11 July, 1789: Louis XVI dismisses his finance minister

As unrest grew in France, Louis XVI took the decision to sack his popular finance minister. Three days later, crowds stormed the Bastille, and the French Revolution had begun.

Dr Matthew Partridge
By
published
in Features

140711-necker

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.

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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.

Dr Matthew Partridge
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri

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