‘The most difficult financial matter that has ever presented itself’: paper money and the financing of warfare under Louis XIV

Joël Félix

Financial History Review, 2018, vol. 25, issue 1, 43-70

Abstract: Based on an extensive survey of French primary sources and a discussion of the recent literature on fiscal policy in France and Europe during Louis XIV's wars, this article revisits the rationale behind the first experiment with paper money undertaken by finance minister Michel Chamillart, comparing it to other belligerents’ strategies, in particular England's, to adjust their monetary regime to the challenges of funding long wars of attrition. The article shows how concerns about economic activity, coinage and the need to finance the war deficit led to a series of debasements of the French currency, the establishment of a bank in the form of a Caisse des emprunts and the introduction of mint bills, which became legal tender and caused the first experience of fiat money inflation in history. Whereas Chamillart's personal shortcomings have been recently suggested as the cause of Louis XIV's humbling in the War of the Spanish Succession, I argue on the contrary that the introduction of paper money in 1704 was key to the capacity of France to sustain its military effort, but that a succession of military defeats against a more powerful coalition led to inflation. I also argue that the introduction of paper money saved the Caisse des emprunts and its bonds which helped sustain the war effort up until the peace. By situating the use of paper money within the broader question of the exercise of power in the absolute monarchy, this article examines the formation of fiscal policy, paying attention to the ways in which government sought advice from experts. It concludes by calling for further studies on policy- and decision-making under Louis XIV.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:fihrev:v:25:y:2018:i:01:p:43-70_00

Access Statistics for this article

More articles in Financial History Review from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().