The Financial Decline of a Great Power: War, Influence, and Money in Louis XIV's France.
Recent events and scholarship have conspired to bring the history of state finance in early modern Europe back to the center of historical concern. This book by a specialist on the French military machine takes a deep dive into one of the ugliest episodes in that field: Louis XIV's financing of the War of the Spanish Succession. Guy Rowlands seeks to describe the personalities and institutional structures that accomplished that task in the face of repeated military and economic disaster, to explain their methods as they evolved over time, and to diagnose a series of errors that made this financing unduly expensive and economically damaging. In the first two tasks, he succeeds admirably, but his critique of the Sun King's fiscal strategies, necessarily based on counterfactuals, is less definitive. Still, if the financial challenges France faced in 1715 were not completely insurmountable, they were clearly very formidable and played an important role in constraining the French state down to and past the Revolution.
The book is divided into three parts along the lines indicated above. In the first, Rowlands focuses on the two men who led the fiscal administration during the war as controleurs generaux des finances: Michel Chamillart, who cumulated this post with that of secretary of state for war, was overmatched by his responsibilities and in 1708 handed the controle over to Nicolas Desmaretz, who brought a firmer hand and some new personnel to a deteriorating situation that he stabilized just enough to stave off utter collapse. The system these men directed was extraordinarily complex and in constant flux, but its defining characteristic (despite belated moves towards broader-based taxation) was a disproportion of revenue to expenses, and thus massive borrowing. While Britain was developing a system of long-term, low interest, publicly traded bonds, France had little luck creating any equivalent. Instead, it issued huge quantities of poorly coordinated, short-term paper from every corner of the fiscal apparatus and from the contractors who worked with it. This created enormous opportunities for fraud and self-dealing. Perhaps its most damaging element was a flood of "mint bills"--originally receipts for specie left for coining that became a kind of bastard paper currency before nearly destroying French foreign exchange. As the war progressed, contractors and treasurers increasingly simply defaulted on their obligations to creditors, suppliers, and troops.
In Rowlands's view, much could have been done better in terms of nurturing capital markets, controlling exorbitant foreign-exchange costs, reducing corruption and rent seeking, and directing resources more effectively to the front lines. This is almost certainly true, but in the absence of either a formal model or a systematic comparative project it is hard to say what exactly should have been changed and what difference it would have made. Military disaster and exogenous economic shocks might well have overwhelmed even an improved fiscal administration. More technically, it would be interesting to explore the macroeconomic impact of the monetary manipulations and proliferation of money-like debt instruments that Rowlands chronicles. Still, this study provides a sure guide to a bureaucratic labyrinth and a convincing argument that the War of the Spanish Succession was even more of a disaster for France than has generally been believed.
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|Article Type:||Book review|
|Date:||Mar 22, 2015|
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