France’s ability to build armies and fight wars depended on a strong economy. Fortunately for Louis, his controller general, Jean-Baptiste Colbert (1619–1683), proved to be a financial genius. Colbert’s central principle was that the wealth and the economy of France should serve the state. To this end, Colbert rigorously applied mercantilist policies to France.

Mercantilism is a collection of governmental policies for the regulation of economic activities by and for the state. It derives from the idea that a nation’s international power is based on its wealth, specifically its supply of gold and silver. To accumulate wealth, a country always had to sell more goods abroad than it bought from foreign countries.

To increase exports, Colbert supported old industries and created new ones. He enacted new production regulations, created guilds to boost quality standards, and encouraged foreign craftsmen to immigrate to France. To encourage the purchase of French goods, he abolished many domestic tariffs and raised tariffs on foreign products. In 1664 Colbert founded the Company of the East Indies with hopes of competing with the Dutch for Asian trade. Colbert also sought to increase France’s control over and presence in New France (Canada) (see “Canada” in Chapter 27).

During Colbert’s tenure as controller general, Louis was able to pursue his goals without massive tax increases and without creating a stream of new offices. The constant pressure of warfare after Colbert’s death, however, undid many of his economic achievements.