20-Financial and economic policies and problems

Napoleon’s Economic Policies

Taxation

Napoleon maintained high levels of taxation due to the costs of war. He inherited and adapted existing taxes while improving collection methods.

Direct Taxes

• Contribution foncière (land tax) – Provided the bulk of government revenue and remained unchanged.

• Contribution personelle mobilière (tax on personal property) – Applied in urban areas but generated little revenue and was often costly to collect.

• Other direct taxes, such as customs duties and registration fees, continued from previous administrations.

Tax Reforms & Collection Improvements

• 1807: New ‘cadastre’ (land register) created to assess land value for tax purposes.

  • Aimed to make taxation fairer and ensure increased productivity was taxed accordingly.

  • However, progress was slow—by 1815, only 20% of France had been assessed.

• September 1803: Towns and cities could levy an ‘octroi’ (tax on consumer goods entering the area), gradually replacing the contribution personelle mobilière.

• Strengthened tax administration

  • Tax collectors and inspectors were appointed in each département and paid based on performance.

  • Receipts were carefully monitored by central government.

• Cour des Comptes (September 1807):

  • A central financial auditing bureau to monitor state income and expenditure.

Challenges

• Despite improvements, war costs offset tax gains.

• Heavy reliance on indirect taxes (salt, alcohol, tobacco), which disproportionately affected the working class—taxes on these goods increased fourfold.

Central Economy & Money Supply

Monetary Policy

• Napoleon sought economic stability by returning to metal coinage and refusing to honor payments in paper money.

• January 1800: Established the Bank of France

  • Provided credit to the government and entrepreneurs.

  • Issued limited paper money (500-1,000 francs), restricted to merchants in Paris.

  • Controlled a national gold and silver currency, ensuring stability.

  • From 1808, sub-branches were created in growing trade centers.

Standardization of Weights & Measures

• Under the Directory, regional variations persisted.

• Napoleon enforced uniformity in 1804-05, improving consistency across France.

Economic Growth

Industrial & Commercial Reforms

Napoleon’s ministers, particularly Chaptal, implemented key economic initiatives:

• Bureau of Statistics – Gathered data on population, agriculture, commerce, and industry.

• Société d’Encouragement pour l’Industrie Nationale (1801):

  • Offered prizes, published newsletters, and promoted industrial exhibitions.

• Council of Agriculture, Arts, and Commerce established in each département.

• Chambers of Commerce (1802) in 23 major cities and Chambres Consultatives des Arts et Manufactures (1803) in 150 smaller towns.

Industrial Developments

• Increased mechanization and technical innovation in consumer goods.

• Napoleon prioritized luxury goods to reflect his regime’s prestige.

• Industrial progress (per Montalivet, Minister of Interior, 1811-1812):

  • Wool yield increased 400%.

  • Silk exports rose from 26M francs (1790) to 64M francs (1812).

Agriculture

• Largest sector of the French economy.

• Some regions saw improvements:

  • Large landowners introduced new crops, animal breeding, and scientific farming.

  • Agricultural associations were established to share best practices.

• However, most land was held by small peasant proprietors, struggling to sustain themselves.

• Farm division (supported by Civil Code) worsened productivity issues.

• Tenant farmers avoided improvements to prevent rent increases.

‘Replacement Crops’ Policy

• Encouraged production of cotton, coffee, dyes, tobacco, and sugar to reduce reliance on colonial imports (disrupted by war).

• January 1813: Sugar cane imports banned to promote domestic production.

• Impact:

  • Targets were not met before 1815, but long-term effects were positive.

  • Good harvests in early Consulate/Empire years (except 1806) boosted prosperity, but conditions declined after 1809.

  • Montalivet’s data (1812):

    • France was self-sufficient in butter, cheese, and vegetable oils (previously imported).

  • Prefects reported positive agricultural conditions, but major progress was limited beyond wine production.

Impact of War & Continental System

War Economy

• Stimulated armament production but harmed peacetime industries.

• Loss of labor to military service reduced domestic demand.

• Napoleon funded wars through:

  • Tightened taxation

  • Conscripting soldiers at low wages

  • Selling land (e.g., Louisiana to the USA)

  • Plundering conquered territories

• The Empire never became financially self-sufficient.

Trade Disruptions

• British blockade damaged trade, especially in western France (Le Havre, Rouen, Bordeaux).

• Maritime commerce in the Mediterranean suffered due to British naval dominance.

The Continental System (1806-07)

• Banned all French trade with Britain.

• Forced allies & neutral states to comply—those who refused were treated as enemies.

• Goals:

  • Weaken Britain economically and force it to sue for peace.

  • Shift trade from Atlantic-focused to European-focused.

Failure of the Continental System

• Napoleon lacked naval power & coastline control to enforce it.

• Smuggling thrived despite a threefold increase in customs officials (1797-1810).

• Some officials, soldiers, and gendarmes engaged in illegal trade themselves.

• British counter-blockade deprived French producers of raw materials.

• Economic consequences for France:

  • Wine & colonial trades suffered.

  • Shortages of sugar, coffee, and British-imported goods.

  • 1810: Napoleon allowed licensed trade with Britain to offset customs revenue decline.

  • Britain’s trade with North & South America compensated for losses in Europe, preventing economic collapse.

Degree of Economic Change

Limitations & Challenges

• Low domestic demand – Most of the population was still engaged in farming, heavily taxed, and had low purchasing power.

• Industrial work was unattractive due to:

  • Mandatory ‘livret’ (worker ID book).

  • Ban on trade unions.

  • Poor urban living conditions.

• War-based industries thrived, but peacetime economic expansion was limited.

• Weak capitalist class – The bourgeoisie focused on acquiring ‘biens nationaux’ (nationalized property) rather than investing in industry.

• Poor communications & infrastructure, except for some military roads.

• Agricultural inefficiencies – Many small, unprofitable farms.

• State control of prices & food supplies prevented riots but discouraged investment in agriculture.

Key Figures in Economic Management

• Finance Ministry – Gaudin (1799-1814): Handled taxation & revenue.

• Treasury – Barbé-Marbois (1801-1806): Managed expenditure.

• Interior Ministry – Chaptal (1801-1814): Oversaw economic organization.