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How did Frederick II finance Prussia’s large standing army?
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Frederick II
Frederick II, painting in the Castello di Miramare, Trieste, Italy.
Frederick II financed Prussia’s large standing army by prioritizing military needs above all other state functions, treating the administrative system as a tool to recruit, feed, equip, and pay his forces. His financial strategy relied on several key pillars:1
- Taxation: The tax system remained largely unchanged from his father’s reign, consisting of the excise (a tax on food) paid by towns and the contribution (a property tax) raised in the countryside. While he experimented with new taxes on commodities like tobacco, these innovations were secondary to the established collection methods.1
- Royal Domains: The state generated significant revenue through the profits of extensive royal domains.1
- Cash Reserves: Frederick maintained a large reserve of cash to ensure the state could fund recruitment and military operations during wartime, a practice he deemed essential despite its potential to limit liquid capital in the economy.1
- Mercantilism: His economic policies were strictly mercantilist, aiming to prevent money from leaving the country while encouraging exports and domestic production through grants and privileges.1
- Efficient Administration: Through a hardworking and thrifty bureaucracy, Frederick ensured relatively efficient tax collection, preventing the government from being hampered by a lack of funds.1