years’ War and what was its estimated cost?

Answer 3

1756-63

Around 1.8 billion livres

Question 4

What was Louis’ main problemo?

Answer 4

Louis could not pay off the debts he was in.

Question 5

What were the problems of royal income?

Answer 5

Even in peacetime, royal income wasn’t enough to cover expenditure because of size of interest payments.

Question 6

What did the lack of royal income mean in the short term and long term?

Answer 6

Short term:
The Crown borrowed from International banks

Long term:
Just made things worse as still couldn’t repay

Question 7

Where did the majority of royal income come from?

Answer 7

Taxation

Question 8

Why was royal income from taxation a problem?

3 points

Answer 8

• 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

Question 9

What did Louis try to do to resolve his economic problems and who was responsible for this?

Answer 9

Louis tried to follow a policy of reform to improve royal finances.
Controller General was minister responsible.

Question 10

When was Turgot appointed?

Answer 10

1776

Question 11

Who was Turgot influenced by?

Answer 11

Ideas of the physiocrats.

Question 12

What did Turgot do?

Answer 12

Removed price controls, abolished guilds and proposed a new property tax.

Question 13

How did people respond to Turgot’s reforms?

Answer 13

Reforms and way he went about them aroused great hostility from people whose interests were threatened.

Question 14

How did Louis respond to Turgot’s reforms?

Answer 14

Louis dismissed him

Question 15

When was Necker appointed?

Answer 15

1776

Question 16

What did Necker do?

Answer 16

Necker tried to cut venal offices to increase royal finance.

Question 17

How did people respond to Necker’s reforms?

Answer 17

Necker received much hostility, particularly from nobles who held the venal offices.

Question 18

What was Necker’s key mistake?

Answer 18

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.

Question 19

How did Necker try to defend his position and when?

Answer 19

1781

Issued the first public report on royal finances to show that he believed them to be in good order.

Question 20

What was the response to Necker’s public finance report?

Answer 20

Some of the minor details were seized upon by enemies of the monarchy as examples of extravagant royal spending.

Question 21

What happened to Necker?

Answer 21

The hostility and anger over his public finance report lost Necker the support of the court and he resigned.

Question 22

When was Calonne appointed?

Answer 22

1783

Question 23

How did Calonne manage royal finance?

Answer 23

Selling offices and by lavish spending.

Question 24

How did Calonne’s measures help?

Answer 24

Spending maintained confidence in the monarchy which meant it could raise loans

Question 25

What were the problems with Calonne’s measures?

Answer 25

Was not a long term solution and could not continue indefinitely = needed further reform

Question 26

When did Calonne hope reform would happen?

Answer 26

1787 when a number of taxes were due for renewal

Question 27

What happened to Calonne?

Answer 27

Unsuccessful in raising loans 1785 - 1786

Had to tell Louis that government was close to bankruptcy in Aug 1786