Though France was one of the first centuries in Europe to witness the growth of capitalism, in comparison to England she was rather a late starter. Till the beginning of the nineteenth century, France was primarily an agricultural country.
However, as a result of certain changes like the extinction of the guilds, the rise of factory system due to use of machinery and steam power, and quickening and cheapening of the transportation facilities the development of capitalism in France was facilitated.
The first bid to free the individual from the control of the guilds was taken by Turgot in 1874-76 when he abolished the privileges of the guilds and permitted the individual to follow any profession of his choice. But this was only a temporary phase because soon after the dismissal of Turgot the guilds were revived.
The demand for freeing the individual from the control of the guilds was raised with great force in the wake of the French Revolution. Ultimately on 16 February 1791 the monopoly of the guilds was terminated. Thereafter the guilds gradually disappeared and the individual gained lot of industrial freedom. Under Napoleon this industrial freedom suffered a set back and he imposed a number of restrictions with a view to regulate the price and quality of goods as well as preserving industrial peace. But this was only a temporary set back and after 1815 most of the trades were again thrown open to all.
The industrial transition which took place in France in the thirties of the nineteenth century also greatly helped the growth of capitalism. Mechanical looms were introduced in France between 1834 and 1846. Coke-smelting, pudding and other improvements in iron manufacture were introduced after 1830. The steam engines which were first employed in mining and metal works were gradually applied to manufacture of textiles.
Finally, the improved means of transportation in the nature of roads, railways and navigable waterways which could be used for traffic without tolls and greatly helped the transportation to the commodities in bulk, also helped industrialization of France and thereby contributed to the growth of capitalism. In the development of these means of communication, the state played a significant role by making substantial funds available.
Certain other factors also greatly facilitated the growth of capitalism in France. One of the first measures which greatly contributed to this was the confiscation of the feudal and church property by the Revolutionaries and the acceptance of the concept of full private property in land.
The abolition of the interior tariff barriers by the Constituent Assembly was no less significant factor. Similarly the introduction of the rational system of weights and measures by the state promoted commerce and trade and thus indirectly contributed to the strengthening of capitalism.
The policy of colonialism pursued by France also provided a fillip to the growth of capitalism in the country. The colonies of France not only enabled France to increase her trade with them but also provided profitable avenues for investment of the French capital. France also witnessed the growth of a number of joint stock companies between 1774-89 which strengthened capitalism.
However, these companies suffered a set back during the revolutionary period. In 1793 these companies were formally abolished. But with the enactment of a general law by Napoleon in 1807 these companies were once again recognized. Under the law two types of stock companies were envisaged.
Firstly, there were companies in which the liability of the stockholders was limited or unlimited according to the company’s constitution. Secondly, there were silent partnerships in which the active managers were liable for the debts of the enterprise. However, joint stock companies in the true sense developed only slowly.
The most stupendous growth of these companies took place between 1899 and 1913 when 25,451 companies were organized in France. It may be noted that individual enterprises also continued to operate side by side.
Simultaneously, there was concentration of economic enterprises and displacement of the small units by large units. This was done to eliminate the cost of competition and effect economies of production. In comparison to other European countries, the French combinations were rather informal and voluntary.
But probably the most important role in the development of capitalism in France was played by the growth of banking system and the acceptance of the principle of free trade. The banking system in France originated with the founding of the Bank of France in 1800.
The bank started with privately owned capital was endowed with exclusive right of note-issue and worked in close co-operation with the government. In a way it was a sort of semi-official institution. After 1817 a number of independent note- issuing banks were also set up in a number of provincial centres. In addition the adoption of the instruments like negotiable papers and money also significantly contributed to the development of capitalism in France. It made possible for the credit-seeking active enterprises to secure loans for equipments and other operational activities.
Likewise, the policy of free trade adopted by France in the mid-nineteenth century also greatly helped the growth of capitalism in France. In 1860 France concluded the Cobden Treaty with England under which France accepted policy of free trade. France also concluded similar treaties with other European countries like Belgium, Italy, Germany, Austria, Switzerland, Sweden and Norway. However, this policy of free trade was not approved by majority of the people and the state resorted to renewed management of the external economic relations.