A survey of the financial history of France in the years from 1781 through 1787 reveals two interrelated developments: an unprecedented series of loans opened by the state in an effort to meet growing war and postwar expenses and to service a burdensome debt, and a speculative boom which thrived on the confusion of public and private finance which the French revenue system allowed. Both developments are of central importance in any inquiry into public finance in the decade, and thus in any explanation of the financial origins of the French Revolution. Both were fed in part by the unprecedented volume of capital and credit available on the Parisian Bourse as on other European capital markets in this decade. But to an extent too little comprehended, both the increase in public indebtedness and the speculative boom were assisted by investments from abroad, investments which helped to obscure the enormous and onerous public debt in a mask of apparent soundness by responding readily to repeated calls for credit, and which likewise helped sustain the speculative mania through the extension of credit to the speculators themselves. It is known that Genevan, Genoan, and Dutch credit played some role in these events. Indeed, Genevan commitments have, to a degree, been clarified. But the Genoan and Dutch roles have remained vague, always cited but never detailed. What will be attempted here is an analysis of the Dutch role, of the structure and method of Dutch investments in France during this period in which such investments made some contribution to maintaining the appearance of public solvency while assisting Bourse expansion.
Blending Public and Private Finance: What Lessons Can Be Learned from IFC’s Experience?
