Debt and the Price of the American War

The immediate cause of the French Revolution was a financial crisis. France had fought costly wars throughout the 18th century, including the Seven Years' War, which ended in 1763 with heavy losses. Then from 1778 France openly supported the American colonies against Britain, at a cost commonly estimated at over a billion livres, paid mainly by borrowing rather than new taxes. By the late 1780s interest payments on the debt consumed roughly half of royal spending.

In August 1788 the treasury suspended some payments, a sign that lenders were losing confidence. The American war mattered in a second way too: French officers and readers had watched colonists justify resistance in the language of rights and representation. Historians therefore see the war as both an economic and an ideological link between the two revolutions.