The inability of the French crown to sustain itself during bouts of prolonged warfare, and its dependence on bankers and financiers to fund its operations, is a recurring theme in the history of Bourbon France. In recent decades, scholars burrowing deep into the archives have examined many of the arcane financial practices of the French state and its collaborators. Studies by Françoise Bayard, Julian Dent, Daniel Dessert, Richard Bonney, and James Collins, ^{Footnote 1} among others, have provided a deeper understanding of these mechanisms, of their inordinate costs to the French treasury (and taxpayers), and of the interlocking relationships and conflicts of interest that bound together ministers of state, other members of the elite strata of French society, and the world of finance.

Guy Rowlands has already made a major contribution to this field. ^{Footnote 2} In Dangerous and Dishonest Men, he focuses once more on the War of the Spanish Succession (1701–1714) and the increasingly frantic efforts required to provide funding for France’s armies fighting in Spain, northern Italy, the Low Countries, and the Empire.

In this latest study, Rowlands works out in great detail the techniques involved in providing local currencies to armies fighting beyond France’s borders. In the absence of any foreign currency reserves or central bank clearing mechanisms, French officials had to turn to “private sector” bankers and financiers. The bankers of the time wore many hats, often acting as wholesale merchants, or investors in international trading ventures, or as dealers in commodities. In these various roles, they had built up networks of correspondents and credit arrangements that could be used to provide funds abroad by drawing drafts (bills of exchange) on foreign correspondents in key locations. Since the obligor on the draft was the drawer banker, not the underlying client (the Crown), the state was substituting the banker’s credit and resources for its own. There could be, in fact, multiple layers of risk involved in these transactions: the correspondent paying institution (or a holder in due course) depended on the drawer/banker for repayment; the drawer/banker in turn depended on the state to reimburse the outlay (rarely done at the opening of the transaction); there was also an open foreign exchange risk (for which the state was ultimately liable), complicated by the state’s own currency manipulations, yet another source of profit to clever bankers. As the volume of funds drawn expanded exponentially over the course of the war, and as the state was unable to honor its obligations, bankers sometimes repaid their outstandings with new drafts drawn on other correspondents, often at remote locations: in effect, kiting.

Rowlands does a good job of providing the reader with a sampling of the many possible variations in these operations. He also shows that bankers took full advantage of the weakness of the state to impose harsh terms: high fees, premiums for foreign exchange risk, deep discounts of government paper, chiefly Mint bills and assignations (payment orders on specific state revenues), when offered in settlement.

After delineating the mechanisms and expedients involved, Rowlands cites specific transactions to illustrate the system in practice. The star here and the mainstay of these operations is Samuel Bernard (1651–1739), reputedly the richest banker in France. Bernard had made his initial fortune as a wholesaler of fine textiles, before moving on to privateering and any number of commercial activities. A converted Huguenot with close ties to Huguenot exiles who had set up shop in Geneva, Amsterdam, London, as well as other locales, Bernard had a gigantic banking network he could put at the disposal of the state—for, of course, the right price.

As the war continued, even Bernard’s resources became stretched; his own paper was subject to deep discounts and had to be partially collateralized with shaky state instruments (Mint bills or assignations). In 1709, Bernard faced a serious liquidity crunch when he was unable to honor bills presented at Lyons totaling 38 million livres. The state had to intervene directly, barring any legal action against Bernard, and forcing his creditors to accept state obligations as payment: Mint bills, assignations, and long-dated annuities (pp. 158–161). Bernard was simply “too big to fail.”

In an ironic role reversal, state intervention strengthened Bernard’s hand; his paper was still accepted in key financial centers, and he continued to provide significant financing for the war effort. Again, always for the right price: in 1713, with the state once more in desperate straits, his fees shot up to 51 percent of the sums remitted (p. 163).

Bernard was only the brightest star in a galaxy of wartime financiers. By Louis XIV’s death in 1715, the state had amassed debts of around 1.5 billion livres. As in the past, the state defended itself after the fact from its bankers by convening a special court, a Chambre de justice, in 1716, to investigate the “abuses” of its finances, promising to punish those who had taken advantage of the state’s plight. In reality, this was simply using a judicial mechanism to renegotiate after the fact the terms of loans and advances by means of the fines and penalties imposed (pp. 1643–165). The bankers were willing, collectively, to recognize about 713 million livres in excess profits and to pay in the aggregate fines of nearly 220 million livres, of which only a fraction was ever collected, and even that was mostly in the form of state paper probably acquired at deep discount. ^{Footnote 3}

All in all, for the bankers concerned, one more cost of doing business.

The underlying problem, Rowlands argues, was that the state needed the financiers to provide vast amounts of short-term credit and quickly, but neither Louis XIV nor his successors could keep them in check, thereby incurring “astronomical liabilities in the process,” a failure that would eventually bring down the monarchy (p. 164). Rowlands finishes with a summary of the Regent’s attempts to fix the state’s finances using Law’s schemes, their failure, and the consequences for France down to the Revolution.

While putting plenty of blame on the bankers for the mess in 1715, he also faults many of the state officials of the period, especially Michel Chamillart, minister of finance and of war, as well as Louis XIV’s own dynastic ambitions, the reason so many costs were incurred in the first place. As he notes, “even when bankers tried to behave in a relatively honorable manner they still had to be highly manipulative to protect themselves from a crisis of liquidity” (p. 183). Perhaps the bankers were simply being bankers. To use an old bankers’ joke: “We know what we are, the only question is price.”

This is an impressive, thoroughly researched work, and will add to Guy Rowlands’s reputation as a leading historian of Louis XIV’s reign.