1 Primary Source 4.7 COLBERT’S REFORMS1 Jean-Baptiste Colbert (1619–83) was Minister of Finances in France from 1665 to 1683 under Louis VIX (r. 1643–1715). In this position, Colbert attempted to reform government finances, stimulate economic development, and pay down France’s vast debts accumulated from massive wartime spending. He strove to balance France’s trade, improve infrastructure, subsidize commercial development, rationalize taxation, increase colonial holdings, and raise tariffs to encourage domestic production. Furthermore, the French East India Company gained more access to foreign markets. The French economy, which remained the biggest in Europe, indeed grew, though almost unremitting warfare led state debt to continue to pile up. Together Colbert and Louis contributed to the development of French political absolutism and the economic policy of mercantilism. Absolutism emerged in Europe thanks to the incessant financial demands of the Military Revolution and the growth of bureaucracies meant to administer military resources, though absolutist government had been the norm in other developed societies for centuries. Mercantilism, by contrast, was the first economic theory ever devised. During most of human history, economic growth was all but imperceptible, so thinkers and scholars saw no need for theories of economic improvement. When economies began to grow in early modern Europe, however, such ideas naturally evolved in a Europe where systematic thought was being brought to bear on all human problems. In the first passage below, Colbert describes the financial condition of France before and after he became minister. The second excerpt is a letter from Louis XIV to the people of Marseilles dated 1664. Written shortly after Colbert was appointed Minister of Finances, the letter illustrates the ways in which the new minister proposed to reform the financial situation of France and how the crown intended to encourage commerce. For the text online, click here. As we have had only examples of want and necessity in our finances since the death of Henry IV,2 it will be well to determine how it has come about that for so long a time financial there has not been, if not abundance, at least a tolerably disorders satisfactory income,—something else than dearth and destitution, some approximation of equality between output and revenue. .3 During the twenty years immediately following the death of Henry IV, the superintendents of the finances either gorged themselves with wealth,—all the other financial officials following their example,—or, if they were upright men, they 1 James Harvey Robinson (ed.), Readings in European History, 2 vols., (New York: Ginn and Company, 1906), 2:277–281. 2 King Henry IV of France (r. 1589–1610) was the first French monarch of the House of Bourbon, which produced the subsequent kings of France, including Louis VIX. 3 All ellipses from source. 2 did not have sufficient penetration to perceive the abuses, malfeasance,4 thefts, and waste which went on under cover of their authority, and even under their eyes, so that the state was always in need. It even happened that the incompetency of the superintendents was commonly more prejudicial to the state and the people than their personal thefts, seeing that there never was a time when the superintendents appeared to be more honest than from 1616 to 1630. But since the expiration of these twenty years the change in the character of the persons chosen to fill this post has not altered the fate of the state; on the contrary, the most pernicious maxims took root in their minds and controlled their conduct and, in the course of time, assumed such strength that they have come to be considered fixed and unquestionable, and it seems to be assumed that they are not endangering the state. These maxims were: This realm can exist only in confusion and disorder; The secret of finance consists solely in making and unmaking, in bestowing emoluments5 and new honors on old officers, in creating new offices of every kind and character, in alienating rights and sources of income, withdrawing these and then reestablishing them once more; Causing the payment of taxes on all kinds of pretexts; Increasing the indirect taxes and tailles,6 alienating rights, then reducing or withdrawing them to alienate them anew; Consuming for current expenses the ordinary and extraordinary receipts of the two years following; Giving prodigious discounts for advances in cash, not only in raising exceptional revenue, but even in the collection of the ordinary revenue, more than half of which is consumed by discounts and interest on money advanced; Giving the opportunity to the treasurers of the public funds, other financial agents, and farmers of the revenue of making immense profits; maintaining that the grandeur of the state consists in having a small number of persons who can furnish prodigious sums and astonish foreign princes; Neglecting the farmed taxes and general receipts which constitute the ordinary revenues, in order to apply themselves actively to extraordinary sources of income. All these pernicious maxims were so firmly established that the most able and enlightened persons connected with the government of the state thought that in a matter so delicate it would be more dangerous to try a new policy than to submit to the existing evils. It is not astonishing that superintendents of finance regulated their conduct by these maxims, since they found in them two considerable advantages: the first was that in this confusion they enjoyed plenty of opportunity to enrich themselves and to make important gifts to their relatives and friends and to all the persons of the court whose good offices they had need of in order to maintain themselves in all 4 Wrongdoing. 5 A salary, fee, or profit from employment or office. 6 A direct land tax in France prior to the French Revolution levied on the common people but not the clergy or nobility. 3 the disorder; and the second, that they were persuaded that this policy rendered their services necessary and that no resolution to remove them could be considered. A Letter Addressed by Louis XIV to the People of Marseilles (1664) Very dear and well beloved: Considering how advantageous it would be to this realm to reestablish its foreign and domestic commerce, . we have resolved to establish a council particularly devoted to commerce, to be held every fortnight in our presence, in which all the interests of merchants and the means conducive to the revival of commerce shall be considered and determined upon, as well as all that which concerns manufactures. We also inform you that we are setting apart, in the expenses of our state, a million livres7 each year for the encouragement of manufactures and the increase of navigation, to say nothing of the considerable sums which we cause to be raised to supply the companies of the East and West Indies; That we are working constantly to abolish all the tolls8 which are collected on the navigable rivers; That there has already been expended more than a million livres for the repair of the public highways, to which we shall also devote our constant attention; That we will assist by money from our royal treasury all those who wish to reestablish old manufactures or to undertake new ones; That we are giving orders to all our ambassadors or residents at the courts of the princes, our allies, to make, in our name, all proper efforts to cause justice to be rendered in all cases involving our merchants, and to assure for them entire commercial freedom; That we will comfortably lodge at our court each and every merchant who has business there during all the time that he shall be obliged to remain there, having given orders to the grand marshal of our palace to indicate a proper place for that purpose, which shall be called the House of Commerce; . That all the merchants and traders by sea who purchase vessels, or who build new ones, for traffic or commerce shall receive from us subsidies for each ton of merchandise which they export or import on the said voyages. We desire, in this present letter, not only to inform you concerning all these things, but to require you, as soon as you have received it, to cause to be assembled all the merchants and traders of your town of Marseilles, and explain to them very particularly our intentions in all matters mentioned above, in order that, being informed of the favorable treatment which we desire to give them, they may be the more desirous of applying themselves to commerce. Let them understand that for everything that concerns the welfare and advantage of the same they are to address themselves to Sieur9 Colbert. 7 The currency of France from 781 to 1795. 8 France was ridden with tolls at this time as administrative districts of all sizes, even many cities, had their own tolls for merchants and traders. 9 A French title of respect; the French equivalent of the English “Sir.” .