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The case of the undying debt

Published online by Cambridge University Press:  29 July 2010

François R. Velde
François R. Velde
Affiliation:
Federal Reserve Bank of [email protected]
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Abstract

The French government currently honors a very unusual debt contract: an annuity that was issued in 1738 and currently yields €1.20 per year, payable to the descendants of its original recipient. I tell the story of this unique debt, which serves as an anecdotal but symbolic summary of French public finances since the eighteenth century. Created by a powerful nobleman for one of his servants, it survived the turmoil of the French Revolution, became part of the public debt and has been scrupulously honored to this day, even though its value has been eroded away by decades of inflation.

Type
Articles
Information
Financial History Review , Volume 17 , Issue 2 , October 2010 , pp. 185 - 209
Copyright
Copyright © European Association for Banking and Financial History e.V. 2010

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References

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11 Deparcieux, A., Essai sur les probabilités de la durée de la vie humaine (Paris, 1746)Google Scholar, table XIII.

12 Archives parlementaires, vol. 87, pp. 122–3.

13 I use the method of Deparcieux, Essai, pp. 111–12, to infer Duvillard's life table. Duvillard published another life table in 1806, which became standard in nineteenth-century France, although the source data were never clear (Jonckheere, ‘La table’).

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15 See Assemblée Nationale, Annales (Paris, 1881–1940), vol. 44, p. 683, vol. 50, p. 10, vol. 58, p. 2277, vol 64(2), p. 1506, vol. 71(1), p. 962, vol. 75, p. 886, vol. 79, p. 1555; Archives économiques et financières, Ministère de l'Économie et des Finances, Paris, B 47 371.

16 I do not know how these rentiers born after 1794 managed to obtain these annuities.

17 Marion, Histoire financière, vol. 6, p. 163.

18 See Ozeray, M.-J.-F., Histoire de la ville et du duché de Bouillon (Brussels, 1974)Google Scholar for a general history of Bouillon.

19 See Prévost, M. and d'Amat, J.-C., Dictionnaire de Biographie Française (Paris, 1933–), vol. 6, pp. 1323–32Google Scholar and Levantal, C., Ducs et pairs et duchés-pairies laïques à l'époque moderne: 1519–1790 (Paris, 1996), pp. 466–73Google Scholar, on the La Tour d'Auvergne family, and Dickerman, E. H. and Walker, A. M., ‘The politics of honour: Henri IV and the Duke of Bouillon, 1602–06’, French History, 14 (2000)CrossRefGoogle Scholar; Hodson, S., ‘Politics of the frontier: Henri IV, the Maréchal-Duc de Bouillon and the sovereignty of Sedan’, French History, 19 (2005)CrossRefGoogle Scholar on Henri.

20 See Blanquie, C., ‘Le prix de la pairie: les évaluations du duché d'Albret’, Revue d'histoire moderne et contemporaine, 50 (2003)Google Scholar, for the exchange.

21 Other opportunistic marriages followed. In 1720, the next duke's younger brother Frédéric-Jules, prince d'Auvergne, married Olive Trant, an Irish member of Jacobite circles, who had made a great deal of money speculating on the stock-market during John Law's System. In 1707, their youngest brother, the comte d'Évreux, married the daughter of the financier Antoine Crozat, John Law's predecessor in Louisiana.

22 This correspondence is in the French Archives Nationales [henceforth AN] R/2/182.

23 His father, Auguste-François Linotte (d. 1693) was greffier du parc civil du Châtelet or clerk of the civil court in Paris; his mother was Marie-Antoinette de Walland (d. 1719). On the Linotte and Noirfontaine families, see Neyen, A., Biographie Luxembourgeoise, Supplément (Luxemburg, 1876), pp. 42–5, 252–4Google Scholar, and Bodard, P., Histoire de la cour souveraine du duché de Bouillon sous les La Tour d'Auvergne (Brussels, 1967), pp. 63–8, 77Google Scholar.

24 See an undated Mémoire in AN 257/AP/5.

25 AN R/2/182, p. 50.

26 AN Minutier Central [henceforth MC] LXVIII/405, 22 Apr. 1738; copy in AN R/2/182, p. 48; see the Appendix, document 1.

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28 A copy of the warrant is in MC LXVIII/422, 23 Jul. 1743.

29 AN R/2/182, pp. 48, 49.

30 AN R/2/182, pp. 43, 45–7, 50, 53.

31 MC XVII/967, 19 Aug. 1775; MC LXVIII/431, 7 Mar. 1746; MC LXVIII/422, 23 Jul. 1743.

32 AN 273/AP/207bis, 384*.

33 Besenval, P. –V. de, Mémoires sur la cour de France (Paris, 1987), pp. 288–92Google Scholar; the Navy's budget was 31m livres, Necker, J., Compte rendu au Roi (Paris, 1781), p. 110Google Scholar.

34 Archives parlementaires, vol. 20, pp. 316–22, 653–6.

35 Details are found in several petitions by La Tour d'Auvergne in AN AF/IV/32, as well as in the report on the law of 8 floréal II; see below.

36 Archives parlementaires, vol. 79, pp. 104–10.

37 The relevant decrees and documents are in AN AF/IV series: 32, 157, 259/1, 349, 528 dossier 4113, 717 dossier 5753.

38 AN AF/IV/259–1; see the Appendix, document 3.

39 The castle's name comes from the fact that the counts of Évreux were once kings of Navarre. The castle was inherited by the prince Eugène and razed in 1836; the estate was confiscated in 1855 after Eugène's descendants had settled in Russia and become part of the Russian imperial family. The Parisian hôtel, on the quai Malaquais, is now the École des Beaux-Arts.

40 AN 273/AP/384*.

41 AN AF/IV/717 dossier 5753; see the Appendix, document 4.

42 During the American War of Independence, Godefroi-Charles-Henri met a young English naval officer who had been taken prisoner of war. The prisoner, of modest origin, was named Philip Dauvergne. The duke was amused by the resemblance in their surnames and took a liking to the prisoner. Expecting his own son to have no heirs, he decided a few years later to appoint the Englishman as the successor of his son in the principality. In 1814 Dauvergne duly took possession of the duchy and was recognized by the Bouillonnais, but the validity of the will was vigorously contested by relatives of the last duke. The European diplomats assembled in Vienna initially contemplated recreating the duchy, just as they recreated the principality of Monaco, but in view of the disputes they found it simpler to award sovereignty over the territory to nearby Luxembourg, leaving the claims over the real estate to an arbitration court. Dauvergne's claim was rejected in 1816 and he committed suicide; the disputes between collateral heirs continued until 1825; see Balleine, G. R., The Tragedy of Philip d'Auvergne, Vice-Admiral in the Royal Navy and Last Duke of Bouillon (Chichester, 1973)Google Scholar.

43 Nussbaum, A., Money in the Law: National and International (Brooklyn, NY, 1950), pp. 262–7Google Scholar.

44 Internal documents of the ministry of finance show that the government had also lost track of the annuity's origins. In 1908 it was thought that the annuity originated in the acquisition by Claude-Henri Linotte of three life annuities issued by the monarchy before 1764.

45 Compte de la dette publique (Paris, 1989), p. 16.

46 Letter from the Ministry of the Economy, Finances and Industry, 31 Jul. 1988.

47 I am most grateful to Mme Marie Verrier, grand-daughter of Hugues Chabiel de Morière, for access to the family archives.

48 Lucas, R. E. Jr. and Stokey, N., ‘Optimal fiscal and monetary policy in an economy without capital’, Journal of Monetary Economics, 12 (1983)CrossRefGoogle Scholar.

49 Goetzmann, W. N. and Rouwenhorst, K. G., ‘Perpetuities in the steam of history’, in Goetzmann, W. N. and Rouwenhorst, K. G. (eds.), The Origins of Value: The Financial Innovations that Created Modern Capital Markets (Oxford, 2005)Google Scholar, cite a perpetual annuity issued by a Dutch water board in 1624 that is still honored, but the Linotte annuity may be the oldest government debt in existence: British consols only go back to Goschen's conversion of 1888.

50 in 1738.

51 Philbert Orry (1730–45).