Published by EH.Net (September 2015)

Jeff Horn, Economic Development in Early Modern France: The Privilege of Liberty, 1650-1820.  Cambridge: Cambridge University Press, 2015. viii + 319 pp. $105 (hardback), ISBN: 978-1-107-04628-3.

Reviewed for EH.Net by Gail Bossenga, Elizabethtown College.

It has often been said that economic growth in France during the old regime suffered from the stranglehold of a welter of privileges that prevented efficiency, innovation, and competition.  At the same time, historians have observed that economic growth in eighteenth-century France was quite robust and compared favorably with Great Britain.  In this ambitious study, Jeff Horn, Professor of History at Manhattan College, takes on this seeming contradiction and argues that although some privileges did check economic development, the Bourbon government was able to use other privileges effectively as a way to counteract these blockages and open up France to economic opportunities.  These countervailing privileges freed businessmen from regulations, inspections, guild reception fees, limitations on workforce size, taxes, militia service, and other such requirements associated with the jumble of privileged bodies in the old regime.  Because these privileges liberated entrepreneurs from other, undesirable privileges, Horn calls the government’s strategy the “privilege of liberty.”  Not only did businessmen acquire the liberty that they needed to create dynamic enterprises, the French government found a way to create dynamic growth that allowed it to compete with its rivals internationally.

Several types of privileges contributed to this strategy.  Enclaves outside city walls controlled by seigneurs with rights of high justices were unimpeded by guild regulations, allowed manufacturers to hire as many workers as they needed, and provided the freedom to experiment with innovative products.  Territories, such as Avignon and Orange, enjoyed rights of transit, which allowed them to sell silk at costs lower than a rival like Lyon.  The special status of “royal manufacture” exempted entrepreneurs from burdens such as guild controls and customs duties, and sometimes even provided subsidies.  Rights of naturalization and de facto toleration allowed highly successful Jewish, Protestant and foreign businessmen to continue to build up their enterprises, even though religious minorities as a whole suffered legal disabilities.

Colbert and many of his successors believed that quality control was essential to win foreign markets, and used a combination of strict regulation and privilege to achieve this end.  The poor quality of the woolens in Languedoc, for example, had led Turkish markets to reject them.  By subsidizing woolen manufacturers there, setting up a cartel that limited debilitating competition, and requiring members of the cartel to adhere to rigorous quality controls, officials were able to stimulate a noticeable increase in woolen exports.

In the realm of colonial commerce, the Bourbon state used privileged, chartered trading companies to raise the necessary capital to exploit overseas markets.  Under Louis XIV, the government created 39 trading companies with monopolies over trade in particular regions.  All of these companies, however, with the exception of the East Indies Company, failed.  Greater freedom to trade in the Antilles, by contrast, led to spectacular commercial growth.  In this case, by contrast to Horn’s other examples, “liberty was more effective than privilege in encouraging colonial development” (p. 118).

After 1750, reforming government officials began to embrace liberty and competition as the watchword of economic vitality.  As a result, Horn argues, Bourbon policy became characterized by the “privilege of liberty,” that is, officials “increasingly deployed the language of liberty to justify the long-standing practice of granting privileges” (p. 5).  Liberty proved difficult to implement, and was no panacea for the economy.  Turgot’s unsuccessful attempt to abolish the guilds, for example, destabilized the work force and undid years of regulatory quality measures that had supported exports.

The Revolution changed the rules of the game by embracing liberty as a foundational principle.  Some economic privileges survived one or two years, but overall the slate was wiped clean.   Horn argues that after the Revolution privilege started to return under the guise of regulations, but the goal of administrators was always to protect consumers and guarantee the quality of exports.  No lasting privileges took root, except for a reduced version of Marseille’s old free port status and a set of state-regulated trademarks that could be used in regions known for producing high-quality textiles.

Horn’s book draws on an impressive array of sources in the secondary literature, as well as national and regional archives.  He shows that the Bourbon state was more flexible and pragmatic than one might have assumed, and he makes a good case that privilege had a role to play in helping to advance the cause of economic progress.

At the same time, some features of the book are problematic.  The author has a disconcerting and recurring tendency to start with one generalization and end with another that appears to contradict the first. Thus one runs into statements like, “chapters two to seven demonstrate that reliance on privilege made the practice of mercantilism both capitalist and absolutist.”  The next paragraph states, “Even though it created a potentially hegemonic fiscal-military state, the Bourbon monarchy was never ‘absolute’” (p. 12).  Does this mean that the mercantilist use of privilege was absolutist, but the Bourbon government employing it was not?

There is reason to suspect that crony capitalism was more involved in the distribution of privilege than Horn’s narrative suggests.  There are occasional allusions to favoritism.  Thus, in Guyenne, “close ties to administrative and social elites” allowed protected entrepreneurs to drive out competitors, so that glass making there stagnated (p. 212).  Yet it would be surprising if more of these deals were not present.  Royally chartered joint stock companies, for example, were notorious for relying on insiders at the royal court.

Finally, evaluating the relationship of privilege to economic growth requires a more comprehensive understanding of the fiscal underpinnings of the state.  According to Horn, the “quid pro quo demanded by the state in exchange for the granting of privilege was development” (p. 22).   Too often, however, the quid pro quo was the payment of cold cash into the perennially bankrupt French treasury. The French monarchy had a longstanding habit of manipulating privilege as a source of much-needed revenue.  Cities were forced to purchase offices or make “free gifts” to the king.  The consortium of financiers known as the “General Farm” not only leased the right to collect indirect taxes including customs, but also, in the absence of a national bank like the Bank of England, served as a banker to the crown by advancing short-term credit to it. Periodically, the monarchy sold offices of inspectors and masterships in the guilds to raise money.

Each of these payments to the crown was backed by local revenue sources, which then had to be protected.  Cities had a vested interest in guarding the tax-paying population within their walls.  The Farmers General were naturally vigilant about collecting every last toll and custom duty under their lease. Guilds raised the cost of their masterships to raise required sums for the crown.

In other words, by using privilege periodically to support its finances, the Bourbon state itself contributed to the blockages and market fragmentation that its administrators tried to circumvent in other circumstances by using “the liberty of privilege.”  This fundamental contradiction in state policies may help to explain why when the monarchy tried to “liberate” or “rationalize” the economy, it was reduced to nibbling around the edges by applying counteracting privileges and liberties.  To reform the economy as a whole would have meant alienating powerful allies and finding alternative sources of revenue.

Overall, then, Horn demonstrates why economic privileges need not be viewed in uniformly negative terms and were used in certain situations to stimulate economic growth.  His broader claim about “the effectiveness and the dynamism” (p. 5) of state-sponsored reform relying on privilege, however, ignores other, less praiseworthy uses of economic privilege that the crown also employed.

Gail Bossenga is a Scholar in Residence at Elizabethtown College.  She is the author of “Financial Origins of the French Revolution,” in Dale Van Kley and Thomas E. Kaiser, eds., Origins of the French Revolution (Stanford University Press, 2011), and “A Divided Nobility: Status, Markets, and the Patrimonial State in the Old Regime,” in Jay Smith, ed., The French Nobility in the Eighteenth Century: Reassessments and New Approaches (Penn State University Press, 2006).

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