Why was there a financial crisis in France in 1788/9

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Jannine Layhe

“Why was there a financial crisis in France in 1788/9?”

In the run up to the French revolution in 1789 France faced much financial problems. This was not helped in the years before by Louis 15th and his love for wars, like the Austrian succession and seven years war and his lavish lifestyle including the building of the palace in Versailles and his many mistresses. This set France up for many future problems, such involved the Ancien Regime, the tax and estate system, there being no central bank, poor investment into transport and agriculture and the reforms not passed for tax.

One of the main problems in France at that time was the Ancien Regime which involved the three estates, of which the upper estates, 1st and 2nd, of whom were nobility and clergy, were exempt from taxes as a privilege although they were the wealthiest. Instead the direct taxes were paid by the 3rd estate through a system called tax-farming, which was a very corrupt system and meant that of the taxes being paid little reached back to the monarch and went into the tax-farmers pocket. This was so much of a problem because the country was not getting enough money in order to maintain the monarchs lavish spending and the rest of country, not to forget putting money back into the country through investment.

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As his father, Louis 16th had a very expensive lifestyle and taste, as did his young Austrian wife Marie Antoinette. They would spend excessive amounts on clothing, parties and luxuries. It wouldn’t be unknown for the young queen of France to change clothes 2-3 times a day, and the dresses she would be clothed in often costed far more than the state could afford. She was given the nickname, ‘Madame Deficit’ by the people due to her spending because this caused much hatred amongst the people. Also the monarch took a beating with Louis 16th’s father who had dragged the ...

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