seem to have encouraged those with surplus capital to purchase an office or an annuity rather than to invest in business. On some occasions, it was true, there were attempts to provide France with a national bank, so that the debt could be properly managed and cheap credit provided; but such schemes were always resisted by those with an interest in the existing system. The French government’s financial policy, if indeed it deserves that name, was therefore always a hand-to-mouth affair.
France’s commercial development also suffered in a number of ways. It is interesting to note, for example, the disadvantages under which a French port like La Rochelle operated compared with Liverpool or Glasgow. All three were poised to exploit the booming ‘Atlantic economy’ of the eighteenth century, and La Rochelle was particularly well sited for the triangular trade to West Africa and the West Indies. Alas for such mercantile aspirations, the French port suffered from the repeated depredations of the crown, ‘insatiable in its fiscal demands, unrelenting in its search for new and larger sources of revenue’. A vast array of ‘heavy, inequitable and arbitrarily levied direct and indirect taxes on commerce’ retarded economic growth; the sale of offices diverted local capital from investment in trade, and the fees levied by those venal officeholders intensified that trend; monopolistic companies restricted free enterprise. Moreover, although the crown compelled the Rochelais to build a large and expensive arsenal in the 1760s (or have the city’s entire revenues seized!), it did not offer a quid pro quo when wars occurred. Because the French government usually concentrated upon military rather than maritime aims, the frequent conflicts with a superior Royal Navy were a disaster for La Rochelle, which saw its merchant ships seized, its profitable slave trade interrupted, and its overseas markets in Canada and Louisiana eliminated – all at a time when marine insurance rates were rocketing and emergency taxes were being imposed. As a final blow, the French government often felt compelled to allow its overseas colonists to trade with neutral shipping in wartime, but this made those markets ever more difficult to recover when peace was concluded. By comparison, the Atlantic sector of the British economy grew steadily throughout the eighteenth century, and if anything benefited in wartime (despite the attacks of French privateers) from the policies of a government which held that profit and power, trade and dominion, were inseparable.18
The worst consequence of France’s financial immaturity was that in time of war its military and naval effort was eroded, in a number of ways.19 Because of the inefficiency and unreliability of the system, it took longer to secure the supply of (say) naval stores, while contractors usually needed to charge more than would be the case with the British or Dutch admiralties. Raising large sums in wartime was always more of a problem for the French monarchy, even when it drew increasingly upon Dutch money in the 1770s and 1780s, for its long history of currency revaluations, its partial repudiations of debt, and its other arbitrary actions against the holders of short-term and long-term bills caused bankers to demand – and a desperate French state to agree to – rates of interest far above those charged to the British and many other European governments.* Yet even this willingness to pay over the odds did not permit the Bourbon monarchs to secure the sums which were necessary to sustain an all-out military effort in a lengthy war.
The best illustration of this relative French weakness occurred in the years following the American Revolutionary War. It had hardly been a glorious conflict for the British, who had lost their largest colony and seen their national debt rise to about £220 million; but since those sums had chiefly been borrowed at a mere 3 per cent interest, the annual repayments totalled only £7.33 million. The actual costs of the war to France were considerably smaller; after all, it had entered the conflict at the halfway stage, following Necker’s efforts to balance the budget, and for once it had not needed to deploy a massive army. Nonetheless, the war cost the French government at least a billion livres, virtually all of which was paid by floating loans at rates of interest at least double that available to the British government. In both countries, servicing the debt consumed half the state’s annual expenditures, but after 1783 the British immediately embarked upon a series of measures (the Sinking Fund, a consolidated revenue fund, improved public accounts) in order to stabilize that total and strengthen its credit – the greatest, perhaps, of the younger Pitt’s achievements. On the French side, by contrast, large new loans were floated each year, since ‘normal’ revenues could never match even peacetime expenditures; and with yearly deficits growing, the government’s credit weakened still further.
The startling statistical consequence was that by the late 1780s France’s national debt may have been almost the same as Britain’s – around £215 million – but the interest payments each year were nearly double, at £14 million. Still worse, the efforts of succeeding finance ministers to raise fresh taxes met with stiffening public resistance. It was, after all, Calonne’s proposed tax reforms, leading to the Assembly of Notables, the moves against the parlements, the suspension of payments by the treasury, and then (for the first time since 1614) the calling of the States General in 1789 which triggered off the final collapse of the ancien régime in France.20 The link between national bankruptcy and revolution was all too clear. In the desperate circumstances which followed, the government issued ever more notes (to the value of 100 million livres in 1789, and 200 million in 1790), a device replaced by the Constituent Assembly’s own expedient of seizing church lands and issuing paper money on their estimated worth. All this led to further inflation, which the 1792 decision for war only exacerbated. And while it is true that later administrative reforms within the treasury itself and the revolutionary regime’s determination to know the true state of affairs steadily produced a unified, bureaucratic, revenue-collecting structure akin to those existing in Britain and elsewhere, the internal convulsions and external overextension that were to last until 1815 caused the French economy to fall even further behind that of its greatest rival.
This problem of raising revenue to pay for current – and previous – wars preoccupied all regimes and their statesmen. Even in peacetime, the upkeep of the armed services consumed 40 or 50 per cent of a country’s expenditures; in wartime, it could rise to 80 or even 90 per cent of the far larger whole! Whatever their internal constitutions, therefore, autocratic empires, limited monarchies, and bourgeois republics throughout Europe faced the same difficulty. After each bout of fighting (and especially after 1714 and 1763), most countries desperately needed to draw breath, to recover from their economic exhaustion, and to grapple with the internal discontents which war and higher taxation had all too often provoked; but the competitive, egoistic nature of the European states system meant that prolonged peace was unusual and that within another few years preparations were being made for further campaigning. Yet if the financial burdens could hardly be carried by the French, Dutch, and British, the three richest peoples of Europe, how could they be borne by far poorer states?
The simple answer to this question was that they couldn’t. Even Frederick the Great’s Prussia, which drew much of its revenues from the extensive, well-husbanded royal domains and monopolies, could not meet the demands of the War of the Austrian Succession and Seven Years War without recourse to three ‘extraordinary’ sources of income: profits from debasement of the coinage; plunder from neighbouring states such as Saxony and Mecklenburg; and, after 1757, considerable subsidies from its richer ally, Britain. For the less efficient and more decentralized Habsburg Empire, the problems of paying for war were immense; but it is difficult to believe that the situation was any better in Russia or in Spain, where the prospects for raising monies – other than by further squeezes upon the peasantry and the underdeveloped middle classes – were not promising. With so many orders (e.g. Hungarian nobility, Spanish clergy) claiming exemptions under the anciens régimes, even the invention of elaborate indirect taxes, debasements of the currency, and the printing of paper money were hardly sufficient to maintain the elaborate armies and courts in peacetime; and while the onset of war led to extraordinary fiscal measures for the national emergency, it also meant that increasing reliance had to be placed upon the western European money markets or, better still, direct subsidies from London, Amsterdam, or Paris
