Economic problems and royal finances

Question 1

Thriving

Answer 1

• Rapid growth with a population of 27 million, 3x GB
• United and politically stable whilst Italy and Germany were politically fragmented
• lots of land suitable for farming and rise in demand
• Second to Britain in trade so trade with colonies 4x
• Transport increasing by 1780 it took 8 days from Paris to Toulouse when in the 1760s it had taken 15
• Industrial production doubled between 1715 & 1771
• Paris became France’s centre of banking

Question 2

Failing

Answer 2

• The economy was prominently agricultural making it backwards compared to Britain and dutch provinces
• Yield from french farms was low and food production could not keep up with population growth
• Lacked a network of rivers to carry goods
• 1780s saw a decline in Frances textile industry due to British competition
• Banking system not advanced
• Poor harvests led to a downturn leading to layoffs in industry at the time of rising bread prices

Question 3

reasons for the royal debt

Answer 3

• war of Austrian succession (1740 -1748) cost 1 billion livres
• seven years war (1756-1763) cost 1.8 billion livres

Question 4

Royal finances

Answer 4

• Government financed by direct and indirect taxation
• Widespread corruption meant that funds were insufficient funds so loans had to be taken out leading to a substantial royal debt
  Direct taxes
  Taille - property and income of 3rd estate
  Capitation - poll tax, clergy paid don gratuit instead
  Vingtieme - income tax, clergy were exempt
  Indirect taxes
  Gabelle - salt tax
  Aides - consumption tax on consumer goods

Question 5

insufficient taxation

Answer 5

• richest (nobility) exempt from taxation policies
• efficiency of tax collection hampered from the numerous regional differences in taxation polices
• tax farming - corruption within tax collection as they would collect more taxes than was given to the state

Question 6

Royal debt

Answer 6

• Louis XVI inherited a national debt of 2 billion livres
• Interest payment on the debts was more than what the government collected in taxes resulting in a balance of payment crisis +
• Wars of the 18th century added to french debt
• War of Austrian succession and 7 year war cost 1.3 billion livres
• American war of independence further increased this debt

Question 7

Attempts to improve royal finances under turgot (1774 - 76)

Answer 7

• Believed that the french economy would work more effectively if privileges were regulations and customs duties were replaced with a freer system
  Policies
• Cuts to royal expenses
• Reduction of pensions
• Reforms to tax farming system to increase efficiency
• Opposed participation in the AWI
• Able to negotiate a low interest loan with dutch bankers in 1776
• Abandoned proposals
• Replacing indirect taxes with property tax was opposed by the nobles
• Attempted in 1774 to establish free trade in grain nut abandoned by bread rights in spring 1775
• 6 edicts 1776 to abolish privileges, tax all and grant everyone the right to work,protested due to the 5th which suppressed guilds and the 6th which abolished the corvee and the Paris Parliament presented 2 remonstrances
• March 1776 Louis pushed it through using his lit de justice
• Ordered it resigned in may 1776 after offending Marie Antoinette

Question 8

Attempts to improve royal finances under necker (1777 - 1781)

Answer 8

• Could not be made controller general as he was protestant so given the title of director general
  Policies
• Reduced royal household expenses and pensions
• Appointed salaried official rather than venal corporation to run royal estates
• Removed the ventime on industry
• Reduced the number of tax farms from 60 to 40
  Removal of venality meant its income to government budget was lost
• 1781 published the compte rendu
  Inaccurate
• Suggested that France was in a stronger financial position than it really was
  It appeared that France had a surplus of 10 million livres rather than deficit
• Popular with the french as he did not raise taxes
  Enemies with Marie Antoinette resigned in 1781

Question 9

Attempts to improve royal finances under Calonne (1783 - 87)

Answer 9

• Supported pensions and extravagant public spending in order to maintain confidence
• Parlements more reluctant to agree to loans in December 1785
• 1786 reform package
• General land tax and abolition of vingtiemes
  Indirect tax on legal document
• End of the corvee royal to be replaced by a tax on landowners
• Louis accepted these measures but other ministers did not so he decided to put it in front of the assembly of notables