Finance in France

Question 1

What were the three main causes of the financial situation in 1774?

Answer 1

1. Wars (7 years, American independence)
2. Foreign policy
3. Economic condition

Question 2

What was France regarded as before the economic difficulties it began to face?

Answer 2

A large, prosperous nation with a thriving agriculture industry that was growing.

Question 3

What were the developments with international trade?

Answer 3

It had expanded and overseas trade in wine and luxury goods were flourishing, with established colonial and European trading links.

Question 4

When was the 7 years war?

Answer 4

1756-63.

Question 5

What was an impact of the 7 years war?

Answer 5

It had proved to be disastrous and expensive.

Question 6

Who did France side with during the 7 years war?

Answer 6

The Austrians but lost a series of crushing defeats in India and North America.

Question 7

Who did France support during the American War of Independence?

Answer 7

The American colonists in their fight against Britain.

Question 8

How did the American war of Independence influence France’s ideologies?

Answer 8

It laid the foundations for providing crucial ideas for the French Revolution.

Question 9

When did France join the American war of Independence?

Answer 9

1778 and they provided military and financial help for the US.

Question 10

What was the financial effect of France’s efforts during the war?

Answer 10

The cost of the war was huge and caused problems for the finance of the country, plunging France into financial crisis despite them being victorious.

Question 11

What were the wars funded by?

Answer 11

Borrowing, meaning everytime the crown took out a loan it faced future repayment debts and interest.

Question 12

In order to repay the debt, what did Louis and his ministers have to do?

Answer 12

Squeeze the maximum amount from existing taxation and also introduce a number of temporary taxes.

Question 13

Which particularly hated tax was introduced?

Answer 13

The Vingtieme, which was a levy on income paid by all except the clergy. It was introduced in 1749 and was still being levied in 1780.

Question 14

What was the public opinion of taxation?

Answer 14

There was a resistance to taxation which made it difficult for the government to fund the wars and repay debts. Those with the greatest wealth and who had the greatest means of paying taxes were not contributing to the country’s economic welfare.

Question 15

Why was there little land investment?

Answer 15

The pattern of land distribution, with tiny peasant holdings, meant that there was limited investment in land and that therefore productivity was relatively low- no mass production. The economy was largely rural and a bad harvest could therefore send prices rocketing and hit industry and trade.

Question 16

What were the 1770s and 1780s dominated by?

Answer 16

Bad harvests

Question 17

What was there a scarcity of in the 1780s?

Answer 17

Food, particularly grain

Question 18

How much did bread rise by 1789?

Answer 18

89% from 9 sous to 14-15 sous.

Question 19

What was simultaneously happening to the population during the food shortages of 1770-80?

Answer 19

The population was steadily increasing and so food prices began to rise out of proportion to income.

Question 20

What was there a decline in?

Answer 20

There was a decline in the manufacturing industry and a further increase in urban and rural unemployment. It was therefore harder for the government to collect taxes and so more loans were taken out.

Question 21

How did the Ancien Regime create these economic conditions within France?

Answer 21

Taxing the third estate out of refusal to pay taxes themselves ie. Vingtime; an income tax paid by all except the clergy, limiting the investment in the land (not owned by people working on it- thus no investments are being made to improve it as the noble get paid regardless)

Question 22

What caused the economy of France to dip in the 1770s and 1780s?

Answer 22

1. Crops failed, bread prices rose 89% from 1788 to 1789- led to starvation
2. Rising food prices, decline in industrial production and increase in unemployment in both rural and urban areas; made it harder for the government to collect taxes and thus they had to continue to take out loans, perpetuating the crisis
3. 1786 Eden Treaty

Question 23

What was the Eden Treaty?

Answer 23

The Eden Treaty of 1786 lowered tariffs to encourage international trade between France and Britain.

Question 24

Why was the Eden Treaty detrimental to the French economy?

Answer 24

A treaty like the Eden Treaty would usually advance economic growth but due to the shortage of goods to fill the French markets in the 1780s, there was no surplus to export. Gaps in the French economy allowed for the market to be flooded with British goods which crushed the struggling French industries.

Question 25

How did war debts affect the economic situation of France in the 1770s and 1780s?

Answer 25

1. War debts acquired from wars in the 18th century (Spanish, Polish and Austrian)- prior economic condition
2. 7 years war; lost territories in Canada, India, West Africa and some islands in the West Indies to the British
3. American Revolution; French soldiers who fought in America wanted to bring the same ideals to France (catalyst to revolution), even though they were on the victors side it largely contributed to triggering a financial crisis