1.
Introduction
Contextual Overview: The French Revolution of 1789 was a pivotal event in world history, marking the
end of absolute monarchy and the rise of democratic ideals.
Significance of Financial Crisis: A severe financial crisis was a fundamental cause of the revolution,
exacerbating social inequalities and eroding public trust in the monarchy.
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2. Causes of the Financial Crisis
A. Extravagant Spending
Royal Expenses: King Louis XVI and Queen Marie Antoinette's lavish lifestyle, including opulent court life
at Versailles, drained state resources.
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Costly Wars: France's involvement in expensive conflicts, notably the Seven Years' War and support for
the American Revolution, significantly increased national debt.
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B. Inequitable Taxation System
Tax Burden on the Third Estate: The majority of taxes were levied on the common people (Third Estate),
while the nobility and clergy enjoyed numerous exemptions.
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Social Inequality: This unfair tax system deepened social divisions and resentment among the populace.
C. Government Debt and Borrowing
Accumulation of Debt: By 1789, France's national debt had reached approximately 4.5 billion livres, with
interest payments consuming a significant portion of state revenue.
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Reliance on Loans: The government depended heavily on borrowing, but lenders became reluctant to
extend further credit due to concerns over repayment.
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3. Key Events in the Financial Crisis
A. Attempts at Fiscal Reform
Charles de Calonne's Proposals: In 1787, Finance Minister Calonne proposed comprehensive fiscal
reforms, including new taxes and the taxation of the privileged classes.
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Assembly of Notables: The proposal was met with resistance from the nobility, leading to the convening
of the Assembly of Notables, which ultimately rejected the reforms.
B. Convocation of the Estates-General
Failure of Reforms: Unable to resolve the financial crisis through reforms, King Louis XVI called for the
Estates-General in May 1789, a general assembly representing the three estates.
Formation of the National Assembly: The Third Estate, representing commoners, proclaimed itself the
National Assembly, signaling the beginning of a power struggle with the monarchy.
4. Consequences of the Financial Crisis
A. Erosion of Royal Authority
Loss of Public Confidence: The financial mismanagement and inability to resolve the crisis led to a loss of
confidence in the monarchy's ability to govern effectively.
Rise of Revolutionary Sentiment: Economic hardship and perceived injustice fueled revolutionary
sentiments among the populace.
B. Social Unrest
Bread Riots: Rising bread prices due to poor harvests and economic instability led to widespread protests
and riots, particularly in Paris.
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Storming of the Bastille: On July 14, 1789, the storming of the Bastille became a symbol of the people's
revolt against oppression and the monarchy.
C. Financial Reforms and Consequences
Confiscation of Church Property: In November 1789, the National Assembly declared church properties
as "biens nationaux" (national goods), selling them to raise funds.
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Issuance of Assignats: The government issued paper currency known as assignats, backed by church
properties, to address immediate financial needs. However, over-issuance led to inflation and economic
instability.
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5. Conclusion
Summary: The financial crisis of 1789 was a critical catalyst for the French Revolution, highlighting the
interplay between economic hardship, social inequality, and political unrest.
Legacy: The revolution led to significant political and social changes in France, including the
establishment of the First French Republic and the promotion of democratic ideals.
6. Visual Aids
Timeline of Key Events: A chronological timeline illustrating significant events leading up to and during
the financial crisis.
Charts and Graphs: Visual representations of France's national debt, tax distribution among estates, and
inflation rates during the revolution.
Political Cartoons: Contemporary satirical illustrations depicting the financial crisis and its impact on
society.
7. References
Best Diplomats. "The History of the French Revolution: Causes and Legacy." bestdiplomats.org.
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Journalia. "French Revolution: Economic Causes." journalia.blog.
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Pro-Papers. "The Economic Causes of the French Revolution: Financial Crisis and Inequality." pro-
papers.com.
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If you require further assistance with specific sections or additional resources, feel free to ask!
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