Basically,
France had been in what amounted to a five-year long financial crisis by 1789, and it faced a
serious, multifaceted economic emergency in that year. One major economic problem the French
government confronted was a crippling national debt. This was the result of massive spending on
the administration of the royal bureaucracy, the financial burden of supporting the royal court
at Versailles, and especially military spending, much of which had been expended on French
participation in the American Revolutionary War. By 1788, the French government was no longer
even able to pay the interest on its growing debt.
Another facet to the
economic crisis had to do with the structure of the French tax system itself. Under the outdated
social and political system, the French nobility was basically exempt from taxation, and
attempts by the ministers of Louis XVI to reform this system were met with opposition from the
French courts. This was both a symptom and a cause, because by diminishing confidence in the
ability of France to repay its debt, the French government made it unlikely that they would be
able to secure future credit, either from the sale of bonds or from foreign
investors.
Finally, the year 1789 witnessed one in a series of crop failures
which led to a severe food shortage and inflation (rising food prices) especially in Paris and
other urban areas. This economic crisis struck at exactly the time the nobles, the monarch, and
the educated bourgeoisie were squabbling over the tax system, and when Louis's ministers were
scrambling to figure out how to service the debt. This even goes a long way toward explaining
why many ordinary Frenchmen supported the early efforts toward reform that led to the French
Revolution. As one historian puts it: "Hunger...did not abate, and the traditional bread
riot became more serious because it was occurring at a time of political
crisis."
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