Baron Louis takes office
Baron Louis, full name Joseph-Dominique Louis 29, worked in the national treasury after returning to France in 1799. During the Empire, his outstanding performance in paying off debts during the Directory's reign led to his entry into the treasury of the Restoration government. After Louis XVIII entered Paris, he continued to appoint former officials as Minister of Finance. The list and term of office of the French Treasurer in 1813~1815 are as follows:
During his stay in England, Baron Louis carefully studied the country's complete banking system and the financial system of the City of London, and accumulated a wealth of theoretical knowledge, which was valued by Morion, Talleyrand and Ferrand. After returning to China, his talents were constantly appreciated. In 1800 he was appointed head of the War Office and in 1806 he was appointed president of the Légion d'honneur (Order of Honor).
Napoleon also extended an olive branch to him in the recommendation of the crowd. During the Empire he was appointed head of several financial institutions at the same time, and later joined the Treasury Department headed by Morion. Thereafter, Baron Louis began to work on the reform of the French financial system and the government's fiscal system.31 Minister of the Treasury, Morion32, recommended him for this important position before leaving office. Both are Swiss fiscal theorists and bankers of Isaac Panchaud's philosophy of public finance.
Baron Louis believed that public credit was the key to revitalizing modern state finances, and a strict installment system was the guarantee for establishing public credit. This principle later provided a reference for the government of Louis XVIII to repay its huge public debt and war reparations, and the basic measure was to raise funds from local savings banks through central financial institutions.33
Definition and relief of debt
Baron Louis, who succeeded as Chancellor of the Treasury, focused his work first on public debt. To reduce the deficit, he readjusted the categories and amounts of deferred payments. According to the report submitted by Morion, the total amount of deferred payments left by the Empire was approximately 1,645 million francs. Baron Louis divided it into three categories by age: deferred payments until 1813, deferred payments for the first three months of 1814 and deferred payments related to finances, and revised the total amount to 1.308 billion francs.
Subsequently, he forgave 490 million francs of non-repayment. The total amount of deferred payments that could be repaid immediately (i.e. direct debts) was finalized at 759 million francs34, which became a special category in the Budget Amendment of 1814: deferred payments that were immediately reimbursable.
Even so, the debt is still quite large, totaling the sum of France's tax revenues in a year. How to pay off debts without raising taxes is the main problem that plagues the government. The House of Lords later voted to issue treasury bills with an interest rate of 8 per cent, which were pledged against the proceeds from the sale of 3 million hectares of timber.35 In addition, during his tenure, Baron Louis carried out drastic reforms of the irrational fiscal system, mainly for funds that did not comply with legal procedures and temporary additional taxes established during the war.
The first budget of the Restoration Dynasty was formulated
Faced with the malpractice of the imperial budget and the huge amount of deferrals, public debt, and war reparations, Baron Louis amended the budget drafted by Morion in 1813. In terms of revenue, 100 million francs of customs revenue after the collapse of the continental blockade policy is impossible to complete. The budget of 1814 had a deficit of 307 million francs36 and the budget revenue was already less than necessary state expenditures.
Table 4
Table 4 shows Baron Louis's amendments to the Morion budget. As shown in the table, direct tax revenues fell by about 59 million francs, which was caused by the Government's reduction in taxes to appease the people. Revenues from customs duties and salt taxes fell sharply, from 145 million francs to 25 million francs, as a direct consequence of the failure of the continental blockade system. In terms of the tax rate on imported raw materials, the cost of entering the French market has been greatly reduced, but the government's revenue has also shrunk significantly. The salt tax, which attracted much attention during the Ancien Régime, was abolished during the Revolution but was reintroduced by the Empire after 1806, and its share in this budget was negligible, and it seems that the new government adopted some proposals that represented the will of the people. In terms of the total amount of salt taxes, the government almost abandoned the salt monopoly that was criticized by the citizens and peasant class.39
Baron Louis's new budget sparked a fierce debate in both houses, and Duc de la Rochefoucauld (1747~1827), a member of the House of Peers, criticized him for not knowing anything about numbers.15 After his arrival, Baron Louis, faced with the embarrassment that the treasury could not even pay for the daily administrative expenses of the government, successfully persuaded the Empress Marie Louise to return the cash of 9 million francs to the treasury, and raised 84 million francs.
The most controversial is the move to retain the comprehensive consumption tax. The question of whether or not to levy a "comprehensive consumption tax" rose to the political level in the Restoration government.40 Since the beginning of the empire, the comprehensive consumption tax has become a stable source of national revenue41. In 1810, in addition to customs taxes, this tax earned more than direct taxes.17 The Count of Artois had proposed the abolition of the comprehensive excise tax in order to win the hearts and minds of the people, but such a promise was not conducive to increasing state revenue to restore public credit. King Louis XVIII has always been undecided. However, in the long-term interest of repaying internal and external debts to restore the country's public credit, Baron Louis eventually tried to preserve the tax.
In the face of a difficult situation, Baron Louis not only tried his best to "open source", but also worked hard to "throttle". Table 5 shows the expenditure component of Baron Louis's budget. As the figure shows, military spending is reduced to a minimum. In peacetime, the military expenditure of the navy and army was reduced by about half compared with the imperial period, from 840 million francs to 516 million francs, and the total expenditure fell from 1.202 billion francs to 827 million francs, "most of the savings came from military expenditure"42.
Although the funds allocated to the War Department accounted for more than 50% of the total budget expenditure, the absolute value of military spending in the revised budget has been greatly reduced, especially since the Admiralty budget is less than half of the imperial period. Military spending on the Restoration dynasty was drastically reduced, also influenced by King Louis XVIII's proposal to reduce the number of troops to reduce expenditure,43 and the government introduced a "demi-solde" (semi-salary) system for demobilized armies.44
In addition, the efforts of the Louis XVIII government to maintain order in the country were intensified, and the funds allocated to the Ministry of the Interior and the police in the budget increased markedly both in absolute terms and as a proportion of total expenditure. All in all, debt servicing and maintaining stability were top priorities in the budget of the restored dynasty government. However, the government's investment in the national economy and people's livelihood is obviously insufficient, the government has not yet consciously intervened in national economic activities, the budget expenditure of the Ministry of Finance and the security deposit have been reduced to varying degrees, and the budget expenditure related to economic activities only accounted for 9.5% of the total expenditure in 1815~1819.45
Table 5
The new budget shows that the Restoration government has taken positive steps to rebuild public credit. The Ministry of Finance, chaired by Baron Louis, took the British budget system as a model, constantly absorbing the essence of the modern fiscal system, and committed to improving France's poor financial and economic situation. It is undeniable that, although the monarchy returned to France, the monarchy at this time was different from the administrative structure under a totalitarian monarchy: government officials, although still appointed by the king, already had a certain degree of expertise, and under the leadership of these technical elites, the administration of the various departments was increasingly independent and autonomous, and embodied the three principles of national character, equality and simplicity.47 The establishment of the budget is an important coordinate in the history of the French system, and it is also an aspect of the specialization of modern French administration.
Conclusion
To sum up, the first state budget of the restored dynasty, as an important part of the fiscal system of the same period, has the following main characteristics.
First, the implementation of an advanced fiscal system similar to that of England was a necessary means to stabilize the financial situation of the restored dynasty. In the process of perfecting the country's financial system, Baron Louis mastered and applied many economic theories and fiscal instruments from England. This was made possible by his in-depth study of his fiscal system during his "exile"48 in Britain.
The British fiscal system is advanced, and the country has replaced the Dutch supremacy in maritime trade at the end of the 18th century, and has established a complete financial and fiscal system to match long-distance trade. At the beginning of the 19th century, the British banking system had accumulated for more than a hundred years. Baron Louis's use of the British model to build his own fiscal system is undoubtedly forward-looking. His outstanding performance as Treasurer led him to be referred to by later historians as a "technocrate."
Baron Louis not only had to face pressure to carry out fiscal reforms, but also navigated the fierce and complex political struggles of the time. His statesmanship and dexterity are on display. From his friendship with Morion, who promoted him, to his cooperation with Ferrand, who held political power, he was guaranteed the freedom to apply his personal ideas in the financial field.
Second, the modernization and democratization of state structures are beginning to emerge in the fiscal sphere. The essential difference between the modern budget and the budget under the old system is that the former is guaranteed by strict economic and political execution; The latter, on the other hand, is subject to the will of the ruler. The failure to repay the public debt due, the failure to complete the planned revenue, and the failure to honor the promised interest would have severely damaged the country's public credit, all contrary to Baron Louis's proclamation in 1830 that "the government should be the most trustworthy man in France".
In addition, the transparency of the budget is also an important feature of the modern national financial system. Although the Empire also committed itself to the clarity and democracy of the fiscal system, such as the Court of Auditors established in 1807, which was intended to supervise the implementation of the national budget.49 From the perspective of the budget of the Napoleonic Empire, the high proportion of extraordinary expenses and extraordinary revenues reflects the obvious arbitrariness and authoritarianism of the budget, and this institution is useless. Baron Louis's budget was in line with the reality of France's post-war weakness, and more objectively determined the government's expenditure and revenue for the next fiscal year. Although the first budget of the Restoration Dynasty eventually evolved into a battlefield for political forces, the scientific spirit of the decision-makers was remarkable.
Third, regulating the national economy from a macroeconomic perspective is a necessary condition for the formation of the modern budget system. In order to guide and advance fiscal reform at the macro level, Baron Louis is committed to supervising the effective and independent operation of all departments.
In addition to the Minister of Finance, he also sits on the National Financial Advisory Committee and formulates laws and regulations related to the Ministry of Finance; Stipulate that the Ministry of Finance and the finance-related projects for which it is responsible are to report to and be under the direct authority of the Minister; He put Ferrand (then Minister of State) in charge of the post, Duchâtel in charge of registration and land, Bergon in charge of forestry, Berenger in charge of indirect taxes, and Saint-Cricq in charge of customs duties, which shows the importance he attaches to the implementation of the budget. Finally, he established the administrative autonomy of the Mint and the Installment Fund. These measures improve the set of administrative plans necessary to establish public credit.
The establishment of a modern national financial system must rely on a peaceful and stable political environment. Judging by the budgets of 1814 and 1815, Baron Louis gradually solved some problems, but the deep-rooted internal struggle of the country remained, and the division of the "two Frances" (the Hundred Days coup and the assassination of the Duke of Berry brought this confrontation to a peak) undoubtedly delayed the process, but Baron Louis's contribution to the modernization of the French fiscal system cannot be erased.
The number of factors influencing the country's economy is beyond imagination, and the history that follows will slowly prove that this is indeed the case, and the interest will keep us investigating.