The Coin of a Memory: Never Trust Paper

Metal Built on the Memory of a Bubble

The silver écu in one's palm was a piece of metal built on the memory of never trusting paper again. After John Law's scheme vanished like a bubble, France detested paper money for a century. It is often recounted that even the word "bank" was avoided.

After the chaos of the Regency, the currency reform of 1726 returned the monetary system to metal. The silver écu was fixed at six livres, its weight and value firmly established. This stability lasted for about sixty to seventy years, until the French Revolution. However, the curse against paper had not been broken. Sixty-nine years later, when the revolutionary government issued the Assignat banknotes, Foreign Minister Talleyrand warned that they would meet the same fate as John Law's scheme.

Stable Currency, Growing Trade

Under Louis XV, following the reforms of Cardinal Fleury who steered the nation's finances, the currency remained largely unchanged for about half a century. The practice of debasement, common during the reign of Louis XIV, also came to an end.

As the currency stabilized, the economy's growth became evident in the figures. Maritime trade expanded from 80 million livres in 1716 to 308 million livres in 1748. Despite this, by the end of the century, the nation was bankrupt. The cause was not currency depreciation, but the debt accumulated from successive wars.

The Tax Farmers Who Filled the Treasury

It was the financiers known as tax farmers who actually filled the state treasury, which operated on metallic currency. They contracted with the king for six-year terms to collect indirect taxes, such as those on salt and wine, and paid a lump sum in advance to the treasury. Their profit was the difference between this amount and the taxes they actually collected.

They were both bankers who lent money to the state and officials who collected its taxes. This dual role was the source of their immense wealth. The inequality of the salt tax, the *gabelle*, was extreme; the price of salt in Paris was about thirty times that in Brittany. At the apex of this system were forty Farmers-General, who employed some twenty-five thousand tax collection agents.

The Wall That Blocked Taxation

The way to repay the accumulated debt was through taxation. However, the French tax system was fundamentally distorted. The Third Estate, comprising ninety-eight percent of the population, paid most of the taxes, while the clergy and nobility were exempt from the main direct taxes.

In May 1749, Controller-General of Finances Machault attempted to address this distortion. To repay war debts, he sought to impose a tax of one-twentieth (the *vingtième*) of net income, extending it for the first time to the clergy and nobility. However, the Parlement of Paris first rejected the measure and registered it only when the king pressed, while the provinces of Brittany and Languedoc refused to comply. The following year, the king withdrew the tax on the clergy. Every attempt to tax the privileged orders was whittled down by their resistance.