The Directory's Economic/Financial Problems

What were France's main economic issues in 1795?

Inflation, assignant plummeting in value, unbalanced budget/issues with tax collection, issues with food supply, trading hindered by the war

How was the Directory's reform of France's currency long-term a benefit?

It set up the foundations for the establishment of the Bank of France in 1800

What were the currency reforms carried out by the Directory?

They replaced the assignat with the paper currency mandate, and when the mandate didn't work they went to coinage

Why was the adoption of the mandate unsuccessful?

The mandate was valued against the old assignat-- meaning it devalued greatly because the assignat was worthless--leading to inflation

In 1797, the mandate was only ___% of its nominal value

5%

Why was the adoption of coinage unsuccessful?

There wasn't enough supply of coins-- leading to deflation (upsetting the bourgeoisie)

Who disliked the Directory due to inflation and who disliked them due to deflation?

Inflation--workers and peasants

Deflation--bourgeoisie

What was the state of French trade by 1797 due to the failure of the Directory's currency reform?

There was a partial return to the natural (bartering) economy, with members of the Councils being paid in grain

What method did the Directory use to pay off its debts?

It paid off debts through issuing state bonds which could be used to purchase the biens nationaux + just wiping debts

What was the Bankruptcy of 2/3?

The Directory simply wiped away 2/3 of its debts-- successful?

By how many livres did annual government spending reduce due to the Bankruptcy of 2/3?

By 160million livres

What were the successes of the Directory's attempts to reduce state debts?

The methods did NOT require interest payments, borrowing or spending + the economy is stabilised for the first time since the revolution + the deficit is managed + it made the bourgeoisie happy

Why were the bourgeoisie happy about the Directory's policy to reduce state debts?

The policy of issuing bonds which could be used to purchase the biens nationaux allowed property ownership to expand

Why was the Directory's policy regarding bonds and the biens nationaux ultimately unsuccessful?

The bonds soon lost their value to the point where the government stopped accepting them as payment for land-- this made the government appear unreliable for potential lenders

Was the Directory's policies regarding reducing state debts popular?

NO-- they were controversial and unpopular-- the Council of Ancients condemned this policy as unorthodox

Why was passing economic policies politically easy for Ramel?

The Coups of Fructidor and Floreal meant that the councils were subordinated to the Directory-- Ramel is able to easily pass economic measures through the council

By what % did state bonds fall in value after one year?

By 60% of their value

When was the bankruptcy of 2/3?

Sept 1797

What was the main fiscal achievement of the Directory?

They balanced the books for the first time since 1788?

What were the four main types of tax used by the Directory?

Tax on trading licenses, tax on windows/doors, tax on movable property, land tax

What was the main indirect tax introduced by the Directory?

The octrois + they introduced stamp tax

Which controversial indirect tax did the Directory suggest introducing?

Gabelle-- but it was NOT introduced

How did the Directory reform tax collection to make it more efficient?

The appointed commissioners to assess and levy taxes + tax collection was put under greater central control as opposed to being entirely down to local governments

Which group was the most targeted by taxes under the Directory?

The bourgeoisie-- the most prosperous class, these taxes are fair because they're proportional to wealth

How were the Directory's tax reforms successful?

They were one of the Directory's lasting achievements-- these taxes remain until 1914 + the tax reforms help them to balance the books for the first time after 1788

What did the Directory really rely on (aside from tax) to fund itself?

It relied on war plunder to fund itself-- heightens reliance on the army

Why was it difficult for the Directory to introduce more impactful tax reform?

The excessive safeguards in the constitution and annual elections made passing tax reforms difficult, the difficulty in actually executing tax reforms (e.g there was still no land survey or registry)

Which aspects of the Directory's tax reforms were unpopular with different sections of French society?

The indirect taxes were unfair and unpopular with workers while the direct taxes were very unpopular with the bourgeoisie