The Causes of the French Revolution 43

situation was beyond dispute. According to Calonne, thetotal revenue for 1786 would amount to 475 million livres,hut expenditure would probably total 587 millions-a deficitof 112 millions, or almost a quarter of the annual revenue.When Louis XV1 had come to the throne in 1774, Calonneclaimed, the deficit had been 40 millions, and it had evenfallen over the next two years. But since 1777 it had risensteadily, and there was every prospect, over the next fewyears, of its rising further if drastic action was not soon taken.The basic reason for this deterioration was that since 1777there had been an enormous rise in state borrowing and con-sequently in the annual interest and repayments that the trea-sury was obliged to disburse. Since 1776, Calonne claimed,1,250 millions had been borrowed. Until 1794, 50 millionsper year of short-term loans would fall due for repayment,and meanwhile, the cost of servicing the total debt ate upnearly half of the annual revenue. Worse still, no less than280 millions of the next year's revenues had already been an-ticipated in order to raise money for earlier expenditure.

Financial difficulties were nothing new under the Frenchmonarchy. Indeed, throughout the seventeenth and eigh-teenth centuries they were the normal state of affairs; it wasthe rare moments of financial health that were extraordinary.Nor was the cause of these difficulties any mystery. Succes-sive kings had always spent too much on war. The wars ofLouis XIV had imposed a crippling legacy of debt on theroyal finances, and although this burden was much alleviatedby the great financial crash of 1720-21, which enabled thegovernment to write off huge sums, four major Europeanand overseas wars since that time had brought matters oncemore to crisis proportions. They were already serious by1763, at the end of seven years of costly and unsuccessfulconflict on a worldwide scale; the deficit had reached 50 mil-lions, and for the next fifteen years successive comptrollers-general of the finances warned unceasingly against the dan-gers of further wars. French participation in the AmericanWar of Independence between 1778 and 1783 was gloriousand successful, but it confirmed these ministers' worst fears.By 1783, the financial situation was as bad as it had been in

The Monarchy's Financial Crisis\Villiam Doyle

William Doyle, chairman of the School of History at theUniversity of Bristol in England and ,1 respected scholarof the French Revolution, here focuses on one of theRevolution's chief causative factors-the steadily worsen-ing state of the royal finances in the 1770s and 1780s. Ac-cording to Doyle, when, in November 1783, Louis Xv]

appointed former provincial administrator CharlesAlexander Calonne as comptroller-general, the dominantminister of state, Calonne found that he had very limitedoptions for a strictly financial solution. This finally ledCalonne to conclude that the nation could onlv be savedfrom bankruptcy and ruin by a drastic reform of thewhole governmental system.

The revolution that was to sweep away the political institu-tions of old France, and shake her society to its foundations,did not begin on 14 July 1789. By that time the old order wasalready in ruins, beyond reconstruction. This was the resultof a chain of events that can be traced as far back as 20 Au-gust 1786. For it was on that day that Calonne, comptroller-general of the royal finances, first came to Louis X\O and in-formed him that the state was on the brink of financialcollapse.

We have no absolutely reliable or completely unambigu-ous figures to illustrate the financial condition of France in1786. Nor did contemporaries have such figures. EvenCalonne, with all the accounts of the royal treasury at his dis-posal, claimed that it had taken him two years to arrive at hisown assessment of the problem. But the seriousness of the

Reprinted from William Doyle, Origi77S or the French Reuoltuion, ©,,,rilliam Doyle,1980, 1988, by permission of Oxford University Press.

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44 The French Revolution

J 715, and over the next three years it continued to deterio-rate to the point which Calonne announced to the king inAugust 17H().

Possible Remedies?A number of OiJvIOUS expedients arc open to governments infinancial difficulties. Unforrunatclv, most of these expedi-ents were not open to Calonne-or, if they were, there werereasons why they could not prove as effective as they should.

One natural step, For example, was to effect economics[i.e., reduce spending]. There was undoubtedly scope forthis, and the plan which Calonne put Forward to the Assem-bly of Notables the next year was to include a number ofmoney-saving proposals. I Jeverthelcss, none of the majoritems of public expenditure could be substantially reduced.... The armed forces could onlv he markedlv reduced at the. .cost of jeopardizing France's international position at a mo-ment when the internal instability of the Dutch Republic anduncertainties in Eastern Europe following the death of Fred-erick the Great made the international situation ominous.Economies, therefore, must largely be a matter of trimmingexpenditure over a whole range of minor items such as pen-sions, the royal household, public works, and welfare serviceswhich together accounted For only about one-seventh of an-nual outlay ... nowhere near enough to meet a deficit on thescale of 1786. Clearly economies could only be effective inconjunction wi th more com preh ensive measures.

A second possibility would be to increase taxes. YetFrance was already one of the most highly taxed nations inEurope. It is true that the average Dutchman or Englishmanpaid more per head in taxes than his French counterpart; butin France there were immense regional diversities, so thattaxpayers in the Paris region paid more per head than any-body else in Europe. And when we consider that the popu-lations of Great Britain and the Dutch Republic were in anycase far wealthier as a whole than that of France, the Frenchburden appears all the greater. What is more, it seemed tohave increased inordinately within living memory. ... In1749, a new tax on landed property of 5 per cent had been

The Causes of the French Revolution 45

introduced-the vingtihne. It proved to be permanent. In1756, it had been doubled For a limited period, but in prac-tice the government never felt able to do without the extrarevenue, so this second tnngtieme became in effect as perma-nent as the first. Between J 760 and 1763, the most costly pe-riod of the Seven Years War, a third uinotteme was levied;and in 1783, it was reintroduced with the assurance that itwould end three years after peace was concluded. That mo-ment came at the end of 1786, and this imminent Fall in rev-enue was another of the factors which led Calonne to con-front the crisis when he did ....

Another possibility was for the state simply to renounceits overwhelming burden of debt by declaring bankruptcy.Earlier governments had often adopted this expedient; butover the eighteenth century it had come to seem less and lessrespectable. The financial crash of 1720, in which thousandsof government creditors were ruined, and a series of reduc-tions in the rentes (government annuities) in the chaoticyears following that crisis, had instilled French public opin-ion with a deep hostility to breaches of public faith, and from1726 onwards governments had striven to keep pubLic con-fidence by avoiding any suggestion that they might defaulton their debts .... The lesson seemed clear; bankruptcy wasnot only dishonourable, it destroyed the state's credit andmade further borrowing difficult .... Turgot, and every min-ister who followed him, Calonne included, set their facesfirmly against even partial bankruptcy. The determination ofsuccessive revolutionary assemblies down to 1797 to honourthe debts accumulated under the old order shows howdeeply and generally public opinion shared the view that thepublic debt should be sacrosanct.

But Calonne could hardly go on borrowing. It is true thatthe plan of action which he laid before the king containedproposals for further loans in order to cover the repaymentsof the coming years, but there was no long-term future infighting a debt problem by new borrowings. In any case itwas uncertain whether such borrowing would even be possi-ble. The French government already borrowed money onterms distinctly less favourable than either the British or the

46 The French Revolution The Causes of the French Revolution 47

Dutch, because in France there was no publicly supportedbank through which government credit could he cheaplychannelled .... In the absence of a hank, the governmentwas compelled to rely on intermediaries for r<lising its loans,bodies like the municipality of Paris, the estates of provincesthat retained them (like Languedoc and Brittany), or greatcorporations like the clergy, all of which could borrowmoney on better terms than the king. But when needs wereextraordinary even these resources were not enough. Then,the government was compelled to float loans on its own be-half, but on terms so generous that even the most prudentinvestor found them hard to resist. This is what happenedbetween I77 7 a nd I786 ....

An expedient that Calonne did not consider W<lS a reformof the system by which the government financed its activi-ties. One reason why it took him so long to come to any con-clusions about the true state of the finances was that the kinghad no central treasury where accounts were kept, revenuestaken in, and payments made. Nor was there any real notionof an annual budget. Most of the state's financ~s were han-dled by independent financiers who held bought the right tohandle government revenues, either through membership ofthe company of farmers-General, who collected most of theindirect taxes, or through buying an office of accountant(variously called payers, receivers, or treasurers) to a govern-ment department. Once in office, all that these officials wereobliged to do was to receive or payout funds on the govern-ment's orders, and send in periodic accounts to the crown'scourts of audit, the cbambres des comptes. What they did withthe money in their accounts otherwise was their own affair.And what they often did with it in practice was to lend it tothe government in short-term credits-so that the kingfound himself borrowing and paying interest on his ownmoney. The day-to-day payments of the government, in fact,depended on short-term credits of this sort, the anticipationswhich ate up so much of the expected revenue for 1787, ad-vanced by men who were nominally state employees, butwho in reality were private businessmen making a profitfrom manipulating public funds. Nor did such businessmen

confine their activities to juggling with the state's money.They normally had extensive private financial dealings, too,and made no distinction between the two fields of activity. Sothat when, in times of economic stringency, their operationscame under strain, so did the finances of the government.This is what happened in 1770 and again in 1786-87, whenthe government's difficulties were heralded by the bank-ruptcy of a number of its financiers. A state bank would, ofcourse, have freed the government from its dependence onthese profiteering agents, who constituted in effect a body ofseveral hundred petty bankers ....

The Call for Comprehensive ReformWith so many courses of action either closed or consideredimpractical, what then did Calonne propose to do in orderto resolve the crisis? othing could put it more clearly thanhis own words. 'I shall easily show,' he declared to the king,'that it is impossible to tax further, ruinous to be always bor-rowing and not enough to confine ourselves to economicalreforms and that, with matters as they are, ordinary waysbeing unable to lead us to our goal, the only effective rem-edv, the only course left to take, the only means of manag-ing finally to put the finances truly in order, must consist inrevivifying the entire State by recasting all that is vicious inits constitution.' He was proposing something quite un-precedented in the history of the monarchy-a total andcomprehensive reform of all its institutions, according toclear principles, in such a way that it should never fall intodifficulties like those of the 1780s again.

Tn the document he presented to the king, SU711711a1Y of aPlan for the lmprouement of the Finances, Calonne never de-fined his guiding principle in a few words. But it emergedvery clearly from the way he put the problem .... In short,the French state lacked rational organization and uniformprinciples, and it was not enough to attempt to solve finan-cial problems, as previous ministries had, by exclusively fi-nancial means. Calonne believed that it was now necessaryto reform the economy, government, and to some degreeFrench society itself.