As I continue my studies of the French Revolution, I am amazed at how many lessons there are for Americans today, lessons concerning taxation, tax avoidance, government induced inflation and the problems of national debt. Apparently, these things were the major causes for the French Revolution and I shall deal with each of these throughout the course of this introductory essay, which will form the basis of a more thorough political economical study to come.
Costly Wars: The French nation was bankrupted by three highly costly, successive wars, namely, the War of the Austrian Succession, the Seven Years War and the American War for Independence. In 1739, the French had just managed to come out from the debts and extravagant spending of the late Sun King, Louis XIV, such that they just started to run a modest budget surplus. This was not to last. The War of the Austrian Succession, from 1740-1748 cost the French 1 billion livres, most of this borrowed from wealthy noblemen at high interest rates, as the French didn’t pull in enough revenue from taxation to pay for the war. As such, the country began to run a sizeable national debt. By 1753, the principal of the national debt was 1.2 billion livres and the annual interest paid on this debt was 85 million livres, which was 20% of France’s annual revenue. (Citizen: A Chronicle of the French Revolution, Simon Schama at 65). The Seven Years War, or “French and Indian War,” as it is called in the US, lasted from 1756 to 1763. This war cost 1.8 billion livres, again, most of it borrowed from noblemen at high interest rates, pushing the country further into debt. (Schama, at 65). Immediately after this war, in 1763, the principal on the French national debt was 2.324 billion livres, or 7.3 times annual revenue, with interest payments amounting to 160 million livres a year, which was almost half of the country’s annual budget. (Id.) (See also, Public Debt and the Birth of the Democratic State, David Stasavage, 93-95).
One would think the French would temporarily give up their appetite for war and glory since it was bankrupting them. However, France had grown accustomed to being, along with Britain, the 18th century’s version of a superpower, and viewed war and geopolitical intrigue as the chief function of state. As such, when the American colonies broke away from Britain and asked for French assistance, the French jumped at the opportunity to play chess on the world stage and avenge their humiliations from the prior war, regardless of the financial costs and domestic political consequences. During the American War for Independence (1775-1783), the French spent 1.3 billion livres, again, almost all of it borrowed from wealthy noblemen. As a result of these enormous war expenditures and the high-interest debts accrued, by 1785, France was on the verge of total bankruptcy and few noblemen, nations or bankers would lend to them. France had become a “sub-prime” nation.
Tax Evasion: The major reason the French had to borrow for their wars was because they didn’t pull in enough revenue through taxation. The French clergy and nobility, which were the wealthiest sections or Estates in French society, held 90% of the national wealth, but they were practically exempt from most forms of taxation, freedom from taxation being one of the chief legal distinctions and prerogatives of European feudal nobility since the collapse of the Roman Empire. As a result, taxation only fell on the peasants, middle class and the upper middle class, who together comprised 90% of French society, but only held 10% of its wealth.
Of these three groups the upper-middle class, which was comprised of a small number of educated and influential doctors, lawyers and merchants, was singled out for the highest taxes. Since they comprised the principal economic engine which propelled the French economy, they felt unfairly treated and this was one of the principal motives behind their rapid radicalization. Most hated among the taxes leveled upon the peasants, middle class and upper middle class, or Third Estate, as it was known, was the Taille, which was a property tax applied to all non-noble and non-clergy landholdings. http://en.wikipedia.org/wiki/Taille. As a result of this tax, the more land one held, the more one was taxed, unless one was noble or clergy. As such, the productive classes were being penalized for their success, while the unproductive leisure class of noblemen and clergymen had lives of luxury subsidized by the efforts of the middle classes. You can imagine the fully-justified hatred dwelling in the hearts of self-made lawyers and doctors, fisherman and farmers, who worked hard and did much, only to see the nobility squander their expropriated/extorted tax dollars in frivolous displays of ostentation at the royal palaces of Versailles and the Tuilleries.
Inflation: Since the 1760s, the French government had consistently tried to inflate its way out debt. This was, and still is, an important debt-fighting instrument at the disposal of all national governments and is employed simply by printing or minting more money and devaluing the currency. As such, single livre was worth a certain amount of gold, and while at a nominally fixed rate, this rate was often changed arbitrarily by the state. When more money is minted and/or printed, a single livre would thus be worth far less gold. As a result, if the national debt is denominated in a specific currency, such as a livre (rather than a precious metal, like gold) by printing/minting more money, you can spend far less gold getting out of your debt, then you would be able to do, prior to the state enacting said inflationary measures. To aid in this inflationary attempt, the French adopted paper currency in 1776, because it was easier to print paper money, then mint metallic coins. http://en.wikipedia.org/wiki/French_livre
An unintended or perhaps flagrantly disregarded result of this monetary inflation, which happens with most inflation, is that the common people suffer because they can no longer afford staple products they once afforded with ease. As inflation creeps into the economy, the prices of goods go up. A single loaf of bread is still priced in terms of its equivalent value in silver or gold. However, wages are often not linked to inflation, because employers tend to be greedy and hold workers to their specific monetary-linked, rather than precious metal-linked, wage contracts. As such, if the price of a four pound loaf of bread (what an average French family ate in a day) goes up from 8 sous to 12 sous, but you only make 10 sous a day, then you will barely be able afford food. Forget about rent, firewood for keeping warm, etc… http://en.wikipedia.org/wiki/French_Revolution#Storming_of_the_Bastille.When When heavy taxes were added into the equation, as well as the knowledge that those most capable of paying it didn't have to, the situation became volatile, especially as people started to borrow money at high interest rates just to meet the demands of daily living. This would have deadly and perhaps, even, justifiable consequences for the aristocracy.
Closing Thoughts: The French Revolution and its contributing factors have been much discussed and written about in the 200 years following in its fiery wake. The issues I discuss above are not new, but they have been forgotten. We would do well to re-learn the lessons of the past. As such, I serve not as a novel thinker with new ideas, but a reminder, somebody re-telling old tales that we should keep telling, lest we forget and be doomed to repeat the past mistakes of those who have gone before us. This is the principle value of history, I believe.
The most interesting lesson from the French Revolution, I believe, is how quickly a great power/superpower can fall from the heights of preeminence, how quickly bad state finances can erode into a political crisis, how rapidly the domestic order can erode and even dissolve, due to the economic costs of continuous wars, an ever-increasing national debt, an aristocracy that refuses to pay its fair share of taxes, and a tightly-squeezed middle class that carries the majority of the financial burdens of state upon its shoulders, while dealing with the consequences of a horrendous, state-induced inflation.
We also shouldn’t forget the sad cultural results of this fall. Before the Revolution, French was the international language of business, science, culture and politics. The Czar spoke French in the Kremlin. Benjamin Franklin and Thomas Jefferson wrote many scientific and philosophical essays in French (even if translated with the help of others). The greatest scientific journals of the age were published in French. Frederick the Great of Prussia, the greatest of all German monarchs and military heroes, surprisingly refused to speak German (which he regarded as too gutteral and barbaric for his refined, sensitive tastes) and only spoke French at his French-named palace in Potsdam, Sanssouci.
After the Revolution and the 20 years of world war that followed in its wake, French fell by the wayside and was seen as the language of a failed empire and people. In the 100 years that followed, the 19th century world was without a leading culture, without a common language/lingua franca and the world would be divided as countless new powers struggled with eachother as they tried to acquire the lost mantle of global supremacy. By 1945 a new language emerged and picked up the fallen mantle of French--English, the language of the ancient foe.
Forgotten are the days of the Sun King, our strongest memories today are of Dien Bien Phu and the summer of 1940. As Napoleon Bonaparte once said: “From the sublime to the absurd, ‘tis but one step.”