France of the 18th century conjures the image of nobles in extravagant gowns and suits dancing the night away in expansive palaces. That image, however, overlooks the harsh economic realities of the era. Economic stagnation, turmoil and crisis reverberated through the county for years before finally boiling over in the late 1780s. These economic problems set the stage for the French Revolution.
A central economic problem facing France throughout the late 1700s was unsupportable levels of government spending. The French King Louis XV accumulated huge debts building the famous palace at Versailles and waging wars against his neighbors. His grandson, Louis XVI, continued the extravagant spending practices by expanding the military and wasting state funds on lavish parties and social functions. The pattern of excessive spending left France in a perpetual state of fiscal crisis throughout the latter half of the 18th century.
Poor Tax Collection
While French spending was growing larger, its tax revenues were shrinking. The wealthiest groups in France were virtually exempt from paying taxes. The nobility and clergy contributed nothing to state coffers, while the peasant classes endured high tax rates. By the 1780s, the peasants simply couldn't couldn't keep up with the state's voracious appetite for gold. Although a few French advisers tried to reform the tax system, political infighting and the already enormous size of the deficit made reforms impossible or ineffective.
Adding to France's economic woes was its deeply divided class system. According to historian Henri See of the University of Rennes, by the late 1700s roughly 90 percent of French peasants lived at or below the subsistence level. In other words, they had barely enough money to even feed themselves. The aristocratic classes controlled virtually all of the society's wealth. The lack of a consumer base left the French economy stagnant. Only a tiny fraction of the population had any money to spend, so small businesses could not survive. With labor almost entirely devoted to subsistence agriculture, there was no room for economic growth.
Skyrocketing Food Prices
The problems described above created ongoing economic stagnation, but a series of crop failures in the 1780s sparked a true crisis. In 1788, hailstorms destroyed huge portions of French crops. Crop failures shrunk the supply of food and caused prices to increase rapidly. The King's advisers tried to import more food, but the state's debt problems and political pressures limited the effectiveness of the program. With bread prices skyrocketing and tax rates higher than ever, thousands of French peasants began protesting and rioting. These riots sparked the French Revolution.