Modern history

IV LAST BEST HOPES: THE COACHMAN

Public bankruptcies are a state of mind. The exact point at which a government decides that it has exhausted resources so completely that it can no longer fulfill its most basic function, the protection of its sovereignty, is quite arbitrary. For great powers never go into receivership. However dreadful a financial situation they may get into, there generally will always be moneymen lurking in the wings prepared to set them on their feet – at a price. Only recently has that price been some sort of partial abdication of sovereignty – to the decrees of the International Monetary Fund, for example, or in the age of Victorian imperialism, the international debt commissions that the British and their partners imposed over the fiscally prostrate corpses of the Egyptians and the Chinese. For the French monarchy in the late 1780s, the moment of truth seemed to occur when it ran out of “anticipations” of future revenue to secure new loans. And those loans were needed to service past ones. At this point the technical apparatus of refunding seemed to have broken down. While there was no international financial agency waiting in the wings to shoulder the debt and dictate terms of repayment, the return of Jacques Necker, associated with the international money market, was the closest thing to such an agency. But only a more popular form of domestic political authority would gain the public confidence necessary to secure government credit. Financial rescue, then, was contingent on political change.

This had been apparent to a succession of Louis XVI’s ministries, each of which was clearly exercised by the need to reform the way in which the crown obtained its income. Indeed, even under Louis XV this had been the most pressing priority of Controllers-General, but during the 1750s and still more in the 1760s, the political arm that they had flexed to institute tax reform had been that of absolutism. Time and again in the 1760s Louis XV had called a lit de justice to utter the most emphatic command in the royal vocabulary: “Le roi le veult” (The King so wishes it). Against that command there was no appeal.

Louis XVI, however, as befitted his incoherently amiable character, came to the throne wanting to be loved. This pathetic passion survived even the grim flour wars that disturbed the early years of his reign when rioters were turned back from the gates of the royal palace at Versailles (the court having prudently evacuated). So he got rid of those ministers identified with the muscular absolutism of his grandfather and replaced them with reformers who would somehow conjure up changes that might be both politically liberal and fiscally copious. The trouble was that no two ministries had identical ideas about which strategies of change to pursue. Not only were their policies not consistent, but each virtually defined its government as the complete reversal of the preceding one, both in men and measures. Needless to say, this did not make for positive results.

There had been three classic ways in which Controllers-General had dealt with the growing burden of French government finance: disguised bankruptcies, loans from domestic and foreign syndicates and new taxes. Louis XV’s last controller, the AbbéTerray, had used all three. Louis XVI’s first controller, Turgot, repudiated all three. Instead, he proposed the lessons of liberal economic theory, in particular that of Physiocracy, whose very name proclaimed it to be the “Law of Nature” and thus irrefutable.

The “sect” of the physiocrats argued that it was corporatism, regulation and protection – the heavy hand of the state – that was stifling productivity and enterprise in France. Internal customs barriers; restrictions on the movement of grain and other basic commodities; elaborate tariffs of tolls and excises: all had to go so that the economy could breathe the pure and heady air of market exchange. The crazy-quilt pattern of indirect impositions and property levies in some but not other parts of France should be swept away and replaced with a single property tax – the impôt unique. That would make it possible for cultivators – the only true producers of wealth – to calculate precisely their costs and aim at supplying the market, where in the natural course of things higher prices would buoy up rural incomes and create capital accumulation on the land. Those savings and profits would then be plowed back into technical improvements, thus further improving productivity and creating disposable income that would be spent on the manufactured goods produced in towns. Hence the urban and rural sectors would co-exist in charmed reciprocity and France would swarm with contented, rational rustics all plowing, producing, saving and spending to the deep rhythm of the market.

That, at any rate, was the theory. Its most famous authors were the court physician Quesnay and his temperamental opposite, the fulminating Marquis de Mirabeau (the father of the revolutionary orator). Oddly enough, Mirabeau had made his name denouncing the inroads that capitalism and individualism had made in what he fondly imagined to be the paternalistic virtues of seigneurial feudalism. It was in a long personal interview which Mirabeau later described as “the cracking of the skull of Goliath” that he became converted to laissez-faire. So, for better or worse, did a number of Louis XV’s Controllers-General who proceeded in the 1760s to remove all restrictions from both the internal and external transshipment of grain, as well as regulations on place of sale and price. The result was immediate dearth and riot. Granaries were pillaged, barges halted before they could depart, merchants forced to sell at the tariff deemed “just” by the crowds. In 1770, Terray restored most of the restrictions, obliging merchants once again to be officially licensed and sell their product only in designated markets. Calm was restored.

All of Terray’s actions, however, some of them eminently sensible, were badly compromised by the way he and his colleague Maupeou had elected to execute them: through the absolute writ of royal decree. When Turgot came into office as Controller-General in 1774, having served briefly as minister for the navy, it was not just as an economic but as a political liberal. Only if he could depend on support from the noble Parlements could he deliver policies that avoided the most arbitrary excesses of the previous reign in respect of bankruptcies, loans and taxes. So, with the King’s warm endorsement, he rescued the Parlements from the limbo into which Chancellor Maupeou had sent them. His mistaken assumption was that they would back his reforms out of a combination of gratitude and rationality. But nothing was quite that simple in Louis XVI’s France.

It followed from Turgot’s sympathy with physiocratic ideas that the liberalization of the French economy would, of itself, generate the kind of prosperity that would solve the financial problems of the government. This would happen in two ways. Public confidence, that most alchemical of economic quantities, would revive, disposing of the need for additional new loans since the old ones, duly honored, would suffice. Trade and manufactures would flourish to such an extent that they too, from increased turnover, would yield enough revenues to repair the damage. All this was, of course, the direct ancestor of supply-side public finance, and had just about as much chance of success as its version two hundred years later in a different but similarly fiscally overstretched empire.

Lest this account sound too sardonic it should be said immediately that Turgot was no ministerial Pangloss. A rather somber, self-questioning man whose principal recreation was his work, he had an excessively dim view of human nature but an excessively cheerful view of the possibilities of its improvement. He was, in short, typical of the later years of the Enlightenment. Born into a family long distinguished for public service, Turgot père had been prévôt des marchands in Parisand had crowned his career as town planning expert there by designing and constructing a great sewer for the right bank of the Seine. His son Anne-Robert came to the Contrôle having spent many years as a brilliantand exceptionally hard-working intendant in the impoverished province of the Limousin in southwest France. There he had labored industriously to do good, building roads and persuading the peasants to plant and consume potatoes, a crop previously thought unfit even for animals and certainly less nourishing than the boiled chestnut and buckwheat gruel that had been the standard Limousin fare.

Unfortunately the region of the Limousin was peculiarly unsuited to the application of his most cherished ideas, especially those he had published on capital accumulation, for it was difficult to accumulate any capital while subsisting on boiled chestnuts, or, for that matter, on potatoes. It was only when Turgot became Controller-General that the opportunity arose to apply them on a national scale. Far more than the pragmatic succession of Controllers-General who came into office with nothing much on their minds except personal and national survival, Turgot, as Carlyle put it, “came into the Council of the King with a whole peaceful revolution in his head.” A memorandum sent to the King in 1775 revealed just how sweeping was his vision of a France transformed by economic and political liberty. “In ten years,” he claimed, “the nation would be unrecognizable… in enlightenment, morals, zeal for your service and for the patrie, France would surpass all other people who exist and who ever have existed.”

Turgot’s basic operational method was to dismantle all obstacles to the flow of free trade, free labor and free market pricing, while giving some active encouragement to what he believed to be the enterprises of the future. The encouragement took the form of education and direct subsidy. Serious men in tricorn hats were sent off to study the British coal industry, while grants were given out in the manner of a superior Chamber of Commerce for mechanical silk looms in Lyon, lead-rolling machines in Rouen and – predictably – porcelain manufactures at Limoges. His learned friends Condorcet and d’Alembert were recruited to serve on a committee to study river navigation and pollution, and in the spirit of his father’s Grand Designs the Controller-General began construction of the “machine Turgot,” which was supposed to break ice floes at the mouth of the Marne and the Seine. Instead, the machine broke itself after incurring considerable expense. More happily, the foundation of a new system of mail and passenger transport, themessageries royales, based on light-sprung coaches known as “Turgotines,” cut travel time in half between French cities and made the dream of a national market slightly less absurd.

Turgot’s principal line of attack, though, was directed against the barriers that were in the way of realizing the free economy. First to go had to be the local tolls on grain (except for Paris and Marseille) and with them went all monopolies of chandlers, merchants and porters. While this represented the dismantling of Terray’s system of regulated supply, Turgot wisely continued the prohibition on export abroad. Yet he still chose the worst possible time for the reform. The year 1774 saw the return of bad harvests, and with them the resumption of dearth, high prices and anger directed at engrossers accused of hoarding to profit from price rises. The natural consequence of this by the spring of 1775 was a resumption of the riot patterns of the mid-1760s: barges stopped at river stations, attacks on granaries and millers and compulsory sales at prices demanded by the crowds. In Paris the militia of the gardes françaises failed to prevent a crowd from pillaging the Abbaye Saint-Victor because it was busy having its regimental banners blessed in Notre Dame.

Turgot’s response to this impertinent interruption of free trade was to call out twenty-five thousand troops and institute summary tribunals and exemplary hangings. The commander of the royal guards at Versailles, the Prince de Poix, who had hastily promised flour at two sous a pound to a crowd of five thousand on the point of storming the palace at Versailles, was reprimanded for his temerity. As they had done in the last round of free grain trade, local police and magistrates widely ignored Turgot’s edicts in favor of immediate public peace, and it was this as well as a better harvest, rather than martial law, that restored a measure of calm by the summer of 1775. Stung by violent pamphlet polemics against his policy, Turgot believed (as do many sympathetic historians to this day) that the “flour war” was all an elaborate conspiracy, and that people were pretending to be hungry in order to embarrass his ministry.

Turgot was equally determined to deregulate the meat trade. And in this case he did not stop at the gates of Paris but abolished outright the large number of officeholders and officials of the so-called Bourse de Sceaux et Poissy who held the right to set the price at which drovers could sell their stock to butchers. Under old regulations, suet and tallow (essential for candle lighting) could not be collected by butchers after slaughter but had to be taken by special guilds that enjoyed the monopoly of their sale. They too went under Turgot’s axe. This happened at a time least auspicious for success, for 1775 saw a visitation of cattle murrain that devastated the country’s herds, and in trying to establish a cordon sanitaire within which peasants were required to destroy infected stock and bury the carcasses in lime, Turgot’s well-meaning intendants ran straight into local resistance. Especially in the southwest the meadows and woods were populated by eerie nocturnal processions of peasants attempting to smuggle cows across the sanitary border.

It was with the Six Edicts that Turgot’s policies came most seriously unstuck. The principal elements of this bundle of reforms concerned the abolition of the trade guilds, which had confined labor, production and sale of commodities to licensed corporations with their own internal monopoly of training, goods and services. The guild system was directly at odds with Turgot’s vision of the market determining wages, demand and supply of all these economic elements. His reform would have done away with most of the guilds except barbers, wig makers and bathhouse keepers, whose officeholders would have required special reimbursement. Also exempt were goldsmiths, pharmacists and printers but on the very different grounds that it was in the public interest for their respective trades (wealth, health and wisdom) to remain under some sort of license. More ominously the edicts strictly prohibited any kind of assembly of masters or journeymen for the purposes of wage negotiations, or anything else: a principle that the Revolution would uphold in 1791.

The other major proposal was the abolition of the forced labor service, the corvée, which commoners owed to the state and from which much of its road building program had been manned. Turgot was quite right to suppose that the corvée was generally loathed in the French countryside for abducting a precious (indeed often the only) source of manpower from a tiny family farm precisely at the time when it was most needed for crucial labor, such as plowing or harvest. The corvée could be commuted by the payment of a sum of money, but that presupposed that the peasant belonged to the kind of cash economy where this was feasible, and for the vast majority of the French peasantry nothing of the sort was true. The most courageous and controversial element in the reform, however, was the proposal to put in place of the corvée a property tax, payable by all sections of the population. With the revenue thus gathered the state would have the roads built by contractors with the terms of the contract published to show the relationship between the cost of local works and revenues taken to finance them. This measure would thus have redistributed the burden of funding roads and canals to the whole population and would have been in effect the withdrawal of another privilege from the exempt classes.

Predictably, then, the abolition of forced labor service was greeted with intense and vocal hostility by the nobles through their collective voice in the Parlements. Apart from the dilution of privilege, the abolition also threatened, by example, the right of the nobles to demand comparable services from their own peasants on their estates, an effect that Turgot probably had in mind. Defending his reform he was drawn into an extraordinary but telling exchange of views with Miromesnil, the Keeper of the Seals (in effect the Minister of Justice), over the legitimacy of privilege. Privileges, Miromesnil claimed, were grounded in the exemptions granted to the warrior caste in return for their blood service to the crown. “Take away from the nobility its distinctions, you destroy the national character, and the nation ceasing to be warlike will soon be the prey of neighboring nations.” The silliness of this claim provoked Turgot to remind his opponent of the obvious truism that “the nations in which the nobility pays taxes as do the rest of the people are not less martial than ours… and in the provinces of the taille réelle where thenobles and commoners are treated the same… the nobles are no less brave nor less attached to the crown.” For that matter, he argued, he was unable to recall any society where the idea of exempting nobles from taxes “has been regarded as otherwise than an antiquated pretension abandoned by all intelligent men, even in the order of the nobility.”

Other equally selfish vested interests were responsible for similar opposition to the abolition of the guilds. Turgot defended the measure in the high-flown philosophical rhetoric of economic natural rights. “God, by giving to man certain needs and making them dependent on the resource of labor, has made the right of labor the property of all men and that property is primary, the most sacred and imprescriptible of all.” But for its opponents the measure destroyed rather than protected property, for a number of the masters of such guilds were far from being horny-handed sons of toil laboring in leather aprons. They were in fact the aristocratic purchasers of municipal sinecures and dignities which they did not care to see disappear in the name of some theoretically determined version of the general good. Nor for that matter did more genuine artisans who had sunk precious capital, not to mention years of apprenticeship, in a system that guaranteed them both skilled labor and remunerative prices. Compared with those securities Turgot’s brave new world of economic liberty was a very uncertain prospect.

Yet it was less the substance of Turgot’s reforms that played into the hands of this opposition than the manner in which he attempted to carry them out. For once it became apparent that his restored Parlements were not, in fact, going to be the tame creatures of royal reform, Turgot collapsed back onto precisely the same absolutist legal enforcement that he had found so repugnant in Maupeou and Terray. He did not go so far as to abolish the remonstrating courts, but he did urge Louis XVI, who was himself extremely reluctant to play the absolutist, not to shrink from a lit de justice, should that become necessary. This classically high-handed way of proceeding looked particularly bad since Turgot had encouraged the dévolution of power to provincial assemblies and had set up two such bodies in the provinces of Berri and Haute-Guienne in 1774. Viewing himself as the most liberal of Controllers-General he was in fact the one who most freely used the arbitrary arrest granted in the lettres de cachet, and a number of opponents of his policies ended up smartly in the Bastille.

This was the undoing of the Minister, for it ensured that, in addition to his many personal enemies at court, Turgot could no longer rely on figures within the ministry who had previously been his allies. By the spring of 1776 he was complaining to the King about the open factions that were appearing in the council and demanded that Louis throw the full weight of his authority behind the reforms. His way of putting this was not tactful.

You are too young to judge men and you have yourself said, Sire, that you lack experience and need a guide. Who is that Guide to be?… Some people think that you are weak, Sire, and indeed on occasions I have been afraid that your character has this defect. On the other hand on more difficult occasions I have seen you show real courage.

This schoolmasterly approach did not pay off. Thirteen days later Turgot was dismissed amidst the usual hurrahs of despotism laid low. With him went some of his men and many of his measures. The guilds were restored, though in an attenuated form; and local parishes were given the choice of whether to supply the corvée or comply with a tax.

This was a long way from the peaceful revolution that Turgot had hoped to accomplish. Almost by definition, his macroeconomic approach to solving both the economic and financial troubles of France required time if it was to have any chance at all of working. His most easygoing and worldly colleague, Maurepas, who in his seventy years had seen ministries come and go with the seasons, counseled him to spread his reforms over a number of years rather than take them at a hectic rush. But Turgot had been in a frantic hurry. Mortality was pressing in: “In our family we die at fifty,” he replied to Maurepas. A more urgent mortality, he felt, was that of the regime. Without drastic action, he told the King, “the first gunshot [of a new war] will drive the state to bankruptcy.”

If you find an error please notify us in the comments. Thank you!