"Everybody celebrates the 14th July in France. But no one
would want to see a return of the revolution. "
Only an American would say such a thing at a Bastille Day
celebration. Raising our glasses at yesterday's picnic,
the Frenchmen looked puzzled, then amused, at my toast.
Everybody celebrates the 14th July in France. But no one
would want to see a return of the revolution.
"Oh... there were some good things and some bad things that
came out of it," said a friend on Sunday. Asked what the
good things were, he couldn't think of any.
We wonder from time to time how it will all turn out - we
mean the Great Bear Market and the long, soft, slow
depression that America seems to be entering. What happens
when a great people get themselves into a great mess?
The French Revolution was a terrible mess. By the 18th
century, France had become the greatest power in Europe,
the richest and most populous country in the western
world, and the clear leader in art, science, philosophy,
education, cuisine, fashion, architecture... and, of
course, viticulture. It had the richest people in the
world, the prettiest women, and the best booze.
It also had the most enlightened economists - the
physiocrats - from whom Adam Smith was boosting some of
his best ideas.
A poll taken in the early 1780s might have shown the
French to be extremely optimistic and confident. And why
shouldn't they be? The last major financial crisis -
caused by John Law's Mississippi Bubble - blew up over 60
years before. And had the world ever seen anything
approaching the splendor of Versailles?
But in 1789, Paris mobs came to the crossroads of history
and veered left. They replaced an absolute monarch who had
very limited power, with a people's republic restrained
neither by common sense nor common decency.
The uprising began on July 14th, 1789, at the old prison,
the Bastille, which was seen as an emblem of the ancien
regime. The prison was stormed by the Paris proles, who
took the guards hostage (promising they could go unharmed
if they laid down their guns) and released a handful of
lunatics and hoodlums from their cells. Then, the crowd
hacked the unarmed guards to pieces and paraded around the
city with body parts on the end of pikes. Not long after,
the "law of the lamppost" became the ruling order in
Paris: aristocrats, CEOs, government officials and army
officers were hung from streetlights. The Marquis de
Lafayette, the liberator of the American colonies, tried
to maintain order at the command of the National Guard.
Lafayette was supposed to be guarding Louis XVI when a mob
attacked the palace at Versailles on the 4th of October,
1789. A few raggedy women broke into the palace trying to
kill Marie-Antoinette, who fled to her husband's
bedchamber. There, the attackers backed off. They may have
doubted that Louis was put in his place by God
himself... maybe God wouldn't mind if they cut up the
Bourbon king; but the femmes decided not to take a chance.
Lafayette intervened, telling the crowd that he would make
sure Louis returned to Paris - where the king would be at
the mercy of the radical new government. A few years
later, Louis and his family went to the scaffold... along
with thousands of others. France was soon at war with
nearly all its neighbors, and with the Vendee, a region in
west of the country that refused to go along with the
revolution. Church property was confiscated, a new paper
currency - the assignat - was created, and then destroyed,
by inflation. Outrages to the clergy, the aristocracy, the
language, and even the calendar were perpetrated.
None of this might have happened, however, except for the
efforts of the Alan Greenspan of the late 18th century -
Jacques Necker. It was Necker who replaced laissez-faire
economist, Jacques Turgot, as French finance minister in
1776.
Turgot's free-trade policies had the fatal flaw of all
sensible rules - they benefited everybody to the advantage
of nobody in particular. Turgot dissolved the guild
system, eliminated the corvee (the forced labor of the
peasants), imposed a simple property tax and opposed all
forms of economic privilege at the expense of the common
good. He even set himself against Marie Antoinette, by
refusing to grant favors to her cronies. Since everybody
in France in the 18th century as well as every American in
the 21st wanted the privilege of picking someone else's
pocket, Turgot eventually made enemies of nearly every
class. Louis XVI, though responsible for the well-being of
the entire nation, had not the strength to stand up to the
special interests.
Turgot even had a prophetic intuition and a view of
history similar to our own. Periods of civilized progress
are followed, he noted, by periods of barbarism and
madness. Dismissed in 1776, he warned Louis XVI: "Do not
forget, Sire, that it was feebleness that placed the head
of Charles II on the block."
Necker made enemies of no one. His program was the
opposite of Turgot's; he favored particular privileges at
the expense of everybody else. Rather than tax people to
pay for state expenses, Necker borrowed - taking short-
term, high-interest loans that brought the government
close to bankruptcy. Then, Necker turned to accounting
tricks to show that the government was actually running a
surplus! The patsies loved it.
Pushed out for the first time in 1781, Necker was called
back on the eve of revolution in 1788 for another dose of
his financial magic. But it was too late. The old miracle
elixirs - heavier debt and cooked books - wouldn't work
any longer; bankruptcy was unavoidable. The aristocrats
got rid of him again - on July 14, 1789. The mob, which
still had faith, was so disappointed... it headed for the
Bastille.
P.S. The American revolution was not a revolution at all -
but just a revolt. The American colonists had gotten used
to having their own way in the wilderness of North
America. When King George III tried to reassert his
control, Americans took up arms. An American in Baltimore
or Philadelphia might have gone about his business before
the War of Independence, during and after, and hardly have
noticed the change.
Not so in France, where the revolution left hardly anyone
undisturbed. Even my house in rural France - 200 miles
from Paris - changed hands when the owners fled the
country to avoid the guillotine.
P.P.S. King George III was no stranger to madness. He was
already going mad from porphyria when the French
revolution began. Thought cured on more than one occasion,
George went mad permanently in the early 19th century and
was replaced by his son, George IV.
The Daily Reckoning
Monday, 14 July 2003
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