11 July, 1789: Louis XVI dismisses his finance minister

Necker: failed to negotiate a solution

By the late 1780s France was on the brink of revolution. Support for the Americans during their war of independence, and general overspending, had left it with huge debts. At the same time, a more politically aware population was beginning to demand an end to the absolute monarchy of Louis XVI.

With popular revolts starting to spring up, Louis turned to his popular former finance minister, Jacques Necker, to come up with a solution to the problems.

Necker attempted to solve these problems through negotiation. He organised the return of the Estates-General, an assembly consisting of clergy, aristocrats, and commoners (the ‘Third Estate’), for the first time since 1614.

However, the three parties couldn’t reach an agreement as to whether they should have equal power, or should have support in proportion to their membership. For his part, Necker failed to grasp that the main demand was political reform, not administrative tinkering.

By the summer of 1789, it was clear that the King wasn’t prepared to give up any power, while the Third Estate wanted full democracy, with many even pushing for a republic. On 11 July, all hopes of a compromise were ended when Louis dismissed Necker. This was widely seen as confirmation that the king wished to go on ruling as an absolute monarch. Three days later, crowds would storm the Bastille, showing that royal forces had lost effective control.

The next three years would see the Third Estate, (renamed the National Assembly) firmly in control. Attempts by monarchists to seize back power only boosted the faction that wanted a complete end to the monarchy. After a disastrous war with Austria, these radicals became ascendant, culminating in the formal end of the monarchy in August 1792. Louis would eventually be executed in January 1793.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

  • davidstuart

    Umm! Huge debts and a more politically aware population – interesting!

MoneyWeek magazine

Latest issue:

Magazine cover
Party's over for Putin

The only portfolio safe from Russia's rout

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Hedge fund manager Hugh Hendry: 'It felt like the sun rose only to humiliate me'

In a series of three short videos, Merryn Somerset-Webb talks to Hugh Hendry, manager of the Eclectica hedge fund, about everything from China to the US, Europe, and Japan.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


19 December 1932: BBC World Service begins

The first royal Christmas message by George V gave the fledgling World Service an early boost six days after it was founded in 1932.