Why the French Revolution was a financial revolution - Part 1

Robin Wigglesworth (0:00)

Today, on The Story of Money, how the French Revolution's fight for liberty was also a fight over money.

Rebecca Spang (0:07)

Nobody at the time knew or expected that this was the French Revolution. So it's really a scene of bloody violence and horror. And very shortly after that, they say, all of the existing taxes are illegal because we didn't vote on them. And then the next thing they say is, you should keep paying them anyway until we get some new taxes. Well, you can imagine which part of that message got heard and which part got ignored. It ruins everybody's finances because suddenly, people can no longer expect that tomorrow is going to be just like yesterday. In fact, it's pretty obvious that tomorrow is going to be nothing like yesterday.

Robin Wigglesworth (0:53)

Today, on The Story of Money, Liberté, Égalité, Fraternité, the rallying cry of the French Revolution is very familiar. But what you may not know is that this crucial moment in European history was also a violent financial revolution.

That's because money represented not just a way to buy and sell things, but also formed a piece of a larger social contract. And when that social contract is turned upside down, the results can be disastrous. So in today's show, part one of our series on the French Revolution, we'll be taking you through the revolution's origins under King Louis XVI, the storming of the Basis, to the development of a controversial new currency called at different times, both a savior of France and a poison.

This is Montre policy at the time of revolution. And this is the story of money. Gillian's away this week and I'm Robin Wigglesworth. To tell this story, I'm joined by Rebecca Spang. Rebecca is a professor of history at Indiana University. She's also the author of the fabulous Stuff and Money in the Time of the French Revolution, which is a cracking title, Rebecca. Thanks so much for being here today.

Rebecca Spang (2:10)

Thank you. I never, never want to turn down a chance to talk about the French Revolution.

Robin Wigglesworth (2:15)

In your book, you make an argument that really kind of almost upends the conventional thinking around what happened with money during the French Revolution. Is it fair to say that to really understand the French Revolution, we have to understand the story of French money at the time?

Rebecca Spang (2:32)

I definitely think so. I mean, the standard wisdom such as it is, is that the French Revolution fails because the government over issues paper money, there's hyperinflation, it's a catastrophe, the whole thing falls apart. That story has been used as a point of reference every time there's a question about fiat currency actually.

My argument is that that actually gets things backwards, that money in France began losing people's trust way before the government printed enormous amounts of it. That's because the monetary crisis was deeply entwined with the political and social conflict that was the revolution itself.

Robin Wigglesworth (3:25)

Well, that sounds fascinating and right up our alley here at The Story of Money. Let's go to the beginning. Can you tell us a little bit about France and the situation there, leading up to the revolution in 1789?

What's the country like at the time?

Rebecca Spang (3:43)

So, France, before 1789, what is conventionally called the Old Regime. Though, of course, nobody at the time knew they were living in an Old Regime, right? I mean, they're living in the Kingdom of France, and the King of France is an absolute ruler.

That means he's bound to no one. There are no representative bodies. At the same time, that doesn't mean that the King has limitless wealth, far from it. In fact, there's a lot of it in the hands of the nobility and that of the Catholic Church. The monarchy would really like to be able to tap into some of that wealth because France in the 18th century is almost constantly at war, usually with Britain.

Robin Wigglesworth (4:33)

Yeah, that sounds familiar. I've lost track of all the wars between France and England over the decades.

Rebecca Spang (4:39)

Sometimes people call it the Second Hundred Years' War.

Robin Wigglesworth (4:42)

The King was Louis XVI at the time, right? Yes.

Rebecca Spang (4:47)

Louis XVI, I suppose Louis' most consistent character trait was his inconsistency. He's just not a strong leader.

On one hand, does he want to be a model absolutist and the terror of his enemies, quote, unquote, just like his great great grandfather, Louis XIV, the Sun King who built Versailles? Yes, he would like to be that.

Robin Wigglesworth (5:13)

I mean, so would I, to be fair. That sounds like a pretty good gig being called the Sun King.