The economic legislation of the French Revolution was guided by individualistic ideas which expressed the interests of the rising middle classes who felt a necessity of removing the obstacles in the way of economic initiative and of personal effort. These interests and ideas dictated the law of March 2-17, 1791, which abolished the guilds and inaugurated the era of competition in France (Liberté du Travail). The law declared that henceforth everybody was “free to do such business, exercise such profession, art, or trade, as he may choose.”[2]
The abolition of the guilds cleared the way for the technical changes that had just begun and the development of which was yet in the future. These changes may be summarized as the application of science to industry and the introduction of machinery. The process went on in France irregularly, affecting different industries and different localities in various degrees. The first machine (machine à vapeur) was introduced in France about 1815; in 1830 there were about 600 in operation. Some idea of the later changes may be gained from the following table giving the number of machines in France from 1839 to 1907:
| Year | No. of Machines | Total Horsepower |
| 1839 | 2,450 | 33,000 |
| 1851 | 5,672 | 71,000 |
| 1861 | 15,805 | 191,000 |
| 1871 | 26,146 | 316,000 |
| 1881 | 44,010 | 576,000 |
| 1891 | 55,967 | 916,000 |
| 1901 | 75,866 | 1,907,000 |
| 1910 | 82,238 | 2,913,013[3] |
The introduction of machinery meant the absorption of a larger part of the population in industry, the concentration of industry in a smaller number of establishments and the absolute and relative increase in the numbers of the working population of France.
This class of the population was regulated in its economic action for nearly a century by another law passed June 14-17, 1791, and known by the name of its author as the law Le Chapelier. The law Le Chapelier, though dictated by the same general interests and ideas as the law on the guilds, was made necessary by special circumstances.
The abolition of the guilds had as one of its effects an agitation among the journeymen for higher wages and for better conditions of employment. During the summer of 1791, Paris was the scene of large meetings of journeymen, at which matters of work and wages were discussed. The movement spread from trade to trade, but the struggle was particularly acute in the building trades. Profiting by the law of August 21, 1790, which gave all citizens the “right to assemble peacefully and to form among themselves free associations subject only to the laws which all citizens must obey,”[4] the carpenters formed L'Union fraternelle des ouvriers en l'art de la charpente, an association ostensibly for benevolent purposes only, but which in reality helped the carpenters in their struggle with their masters. The masters repeatedly petitioned the municipality of Paris to put an end to the “disorders,” and to the “tyranny” of the journeymen. The masters complained that a general coalition of 80,000 workingmen had been formed in the capital and that the agitation was spreading to the provincial towns.[5] The municipal authorities tried to meet the situation, but their “notices” and “decrees” had no effect. They then appealed to the Constituent Assembly for a general law on associations and combinations. The result was the law Le Chapelier.
The report by which the bill was introduced brought out very clearly the individualistic ideas by which the legislators of the Revolution were inspired. “Citizens of certain trades,” read this report, “must not be permitted to assemble for their pretended common interests. There is no longer any corporation (guild) in the State; there is but the particular interest of each individual and the general interest....” And further, “It is necessary to abide by the principle that only by free contracts, between individual and individual, may the workday for each workingman be fixed; it is then for the workingman to maintain the agreement which he had made with his employer.”[6]
The law identified the new combinations with the ancient guilds. Its first clause declared that “whereas the abolition of all kinds of corporations of citizens of the same estate (état) and of the same trade is one of the fundamental bases of the French Constitution, it is prohibited to re-establish them de facto under any pretext or form whatsoever”. The second clause formulated the prohibition to form trade organizations in terms which left nothing to be desired in clearness and precision. It read: “The citizens of the same estate or trade, entrepreneurs, those who run a shop, workingmen in any trade whatsoever, shall not, when assembled together, nominate presidents, nor secretaries, nor syndics, shall not keep any records, shall not deliberate nor pass resolutions nor form any regulations with reference to their pretended common interests.” The fourth clause declared all acts contrary to this law unconstitutional, subject to the jurisdiction of the police tribunals, punishable by a fine of 500 livres and by a temporary suspension of active rights of citizenship. The sixth and seventh clauses determined higher penalties in cases of menace and of violence. The eighth clause prohibited all “gatherings composed of artisans, of workingmen, of journeymen or of laborers, or instigated by them and directed against the free exercise of industry and work to which all sorts of persons have a right under all sorts of conditions agreed upon by private contract (de gré a gré)”. “Such gatherings are declared riotous, are to be dispersed by force, and are to be punished with all the severity which the law permits.”[7]
After the law was passed by the Assembly, the author of the law, Le Chapelier, added:
I have heard some say that it would be necessary to make an exception in favor of the Chambers of Commerce in cities. Certainly you understand well that none of us intend to prevent the merchants from discussing their common interests. I therefore propose to insert into the proceedings the following clause: “The National Assembly, considering that the law which it has just passed does not concern the Chambers of Commerce, passes to the order of the day.”