‘Mercantilism’ is the name given by late 19 th century historians to the politico-economic

system of the absolute state from approximately the 16 th to the 18th centuries. Mercantilism has
been called by various historians or observers a ‘system of Power or State-building’ (Eli
Heckscher), a system of systematic state privilege, particularly in restricting imports or
subsidizing exports (Adam Smith), or a faulty set of economic theories, including protectionism
and the alleged necessity for piling up bullion in a country. In fact, mercantilism was all of these
things; it was a comprehensive system of state-building, state privilege, and what might be
called ‘state monopoly capitalism’.

The French monarchy tried to regulate, direct and control the economic life of the people
through mercantilist methods. French mercantilism was well expressed by Montchretien at the
beginning of the 17th century. He insisted that the wealth of the state required the wealth of the
bourgeoisie, and that public prosperity was indivisible from prosperity of treasury. He
recommended encouraging national trade by preventing foreign merchants from exporting
bullion out of France, regulating the economic professions, creating trade workshops and
promoting production through and privileges. Richelieu and Colbert carried out these policies
subsquetly.

Early in the 17th century, the Commission of Commerce, founded by Laffemas was
involved in all aspects of economic growth – from mining to linen manufacturing, from
manufacturing glass to horse breeding. It also promoted mulberry cultivation – raising silk
worms to promote the French silk industry. Laffemas invited Flemish tapestry to help in the
Gobelins tapestry manufacture in France. Skilled artisans were encourage to settle in France and
they were provided with all facilities. All these tendencies of French mercantilism reached a
climax in the era of Jean Baptist Colbert (1619-83), so much so that he gave the name
‘Colbertism’ to the most hypertrophied embodiment of mercantilism.

Colbert was the virtual economic czar – absorbing such offices as superintendent of
finance, of commerce, and secretary of state – under the great Sun King, that epitome of
absolutist despotism, Louis XIV. He followed Vodin’s protectionist principles and vigorously
pursued it for the benefit of French industry. He considered manufactories to be not only a
source of wealth but also of social stability. Colbert engaged in a virtual orgy of grants of
monopoly, subsidies of luxury, and cartelizing privilege, and built up a mighty system of central
bureaucracy, of officials known as intendants, to enforce the network of controls and
regulations.

Colbert also created a formidable system of inspections, marks and measurements to be

able to identify all those straying from the detailed list of state regulations. The intendants
employed a network of spies and informers to ferret out all violations of the cartel restrictions
and regulations. Penalties for violations ranged from confiscation and destruction of the inferior
production, to heavy fines, public mockery, and deprivation of one’s license to stay in business.
Furthermore, pervasive maximum wage controls discouraged workers from moving or, in
particular, entering industry, and tended to keep workers on the farm. Apprenticeship
requirements of 3 or 4 years greatly restricted labour mobility and prevented entrance into
crafts.
 Each master was limited to 1 or 2 apprentices, thereby preventing the growth of any
single firm. Before Colbert, most French revenue came from taxation, but grants of monopoly
proliferated so much during the Colbert regime to try to pay for swelling expenditures, that
monopoly grant revenue came to more than one-half of all state income. Most onerous and
strictly enforced was the government’s salt monopoly. Salt producers were required to sell all
salt produced to certain royal store-houses at fixed prices. The consumers were then forced to
purchase salt and, to expand state income and deprive smugglers of revenue, to purchase a fixed
amount at four times the free market price and divide it among the inhabitants.

Despite the enormous increase in monopoly grant revenue, taxes rose greatly in France
as well. The land tax, or taille reelle, was the single largest source of revenue for the state, and in
the early part of his regime, Colbert tried to expand the burden of the taille still further. But the
taille was hampered by a network of exemptions, especially including all the nobility. Colbert
tried his best to spy on the exempt, to ferret out false nobles, and to stop the network of bribes of
the tax-collectors. An attempt to lower the taille slightly and greatly to increase the aides –
indirect internal taxes at wholesale and retail, particularly on beverages – came a cropper on the
bribery and corruption of the tax farmers.

And then there was the gabelle (tax on salt), revenue from which rose tenfold in real
terms between the early 16th and mid-17th centuries. During the Colbert era, gabelle revenues
rose not so much from an increase in tax rates as from the tightening of enforcement of the
existing steep taxes. Colbert believed in a policy which provided extensive state control. For him,
the trading companies were the armies of the king and the manufactures of France were his
reserves. He adopted defensive measures by imposing tax on foreign ships, introducing
protective tariffs and then developing production. To encourage commercial expansion, he
established several royal companies, which were directed by the state – the French East India
Company, the West India Company, the Northern Company, and the Levant Company.

These companies helped in the creation of French colonies in different parts of the
world. The state under Colbert took keen interest in industrial manufacturing. Van Robais was
lured from Netherlands to establish a sponsored textile manufacturing unit at Abbeville to
produce cloth. A company was set up and given subsidies to produce serges in Burgundy;
Languedoc was given bounty to encourage exports to Levant, and the silk industry at Lyon was
promoted by royal orders. The iron industry was given state protection against the competition
from Swedish iron. The state foundries were also created to manufacture cannons and
armaments.

To improve the quality of industrial goods in France minute instructions were issued and
regulations were carried out to guide the preparation of raw materials, and inspectors to
appointed to control the quality of production. To protect the new industries against foreign
competition, tariffs were imposed on imported goods. He concentrated on ship building to
improve shipping and have control over distant colonies. Colbert was aware of the problem of
internal communication. He encouraged the construction of the canal, called Canal des Deux
Mers that linked the Atlantic with the Mediterranean. Perhaps the most important of the
numerous mercantile restrictions on the French economy imposed in the 17 th century was the
enforcing of quality standards on production and trade.
 This tended to mean a freezing of the French economy at the level of the early or mid-17 th
century. That coerced freeze effectively hobbled or even prevented the innovation – new
products, new technologies, new methods of handling production and exchange – so necessary
to economic and industrial development. As a result of all these factors, even though the
population of France was six times that of England during the 16 th century, and its early
industrial development had seemed promising, French absolutism and strictly enforced
mercantilism managed to put that country out of the running as a leading nation in industrial or
economic growth.