Another reason was that the French government borrowed money on terms less favourable that the British or Dutch because in France there was no publicly supported bank through which government credit could be cheaply channelled.
French kings had always spent too much on wars as in their participation in the Seven Years’ War and the American War of Independence. This sent the financial state of France into a deteriorating state.
Another reason was that there was no annual budget. The corruption of the independent financiers who handled the state’s finances was another factor to the financial crisis. This position could easily be retained by the buying of an office of accountant to a government department or through membership of Farmers- Generals; who collected most of the indirect taxes. It was noted that these independent financiers would often loan money from their accounts to the King through short-term loans. Therefore the King was ironically borrowing money from himself. This custom was practiced often, as there was no central treasury where records of transactions were accounted for.
The financial crisis played an important role in the French revolution because the bourgeoisie was greatly affected by it. The bourgeoisie, which comprised of merchants, traders, industrialists, lawyers, doctors and other professional groups, were the main leaders in the revolution. They were greatly affected as the government tried to correct the financial situation by raising huge loans from the nobility, the bourgeoisie and even the Church. As the National Debt increased the bourgeoisie grew worried as to weather or not they would ever recover their money. This problem confirmed the necessity for a revolution.
In addition to the financial crisis, the economic crisis also contributed to the outbreak of revolution. The economy of France depended heavily on agricultural revenue. Droughts continuously supplied poor harvests in the 1770’s and 1780’s. This depressed the agricultural revenue. Consequently the price of bread rose dramatically due to weak harvests of wheat and grain. As food got expensive the textile industry fell, as people no longer had the money to spend on textiles. The flax, hemp and silk harvests failed miserably and this caused high unemployment and wage reductions. The rents rose as the population steadily increased. The cost of living in France increased drastically while wages rose minimally. These conditions only upset the already disgruntled peasantry, who comprised of 23,000,000 of France’s total population. This meant that an overwhelming majority of France was discontented with the situation of the country, and was willing to participate in a revolution.
The government proved to be incompetent of running the functions of the country. King Louis was deemed incapable of being an absolute king. It was evident that he was not interested in being a King. It was seen that he was greatly influenced by his advisors and often gave others the power to rule in certain areas. This was uncharacteristic of an absolute king. There was also continuous conflict between ministers. It was obvious that the government did not rule for the benefit of every citizen but instead those of high wealth, power, or prestige.
The majority of French people were tired with the unjust privileges of higher classes above them. They struggled in the inequality of the classes, as the lower classes where forced to pay exorbitant amounts of taxes while the nobility and clergy were partially or fuller exempted. They struggled to obtain political status in their community. This added to their misery.
There are many factors that caused the outbreak of revolution in France in 1789. The financial crisis played a key role in the outbreak but the common factor of all contributing factors was that the government attributed to all the problems. The government was at fault for everything that went wrong, and the majority of citizens felt that the only way for profitable change to occur was for a revolution.