LOUIS XIV -- ECONOMIC POLICY

NB : These notes are the first draft and will be updated. EVERYTHING that will be on these notes -- even after updating -- will have been covered in at least one of the three following ways:

(a) In lessons

(b) On worksheets handed out

(c) In the textbook -- you are expected to have undertaken the reading

The examiner is looking for evidence that you understand what the economy was like when Louis became king, why he needed to raise money, what Colbert set out to do, how he tried to do this and how successful his policies were. Questions invariably focus on Colbert and what he was trying to achieve and an assessment of his achievements. Read the notes below and then read the essay.

SITUATION IN 1661

• (17^th witnessed period of economic decay across Europe
• In France population fell in (17^th and GNP fell by 5%
• Louis’ propagandists created impression of happy thriving nation – not true
• France had difficulty feeding population. Had population of 18m (three times English population) yet its soil and climate should have led to sufficient food being grown – in practice most French people lived below subsistence level, while starvation inevitably resulted from especially bad harvests.
• Since there was little food in reserve, hunger and threat of hunger common during Louis’ reign
• Agriculture suffered from excessive demand for grain to feed population – led to excessive arable farming and consequent shortage of animals to pull ploughs and produce manure. As result poor ploughing led to poor harvest which led to poverty and inability to buy animals and so it went on again.
• Result was peasants died, became vagrants or moved to cities. All this created social and political problems. Governments replied with anti-vagrancy laws.
• In France tax system designed so poor paid most tax. Peasants forced to pay series of taxes to central government, Church, local landlord etc.
• Burden on peasants increased under Louis since wages fell but rent and taxes either remained same or increased.
• Church collected tithes, government collected taille (land tax imposed on poor) and gabelle (tax on salt).
• Taxes on peasants rose by 50% under Louis – resulted in national impoverishment and ruin of peasants.
• Whilst landowners invested in new farming methods in England, landowners in France saw land as merely a means of achieving social standing and failed to improve agricultural methods. Peasants also saw no point in making improvements, since led to higher taxes.
• Historians are convinced conditions on land were terrible – surprised at survival of peasants and lack of rebellions.
• Life in towns also depressing. Only 10% of population not engaged in agriculture. Manufacturing done on small scale and restrictions made life difficult for tradesmen – had to belong to guild and controlled by regulations. Merchants who did succeed tended to use money to buy land and escape merchant classes.
• Trade seen as beneath aristocrats – responsible for France’s economic backwardness.
• Crown added to economic woes – involvement in wars meant higher taxes for peasants – Crown also forced to borrow at high rates. Other main method of gaining royal revenue was to sell offices – 45,000 posts created as result of policy – led to costly and inefficient bureaucracy.
• Thus when Louis became king, Crown saddled with crippling debts, mortgaged revenue and army of unproductive office-holders – Louis looked to peasants as main area to solve problems.
• France needed peaceful period under Louis to prosper – Louis’ obsession with war was last thing country needed.

THE POLICIES OF COLBERT, 1661-1683

• French economy dominated by Jean-Baptist Colbert between 1661 and 1683.
• Until recently he was viewed as a great statesman – Colbert seen as moderating influence on Louis and man who did much for French economy. His death seen as tragedy for France.
• Recently historians have been more critical of Colbert and questioned his reputation.
• Colbert rose through the ranks under Mazarin. The day before Mazarin died, Colbert was named intendant des finances – influential position but Colbert subordinate to the superintendant, Nicholas Fouquet – Colbert could only increase his power at expense of Fouquet.
• Colbert knew that Mazarin had made huge fortune under Crown – started with virtually nothing and had 35 million livres at time of death. Fouquet had managed Mazarin’s finances and had used opportunity to enrich himself.
• Fouquet made several mistakes – took it for granted that he would be Mazarin’s successor as first minister and acted role and his scandalous private life made him many enemies. Main reason for fall was his invitation to Louis to visit his grand chateau at Vaux le Vicomte – Louis saw how Fouquet had enriched himself – few days later he was arrested.
• Yet Fouquet’s fall also due to disagreement over how to tackle France’s economic problems. Colbert wanted to declare Crown bankrupt and set up special chambers de justice to investigate financiers who had lent money to the Crown; Fouquet rejected idea since feared to default on Crown’s debts and investigate financiers would remove support of very people Crown needed. Louis backed Colbert. Colbert then convinced financiers that it was in their interests to serve Crown and most financiers were not alienated.
• Louis never regretted supporting Colbert – Louis needed money to finance war and that was Colbert’s job. Colbert saw his role as king’s servant whose duty it was to raise such money, irrespective of effects on others within kingdom.
• Under Louis, Colbert became more and more powerful – appointed to Conseil d’en haut; made Controller-General of the Finances (1665), secretary of navy and royal household (1669). Louis encouraged Colbert to enrich himself in service of France and supported marriage of Colbert’s daughters to dukes, even contributing to dowries.
• Colbert was an industrious worker – worked 15 hours a day.
• Every month he presented king with summary of financial situation, and at end of year with statement of income and expenditure, plus estimates for coming year.
• Colbert was determined to have accurate picture of country – conducted frequent enquiries and compelled intendants to submit statistics about population, taxation and productivity levels of the regions.
• Colbert held mercantilist ideas – state should amass gold by boosting exports, limiting imports and prohibiting movement of gold out of country. Colbert seems to have accepted that just as amount of precious metal in circulation was limited, so were opportunities to trade and profit. Logically, therefore, a nation could only improve its balance of trade by beggaring its neighbours. In effect this meant that France could only prosper by defeating foreign rivals such as the Dutch and the English.
• To improve economy Colbert felt leaders of society should play larger role. He admired fact that ruling elite in Holland tended to be rich merchants. Set out to change perception of French aristocrats and Church that such activities were beneath them. Persuaded King in 1669 to issue statement encouraging nobles to engage in trade and decreeing that such activities would not result in loss of noble status, providing that they did not engage in retail trading. To encourage Church, Colbert ordered monasteries to produce cloth.

Colbert’s achievements

·        His achievements in state finance seems impressive – ensured Crown received more of money raised by tax-farmers than in the past and reduced cost of collecting revenue from 52 million livres to 24 million.

• Colbert established investigations to stamp out fraud – several noblemen who claimed tax-exemption on account of their status were proved to be frauds and had to pay.
• Colbert reduced net yield of taille from 42 million livres a year to 35 million to reduce harm to peasants.
• Yet increased amount raised from indirect taxes which continued to hit poor – but also obliged rich to pay something. By 1672 yield from indirect taxation had increased from 36 million livres a year to 42 million.
• Hated gabelle brought in 4 million livres because collection was improved.
• Colbert reduced payments to office-holders and succeeded in borrowing from newly-formed syndicates of financiers at only 5%.
• Royal lands sold by Colbert’s predecessors were recovered and financial yield quadrupled between 1661 and 1672.
• By 1672 national budget showed annual surplus.
• Colbert believed expansion of commerce and industry would help French economy.
•  As a mercantilist Colbert believed that a nation needed gold, silver and precious metals to be rich and powerful. His aim was to encourage trade in order to see such items pour into France, whilst seeking to discourage people from buying foreign goods and thereby exporting French wealth. The answer was to encourage the establishment of French industries to supply the goods French consumers wanted.
• Examples of industries stimulated or created include: the Van Robais woollen factory at Abbeville (1665) which became the largest industrial business in France; the lace making industry in Burgundy and silk production at Lyon.
• Other companies were encouraged by royal patronage, such as the Gobelins tapestry and Savonnerie carpet businesses.
• Foreign craftsmen were encouraged to settle in France and teach their skills to Frenchmen -- royal envoys in other countries persuaded manufacturers of luxury goods to move to France.
• Protective tariffs were introduced and some of the restrictive practices of the guilds removed
• Monopolistic privileges were awarded for new methods of preparing leather and manufacture of glass.
• Colbert also believed that France would be strengthened by trade and so decided on state intervention. Four trading companies were established, the most famous being the East India Company. Yet Colbert found it hard to encourage private individuals to invest -- this was partly because trade was considered a socially inferior way to make money and was considered risky. Louis XIV even tried to persuade courtiers that investing in East India Company did not count as trade as company had aim of spreading the gospel. Yet companies were a disappointment and even the East India Company never competed effectively with other countries.
• However, Colbert's attempts to expand trade did have some success. Private individuals were encouraged by Colbert's lead and number of individual merchants trading overseas rose from 329 in 1664 to 648 in 1704.
• Colbert's emphasis on maritime matters stimulated domestic economy. By developing navy, ship-building was subsidised, forests planted and foreign sailors encouraged to settle in France. Rochefort and Brest, where Colbert established naval arsenals, became thriving ports and navy's demand for weapons stimulated metallurgic industries in France.
• Colbert's policies also achieved lasting results overseas. He imposed orderly government on France's colonies in West India and Canada and encouraged colonists -- to this day much of Canada's Quebec region is French-speaking. He encouraged exploration for trading purposes and established a French maritime navy, which soon traded across the globe.
• Colbert also wanted to improve conditions for internal trade -- needed to improve communications - spent 600,000 livres on improving roads, developed canal between Bordeaux and Mediterranean and created postal system with 800 post offices. Tried to eradicate numerous internal tolls and tariffs which inhibited trade. His success was limited in the latter but did manage to simplify tolls levied in the cinq grosse ferms, a customs are in northern France.
• In 1667 Colbert tried to introduce a simplified customs due on all imports and exports across the kingdom -- proved difficult to enforce as too many local entrepreneurs were making a profit out of the existing arrangements.
• An attempt to standardise weights and measurements across France also provoked opposition from merchants who argued that changing the system would confuse people -- Colbert withdrew the idea.
• Yet Colbert made real advances -- effectively raised money for king, terrified idle and crooked by his war on waste, corruption and inefficiency and -- despite setbacks over regulations and tolls -- he achieved real, if limited, progress in galvanising French trade and industry.

COLBERT'S FAILURES

• When Colbert died in 1683 little to show for his efforts -- French economy still backward and Crown bankrupt again.
• One of Colbert's main problems was the Dutch -- they always outdid the French. Everywhere French industrialists and merchants turned, there were the Dutch. When Colbert protected French producers by imposing tariffs, Dutch retaliated -- resulting tariff war harmed French most. Attempts to found colonies and healthy merchant fleet found Dutch already in possession of key places. French traders persistently undercut by Dutch rivals -- they sold at loss to corner market.
• Colbert's solution was to encourage Louis' war against Dutch in 1672 in attempt to destroy or take over Dutch industry and commerce.
• The Dutch War proved costly mistake : conflict lasted for 7 years and saw French economy slide into trouble. Annual surpluses became things of past -- Crown in debt again. Solution rested on borrowing at 10% from foreign bankers. As result Colbert forced to abandon pet projects -- between 1674 and 1678 Colbert forced to withdraw subsidies to certain industries and in 1673 all financial support to French colony in Canada stopped. The trading companies fell into trouble -- Company of the North sent last trading ship in 1684. Trade was interrupted by Dutch men-of-war and his instruction to stop trade between Brittany and Dutch provoked full-scale rebellion in 1675.
• Colbert tried to economically unify France -- met fierce local opposition. Where there was progress, due to consultation with local interests -- for example when East Indies Company founded, Archbishop of Lyons persuaded local merchants to invest 1,000,000 livres on condition company HQ set up in Lyons. Again canal linking Bordeaux and Mediterranean constructed because a local millionaire and Archbishop of Toulouse won round first. Colbert never appreciated projects lacking local support and enthusiasm would fail.
• Class prejudices sabotaged much of his campaign to improve trade. Louis showed little real interest and the aristocrats took their lead from him and resisted attempts to show interest in commerce. In their turn office-holders set their sights on nobility, rather than investing in new economic opportunities, while successful merchants preferred to invest in office rather than develop their business.
• Problem was that if a noble engaged in seaborne trade he lost his rank.
• Colbert's insensitivity matched by economic blindness -- failed to appreciate backbone of French economy was agriculture. Many of his policies actually damaged peasants -- for example in order to get timber for navy drove peasants out of the forests. He lowered taille -- but only so peasants could pay promptly. Otherwise Colbert indifferent to agriculture and welfare of vast majority of people. 
• Instead of subsidising luxury industries and non-viable trading companies, should have invested in agricultural research -- or in manufacture of cheap, low quality products which French people could afford. But unfortunately with all his qualities, Colbert lacked grasp of reality to achieve greater success.

How did Colbert try to solve the economic problems facing  France and with what degree of success?

When Louis XIV assumed control of France in 1661, the country faced serious economic problems. Louis’ propagandists created impression of a happy thriving nation under the Sun King, but this impression does not match the reality. Although the population of France fell in the Seventeenth Century, so did the GNP, by 5%, and as a result France had difficulty feeding her population. Yet  its soil and climate should have led to sufficient food being grown but  in practice most French people lived below subsistence level, while starvation inevitably resulted from especially bad harvests. French farming was woefully primitive and unproductive. Since there was little food in reserve, hunger and the threat of hunger were common during Louis’ reign. Even the tax system penalised the peasants and made their plight worse. In France the tax system was designed so that the poor paid the most tax. Peasants were forced to pay a series of taxes to the central government, the Church and their local landlord. 

One key priority of any government should, therefore, have been to solve the agricultural problem so that the country could feed its population and to reform the tax system so that peasants were not forced into starvation by crippling taxes. Yet instead the burden on peasants increased under Louis since wages fell but rent and taxes either remained the same or increased. Taxes on peasants rose by 50% under Louis, which resulted in national impoverishment and ruin of peasants. Historians are convinced that conditions on the  land were terrible and many are surprised at the survival of the peasants and the lack of rebellions. 

So why had France not addressed the agricultural problem, as England had largely done? Whilst landowners invested in new farming methods in England, landowners in France saw land as merely a means of achieving social standing and failed to improve agricultural methods. Peasants also saw no point in making improvements, since led to higher taxes. If there was to be a genuine improvement in agriculture, such attitudes needed to be tackled.

There were also other serious problems facing France in 1661.Her rivals like England and the United Provinces were flourishing economically through trade and commerce. Yet such activities were given little priority in France. Manufacturing was done on a small scale and the numerous restrictions made life difficult for tradesmen, for example they  had to belong to a guild and were controlled by a stream of regulations. Merchants who did succeed tended to use money to buy land and escape the merchant classes, whereas in England and the United Provinces merchants gained respectability and became politically powerful and trade was seen as honourable. In France, on the other hand, trade was seen as beneath aristocrats and those who engaged in trade lost their aristocratic rank. Such an attitude was responsible for France’s economic backwardness.

Finally the country was hugely in debt. The Crown had added to France's economic woes through involvement in wars. This had led to meant higher taxes for peasants and the Crown had also been forced to borrow at high rates of interest. 

France needed an economic policy which stimulated agricultural production, encouraged investment in industry and trade, reduced Crown's expenditure and reformed taxation system to make it more efficient and less of a burden on the peasantry.

The man Louis appointed in control of the royal finances was Colbert. Colbert certainly set out to solve some of these problems and his successes were variable. His achievements in state finance seems impressive for he ensured that the Crown received more of the money raised by the tax collectors than in the past and he reduced the cost of collecting revenue from 52 million livres to 24 million. One way he managed this was by establishing investigations to stamp out fraud, for example several noblemen who claimed tax-exemption on account of their status were proved to be frauds and had to pay. By 1672 the yield from indirect taxation had increased from 36 million livres a year to 42 million and the hated gabelle brought in 4 million livres because its collection was improved. Also to supplement royal revenue, Colbert reduced payments to office-holders and succeeded in borrowing from newly-formed syndicates of financiers at only 5%. In addition royal lands sold by Colbert’s predecessors were recovered and the financial yield quadrupled between 1661 and 1672. This was a great achievement and by 1672 national budget showed annual surplus.

The second area Colbert targeted was commerce and industry. Colbert believed that the expansion of commerce and industry would help the French economy. As a mercantilist Colbert believed that a nation needed gold, silver and precious metals to be rich and powerful. His aim was to encourage trade in order to see such items pour into France, whilst seeking to discourage people from buying foreign goods and thereby exporting French wealth. The answer was to encourage the establishment of French industries to supply the goods French consumers wanted. Examples of industries stimulated or created include: the Van Robais woollen factory at Abbeville (1665) which became the largest industrial business in France; the lace making industry in Burgundy and silk production at Lyon. Other companies were encouraged by royal patronage, such as the Gobelins tapestry and Savonnerie carpet businesses. However Colbert was aware that France lacked many of the essential craftsmen it needed to stimulate industry. As a result foreign craftsmen were encouraged to settle in France and teach their skills to Frenchmen by royal envoys in other countries who persuaded manufacturers of luxury goods to move to France. To encourage the stimulation of French industries protective tariffs were introduced, making foreign goods more expensive, and some of the restrictive practices of the guilds were removed. In addition, monopolistic privileges were awarded for new methods of preparing leather and the  manufacture of glass.

The third area that Colbert targeted was external trade. Colbert also believed that France would be strengthened by trade and so decided on state intervention. Four trading companies were established, the most famous being the East India Company. Yet Colbert found it hard to encourage private individuals to invest -- this was partly because trade was considered a socially inferior way to make money and was considered risky. Louis XIV even tried to persuade courtiers that investing in East India Company did not count as trade as company had the aim of spreading the gospel. Yet companies were a disappointment and even the East India Company never competed effectively with other countries. However, Colbert's attempts to expand trade did have some success. Private individuals were encouraged by Colbert's lead and the number of individual merchants trading overseas rose from 329 in 1664 to 648 in 1704.

The fourth area that Colbert targeted was internal trade. To do this successfully he needed to improve communications, streamline the tolls system and unify the weights and measures system.  He spent 600,000 livres on improving roads, developed the canal between Bordeaux and the Mediterranean and created a postal system with 800 post offices. He tried to eradicate the numerous internal tolls and tariffs which inhibited trade. His success was limited in the latter but he did manage to simplify tolls levied in the cinq grosse ferms, a customs are in northern France. In 1667 Colbert tried to introduce a simplified customs due on all imports and exports across the kingdom -- proved difficult to enforce as too many llocal entrepreneurs were making a profit out of the existing arrangements. An attempt to standardise weights and measurements across France also provoked opposition from merchants who argued that changing the system would confuse people -- Colbert withdrew the idea. 

The fourth area that Colbert targeted was the navy. Colbert's emphasis on maritime matters stimulated domestic economy. By developing navy, ship-building was subsidised, forests planted and foreign sailors encouraged to settle in France. Rochefort and Brest, where Colbert established naval arsenals, became thriving ports and navy's demand for weapons stimulated metallurgic industries in France.

So how successful was Colbert in solving France's economic problems? He certainly made real advances : he  effectively raised money for king, terrified the idle and crooked by his war on waste, corruption and inefficiency and -- despite setbacks over regulations and tolls -- he achieved real, if limited, progress in galvanising French trade and industry.

Historians use to be full of praise for Colbert, but today his achievements are increasingly questioned. When Colbert died in 1683 little to show for his efforts for the French economy still backward and Crown bankrupt again. Yet most of the reasons for this were due to factors outside his control. One of Colbert's main problems was the Dutch -- they always outdid the French. Everywhere French industrialists and merchants turned, there were the Dutch. When Colbert protected French producers by imposing tariffs, the Dutch retaliated and the  resulting tariff war harmed French most. Attempts to found colonies and healthy merchant fleet found the Dutch already in possession of key places. French traders were persistently undercut by their Dutch rivals who would deliberately sell at a loss to corner the market. There was little Colbert could do against such fierce and determined opponents. Colbert's solution was to encourage Louis' war against Dutch in 1672 in attempt to destroy or take over Dutch industry and commerce. Yet by any analyst the Dutch War proved to be a costly mistake : the conflict lasted for 7 years and saw the French economy slide into trouble. In 1672 Colbert had turned the corner of royal debt with an annual surplus, but due to the Dutch War, annual surpluses became things of the past and the Crown was soon in debt again. The only solution available to Colbert was to borrow at 10% from foreign bankers. As a result Colbert lacked the money for his ambitious schemes and was  forced to abandon pet projects. For example between 1674 and 1678 Colbert was forced to withdraw subsidies to certain industries. The trading companies also fell into trouble with the Company of the North sending its last trading ship in 1684. Trade was interrupted by Dutch men-of-war and his instruction to stop trade between Brittany and Dutch provoked full-scale rebellion in 1675.

His attempts to economically unify France met fierce local opposition. Where there was progress, this was as a result of consultation with local vested interests; for example when the East Indies Company was founded, the  Archbishop of Lyons persuaded local merchants to invest 1,000,000 livres on the condition that the company HQ be set up in Lyons. Again canal linking Bordeaux and Mediterranean was constructed because a local millionaire and the Archbishop of Toulouse were won round first. Colbert never appreciated projects lacking local support and enthusiasm would fail. All too often he failed to seek local support. 

Class prejudices sabotaged much of his campaign to improve trade. Louis showed little real interest and the aristocrats took their lead from him and resisted attempts to show interest in commerce. In their turn the  office-holders set their sights on nobility, rather than investing in new economic opportunities, while successful merchants preferred to invest in office rather than to develop their business. The problem was that if a noble engaged in seaborne trade he lost his rank.

Yet Colbert's main fault was his failure to appreciate that the backbone of the French economy was agriculture. Many of his policies actually damaged peasants, for example in order to get timber for the navy he drove peasants out of the forests. He lowered taille but only so peasants could pay promptly. Otherwise Colbert was  indifferent to agriculture and the welfare of vast majority of people. The failure to solve the agricultural problems meant that France continued to suffer from famines and starvation and never exploited its huge potential resources to maximum effect. Instead of subsidising luxury industries and non-viable trading companies, he should have invested in agricultural research or in the manufacture of cheap, low quality products which French people could afford. But unfortunately with all his qualities, Colbert lacked the grasp of reality to achieve greater success.

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LOUIS XIV AND COLBERT, 1661-1715

  (a) SITUATION IN 1661

• (17^th witnessed period of economic decay across Europe
• In France population fell in (17^th and GNP fell by 5%
• Louis’ propagandists created impression of happy thriving nation – not true
• France had difficulty feeding population. Had population of 18m (three times English population) yet its soil and climate should have led to sufficient food being grown – in practice most French people lived below subsistence level, while starvation inevitably resulted from especially bad harvests.
• Since there was little food in reserve, hunger and threat of hunger common during Louis’ reign
• Agriculture suffered from excessive demand for grain to feed population – led to excessive arable farming and consequent shortage of animals to pull ploughs and produce manure. As result poor ploughing led to poor harvest which led to poverty and inability to buy animals and so it went on again.
• Result was peasants died, became vagrants or moved to cities. All this created social and political problems. Governments replied with anti-vagrancy laws.
• In France tax system designed so poor paid most tax. Peasants forced to pay series of taxes to central government, Church, local landlord etc.
• Burden on peasants increased under Louis since wages fell but rent and taxes either remained same or increased.
• Church collected tithes, government collected taille (land tax imposed on poor) and gabelle (tax on salt).
• Taxes on peasants rose by 50% under Louis – resulted in national impoverishment and ruin of peasants.
• Whilst landowners invested in new farming methods in England, landowners in France saw land as merely a means of achieving social standing and failed to improve agricultural methods. Peasants also saw no point in making improvements, since led to higher taxes.
• Historians are convinced conditions on land were terrible – surprised at survival of peasants and lack of rebellions.
• Life in towns also depressing. Only 10% of population not engaged in agriculture. Manufacturing done on small scale and restrictions made life difficult for tradesmen – had to belong to guild and controlled by regulations. Merchants who did succeed tended to use money to buy land and escape merchant classes.
• Trade seen as beneath aristocrats – responsible for France’s economic backwardness.
• Crown added to economic woes – involvement in wars meant higher taxes for peasants – Crown also forced to borrow at high rates. Other main method of gaining royal revenue was to sell offices – 45,000 posts created as result of policy – led to costly and inefficient bureaucracy.
• Thus when Louis became king, Crown saddled with crippling debts, mortgaged revenue and army of unproductive office-holders – Louis looked to peasants as main area to solve problems.
• France needed peaceful period under Louis to prosper – Louis’ obsession with war was last thing country needed.

 (b) THE POLICIES OF COLBERT, 1661-1683

• French economy dominated by Jean-Baptist Colbert between 1661 and 1683.
• Until recently he was viewed as a great statesman – Colbert seen as moderating influence on Louis and man who did much for French economy. His death seen as tragedy for France.
• Recently historians have been more critical of Colbert and questioned his reputation.
• Colbert rose through the ranks under Mazarin. The day before Mazarin died, Colbert was named intendant des finances – influential position but Colbert subordinate to the superintendant, Nicholas Fouquet – Colbert could only increase his power at expense of Fouquet.
• Colbert knew that Mazarin had made huge fortune under Crown – started with virtually nothing and had 35 million livres at time of death. Fouquet had managed Mazarin’s finances and had used opportunity to enrich himself.
• Fouquet made several mistakes – took it for granted that he would be Mazarin’s successor as first minister and acted role and his scandalous private life made him many enemies. Main reason for fall was his invitation to Louis to visit his grand chateau at Vaux le Vicomte – Louis saw how Fouquet had enriched himself – few days later he was arrested.
• Yet Fouquet’s fall also due to disagreement over how to tackle France’s economic problems. Colbert wanted to declare Crown bankrupt and set up special chambers de justice to investigate financiers who had lent money to the Crown; Fouquet rejected idea since feared to default on Crown’s debts and investigate financiers would remove support of very people Crown needed. Louis backed Colbert. Colbert then convinced financiers that it was in their interests to serve Crown and most financiers were not alienated.
• Louis never regretted supporting Colbert – Louis needed money to finance war and that was Colbert’s job. Colbert saw his role as king’s servant whose duty it was to raise such money, irrespective of effects on others within kingdom.
• Under Louis, Colbert became more and more powerful – appointed to Conseil d’en haut; made Controller-General of the Finances (1665), secretary of navy and royal household (1669). Louis encouraged Colbert to enrich himself in service of France and supported marriage of Colbert’s daughters to dukes, even contributing to dowries.
• Colbert was an industrious worker – worked 15 hours a day.
• Every month he presented king with summary of financial situation, and at end of year with statement of income and expenditure, plus estimates for coming year.
• Colbert was determined to have accurate picture of country – conducted frequent enquiries and compelled intendants to submit statistics about population, taxation and productivity levels of the regions.
• Colbert held mercantilist ideas – state should amass gold by boosting exports, limiting imports and prohibiting movement of gold out of country. Colbert seems to have accepted that just as amount of precious metal in circulation was limited, so were opportunities to trade and profit. Logically, therefore, a nation could only improve its balance of trade by beggaring its neighbours. In effect this meant that France could only prosper by defeating foreign rivals such as the Dutch and the English.
• To improve economy Colbert felt leaders of society should play larger role. He admired fact that ruling elite in Holland tended to be rich merchants. Set out to change perception of French aristocrats and Church that such activities were beneath them. Persuaded King in 1669 to issue statement encouraging nobles to engage in trade and decreeing that such activities would not result in loss of noble status, providing that they did not engage in retail trading. To encourage Church, Colbert ordered monasteries to produce cloth.

              (c) COLBERT'S ACHIEVEMENTS

• His achievements in state finance seems impressive – ensured Crown received more of money raised by tax-farmers than in the past and reduced cost of collecting revenue from 52 million livres to 24 million.
• Colbert established investigations to stamp out fraud -- several noblemen who claimed tax-exemption on account of their status were proved to be frauds and had to pay.
• Colbert reduced net yield of taille from 42 million livres a year to 35 million to reduce harm to peasants.
• Yet increased amount raised from indirect taxes which continued to hit poor – but also obliged rich to pay something. By 1672 yield from indirect taxation had increased from 36 million livres a year to 42 million.
• Hated gabelle brought in 4 million livres because collection was improved.
• Colbert reduced payments to office-holders and succeeded in borrowing from newly-formed syndicates of financiers at only 5%.
• Royal lands sold by Colbert’s predecessors were recovered and financial yield quadrupled between 1661 and 1672.
• By 1672 national budget showed annual surplus.
• Colbert believed expansion of commerce and industry would help French economy.
•  As a mercantilist Colbert believed that a nation needed gold, silver and precious metals to be rich and powerful. His aim was to encourage trade in order to see such items pour into France, whilst seeking to discourage people from buying foreign goods and thereby exporting French wealth. The answer was to encourage the establishment of French industries to supply the goods French consumers wanted.
• Examples of industries stimulated or created include: the Van Robais woollen factory at Abbeville (1665) which became the largest industrial business in France; the lace making industry in Burgundy and silk production at Lyon.
• Other companies were encouraged by royal patronage, such as the Gobelins tapestry and Savonnerie carpet businesses.
• Foreign craftsmen were encouraged to settle in France and teach their skills to Frenchmen -- royal envoys in other countries persuaded manufacturers of luxury goods to move to France.
• Protective tariffs were introduced and some of the restrictive practices of the guilds removed
• Monopolistic privileges were awarded for new methods of preparing leather and manufacture of glass.
• Colbert also believed that France would be strengthened by trade and so decided on state intervention. Four trading companies were established, the most famous being the East India Company. Yet Colbert found it hard to encourage private individuals to invest -- this was partly because trade was considered a socially inferior way to make money and was considered risky. Louis XIV even tried to persuade courtiers that investing in East India Company did not count as trade as company had aim of spreading the gospel. Yet companies were a disappointment and even the East India Company never competed effectively with other countries.
• However, Colbert's attempts to expand trade did have some success. Private individuals were encouraged by Colbert's lead and number of individual merchants trading overseas rose from 329 in 1664 to 648 in 1704.
• Colbert's emphasis on maritime matters stimulated domestic economy. By developing navy, ship-building was subsidised, forests planted and foreign sailors encouraged to settle in France. Rochefort and Brest, where Colbert established naval arsenals, became thriving ports and navy's demand for weapons stimulated metallurgic industries in France.
• Colbert's policies also achieved lasting results overseas. He imposed orderly government on France's colonies in West India and Canada and encouraged colonists -- to this day much of Canada's Quebec region is French-speaking. He encouraged exploration for trading purposes and established a French maritime navy, which soon traded across the globe.
• Colbert also wanted to improve conditions for internal trade -- needed to improve communications - spent 600,000 livres on improving roads, developed canal between Bordeaux and Mediterranean and created postal system with 800 post offices. Tried to eradicate numerous internal tolls and tariffs which inhibited trade. His success was limited in the latter but did manage to simplify tolls levied in the cinq grosse ferms, a customs are in northern France.
• In 1667 Colbert tried to introduce a simplified customs due on all imports and exports across the kingdom -- proved difficult to enforce as too many local entrepreneurs were making a profit out of the existing arrangements.
• An attempt to standardise weights and measurements across France also provoked opposition from merchants who argued that changing the system would confuse people -- Colbert withdrew the idea.
• Yet Colbert made real advances -- effectively raised money for king, terrified idle and crooked by his war on waste, corruption and inefficiency and -- despite setbacks over regulations and tolls -- he achieved real, if limited, progress in galvanising French trade and industry.

  (d) COLBERT'S FAILURES

• When Colbert died in 1683 little to show for his efforts -- French economy still backward and Crown bankrupt again.
• One of Colbert's main problems was the Dutch -- they always outdid the French. Everywhere French industrialists and merchants turned, there were the Dutch. When Colbert protected French producers by imposing tariffs, Dutch retaliated -- resulting tariff war harmed French most. Attempts to found colonies and healthy merchant fleet found Dutch already in possession of key places. French traders persistently undercut by Dutch rivals -- they sold at loss to corner market.
• Colbert's solution was to encourage Louis' war against Dutch in 1672 in attempt to destroy or take over Dutch industry and commerce.
• The Dutch War proved costly mistake : conflict lasted for 7 years and saw French economy slide into trouble. Annual surpluses became things of past -- Crown in debt again. Solution rested on borrowing at 10% from foreign bankers. As result Colbert forced to abandon pet projects -- between 1674 and 1678 Colbert forced to withdraw subsidies to certain industries and in 1673 all financial support to French colony in Canada stopped. The trading companies fell into trouble -- Company of the North sent last trading ship in 1684. Trade was interrupted by Dutch men-of-war and his instruction to stop trade between Brittany and Dutch provoked full-scale rebellion in 1675.
• Colbert tried to economically unify France -- met fierce local opposition. Where there was progress, due to consultation with local interests -- for example when East Indies Company founded, Archbishop of Lyons persuaded local merchants to invest 1,000,000 livres on condition company HQ set up in Lyons. Again canal linking Bordeaux and Mediterranean constructed because a local millionaire and Archbishop of Toulouse won round first. Colbert never appreciated projects lacking local support and enthusiasm would fail.
• Class prejudices sabotaged much of his campaign to improve trade. Louis showed little real interest and the aristocrats took their lead from him and resisted attempts to show interest in commerce. In their turn office-holders set their sights on nobility, rather than investing in new economic opportunities, while successful merchants preferred to invest in office rather than develop their business.
• Problem was that if a noble engaged in seaborne trade he lost his rank.
• Colbert's insensitivity matched by economic blindness -- failed to appreciate backbone of French economy was agriculture. Many of his policies actually damaged peasants -- for example in order to get timber for navy drove peasants out of the forests. He lowered taille -- but only so peasants could pay promptly. Otherwise Colbert indifferent to agriculture and welfare of vast majority of people. 
• Instead of subsidising luxury industries and non-viable trading companies, should have invested in agricultural research -- or in manufacture of cheap, low quality products which French people could afford. But unfortunately with all his qualities, Colbert lacked grasp of reality to achieve greater success.

    (e) THE ECONOMY AFTER COLBERT, 1683-1715

• France was confronted with colossal economic problems during the latter years of Louis’ reign. These problems provoked some interesting and worthwhile responses. Indeed research has proved that in many ways Colbert’s successors were his superiors.
• Louvais, for example, tried at first to follow Colbert’s policies, but the one exception was in the treatment of the Huguenots. It is debatable how serious this was to the French economy. It is difficult to prove that the persecution of the Huguenots was a major cause of the fall in population of France, or of the recession in industry, or of the decline in agricultural production which led to a lower standard of living. But contemporaries believed it had disrupted trade, damaged the property market and impeded recruitment for the navy. While such industries as Lyon silk had been declining long before the 1680s, the emigration of 200,000 talented and industrious Protestants cannot have help such industries as textiles and glass-blowing.
• The death of Louvais in 1691 was a watershed in French economic policy. Some of Colbert’s most treasured assumptions were now questioned. The merits of free trade were canvassed, as was the case for less government interference rather than more. A council of commerce was set up – run by merchants – to help industry and trade by consulting those actively involved. As a result during the war of the Spanish Succession French merchants were allowed to continue to trade with the enemy, especially England.
• Colbert’s conservatism was jettisoned in the realm of state finance. In 1694 there was a proposal to introduce a national income tax of 7%, prompted by the acute financial crisis of that year. This was rejected but a poll tax was introduced in 1695. This was a significant and interesting experiment. People were divided into classes depending on their ability to pay; the richest paying 2000 livres, the poorest 1 livre. The tax caused a great furore, too many rich escaped it and the intendants had trouble collecting it. The yield of 22m livres in the first year was disappointing. The tax was lifted when peace was made in 1697 but revived during next war in 1702.
• Crisis in 1710 caused by famine and enemy invasion led to the introduction of the dixieme – the first example of an income tax in European history. Again, mass evasion, shady deals and rebellions against tax collectors reduced the efficiency of this tax, but the amount of direct taxation raised doubled.
• However the story of the French economy in the last years of Louis XIV is one of disaster as the king spent extravagantly and France was crippled by expense of wars. Devaluation and the creation of paper money combined with frenetic borrowing and sale of office could only postpone the total bankruptcy which prevailed in 1715. Despiute all the expedients adopted, the Crown’s debts stood at 2,300m livres in 1715.
• All this made the royal family unpopular at the end of Louis’ reign. During the severe winter of 1708-9 the Dauphin was mobbed by starving townsfolk in Versailles. Louis melted down some of the treasures in his palace, but he was viciously and widely lampooned for his selfishness and incompetence.

SECTION B : MODEL ESSAY

HOW SUCCESSFULLY DID THE FRENCH MONARCHY OVERCOME FINANCIAL PROBLEMS BETWEEN 1589 AND 1715?

In 1589 Henri IV took over a country bankrupted by continual war; in 1715 Louis died leaving the country bankrupted by continual wars. On the surface it would appear that nothing had changed in the period from 1589 to 1715, but this would be wrong. The period had seen attempts by men such as Sully, Richelieu and Colbert to overcome economic problems and strengthen the Crown. They achieve a modicum of success but they could not overcome the inherent unfairness of the existing system, the obsession of kings with wars and lavish expenditure, and the structure of French society, which mitigated against drastic economic reforms, irrespective of their necessity.

Historians use to regard Henri IV as one of France’s greatest monarchs and praised him for his policies. However much of this was due to the propaganda generated by Henri and Sully. A measure of recovery, however, did take place under Sully. By 1610 he had accumulated perhaps as much as 15 million livres in the Treasury, but he only managed it by operating an undeclared bankruptcy. He defaulted on Henri’s debts to his foreign allies and abandoned the payment of arrears of rentes. Essentially the surplus on the current account was achieved by cutting expenditure and maximising revenues rather than by any thorough-going reforms. A return to economic prosperity resulted in an increased yield from indirect taxes which were also more effectively administered. A regular income from the sale of offices was ensured by the creation of the paulette, a tax of one-sixtieth of the value of the office, which enabled the holder to dispose of it freely. By 1610 the income from this source accounted for 12% of ordinary revenues. Financiers were also squeezed: in 1601 Sully forced them to disgorge 600,000 livres. In 1607 he asked them for 1.2 million, though it is not certain how much he actually got.

So there was undoubtedly an improvement in the crown’s financial situation after 1598. Yet much of the revenue raised was quickly spent. Sully estimated that he spent between 30 and 32 million livres in bribes to noblemen to secure their loyalty to Henri. To raise money for such bribes, Henri put pressure on the traditional tax-payers, the peasantry, at a time of economic hardship. Henri and Sully, therefore, did nothing to deal with the deep-rooted financial problems of France : they left the antiquated and unfair taxation system in place, they did little to develop trade and industry, they created new offices which created an increased burden on the Crown and they alienated foreign bankers. Sully’s achievements saved Henri from short-term disaster; they did nothing to save France from long-term financial hardships.

Rulers after Henri IV abandoned the King’s simple lifestyle and embarked on extravagant expenditure which merely added to the financial burdens of the realm. Marie de Medici spent lavishly on palace decorations and entertainments, and Louis XIII and Louis XIV  followed suit. Marie was also forced to spend profusely trying to retain the loyalty and co-operation of the influential nobles, giving 4m livres to Conde alone. Marie was also forced to continue the policy of creating well-paid jobs as bribes to assure loyalty. By the time she fell from power she had spent most of Sully’s reserve and had helped to further weaken the financial stability of the Crown and of France.

Yet the main reason for France’s desperate economic plight was the constant series of wars. No sooner had Louis XIII taken over than he embarked on an expensive and damaging civil war with the Huguenots and France was son dragged into the disastrous Thirty Years War. Instead of seeking to find new methods of raising additional revenue and seeking to reduce France’s involvement in war, both Louis XIII and Louis XIV resorted to the old tradition of taxing their people more and more. Yet the taxation system was flawed since it excluded rich people from any payments at all. A reform of this system would have brought in much additional income and lessened the need for greater persecution of the peasants, but the kings failed to grasp the nettle and instead preferred to wage financial terrorism against their poorest subjects. Yet the Crown failed to tackle the other deep-rooted problem with taxation : the collection. Richard Bonney points out that most financial administrators laced financial skills and most tax-farmers were corrupt : the Crown may have only received half of the taxes collected. The Crown also failed to deal with the third main problem : the differing rights of areas : in areas called pays d’etat, like Brittany, the Crown never raised much as they had the right to negotiate taxes. This meant that in the other areas, the pays d’election, the Crown squeezed the peasants for every penny. The failure of rulers like Henri IV, Louis XIII and Louis XIV, together with their advisers, such as Sully, Richelieu and Colbert, to tackle these three failures meant that the Crown was never able to collect sufficient taxation to finance its policies, and instead left a nation terrorised by financial extraction.

The emphasis on direct taxation could have been eased by a general improvement in the economy, but this meant focus on the development of trade, industry and agriculture. In 1589 trade languished and industry stagnated, whilst French agriculture had failed to emerge from its late-medieval backwardness. What France needed were men of vision who could overcome the insuperable obstacles and develop the French economy, but time and time again they came up against the damaging effects of wars, royal extravagance, royal policies that harmed trade and commerce, and the opposition of vested interests.

Richelieu was well aware of the need for reform. He admired Dutch economic efficiency and genuinely wanted to improve trade and industry. Unfortunately Richelieu was no economist and lacked sufficient appreciation of the nature of such measures needed to overcome the problems. He did, however, attempt to come to grips with the problem through a series of measures, some of which had a degree of success. His founding of the French navy protected and encouraged trade, stimulated the ship-building industry and created thousands of jobs. In 1626 France had an admiral but no navy. Ten years later, 46 ocean-going French warships operated from the Atlantic ports, by 1642 there were 63, while a fleet of 22 galleys operated in the Mediterranean. Equally enterprising though less successful was Richelieu’s colonial policy. He began by founding trading companies. In 1626 New France was founded covering present-day Nova Scotia. Richelieu did his best to support New France and the colony at Quebec, but French colonists were outfought and outfished by the English, and there were only 200 colonists when Richelieu died.

Yet although Richelieu often appreciated the problem, his policies only served to make it worse. Richelieu was well aware that if French trade was to prosper, her merchants must have something to sell; yet here too his achievement was slender. He rightly deplored France’s unproductivity and in particular the backwardness of her industry. During Louis XIII’s reign France’s mines and factories achieved less than a third of England’s production – and England’s population was probably a third of France’s. Richelieu made the situation worse by stifling French production with government regulations. No master craftsman was allowed to produce without a permit. The shop floor was dominated by guilds all of which had to be registered with the government. Royal inspectors interfered in the production of iron and beer. Ostensibly the objective was to raise standards. In truth the goal was to raise money for Richelieu’s foreign policy. The results were deplorable. The only field in which Richelieu intervened effectively was the luxury market. He encouraged the silk manufacturers of Tours, while carpets were produced at the Louvre, glass in Picardy and mirrors in Paris. Otherwise it is a story of grandiose schemes but only modest achievements.

Yet Richelieu was up against formidable odds. He tried to prevent bullion from leaving the country by taxing foreign luxury goods and encouraging French exports. He did his best to combat prejudices against trade; under his Code Michau of 1629 abolishing the punishing of noblemen who traded, though unfortunately aristocrats were slow to respond to this opportunity. Similarly, after opposing the importing of luxuries from the Levant because they drained France of precious metals, Richelieu changed his approach, appreciating that however desirable the husbanding of French coinage the Levant trade gave employment to thousands, stimulated ship-building and raised revenue for the crown.

However, Richelieu’s attention was rarely devoted to economic reform. His ultimate priority was to finance the war with the Habsburgs and – like his predecessors – he failed to look for new methods of income and instead focused on taxation, which soared. This seriously damaged French industry and trade because people could not afford the barest essentials, nor had the government any spare cash which could be profitably invested. War drove merchant ships off the sea; for example the promising Baltic trade had disappeared completely by 1633. Above all, French agriculture languished as more and more peasants were ruined by the billeting of troops and by the demands of the taxman. However, the failure to support and modernise French agriculture cannot be wholly blamed on governments. It reflected the prejudices of the French upper classes who preferred to invest in the purchase of office or in government bonds, contrasting vividly with their estate-managing English contemporaries. There is no evidence that Richelieu appreciated the seriousness of this problem or the possibility of affecting improvements in, say, the growth of cereals, the breeding of cattle or the production of wine. His eyes were fixed on the battlefields of Europe rather than the harvest fields of France.

Yet the priority was not set by him but by his royal master and his failure to finance the war would have led to his fall. Richelieu did not have the time to introduce measures that would have produced long-term benefits. The wars of his master were crippling the economy and he had to find quick measures to reduce their burden. To be fair, it was not easy to find the necessary cash. France’s annual military expenditure more than doubled, from 16 million to 38 million livres, between 1624 and 1642, while in addition considerable subsidies were paid to France’s allies. The problems of finding the money were compounded by disruption of trade caused by war, foreign invasions and billeting of troops. Yet the king’s annual income from taxes should have been 108 million livres, but most failed to reach the Crown. Rather than tackling the abuse of the system, Richelieu merely stepped up the pressure on those forced to pay. Richelieu himself admitted that of the 19m livres raised from the gabelle, only 5m reached the treasury. These ruinous taxes were damaging the economy, causing widespread discontent and hardships and yet failing to solve the Crown’s economic weakness.

Richelieu’s solution only served to damage the future prosperity of France. He resorted to extraordinary revenues selling more and more offices, selling more and more bonds and borrowing at ruinous rates of interest. He was mortgaging the future to solve immediate problems. In other words, by the time of his death, the country was heading for bankruptcy, despite the huge sums raised in taxes. Desperation was the result as millions were driven to armed revolt. Between 1625 and 1675 spontaneous uprisings against harsh social and economic conditions became almost a way of life in the French countryside. Many of them were local and quickly crushed. However there were major rebellions in 1626, 1636-7 and 1639. Also hostility towards high taxation was behind the Fronde rebellions. The Crown’s failure to tackle the economic problems left it financially weak and caused continual challenges to its authority.

Richelieu’s management of the French economy is a depressing story. He ignored agriculture, which remained backward and inefficient. About trade and industry he had some promising ideas, but they were not followed through. As for finance and taxation, a bad system was made worse; inefficient machinery was driven to the point of disintegration in a desperate attempt to find the money. By the time of his death, therefore the economic situation was worse than it had been in 1624.

Mazarin was also hampered in his choice of actions by the ruinous wars that  France was constantly fighting. He was keen to end the war in order to mitigate taxes. But that could only be done through victory or satisfactory settlement, so he was forced to continue the war. In 1642 the war was costing 88m livres, by 1645 it was 136m. The government’s debts exceeded 100m livres. Mazarin responded by borrowing in hope that victory would bring financial rewards. Money was borrowed on massive scale at high rates of interest. For instance, he borrowed 115m livres in 1645, anticipating crown’s revenues until end of 1647. This was financial madness. Once the Frondes were over, Mazarin attempted to solve financial situation. Financiers were back in business and the intendants were used more to collect taxes. To administer the system Mazarin introduced three superintendants of finance. But he did nothing for French industry or agriculture. The taxation system remained inefficient and corrupt and the government was now burdened by 60,000 office holders.

Louis XIV came to the throne at a disastrous time : the country was bankrupt. The country was backward and primitive. France had difficulty feeding its population. It had a population of 18m (three times the English population) yet its soil and climate should have led to sufficient food being grown – in practice most French people lived below subsistence level, while starvation inevitably resulted from especially bad harvests. Since there was little food in reserve, hunger and threat of hunger common during Louis’ reign. Agriculture suffered from the excessive demand for grain to feed the population – this led to excessive arable farming and the consequent shortage of animals to pull the ploughs and produce manure. As a result poor ploughing led to poor harvest which led to poverty and inability to buy animals and so it went on again. Result was peasants died, became vagrants or moved to cities. All this created social and political problems. Governments replied with anti-vagrancy laws. The burden on the peasants increased under Louis since wages fell but rent and taxes either remained same or increased. Taxes on peasants rose by 50% under Louis – this resulted in national impoverishment and the ruin of peasants. Again Louis adopted the tactics of his predecessors – failure to address France’s economic problems and focusing on increasing demands for taxes to pay for continuous wars and royal extravagance.

Whilst landowners invested in new farming methods in England, landowners in France saw land as merely a means of achieving social standing and failed to improve agricultural methods. Peasants also saw no point in making improvements, since led to higher taxes.

There can be no doubt that between 1661 and 1683 Colbert attempted to redress the problems and sought to introduce a series of reforms. To improve the economy Colbert felt the leaders of society should play a larger role. He admired the fact that the ruling elite in Holland tended to be rich merchants. He set out to change the perception of the French aristocrats and the Church that such activities were beneath them. He persuaded the King in 1669 to issue a statement encouraging the nobles to engage in trade and decreeing that such activities would not result in the loss of noble status, providing that they did not engage in retail trading. To encourage the Church, Colbert ordered monasteries to produce cloth. Yet Colbert was attempting to overcome long-held views.

His achievements in state finance seems impressive – he ensured the Crown received more of the money raised by tax-farmers than in the past and reduced the cost of collecting revenue from 52 million livres to 24 million. Through a series of measures designed to improve indirect taxes and solve corruption, by 1672 the national budget showed annual surplus. Colbert had managed to free Louis of the burden of bankruptcy and allowed him to spend money on his ambitious foreign policy and his grand building projects.

Yet, unlike his predecessors, Colbert set out to expand the French economy to help improve national wealth. He believed that the expansion of commerce and industry would help the French economy. The answer was to encourage the establishment of French industries to supply the goods French consumers wanted. He set out to help a number of industries, like the lace making industry in Burgundy. Foreign craftsmen were encouraged to settle in France and teach their skills to Frenchmen -- royal envoys in other countries persuaded manufacturers of luxury goods to move to France. Protective tariffs were introduced and some of the restrictive practices of the guilds removed. Monopolistic privileges were awarded for new methods of preparing leather and manufacture of glass.

Colbert also believed that France would be strengthened by trade and so decided on state intervention. Four trading companies were established, the most famous being the East India Company. Yet Colbert found it hard to encourage private individuals to invest -- this was partly because trade was considered a socially inferior way to make money and was considered risky. Louis XIV even tried to persuade courtiers that investing in East India Company did not count as trade as company had aim of spreading the gospel. Yet companies were a disappointment and even the East India Company never competed effectively with other countries.

Colbert's emphasis on maritime matters stimulated domestic economy. By developing the navy, ship-building was subsidised, forests planted and foreign sailors encouraged to settle in France. Rochefort and Brest, where Colbert established naval arsenals, became thriving ports and the navy's demand for weapons stimulated metallurgic industries in France.

Colbert also wanted to improve conditions for internal trade – he needed to improve communications – he spent 600,000 livres on improving roads, developed the canal between Bordeaux and the Mediterranean and created a postal system with 800 post offices. He tried to eradicate the numerous internal tolls and tariffs which inhibited trade. His success was limited in the latter but he did manage to simplify the tolls levied in the cinq grosse ferms, a customs area in northern France. In 1667 Colbert tried to introduce a simplified customs due on all imports and exports across the kingdom -- proved difficult to enforce as too many local entrepreneurs were making a profit out of the existing arrangements.

Yet Colbert made real advances – he effectively raised money for the king, terrified the idle and crooked by his war on waste, corruption and inefficiency and -- despite setbacks over regulations and tolls -- he achieved real, if limited, progress in galvanising French trade and industry.

Yet despite all this by the time of his death, Colbert’s achievements were not as considerable as was once believed : the French economy still backward and Crown bankrupt again. The war against the Dutch proved to be largely responsible for this situated. The Dutch hit back by sabotaging French trade and the cost of the war proved ruinous. The conflict lasted for seven years and saw the French economy slide into trouble : annual surpluses became things of past and the Crown was in debt again. Colbert was forced to abandon many of his reforms. He was forced to borrow  at 10% from foreign bankers. As a result Colbert was forced to abandon pet projects -- between 1674 and 1678 Colbert forced to wwithdraw subsidies to certain industries.

Colbert failed to appreciate backbone of French economy was agriculture. Many of his policies actually damaged peasants -- for example in order to get timber for the navy he drove the peasants out of the forests. He lowered the taille -- but only so peasants could pay promptly. Otherwise Colbert was indifferent to agriculture and the welfare of vast majority of people. Instead of subsidising luxury industries and non-viable trading companies, Colbert should have invested in agricultural research -- or in manufacture of cheap, low quality products which French people could afford. But unfortunately with all his qualities, Colbert lacked a grasp of reality to achieve greater success.

France was confronted with colossal economic problems during the latter years of Louis’ reign. Whilst one may argue over the extent of the harm done by Louis’ attack on the Huguenots, the emigration of 200,000 talented and industrious Protestants cannot have help such industries as textiles and glass-blowing.

There were attempts to deal with the seriousness of the situation after 1691, with even plans to introduce income tax, and the actual introduction of a poll tax in 1695. Yet too many rich eluded paying and the intendants had trouble collecting it. The yield of 22m livres in the first year was disappointing. The tax was lifted when peace was made in 1697 but revived during the next war in 1702. The crisis in 1710 caused by famine and enemy invasion led to the introduction of the dixieme – the first example of an income tax in European history. Again, mass evasion, shady deals and rebellions against tax collectors reduced the efficiency of this tax, but the amount of direct taxation raised doubled.

However the story of the French economy in the last years of Louis XIV is one of disaster as the king spent extravagantly and France was crippled by expense of wars. Devaluation and the creation of paper money combined with frenetic borrowing and sale of office could only postpone the total bankruptcy which prevailed in 1715. Despite all the expedients adopted, the Crown’s debts stood at 2,300m livres in 1715. All this made the royal family unpopular at the end of Louis’ reign. During the severe winter of 1708-9 the Dauphin was mobbed by starving townsfolk in Versailles. Louis melted down some of the treasures in his palace, but he was viciously and widely lampooned for his selfishness and incompetence.