La terre et l'argent: L'agriculture et le credit en France du XVIIIe au debut du XXe siecle (review)

La terre et l'argent: L'agriculture et le crédit en France du XVIIIe au début du XXe siècle. By Gilles Postel-Vinay (Paris, Editions Albin Michel, 1998) 462 pp. Fr 180.

A new generation of historians has discovered a French rural economy full of vigor, sophistication, and, above all, markets. In the last twenty years, their work has replaced the model of an unchanging, autarchic countryside with a more complex world of peasant capitalists, commercial integration, and economic development. Postel-Vinay has been one of the leading practitioners of this new approach, and his most recent book offers an elegantly conceived investigation of the rural economy and its credit markets. Asserting that the French credit system has been unfairly stigmatized as inadequate and usurious, he responds with a finely nuanced and impressively detailed defense of its strength, availability, and utility.

In the absence of banks until the nineteenth century, the credit market was organized by notaries, who, in addition to registering all contracts, wills, and inventories, acted as intermediaries to connect those with money to invest to people looking to borrow. Their knowledge of their clients' economic activities and resources gave them the unique ability to assess their creditworthiness. Loans were typically secured with land, but land could be discreetly mortgaged to the hilt. The premium on such knowledge made notaries indispensable and restricted their business to a small radius of borrowers whom they could know with some intimacy. Neither the efforts to make this kind of information more generally available at the end of the old regime, through registration of mortgages, nor the rise of banks, competed significantly with the notaries' control of the credit market until late in the nineteenth century.

On the basis of extensive research in the notarial archives and the official registers of contracts, conducted in a dozen locations around France, Postel-Vinay is able to offer detailed analysis of credit practices in both the eighteenth and nineteenth centuries. He argues that notaries arranged massive amounts of credit, as much as 10 or 20 percent of the value of land by the end of the old regime. The Revolution allowed borrowers to pay off their debts, using inflated treasury bonds (assignats), and totally disrupted the credit market. Indebtedness, however, quickly returned to old-regime levels by the second quarter of the nineteenth century and, despite significant fluctuations, rose to new heights by the end of the century. Certain innovations after the Revolution, such as the development of banks and intermediaries connecting notaries with each other, assisted the credit market, although much of the basic pattern changed little during two centuries. Most loans circulated locally, with only a dozen kilometers between lenders and borrowers, largely flowing from cities to the countryside, and from an older generation to a younger.

Although the general outlines of rural credit changed little from the eighteenth century to the nineteenth, Postel-Vinay underscores one irony in the shift to a more rigid imposition of anti-usury laws after the Revolution--a return, as he says, of the "moral economy." He demonstrates the flexibility of credit instruments in the old regime, where notaries could evade official interest levels by turning from perpetual annuities (rentes perpétuelles) to the less formal promissory notes (obligations) when levels became too restrictive. The nineteenth century offered only one kind of credit mechanism, the obligation, and maintained a 5 percent ceiling, although interest rates actually remained below the official level for much of the century. Postel-Vinay argues that interest-rate limits in the nineteenth century reduced the credit available to smaller, riskier borrowers and biased credit markets in favor of large landowners and large enterprises.

In addition to offering an extremely lucid analysis of how credit markets functioned, Postel-Vinay examines credit as...