RENTIERS

RENTIERS. Rentiers—men and women who relied on government bonds and other securities for substantial parts of their incomes—became a significant social group in mid-sixteenth-century France, and they remained a presence in French society through the twentieth century. Comparable groups emerged everywhere in early modern Europe, but nowhere else did they have so profound an effect on their societies' economic values and political evolution. As a result, some historians have argued that the rentiers' taste for the low but safe returns offered by government bonds permanently diminished French economic dynamism. Although these claims seem overstated, a high percentage of early modern French capital remained tied up in long-term loans, and many French bourgeois preferred them to the perils of entrepreneurship.

The rentiers' emergence resulted from basic governmental needs. All sixteenth-century states had to raise more money than their predecessors, and with its grandiose international ambitions, France had especially pressing fiscal problems. Government borrowing offered a way to meet some of these, but kings were unattractive debtors. They had the power to manipulate currency values, thus unilaterally diminishing what they owed lenders, and royal bankruptcies were frequent; in any case lending at interest was condemned by the Catholic Church. In 1522 the government of Francis I (ruled 1515–1547) devised bonds guaranteed by the Paris city government (rentes sur l'hôtel de ville de Paris) as a way to meet all these objections. Against church prohibitions of usury, the rentes were defined not as a loan but as a sale of property. In exchange for a cash payment from the buyer-lender, the king was to make fixed yearly payments at an interest rate set out in the initial contract. So long as the interest was paid, reimbursement was entirely at the borrower's discretion, making the transaction a sale of income not unlike the fixed feudal rents found throughout France. Against lenders' doubts about the king's reliability, the transaction used the city's good credit, and high interest rates—8.25 percent in Paris, 10 percent in some of the provinces—allayed fears of currency manipulation.

The rentes proved a popular device for many purposes beyond state finance. Often, through the mediation of local notaries, private borrowers made similar arrangements to meet cash flow problems, and families used them to ease transactions among heirs. Kings remained unreliable, occasionally defaulting on obligations or arbitrarily lowering interest rates on existing loans. But both public and private rentes were attractive enough that members of the middle class continued buying them, and the government could slowly lower interest rates; by 1665 rentes could find buyers at 5 percent, and most bourgeois portfolios included an array of them. The early eighteenth century brought shocks to this credit system. John Law's (1671–1729) introduction of paper money in 1717–1718 provoked a burst of inflation and allowed debtors to pay off loans with depreciated currency, and more flexible instruments of credit emerged. As a result, the classic rente tended to disappear. But the mind-set that it had engendered—a concern for safety and a willingness to tie up funds for long periods—continued to characterize the French bourgeoisie throughout the nineteenth century.

See also Interest ; Law's System .

BIBLIOGRAPHY

Hoffman, Philip T., Gilles Postel-Vinay, and Jean-Laurent Rosenthal. Priceless Markets: The Political Economy of Credit in Paris, 1660–1870. Chicago, 2000.

Schnapper, Bernard. Les rentes au XVIe siècle: Histoire d'un instrument de crédit. Paris, 1957.

Jonathan Dewald