Although France existed for a long time, we believe that it, being an Empire, started from the reign of Louis XIII. Since he was still too young to rule, Cardinal Richelieu was appointed as the first minister to the crown in 1628, thus marking the beginning of the French economic revolution.
Since France was involved in many wars, Richelieu realized that more revenues were needed through taxation. However, seventeenth-century France remained “a collection of local economies and local societies dominated by local elites”.
Figure 1. Cardinal Richelieu was the chief adviser to the young French King.
The government’s tax power was limited by the rights of assemblies in some provinces to vote their own taxes. Richelieu, however, solved these problems by securing cooperation of local elites. But because the French monarchy could not tax at will, it never actually completely controlled the financial system.
When Louis XIV came to power, the French economy was badly disrupted and would take years to rebuild.
Louis XIV’ launched a series of military crusades, as well as lavishly spending money on his own court, such as the building of his own palace outside Paris called Versailles.
Figure 2. The 17th century was marked by a period of exceptional power and glamour for the French monarchy. Louis XIV built Versailles, at the expense of nearly bankrupting the French treasury, though giving him better control and display of his glorious power.
The bureaucracy, court and army cost a great amount of money, and the French method of taxation filed to produce the necessary revenue. Many taxes went into the pockets of tax collectors. In addition, an agreement between the Crown and the nobility permitted the king to tax the common people if he did not tax the nobles. The middle class also secured many tax exemptions. With the rich and prosperous classes exempt, the tax burden fell on those least able to pay: the poor peasants.
“In the American economic system, there are 3 kinds of taxes. There are progressive taxes, which tax richer more than the poorer. Then there are progressive taxes, which tax poorer more than the richer, and there are proportional taxes, which tax both poor and rich proportionally.”
The kind appointed Jean-Batiste Colbert as controller-general of finances. Colbert proved a financial genius, by using his principle that the wealth and the economy of France should serve the state.
“In 17th and 18th centuries, a nation’s international power was based on its wealth and specifically the gold so necessary to fight the wars.”
“Since I possess a highly-valued advice on trade matters, to accumulate gold and become rich, the country should always sell more goods abroad than it should buy. Colbert is a fool! He insists that France should be self-sufficient, able to produce everything within its own borders”.
“Colbert’s ideas worked: outflow of the gold was halted; debtor states paid in bullion and the wealth of the nation increased.”
Colbert attempted to accomplish self-sufficiency through state support for both old industries and newly created ones. He subsidized new cloth, steel and firearms industries. Colbert encouraged skilled foreign craftsmen and manufacturers to immigrate. To improve communications, he built roads and canals. To protect the French goods he enacted high tariffs.
“When a country tariffs foreign goods, they have to sell at a higher price on a domestic market, thus discouraging consumers to buy foreign goods, and buy cheaper domestic goods instead.”
Colbert’s most important work was the creation of a powerful merchant marine to transport French goods.
FYI: Did you know that in 1661 France possessed 18 unseaworthy vessels, by 1861 it had 276 frigates, galleys and ships of the line.
Colbert’s achievements in the development of manufacturing were prodigious. The textile industry expanded enormously, and the commercial class prospered.
“France had become in 1683 the leading nation of the world in industrial productivity.”
The French economy however rested solely on agriculture. The peasants were still mercilessly taxed, many of them emigrated and the population declined dramatically.
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