Why Nations Fail: The Origins of Power, Prosperity, and Poverty (45 page)

Meanwhile, the mood in the country, and especially in Paris, was becoming more radical. In reaction, the conservative circles around Louis XVI persuaded him to sack Necker, the reformist finance minister. This led to further radicalization in the streets. The outcome was the famous storming of the Bastille on July 14, 1789. From this point onward, the revolution started in earnest. Necker was reinstated, and the revolutionary Marquis de Lafayette was put in charge of the National Guard of Paris.

Even more remarkable than the storming of the Bastille were the dynamics of the National Constituent Assembly, which on August 4, 1789, with its newfound confidence, passed the new constitution, abolishing feudalism and the special privileges of the First and Second Estates. But this radicalization led to fractionalization within the Assembly, since there were many conflicting views about the shape that society should take. The first step was the formation of local clubs, most notably the radical Jacobin Club, which would later take control of the revolution. At the same time, the nobles were fleeing the country in great numbers—the so-called émigrés. Many were also encouraging the king to break with the Assembly and take action, either by himself or with the help of foreign powers, such as Austria, the native country of Queen Marie Antoinette and where most of the émigrés had fled. As many in the streets started to see an imminent threat against the achievements of the revolution over the past two years, radicalization gathered pace. The National Constituent Assembly passed the final version of the constitution on September 29, 1791, turning France into a constitutional monarchy, with equality of rights
for all men, no feudal obligations or dues, and an end to all trading restrictions imposed by guilds. France was still a monarchy, but the king now had little role and, in fact, not even his freedom.

But the dynamics of the revolution were then irreversibly altered by the war that broke out in 1792 between France and the “first coalition,” led by Austria. The war increased the resolve and radicalism of the revolutionaries and of the masses (the so-called
sans-culottes
, which translates as “without knee breeches,” because they could not afford to wear the style of trousers then fashionable). The outcome of this process was the period known as the Terror, under the command of the Jacobin faction led by Robespierre and Saint-Just, unleashed after the executions of Louis XVI and Marie Antoinette. It led to the executions of not only scores of aristocrats and counterrevolutionaries but also several major figures of the revolution, including the former popular leaders Brissot, Danton, and Desmoulins.

But the Terror soon spun out of control and ultimately came to an end in July 1794 with the execution of its own leaders, including Robespierre and Saint-Just. There followed a phase of relative stability, first under the somewhat ineffective Directory, between 1795 and 1799, and then with more concentrated power in the form of a three-person Consulate, consisting of Ducos, Sieyès, and Napoleon Bonaparte. Already during the Directory, the young general Napoleon Bonaparte had become famous for his military successes, and his influence was only to grow after 1799. The Consulate soon became Napoleon’s personal rule.

The years between 1799 and the end of Napoleon’s reign, 1815, witnessed a series of great military victories for France, including those at Austerlitz, Jena-Auerstadt, and Wagram, bringing continental Europe to its knees. They also allowed Napoleon to impose his will, his reforms, and his legal code across a wide swath of territory. The fall of Napoleon after his final defeat in 1815 would also bring a period of retrenchment, more restricted political rights, and the restoration of the French monarchy under Louis XVII. But all these were simply slowing the ultimate emergence of inclusive political institutions.

The forces unleashed by the revolution of 1789 ended French absolutism
and would inevitably, even if slowly, lead to the emergence of inclusive institutions. France, and those parts of Europe where the revolutionary reforms had been exported, would thus take part in the industrialization process already under way in the nineteenth century.

On the eve of the French Revolution in 1789, there were severe restrictions placed on Jews throughout Europe. In the German city of Frankfurt, for example, their lives were regulated by orders set out in a statute dating from the Middle Ages. There could be no more than five hundred Jewish families in Frankfurt, and they all had to live in a small, walled part of town, the Judengasse, the Jewish ghetto. They could not leave the ghetto at night, on Sundays, or during any Christian festival.

The Judengasse was incredibly cramped. It was a quarter of a mile long but no more than twelve feet wide and in some places less than ten feet wide. Jews lived under constant repression and regulation. Each year, at most two new families could be admitted to the ghetto, and at most twelve Jewish couples could get married, and only if they were both above the age of twenty-five. Jews could not farm; they could also not trade in weapons, spices, wine, or grain. Until 1726 they had to wear specific markers, two concentric yellow rings for men and a striped veil for women. All Jews had to pay a special poll tax.

As the French Revolution erupted, a successful young businessman, Mayer Amschel Rothschild, lived in the Frankfurt Judengasse. By the early 1780s, Rothschild had established himself as the leading dealer in coins, metals, and antiques in Frankfurt. But like all Jews in the city, he could not open a business outside the ghetto or even live outside it.

This was all to change soon. In 1791 the French National Assembly emancipated French Jewry. The French armies were now also occupying the Rhineland and emancipating the Jews of Western Germany. In Frankfurt their effect would be more abrupt and perhaps somewhat unintentional. In 1796 the French bombarded Frankfurt, demolishing
half of the Judengasse in the process. Around two thousand Jews were left homeless and had to move outside the ghetto. The Rothschilds were among them. Once outside the ghetto, and now freed from the myriad regulations barring them from entrepreneurship, they could seize new business opportunities. This included a contract to supply grain to the Austrian army, something they would previously not have been allowed to do.

By the end of the decade, Rothschild was one of the richest Jews in Frankfurt and already a well-established businessman. Full emancipation had to wait until 1811; it was finally implemented by Karl von Dalberg, who had been made Grand Duke of Frankfurt in Napoleon’s 1806 reorganization of Germany. Mayer Amschel told his son, “[Y]ou are now a citizen.”

Such events did not end the struggle for Jewish emancipation, since there were subsequent reverses, particularly at the Congress of Vienna of 1815, which formed the post-Napoleonic political settlement. But there was no going back to the ghetto for the Rothschilds. Mayer Amschel and his sons would soon have the largest bank in nineteenth-century Europe, with branches in Frankfurt, London, Paris, Naples, and Vienna.

This was not an isolated event. First the French Revolutionary Armies and then Napoleon invaded large parts of continental Europe, and in almost all the areas they invaded, the existing institutions were remnants of medieval times, empowering kings, princes, and nobility and restricting trade both in cities and the countryside. Serfdom and feudalism were much more important in many of these areas than in France itself. In Eastern Europe, including Prussia and the Hungarian part of Austria-Hungary, serfs were tied to the land. In the West this strict form of serfdom had already vanished, but peasants owed to feudal lords various seigneurial fees, taxes, and labor obligations. For example, in the polity of Nassau-Usingen, peasants were subject to 230 different payments, dues, and services. Dues included one that had to be paid after an animal had been slaughtered, called the blood tithe; there was also a bee tithe and a wax tithe. If a piece of property was bought or sold, the lord was owed fees. The guilds regulating all
kinds of economic activity in the cities were also typically stronger in these places than in France. In the western German cities of Cologne and Aachen, the adoption of spinning and weaving textile machines was blocked by guilds. Many cities, from Berne in Switzerland to Florence in Italy, were controlled by a few families.

The leaders of the French Revolution and, subsequently, Napoleon exported the revolution to these lands, destroying absolutism, ending feudal land relations, abolishing guilds, and imposing equality before the law—the all-important notion of rule of law, which we will discuss in greater detail in the next chapter. The French Revolution thus prepared not only France but much of the rest of Europe for inclusive institutions and the economic growth that these would spur.

As we have seen, alarmed by the developments in France, several European powers organized around Austria in 1792 to attack France, ostensibly to free King Louis XVI, but in reality to crush the French Revolution. The expectation was that the makeshift armies fielded by the revolution would soon crumble. But after some early defeats, the armies of the new French Republic were victorious in an initially defensive war. There were serious organizational problems to overcome. But the French were ahead of other countries in a major innovation: mass conscription. Introduced in August 1793, mass conscription allowed the French to field large armies and develop a military advantage verging on supremacy even before Napoleon’s famous military skills came on the scene.

Initial military success encouraged the Republic’s leadership to expand France’s borders, with an eye toward creating an effective buffer between the new republic and the hostile monarchs of Prussia and Austria. The French quickly seized the Austrian Netherlands and the United Provinces, essentially today’s Belgium and the Netherlands. The French also took over much of modern-day Switzerland. In all three places, the French had strong control through the 1790s.

Germany was initially hotly contested. But by 1795, the French had firm control over the Rhineland, the western part of Germany lying on the left bank of the Rhine River. The Prussians were forced to recognize this fact under the Treaty of Basel. Between 1795 and 1802, the French held the Rhineland, but not any other part of Germany. In 1802 the Rhineland was officially incorporated into France.

Italy remained the main seat of war in the second half the 1790s, with the Austrians as the opponents. Savoy was annexed by France in 1792, and a stalemate was reached until Napoleon’s invasion in April 1796. In his first major continental campaign, by early 1797, Napoleon had conquered almost all Northern Italy, except for Venice, which was taken by the Austrians. The Treaty of Campo Formio, signed with the Austrians in October 1797, ended the War of the First Coalition and recognized a number of French-controlled republics in Northern Italy. However, the French continued to expand their control over Italy even after this treaty, invading the Papal States and establishing
the Roman Republic in March 1798. In January 1799, Naples was conquered and the Parthenopean Republic created. With the exception of Venice, which remained Austrian, the French now controlled the entire Italian peninsula either directly, as in the case of Savoy, or through satellite states, such as the Cisalpine, Ligurian, Roman, and Parthenopean republics.

There was further back-and-forth in the War of the Second Coalition, between 1798 and 1801, but this ended with the French essentially remaining in control. The French revolutionary armies quickly started carrying out a radical process of reform in the lands they’d conquered, abolishing the remaining vestiges of serfdom and feudal land relations and imposing equality before the law. The clergy were stripped of their special status and power, and the guilds in urban areas were stamped out or at the very least much weakened. This happened in the Austrian Netherlands immediately after the French invasion in 1795 and in the United Provinces, where the French founded the Batavian Republic, with political institutions very similar to those in France. In Switzerland the situation was similar, and the guilds as well as feudal landlords and the Church were defeated, feudal privileges removed, and the guilds abolished and expropriated.

What was started by the French Revolutionary Armies was continued, in one form or another, by Napoleon. Napoleon was first and foremost interested in establishing firm control over the territories he conquered. This sometimes involved cutting deals with local elites or putting his family and associates in charge, as during his brief control of Spain and Poland. But Napoleon also had a genuine desire to continue and deepen the reforms of the revolution. Most important, he codified the Roman law and the ideas of equality before the law into a legal system that became known as the Code Napoleon. Napoleon saw this code as his greatest legacy and wished to impose it in every territory he controlled.

Of course, the reforms imposed by the French Revolution and Napoleon were not irreversible. In some places, such as in Hanover, Germany, the old elites were reinstated shortly after Napoleon’s fall and much of what the French achieved was lost for good. But in
many other places, feudalism, the guilds, and the nobility were permanently destroyed or weakened. For instance, even after the French left, in many cases the Code Napoleon remained in effect.