Deflation Made Simple II

The Story of Real Money (Entry 182)

From 1689, when William III of Orange, King of England, declared war against Louis XIV until Louis XIV’s death in 1715 — a little more than a quarter century (26 years) — the value of the French livre (the French unit-of-count) dropped by more than 30 percent! During this period the livre was collected, melted down, and reformed no fewer than five times. Over night, France became a money-changers paradise rivaling even that of London, England!

Although monetary debasement (Entries 3-12, 125-128, 147-151) made it easier for the king to purchase military supplies at home, it made it much more difficult for him to purchase what he needed to conduct war beyond the borders of his kingdom. Pillaging became more commonplace as a result (Entry 117).

At the Treaty of Ryswick in 1697 the Nine Years War came to an end. By 1699 it was clear that the monarchy could no longer honor its debt commitments, and De Ponchartrain was replaced by Michel Chamillart (1652-1721) as Contrôleur général des finances. Unlike what you might expect of someone who had so poorly managed the finances of the French monarchy, De Ponchartrain was elevated to the post of chancellier (chancellor) and placed in charge of the king’s correspondence — a task for which he was likely much better suited and a position that he would hold for the next 14 years with good remuneration.

Unfortunately, Michel Chamillart, was not any better in the performance of his designated functions. He was once described by Saint-Simon (1675-1755) — a court opponent and nephew of Louis XIV and the one person on whom historians rely most for a detailed chronicle of the French monarchy during the latter half of Louis XIV’s rule — as follows:

“C’était un bon et très honnête homme, à mains parfaitement nettes, et avec les meilleures intentions, poli, patient, obligeant, bon ami, ennemi médiocre, aimant l’Ètat …, d’ailleurs très borné, et, comme tous les gens de peu d’esprit et de lumière, très opiniâtre, très entèté ….”

In translation from French into English,

“He was a very honest man with perfectly formed hands. He had the best of intentions, was polite, patient, obliging, a good friend, an average enemy, and loyal to the monarchy…. In addition, he was of limited intelligence — as are all people who lack both spirit and vision — , opinionated, and stubborn.”

Chamillart retained the position of Contrôleur général des finances from 1699 until 1708. In 1701 — just two years after taking office — he was named Secétaire d’état de la guerre, a position that he held until 1709 when he fell out of favor with the king over the conduct of the War of the Spanish Succession (1701-1714).

Between 1689 and 1715 royal gross expenditures amounted to 4,956 million livres — an average of 190 million livres per annum! Net revenue — what was left to pay for operating costs — was no more than 1,370 million livres, or about 53 million per annum. And this, despite two impositions of an extraordinary per capita tax (impôt de capitation) on all of the king’s subjects: once, between 1695 and 1698, and once between 1701-1710.

Had the per annum cost of relentless war with one’s neighbors really become so much less? So, how did the king’s financiers manage to pay for these extraordinary expenses? Already we have touched on it. Simply the details are far more revealing.

In liberty, or not at all,
Roddy A. Stegemann, First Hill, Seattle 98104