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LEARNING INTENTIONS

LEARNING INTENTIONS. Knowledge: Identify events that led to financial and fiscal crisis in France Understanding: Using evidence and examples, explain how these events contributed to the crisis Skill:

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LEARNING INTENTIONS

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  1. LEARNING INTENTIONS • Knowledge: • Identify events that led to financial and fiscal crisis in France • Understanding: • Using evidence and examples, explainhow these events contributed to the crisis • Skill: • Start creating your own annotated timeline that will help you to recall, explain and analyse the events that contributed to financial and fiscal crisis

  2. SIGNIFICANT EVENTS 1740 – 1787

  3. FINANCIAL CRISIS

  4. THE THREE WARS Look a the class timeline and find the three wars between 1740 and 1783: • ? • ? • ? There was no increase in taxes during this time to fund the wars. The American War of Independence, for example, cost France over 1 billion livres.

  5. NECKER’S COMPTE RENDU AO ROI 1781 (Necker’s Report to the King) • Find this event on the timeline • Necker – Comptroller General: Swiss born – reputation as financial genius • First published account of the financial situation of the French State (CompteRendu 1781) • The report showed ordinary revenues to be exceeding expenditure by over 10 million livres(very healthy) • No inclusion of extraordinary accounts where the real cost of war was included – deep deficit What would the consequence be if the Banks knew about the extraordinary accounts?

  6. ATTEMPT AT REFORM • Necker tried to: • Organise central accounting procedures • Establish central treasury • Nation-wide survey on venal offices – how many and how much did they make? This was funded by more borrowing. Between 1777 and May 1781 he borrowed 520 million livres in loans with high interest rates. More borrowing by Calonne (appointed 1783) – 653 million livres.

  7. FRANCE FACING BANKRUPTCY - 1786 • France’s income in 1775 - $377.2 million • France’s expenditure in 1775 - $411.4 million • By 1786 there was a deficit of $112 million livres What solution do you think Calonne (Necker’s replacement) proposed?

  8. PROPOSED SOLUTION MAJOR TAX REFORM • Why might this have been controversial? • Why was there no choice?

  9. FISCAL CRISIS

  10. PROPOSED SOLUTION Cont. Calonne in correspondence with Necker: “It is impossible to tax further, ruinous to be always borrowing and not enough to confine ourselves to measures of the economy… Ordinary ways are unable to lead us to our goal…The only effective remedy, the only means of managing finally to put the finances truly in order, must consist in reviving the entire state by recasting all that is unsound in its constitution (make up)”

  11. CALONNE’S PLAN FOR TAXATION REFORM • 20 August 1786 – Calonne presented his Plan for the Improvement of the Finances. It proposed: • New direct tax – on all landowners without exemptionsdetermined by income – worth $35 million in revenue • Termination of internal tax barriers • No more fixed price of grain This was a move towards a national economy – stimulate trade.

  12. RESISTANCE Who might oppose taxation reform? Why?

  13. BORROWING MONEY • In order to borrow more money from banks to keep the country going, Calonne needed to show that his proposed reforms would become law SO… • He proposed that King Louis XVI convoke an Assembly of Notables to convince them of his plan WHY??

  14. ASSEMBLY OF NOTABLES • What was the purpose of the Assembly of Notables? • Who would the assembly comprise? • Who decided who joined the assembly? • Why was this important?

  15. TO DO: Start your own annotated timeline. Include the following events: • The three wars • End of American War of Independence • Necker’s CompteRendu • Appointment of Calonne as controller general • Calonne’s Plan for the Improvement of the Finances • The Assembly of Notables Make sure you include exact dates, short explanations, examples and evidence on your timeline. It should act as a storyboard for you.

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