The seventeenth century witnessed the emergence of economic theory as a key factor in government policy: Mercantilism, the belief that prosperity resulted from a balance of trade that drew gold and silver into a nation’s coffers, was spearheaded by France under Jean-Baptiste Colbert. He achieved some degree of solvency in French state finances during the reign of Louis XIV by addressing the corruption, inefficiency, and inequities of public revenue policies through a number of mercantilist reforms.

In the mid-seventeenth century, France was industrially and economically fragmented, had been laboring under a long-standing corrupt feudalistic system of state finance that was woefully inefficient, and had experienced twenty-five years of foreign and civil wars. Furthermore, the nation had no coherent plan to improve revenue from international trade. As a result, France had little wealth or power compared with European rivals such as England and Holland. Jean-Baptiste Colbert, Colbert, Jean-Baptiste who became French controller general in 1665, was determined to improve the fortunes of his country and king through an aggressive program of mercantilist reforms. [kw]Colbert Develops Mercantilism (1661-1672)
[kw]Mercantilism, Colbert Develops (1661-1672)
Economics;1661-1672: Colbert Develops Mercantilism[2050]
Trade and commerce;1661-1672: Colbert Develops Mercantilism[2050]
Government and politics;1661-1672: Colbert Develops Mercantilism[2050]
France;1661-1672: Colbert Develops Mercantilism[2050]
Mercantilism

In 1661, King Louis XIV Louis XIV;Colbert and wished to publicly assume the positions of chief minister and superintendent of finance himself, but he effectively gave the real power of both offices to Colbert. The new controller general believed that France could be economically revitalized through policies based on mercantilism, an economic doctrine that emphasized the belief that national wealth was created by a favorable balance of trade that brought gold and silver (universal currency) into the country at the expense of trading rivals.

Colbert’s mercantilist program, known as “Colbertisme” (Colbertism Colbertism ) began with the reorganization of the system of generating national revenue, which was based on taxation. The main royal tax, called the taille, was a direct tax on land and property. Nobles, the clergy, and all government officials were exempted from the taille, leaving the vast majority of the tax burden to be paid by the poorest commoners. Not only did the wealthiest citizens who owned two-thirds of the land pay no direct taxes, but the peasants were also taxed multiple times locally by these same aristocrats and clergymen. Taxation;France In the absence of any organized system of royal tax collection, the Crown used “tax farmers” as collectors. Tax farmers paid the royal treasury in advance and then assessed and collected taxes to recover their investment and pay their commissions. The arbitrary assessments, multiple taxations and excessive interest charged by collectors, with no real system of accounting, produced a corrupt, inefficient system that was absolutely regressive.

In 1662, Louis XIV decreed that all treasury officials would answer to his controller general. Colbert established an accounting system for the royal treasury and the concept of a “national budget.” He reduced the number of local treasurers and tax farmers, and those remaining were required to submit documented accounts to Colbert. The controller general’s power grew quickly, and he expanded his financial reforms. Between 1664 and 1666, he became the royal treasurer, reduced the commission of tax farmers from 25 percent to 4 percent, bought back and abolished numerous functionless salaried government offices that had been purchased earlier, and established the Chamber of Justice to audit treasurers. Colbert also succeeded in reducing the amount of revenue from the taille and increasing revenue from indirect taxes on commodities such as salt and wine, from which none were exempt. In addition, he lowered the interest rates on state loans and confiscated the excessive profits of wealthy long-time speculators for the state treasury.

The effectiveness of these reforms required the creation of a centralized nationwide jurisprudence system. In 1667, Colbert succeeded in establishing France’s first uniform codified rules of judicial procedure. The uniform administration of justice usurped the traditional power of each province’s high court to make and enforce its own laws, and established the civil rights of citizens within the monarchy.

Colbert realized that he could never balance the budget through tax reforms alone; that would require major changes in French industry and commerce. He sought to improve the quality and quantity of goods by establishing factories in each region that specialized in a particular product, employed all available workers, were bound by stringent quality control regulations, and were financed by private capital and royal subsidies. High quality luxury goods were produced to stop the flow of French money to the countries that had traditionally produced them. Skilled immigrant workers were brought to France to oversee the manufacture of numerous commodities, including mirrors, silk, fine textiles, and ships. Laws were passed to forbid immigrant workers from returning home and to prohibit skilled French workers from emigrating. Although Colbert did succeed in increasing foreign demand for French products, there was widespread resentment over the rules and practices of the Industrial Inspection Service. These measures served the dual purposes of increasing production for export and reducing unemployment and poverty.

Jean-Baptiste Colbert.

(Library of Congress)

Colbert began early in his career to build the French navy as an integral part of his overall plan to improve international commerce. Protective tariffs on foreign goods were central to Colbertism, but they could not be levied while France was dependent on foreign shippers. Because France possessed only thirty small ships in 1661, Colbert created a maritime budget in 1662 and significantly increased the number of oceangoing vessels, founded naval training schools, established pay and pension plans for seamen, required judges to sentence criminals to be oarsmen in galleys, and improved harbors and ports. French shipbuilders were subsidized, and French seamen convicted of serving on foreign ships faced capital punishment.

Improvements in French industry coupled with the growth of the navy and merchant marine formed the basis of Colbert’s policy of “progressive protectionism.” In 1662, he actually reduced a modest customs tax, but, as France quickly became more competitive, it was reinstated in 1663, higher import tariffs were imposed on each specific category of goods in 1664, and those tariffs had been doubled, at minimum, by 1667.

Colbert also sought to create a more-favorable balance of trade Trade;France for France by founding colonial settlements and monopolistic trading companies. The objectives of colonization were to obtain raw materials directly without going through rival nations, and to create exclusive markets for the sale of manufactured products. In this regard, other European powers had a significant head start over France. Colbert established colonial outposts in places such as Madagascar, India, the Caribbean, and Canada, but with limited success because of the indigenous populations’ resentment of the one-sided economic regulations, designed to benefit France. He created trading companies and gave them exclusive rights to compete with France’s rivals in various regions of the world. The disappointing performance of companies like the East Indies, West Indies, and North Sea Companies was also due, in large part, to the inflexibility of overbearing mercantilist regulations.

Colbert insisted that the glory of France also should be enhanced by artistic and intellectual advancement. He established and funded the Academies of Inscriptions, Painting and Sculpture, Architecture, and Sciences. He patronized artists and scholars, directed the creation of a French dictionary to standardize the language, and greatly increased France’s artistic and literary treasures.

The first several years of Colbert’s tenure as controller general, from 1665 to 1672, was a period of relative peace, state solvency, and cultural development. During this time, Colbertism increased state revenues dramatically, making France’s economy the strongest in the world except for that of England. However, by 1672, the minister of war, the marquis de Louvois, Louvois, marquis de had gained considerable influence with the king as Colbert fell from favor. Louvois undermined Colbert’s policies, and he initiated an extended period of aggressive warfare, beginning with the French-Dutch War French-Dutch War (1672-1678)[French Dutch War (1672-1678)] in 1672, that began France’s march toward national bankruptcy and, eventually, the French Revolution.

In spite of his declining status and influence after 1672, Colbert’s industrial, trade, maritime, colonial, and cultural policies continued to affect France for the rest of his career and after his death. His reorganization of French industry to produce quality goods for export firmly established the competitiveness of numerous products. The trade links that survived the breakup of Colbert’s trading companies remained a significant source of revenue for many years. The increase of French overseas possessions in the eighteenth and nineteenth centuries was based on Colbert’s ideas on colonization. Colbert’s maritime policies, including codified ordinances, uniform training, and improved harbors, have been reflected in the organization of the French navy until the present. His support of the arts, letters, and sciences made Paris the cultural center that it became and remains today.

Colbert’s policies have had a continuing impact on political and economic theories and policies. His groundwork in creating more equitable laws and judicial practices had far-reaching implications for future governments, becoming a model for both the republic following the French Revolution and for the Napoleonic Code. It also is reflected in the concept of civil liberties in all democracies. French Physiocrats, in repudiating Colbert’s program, were instrumental in the development of laissez-faire free market economic theories that directed economic policies around the globe for generations, and vestiges of Colbertism can be seen into the twenty-first century whenever powerful lobbies seek to obtain favorable trade agreements or protective tariffs for industries.

• Ames, Glenn Joseph. Colbert, Mercantilism, and the French Quest for Asian Trade. DeKalb: Northern Illinois University Press, 1996. Includes a detailed account of Colbert’s attempts to initiate mercantilist reforms.
• Clark, Henry C. “Commerce, the Virtues, and the Public Sphere in Early-Seventeenth-Century France.” French Historical Studies 21 (1998): 415-440. An analysis of the long-held traditions of generating public revenue that brought France to the brink of bankruptcy and set the stage for Colbertism.
• Cole, Charles Woolsey. Colbert and a Century of French Mercantilism. 2 vols. Hamden, Conn.: Archon Books, 1964. More than one thousand pages present a comprehensive examination of Colbert’s impact on public policy under Louis XIV and the effects on France’s politics and economy.
• Dent, Julian. Crisis in Finance: Crown, Financiers, and Society in Seventeenth-Century France. New York: St. Martin’s Press, 1973. A solid exposition of the financial workings of the seventeenth century French monarchy, starkly exposing the weaknesses of the financial administration Colbert set out to reform. Detailed and scholarly, this work offers a strong portrait of the political and social world of the financiers.
• Emmer, P. C., and F. S. Gaastra. The Organization of Interoceanic Trade in European Expansion, 1450-1800. Aldershot, England: Variorum, 1996. Examines the comparative mercantile, naval, and political strategies of various European powers for world trade, particularly in the Far East.
• Levi, Anthony. Louis XIV. New York: Carroll & Graf, 2004. This biography contains a great deal of information on Colbert’s administration and his relationship with Louis XIV.

Jean-Baptiste Colbert; Louis XIV; Marquis de Louvois; Jules Mazarin; Cardinal de Richelieu. Mercantilism