In the years leading up to the French Revolution and the subsequent overthrow of the monarchial systemin France, there were a number of significant financial problems stemming from many years of bed financial decisions made by previous rulers and their advisors. In addition, before the French Revolution, wars and other drains of coffers decimated the financial well-being of the country and it was difficult for the monarchs to reconcile these issues with their lavish spending habits. The Seven Years’ War and the American Revolution were both devastating to the French treasury, especially with the large armies required for each conflict.
In addition, the very ideology behind monarchies before the French Revolution almost seemed to assist in the ruin of the economy since with the concept of divine right to rule, many rulers took the throne and saw little problem with spending vast amounts of resources on personal pleasure, grand palaces, and other examples of excess. Furthermore, being despots, these rulers (most notably the Sun King) did not have a group of legislators or advisors that had any real power and thus the finances of France were left to the decisions of the monarchs and nobility. In the wake of the Thirty Years’ War the economic crisis in France was reaching new heights. Population growth was slowing down, less goods were being produced and as a result, recession occurred. Furthermore, agricultural yields were also declining while taxes were growing steadily higher.
Along with massive unchecked spending on the part of the monarchs themselves before the French Revolution, there were a number of other issues that had a dramatic impact on the French financial situation. For one thing, the national debt was quite large in the years before the French Revolution. In addition to the fact that there were several bad decisions made by officials and advisors as they tried to improve the financial situation after the Seven Years’ War and the American Revolution, both of which almost decimated the treasury because of the size of the armies required. Besides the costs of the wars, King Louis XVI built a giant palace called Versailles which was a testament to unchecked spending with vast amounts of gold decorating the interior. Estimates suggest that over 7 to 10 percent of the national treasury was spent on the palace. “By 1685, the effort engaged 36,000 workers, not including the thousands of troops who diverted a river to supply water for fountains and pools. Royal workshops produced tapestries, carpets, mirrors, and porcelains" The King (and those before him as well) also had large courts and there was a large amount of money spent on entertainment and courtly expenses.
Aside from the debt issues plaguing France in the years prior to the French Revolution, there was also the issue of provincial corruption which had a devastating effect on the financial situation of the already floundering French economy. Throughout the succession of rulers during the Bourbon reign, corruption among minor and regional authorities was a rampant problem, especially considering that the tax system wrung money out of the peasantry (which was a majority of the French population under the monarchial system) and went into the hands of nobles rather than back into state funds. Like many other revolutions with similar motivations, these financial issues were at the forefront. Although the Sun King held the reins of power, he was very dependent on the nobles and advisors surrounding him. Prior to the French Revolution, these people had a great deal of economic power and influenced the financial problems that were to grow even worse before the eventual revolution. Being a very large country, it would have been completely impossible for Louis to run the country himself and as a result there were hundreds of small provinces, each of which was watched over by noble officials. These officials had the power to collect taxes, enforce the laws set forth, the ability to make loans and collect interest, for example and this led to corruption. Without organized oversight and along with the courtly lifestyle which stressed extravagance, funds that might have been made available to the state were sucked out of the treasury. This was a double-fold problem; first of all, it drained needed resources from the country and made a number of aristocrats very rich. Secondly, this did little to improve the opinion peasants had toward nobles and the common people, who saw themselves as well as their country in general growing poorer, were beginning to mobilize. This mobilization of the common people in France would lead to a large-scale revolution and overthrow eventually.
Between corruption, excessive spending, depletion of the treasury after two large and expensive wars, it became clear that something had to be done before France was completely broke and before the people would (and did) engage in the French Revolution. In response to the mounting crisis and all-to-clear lead up to the French Revolution, Louis XIV appointed Charles de Calonne as the controller general of the France’s finances. Calonne had a very difficult decision to make. On the one hand, he knew that raising and creating new taxes was the only way to save the economy but also was aware that if he attempted to get the money from nobles or peasants, there would be a huge backlash either way. Seeing the possibility of a French Revolution, he also tried to obtain loans from banks throughout Western Europe but by the time this occurred, it was well known that France was in an economic freefall. To make matters more complex, Calonne found that the very system the economy was based on was flawed and open to corruption by even the most minor accountants. With such a grim situation, all that could be done was the institution of more and far higher taxes on the already poor peasantry.
In order to institute the changes prior to the French Revolution, Calonne organized a conference so that he could announce the dire financial state of France to the assembly. This gathering was called the Assembly of Notables and these “notables" were all people of the nobility who did not want to have to pay taxes themselves (especially since they had all enjoyed tax-exempt status simply because their titles). During this meeting Calonne told these nobles that either they would have to agree to much higher taxes on the peasantry or else they would have to give up their status as non-taxpayers. The nobles had no desire to do either, especially since there was already growing turmoil among the peasantry, and the one chance France might have had at greater financial stability disappeared as Calonne was let go as the advisor. Without the release of Calonne, the French Revolution might not have taken place as he was advocating more sound policies and fiscal responsibility.