As public revenue lagged behind expenditures, public debt began to grow rapidly, trebling in fifteen years from 1773 to 1788. In France by 1789, nearly half of national spending went for interest payments on the national debt. Europe’s greatest power, with its massive military spending, became a heavy debtor. But it was not the heaviest. In relative terms, other countries such as the Netherlands had an even larger national debt than France during the late eighteenth century.30
Britain’s national debt also grew at a formidable rate, rising during the Seven Years War, falling in the peace that followed, then rising again during the American War of Independence. These fluctuations gave rise to heavy speculation in public securities. There were many angry complaints against speculators, whose operations added to fiscal instability. But one of this group responded, “There is only one way to get rid of us; pay off the national debt.”
This, Britain was unable to do. Stock speculation, originally conducted furtively in alleys and coffee houses, institutionalized itself. By the year 1773, a favorite meeting place called New Jonathan’s Coffee House posted a sign saying “The Stock Exchange” above its entrance, and admitted only those who paid for the privilege.
Speculators found opportunities in the growing economic instabilities of this era, and created further instability in their turn. A case in point was Sir George Colebrooke, scion of a prominent English banking family and “a great adventurer in . . . articles of speculation.” Colebrooke attempted to corner the English market in hemp, a strategic commodity for the Royal Navy. One of his rivals unkindly observed that his purpose was “so that if he should be ordered to be hanged, no one will have hemp enough to find him a halter.”
When his national hemp corner failed, Colebrooke tried in 1771–72 to make a world corner on alum, a substance used in the dying of textiles. He actually succeeded in buying up the output of most major suppliers, but drove the price so high that new producers suddenly appeared. The market for alum was glutted and Colebrooke was ruined, dragging down other speculators with him. His fall contributed to a massive credit crisis throughout Europe.31
There were many financial collapses in the second half of the eighteenth century. One of them began in the Netherlands with the failure of the Dutch firm of de Neufville (1763), and spread quickly to Germany, France, Britain and America. Another panic started in Scotland with the failure of a Scottish banker and speculator named Alexander Fordyce, who had taken a short position in East India stock and was ruined by a sudden rise in the market. He fled to Europe, leaving a disaster in his wake. The reverberations spread throughout the Atlantic world.32
There were also growing political tensions, which in the 1760s and 1770s began to develop into armed insurrections. The Swiss city of Geneva experienced a bourgeois revolution in 1768 and a counterrevolution in 1782. A close student of these events concludes that they rose partly from the writings of Jean-Jacques Rousseau and partly from price movements in Switzerland.33
In Russia, a great rebellion was led by Cossack private Emilian Pugachev, who killed members of the gentry and captured many towns. Pugachev’s Rebellion grew in large part from economic grievances that had been exacerbated by rising prices. Other rebellions broke out in the Netherlands, Corsica, and Ireland.
The largest of these insurgencies developed in England’s American colonies, in response to repeated attempts by the British government to raise taxes in the Revenue Act of 1764, the Stamp Act of 1765, the Townshend Acts of 1767 and the Tea Act of 1773.
The American rising was not unique. The regiments of British infantry that were sent to restore order in Boston after the Tea Party had been employed on many similar missions throughout the British Empire. The history of their service was a record of the rising spirit of rebellion throughout the western world. The 23rd Foot (Royal Welch Fusiliers) had been used to “restore order” throughout Devon and Cornwall. The 18th Foot (Royal Irish) had been putting down riots against press gangs in Whitehaven. The 43rd and eight other regiments had been assigned to suppress agrarian risings through twelve counties of the South Midlands and East Anglia in 1766. The 4th Foot had been suppressing smugglers along the Channel coast, and the British Marines had been dispatched on the same mission into Romney Marsh. Many regiments had served in Ireland, which was in a state of insurrection in 1771 and 1772. In England itself there were at least 159 major riots between 1740 and 1775, and minor ones beyond counting.34
At the same time, the nobility from Poland to France demanded more advantages for themselves. Statesmen struggled to hold the system together, while short-sighted elites destroyed the props of their own privilege. By 1783, the long inflation was turning class against class. The old regime was on the edge of disaster.
The Revolutionary Crisis, 1789–1820
After 1783, the great wave approached its climax, in a crisis that overswept the western world. In some ways this event was remarkably similar to the troubles of the fourteenth and seventeenth centuries. In others, it was entirely new.
The crisis began during the decade of the 1780s. It was triggered by change in the weather. During the late eighteenth century, the climate of western Europe became highly variable. The years from 1778 to 1781 were exceptionally warm, with long hot summers and unusually mild winters. Then the pattern reversed. From 1782 to 1787, Europe and America suffered hard winters, wet summers and short harvests. In 1788, the weather was even worse. Throughout western Europe, crops rotted in the fields. In France that year the final blow was a fantastic hailstorm that dropped stones as heavy as eight pounds, killing animals and ruining what remained of the ripening grain. The harvest was very short, and food prices soared during the winter of 1788–89. Shortages became more severe in 1789. Farmers had yet another dismal crop year, and a very poor harvest.1
These events were not unique. Prolonged spells of bad weather had happened many times in Europe during the eighteenth century: 1711–17, 1739–52 and 1769–77. But the hard years of the 1780s were different. They came after half a century of rising prices, falling wages and growing instability. In the countryside, a long run of short harvests meant less work for country laborers and a surge in rural unemployment. In the cities, small crops caused grain prices to surge. Even in good times, the wages of working class families went mostly for food. In the period from 1726 to 1791, an average wage-earner in France spent 50 percent of his income to feed his family. In 1789, that proportion rose to 88 percent.2
In France, these troubles coincided with a fiscal crisis. By 1787, Europe’s most powerful government was on the edge of bankruptcy. Annual expenditures of 300 million livres and revenues of merely 140 millions left a deficit of 160 million livres—more than half of total national public spending.
Figure 3.13 represents annual harvest prices in England as a percentage of a 25-year moving average. It shows an increase in the severity of harvest shortages, peaking circa 1799–1816. Thereafter, the trend reversed. The source is Henry Phelps-Brown and Sheila V. Hopkins, A Perspective of Wages and Prices (London, 1981), 59.
Ministers tried desperately to balance their books. Economies were enacted. The king himself, Louis XVI, set an example by reducing his household expenses from 22 million livres to 17 million, largely by consolidating the royal stables. But this was merely 3 percent of the deficit. Much of the budget went for irreducible military and social spending. Half of it was needed for service on the debt.
The financial ministers of Louis XVI pleaded desperately for more revenue, and were refused. The possessing classes refused to accept new taxes. Many demanded more privileges and exemptions. This combination of public need and private greed was fatal to the old regime. In scenes reminiscent of fourteenth century England, sixteenth century Spain, and twentieth century America, the national credit of the most powerful nation in the world was systematically wrecked by the selfishness of its affluent citizens.3
The effect of fiscal crisis in France was compounded by a world depression in commerce and industry. From 1782 to
1789, the output of the French textile industry fell by 50 percent. Employers ruthlessly laid off workers. In the town of Troyes alone, it was reported that 10,000 people lost their jobs. Conditions were much the same throughout western Europe and North America during the 1780s. Unemployment rapidly increased among silkworkers in Italy, shipbuilders in Massachusetts, and miners in Germany. Those who kept their jobs lost much of their income, as real wages declined.4
Benjamin Franklin toured a textile factory in Norwich and observed a cruel and bitter irony. He was amazed to see that the English clothmakers were themselves “half-naked or in tatters.” The factory owner pointed proudly to his inventory and said, “those cloths are for Italy, those for Germany, the ones over here for the American islands, and those for the continent.” Franklin replied, “Have you none for the factory workers of Norwich?”5
When wages fell and the price of food surged throughout the western world, crime increased sharply—especially crimes against property. The poor in desperation took what they could get no other way. The long downward trend in crime reversed during the later stages of the price-revolution, as it had done in every other great wave. Crimes against property surged to high levels.
Local and national governments made a major effort to provide relief on an unprecedented scale, and succeeded in doing so. The French minister Necker suspended grain exports in 1788, bought heavily abroad, and compelled merchants to sell their stocks. In consequence, there was nothing like the epidemic famines of the fourteenth century, nor even a demographic contraction as in the seventeenth century. Few people starved in the 1780s, but many were hungry, and more were angry.
The politics of hunger were very different from those of starvation. In the early fourteenth century, starving peasants had been too weak to rebel. In the late eighteenth century, hungry peasants were outraged against feudal lords and seigneurial dues. They were infuriated by the prosperity of bourgeois speculators with their bulging granaries. They felt oppressed by bullying tax-gatherers and corrupt officials.
Figure 3.14 compares prosecutions for theft in the Staffordshire Assizes with the Schumpeter-Gilboy price index, and with periods of war and depression. It shows that crime increased in periods of inflation and depression. Wars caused crime rates to fall in their early years, then to rise in later years and to rise higher in immediate post-bellum periods. The greatest increases in crime occurred when these conditions coincided in post-bellum periods of stagflation. The source for the data shown here is Douglas Hay, “War, Dearth and Theft in the Eighteenth Century: The Record of English Courts,” Past & Present 95 (1982) 125, which offers a different interpretation. The Schumpeter-Gilboy index is in Mitchell and Deane, Abstract of British Historical Statistics, 468–69.
Few people in France blamed their amiable King Louis XVI, but many hated his Austrian Queen, Marie Antoinette. While hunger stalked the countryside she amused herself in an endless whirl of fashion. She made a game of peasant life, building a play-cottage of the finest materials and tending miniature fields and flocks with silver tools that seemed to mock the misery of her suffering subjects.
Marie Antoinette never said “let them eat cake,” but similar expressions were heard from high officials. When a royal officer in Touraine was told in 1788 that the peasants had no grain, he did actually say, “Let them eat grass.” An officer employed by the Duc de Deux Ponts observed contemptuously of the local peasantry in 1786, “It is our interest to feed them, but it would be dangerous to fatten them.” An old Alderman of Orleans was arrested after the Revolution began for allegedly saying, “If all the little girls died, there would be plenty of bread.”6
A sense of outrage against the arrogance and imbecility of ruling elites developed rapidly throughout Europe. That emotion was specially strong in France. The most powerful nation in Europe was in some respects the most vulnerable. It had no social safety-valve comparable to the virgin land of Russia and America, and no outlet such as the heavy emigration from Britain and Germany. In France during the late 1780s, anger and frustration overflowed into acts of violence.
First came individual acts of rage—the burning of a speculator’s house in Paris, the beating of a bailiff in Languedoc, the stoning of a bishop in Manosque, the theft of grain everywhere. By 1788, gangs of desperate men were roaming the countryside, stealing what food they could find and assaulting tax collectors. In the Spring of 1789, food riots broke out in the cities and towns, and the spirit of resistance spread swiftly through the countryside. The authorities made the worst possible response—sporadic acts of symbolic violence that were just harsh enough to stimulate resistance, but not sufficient to repress it. From time to time, beggars and petty thieves were rounded up in large numbers, but there were not jails and galleys enough to hold them. Increasingly, soldiers whose families were themselves suffering refused to act against the people. As food prices surged in 1789, these various insurrections suddenly exploded into revolution.7
There were no fewer than four French Revolutions in 1789: a continuing aristocratic revolt against royal ministers; a bourgeois revolution against the aristocracy, a rising of urban workers against the high bourgeoisie, and a peasant insurrection against all of their oppressors. Each of these movements was set in motion by rising prices. All were responses to the fiscal and economic crisis of the 1780s.
In Paris, urban workers began their revolution by attacking the barrières where internal customs were levied on food coming to the city. They went on to ransack the monastery of St. Lazere, not in an orgy of anti-clericalism but in search of something to eat. A vast hoard of food was found in the cellars. Then they turned their wrath against that hated symbol of injustice, the Bastille. Historians Ernest Labrousse and Georges Lefebvre discovered that the Bastille was attacked on precisely the same day when grain prices reached their cyclical high in Paris. The men who assaulted the Bastille were not the canaille of the city. The great majority were artisans, masters, journeymen, and shopkeepers who were driven to desperate acts by the high cost of living, and by their rage against a government that had turned away from the people.8
At the same time, the peasants’ revolution broke out in the countryside. Complaints centered on feudal dues, seigneurial ovens, high rents, the hated hunting parties, cruel moneylenders, the loss of collective rights and the imposition of individual exactions. Specially resented were unequal taxes that fell heavily upon the poor and rose in proportion to soaring prices—the taille, champart, gabelle, picquet de farine, and taxes on wine and beer.
Throughout France many vestiges of privilege were attacked, sometimes with great violence. Chateaux were burned, convents attacked, mills pulled down, warehouses looted. Archives became a common target. Rent rolls and debt books were systematically destroyed. The streets of provincial capitals were strewn with official papers.
Figure 3.15 shows the association between prices and revolution in Paris. The sources are George Rudé, “Prices, Wages and Popular Movements in Paris during the French Revolution,” Economic History Review 2d ser., 6 (1953–54) 246–67; and Georges Lefebvre, “Le mouvement des prix et les origines de la Revolution française,” Annales Historiques de la Revolution Française 14 (1937) 289–329.
A third bourgeois revolution, which claimed to be “The Revolution,” was a syncretist movement dominated by the middle class who attempted to give France a system of constitutional and representative government under a new National Assembly. The leaders of this body at first pursued two economic ideas: free trade and the sanctity of private property. The new regime did not repudiate the national debt, which was held by many bourgeois rentiers. Instead, it tried to solve the nation’s fiscal problems by other means—partly by seizing the assets of the church and selling them to private buyers. It extinguished monopolies and guilds, and abolished collective rights that had been cherished by the peasantry.
For two years from 1789 to 1791, the prospects were encouraging for this bourgeois revolution. The weather improved in Europe. Business revive
d throughout the western world, and the price of provisions fell sharply. This was the moment when it seemed that France might succeed in creating a stable constitutional monarchy for itself.
But it was not to be. The problem, once again, was the cost of living. From 1791 to 1793 there was another economic crisis. Food prices surged again, in a volatile movement that was typical of the last stage in every price-revolution. Food riots once more became common in Paris. The result was a second and more radical French Revolution. The king was deposed and later executed; the Jacobins seized power and the Terror began.
Robespierre’s Jacobin regime tried to deal with the problem of price surges by imposing a maximum. This measure briefly halted inflation by a highly effective system of price controls, but it was accompanied by food-rationing and wage-restraints which proved to be intensely unpopular. When Robespierre fell from power, he was brought down by a riot against wage-controls.9
Then came the counter-revolution called “Thermidor” which took its name from the month in the revolutionary calendar when the wage riots occurred. A new and highly corrupt regime called the Directory gained control of the government and relaxed the system of wage and price controls. The result was yet another period of soaring prices, falling wages, extreme suffering for the poor, and high prosperity for speculators. More riots occurred, and were met this time by harsh repression, which ended in the fall of the Directory.
From 1789 to 1799, every twist and turn of fortune in the French Revolution was closely tied to the movement of prices. Market fluctuations and political events were linked together.10
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