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The French Revolution Essay

1931 words - 8 pages

The Financial Crisis that Contributed to the French Revolution By Walter S. Zapotoczny Jr. "The revolution that was to sweep away the political institutions of France did not begin on 14 July 1789," writes William Doyle in Origins of the French Revolution. On 20 August 1786 the comptroller-general of the royal finances, Charles-Alexandre de Calonne, went to King Louis XVI and informed him that France was on the brink of financial collapse. According to Calonne, the 1786 deficit would be 112 million livres (currency of France until 1795). This represented about a quarter of the annual revenue of France. When Louis XVI had come to power in 1774 the deficit had been 40 million, and had even ...view middle of the document...

Many in France were still upset over the humiliating and catastrophic defeat suffered by France in the Seven Years War. The French foreign ministry calculated that by helping the Americans gain their independence they could weaken the British Empire, gain revenge, and restore France's previous position as one of the world's superpowers. Turgot argued that another war with England would derail his reform program, bankrupt the state, and, even if successful, do little to weaken British power. International power politics and considerations of national prestige took precedence over domestic reform and the king dismissed Turgot in May 1776. The French began covertly supplying war material to the American colonists in 1777. Throughout the war, they supplied money loans and underwrote others for the purchase of war supplies in Europe. Turgot's successor Jacques Necker, a Swiss banker, financed these expenditures almost entirely through loans. Although successful, France's intervention cost 1.3 billion livres and almost doubled her national debt. By 1788 the French government devoted about a quarter of its annual expenditure to the maintenance of the armed forces and about half to the payment of its debts. Most large countries at the time struggled with the same burden due to past wars. British expenditures showed almost the same distribution as that of France. By then, the French debt stood at almost four billion livres. It had been swollen greatly by the Seven Years War and the War of American Independence. Yet it was only half as great as the national debt of Great Britain, and less than a fifth as heavy per capita. It was less than the debt of the Dutch Republic. It was apparently no greater than the debt left by Louis XIV three-quarters of a century before. Why then could the debt not be carried and why did it contribute to revolution?
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The French debt could not be carried for the simple reason that the revenues fell short of the expenditures. This was not due to national poverty but to the tax exemptions and tax evasions of the privileged classes and the complications in the fiscal system, or lack of it. Much of what taxpayers paid never made it into the hands of the Treasury. The most important tax, the taille, was generally paid only by the peasants. The tax was imposed on each household and based on how much land it held. Nobles were exempt by virtue of their class privilege and office holders and bourgeois obtained exemptions in various ways. The church too insisted that its property was not taxable by the state. Its periodic gifts to the king, though substantial, were less than might have obtained from direct taxation of the church's land. Therefore, although the country was prosperous, the government treasury was empty. A long series of responsible persons had seen the need for taxing the privileged classes. Necker made moves in the same direction and, like his predecessors, was dismissed. Between 1777...

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