The Fiscal-Military State in Eighteenth-Century Europe

Essays in honour of P.G.M. Dickson

Christopher Storrs

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780754658146
• eBook ISBN:
  9781317031659
• Topic: History
• Subtopic: World History
• Index: History

In recent decades, historians of early-modern Europe, and above all those who study the eighteenth century, have elaborated the concept of what has been called the 'fiscal-military state'. This is a state whose international effectiveness was founded upon the development of large armed forces, whose performance and supply necessitated both further administrative development and the provision of large sums, the raising of which involved unprecedented levels of taxation and borrowing by governments. The present collection of essays, by leading authorities in their individual fields, all of whom have published widely on their chosen topic, explores the subject of the fiscal-military state by focusing on its leading exemplars in eighteenth-century Europe: Austria, Britain, France, Prussia and Russia. It also includes a chapter on the Savoyard state (the kingdom of Sardinia), a lesser power whose career illuminates by comparison developments elsewhere. In addition, and rather unusually, a further chapter considers the fiscal-military state in a broader, comparative international context, in the arena of international relations. Each chapter provides a summary of the state of knowledge regarding the fiscal-military state debate insofar as it relates to the state under consideration. As well as contributing to that debate, they take matters further by systematically analysing the sources of wealth and income, and the way these were tapped, and the broader impact that this attempt to extract resources had on society and the state, both in the short and longer term. The differing patterns, and the variety of models of fiscal-military state makes for ease of comparison across Europe, making the volume an invaluable resource to both students and researchers alike.

Chapter 1
The Fiscal-Military State and International Rivalry during the Long Eighteenth Century

Hamish Scott

[A]n army is a beast that hath a great belly, and must be fed …

James Harrington

A financial system, handed over by father to son and constantly improved, can change a government’s position. From being originally poor it can make a government so rich that it can throw its grain into the scales of the balance between the European great powers.

Frederick the Great¹

I

Two contrasting episodes, separated by almost exactly a century, encapsulate the central theme of this chapter.² The first was the debate, or more accurately the ministerial rivalries, at the French court, which preceded Louis XIV’s attack on the Dutch Republic in the spring of 1672. The issue of peace or war provoked a struggle among the king’s advisers, which began in the later 1660s and continued for several years. It ranged Jean-Baptiste Colbert, the influential financial and naval minister, against the rising star of the court, Louvois, son of the war minister Le Tellier.³ The king was determined to punish the upstart Dutch. As a Catholic absolutist ruler, he abhorred their Calvinism and republicanism, while he resented their temerity in intervening unexpectedly in the War of Devolution in 1667–68, limiting France’s territorial gains. He was supported in this by the military leaders, headed by Turenne and, in particular, egged on by the young, ambitious, bellicose Louvois, who shared his sovereign’s conviction that France’s powerful army could resolve any problem in foreign policy.

Colbert was on the other side of the argument. Though the Dutch were an important trading rival and a serious obstacle to French economic recovery, his approach at this period was strongly pacific, and he did all he could to prevent renewed fighting. He was concerned about the likely economic and financial repercussions for France and specifically the threat to the monarchy’s stronger fiscal position, which his policies had created during the preceding decade. In a clear attempt to influence this struggle, Colbert submitted to the king a remarkable document, the so-called ‘Memoir to the King on the Finances’. Drawn up in October 1670, it was the latest in an annual series of reports, although it was even more detailed than its predecessors and was dominated by the overwhelming economic and fiscal reasons why he believed that France should remain at peace.⁴ It discreetly threatened the king, if he went to war, with an intensification of the economic recession which had started to affect France in that summer, with financial chaos and a return to the critical situation at the beginning of the personal rule in 1661, and, perhaps worst of all, with insufficient funds for what was now Louis XIV’s favourite project, the building of a great palace at Versailles.

Colbert’s ‘Memoir’, however, has a far wider importance for the subject of this chapter. It set out a case, unusual at the time of its composition, that wars have financial consequences and, at one level, challenged a long-established assumption: the idea that rulers, especially powerful and therefore wealthy ones, could fight wars with impunity, always being able to raise the necessary resources and ignore the fiscal, financial and economic consequences. As he himself had grumbled several years before, ‘They [sic: the ruler and his military advisers] raise troops and then they press for the money!’⁵ Rejecting any such approach, Colbert instead set out the likely repercussions of any war – which, as it transpired, he foresaw with grim accuracy – and buttressed his arguments with an array of statistics: what he termed the ‘mathematical and demonstrable truths which cannot be denied, provided that it pleases Your Majesty to listen to them carefully’.⁶

Colbert’s arguments were ignored, as he had perhaps anticipated. At the end of his ‘Memoir’ he had noted Louis XIV’s ‘preference for war over all other things’ and complained that ‘the financial administration and everything which relates to it, which consists of dull figures, is not the usual and natural function of kings. Your Majesty thinks of war ten times more than he thinks of his finances…’.⁷ His proposals for cuts were rejected, and fighting began 18 months later. Yet if Colbert had lost this battle, his approach represented the future, aware as he was that international rivalries were not cost-neutral and that foreign policy had to take account of the likely economic and financial consequences of any particular course of action. In a second respect, moreover, his approach was distinctly modern in his careful marshalling of detailed figures to support his recommendations. Budgets – that is, the careful adding up of income and expenditure accompanied by an attempt to balance the two – on which Colbert’s ‘Memoir’ and, indeed, his whole financial policy depended were not yet established as a part of domestic government, and although his ministry saw important steps in this direction, they were not continued under his successors.⁸

The second episode took place over a century later, at the court of a later French king, Louis XVI, although it had a very different outcome. It concerned the question of intervention in the Dutch Republic in the later 1780s, to support the Patriot party, which wished to see a broadening of the basis of Dutch political life and was supported by France. A formal Franco-Dutch alliance had been signed in autumn 1785. Throughout the 1780s effective political authority within the Republic had ebbed towards the Patriots, but in 1787 they faced the threat of Prussian intervention to restore the authority of the Stadtholder, William V, who was married to the sister of Prussia’s King, Frederick William II. By this point the French monarchy was effectively bankrupt, while the ministry was increasingly divided.⁹ The fault lines at Versailles transferred themselves to France’s diplomacy in the Republic, where there were never less than two divergent diplomacies in operation, each conducted by a different French agent.¹⁰ In the discussions at the French court in 1787 over possible intervention, which French diplomats and France’s clients within the Republic were urging, and over the response to the Prussian invasion in September, French policy was dictated by financial weakness. The veteran foreign minister, Vergennes, fully recognized this unpalatable truth during the final months of his life, and his approach was confirmed by his successor, Montmorin.¹¹

Although France’s predicament at this time was unique in its severity, the wider implications of this episode are instructive. The French state’s financial weakness was recognized by policy-makers at Versailles and a pacific approach upheld, which avoided a costly war but at the price of destroying its international standing. The Dutch crisis of 1787–88 revealed to Europe that the Bourbon monarchy could no longer be ranked among the Great Powers. In a wider sense, it suggested that, by the second half of the eighteenth century, policy could no longer be drawn up without an assessment of likely costs – exactly as Colbert had unavailingly argued a century before.

These two episodes highlight a decisive change, though one that was relative rather than absolute. By the later eighteenth century, military, and therefore diplomatic, calculations were more closely linked to an assessment of their probable financial impact. In a general way, ministers, advisers and even rulers had usually acknowledged that their policies had to take account of the ability to fund a particular course of action. What was new during the long eighteenth century was the recognition that all such decisions had an important financial dimension, together with the greater degree of statistical precision which such calculations acquired, first apparent in Colbert’s ‘Memoir to the King’.

II

The very notion of a ‘budget’, in the sense of a relatively precise statement which tried to record income and project expenditure on an annual and cumulative basis, was a comparatively recent innovation and had established itself at a surprisingly late date. The first use of the English term ‘budget’ in this, its modern sense, seems to have been in 1733 when a pamphlet critical of Sir Robert Walpole and his projected Excise Bill was entitled The Budget Opened.¹² In its modern sense the word was only coming into common usage in Britain during the final third of the eighteenth century. Until then, such statements were known as ‘états’, or in France as ‘comptes rendus’.¹³ The term ‘budget’ migrated to France in the 1760s, first of all to describe the British financial statement and then to designate France’s own assessments of income and expenditure, and by the 1780s and 1790s it was established.¹⁴ Subsequently it spread throughout Europe, becoming ubiquitous.

The changing meaning of the word ‘budget’ reflected the replacement of elementary accounts by annual statements of revenues and expenditures.¹⁵ Although such accounting procedures had long been established in merchants’ firms, it was only during this period that the governments of major states began to emulate this practice, and even then in a very rudimentary way. States where much of the monarch’s revenue was from the royal domain were the first to acquire such estimates: Sweden, from as early as the 1620s, and Denmark, from 1662, had what were in effect detailed budgets which allocated anticipated revenues to particular expenses. Colbert, as we have seen, was producing detailed financial estimates, yet it would be the Napoleonic period before a modern budget was drawn up in France. It was the long eighteenth century before this practice was adopted in other leading states, and then only hesitatingly and partially. The English treasury began to draw up statements of income and expenditure from the 1690s; the Habsburg Monarchy announced that it would do so in 1719–20; while Russia’s ruler, Peter the Great, compiled a surprisingly detailed state budget in 1724.¹⁶

One obstacle was the absence, in many countries, of a minister or administrative body responsible for all revenues and expenditures. In Russia at Catherine II’s accession in 1762 there were no less than 50 separate agencies involved in collecting and spending taxation, and, while this was an unusually high figure, most old regime governments lacked any centralized control of state finances.¹⁷ This reflected the way in which financial systems had usually developed piecemeal and over several centuries, with a consequent lack of clarity and manifold ambiguities. Income could not always be distinguished from expenditure, and this confusion was reinforced by the way in which early modern finance directed particular revenues to specific purposes.¹⁸

A second, even more fundamental barrier to accurate budgeting was governments’ remarkable slowness in adopting double-entry book-keeping, which was essential if annual revenues were to be measured against expenditures, or a rapid and accurate assessment made of the detailed financial situation at any point. In the world of commerce, double-entry book-keeping had become commonplace in the Italian peninsula by the end of the fifteenth century and north of the Alps 100 years later, but it was the eighteenth century before most European governments adopted the practice and, even then, in an incomplete form. Sweden, where it had been introduced as early as 1623 by the Dutchman Abraham Cabiliau (Cabeljau), was extremely unusual in doing so. Notoriously, Sully – Henry IV’s great finance minister in early seventeenth-century France – rejected its introduction when it was recommended to him. By the eighteenth century, double-entry book-keeping was slowly making inroads into parts of the French administration, but it was to be 1808 before it was established in all the financial departments.¹⁹ Significantly, Jacques Necker’s celebrated Compte rendu au Roi, published in 1781, presented its figures in single-entry book-keeping.

In the Austrian Habsburg Monarchy an instruction of August 1723 imposed the obligation to keep all accounts in ‘mercantile form’, but it was another generation before it...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Maps and Figures
• List of Tables
• Notes on Contributors
• Acknowledgements
• Introduction: The Fiscal-Military State in the ‘Long’ Eighteenth Century
• 1 The Fiscal-Military State and International Rivalry during the Long Eighteenth Century
• 2 The Habsburg Monarchy: From ‘Military-Fiscal State’ to ‘Militarization’
• 3 Prussia as a Fiscal-Military State, 1640–1806
• 4 Russia as a Fiscal-Military State, 1689–1825
• 5 The French Experience, 1661–1815
• 6 The Triumph and Denouement of the British Fiscal State: Taxation for the Wars against Revolutionary and Napoleonic France, 1793–1815
• 7 The Savoyard Fiscal-Military State in the Long Eighteenth Century
• Index