(...) History repeats because the passion of man never changes. We are looking at France in the same strange position as when Louis XVI ascended to the throne. Then too the country was in the middle of a financial crisis and France was on the verge of bankruptcy. This was due in part to France’s costly involvements in the Seven Years’ War. In May 1776, finance minister Turgot was dismissed, after failing to enact reforms to correct the crisis.
On August 8th, 1788, the royal treasury was declared empty, and the Parliament of Paris, which was an assembly of nobles, refused to reform the tax system or loan the Crown any more money. To win their support for fiscal reforms, the Minister of Finance, Étienne Charles de Loménie de Brienne (1727 – 1794) , declared May 5th, 1789 for a meeting of the Estates General, which was an assembly of the nobility, clergy and commoners (called The third Estate), which had not met since 1614. Then on August 16th, 1788, the treasury suspended all payments on government debts going into default. Finally, on August 25th, Brienne resigned as Minister of Finance. He was replaced by Jacques Necker, a foreigner who was a Swiss banker. Necker was appointed Comptroller-General of Finance but could not be made an “official minister” because he was a Protestant. Nevertheless, Necker was very popular with the common people.
On September 23rd, 1788, Necker reassured French bankers and businessmen should agree to loan the state 75 million livers, on the condition that the Estates General will have full powers to reform the system. The political turmoil was unleashed. On December 27th, 1788, over the opposition of the nobles, Necker announced that the representation of the Third Estate will be doubled, and that nobles and clergymen will be eligible to sit with the Third Estate.
The financial crisis was astute. Necker realized that the country’s tax system subjected the lower classes to a heavy burden and was extremely regressive, simultaneously, numerous exemptions existed for the nobility and clergy. Necker warned that the country could not be taxed higher. He further argued that the tax exemptions for the nobility and clergy had to be reduced. He also proposed that the government borrow more money to solve the country’s fiscal shortages.
Necker actually published his report to support this claim showing the accounting of the crisis. He underestimated the deficit by more than 36 million livres or 6 million silver Ecu. Necker proposed restricting the power of the Parliament to protect the nobility. Necker also argued to be made a minister giving him the power to push through reforms. The King refused and Necker was dismissed. (...)