Birth of Modern Europe

Mr. Meyers

Jake Perlman-Garr

3/11/04

Paris Economy: The Balance of Power Between Land and Trade

Paris could not become the economic center of France until the late 18^th century because of the economic system that was in place. Throughout France, the widespread European institution of feudalism was in place. Feudalism was based upon the dominance of the rich lords and their respective land. A lord would engage in "manorialism," giving pieces of his land, called "fiefs," to his servants as places to live, and in return the servants had to till the land they lived on but could only keep a fraction of their harvests. The rest of their profit was given to the lord as a tribute or tax. Feudalism dominated France until 1527 when Louis XI shattered the grip of the last powerful feudal lords on their land. By the time Louis XV claimed the throne, France was united but was still "burdened by the remnants of feudalism." Feudalism finally became extinct with the French Revolution of 1789. The economic system was rebuilt after the fall of feudalism o on the basis of mercantilism. Mercantilism was a system based on trade and commerce, with many exports to help increase the in-country wealth. Paris's economy prospered when it became a merchant city rooted in trade and simple industry but its growth was restrained by the land-emphasizing philosophy of the Physiocrats (a group of economic thinkers who emphasized land as the basis of wealth) and the excessive intervention of the monarchy, culminating in the actions of King Louis XIV.

After Feudalism, was destroyed the new system that rose from the ashes to become prominent was mercantilism. Mercantilism was based upon the principle of selling: the increase of exports an a d the collection of the precious metals that constituted money, meaning gold and silver. Paris, for example, produced luxury goods and traded in tapestries and fine materials. Mercantilism was better suited to urban areas, and because of this manufacturing and industry became important because the system was so dependent on the "selling" facet of trade. In France, mercantilism caused the urban areas to flourish, especially Paris, and a stable national economy was established. As the cities became the hubs of commerce, the previously vital country-sides (because they were required for feudalism) became less popular. Although the economic growth created by the shift from feudalism to mercantilism was very good for France, it was hampered by the serious debt of the Crown and the "laissez-faire" idealism in place.

The worst hindrance for Mercantilism was the intervention of the crown and state, and, more specifically, King Louis XIV and his financial advisor Colbert. The King himself encumbered the economy because of the great cost of his wars, which began at 60 million livres and eventually grew to 310 million after Colbert's death. He was also obsessed with absolutism, which caused Colbert to try and impose an "absolutist mercantilism" to please his king. Colbert's original theory was that it was important to export aggressively, fitting with the mercantilistic mindset of the era perfectly, and he wanted to completely overhaul the economy by centralizing trade to support this. Unfortunately, because of the immense debt of the crown, Colbert was forced to impose high tariffs on imports, which were increased in 1667 and 1672. These tariffs caused the economy and trade relations to falter. And although Paris was established as the economic center of Mercantilism eventually Colbert's plan to consolidate trade eventually failed entirely.

Besides the extreme intervention of the crown upon the economy, mercantilism was threatened by the popular group of thinkers called the physiocrats, which was founded by Francois Quesnay. The physiocrats did not support mercantilism because they believed that the source of all wealth was land. To increase the wealth generated by land, agriculture must be utilized. They believed that agriculture was important for a healthy economy and that crop abundance and high prices caused economy prosperity. They also believed that there should be a single tax on land, because it was the source of all wealth and it was a waste of time taxing anything else. The physiocrats knew competition was important, and to support this they promoted free trade, as well as the "laissez-faire" attitude they expected would help reestablish the economy. The ideas of the physiocrats become popular through the journals they published, and their principles eventually became so popular and well-known that economic reform became one of the causes of the French Revolution.

The financial system of France was based on the strong backbone of mercantilism, but economic growth was limited by the monarchy as well as the physiocrats. In France, Paris was the center of manufacuturing (and therefore the entire economy) because all roads led to Paris. But during the period of feudalism, Paris was not important because it was not rural and in consequence did not mesh well with the economy. It seemed that Paris would again become insignificant after the physiocrats provoked revolution, by creating a goal of economic reform, with their ideas of agriculture. This was not the case though, because mercantilism had made the economy of Paris became so strong that it remained the financial center of France and still is today.

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Bibliography

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Edited by Charlton, D.G.

Pitman Publishing Corporation

New York, 1972

2. France: A History of National Economics 1789-1939

Clough, Shepard Bancroft

Charles Scribner's Sons

New York, 1939

3. History of France

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