Colbertisme and the French Economy

Abenomics, Bidenomics, Thatcherism - it seems to be a fad among politicians to label their economic policies. Apparently it also applies to economic managers from distant past, like the case of the 17th century financial and economic manager of King Louis XIV (1643 - 1715) of France. So who is Jean-Baptiste Colbert? What are the pillars of his so-called Colbertisme? Was he successful?

Jean Baptiste Colbert

The policy maker - Jean-Baptiste Colbert

 

From a middle class family in Reims, Jean Baptiste Colbert despite the nepotistic nature of his entry, proved himself deserving to be in King Louis XIV’s inner circle. Eventually rising to become the monarch’s most trusted adviser for some time.

Born on August 29, 1619 to a middle-class draper's family in Reims, Colbert gained experience in finance through  his uncle. Turns in his family’s fortune forced them to move to Paris where, with the help of his cousin, entered the service of Cardinal Mazarin, the top minister of the newly enthroned King Louis XIV.

Ambitious, driven and impeccable work ethics, he earned Mazarin’s trust. So much so, in the Cardinal’s passing in 1661 he entrusted his reliable mentee to the King saying, "Sire, I owe everything to you; but I pay my debt... by giving Colbert."

It took a while before Colbert completely became the King’s most trusted lieutenant and economic manager. He waited for 3 years. During that period he eliminated his rival and Louis’s then Comptroller-General Nicolas Fouquet.

Eventually, Colbert filled the vacuum left by Fouquet. In 1664, he became Superintendent of Buildings, Royal Manufactures, Commerce and Fine Arts. In 1665, he finally grabbed the coveted position of Comptroller General.

Challenges in the Economy

Colbert had his task cut out for him. External crisis, lacking data, huge debt among others confronted him. These challenges he tried to solve while keeping the favor of his flamboyant boss, King Louis XIV aka the Sun King.

When Colbert took the reins of France's finances, debts from the Thirty Years' War still burdened the Kingdom. Mostly due to the high interest rates that reached 18% of acquired loans. Furthermore, the monarchy and nobility spent uncontrollably. Worse, he lacked the data and facts to formulate efficient solutions and policies.

Along with debt, bribery and corruption plagued the government. Selling of offices or the paulette became a norm. Colbert himself owed his advances to the purchase of office and nepotism.

On the other hand, state revenue relied on Medievalistic taxes, such as the Taile. Tax Farms littered the kingdom where wealthy individuals after paying huge sums gained the right to collect taxes including Aides (Excise Tax), Gabelle (Salt Tax), and domestic tariffs in a specific area.

Blindedness, debt, corruption, and medieval practices, Colbert must answer these problems to create an economy to match King Louis XIV’s ambition of a powerful France. His response reshaped the Kingdom’s economy with policies that came to be known as Colbertism.

Economic Reforms

Colbert wasted no time improving finances and the economy. As his guiding light, he relied on Mercantilism. A policy that led to greater state power but with mixed results.

The economic thought of Mercantilism heavily prevailed prior to the 19th century. In simpler terms, the amount of metallic currency on hand dictated a state's wealth. Discouraging imports and promoting exports became the norm. Colbert said, " It is almost certain that each state in proportion to its greatness and extent is sufficiently supplied with means of subsistence within itself, provided that these means are well and faithfully administered."

As he took the position of Comptroller-General, he first addressed the issue of lacking data. In 1666 he ordered a massive survey of the production capability, population, resources, etc of France and neighboring countries. The compilation of data resulted in the Enquete Statistique, which guided Colbert’s policies. The data collection and its updates accumulated, by the time of Colbert’s passing,  around 50,000 books and 15,000 documents which formed the core of the royal library.

Government Finances

Colbert launched a reign of terror against tax evaders and creditors. The Chamber of Justice formed to prosecute Nicolas Fouquet continued to operate and shifted their sights towards domestic creditors. They reviewed all loans taken as far back as 1635. 

Basically, Colbert intimidated creditors. He threatened them either lower interest payments or suffer property confiscation, arrest, and even execution. Some resisted, but most complied. The nobility dubbed the whole witch hunt as “Colbert Terror” which resulted in 150 million Francs going to the coffers of the state.

With the King’s blessing, Colbert then trimmed down the government and court. He decreased the number of staff and sacked officials with allowances but no duties or redundant duties. In other words, he "right-sized" the court and government.

Next focus went to improving government revenue. Tax farms faced the Colbert Terror, especially those who cooked books and abused their authority. Moreover, descendants of the original owner of the right for tax farming paid heavy fines.

After the tax farm reorganization, Colbert tackled the ancient tax called taille. A confusing tax imposed on whatever comes to mind whether on individual wealth, land, or consumption. Worse, the nobility and clergy enjoyed exemption. Colbert once reported to Mazarin that only 10% of the total taille went to the King.

Colbert’s reform began with a review of the table of ranks to identify who really had the privilege of exemption. Knowing the burden of the taxes, he reduced the amount but ordered full payment in time. He supervised as well the strict collection and implementation of the taxes using his agents.

Despite his ruthlessness in some aspects, some mercy came out of Colbert. He petitioned the King for a tax amnesty for unpaid taxes from 1647 to 1658, those right after the war. Other than that, evaders suffered the terror of Colbert which also gained the state 31 million to 75 million livres.

Shipping and Trade

While fixing finances, Colbert devoted energy to a key aspect of Mercantilism: Trade. Export to be promoted while imports to be diminished. However, both international and domestic commerce suffered from challenges. In this fight he won only short victories.

Domestically, internal customs duties hampered the flow of goods. Tax farms collected duties while different regions imposed their own. In one account, French products from one region traveling to another needed to pay at least 16 custom duties. This raised prices and limited profits.

To limit importation and improve domestic commerce, Colbert issued a tariff ordinance in 1664. It aimed to reduce the number of domestic tariffs but with results below expectation. Only 37% of the country formed a single customs union. 

Colbert then turned to law and infrastructure. In 1666, construction began for the Royal Canal of Languedoc later called the Canal du Midi that connected the Atlantic Ocean to the Mediterranean. This reduced travel time and reliance on Gibraltar. Finally in 1673, Colbert unveiled the Ordinance of Trade in 1673 compiling and organizing the various commercial laws of the Kingdom to provide clarity and consistency. Moreover it placed industries under the control of guilds which gave the state better supervision of jobs and trades.

For international trade, shipping posed a problem. France only possessed around 600 ships compared to the Dutch that ruled the industry with its armada of 20,000 ships. Thus, the Dutch controlled shipping rates and placed French exports in a vulnerable position.

The 1664 trade ordinance that imposed high tariffs failed to lower imports. Hence, a higher rate went out in 1667. It strained diplomatic relations with the Dutch that eventually contributed to a war. By its end, stipulation in the treaty reverted tariffs back to 1664 levels. 

If importation failed to go down, Colbert decided to control it. In 1664, several trading companies emerged such as the West India Company and East India Company. Both successfully built footholds or factories in different parts of India and the Caribbeans, supplying France with exotic goods. Nevertheless mismanagement and political interference resulted in the revocation of the companies’ privileges in 1682.

But the cherry on the top of Colbert’s push on expansion of  trade laid with a navy. His pet project for France dominating the seas. Luckily for him, Louis XIV gave him the office of Secretary for the Navy in 1668, using it to promote shipbuilding.

With control of finances, Colbert ordered the development of various facilities. Toulon hosted an arsenal capable of holding 50 to 60 warships. Shipyards established as well in Rochefort and Brest while Dunkirk’s facilities became widely used too. Then Colbert also supported the establishment of naval schools, for instance the one in Toulon trained naval officers and shipbuilders. 

Colbert secured the necessary wood for his news ships, specifically oak. In 1669, he issued the Ordinance of Water and Forest. It placed forests under state control, setting up the management of these natural resources and imposed punishment on those who will violate it.

The Navy Secretary also turned attention to the navy’s manpower. Whether through impressing sailors or ordinary civilians to the navy, having courts sentence criminals to a life in the seas he did it or purchasing slaves, he did it. All for the navy.

To further promote self-sufficiency, and form the bulwark of an export drive, Colbert patronized domestic industries. As mentioned before, he imposed tariffs on imports to shield local businesses from foreign competition. Moreover, he showered them with tax breaks, cheap credit, and monopoly rights. Somewhat a 17th century version of economic populism.

New state enterprises, known as Royal Factories, sprang up. For example, the case of the Gobelin Works and Manufactory that became state owned in 1667 to produce furniture and tapestries for the palaces and chateaux of the elite. Similar to Gobelin, the town of Van Robais hosted a linen factory likewise for Beauvais with a tapestry workshop. 

The textile industry under Colbert saw 44,000 looms operating across France. In Tours alone textile manufacturing employed 20,000. Lyon also became a famous hub for silk manufacturing. This city and its industry later inspired a certain Joseph-Marie Jacquard to build a mechanism considered to be an early form of computer.

State patronage, however, came with responsibilities, and a lot of it. Colbert poked too much in the maintenance of high quality. Especially as he considered these products not just for local nobles, but for across Europe. Thus, guilds and Colbert’s agents, similar to an economic version of a Gestapo, monitored every factory, checked the qualities of their product, and punished those who deviated. 

Investment in local industry also saw a rise in the hiring of foreign workers and in the number of training schools. Germans helped in mines while Dutchmen helped in shipbuilding. To foster local talents, several training schools began operation, like the Academy of Science in 1666.

Tax reforms, Mercantilist trade policies, naval build up and states-sponsored industries formed the pillars of Colbert’s economic policies. Ruthlessness matched with a keen eye for efficiency created a command economy to pair with Louis XIV’s political absolutism. In the end, it resulted in mixed outcomes.

The Impact

Colbertism gave France different results. Some went well in the short term but failed in the long run. Some attributed to the man, but others to the King. His economic policies stood as a demonstration of mercantilism’s effectiveness or lack thereof.

On the positive note, Colbert’s policies gave financial gains for France. The government began to implement sound policies from data gathered throughout the country. Indebtedness decreased while revenues increased. New factories provided employment backed by the massive shipbuilding campaign that gave France a chance to challenge top naval powers England and the Netherlands. 

On the other hand, his policies and even his management style proved to be problematic in some areas. The information gathering failed after less than a generation from Colbert’s passing. This mainly due to Louis XIV’s lack of interest and the Colberts’ political battle with their rivals, the Louvois. Failure to make data gathering a sustainable system led to a return to blinded policy making. 

His trade policies also failed. In international trade, his tariffs contributed to a start of a war and his trading companies fell after mismanagement. For domestic trade, his goal to eliminate local customs duties never materialized for about a century. 

In taxation, despite massive reforms, it faltered in addressing the fundamental issue of exemption of the nobility and clergy. The nobility hampered much of the reforms in tax farming. As a result, the peasantry that comprised the majority of the population, but not the wealth continued to bear the brunt of taxation.

For industries, Colbert’s micromanagement and strict implementation of quality and standards stifled and even punished innovation and creativity. This stagnated production. Moreover, the guilds became ever more elitist having control on who enters the trade or crafts. 

The goal of making France an exporting power also went nowhere. France’s imposition of tariff prompted the continent to do the same with French products. Hence, the products never left France. 

Economics mixed with Politics and Whims

The biggest problem for Colbert’s economic policy, unfortunately, lay, not with economics, but politics. “L'etat c'est moi” or I am the State as Louis XIV heralded his absolute rule. In other words his words are law. Thus, the King decided the fate of the economy and France as a whole for generations to come. 

The King’s extravagance both in palaces and foreign affairs took its toll on the French economy. All the gains from reforms went into the construction of the Palace of Versailles and the numerous wars Louis XIV started for the flimsiest reasons. 

Colbert reasoned with the King but the adrenaline of war pulled the monarch stronger. The King’s attention soon shifted to Colbert’s rivals, the Louvois who controlled the war ministry. In 1683, Colbert laid in his bed a broken man worried for the future of the kingdom and disappointed in the outcomes. Little did he know, he only saw a trailer of disappointment.

He failed to witness the King’s later specialties, religious bigotry and more wars. In 1685, Louis enacted the Edict of Fountainbleu that expelled French protestants aka Hugguenots from the Kingdom. The Huguenots held most of the professional and skilled jobs, hence the expulsion meant a massive brain drain for the country. 

Louis dragged France into the War of the Grand Alliance and the Spanish Succession War. These wars strained France’s resources. Worse, war debts once again rose up and it began an unsustainable rivalry with neighboring countries. 

The ultimate result of Louis XIV’s catastrophic wars only came into fruition more than a century after Colbert’s passing. The French Revolution finally toppled the vanity of the monarchy, nobility and clergy. Few more decades, Mercantilism gave way to economic nationalism and capitalism. 

See also:

Industrial Revolution of Belgium

Industrial Revolution of France

Bibliography:

Books:

Cameron, Rondo. A Concise Economic History of the World: From Paleolithic Times to the Present. New York: Oxford University Press, Inc, 1993.

Chappell, william. "Colbert, Jean Baptiste." in Economic Thinkers: A Biographical Encyclopedia. Edited by David Dieterie. Santa Barbara: ABC-CLIO, LLC, 2013.

Clough, S. & C. Moodie. European Economic History: Documents and Readings. New York, New York: Van Nostrand Reinhold Company, 1965.

Davidson, Marshall. France: A History. New Word City.

Durant, W. & A. Durant. The Story of Civilization: The Age of Louis XIV. New York, New York: Simon and Schuster, 2011.

Macdonald, J.R. A History of France. New York, New York: The Macmillan Company, 1915.

Rosner, Lisa & John Theibault. A Short History of Europe, 1600 - 1915: Search for a Reasonable World. Armonk, New York: M.E. Sharpe, Inc., 2000.

Vittoria, Antonio. An Economic History of Europe: From Expansion to Development. New York, New York: Routledge, 2006.

Website:

Tapie, V. "Jean=Baptiste Colbert." In Encyclopedia Britannica. Accessed March 29, 2024. URL: https://www.britannica.com/biography/Jean-Baptiste-Colbert