Les Idées de Necker
Jacques Necker was born in Switzerland in 1732 of a Swiss mother but a Prussian father who had emigrated from Küstrin in the Mark of Brandenburg and established himself in Geneva as a professor of German public law. Though the family seems to have been in prosperous circumstances, and though the young Necker was a promising scholar, his school days were cut short, and at the age of fifteen he was apprenticed to a Swiss bank operating in France. There, during twenty years of frugal living and hard work, he accumulated a fortune and a desire to make a name for himself in French political life. In this ambition he was powerfully aided by his wife, an intellectually ambitious Swiss beauty whom Gibbon had hoped but been forbidden by his father to marry. Once Necker’s financial circumstances permitted it, she established a salon in Paris (where their daughter Germaine, later Mme de Staël, was born).
Necker first took office under the French crown in 1776 when he was made director of the treasury—a post upgraded the following year to that of director general of finance. At this time the French government was preparing to intervene in the American War of Independence, and Necker himself attributed his appointment to the belief that a successful businessman was better equipped than the officials normally in charge of financial affairs to revive the government’s credit, then at an extremely low ebb, and to raise the sums required to wage a major war.
From 1776 to 1790, as Jean Egret observes in his work here under review, Necker was the most important figure in French history. His first ministry lasted until 1781. Thereafter, on two subsequent occasions—in August 1788 when the government was bankrupt, and in July 1789 after the capture of the Bastille—he was again summoned by the king to save the state from the financial and political disasters which seemed on the point of engulfing it. An author as well as a successful businessman and a leading political figure, he wrote books which were widely read throughout Europe, and of which one—his Traité sur l’Administration des Finances de la France, first published in 1784—was, according to Henri Grange, the best seller of the century. His reputation as a financial genius, his personal honesty, his domestic virtues, his humane sentiments, and his championship of the oppressed, won him, for a large part of his public career, a wider and more vociferously expressed popularity than any other minister enjoyed in eighteenth-century France. And yet, until recently, the French have always treated him with a certain neglect and even contempt. Before Professor Egret’s work came out in 1975 he found no worthy biographer, and in the last forty years no biographer at all.
All his attempts at reform were, it is true, failures, but this cannot be held against him since in France in the second half of the eighteenth century the same fate overtook every other reforming minister without exception. The French at this time lacked anything that could be called a civil service, all administrative functions, apart from those of the ministers and of the intendants in the provinces, being discharged by people who had bought or inherited their offices, which were their personal property like their houses or land. The crown in consequence had no direct control over the administration.
The ideology of absolutism made it impossible to have a prime minister, with the result that any minister’s policy was always likely to be defeated by intrigues at court or among his colleagues, even if it were of a kind to escape censure by the thirteen Parlements, whose consent was necessary before any major government measure could have the force of law. Since the members of these Parlements were lawyers whose principal duty it was to safeguard the so-called “Fundamental Laws”—a term synonymous with existing custom—they were committed ex officio to preserving the status quo. The structure of the French state at this time was in fact such that insuperable barriers blocked the way to reform and anyone who tried to surmount them merely courted disaster.
Among the many who suffered this fate only one—Turgot—has until recently emerged with an untarnished reputation. For generations every amateur who attempted to understand French history in the eighteenth century was always taught that the reforms which Turgot tried to introduce, would, had he succeeded, have averted the Revolution. The same could also be said of Necker’s proposed reforms, and arguably with more justice. Turgot, nevertheless, was always portrayed as a great man and Necker as a vain and somewhat ridiculous upstart.
Now, however, the fashion is changing, and principally, it would seem, for two reasons. In the first place Turgot, with certain qualifications, was a physiocrat. That is, he defended free enterprise and free trade, the belief in which is now equated by many Europeans, though quite unjustly in Turgot’s case, with the belief that the strong have a right to exploit the weak. Necker, by contrast, first brought himself before the public eye with a work—his Eloge de Colbert—in which he argued that it was essential to control the grain trade if the poor were to be preserved from starvation. Turgot’s preoccupation with the poor was as great as Necker’s, but since Necker believed that intervention on their behalf, albeit only to a very limited extent, was one of the essential tasks of government, he has seemed a legitimate object of interest in circles where the physiocrats are anathema.
At the same time Necker has become an object of interest, for a quite different reason, to those who are unconvinced by the orthodox analysis of the class struggle in eighteenth-century France. Turgot’s works lent considerable support to this analysis. In memorandum after memorandum written while he was intendant in the Limousin, he stressed the inequities of the nobles’ tax privileges, and for generations his indictments seemed to justify the view that these privileges were among the principal abuses from which France suffered.
In principle Necker objected as strongly as Turgot did to the kind of privilege that existed under the ancien régime, but his priorities were different. He realized that depriving the nobles of their tax privileges would yield only a small financial return—a return which he estimated on one occasion at about twelve million livres per annum or, very roughly, some 2 percent of government revenue. In his view the place where reforms should start was the central financial administration. By diminishing the number of purchasable offices and by abolishing the analogous practice of farming out the indirect taxes, he hoped to bring the whole financial system under government control, or, in other words, to nationalize it.
These reforms were the sine qua non of any rational government policy since in their absence it was impossible to estimate with any hope of accuracy either revenue or expenditure, or to draw up a budget. Such procedures were in fact so far removed from the current French practice that even the idea that a budget was necessary and, indeed, the very meaning of the word were unknown. In the volume on finance, for example, in the Encyclopédie Méthodique, which came out in 1784, budget was defined as an English parliamentary term “which means, properly speaking, a bag.”
Necker’s preoccupation with financial reform was not calculated to fire the imagination of historians. The subject is highly technical and for most of the present century has seemed irrelevant to the main developments in French history in the eighteenth century. The suspicion, however, has been growing for some time that perhaps it is not irrelevant, and that there may be something to be said for the contemporary view, continually repeated by Arthur Young and by many central Europeans, that it was the vices of the French administration, and system of government generally, that were responsible for the collapse of the ancien régime. This was Necker’s opinion, and since he understood the defects in the structure of the French state better than most of his contemporaries, and did his best to remedy them, there has seemed to be a case for deposing Turgot from the pedestal he has hitherto occupied as the great reformer manqué, and for replacing him by Necker.
Necker’s star in fact is in the ascendant and everyone is now anxious to give him not only his due but more than his due. The first of his recent admirers to yield to this temptation was the Canadian professor J.F. Bosher in his highly illuminating French Finances 1770-1795, published in 1970. Professor Goubert of the University of Paris once observed that it was a national disgrace that Professor Bosher’s revelations should have had to be made by a foreigner, and since then the new information which he brought to light about Necker has been supplemented in the two French works here under review.
Each makes a notable contribution to the subject and each complements the other. Henri Grange in a doctoral thesis has analyzed with admirable clarity Necker’s social and political ideas as these were expressed in his writings. Jean Egret has written a full-scale life of him distinguished by the old-fashioned virtues of readability combined with scholarship. Necker, however, became a hero to both these writers who try to defend him beyond what the facts warrant. Professor Grange, it is true, only does this on the rare occasions when he departs from his principle of ignoring Necker’s public life. Professor Egret, in spite of his obvious desire to be impartial, does so more often.
In summarizing, for example, the results of Necker’s first period of office, Professor Egret observes that “he achieved with the ease of an experienced professional the precise task which had been expected of him.” This is a strange judgment which ignores all the criticism directed against him both by contemporaries and by later writers.
Necker’s task was not merely to raise enough money to finance the French war effort on behalf of the Americans, but to do so without adding to the taxes, which could only be assessed and collected in an extremely arbitrary manner, and which, given this defect, were already so high, as well as the cause of so many protests, that it was impossible to increase them. Impressed as he was by the size of the British government debt and the apparent ease with which it was shouldered, Necker assumed, in spite of the great differences in the financial arrangements of the two nations, that what the British could do the French must be able to do also. Though Turgot had maintained, rightly as it turned out, that France could not afford to wage a major war, Necker was prepared to take a gamble. He succeeded in borrowing enormous sums, a feat of which he obstinately remained proud although it had disastrous consequences.
Most of Necker’s loans were raised in the form of annuities which, because everyone knew of the precarious state of the French finances, he could only sell at high rates of interest and without regard to differences in the ages of the purchasers. The Swiss bankers, who were experienced in affairs of this sort, quickly saw that he had presented them with a gold mine. They discovered that Switzerland, where the latest improvements in medicine were widely applied, was a particularly healthy country; that young girls were generally healthier than young boys; and that if the families were selected with proper care the average expectation of life of a girl aged between four and seven was sixty-three years, as against the twenty years on which the French government had reckoned.
On the basis of these discoveries the Swiss bankers, followed by their French colleagues, organized a traffic in annuities to the great profit of themselves and their clients. They took out annuities on the lives of each one of a group of thirty little girls (the so-called “trente demoiselles de Genève” who became a standing joke)—a procedure that could be proved mathematically to reduce to a minimum the chances of loss because of unanticipated early deaths. They then sold shares in these thirty annuities to their clients, often advancing them the money. It was reckoned that a man who borrowed from his banker the sum necessary to purchase such a share could pay back the capital and the interest within twelve years out of the interest he received from the government. Thereafter, without at any time having expended so much as a sou, he could expect to enjoy this interest for the rest of his life.
“One can understand,” observed Herbert Lüthy, who made a study of Necker’s financial operations, “the craze that developed for this miraculous investment.” Mirabeau, whose Swiss friends primed him with the details, concluded that “the loans raised by M. Necker must be held to be among the most costly, the worst organized and the most ruinous that France has ever been forced to undertake.”
Necker followed up these unfortunate transactions with his famous Compte Rendu which he published in 1781 just before he resigned from his first ministry. This was the first public statement of the financial situation ever to be made in France, and in it Necker—to give publicity to his own achievements and to his belief that secrecy in financial affairs was bad for credit—maintained that revenue exceeded expenditure. It very quickly emerged, however, that the truth was the exact opposite.
How, precisely, Necker arrived at his astonishing conclusion is obscure. His reorganization of the finances had not reached the point at which it was possible—without a prodigious labor which he thought unwarranted—to produce anything approaching a complete set of figures. The error, however, does not appear to have come from this but from the fact that Necker’s calculations related to what was called “une année ordinaire.”
In the accounts of the French and of most other eighteenth-century governments it was customary to distinguish between ordinary and extraordinary revenue and expenditure, the term “ordinary” being used to describe the revenue and expenditure which in these slow-moving economies was approximately the same every year, and the term “extraordinary” to describe the sums that had to be raised and spent because of some emergency, principally war. In 1781 the most expensive war that France had ever waged was still in progress, and this year was thus as far removed from an “ordinary year” as it is possible to imagine. Moreover as Calonne—then intendant of Lille but with his eye on higher things—discovered as soon as the Compte Rendu was published, Necker’s “année ordinaire,” no doubt inevitably, was a model put together from figures relating to a variety of different years, and was not a year which had ever existed.
Not unreasonably in these circumstances, Calonne asked what purpose the Compte Rendu could conceivably serve, and after he himself had taken over the control of financial affairs in 1783, he claimed, apparently with justice though at the cost of a great political storm, that in 1781, so far from there having been, as the Compte Rendu suggested, a surplus of revenue over expenditure of 10.2 million livres, there was in fact a deficit of between 50 and 60 million livres.
These are only two examples among a number that could easily be produced to show that Mirabeau was not without a case when he told his Swiss friends that Necker was “un sot“—an ass.
Professor Egret does not attempt to deny that he was singularly lacking in political sense, a criticism which has often been brought against Turgot also, though with less justification. Necker continually miscalculated the way in which political and financial situations would develop and overestimated his own capacity to control them. The combination of vanity and unsureness of himself typical of the parvenu in old-established societies made him over-optimistic at the beginning of his periods of office and increasingly hesitant and indecisive afterward.
These defects might well have proved fatal to his chances of success had such chances existed. They did not, however, exist, and the interest of his career therefore does not lie in why he failed to avert the Revolution or, alternatively, in how far he promoted it, which he can also be said to have done. For in spite of his fear of sudden change, which he repeatedly expressed even before 1789, he contributed to the development of a revolutionary situation in various ways—sometimes accidentally, as in the affair of the Compte Rendu, but sometimes by deliberate action, as when he argued in favor of summoning the States General, and of the “doublement,” or provision which allowed the third estate a number of deputies equal to that of the clergy and the nobles combined.
His interest lies in the light which his career throws on the ancien régime in its death agonies, and in the illuminating reflections to which his experiences led him; for though in his public appearances he often contrived to make himself look an ass he was also a man of great intelligence, whose business training and foreign origin gave him unusual insights into the French administration and French social and political life.
Though France was his adopted country, for which he came to feel a deep devotion, and where he lived until 1790 when the revolutionaries drove him out, he never succeeded in turning himself into a Frenchman or abandoned his Protestant religion, notwithstanding the fact that until 1787 the Protestants in France were legally without civil rights. He greatly admired French culture and the savoir vivre of the French ruling classes, but his own intellectual interests were confined to social, financial, and political questions, and he retained throughout his life much of the austere morality in which he had been brought up. His personal honesty was complete, never questioned, and sometimes pushed to quixotic lengths. Though he lived in great style because this was the sine quanon of the political success he coveted, he was personally indifferent to the trappings of wealth. Gauche in manner and appearance, he never learned, or apparently wished to learn, how to imitate the grands seigneurs. Neither typically French nor Swiss nor North German but a mixture of all three, he was, as it were, the platonic ideal of a European grand bourgeois of the late eighteenth and early nineteenth centuries.
He was, it is true, both less optimistic and complacent, and less convinced of the merits of free enterprise, than this remark might suggest, since his cardinal beliefs were in the iron law of wages and in the need for the state to mitigate its operation. Living as he did at a time when the French population was increasing faster than the possibilities of employment, it seemed to him inevitable that the unskilled workers should at best earn no more than was necessary to keep them alive. He was never one of those who believed in a hidden hand guiding for the common good the actions of individuals pursuing their private interests. He thought that the state must ensure their “minimum vital” to the weak. If it failed to do this, he said, “the present organization of society would have no meaning and the world would be absurd.”
He did not, however, think that the state should intervene in economic affairs except in so far as this was necessary to prevent the price of grain from rising in times of scarcity to levels the poor could not afford. In general, and with this exception, he thought state intervention commonly did more harm than good. He believed that private property, and particularly private property in land, which provided the bulk of the nation’s wealth, was the basis of society. It alone, in his view, could ensure the production without which the human race, with its propensity to multiply, could not subsist. He was convinced that the only way of averting economic paralysis was to allow the landowner an undisputed right to his property; and since he also thought that the landowners were only moved to produce by their desire for the goods and services they could acquire from the sale of their agricultural produce, it seemed to him to follow that they must be allowed to spend their money as they chose.
Though he maintained that a large proportion of the French population was living in conditions worse than those of slavery (the slaveowner, he pointed out, at least had an interest in the welfare of his slaves), he did not think that the government should intervene to prevent the rich from spending their money on luxuries. On the contrary, he believed that such expenditure fulfilled a useful function except when it led to bankruptcy, or the corruption of morals, or when, as in the case of the parks maintained by the rich, it kept useful resources idle.
He continually expressed his admiration for the progress made by French civilization in the century or so before his own day—for the growth in wealth, in education, and in technical skills of all kinds. He wished this progress to continue unhindered by all the obstacles which the ancien régime put in its way, and of which by far the worst seemed to him the wasteful and disorderly financial management.
A great admirer of Britain, he thought that the British social structure and the British constitution should serve France as models—an opinion which his adopted compatriots increasingly came to find objectionable. Though the reverse of an egalitarian in matters of wealth, he believed in equality before the law, in careers open to the talents, in the association, in some form or another, of the people with the government, and in making the government responsible to public opinion, though what he meant by the terms “the people” and “public opinion” is never wholly clear. In all these respects his ideals came to find acceptance in the greater part of Europe in the nineteenth century, and they provided him with better insight into the causes of the discontents prevalent in France before the Revolution than was shown by many of his contemporaries whose works are now read to the neglect of his.
For all this, however, his temperament and his beliefs made him singularly unsuited to cope with the circumstances in which he found himself both before and after the outbreak of the Revolution. A man of genuine humanity, all forms of violence, cruelty, and injustice were repugnant to him. The heroic virtues, which were prized both by the aristocrats and the revolutionaries after their different fashions (not to mention the revolutionaries’ ruthlessness and exaltation of vengeance), had no appeal for him, nor was he capable of them. The political errors he committed before the Revolution were surpassed by those he committed afterward, when he persisted in preaching the virtues of sound finance to a country plagued by anarchy and famine.