Question

The fundamental fiscal problem in France was structural. Which statement about it is INCORRECT?
1. Neither the clergy, who owned about 10 percent of the land, nor the nobility, who owned between 25 to 30 percent of the land, paid any tax.
2. In many areas, tax farmers collected the taxes and forwarded only part of the money to the government.
3. Louise XVI first appointed Necker, then Turgot as the finance minister to improve the financial condition of France 
4. War of the Australian Succession (1740 - 48) and the Seven Year's War (1756 - 63) helped to bankrupt the state.

Answer 1

Correct Answer - Option 3 : Louise XVI first appointed Necker, then Turgot as the finance minister to improve the financial condition of France 

• Anne Robert Jacques Turgot was appointed by Louise XVI as Controller-General of Finances in 1774. His radical reforms met with fierce opposition although they were praised by intellectuals. Marie Antoinette disliked Turgot for opposing the granting of favours to her proteges, which played a key role in the end of his career.
  In 1777, Jacques Necker was made director-general of the finances. His greatest financial measures were the use of loans to help fund the French debt and increasing interest rather than taxes. In 1781, he gave the first-ever public record of royal finances, but the statistics were completely false. In light of the opposition to reforms, Louis forced Necker to resign. Although he was recalled twice, he failed to introduce effective reforms.
• Hence, statement 3rd is FALSE. It was Turgot that was appointed first.

• About 60 per cent of the land was owned by nobles, the Church and other richer members of the third estate. The members of the first two estates, that is, the clergy and the nobility, enjoyed certain privileges by birth.
• The most important of these was the exemption from paying taxes to the state. The nobles further enjoyed feudal privileges.
• These included feudal dues, which they extracted from the peasants.
• Peasants made up about 90 per cent of the population. However, only a small number of them owned the land they cultivated. Peasants were obliged to render services to the lord to work in his house and fields ñ to serve in the army or to participate in building roads.
• The Church too extracted its share of taxes called tithes from the peasants, and finally, all members of the third estate had to pay taxes to the state.
• These included a direct tax, called taille, and a number of indirect taxes which were levied on articles of everyday consumption like salt or tobacco. The burden of financing activities of the state through taxes was borne by the third estate alone. Hence, statement 1st is correct.
• In many areas, tax farmers collected the taxes and forwarded only part of the money to the government. The tax that was collected, a significant sum, was fixed at certain levels by the government through a system of tax farming; private individuals and groups were asked to collect a fixed amount of tax on behalf of the government and could keep any excess.
• When the government failed to accurately forecast the levels of tax that they could collect, they did not benefit from any increase in national output. 
• War of the Austrian Succession, (1740–48), a conglomeration of related wars, two of which developed directly from the death of Charles VI, Holy Roman emperor and head of the Austrian branch of the house of Habsburg, on Oct. 20, 1740. 

• The Seven Years’ War was a global military war between 1756 and 1763, involving most of the great powers of the time and affecting Europe, North America, Central America, the West African coast, India, and the Philippines. 

• The war was fought primarily between the colonies of Great Britain and New France, with both sides supported by forces from Europe as well as American Indian allies. In 1756, the war erupted into a worldwide conflict between Britain and France. The primary targets of the British colonists were the royal French forces and the various American Indian forces allied with them.

• These two wars drained France resources and helped to bankrupt the state.