Immediate Economic Impacts of the French Revolution

Immediate Economic Impacts of the French Revolution

Change in a nation comes in many forms. However, the most drastic and extreme form of national change is revolution. In this context, the word revolution is meant to denote sudden, radical, or complete change. Revolutions themselves vary in form. There is political revolution in which one system of government is replaced by another, but property relations are ultimately left unchanged. The French revolutions of 1830 and 1848 serve as apt examples of political revolutions In contrast, there are social revolutions which seek to change property relations and certain socioeconomic conditions in a nation while not necessarily seeking to overthrow the current government. The French revolution of 1789 serves as an example in this case wherein the call for Liberté, égalité, fraternité served to signal a total shift in societal conditions. There are revolutions in thought in which our entire way of thinking is shifted, such as the shift from the geocentric to the heliocentric model which characterized the Copernican revolution. There is also economic revolution in which an advance in technology or some other factor adds some new dimension or greater economic power that was not previously there. The Industrial revolution of the 18th and 19th centuries (most notably in Great Britain) qualify as such a revolution, with the introduction of inventions like the cotton gin and locomotives. All these forms of revolution may occur independently, but more often than not they become entangled, as nations in turmoil seek to change every aspect of the society in which they live: politically, socially, economically. One such all-encompassing revolution commonly cited is the French Revolution of 1789 which would lead to the destruction of the monarchy,  King Louis XVI’s death, and usher in a period of European warfare that would not cease until 1815. This article will focus on analysis of some of the economic implications of the revolution and how those effects were felt far into the future. It is important to note that “far into the future” is not to imply that France is still plagued by the Revolution and its legacy to this day, but rather that those impacts were felt as far ahead as the first World War. Following WWI, I would argue that any legacy still felt is minimal.

The revolution spawned out of many spheres of thought: political, social, and economic. The poor economic condition of the nation leading up to the revolution were in part caused by the multiple foreign wars of Louis XIV undertaken to cement France as the most powerful European state. While success in reaching this goal is debatable, it is clear that the excessive military spending over years of conflict encompassing at least three distinct wars led to financial exhaustion in France. The Old Regime of France was staunchly mercantilist, meaning that most, if not all, economic activity and production of goods regulated and/or approved by the government. This includes even imports and exports.

Louis XVI shared his predecessor’s habit of spending excessive amounts of money, except in his case most of the national wealth was directly consumed by the royal family. His household included around 4,000 civilians, 198 of which whose only purpose was to care for his body! With the nobility and clergy ultimately tax-exempt, high taxes plagued the lower taxes in order to finance the royal family’s excessive consumption. In 1774, the year of Louis XVI’s ascension to the throne, the deficit in government spending equaled around 27 million livres, or 7% of total spending (which comes out to be approximately 386 million livres). Numerous economists were installed as Finance Ministers and given the task of essentially resuscitating the French economy. Turgot, serving only for two years (1776-1778), received incredible opposition to his proposed reforms that would curb government spending. His successors were all instructed to find some way to complete the task without lowering spending, but they all ultimately came to the same conclusions as Turgot. The royal family would not hear of it, though, and spending remained as it was.

This financial turmoil was one of the primary factors which would lead to the revolution and the installation of a new government subsequent to July 1789. The problem of spending, which precipitated the entire conflict, was not solved, however, as the new administration spent copious amounts on public works and food subsidies for Parisians. To finance such spending, the National Assembly issued a paper currency called assignats. About one year later, excessive printing of money led to 1.5 billion assignats in circulation and a 14% decrease in purchasing power. The crisis point came in 1795 with assignats in circulation numbering around 20 billion and an almost 99% decrease in purchasing power. The ensuing inflation hit the poorest of France the hardest as it was ultimately them who held a majority of the worthless currency. Economic activity stagnated and speculation became common. Merchants and shopkeepers invested in gold and silver abroad that better served to store value than did the inflated assignats.

Excessive inflation led to outcries by the French people for measures by the government to insure that prices would no longer rise, or the implementation of price controls. They began with grain in May 1793 and extended the controls to many other goods sold in France by September of that year. In effect, the price controls drove down supply of many resources such as grain and sugar (thus creating shortages), and the regulators who enforced the measures were quite excessive in their methods. Executions, confiscation of property, even internment of many French citizens into slave labor. These radical measures were predominantly perpetrated by the Jacobins. These were a political faction formed in 1789 formed with the express purpose of amassing support for the revolution. One of their key arguments was for the limiting of royal power and a restructuring of France along Republican ideals. As the faction evolved, sects within the party emerged and a small minority became increasingly radical, insisting upon the separation of church and state, popular education, and universal male suffrage alongside a hardline Republican stance. The Jacobins, as an elitist group consisting generally of bourgeois members, had to seek the support of the masses of the Parisian poor (or Sans-Culottes) which included artisans, shopkeepers, and common laborers. As explained previously, the inflation of the assignat led the San-Culottes to demand price fixing, jobs, and an end to inequality. As the revolution wore on, opponents of the Jacobins in the revolutionary National Assembly were eliminated, and power within the party became increasingly consolidated under Maximilien Robespierre. It was he and other Jacobin leaders who were chiefly responsible for the Reign of Terror that would ultimately end with Robespierre’s execution in 1794. It was from the Sans-Culottes that he gained crucial support. The Parisian poor who had started the chant for Liberté, égalité, fraternité were refitted by the Jacobin leaders as weapons of violence and conflict, used to root out any action deemed counterrevolutionary. The most casual scholar of this time in French history will most likely recognize the guillotine as the infamous symbol of the revolution. It is estimated that by the time of Robespierre’s death, more than 50,000 people were killed on the grounds of suspected counter-revolutionary activity. It is important to note that only a third of that number fell victim to the guillotine.

At the beginning of the revolution in 1789, France was a predominantly rural country with 55% of its people directly or indirectly dependent upon agriculture. Numerous factors led to a downturn and general stagnation in the agricultural industry. First, there were crises as a result of bad weather and poor crop yields. Naturally, this was not a consequence of the revolution, but the troubles caused by the shortages contributed to tension in the Sans-Culottes. The downturn was exacerbated further by revolutionary changes such as the state takeover of church property and the issuance of assignats. The ensuing inflation caused many French merchants and shopkeepers soon stopped accepting the currency as a medium of exchange. Farmers, instead of selling their crops on the market for the inflated assignats, chose to store their produce for some other future use.

As part of a desire to spread land ownership across various sections of French society, the Church land taken over by the state was auctioned off. It did indeed satisfy the goal of making land distribution more equal. However, the core belief of the revolution that all were equal failed to adequately address the phenomenon of skill specialization. In the case of distributed land, it became clear that many of the new owners lacked the specialized knowledge required to run a farm or effectively use the land in some other way. Additionally, because French land was being divided among many more people than previously, each was assigned smaller land plots leading to smaller yields and greater inefficiency overall.

At a time when Great Britain was just beginning its upward transformation into a truly industrial society, industry in France took a turn for the worse. It was not until 1809, nineteen years after the revolution had begun, that industry returned to Old Regime levels. They would not count themselves alongside Britain and Germany as highly industrialized European nations until the outbreak of WWI.  The most noticeable impact on trade is seen in French export volumes. The revolution, though not solely an economic revolution, had a significant impact upon how market forces operated in the country. It also harmed the institution of private enterprise as a result of forced land distribution. More generally, the chaos of the time caused by war, taxes, blockades, government interference, and other factors made the environment increasingly hostile to profitable industrial ventures. Whereas trade had been doing great in 1789, neglect of infrastructure and the loss of life (including many merchants) as a result of the Reign of Terror led to decreased economic trade power. During 1797, the first post-revolutionary year for which there is reliable data exports and imports were 36% and 55% of pre-revolutionary levels, respectively.


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