Financial Crisis
Debt
• In 1786 France was on verge of bankruptcy, almost unable to pay interest on its
huge deficit.
• Louis had to decide whether to:
o Cut costs
o Increase taxes (On 3rd estate)
o borrow more money, or
o declare bankruptcy.
Taxation
• Louis + finance minister of the time, Calonne (previously Necker, who had tried
to institute reforms) tried to reinstate some tax reforms like:
o Abolishing the taille and the vintigieme + establishing one land tax that
would be paid by landowners - from which there was no exemption.
Foreign Policy
• War is expensive - had to be funded by raising taxation.
• People got angry about financing a war.
• Two wars were huge drains on France’s finances before 1789:
o The Seven Years War: France fought her colonial rival Britain, in the
colonies of India and North America, and suffered a crushing defeat (NB
colonies!)
o The American War of Independence: France got involved to try and get
revenge against Britain and aided the rebels financially + with troops.
This meant that French troops who fought in US were exposed to ideas of
equality.
Louis, Marie Antoinette, and the lavish lifestyle of Versailles
• France was an absolute monarchy – the king was ordained by God, and so not
limited by any elected body.
• Louis was being indecisive, and later, against the revolution.
• His wife, Austrian Marie Antoinette, had reputation for being extravagant &
lavish.
• The lifestyle at the court at Versailles was excessive and lavish, while people
were starving.
Limitations to Royal Power
• King was bound by laws + customs of the Kingdom.
• He could not pass laws alone - had to consult ministers.
Debt
• In 1786 France was on verge of bankruptcy, almost unable to pay interest on its
huge deficit.
• Louis had to decide whether to:
o Cut costs
o Increase taxes (On 3rd estate)
o borrow more money, or
o declare bankruptcy.
Taxation
• Louis + finance minister of the time, Calonne (previously Necker, who had tried
to institute reforms) tried to reinstate some tax reforms like:
o Abolishing the taille and the vintigieme + establishing one land tax that
would be paid by landowners - from which there was no exemption.
Foreign Policy
• War is expensive - had to be funded by raising taxation.
• People got angry about financing a war.
• Two wars were huge drains on France’s finances before 1789:
o The Seven Years War: France fought her colonial rival Britain, in the
colonies of India and North America, and suffered a crushing defeat (NB
colonies!)
o The American War of Independence: France got involved to try and get
revenge against Britain and aided the rebels financially + with troops.
This meant that French troops who fought in US were exposed to ideas of
equality.
Louis, Marie Antoinette, and the lavish lifestyle of Versailles
• France was an absolute monarchy – the king was ordained by God, and so not
limited by any elected body.
• Louis was being indecisive, and later, against the revolution.
• His wife, Austrian Marie Antoinette, had reputation for being extravagant &
lavish.
• The lifestyle at the court at Versailles was excessive and lavish, while people
were starving.
Limitations to Royal Power
• King was bound by laws + customs of the Kingdom.
• He could not pass laws alone - had to consult ministers.
