Deflation Made Simple (Part III)
A falsely vilified phenomenon (Entry 181)
In his 1863 work entitled Histoire de Louvois Camille Rousset described the death of Jean-Baptiste Colbert as follows:
“Suspect au roi, calomnié par ses ennemis, — insulté par la populace, Colbert mourut le 6 septembre 1683. Cette mort, qui était un malheur public, fut à peine pleurée par quelques-uns; beaucoup s’en réjouirent; la foule y demeura surtout indifférente.”
In translation from French to English
“Held in suspicion by the king and slandered by his enemies — insulted by the general public, Colbert died on September 6, 1683. His death, a public bane that brought few tears to few people. Many rejoiced, in fact, and the masses were above all indifferent.”
It is difficult to understand how Rousset differentiated between the insulting general public (la populace) and the indifferent masses (la foule). Perhaps he was seeking to distinguish between an informed French public who took an avid interest in the affairs of state and those who cared little, or not at all, about matters over which they believed themselves to be completely impotent. No matter. It is a tragedy that men of such high-caliber as Jean-Baptiste Colbert are so easily brought into disrepute by those who would abuse the power of the public purse for their own selfish ends.
James Madison, Thomas Jefferson’s successor in the Oval Office and 4th President of the United States of America, once wrote:
“If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to control the governed; and in the next place, oblige it to control itself. A dependence on the people is no doubt the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.”
Federalist Papers, No. 51, February 6, 1788
Whether the public purse is controlled by a king, a parliament, or a congress, what fills the purse is the labor of the people — be they subjects or citizens. It is not wealth collected for the consumption of the few at the expense of the many; it is collected for the purpose of sustaining the many no matter the form that the state might assume. It is for this reason that those who manage the purse well should be given the highest praise. Reckless spending that excites should be the private pleasure of the gambling individual, not the prerogative of any head of state and his officers. And, those who keep such heads-of-state — be they a monarch, a parliament, a congress, or any similar assembly — in tow should be lauded for their strictness, not denigrated.
Upon his death the administration of Jean-Baptiste Colbert was divided among three individuals including Seignelay and Louvois whom we have already discussed at some length and Claude Lepeletier (1631-1711) who assumed the role of Contrôleur général des finances. Lepeletier filled his post for five years beginning in late 1683.
Between 1683 and 1689 there were no wars of significance, and military expenses were modest. This said, by 1685 the French budget had gone from a surplus of 2 million livres in 1683 to a deficit of 9 million livres per annum — this despite an increase in the dreaded tailles imposed on the French peasantry amounting to 3 millions livres per annum.
During the five years that Claude Le Pelletier remained in office total expenditures exceeded gross receipts by some 82 million livres — a per annum average deficit of 16.4 million livres. Not only had royal operating expenditure increased during this period, but gross revenue had decreased. Although critical of Jean-Baptiste Colbert, Le Peletier did little to change the general outlines of the financial regime that Jean-Baptiste had put into place. Simply he lacked the strict follow-through that made his predecessor far superior in his management and execution.
By 1689 the royal treasury was empty, and the demands of war were already substantial. A more than 300,000 man army was not cheap — neither to recruit, nor sustain.
Overwhelmed by his responsibilities Lepeletier ceded his post in 1689 to a former Intendant des finances named Louis Phélypeaux de Pontchartrain (1643-1727) who set forth the dismantlement of the Colbert regime.
Upon the death of Seignelay in 1690 Pontchartrain assumed the duties of Jean-Baptiste’s son and protégé and became head of the French marine. Seignelay’s responsibility had been much more than that of the navy and merchant marine. It also included the administration of the kingdom’s colonies, all of its external commerce, France’s overseas diplomatic presence, and the royal dwellings of Paris. In 1691 — with the death of Louvois le Tellier — De Pontchartrain also became the Surintendant des Bâtiments, Arts et Manufactures (Superintendant of Construction, the Arts, and Manufacturing) less that of construction (bâtiments) that went to another.
Indeed, by the close of 1691 — already two years into the Nine Years War — De Pontchartrain had become nearly as powerful as Jean-Baptiste Colbert at his death in 1683.
During De Pontchartrain’s approximately eleven years in office net revenues amounted to 795 millions livres. Unfortunately, the Nine Years War alone cost 1,580 million livres. In effect, during his administration De Pontchartrain ran an average per annum deficit of more than 71 million livres!
In order to fund this mammoth accruing debt De Ponchartrain did what every careless government bureaucrat does; he borrowed.
In the midst of war many a French aristocrat was willing to come to the king’s aid, but they did so with the idea that they would be rewarded for their temporary sacrifice for a better future. Unfortunately, De Pontchartrain was not investing what he raised in the form of money-ad-prodigo, rather he was consuming it in the destructive pursuit of war. His ressources extraordinaires for the king’s affaires extraordinaires included much more than mere loans, however.
De Pontchartrain reverted back to the pre-Colbert era of Cardinal Richelieu and Cardinal Mazarin who funded many of the king’s short-term expenses with the sale of long-term, rent-consuming positions of the Noblesse des robes. In so doing, De Pontchartrain noted to His Magesty, Louis XIV,
Toutes les fois que Votre Majesté crée un office, Dieu crée un sot pour l’acheter.
In translation from French to English
Each time you create a new office, Your Majesty, God creates for you a fool to buy it.
Obviously the emphasis was a power and current revenue; it said nothing of future expense. Just who was the real sot (pronounced so, meaning fool) in that statement, anyway?
A new endless stream of debt and new honorific offices of no functional utility that would drain the royal treasury in the long term were hardly the worst of it, though. De Pontchartrain also destroyed the French currency.
In liberty, or not at all,
Roddy A. Stegemann, First Hill, Seattle 98104