The failure to reform taxation meant that although France was a wealthy country the Crown had to turn increasingly to borrowing to meet its expenditures. To make matters worse the costs of waging war rose exponentially in the eighteenth century as France's global commitments expanded.
The kings of France put the country into debt by building palaces like the Palace of Versailles and waging expensive wars. The people of France had to pay for the debt with taxes, which made them frustrated. Eventually, the inequality and abuses of the government led to the French Revolution.
While the Seven Years' War, 1756–1763, led to an increase in the royal debt and the loss of nearly all of France's North American possessions, it was not until 1775 that the French economy began truly to enter a state of crisis.
Other economic causes of the French Revolution were related to a rising national debt that the government was unable to pay. This debt was primarily related to two earlier wars that the French fought against England.
The causes of the French Revolution can be narrowed to five main factors: the Estate System, absolutism, Enlightenment ideas, food shortages, and the American Revolution. The Estate System placed people into groups based on birth and was known as the Ancien Regime.
France's prolonged involvement in the Seven Years' War of 1756–1763 drained the treasury, as did the country's participation in the American Revolution of 1775–1783.
Although scholarly debate continues about the exact causes of the Revolution, the following reasons are commonly adduced: (1) the bourgeoisie resented its exclusion from political power and positions of honour; (2) the peasants were acutely aware of their situation and were less and less willing to support the ...
In 1795, the United States was finally able to settle its debts with the French Government with the help of James Swan, an American banker who privately assumed French debts at a slightly higher interest rate. Swan then resold these debts at a profit on domestic U.S. markets.
It was inefficient because many taxes were collected by a network of private contractors dubbed 'tax farmers', a system that encouraged graft, corruption and tax avoidance. It was unfair because the bulk of the nation's direct taxation was levied on the Third Estate.
Nearly every year, the government spends more than it collects in taxes and other revenue, resulting in a deficit. (The debt ceiling, set by Congress, caps how much the U.S. can borrow to pay for its remaining bills.) The national debt, now at a historic high, is the buildup of its deficits over time.
Of course, just as with an individual or family, cutting spending and increasing revenue are smart first steps. Beyond that, the government considers things like new taxes, a higher retirement age, removing loopholes from the tax code, and more to reduce annual deficits and the national debt.
In 1765, parliament passed the Stamp Act to help pay down the war debt and finance the British army's presence in the Americas. It was the first internal tax directly levied on American colonists by parliament and was met with strong resistance.
Upon his death in 1715, Louis XIV left his great-grandson and successor, Louis XV, a powerful kingdom, albeit in major debt after the War of the Spanish Succession that had raged on since 1701.
As France slipped into crisis, Louis XVI tried to solve the country's financial woes by forcing increased tax rates on the citizens, including new taxes for the nobility.
Economic Outlook Note - France
Russia's war of aggression against Ukraine, supply chain disruptions and elevated energy prices have dented economic prospects. Inflation is expected to remain high at 6.1% in 2023 and to decline to 3.1% in 2024, lowering household purchasing power and consumption growth.
Throughout the 18th century, France faced a mounting economic crisis. A rapidly growing population had outpaced the food supply. A severe winter in 1788 resulted in famine and widespread starvation in the countryside.
How did American war of Independence add more debt to France? Answer: The French army supported thirteen colonies of America in their war of independence against Great Britain. It added more than one billion livres (unit of currency in France) that had risen to more than two billion livres with interest.
For the past 20 years, Japan and China have been the top two foreign countries with US Treasuries. According to usafacts.org, as of January 2023, Japan owned $1.1 trillion in US Treasuries, making it the largest foreign holder of the national debt.
Total US federal government debt breached $30 trillion mark for the first time in history in February 2022. As of February 2023, total federal debt was $31.5 trillion; $24.6 trillion held by the public and $6.9 trillion in intragovernmental debt.
The case of debts arising from World War II is somewhat less complicated. At this time only four countries, discussed below, owe the U.S. government debts of any size arising from World War II programs to aid our allies. Other countries have paid their debts in full.
On 9 November 1799, as frustration with their leadership reaches a fever pitch, Bonaparte stages a coup d'état, abolishing the Directory and appointing himself France's 'first consul'. This marks the end of the French Revolution and the start of the Napoleonic era.