“How Serious Was The Pre-Revolutionary Financial Crisis Between 1786-88, And How Significant Was The Clash Between The Notables And Calonne In FailingTo Solve It?”On the twentieth of august 1786 Charles Alexandre de Calonne, comptroller-general of the royal finances, informed King Louis XVI that the state was on the verge of a financial meltdown.
Whilst not having exact details to the financial figures to show the full extent of the problem, it is never the less recognized that France was in serious financial difficulty. What then did Calonne propose to sort this financial mess out? How was he to convince the King and the Notables that France was in financial danger and to give backing to his solutions? This essay will attempt to answer such questions by examining the financial crisis France was in and by looking at Calonne’s proposals in which to solve it. We shall also examine his failure to convince the Notables and the steps to his acrimonious dismissal. First then lets look at the financial situation: according to Calonnes calculations the total revenue for France in 1786 would amount to 475 million livres.Order now
The problem was though, that expenditure would come to a total of approximately 587 million livres. That meant a deficit of 112 million – roughly a fifth of the entire annual revenue. This rise in deficit was due to a huge increase in state borrowing since 1777. As a result of the huge amounts of money the state was borrowing there was also the huge rise in the annual interest and repayments that the treasury had to dispurse.
Indeed since 1777, Calonne claimed that ariubd 1,250 million livres had been borrowed. A lot of this borrowing was due to financing the various wars that French kings of the eighteenth century were prone to fighting. The last one, French involvement in the American Civil War between 1778-83, had a crippling effect on the economy and was substantial in rendering it down to the situation that Calonne had announced to Louis XVI. What then did the comptroller-general propose to do? To be fair to Calonne he was not lucky enough to have a myriad of options for him to work with. For instance it would be natural to think that in a time of economic crisis, an increase in tax would be an obvious step- yet not so for Calonne. France was already regarded as one of the most highly taxed states in Europe, and the average Frenchman was already feeling the burden of the Kings’ borrowing.
French taxpayers were already victim of the infamous vingtieme which had risen three times over the course of thirty years. Yet it ended in 1786, which proved costly for the government and was yet another factor which Calonne had to consider in his re-juggling of the states finances. Another possibility for Calonne, that again was mostly out of the question, was to reduce public expenditure and shift the economies. For a start this was effectively a long term solution to France’s financial problem – yet the short term debts were due to be paid back from 1787 onwards. The military, if reduced, would save a lot of money, yet it would come at a time of unrest and tension in Europe. Plus with such a strong international position and reputation, cutting costs on the French army was a strict no.
Even if Calonne were to trim the expenditure of pensions, public works and other economies it wouldn’t raise even half the amount of money which he needed. There was also the possibility of declaring bankruptcy, but this idea was quickly shelved as it would mean more difficulties for the state to borrow again; and borrowing on such grand scales was the reason for France’s economic turmoil in the first place. As Calonne himself put it:”All the funds were empty, all public stocks were low, all circulation wasinterrupted; alarm was general and confidence destroyed. “1As we can see Calonne clearly believed that the economic situation in France was in dire straights when he came to power in 1783.
He remedied the situation by continuing to borrow huge amounts of money. The idea here was for short term plans to help stimulate confidence and the economy by investing in public work schemes and new military projects. Calonne raised approximately over 420 million livres from 1783-87. Yet he could hardly go on borrowing for short term investments when clearly what was needed were long term plans to help France recover. What was then the comptroller-general to do in sorting out this dire financial situation? Especially when so many options were closed to him. Calonne himself even stated to Louis:”I shall easily show that it is impossible to tax further, ruinous to be alwaysborrowing and not enough to confine ourselves to economical reforms the only effective remedy to take, the only true means of managing finally to put the finances truly in order, must consist in revivifying the entire State by recastingall that is vicious in the constitution.
“2Put simply, Calonne had come to realize that the financial problems of France were so extraordinary, that they were beyond financial problems. What Calonne proposed to do was to rework the entire state: all institutions had to be revamped in order to save France from her financial crisis. He believed that the state needed comprehensive organization – as a result he felt it necessary to reform the economy, the government and possibly society in France. Calonne states in his document to Loius:”The disparity, the disaccord, the incoherence of the different parts of the monarchyis the principle of the constitutional vices which enervate its strength and hamperall its organization; one cannot destroy one of them without attacking them all. “3Calonne’s plan for financial revival consisted of two main long term parts. Firstly, came his plan to increase the revenue.
Calonne proposed to restructure the administrative in order to organize better the royal finances. He argued what was needed was a reworking of the tax system. As a result, Calonne proposed to abolish the vingtiemes and replace them with what he called a land tax. This land tax was permanent (unlike the vingtiemes) and there were to be no exceptions in paying this tax as the clergy and privileged had enjoyed with the vingtiemes. Calonne had calculated that this would increase the revenue by 35 million livres. Calonne knew the possibility of the land tax not proving popular so he proposed that the people who would bear the weight of it (the landowners) a role in its administration.
As a result local assemblies were to erected for assessing the distribution of the tax and for its role in public works. Calonne stated:”One cannot take a step through this vast kingdom without encounteringdifferent laws, conflicting customs, privileges, exemptionsrights andclaims of all kinds; and this dissonance, worthy of the barbarian centuriesor those of anarchy, complicates administration, clogs its wheels. “4It is clear that Calonne believed the administration needed evening out and the issue of privilege was costing the state. The next step in Calonne’s plan was to stimulate the economy even further.
He planned to abolish the internal customs barrier, the corvee ( in which an extra tax would be its replacement) and to relax the governmental controls over grain trading. But as mentioned earlier, these were long term plans. Calonne also needed to find a quick short term solution in order to pay off government debts starting in 1787. His problem was that he needed to raise more short term loans on the basis that his calculated increase on tax revenue would provide the money in order to pay them back. Yet he needed to gain the confidence of the potential money lenders that his calculations were sufficient enough to restore order to the states finances. In order to do this, Calonne proposed what would turn out to be a huge misfire: he proposed to gather an assembly of Notables.
This, hoped Calonne, would gain great public support and hence install confidence in the potential loan lenders. This assembly of Notables and the clergy met for the first time in February 1787, and it was clear from the start that Calonne had miscalculated his ability to persuade the assembly – he had especially underestimated the power of the clergy. The clergy were fiercely opposed to losing their place of privilege and the issue of the land tax, as well as being equally outraged on Calonne’s proposal that the clergy should sell off some of its land and properties. Calonne’s reasoning for this was that he believed the clergy would not be able to claim their tax exemption by justifying it helped the state by borrowing. Calonne boldly told the assembly:”Yes, gentlemen abuses themselves constitute a source of wealth which the state hasa right to exploitThey are defended by self-interest, influence, wealth and ancient prejudices which seemed to be hallowed by time; but what are all thesecompared with the common good and necessity of the state?”5It is clear from this passage that Calonne is totally against the idea of peivilege – especially from tax exemption, which he believed was cost the state millions annually. Indeed, in his speech to the assembly Calonne refers to them as abuses’ and not privileges – a clear indication of his view point.
He continues by speech by agitating the assembly even further:”Such are the abuses which oppress the wealth-producing labouring class: the abuses of pecuniary privilege, exceptions to the general rule, and so many unjustexemptions which can only relieve one section of taxpayers by aggravating the condition of the others. “6What Calonne is proposing during this speech is quite extraordinary for the Notables. We can see here that Calonne is not holding back when he told Loius that to fix the financial crisis it would take a complete reworking of the administration and the way of society itself. Essentially, calonne was proposing a radical change to sort the financial problems out; arguably the assembly were not quite sure of what to make at such changes.
In his speech Calonne talks about the abolishing of the corvee and the plans to introduce free grain trading, as well as placing emphasis on the issue of the land tax. Calonne stated:”Next His Majesty brought all his personal attention to bear on establishing thesame principle of uniformityin the distribution of the land taxhe recognizedthatthe vingtiemes, instead of being assessed as they should be on all the land inhis kingdom in true proportion to the value of the crop, suffer an infinity of exceptions which are tolerated rather than regarded as legitimatethat the results of this general taxserve only to demonstrate the offensive inequality between their various contributions. “7In shorter words, Calonne was simply stating that the land tax would replace the varying vingtiemes as a more evenly distributed, fairer tax. Despite all of these proposals in his speech to the assembly, Calonne made one vital mistake. Despite claiming that loss of privileges could increase the revenue, and that a new fairer, more carefully monitored tax system was needed, Calonne failed to produce any accounts or figures on this so called financial crisis in which he was claiming.
How could the assembly vote for such radical reforms when they didn’t even have access to the accounts that Calonne was preaching about? Calonne realized that if were to persuade the increasingly obstinate and cynical assembly, then he would have to give access to the accounts declaring the states financial condition. The problem with the Notables was that they realized how bad the financial situation was, but they mistrusted Calonne and were sceptical of his solutions to the problem. Yet the Notables agreed on the issue of a more evenly distributed tax system; and they had no quarrel over free grain trading and the abolition of internal customs barriers. Yet they still had huge doubts over the issue of the land tax.
It would be unfair to suggest that the Notables were simply in defence of their privilege or that the assembly was a mechanism in which to humiliate Calonne. The Notables did have genuine concerns over Calonne’s proposals. They argued that Louis XVI could only ask for a limited, specific amount of money to meet the requirements. One Notable commented:”The King does not have the competence to institute a percentage tax but to onlyask for a fixed sum to meet specific requirements. Such a tax could not be accepted by the parlements, who possess only a subsidiary and fiduciary powerin the absence of the Estates-GeneralAn Assembly of Notables which gave its blessing to the institution of such a tax would be exceeding its powers and would be dishonoured in the eyes of the nation. “8It is evident here that the Notables are not merely acting on selfish grounds.
Rather they do have great fears over Calonne’s land tax proposals. Essentially, they see it as unconstitutional. Yet by now Calonne had dismissed such criticisms. Despite needing a large amount of support from the assembly to give the go ahead on such radical reforms (and not getting it), Calonne publicly claimed that the Louis was more than happy to see the Notables and Calonne embracing in such good cooperation. This outraged the assembly and was yet another foolish move for Calonne – again shooting himself in the foot.
He also refused to involve the Estates-General despite cries from the assembly for him to do so. Yet the issue of the land tax was still a burden – even for Louis. Despite the opposition of the Notables, Louis still supported Calonne’s plan fore the land tax. In a conversation between Louis and Castries, the King stated:”but I disagree with and I have thought about it a lot: the land tax is the mostjust and least onerous of taxes. “9Yet Castries does not share the King’s enthusiasm for the tax:”But so many agreements, rights, even abuses have arisen that what would have beenjustice would not so be today.
The collection of a tax in kind would be impossibleand would cost a quarter of its yield. “10Despite the opposition to Calonne and the land tax, Louis stood firm. Yet Calonne was going to increasing lengths in order to secure the vote on his financial proposals. His next move was to gain the backing of public opinion. If Calonne could not persuade the Notables then perhaps the opinion of the public could.
The comptroller-general published a text on his plans for the land tax and provincial assemblies. He accompanied it with the Avertissement : a presumptuous piece which attacked the Notables. The Avertissement claimed that the Notables were acting out of self-interest by wanting to hold on to their privileges, rather than acting in the good of the nation. To insure it gained good circulation it was published free. Yet it was a complete disaster fro Calonne.
The public totally ignored the issue over prilege and instead wound themselves up with, what they saw as, more tax for them. The public layed blame with Calonne himself for the financial troubles of France, as not so long before the miracle worker Necker had declared everything was alright when he was in charge of finances. A passage in the Avertissement read:”People will pay more! Doubtless, but who? Only those who do not pay enough; they will pay what they owe as a fair proportion and no one will be wronged. “11Yet, for the pubic they most likely read the first four words of the article and as a result refused to support a comptroller-general who was going to make them pay more. As for the Notables they were outraged. For them it was the final straw.
Calonne had gone to far with this pompous and inflammatory publication. In regards to the Notables refusal to give support to the land tax, Calonne wrote:”It would be doing the nation an injustice and showing it a lack of understandingto doubt for a moment the coincidence between its desires and those of a kingwhom it cherishes and whom it sees animated solely by the wish to make hispeople happy. “12This was quite a brave move for Calonne to take. And quite foolish as well: As he could not muster up the public opinion that he was banking on there was no way he could rely on the Notables to support him.
Calonne’s credibility was torn asunder, and the Notables dutifully called for his resignation. This is evident in the following conversation between Louis and Castries:Castries: ” I do not know if your Majesty knows what is going on, the way in whichM. de Calonne’s scandalous pamphlet (the Avertissement) has beendistributed throughout Paris and the indignation it has caused?”Louis: “Yes, I know: all that has been exaggerated. Castries: “How can one exaggerate seditiously distributing it to all the cures of Paris and disseminating it amongst all the people? Would your Majesty not Be alarmed to see his subjects worked up against each other? I must warn Your Majesty that things are going to become more and more difficult forhim because of the increasing out cry against his controller-general.
“Louis: “All that is the work of intrigue. “Castries: “What we must provide for, sire, is the debt of the stateI much doubtThat it can be done by the means M. de Calonne is employing. “13Here we can see the discontent for Calonne from the Notables. It is obvious that the assembly is not going to solve the major issues of France’s financial crisis.
Louis though, as is evident in his conversation with Castries, was reluctant to abandon his comtroller-general or his proposals. Louis faced a bombardment of people all recommending that Calonne be dismissed from his duties. Ministers, the clergy, the Notables, members of the royal family all persuaded Louis to denounce Calonne. In the end Louis had to face either losing his comptroller-general, whom had managed to persuade the king with a series of blistering economic reforms, or the Notables. Louis opted that it was better to keep the Notables on his side and as a result dismissed Charles Alexandre de Calonne as comptroller-general.
Yet there still remained the proverbial headache of a financial crisis. No problems had been sorted since Calonne’s dismissal and the Notables (still demanding that the Estates-General be brought in to the equation) were increasingly losing confidence in their king. So to avoid royal bankruptcy and to regain the confidence and control of the Notables, Louis appointed Lomenie de Brienne first minister. As we can see the clash between the Notables and Calonne was a bitter divided one. But it could be argued that it was Calonne himself who brought his own downfall. Despite his daring, radical reforms to stimulate the French economy and avoid it from bankruptcy, Calonne made a number of errors in his summoning of the Assembly of Notables.
First was his own misjudgement in being able to control such an assembley when his ideas were so radical and unorthodox. He underestimated the power of the clergy, and would have been foolish not to have for seen their disapproval regarding feudal rights and loss of privilege. Next came his ability not to listen to the constructive criticisms aimed at the land tax. Perhaps as this was the centrepiece of his proposals, Calonne felt insulted by the Notables whose only other solution, it seemed, was to involve the Estates-General. And then there was the Avertissement: a foolish publication that lay blame to the Notables for hindering the recovery of France’s finances. If only Calonne could have seen that the Notables were acting out of concern and not self-interest.
He constantly used the argument of privilege against the Notables and in the end it backfired. All in all then I would argue that it was Calonne’s presumption that lead to the impossible conditions of him and the Notables working together. Yet France’s financial problems remained and in just over a year or two it would arguably lead to the collapse of the Ancien Regime.