France’s
Financial Crisis: 1783–1788
Event Outline
1756–1783
France builds up enormous debt by participating in
the Seven Years’ War and American Revolution
November 2, 1783
Louis XVI appoints Charles de Calonne controller
general of finance
February 22, 1787
Assembly of Notables convenes, rejects Calonne’s
debt-relief proposals
Key People
Louis XVI - French
king of the Bourbon dynasty who took the throne in 1774; inherited
massive debt problems but was unable to fix them
Marie-Antoinette -
Wife of Louis XVI, whose self-indulgent tendencies
became a symbol of royal excess and extravagance
Charles de Calonne -
Controller general of finances appointed by Louis
XVI in 1783; recommended
across-the-board taxation as the only way to salvage France’s dire
financial situation
The French Monarchy and Parlements
The French royalty in the years prior to the French Revolution
were a study in corruption and excess. France had long subscribed
to the idea of divine right, which maintained that
kings were selected by God and thus perpetually entitled to the
throne. This doctrine resulted in a system of absolute rule and
provided the commoners with absolutely no input into the governance
of their country.
In addition, there was no universal law in France
at the time. Rather, laws varied by region and were enforced by
the local parlements (provincial judicial boards),
guilds, or religious groups. Moreover, each of those sovereign
courts had to approve any royal decrees by the king if these decrees
were to come into effect. As a result, the king was virtually powerless
to do anything that would have a negative effect on any regional
government. Ironically, this “checks and balances” system operated
in a government rife with corruption and operating without the support
of the majority.
Power Abuses and Unfair Taxation
The monarchs of the Bourbon dynasty, the
French nobility, and the clergy became increasingly egregious in
their abuses of power in the late 1700s.
They bound the French peasantry into compromising feudal obligations
and refused to contribute any tax revenue to the French
government. This blatantly unfair taxation arrangement did little
to endear the aristocracy to the common people.
France’s Debt Problems
A number of ill-advised financial maneuvers
in the late 1700s worsened
the financial situation of the already cash-strapped French government.
France’s prolonged involvement in the Seven Years’ War of 1756–1763 drained
the treasury, as did the country’s participation in the American
Revolution of 1775–1783. Aggravating
the situation was the fact that the government had a sizable army
and navy to maintain, which was an expenditure of particular importance
during those volatile times. Moreover, in the typical indulgent
fashion that so irked the common folk, mammoth costs associated
with the upkeep of King Louis XVI’s extravagant palace
at Versailles and the frivolous spending of the queen, Marie-Antoinette,
did little to relieve the growing debt. These decades of fiscal
irresponsibility were one of the primary factors that led to the
French Revolution. France had long been recognized as a prosperous
country, and were it not for its involvement in costly wars and
its aristocracy’s extravagant spending, it might have remained one.
Charles de Calonne
Finally, in the early 1780s,
France realized that it had to address the problem, and fast. First,
Louis XVI appointed Charles de Calonne controller general
of finances in 1783.
Then, in 1786,
the French government, worried about unrest should it to try to
raise taxes on the peasants, yet reluctant to ask the nobles for
money, approached various European banks in search of a loan. By
that point, however, most of Europe knew the depth of France’s financial
woes, so the country found itself with no credibility.
Louis XVI asked Calonne to evaluate the situation
and propose a solution. Charged with auditing all of the royal accounts
and records, Calonne found a financial system in shambles. Independent
accountants had been put in charge of various tasks regarding the
acquisition and distribution of government funds, which made the
tracking of such transactions very difficult. Furthermore, the arrangement
had left the door wide open to corruption, enabling many of the
accountants to dip into government funds for their own use. As for
raising new money, the only system in place was taxation.
At the time, however, taxation only applied to peasants. The nobility
were tax-exempt, and the parlements would never
agree to across-the-board tax increases.
The Assembly of Notables
Calonne finally convinced Louis XVI to gather the nobility
together for a conference, during which Calonne and the king could
fully explain the tenuous situation facing France. This gathering,
dubbed the Assembly of Notables, turned out to be a
virtual who’s who of people who didn’t want to pay any taxes. After
giving his presentation, Calonne urged the notables either to agree
to the new taxes or to forfeit their exemption to the current ones.
Unsurprisingly, the notables refused both plans and turned against
Calonne, questioning the validity of his work. He was dismissed
shortly thereafter, leaving France’s economic prospects even grimmer
than before.
Revolution on the Horizon
By the late 1780s,
it was becoming increasingly clear that the system in place under
the Old Regime in France simply could not last. It was too irresponsible
and oppressed too many people. Furthermore, as the result of the Enlightenment,
secularism was spreading in France, religious thought was becoming
divided, and the religious justifications for rule—divine right
and absolutism—were losing credibility. The aristocracy and royalty,
however, ignored these progressive trends in French thought and
society. Rather, the royals and nobles adhered even more firmly
to tradition and archaic law. As it would turn out, their intractability
would cost them everything that they were trying to preserve.
The Bourgeoisie
Although many accounts of the French Revolution focus
on the French peasantry’s grievances—rising food prices, disadvantageous feudal
contracts, and general mistreatment at the hands of the aristocracy—these
factors actually played a limited role in inciting the Revolution.
For all of the hardships that they endured, it wasn’t the peasants
who jump-started the Revolution. Rather, it was the wealthy commoners—the bourgeoisie—who
objected most vocally to the subpar treatment they were receiving.
The bourgeoisie were generally hardworking, educated men who were
well versed in the enlightened thought of the time. Although many
of the wealthier members of the bourgeoisie had more money than
some of the French nobles, they lacked elite titles and thus were
subjected to the same treatment and taxation as even the poorest
peasants. It was the bourgeoisie that would really act as a catalyst
for the Revolution, and once they started to act, the peasants were
soon to follow.