Oh boy, did they! Things got much worse before they got better.

France was miserably in debt on the eve of the revolution. It was this debt that forced King Louis XVI to call the estates general, where he wanted to ask for new taxes to help pay them off. This was a last resort, as the estates general had this pesky habit of asking for more privileges, rights, and concessions for their members in exchange for approving new taxes. Approving new taxes was the sole prerogative of the estates general, but that didn’t stop old Louis of trying a couple of sneaky workarounds before eventually giving up and calling the estates general.

It’s worth noting that France had some serious problems in 1789. Social problems, religious problems, tax problems, poor harvest problems, and especially economic problems; the list goes on and on. The estates general would eventually morph into the national assembly which aimed at solving as many of these issues as possible, including the debt crisis. With this laundry list of items on the agenda, it took a while to get around to the much-needed financial reform. In the meanwhile, the situation got worse before it got better. The National Assembly began using the debt crisis to their own benefit. On June 17, 1789 they declared that should they dissolve, all taxation would be rendered illegal – basically guaranteeing that they couldn’t be dissolved by anyone’s consent other than their own, lest all of France collectively stop paying taxes. They promised to redesign the tax system to be fairer, but all the while the debt wasn’t getting any smaller.

They did work to reform the system, but their changes were implemented slowly. They created a new land tax, for example, but it only came into effect in November 1791, nearly a year after the old one had expired, costing France a year of land tax profits. The National Assembly was also financially cautious; they did not want to take out new loans, even though the funds were desperately needed. As they worked to restructure French political society, the treasury remained empty. Even their financial reform efforts hurt in the short term. The National Assembly consolidated the debt of France – a wise long term decision – but in the short term, a massive amount of money had to be paid up front, somewhere around 370 million livres.

Enter the Assignat. In 1789, the National Assembly instituted a plan where all church land in France would be seized and appraised. The total amount of money it was deemed to be worth would then used to back a new paper currency, called the assignat. But assignats were backed in land, somewhat of an abstract concept. How much land is each assignat worth? Can I trade this piece of paper for a plot of land? Who decides how much the land was worth? How did they decide? Money being worth the gold and silver the coins are minted in was easy to understand, but the French people were skeptical of this new currency.

As you might guess, all of this skepticism led to people not taking the new money at face value, which resulted in significant inflation, especially when all of the hard gold and silver coins were removed from circulation and hidden away. This currency plagued the French economy for years, and all attempts to reform it with similar systems met the same fate. Napoleon helped solve the problem in more ways than one. First, in 1796–1797 Napoleon led a military campaign through northern Italy, during which he confiscated massive amounts of wealth from the wealthy Italian states. Treasure of all sorts was loaded up by the cartload and shipped back to Paris to help stabilize the economy. It didn’t solve the issue, but it slowed the bleeding for a time.

When Napoleon took power in 1799, he had had more than enough of the assignat and its derivatives. He understood as well as any Frenchman that the currency was a failure. On top of that, he resented the time he had to spend in northern Italy seizing treasure, pacifying angry Italians who really didn’t want to lose their treasure, and even inventing new countries to make said angry Italians easier to control. All Napoleon really wanted to do was to take the last fortress city in northern Italy and march straight through the Alps to Venice, and win a glorious victory against the Austrians, thereby ending a war that had been raging for nearly five years. He eventually did just that, but it was much later than he would have liked. After taking power in the Coup of 18 Brumaire, Napoleon would reintroduce hard specie currency, putting an end to the assignat and further facilitating France’s financial recovery.

Most of the finer details here are from Georges Lefebvre’s The French Revolution: From its Origins to 1793