<P> All these factors created a revolutionary atmosphere and a tricky situation for Louis XVI . In order to resolve the crisis, the king summoned the Estates - General in May 1789 and, as it came to an impasse, the representatives of the Third Estates formed a National Assembly, against the wishes of the king, signaling the outbreak of the French Revolution . </P> <P> The essence of the revolutionary situation which existed in France in the 1780s was the bankruptcy of the king, and hence the state . This economic crisis was due to the rapidly increasing costs of government and to the overwhelming costs incurred by fighting two major wars: the Seven Years' War and the American Revolutionary War . These costs could not be met from the usual sources of state revenue . Since the 1770s, several attempts by different ministers to introduce financial stability had failed . The taxation system was burdensome upon the middle class and the more prosperous peasants, given that the nobles were largely able to exempt themselves from it . As a result, there was "an insistent demand" for reform of these abuses of privilege, for an equitable means of taxation and for improved government processes . David Thomson argued that the bourgeoisie and peasantry had "something to lose, not merely something to gain" in their demands for a fairer society and this fear too was a major factor in the revolutionary situation . </P> <P> The population of France in the 1780s was about 26 million, of whom 21 million lived in agriculture . Few of these owned enough land to support a family and most were forced to take on extra work as poorly paid labourers on larger farms . There were regional differences but, by and large, French peasants were generally better off than those in countries like Russia or Poland . Even so, hunger was a daily problem which became critical in years of poor harvest and the condition of most French peasants was poor . </P> <P> The fundamental issue of poverty was aggravated by social inequality as all peasants were liable to pay taxes, from which the nobility could claim immunity, and feudal dues payable to a local seigneur or lord . Similarly, the destination of tithes which the peasants were obliged to pay to their local churches was a cause of grievance as it was known that the majority of parish priests were poor and the contribution was being paid to an aristocratic, and usually absentee, abbot . The clergy numbered about 100,000 and yet they owned 10% of the land . The Catholic Church maintained a rigid hierarchy as abbots and bishops were all members of the nobility and canons were all members of wealthy bourgeois families . As an institution, it was both rich and powerful . As with the nobility, it paid no taxes and merely contributed a grant to the state every five years, the amount of which was self - determined . The upper echelons of the clergy had considerable influence over government policy . </P>

Why did the american revolution cause the french revolution