Financial and Political Problems Facing the French Government in 1787

Financial and Political Problems Facing the French Government in 1787

In 1787, France was in deeply in debt, caused in the main due to the

conflicts in which it had partaken during the earlier years of the

eighteenth century. The conflicts, including the Spanish, Polish and

Austrian Successions, the Seven Years war, and the War for American

Independence, had cost France a massive amount of money, upto

6,000,000 livres. This money was borrowed, mainly from the

bourgeoisie: merchants, manufacturers, businessmen and financiers. The

loans taken out were at high interest rates, leading to over half of

the crowns' budget being spent on interest repayments, and, in order

to balance the books, further loans being taken out to cover the

deficit.

However, the main reason why France was in such a serious financial

position is probably due to the taxation system that was in use. The

First Estate (clergy) and Second estate (nobility) paid little or no

tax to the government, while the third estate paid by far the most.

Problems stem twofold from this, firstly, that the richer people in

the third estate wanted nothing more than to buy their way into the

second estate, thus avoiding the taxation net, and secondly meaning

considerable distress amongst the poor, who paid a majority of their

wages as tax, some estimates being as high as 65%. The result of high

taxes was the growth of movements in France for change, lead by

writers such as Jean Jack Rousseau, who conveyed his feelings about

the monarchy to the masses.

During the 1780's there was a series of bad harvests, at which point

grain prices would rise. The rise in grain prices meant that ...

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... off bankruptcy between 1786 and

1787. While loans had been issued to the state for a long time, by

1785 they were fewer, and on 20 August 1786, Calonne announced to

Louis that the state faced imminent financial collapse. Louis,

reluctant to act, delayed, but finally realised that there was no way

out: taxes must be raised, and that taxes could only be raised one

way, by taxing the church and the nobles. Unfortunately, due to the

Compte Rendu, they felt government finances were in better shape than

they were, and also believed that the taxes proposed would infringe on

their basic rights as nobles. This lead to the Nobles revolts in 1787,

which although lacking concerted leadership, was timed perfectly: at

the beginning of August, 1788, payments from the treasury ceased, and

Louis was forced to call the Estates General.