More On: French Revolution
If only the French elites had decided on a similar course of reform, there would have been no Terror, no Napoleon, and no centralizing, state revolution.
Regardless of how much the American economy expands over the next decade, the government will face significant challenges supporting expanded pensions, greater education expenditure, and continued Middle East conflicts, all while maintaining a worldwide military constabulary and presence. Something must be sacrificed. Regardless of how the numbers are crunched, a crisis is looming, and Americans will undoubtedly see their standard of living decline and their global empire crumble.
It has occurred previously. Consider the foundational and cataclysmic event that ushered in an era of mass politics, bureaucratic centralization, and the ideological state—the French Revolution. It is a monumental and intricate event deserving of Gibbon, but it may not have occurred at all had the French monarchy managed its finances.
While there are several reasons of the Revolution, there is only one source of the crisis that precipitated the Revolution. It was a fiscal and credit crisis that eroded the monarchy's power and trust to the point that it believed it needed to summon a defunct political assembly in order to securely carry out a liberal constitutional and free market reform agenda. It would be as if the federal government of the United States convened a constitutional convention with an open agenda and hoped for the best. The Estates General lasted just over a month before being changed into a National Assembly by the leaders of the Third Estate (bourgeoisie, craftsmen, and peasants). The Revolution was in full swing.
Revisionist historians have disputed the mainstream portrayal of pre-revolutionary France as a society with a stagnated economy, an oppressed peasantry, a chained bourgeoisie, and an outdated political framework. Simon Schama characterizes Louis XVI's France in Citizens (1989) as a rapidly modernizing society characterized by enterprising aristocrats, a reform-minded monarchy, fledgling industries, expanding trade, scientific development, and active intendants (royal administrators in the provinces).
Furthermore, Montesquieu was fashionable; the English hybrid constitution was the cynosure of political reform; and the economic theory of physiocracy, with its emphasis on economic law and endorsement of laissez-faire, had discredited state mercantilism's dogmas.
Jacques Turgot, a Physiocrat, was named Controller-General of Finances by Louis XVI in 1774. Turgot argued that France's productivity and business were being harmed by subsidies, restrictions, and tariffs. Eliminate them, he told the monarch, and commerce would flourish and state income would soar. He advocated an ambitious reform agenda that included the elimination of internal tariffs, the elimination of grain price restrictions, the abolition of guilds and the corvee (forced labor service), and the devolution of political authority to newly constituted provincial assemblies (two of which he established). Turgot envisioned a federated France with a chain of elected bodies stretching from the village to the provinces and culminating in some type of national parliament.
Not surprise, these reforms encountered opposition from both the aristocracy and the populace, but what ultimately killed them was Turgot's adamant opposition to French engagement in the American War of Independence. Many people were still reeling from France's humiliating and devastating defeat during the Seven Years' War (1756–1763). The country had lost all of its territories in North America (Quebec, Louisiana) and all of French India, with the exception of two trade stations. The foreign minister (Vergennes) reasoned that by assisting the Americans in achieving independence, they might undermine the British Empire, exact retribution, and reestablish France's former status as one of the world's two superpowers.
Turgot correctly reasoned that another war with England would undermine his reform efforts, impoverish the state, and, even if won, would do nothing to reduce British dominance. "The first shot will bankrupt the state," he warned the king. It was to no avail. International power politics and concerns about national reputation trumped internal change, and in May 1776, the monarch fired him. On all three counts, he would be proven correct.
In 1777, the French began secretly delivering war equipment to the insurgent colonists, and in 1778, they signed an alliance pact with the Americans. They provided hard money loans and backed others for the acquisition of military supplies in Europe during the war. They landed a 5,000-man force in Rhode Island in 1780. In 1781, Lord Cornwallis's force at Yorktown was blockaded by the French naval.
Turgot's successor, Swiss financier Jacques Necker, virtually totally paid these expenses through loans. Although France's intervention was effective, it cost 1.3 billion livres and nearly quadrupled her national debt. According to Schama, "Indeed, no state with imperial ambitions has ever surrendered what it considers to be essential military objectives to budgetary concerns. And, similar to the apologists for military power in twentieth-century America," imperialists in eighteenth-century France used the country's large population and economic reserves, as well as a thriving economy, as justifications for the burden." Even more, they stated that prosperity was "contingent on such military spending, both directly in naval stations like Brest and Toulon, and indirectly in the security it supplied to the most rapidly developing sector of the economy." The more things change, the more they remain the same.
Necker was neither a wasteful spender of money nor an ultra-royalist. He was simply financing a war determined to be in the national interest by the government. Throughout the battle, he reined in royal spending at home, abolished several sinecures, released a national budget in 1781, and recommended the establishment of a third provincial parliament. He resigned, however, when his application to join the royal council was denied (being a Protestant, he was forbidden). Joly de Fleury, his immediate successor, reinstated several of the posts he had destroyed.
The monarchy had another opportunity to adopt economic, financial, and political changes with the signing of the Treaty of Paris (1783), but it squandered it. There would be no peace dividend, just as there was under the first Bush administration following the Cold War. The administration was adamant about exploiting the vacuum produced by the defeat of the British to reclaim French imperial control. Their worldwide plan was to retain a standing army of 150,000 soldiers to defend the continent's boundaries and maintain the balance of power, while developing a transoceanic fleet capable of confronting the British in all of the world's oceans. Additionally, Calonne, the new Controller General, made no attempt to rein down domestic or court expenses. As a result of this spending frenzy during peacetime, chronic budget deficits developed, and the national debt increased by 700 million livres. By 1788, debt service will consume half of annual earnings. It was French-style guns and butter. Today, we're relishing it in true Texas fashion.
Calonne faced an impending fiscal disaster within a few years. In 1786, the yearly deficit was predicted to reach 112 million livres, and the American war debts were scheduled to mature the next year. Action was required. Calonne invited the Physiocrat Dupont de Nemours, a former Turgot collaborator, to counsel him due to the liberal and federalist views' strength in France. Meanwhile, with their support, Vergennes, the foreign minister, concluded a free trade pact with the United Kingdom (1786). Calonne advocated the following steps to liberalize the French economy with the assistance of Nemours: deregulation of the domestic grain trade, elimination of internal customs barriers, and conversion of the corvee into a public works levy. To provide a consistent and equal revenue stream, he proposed a "territorial subvention" (i.e. a direct tax levied on all landowners, without exception, to be assessed and levied by representative provincial assemblies).
Calonne recalled Turgot's ten-year-old error. He had implemented his agenda entirely through royal power, antagonizing the nobles, who disliked being presented with a fait accompli. To avoid a repeat of this destiny, Calonne proposed convening an Assembly of Notables in early 1787 to evaluate, alter, and authorize the changes prior to their submission to the Paris Parlement for registration (making them law). Calonne's entire scheme was authorized by the king in December 1786. This was the monarchy's final opportunity to enact decentralist constitutional and economic reforms that would liberate the economy, resolve the budgetary crisis, transform absolutism into constitutionalism, and prevent an imminent political calamity.
Unfortunately, as admirable and vital as Calonne's changes were, he was not the man to see them through. He was widely despised for his extravagant court expenditures and use of his power to nurture many unscrupulous stock scams. The nobles lacked confidence in him, and the populace detested him. Recognizing his liability, the king fired him and replaced him with Lomenie de Brienne. Brienne was a notable noble, a reformer, and a high noble. All of the measures, with the exception of taxes, were supported by the Assembly. They resisted here. They desired that the king disclose an annual budget and commit to a permanent panel of auditors before they would authorise new levies.
Their anxiety was palpable. Why should they consent to reforms that will boost royal money if they lack the ability to supervise royal costs to ensure they are being spent prudently? Now the monarch has backed down. He viewed the ideas as an intrusion on his financial and budgetary prerogatives. They were vetoed by him. It was a grave blunder, but indicative of the king's vacillating mentality and the intellectual constraints imposed by an absolutist political tradition.
The Paris Parlement officially recorded the decrees liberalizing the grain trade, commuting the corvee, and establishing provincial assemblies, but refused to register the stamp duty or land tax. They contended that the taxes could only be approved by the Estates General, the medieval representative assembly of the kingdom's three estates (clergy, nobility, and commons) that convened last in 1614. The nobility were betting that Louis would never convene an Estates meeting. It was a deft maneuver for opposing the tax bills without incurring popular contempt. Without a share of political authority, the nobles and clergy would not give up their tax exemptions or provide the monarchy with an unlimited new stream of money. Unexpectedly, this resulted in the establishment of a widespread anticipation for the Estates' reconvening. This time, the nobles made a mistake.
If the kings were not so desperate for finances to avoid bankruptcy, they could have called the recorded edicts a success for reform and postponed dealing with taxes until another day. Brienne and the king frightened because they lacked the luxury. They chose to use the instruments of royal absolutism to enact the tax revisions. They issued lits de justice establishing the new levies as royal decrees. Second, they expelled to Troyes the obstinate Parlement. The popular uproar and institutional opposition to these despotic actions were so strong that the monarchy was forced to retreat. The monarch summoned the Parlement and rescinded the lits de justice.
Brienne has now petitioned the Parlement to register additional royal loans in order to avert bankruptcy. It did so, although it again urged the Estates General to reconvene. Additionally, it strove to cement its new status as a de facto parliament. It held that royal decrees did not become law until they were officially recorded by the parlements and questioned the legitimacy of both lits de justice and lettres de cachet (royal arrest warrants). Because the king and Brienne thought that the future of royal absolutism was on the line, they reacted violently. They deployed troops to encircle the Parlement. The king abolished its remonstrance and registration powers and transferred them to a new Plenary Court to be nominated by him.
The May coup mobilized both nobles and clergy against the Crown, sparked civic unrest, and precipitated a political crisis on a par with the severity of the budgetary crisis. Once again, a blundering attempt to retain the senescent institutions of absolutism inviolately failed. By August 1788, the monarchy had declared bankruptcy and was unable to get credit. It could not obtain additional financing in either Paris or Amsterdam. Brienne was forced to quit. The king recalled Necker, who was the only guy who had investors' confidence, was trusted by the aristocracy, and was popular with the common people. In May 1789, the king also convened the Estates General.
The populace would convene in orderly local assemblies and elect representatives. Over six million Frenchmen would make up the electorate. Schama refers to it as "the world's largest experiment in political representation." By custom, assemblies might compile a list of grievances and demands to offer to their delegates at Versailles. They'd transport 25,000 of them. Students are taught that the nobility and clergy were adamant about preserving the old order, the ancien régime, with the majority of their privileges intact and accepting just a modicum of change, whereas the Third Estate sought a changed France governed by liberty, progress, and modernity.
The reality is nearly identical to the reverse. The bulk of the nobles desired a rational, liberal, and constitutional France. They were prepared to forego tax exemptions and seigniorial dues. They demanded an end to lettres de cachet and all types of censorship; they want an Anglo-Saxon-style bill of rights with constitutional protection for civil freedoms. They advocated for financial changes such as the publication of the national budget, the elimination of the sale of government positions, and the eradication of tax farming. Additionally, they advocated for the dissolution of trade guilds and the elimination of internal customs obstacles.
While many of these ideas appear in the Third Estate's cahiers, they are overshadowed by material concerns—complaints about the high price of bread, the game restrictions, the gabelle (the salt tax), and the tax collectors' depredations. There are also several complaints of recent changes, including the free trade agreement with England, the elimination of grain price regulations, the expansion of agricultural enclosures, and the provision of civil rights to Protestants.
In short, the Third Estate's voice was largely reactive, and while they desired lower taxes, they desired increased government. According to Schama, "much of the rage that resulted in revolutionary violence was motivated by animosity toward that modernity, rather than dissatisfaction with its pace of advancement."
The Third Estate included some liberal businessmen and forward-thinking manufacturers, but it also included a large number of urban craftsmen and peasants. The latter thought they were being taken advantage of and that the nobility, church, and affluent members of their own estate were to blame. They desired the reinstatement of price controls on grain, the imposition of export limitations, the ban of foreign industries, and the prosecution of "speculators" and "hoarders." They discovered leaders among their own estate's legal intellectuals and certain visionary members of the others who talked in a powerful vocabulary of grievance, polarity, and conflict. They spoke of patriots versus traitors, citizens vs aristocrats, morality versus evil, and the nation assaulted by its enemies, notwithstanding their ignorance and lack of concern for economic liberty or federal constitutionalism. They promised the populace panaceas for their ills, villains to blame, and assurances that political power would heave in the dikes of privilege and unleash the fountains of prosperity.
Schama is accurate in concluding that it was the politicization of the masses that "transformed a political crisis into a full-fledged revolution." After convincing the huge Third Estate that they were the country and that a "real national assembly" would bring pleasure due to its "superior moral quality—common patriotism," they were given a direct interest in massive institutional transformation. What is the Third Estate? by the abbe Sieyes published in January 1789 and would be to the French Revolution what Thomas Paine's Common Sense (1776) was to the American Revolution. By the time the Estates General assembled in May, the masses and prominent intellectuals viewed the continuation of distinct social orders with their own institutional representation as not only impeding reform, but as disloyal, if not treacherous. In June 1789, when the Estates General metastasized into the National Assembly, it signaled the start of a profound revolution. Liberty would perish at the guillotine.
Throughout 1788 and 1789, it appeared as though the gods were working to bring about a popular revolt. A spring drought was followed by a July hail storm that wreaked havoc. Crops were destroyed. Following it, one of the coldest winters in French history occurred. Grain prices have soared. Even in prosperous times, an artisan or factor may spend 40% of his earnings on bread. By year's end, 80 percent was not exceptional. "It was the link between fury and hunger that enabled the Revolution," Schama said. Envy was also a driving force for the Revolution's violent excesses and harmful reforms.
Consider the April 1789 Reveillon riots. Reveillon was a prosperous Parisian maker of wall paper. He was not a nobleman, but a self-made man who began as an apprentice paper worker and now controlled a factory with 400 well-compensated employees. He sold his final goods in England (no mean feat). His success was based on technological innovation, technology, labor concentration, and process integration, but the craftspeople in his district viewed him as a danger to their employment for all of these reasons. When he came out in support of deregulation of bread distribution at an election gathering, an enraged mob marched on his factory, destroyed it, and damaged his home.
From then on, the Paris mob would be the Revolution's driving force. Economic science, on the other hand, would score poorly. According to Jean Baptiste Say, "the instant an issue of trade or finance came up in the National Assembly, furious invectives against economists might be heard." That is what happens when pseudo-intellectuals, lawyers, and the crowd are given political power.
The rationalist Enlightenment's proponents advocated for constitutional monarchy, a liberal economic and legal system, scientific progress, and competent government. Schama asserts "They were inheritors of Louis XVI's reformist mentality and real forerunners of the 'new notability' that would emerge following the Revolution's conclusion. Their discourse was rational, and their tempers were restrained. They envisioned a nation endowed with the authority, via its representatives, to remove impediments to modernity. Such a state... would not declare war on the 1780s France, but would fulfill its pledge."
If only the French elites had decided on a similar course of reform, there would have been no Terror, no Napoleon, and no centralizing, state revolution. And it was the urgent financial crisis precipitated by deficit spending to finance a worldwide empire that ultimately thwarted the progressive political and economic freedom that is the genuine path of civilized growth.
This article was originally published on April 9, 2004.