Louis XIV’s domestic policies are harder to evaluate. The pursuit of war put heavy financial demands on the state. In response, Jean-Baptiste Colbert, who managed the state’s finances until he died in 1683, pushed through a series of financial reforms. However, he was not able to correct the fundamental weaknesses of the state’s fiscal system. He streamlined the process of tax collection by creating the unified General Tax Farm, an organization composed of collectors of indirect taxes, and by making the intendants responsible for gathering direct taxes, which he tried to make more equitable. Colbert was a mercantilist—that is, someone who believed that the wealth of the world was more or less fixed and that to increase its revenues the government should actively work to expand production, enhance exports, and limit imports. Among his reforms, he lowered internal tolls, raised tariff barriers to imported goods, and established and granted state monopolies to commercial and manufacturing enterprises (see Mercantilism). Although most of these state companies failed, Colbert did bring a temporary order to state finances. This order was disrupted after Colbert’s death, when Louis’s wars also became longer and more expensive.
By the end of Louis XIV’s reign, the monarchy was so financially squeezed that it adopted one desperate, old, and dubious fiscal measure after the other in attempts to cover expenses. These included contracting massive loans, selling venal offices merely to raise revenue, and tampering with the currency. But the crown also experimented with new, more promising initiatives. These initiatives included the capitation—the first nearly universal tax levied according to status and income—and the Council of Commerce, an advisory board on trade policy that included merchants. "France" © Emmanuel BUCHOT, Encarta, Wikipedia.
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