Financial Crisis Flashcards
INCOME (L/T)
Taxation
Inefficient (hard to collect) and did not provide enough income to run the country.
INCOME (L/T)
The Social System
Financially privileged were given exemption.
Heaviest burden fell on those least able to pay.
INCOME (L/T)
Direct Tax
Main direct tax was the taille - a land tax. (1st and 2nd exempt)
Vingtieme 5% tax on income (1st and most of 2nd exempt)
Capitation (Poll Tax) similarly unpopular.
INCOME (L/T)
Indirect Tax
Taken on goods and services.
Gabelle or salt tax, all necessities were taxed ‘aides’ (food and drink), trade ‘octrois’, corvee unpaid labour for road repair.
INCOME (L/T)
Collection of Taxes
No central treasury - financial planning was impossible.
Taxation collection by ‘Farmers General’ through ‘tax farming’.
Venality - corrupt individuals.
EXPENDITURE (S/T)
Court Expenses
Extravagant court of Louis XVI (2,000 horses and 200 carriages, 500 personal servants
EXPENDITURE (S/T)
The Seven Years War (1756-63)
Major defeat of the French by the British. Devastating effects:
- Crown humiliated
- Costs of war, heavy debt
- French territories lost
EXPENDITURE (S/T)
The American War of Independence (1776-83)
France supported rebel colonists - decisive victory.
The Treaty of Versailles in 1783 - cost of war double the annual royal income.
More loans raised by Necker, increased deficit.
Soldiers returned ideas of liberty and democracy.
EXPENDITURE (S/T)
The Financial Crisis
Low income and expenditure - France facing bankrupcty.
Income = 475m livres
Expenditure = 587m livres
Deficit of 112 m livres
EXPENDITURE (S/T)
The Economic Crisis
Land-based economy dependant upon quality and quantity of harvest.
Series of disastrous harvests culminating in 1788 collapse - devastating effect on peasantry.
50% of wages spent on bread increased to 90% in 1788-9.
Resentment spills over to anger as peasants attack grain stores.
