Origins of the French Revolution: Notes on the Financial Crisis (William Doyle)

Notes on the financial crisis which in part led to the French Revolution, as viewed by William Doyle in his book 'The Origins of the French Revolution'

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The Origins of the French Revolution (pgs 4365) ­ Doyle
Financial Crisis
20th August 1786 Louis XVI informed that state was on the brink of financial collapse
Deficit of almost a quarter of the annual revenue (and rising)
Loans due for repayment, large amount of debt
Too much money spent on wars, esp. by Louis XIV four major wars since financial crash in
Involvement in the American War of Independence, 17781873 (money raised through
borrowing as opposed to increased taxation)
Incongruent system of taxation
State borrowing > short term loans were due for repayment
BUT financial difficulties were nothing new
Money saving policies tried
BUT loans were to be recalled in 1787
Therefore serious financial situation in 1786
Military couldn't be reduced ominous international threats
Expenditure was trimmed but not enough
Taxes were already very high proportional to the wealth of the people, so could not be
greatly increased
Immense regional diversities in wealth
Couldn't declare bankruptcy:
loss of public confidence
bankruptcy destroyed state's credit and made further borrowing difficult
Turgot and co. were v. against bankruptcy
France had no publicly supported bank through which govt. credit could be cheaply
Calonne took over in 1783 with a massive programme of public expenditure to
`demonstrate' that the govt. was `not worried'.
However, king had no central treasury (part of poor finance system)
There was no notion of annual budget
Govt. couldn't impose taxes or borrow money
Possible reforms for financial system (Necker)
Calonne thought the cost of reform would outweigh the benefits
But Calonne proposed radical reform of all institutions
lack of rational organisation
no uniformity in principles
Financial problems could not be solved solely by financial means
Calonne wanted to reform economy, govt. and society
King was shocked by plans and they didn't really come into action

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