Financial Problems Flashcards
Debt
4
In 1774, Louis’ main problem was money.
War of Austrian Succession cost 1 billion livres
7 Years War cost 1.8 billion livres
Even in times of peace royal income wasn’t enough to cover expenditure due to the interest rates, but the decision to aid the American War of Independence made matters worse (1.3 billion livres)
Inefficient Tax System
3
Most royal income came from taxation but it wasn’t enough because:
- Nobility, richest subjects, were exempt from most taxes
- Tax collection was inefficient & chaotic due to regional differences
- Tax farmers reduced income as they took some profit (gov. didn’t receive all tax income)
Controller Generals
Turgot (1774-76)
Necker (1777-81)
Calonne (1783-89)
Dismissing these reforming Generals made Louis appear weak
Turgot
1774-76
Removed price controls & proposed a new property tax
His reforms aroused great hostility & he was dismissed in 1776
Necker
1777-81
Advised Louis that France could afford entering the American War of Independence when it couldn’t.
Resigned in 1781 after he lost the support of the court after his report on Royal Finances, the Compte Rendu
Calonne
1783-89
Sold royal offices & increased spending (but knew this couldn’t continue)
Tried to raise loans but was unsuccessful, and told Louis France was close to bankruptcy in 1786
By 1789 there was a deficit of 126 million livres and interest payments were 51% of expenditure.
Financial Situation by 1789
By 1789 there was a deficit of 126 million livres and interest payments were 51% of expenditure.
Importance of financial problems
3
Failure of the crown to support reforming ministers
Louis & Marie Antoinette were accused of extravagant spending, increasing public discontent
Led to the calling of the Assembly of Notables & the Estates-General in 1789 that sparked the revolution
Rural poverty
Upon death, a mans land was split equally among his heirs. This led to extremely small plots that could only be used for subsistence farming
