Jacques Necker: The Public Darling Who Cooked France’s Book

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Jacques Necker

Portrait of Jacques Necker c. 1781

By Joseph Duplessis

Source: French Cultural Ministry

Who was Jacques Necker?

Jacques Necker (1732-1804) was a successful Swiss banker who decided to rise up the ranks of French politics. He eventually reached the peak, becoming the Director of the Treasury of France. His economic policies, primarily aimed at reducing taxes, earned him much goodwill with many French commoners. Nevertheless, his ineptitude as a political economist, which he managed to conceal for years, eventually led to the loss of the public’s favor during the French Revolution. 

The Zero Theft Movement is working to eradicate the rigged parts of the economy so ethical businesses and American citizens can flourish. In this article, we will take a look at Jacques Necker and how he gained the love of the public. We will also see how the rigged socioeconomic system of 18th century France perhaps relates to the modern day U.S. economy.

Success of the Banking Swiss

Born in Geneva, Switzerland, Jacques Necker got his early entrance in the finance world when he traveled to Paris to work as a bank clerk at 15 years old. Fast forward fifteen years to 1762, and Necker had become a partner of the bank. His keen sense of the market soon made him a very rich man. 

Wealth led to more wealth. Necker set off and formed a bank with fellow Genevese banker Pierre Thelluson. Both the Paris and London branches generated considerable riches through loans to the treasury and speculations in grain. Necker appeared to have the ‘midas touch,’ and his future in banking appeared auspicious. 

However, love slowly ushered him out of the banking world into politics. Suzanne Curchod, a poor Swiss girl Necker fell in love with and married, urged him to seek out a public position. He secured a position as the Director of the French East India Company. At the time, the company’s directors and shareholders had been involved in a contentious political debate with the royal ministry.

Suzanne Curchod

Portrait of Suzanne Curchod (18th century)

By Joseph Duplessis

Source: Wikimedia Commons

Historian Kenneth Margerison summarized the debate: “Portraying themselves as members of a self-governing commercial republic, the shareholders insisted that ultimate authority rested with their assembly and accused the ministry of despotic interference in company affairs. The ministry, concerned with the financial stability of the company, employed the abbé Morellet to shift the debate from the rights of the shareholders to the advantages of commercial liberty over the company’s privileged trading monopoly.” 

Necker successfully managed the company and cogently argued for its independence from the ministry in a response to André Morellet. He continued to lend to the French government, and the republic of Geneva appointed him resident at Paris. From strength to strength, the banker won the prize of the Académie Française in 1773 and published an essay against the free-trade policy of the illustrious 18th century economist Anne Robert Jacques Turgot

Concurrently, Madame Necker established their home as a cultural hub where political, financial, and literary leaders often convened every Friday. She saw her husband’s many successes as a sign that he could serve as a great financier. At his wife’s behest, he gave his shares of his bank to his brother, fully committing to politics. 

Jacques Necker, the Finance Minister?

In October 1776, King Louis XVI appointed Jacques Necker the Director of the Treasury. Necker changed the title a year later to Director-General of the Finances. The former banker essentially served as the Finance Minister of France (the person in charge of the nation’s economy) but his Protestant faith made him ineligible for the official title. The appointment was also quite unusual due to his nationality. 

Economic Policies

He succeeded the aforementioned Turgot whom he’d criticized before, but failed to live up to his predecessor. His approach that had won him much wealth and praise in the finance industry did not exactly translate to his new role as a political economist. Perhaps more importantly though, the commoner class, or “Third Estate” (~98% of the total French population), loved him for the minor reforms he tried to pass. 

For instance, he advocated for the reform of the long-standing, exploitative tax system of the Ancien Régime. The Third Estate shouldered most of the economic production of France but much of their profits went to funding the luxurious lives of the King, the Upper Clergy (First Estate), and the Nobility (Second Estate) through taxes. Necker wanted to redistribute the taille (a land tax against peasants) more equally between the Estates, abolish the vingtième (an income tax), and establish monts de piété (establishments for the poor to gain access to loans with reasonable interest). 

In the U.S., businesses paid $230.2 billion in taxes, only 6.6.% of total government revenue, for FY2019. The Institute on Taxation and Economic Policy alleges that 55 corporations paid a total of $0 in federal corporate taxes. Do you think megacorporations should be able to avoid taxes to such a degree?

Juggling Credit & Debt

But by reducing funding from taxes, Necker had to borrow from Swiss banks to not only fund state expenditures but also to create the appearance of a recovering economy. 

France’s economic struggles occurred, in part, due to the previous king’s copious spending during the Seven Years’ War (1756-1763). But Necker’s ability to ‘cook the books’ instilled false confidence in the new ruler. Louis XVI, without really knowing the terrible state of France’s finances, committed financial support to the American Revolution in 1778. However, he made the unprecedented decision to not raise taxes. Necker was one of the few who advised the king against getting involved in the war effort.

France’s involvement in the American Revolution would cost the country nearly two billion livres (~$16.0 billion in 2015 USD). Necker the war effort but, again, this was achieved with new and revised loans. The Director-General reportedly borrowed around 520 million livres (~$4.28 billion in 2015 USD) over a four-and-a-half year period. 

Dismissal

With the economy in shambles by 1780, Jacques Necker had created a fair share of enemies and skeptics in the royal court. Critics in the public mocked his approach to the nation’s economy. 

The former golden boy decided to defend his reputation by publishing Le Compte Rendu au Roi (“The Record of Accounts for the King”) in 1781. Never before had the French public seen a complete record of the nation’s finances. Granted, Necker had doctored the figures to present himself in a positive light. 

compte rendu

Source: Wikimedia Commons

Louis XVI ordered Necker to resign for releasing the nation’s financial records. Marie Antoinette, the queen, relished the decision as the now former Director-General had prevented some of her underhanded dealings. Charles-Alexandre de Calonne, an associate of Marie Antoinette’s faction at court, replaced Necker. But the economy simply got worse, and by 1788, Calonne’s policies and those of his successor, Loménie de Brienne, had clearly failed.

Necker’s Short Return

Public sentiment had been souring fast. Not only was France in an economic crisis but also a hard winter in 1788 had ruined crops and created food shortages

The Compte Rendu, due to its specious account of the economy, ironically played a part in Louis XVI reappointing Jacques Necker in 1789. The king shared the belief of many in the public: that Necker was an honest man of integrity who had the financial expertise and connections to shepherd France out of its crisis. He was welcomed with fireworks. 

Necker advised the king to call a meeting of the Estates-General, the first time since 1614. Representatives of each Estate gathered at Versailles to air their grievances and figure out how they could dig the nation out of its deep financial hole. Representatives of the Third Estate, along with some of the First and Second Estates, found the proceedings of the Estates-General unfair. They branched off, establishing the National Assembly. Those in attendance vowed to establish a constitution when they took the Tennis Court Oath on June 20th, 1789. 

Necker appeased the growing rebellion by granting the Third Estate with double representation and permitted the Estates to deliberate and vote in common. Nevertheless, he wanted to ultimately get to economic matters rather than the reformation of the entire Old Regime. Regardless, the royal court thought Necker’s concessions were contributing to the widespread defiance and ordered him to immediately leave France on July 11.

The Swan Song

Throughout all the turbulence, public sentiment remained overwhelmingly positive towards Jacques Necker. His dismissal incensed an already angry public and they responded with the Storming of the Bastille on July 14, 1789, setting off the French Revolution in full.

His daughter, Germain De Staël, would later write, “Two days after his departure, and as soon as his removal from office was known, the theatres were shut as for a public calamity.  All Paris took up arms; the first cockade worn was green, because that was the colour of M. Necker’s livery: medals were struck with his effigy; and had he thought proper to repair to Paris instead of quitting France by the nearest frontier, that of Flanders, it would be difficult to assign a limit to the influence that he might have acquired.”

Commemoration of the Storming of the Bastille

Commémoration de la prise de la Bastille (Commemoration of the Storming of the Bastille)

By Pierre Gabriel Berthault and François Louis Prieur

Source: Library of Congress

Attempting to fix irreparable public relations, the king recalled Jacques Necker once more. And finally, the banker’s lack of aptitude as a political economist was exposed. His popularity soon went up in smoke when his efforts to save the economy failed, and he resigned in September 1790. 

Jacques Necker & the French Revolution

A somewhat accidental hero of the Third Estate, Jacques Necker backed a number of economic policies that made the estates system a bit fairer. As we mentioned earlier in the article, the Third Estate had to pay the lionshare of the nation’s taxes without any special social privileges. The King, as well as the First and Second Estates, enjoyed luxurious lives despite their lack of participation in the economy.

The burden of the state held up by the Third Estate

The burden of the state held up by the Third Estate

Source: Library of Congress

The Estates system stacked the deck against the majority of French citizens. The Third Estate, if you recall, made up about 98% of the total French population. They had little chance to receive the proper profits they deserved until they fought back. 

Obviously we are centuries removed from the 18th century, that does not mean that widespread economic foul play does not happen today. Jacques Necker, perhaps due to his Swiss and/or banking origins, could take an outsider’s view of the French tax system. He could see how unfair and untenable it was, despite his massive faux pas.

We need to take that clarity when we examine the U.S. economy. Corporations and plutocrats might be ripping off American citizens today. Through disproportionately high taxes for individuals as opposed to corporations, rigged prices for goods and services, wasteful government spending,market manipulation, damages from financial crises, and many more. 

It’s up to us to first research, prove, and democratically decide what specific parts of the system are rigged and then hold Congress accountable for fixing them. 

The Zero Theft Movement provides an independent and secure voting platform that enables citizens to investigate potential problem areas and author theft proposals. Everyone votes on whether (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically. 

Only through hard evidence can we prove where the rigged parts of the economy exist and force Congress to hold all the bad actors accountable. By eliminating crony capitalism, all the ethical corporations (big, medium, and small) and individuals (wealthy or otherwise) can thrive in a system founded on economic justice.

Standard Disclaimer

The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.   

Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.  

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Beyond Jacques Necker…

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