Economic Problems and Royal Finance under the AR Flashcards
Why did the French Economy have many positive aspects for most of the 18th century (esp. with population and agriculture)?
Many signs of a thriving economy in France for the first 3/4s of the 18th century.
Rapid population growth from 1730s meant it had population of 27 million by 1780s.
It had been 21.5 million in 1700.
This was more than three times the population of Great Britain.
France united and politically stable, in comparison to most neighbours.
Italy and Germany politically fragmented, Spain in decline.
Had lots of excellent agrarian land: prices for produce rising due to demand, large landowners profited and increased their holdings.
From 1730s, France followed Britain’s lead in improving agricultural techniques (crop rotations, use of fertilisers).
Cultivation of American Maize and Potatoes expanded, increasing calorific intake.
Why had French Commerce increased significantly in this period?
Between 1751 and 1771, French commerce increased almost eight fold, making France second only to Great Britain in trade.
Trade with colonies quadrupled, making trading ports prosperous.
Marseilles boomed on trade with Levant; Nantes and le harve with French West Indies.
Bordeaux thrived on handling goods to and from Spain.
Merchants grew rich from the slave trade and import of cotton, indigo, coffee and sugar, which they re-exported across Europe.
How was transport and infrastructure improving in this period?
Transport improving: in 1760s, 1000km from Paris to Toulouse took 15 days.
By 1780s, it took 8.
Visitors commented on quality of royal roads (maintained by the corvée royale).
How was manufacture/industrial production improving in this period?
Industrial production doubled between 1715 and 1771; mining, metallurgy and textiles (in particular printed fabrics) did well.
Mechanisation introduced, some factories appeared.
How did French banking improve in this period?
Paris became the centre of France’s banking.
Caisse d’Escompte founded in 1776 to discount bills of exchange.
These helped trade by offering ready cash for a bill, so that a trader didn’t have to wait for payment.
What economic problems did the AR Economy suffer in terms of agriculture?
However, there were also economic problems, and these grew worse in the 1770s and 1780s.
The French economy was predominantly agricultural: only 15% of pop. Lived in areas of more than 2,000 inhabitants.
However, agriculture comparably backward (say to Britain or the United Provinces), partly due to seigneurial arrangements, and partly due to farm division for multiple sons due to rising population.
This reduced size of holdings to below that of self-sufficiency.
Yield from French farms very low, there was rural over-population, and peasantry high-taxed.
They persisted with backward agricultural techniques (often because they had to?).
Food production could not keep up with population growth.
Why did state regulations often hinder the French Economy’s growth at this time?
State imposed regulations on domestic economy: set requirements for production quality and limited industries to certain cities.
There were also internal trade barriers.
Variations in weights and measures across the country.
Before 1789, estimated 25,000 different units of measure. They varied from town to town and from trade to trade; some traders used their own measuring devices, offering ample opportunity for fraud.
France lacked a network of rivers and canals to carry goods, especially grain.
Why did France’s industry suffer in the late 18th century?
In the 1780s there was a decline in France’s textile industry in the face of British Competition.
French industry was less mechanised than that of Britain.
In 1789, Britain had 200 cotton mills, while France had 8.
Britain also had 20,000 spinning jennies, while France had 1,000.
British competition produced unemployment among France’s spinners and weavers.
Why was the French Banking system weak in the late 18th century?
French banking system not advanced: borrowing scheme using paper money had been initiated by John Law at start of 18th century, but had collapsed.
This led businessmen and traders to fear paper notes, as opposed to metal currency.
Raising capital, therefore, not easy (and aristocrats traditionally uninterested anyway).
Why did AR France suffer a downturn in the 1770s/1780s?
Downturn in 1770s; failure of the vintage in 1778 followed by series of poor harvests and disastrous winters from 1785 to 1789 which depressed peasant incomes.
In July 1788, a hailstorm destroyed crops and France had its worst harvest in 40 years.
This downturn led to a trade slump which produced lay-offs in industry, at a time of rising bread prices.
How in general did the AR government keep France solvent?
Government financed from direct and indirect taxation.
Also supplemented by ‘temporary expedients’ such as loans or the sales of offices.
This was to meet the shortfall between income and expenditure.
What was the main direct tax?
Traditionally, the main direct tax was the taille personelle (paid on the estimated annual value of possessions).
In some areas, however, this was calculated slightly differently, known there as the taille réelle.
What other direct taxes had Louis XIV and XV introduced to pay for wars they had fought?
Louis XIV and Louis XV had also introduced other direct taxes to pay for wars, which theoretically everyone had to pay.
These were the capitation (Poll tax), and the vingtiéme (5% levy).
These taxes collected by royal officials (officiers) but some of the pays d’états paid their taxes as a lump sum.
What were the church’s tax arrangements?
Furthermore the special privileges according to the first two estates varied considerably; the church only offered the crown a ‘don gratuit’, a self-calculated lump sum which bore little relation to the wealth of its lands.
This was paid every 5 years, amounting to 2% of the church’s total revenue.
Church had won right to this in lieu of direct taxation.
Why was the collection of taxation so problematic?
There were also many indirect taxes on goods and services. These were collected by tax farmers and syndicates. However, accounting procedures were limited and there was widespread corruption.
There was no central treasury or bank, so it was almost impossible for ministers to anticipate income and budget accordingly.
Furthermore, financial officials and corporations purchased their positions and it was accepted practice for them to keep something of what they collected.
Why did increasing reliance on loans call problems for the royal finances?
Government was therefore increasingly forced to rely on loans, particularly at times of heavy expenditure, such as during war.
Interest had to be paid on these loans, and they built up a substantial royal debt.
How was royal tax collected?
Direct taxes collected by royal officiers who bought their positions.
Most indirect tax collection had been sold to collection agencies, wither via a 6 year leave to the ferme générale (general farm tax) or to a régie générale.
Régie was a syndicate (régisseurs) who received a fixed salary for their service.
The ferme paid the crown an annual fee and took its income from the difference between that and the amount collected.
Members of the ferme générale called fermiers-généraux (farmers-general).
It was the 2nd largest employer in the country (after the army), bringing in more than half of the government’s revenue.
What was the taille?
A Tax on property and income of 3rd estate.
Divided into taille personelle (property/revenue/personal tax) and taille réelle (land and house property, or household, applicable in Languedoc, Provence, Guyenne and Dauphiné).
What was the Capitiation?
Capitation (Poll Tax)
Theoretically payable by everyone.
Clergy paid don gratuity instead.
2nd estate payments varied depending on rank, status, occupation and property.
22 different tax classes.
What was the Vingtiéme?
Vingtiéme (income tax)
Vingtiéme direct tax of 5% of earnings from land, property, commerce, industry and official offices.
Although intended to be levied on all, the clergy won exemption, the pays d’états won reduced rates and the parlements resisted new assessments of income.
Name some indirect taxes/what they were made on?
Gabelle, The Salt Tax, collected by the ferme générale.
Tabac, The Tobacco Tax, collected by the ferme générale.
Aides, Represented a consumption tax on consumer goods, such as wine, liquor, oil, textiles, tallow, iron, wood, livestock, playing cards, hides, soap and paper. Aides were collected by the régie générale.
