Necker and the Politics of Credit

Jacques Necker, the Genevan banker who dominated financial policy from 1776 to 1781, represented a different reform approach. Where Turgot sought structural transformation, Necker pursued confidence-building through transparency and borrowing. His publication of the Compte Rendu (1781), revealing royal finances to public scrutiny, revolutionized governmental practice while creating dangerous precedents. His successful loans, raised without new taxes through banker networks and public confidence, postponed crisis while accumulating unsustainable debts.

Necker's innovations extended beyond finance to public opinion management. His careful cultivation of writers and salonnières created favorable propaganda. His wife's salon became a center of political influence. His presentation as a virtuous outsider—Protestant, foreign, incorruptible—appealed to enlightened opinion. This mobilization of public support outside traditional channels demonstrated new political possibilities while undermining absolutist principles that royal government needed no external validation.

The American Revolutionary War (1775-1783) dominated Necker's tenure and transformed French politics. French intervention, motivated by anti-British strategy rather than ideological sympathy, succeeded brilliantly in military terms. Yorktown (1781) avenged previous defeats while establishing American independence. Yet the war's costs—over 1 billion livres—created debts that would trigger revolution. More subtly, French officers' exposure to republican government and rights-based politics imported dangerous ideas. Lafayette and other veterans returned as carriers of revolutionary ideology.

Necker's dismissal (1781) resulted from accumulated opposition to his reforms and personality. His exclusion from the Council of State as a Protestant rankled. His attacks on financial waste threatened vested interests. His public popularity aroused royal jealousy. Most fundamentally, his revelation of finances exposed the impossible mathematics of royal government: ordinary revenues covered ordinary expenses, but debt service from accumulated wars created structural deficits requiring new taxes that privileged orders refused to pay.