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<font face="Verdana" size="1" color="#002864">http://www.mises.org/fullstory.asp?control=1489</font>
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<font size="2"><font face="Verdana" color="#002864" size="5"><strong>What Brought on the French Revolution?</strong></font>
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<p class="MsoBodyText"><font face="Verdana" size="4">By H.A. Scott Trask</font>
<p class="MsoBodyText"><font face="Verdana" size="2">[Posted April 9, 2004]</font>
<p class="MsoBodyText"><font face="Verdana" size="2"><img alt src="http://www.mises.org/images3/bastille.gif" align="right" border="0" width="244" height="200">No
matter how much the American economy grows during the next decade, the
government will have serious trouble funding expanding entitlements, increased
education spending, and ongoing wars in the Middle East, while maintaining a
global military constabulary and presence everywhere. Something has to give.
No matter how one crunches the numbers, a crisis is looming, and Americans are
bound to see their standard of living fall and their global empire collapse.</font>
<p class="MsoBodyText"><font face="Verdana" size="2">It has happened before.
Consider that seminal and catastrophic event that inaugurated the era of mass
politics, bureaucratic centralism, and the ideological state—the French
Revolution. It is a large and complex event worthy of a Gibbon, but it may not
have happened at all if the French monarchy had balanced its budget.</font>
<p class="MsoBodyText"><font face="Verdana" size="2">While the causes of the
Revolution are many, the cause of the crisis that brought on the Revolution is
not. It was a fiscal and credit crisis that weakened the authority and
confidence of the monarchy so much that it thought it had to convene a defunct
political assembly before it had safely carried out a successful
program of liberal constitutional and free market reform. It would be as if
the American federal government called a constitutional convention with an
open agenda and hoped that all would go smoothly. The Estates General lasted
only a little over a month before the leaders of the Third Estate (the
bourgeoisie, artisans, and peasantry) transformed it into a National Assembly
and took political power from the monarchy. The Revolution was on.</font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">Revisionist
historians have challenged the standard interpretation of pre-revolutionary</font>
<ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">as a country with a stagnant economy, an oppressed peasantry, a
shackled bourgeoisie, and an archaic political structure. In Citizens
(1989), Simon Schama describes France under Louis XVI as a rapidly modernizing
nation with entrepreneurial nobles, a reform-minded monarchy, nascent
industrialization, growing commerce, scientific progress, and energetic intendants
(royal administrators in the provinces).</font></font>
<p class="MsoBodyText"><font face="Verdana" size="2">Moreover, Montesquieu was
in vogue; the English mixed constitution was the cynosure of political reform,
and the economic philosophy of physiocracy, with its belief in economic law
and advocacy of laissez faire, had discredited the dogmas of state
mercantilism.</font>
<p class="MsoBodyText">
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<p class="MsoBodyText" align="left"><font face="Verdana"><font size="2"><strong>Turgot
argued perceptively that another war with</strong></font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2"><strong>England would</strong></font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2"><strong> derail his reform program, bankrupt the
state, and, even if successful, do little to weaken British power.</strong></font></font>
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<font face="Verdana"><font size="2">In 1774, Louis XVI appointed Jacques
Turgot, a Physiocrat, to be Controller-General of Finances. Turgot believed
that subsidies, regulations, and tariffs were crippling productivity and
enterprise in France. End them, he advised the king, and business would
thrive and state revenues increase. He proposed an ambitious reform program
that included taking down internal custom barriers, lifting price controls
on grain, abolishing the guilds and the corvee (forced labor service),
and devolving political power to newly created provincial assemblies (two of
which he established). Turgot envisioned a federated</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">, with a chain of elected bodies extending from the village
through the provinces to some form of national assembly.</font></font>
</div>
<p class="MsoBodyText"><font face="Verdana"><font size="2">Not surprisingly,
there was both aristocratic and popular opposition to these reforms, but what
really doomed them was Turgot's inveterate opposition to French intervention
in the American War of Independence. Many were still stewing over the
humiliating and catastrophic defeat suffered by</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">in the Seven Years' War (1756-1763). The country had lost her
North American possessions (</font><ST1:PLACE>
<ST1:CITY>
<font size="2">Quebec</font></ST1:CITY>
<font size="2">,</font> <ST1:STATE>
<font size="2">Louisiana</font></ST1:STATE>
</ST1:PLACE>
<font size="2">) and all of French India, except two trading stations. The
foreign minister (Vergennes) calculated that by helping the Americans gain
their independence they could weaken the</font> <ST1:PLACE>
<font size="2">British Empire</font></ST1:PLACE>
<font size="2">, gain revenge, and restore France's previous position as one
of the world's two superpowers.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2"><img alt src="http://www.mises.org/jefffiles/turgot.jpg" align="left" border="0" width="148" height="200">Turgot
argued perceptively that another war with</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">England</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">would derail his reform program, bankrupt the state, and, even
if successful, do little to weaken British power."The first gunshot will
drive the state to bankruptcy," he warned the king. It was to no avail.
International power politics and considerations of national prestige took
precedence over domestic reform, and the king dismissed him in May 1776. He
would be proved right on all three points.</font></font>
<p class="MsoBodyText"><font face="Verdana" size="2">The French began covertly
supplying war material to the rebellious colonists in 1777, and in 1778 they
signed a treaty of alliance with the Americans. Throughout the war, they
supplied hard money loans, and underwrote others for the purchase of war
supplies in Europe. In 1780, they landed a 5,000-man army in Rhode Island. In
1781, the French navy blockaded Lord Cornwallis's army at Yorktown.</font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">Turgot's successor
Jacques Necker, a Swiss banker, financed these expenditures almost entirely
through loans. Although successful, France's intervention cost 1.3 billion livres
and almost doubled her national debt. Schama writes,"No state with
imperial pretensions has, in fact, ever subordinated what it takes to be
irreducible military interests to the considerations of a balanced budget. And
like apologists for military force in twentieth-century</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">America</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">," imperialists"in eighteenth century</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">pointed to the country's vast demographic and economic reserves
and a flourishing economy to sustain the burden." Even more, they
claimed that prosperity was"contingent on such military expenditures,
both directly in naval bases like Brest and Toulon, and indirectly in the
protection it gave to the most rapidly expanding sector of the economy."
Plus ca change, plus c'est la meme chose.</font></font>
<p class="MsoBodyText">
<div>
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<td><font face="Verdana" size="2"><strong>The new Controller General
made no effort to restrain domestic or court spending. The result
was a peacetime spending spree and chronic budget deficits.</strong></font></td>
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<font size="2" face="Verdana">Necker was neither a financial profligate nor
an ultra royalist. He was simply financing a war that the government deemed
to be in the national interest. During the conflict, he held down royal
expenditures at home, eliminated many sinecures, published a national budget
in 1781, and proposed the formation of a third provincial assembly. However,
when his request to join the royal council (as a Protestant, he was barred)
was rejected, he resigned. His immediate successor, Joly de Fleury, restored
many of the offices he had eliminated.</font>
</div>
<p class="MsoBodyText"><font face="Verdana"><font size="2">Upon the return of
peace with the signing of the Treaty of Paris (1783), the monarchy had another
opportunity to institute economic, financial, and political reforms, but it
squandered it. Just as with the first Bush administration after the Cold War,
there would be no peace dividend. The government was determined to exploit the
vacuum created by British defeat to restore French imperial power. Their
global strategy was to maintain a standing army of 150,000 men to defend the
borders and preserve the balance of power on the Continent while building up a
transoceanic navy capable of challenging the British in all the world's oceans.
What is more, the new Controller General, Calonne, made no effort to restrain
domestic or court spending. The result was a peacetime spending spree, chronic
budget deficits, and the addition of 700 million livres to the national
debt. By 1788, debt service alone would absorb fifty percent of annual revenue.
It was guns and butter, French style. Today we are savoring it,</font> <ST1:STATE>
<ST1:PLACE>
<font size="2">Texas</font></ST1:PLACE>
</ST1:STATE>
<font size="2">style.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">In a few years,
Calonne was faced with an imminent fiscal catastrophe. The annual deficit in
1786 was projected to be 112 million livres, and the American war loans
would begin falling due the next year. Action was imperative. Such was the
power of liberal and federalist ideas in</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">that Calonne summoned the Physiocrat Dupont de Nemours, a
former Turgot associate, to advise him. Meanwhile, with their blessing, the
foreign minister, Vergennes, signed a free trade agreement with</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">Great Britain</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">(1786). With the help of Nemours, Calonne proposed the
following measures to open up the French economy: the deregulation of the
domestic grain trade, the dismantling of internal custom barriers, and
commuting the corvee into a public works tax. To raise a regular and
equitable revenue, he suggested a"territorial subvention," (i.e. a
direct tax levied on all landowners, without exception, to be assessed and
levied by representative provincial assemblies).</font></font>
<p class="MsoBodyText"><font face="Verdana" size="2">Calonne remembered the
mistake Turgot had made ten years before. He had relied exclusively on royal
authority to enact his program and in so doing had antagonized the nobility
who did not like being presented with a fait accompli. To avoid a
similar fate, Calonne suggested the summoning of an Assembly of Notables for
early 1787 to consider, modify, and sanction the reforms before they were sent
to the Parlement of Paris for registration (making them law). The king
approved Calonne's whole program in December 1786. Here was the last chance
for the monarchy to institute a program of decentralist constitutional and
liberal economic reform that would free the economy, solve the fiscal crisis,
transmute absolutism into constitutionalism, and avert an impending political
cataclysm.</font>
<p class="MsoBodyText"><font face="Verdana" size="2">Alas, as excellent and
necessary as were Calonne's reforms, he was not the right man to see them
through. He was deeply unpopular for his lavish court spending and for using
his office to cultivate various corrupt stock schemes. The nobility did not
trust him, and the people despised him. Recognizing he was a liability, the
king dismissed him and appointed Lomenie de Brienne in his stead. Brienne was
a high noble, a Notable, and a reformer. The Assembly was supportive of all
the reforms, except the taxes. Here they balked. Before they would give their
sanction to new taxes, they wanted the king to publish an annual budget and to
agree to a permanent commission of auditors.</font>
<p class="MsoBodyText"><font face="Verdana" size="2">Their concern was obvious.
Why should they agree to changes that would increase royal revenue if they had
no way of monitoring royal expenses to see if those funds were being prudently
spent? Now the king balked. He thought the proposals an infringement on
his prerogatives over the finances and the budget. He vetoed them. It was a
grievous error, but typical of the vacillating mind of the king and the
intellectual fetters of an absolutist political tradition. </font>
<p class="MsoBodyText"><font face="Verdana" size="2">The Parlement of Paris
duly registered the decrees freeing the grain trade, commuting the corvee,
and setting up the provincial assemblies, but they would not register the
stamp duty or the land tax. They claimed that only the Estates General, the
medieval representative assembly of the three estates of the kingdom (clergy,
nobility, and commons) that had last met in 1614, could approve the taxes. The
nobles were gambling that Louis would never dare call for an assembly of the
Estates. It was a clever stratagem for defeating the tax proposals without
incurring the popular odium for doing so. The nobility and clergy would not
give up their tax exemptions nor grant the monarchy a potentially
inexhaustible new source of revenue without a share of political power. An
unforeseen consequence was to create a popular expectation for the reconvening
of the Estates. This time the nobility erred.</font>
<p class="MsoBodyText"><font face="Verdana" size="2">If the monarchy had not
been so pressed for funds to stave off bankruptcy, they could have declared
the registered edicts a victory for reform and waited for another day to deal
with taxes. Not having that luxury, Brienne and the king panicked. They
decided to resort to the weapons of royal absolutism to force through the tax
reforms. They issued lits de justice declaring the new taxes to be law
by royal will. Second, they exiled the recalcitrant Parlement to Troyes. The
public outcry and institutional resistance to these tyrannical measures was
such that the monarchy had to back down. The king recalled the Parlement and
withdrew the lits de justice.</font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">Brienne now
requested that the Parlement register new royal loans to stave off bankruptcy.
It did so, but it again called for the re-convening of the Estates General. It
also attempted to establish its new position as a de facto parliament. It
declared that royal decrees were not law unless duly registered by the
parlements and denied the constitutionality of both lits de justice and
lettres de cachet (royal arrest warrants). The king and Brienne
believed that the future of royal absolutism was at stake, so they responded
with force. They surrounded the Parlement with troops. The king stripped it of
its powers of remonstrance and registry, and he invested those powers in a new</font>
<ST1:STREET>
<ST1:ADDRESS>
<font size="2">Plenary Court</font></ST1:ADDRESS>
</ST1:STREET>
<font size="2">to be appointed by him.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">The May coup turned
both the nobility and the clergy against the Crown, excited civil protest and
unrest, and created a political crisis to match the seriousness of the fiscal
crisis. Once again, a foolish attempt to preserve inviolate the senescent
institutions of absolutism had failed. By August 1788, the monarchy
was bankrupt and without credit. It could borrow new funds neither in</font> <ST1:CITY>
<ST1:PLACE>
<font size="2">Paris</font></ST1:PLACE>
</ST1:CITY>
<font size="2">nor Amsterdam. Brienne had no choice but to resign. The king
recalled Necker, who was the one man who had the confidence of investors, was
trusted by the nobility, and popular among the masses. The king also summoned
the Estates General to meet in May 1789.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">The people would
assemble by order in local assemblies and elect delegates. The electorate
would comprise over six million Frenchmen. Schama calls it"the most
numerous experiment in political representation attempted anywhere in the
world." By tradition, the assemblies could draw up a list of
grievances and requests which their representatives would take with them to
Versailles. They would carry 25,000 of them. Students are taught that the
nobility and clergy were determined to preserve the old order, the ancien
regime, with most of their privileges intact, and admit only a modicum of
change, while the Third Estate demanded a transformed</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">in which the watchwords would be liberty, progress, and
modernity.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">The truth is almost
precisely the opposite. The majority of the nobility envisioned a</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">France</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">that was rational, liberal, and constitutional. They were
willing to surrender their tax exemptions and seigniorial dues. They called
for the abolition of lettres de cachet and all forms of censorship;
they wanted an Anglo-Saxon style bill of rights with constitutional protection
for civil liberties. They recommended financial reforms: a published national
budget, the abolition of the sale of government offices, and an end to tax
farming. They also urged the abolition of the trade guilds and the suppression
of internal custom barriers.</font></font>
<p class="MsoBodyText"><font face="Verdana"><font size="2">While many of these
recommendations are found in the cahiers of the Third Estate, they are
eclipsed by material concerns—understandable complaints about the high price
of bread, the game laws, the gabelle (the salt tax), and the
depredations of the tax collectors. There are also numerous criticisms of
recent reforms, such as the free trade agreement with</font> <ST1:COUNTRY-REGION>
<ST1:PLACE>
<font size="2">England</font></ST1:PLACE>
</ST1:COUNTRY-REGION>
<font size="2">, the lifting of price controls on grain, agricultural
enclosures, and the granting of civil rights to Protestants.</font></font>
<p class="MsoBodyText"><font face="Verdana" size="2">In short, the voice of
the Third Estate was largely one of reaction, and while they wanted
fewer taxes they wanted more government. According to Schama,"much
of the anger firing revolutionary violence arose from hostility towards that
modernization, rather than from impatience with the speed of its progress." </font>
<p class="MsoBodyText">
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<td><font size="2" face="Verdana"><strong>If only the French elites had
reformed. There would have been no Terror, no Napoleon, no
centralizing, statist revolution.</strong></font></td>
</tr>
</tbody>
</table>
</div>
<div>
<font face="Verdana">The Third Estate had some liberal merchants and
innovative industrialists, but it had many more urban artisans and peasants.
The latter believed they were getting the shaft and that the nobility and
clergy, as well as the wealthy members of their own estate, were to blame.
They wanted price controls reimposed on grain, restrictions put on its
exportation, the prohibition of foreign manufactures, and the punishment of
"speculators" and"hoarders." They found leaders
among lawyer intellectuals of their own estate, and some visionary members
of the others, who spoke in a charged language of grievance, polarity, and
combat. Knowing little and caring less about economic liberty or federal
constitutionalism, they spoke of patriots versus traitors, citizens versus
aristocrats, virtue versus vice, the nation assailed by its enemies. They
offered the masses panaceas for their plight, villains to blame, and
promises that the possession of political power would heave in the dikes of
privilege and unleash the fountains of wealth.</font>
</div>
<p class="MsoBodyText"><font face="Verdana">Schama correctly deduces that it
was the politicization of the masses that"turned a political crisis into
a full-blooded revolution." Once the vast Third Estate was told
that they were the nation and that a"true national assembly would,
by virtue of its higher moral quality—its common patriotism—provide
satisfaction, they were given a direct stake in sweeping institutional change."
The abbe Sieyes' pamphlet What is the Third Estate? appeared in January
1789 and would be to the French Revolution what Thomas Paine's Common Sense
(1776) had been to the American. By the time the Estates General convened in
May, the masses and leading intellectuals regarded the continued existence of
separate social orders with their own institutional representation not only as
an obstacle to reform, but as unpatriotic, even treasonous. When the Estates
General metastasized into the National Assembly in June 1789, it was the onset
of a radical revolution. <ST1:CITY>
<ST1:PLACE>
Liberty</ST1:PLACE>
</ST1:CITY>
would not fare well on the guillotine.</font>
<p class="MsoBodyText"><font face="Verdana">Through 1788 and into 1789 the
gods seemed to be conspiring to bring on a popular revolution. A spring
drought was followed by a devastating hail storm in July. Crops were ruined.
There followed one of the coldest winters in French history. Grain prices
skyrocketed. Even in the best of times, an artisan or factor might spend 40
percent of his income on bread. By the end of the year, 80 percent was not
unusual."It was the connection of anger with hunger that made the
Revolution possible," observed Schama. It was also envy that drove the
Revolution to its violent excesses and destructive reform.</font>
<p class="MsoBodyText"><font face="Verdana">Take the Reveillon riots of April
1789. Reveillon was a successful Parisian wall-paper manufacturer. He was not
a noble but a self-made man who had begun as an apprentice paper worker but
now owned a factory that employed 400 well-paid operatives. He exported his
finished products to <ST1:COUNTRY-REGION>
<ST1:PLACE>
England</ST1:PLACE>
</ST1:COUNTRY-REGION>
(no mean feat). The key to his success was technical innovation, machinery,
the concentration of labor, and the integration of industrial processes, but
for all these the artisans of his district saw him as a threat to their jobs.
When he spoke out in favor of the deregulation of bread distribution at an
electoral meeting, an angry crowded marched on his factory, wrecked it, and
ransacked his home.</font>
<p class="MsoBodyText"><font face="Verdana">From thenceforth, the Paris mob
would be the power behind the Revolution. Economic science would not fare
well. According to Jean Baptiste Say,"The moment there was any question
in the National Assembly of commerce or finances, violent invectives could be
heard against the economists." That is what happens when political
power is handed over to pseudo-intellectuals, lawyers, and the mob.</font>
<p class="MsoBodyText"><font face="Verdana">The exponents of the rationalistic
Enlightenment had stood for a constitutional monarchy, a liberal economic and
legal order, scientific progress, and a competent administration. According to
Schama,"They were heirs to the reforming ethos of Louis XVI's reign, and
authentic predictors of the 'new notability' to emerge after the Revolution
had run its course. Their language was reasonable and their tempers cool. What
they had in mind was a nation vested, through its representatives, with the
power to strip away the obstructions to modernity. Such a state ... would
not wage war on the <ST1:COUNTRY-REGION>
<ST1:PLACE>
France</ST1:PLACE>
</ST1:COUNTRY-REGION>
of the 1780s but consummate its promise."</font>
<p class="MsoBodyText"><font face="Verdana">If only the French elites could
have agreed on a course of reform along these lines, there would have been no
Terror, no Napoleon, no centralizing, statist revolution. And it was the
pressing financial crisis, brought on by deficit spending to fund a global
empire that in the end frustrated the kind of evolutionary political and
economic liberalization that is the true road of civilized progress.</font>
<p class="MsoBodyText"><font face="Verdana"><span class="890231213-09042004">__________________________</span></font>
<p class="MsoBodyText"><font face="Verdana">Historian Scott Trask is an
adjunct scholar of the Mises Institute. </font><font face="Verdana">hstrask@highstream.net</font><font face="Verdana">.
See his </font><font face="Verdana">article
archive.</font><font face="Verdana"> Discuss this article on the </font><font face="Verdana">blog</font><font face="Verdana">.
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