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Reasons for France's economic problems and attempts to reform - Coggle…
Reasons for France's economic problems and attempts to reform
The State of the French Economy (Context)
A. Demographics and Growth
Rapid Population Growth: France had 27 million inhabitants by the 1780s, compared with 21.5 million in 1700.
• This was three times the population of Great Britain.
• Some signs of thriving economy existed.
B. Trade and Industry
Booming Trade: Trade with the colonies quadrupled.
• Marseilles boomed through trade with the Levant, Nantes, and Le Havre.
• Bordeaux thrived through West Indies and African trade (including sugar and the slave trade).
• Exports included corn, wine, brandy, and printed linens and cottons.
• Industrial production doubled between 1715 and 1771.
• Competition: France faced stiff competition from British mechanisation, particularly in the textile industry (e.g., Britain had 200 cotton mills and 20,000 spinning jennies, while France had eight and 1000, respectively).
C. Structural Problems and Agriculture
• Backward Agriculture: The economy was predominantly agricultural, with only 15% of the population living in towns.
• Low yields and heavy taxation prevented agricultural improvement, unlike Britain, which used crop rotation and fertilisers.
• Food production failed to keep up with population growth.
• Poor Infrastructure: France lacked a comprehensive network of rivers and canals, especially for carrying grain.
• Internal Trade Barriers: There were various internal trade duties and a massive variation in weights and measures (estimated 25,000 different units before 1789).
D. Crisis and Poverty
Social Contrast: Visitors like Arthur Young noted the extreme contrast between the wealth and splendour of cities and the misery and poor condition of the poor.
• Downturns: The 1770s saw harvest disasters, wine price drops, and increasing poverty.
• 1788 Crisis: The worst harvest in 40 years occurred in 1788, leading to lay-offs in industry and a sharp rise in bread prices.
Royal Finance and Taxation System
A. Finance and Debt
Royal government was financed primarily by direct and indirect taxation.
• These funds were supplemented by temporary loans or the sale of offices.
• The government accumulated a substantial royal debt, often being forced to rely on loans.
B. Tax Structure and Inequality
Taxes were traditionally assessed based on taille personnelle (income) or taille réelle (property/house).
• The First and Second Estates enjoyed privileges, including tax exemptions (e.g., the clergy claimed exemption from the vingtième, or income tax).
• Don gratuit was a 'voluntary gift' paid by the Church to the King.
C. Key Taxes (Examples)
Direct Taxes: Taille (property/income tax), Capitation (poll tax, theoretically on all), Vingtième (income tax).
• Indirect Taxes: Gabelle (salt tax), Tabac (tobacco tax), Aides (consumption tax), Domaine (tax on royal lands), Traite (customs duties), and Octrois (local customs on goods entering towns).
D. Tax Collection Issues
• Corruption: Direct taxes were collected by royal officiers who bought their positions.
• Tax Farmers: Indirect taxes were collected by the fermiers-généraux (tax farmers), who paid a fixed fee and kept the surplus, causing widespread corruption. The fermiers-généraux were crucial, collecting more than half of the government's revenue.
Attempts at Reform (Turgot and Necker)
A. Turgot (Controller-General 1774–76)
Philosophy: A Physiocrat who believed the economy would flourish best with freer regulations and no privileges.
• Financial Reforms: Cut royal expenses and reduced/removed pensions. Negotiated a low-interest loan with Dutch bankers in 1776.
• Free Trade and Six Edicts: Attempted to establish free trade in grain and abolish tolls. Proposed replacing indirect taxes with a property (land) tax, to abolish the corvée (unpaid labour obligation). The fifth and sixth edicts sought to suppress the guilds to reduce competition.
• Failure: His reforms were strongly opposed by the nobility, vested interests, and the Paris Parlement (which issued remonstrances). He lost the King's support due to opposition led partly by Marie-Antoinette.
B. Necker (Director-General 1777–81)
Background: Wealthy Swiss Protestant banker,,,.
• Administrative Reforms: Reduced royal household expenses and pensions,. Reduced the number of tax farmers from 60 to 40 and abolished 48 posts of 'receivers-general',,,.
• Financing War: Necker financed France’s entry into the American Revolutionary War without raising taxes,,,. Instead, he relied on increased borrowing,,,.
• The Compte Rendu (1781): He publicised the royal financial accounts for the first time,,,. He falsely suggested France had a substantial surplus of 10 million livres, hiding the true deficit,,,.
• Downfall: Necker was popular with the ordinary public for not raising taxes, but his exposure of finances earned him enemies at Court, including Marie-Antoinette,,,. He was forced to resign in 1781,,,.
Conclusion/Analysis of Failure
Vested Interests: Reforms by both Turgot and Necker failed primarily due to the intense opposition of the privileged classes (nobles, clergy, courtiers, guilds, Parlements) who protected their exemptions and power.
• Royal Weakness: Louis XVI often failed to fully support his ministers against powerful vested interests and influential figures like Marie-Antoinette.
• Financial Legacy: Necker's reliance on loans, rather than taxation, exacerbated the long-term financial stability of France.