Pronounced kärt' blanch' this term has a legacy that is deeply rooted in French history and literally means "blank paper." Evan Morris from The Word Detective says:

    As one of the theories... implies, "carte blanche" is originally from the French, where it literally means "blank paper." The term "carte blanche" was probably of military origin, meaning an agreement of unconditional surrender submitted by the loser to the victor consisting of a sheet of paper blank except for the defeated commander's signature, signifying that the victor could fill in his own terms.
The noble little French phrase played a royal role among the kings in the French Revolution. It first appeared in the French literature around 1707 probably as an alteration of the phrase lettres de cachet. Lettres de cachet were created by signing a blank sheet of paper and giving it to somebody with a high level of trust. These papers then became an automatic authorization for him or her to fill in what they wanted to do.

Henry III, king of France (1574–89) succeeded his brother Charles IX and lived through the turbulent era as leader of the royal army in the French Wars of Religion against the French Protestants. In a document titled Isambert, 'inciennes lois franfaises( xiv. 278) dated two years after ascending the throne Henry III comments that Francois de Montmorency who had been implicated in the appalling Poison Affair was a " prisoner in our castle of the Bastille in Paris by verbal command" of the late king Charles IX.

In 14th century France the king’s order for imprisonment was simply verbal, but by the 18th century a standard was initiated that these orders were to be written, and from this came the lettres de cachet. The tradition for this was established from principles surrounding royal privileges recognized by old French law where the king could directly intercede in the administration of justice, by a special act or will.

These were simply letters sealed by the king, countersigned by the king’s ministers, and closed with the royal seal or cachet, they usually contained an order originating directly from the king. At times these letters were regardless and even contrary to the laws. The most commonly issued lettres de cachet were penal where the king could sentence “a subject without trial and without an opportunity of defence to imprisonment in a state prison or an ordinary gaol, confinement in a convent or a hospital, transportation to the colonies, or relegation to a given place within the realm.”

Useful as silent weapons against political foes or critical writers lettres de cachet were handy for punishing perpetrators of high birth without the scandal of a lawsuit. Other uses for them included issuing them to the police in “dealing with prostitutes, and on their authority lunatics were shut up in hospitals and sometimes in prisons.” Many times heads of families employed them in attempts to protect the family honor as a means to control “disorderly or criminal conduct of sons; wives, too, took advantage of them to curb the profligacy of husbands and vice versa”. In the 18th century it was common practice for the Secretary of State to issue them arbitrarily with no record of the action being sent to the king. One had to simply fill in the name in order to make the letter effective.

Eventually someone struck upon the idea to issue blank lettres de cachet for a bribe or some other consideration. These became know as carte blanche warrants. With its space for the name left blank this precursor to carte blanch inspired great fear. Sometimes the warrant was to set a prisoner at large, but it was more commonly used for detention in the Bastille.

Eighty thousand carte blanche warrants were issued during Cardinal André Hercule de Fleury’s (1653-1743) administration with the majority being against the Jansenists, followers of Cornelius Jansen (1585–1638), in an effort to suppress the religious movement. During the reigns of Louis XV and Louis XVI fifty-nine cachets were obtained against family members of French revolutionary Honoré Gabriel Riquetti Mirabeau (1749–1791). These acts precipitated a ground swell against these and a number of other abuses. Secretary of State Chrétien Guillaume de Lamoignon de Malesherbes (1721-1794) tried to enact some measure of justice into the system during his short ministry. The occasional invocation of them against leaders of opinion, including Voltaire, became symbolic of arbitrary royal authority and oppression. Malesherbes resigned in 1776 after the failure of the reform program.

In 1779 ranking officials in Paris argued for their suppression and in March 1788 the parliament of Paris demanded action. Reluctant to lay aside these political weapons,on June 23rd 1789 in a pronouncement during the royal session to the States-General by the crown refused to renounce it absolutely. Following the previous scandals lettres de cachet were abolished by the Constituent Assembly on January 15th, 1790 only to be resurrected for a time in March 1801 in a decree by Napoleon as a political measure against his enemies filling up the state prisons. On April 3rd 1814 this was one of the acts brought up against him by the senatus-consulte. They predicated their verdict on the law established in 1790 stating that "considering that (Napoleon) has violated the constitutional laws by the decrees on the state prisons." Found guilty of this and many other war crimes Napoleon abdicated unconditionally in Fontainebleau seven days later on April 11th and was exiled to the Mediterranean island of Elba.

Carte blanche can also be used to describe a playing card used in card games like the French game of piquet that are usually blank and have special values for scoring. Even though carte blanche first appeared in English in the literal sense around 1700 and was brought to an end by the latter part of the 18th century the phrase was being used as an adverb in its modern day sense of having a ‘free hand or ability to do whatever a person needs or wants to do.’ It’s the modern day equivalence to giving a person a blank check.

From royal scandal and political intrigue to modern day blank checks I would like to thank mcd who said to me “(I) was wondering if you might want to add a little tidbit to carte blanche. Just a suggestion - I know you're good ”. It’s just so great that I can come to a place write about things that interest me and get such terrific feedback from people who read my work. It has made me the writer I am today.

Sources:

BREWER: Dictionary of Phrase and Fable:
www.bootlegbooks.com/Reference/ PhraseAndFable/data/195.html

The Columbia Encyclopedia, Sixth Edition. Columbia University Press (2000).

Lettres de cachet:
86.1911encyclopedia.org/L/LE/LETTRES_DE_CACHET.htm

Online Etymology Dictionary:
www.etymonline.com/c2etym.htm

Morris, William and Mary, Dictionary of Word and Phrase Origins. HarperResource; 2nd edition (April 1988).

The Word Detective:
http://www.word-detective.com/020403.html#carte%20blanche