On March 15, 1848, the governor of the Bank of France, Antoine d'Argout, faced the potential collapse of his institution. A cascade of agricultural and industrial shocks, rising food prices, spikes in unemployment, and currency outflows struck at the heart of the French economy. At the same time, France, and Europe more broadly, had dissolved into armed revolution. The French king's abdication in February, alongside the already teetering financial system, resulted in massive bank runs that toppled a substantial part of the Paris banking system. Dramatic monetary contraction and the collapse of credit markets choked off sources of economic growth. Across Europe, proposals for action polarized three broad coalitions—liberals, radicals, and conservatives—each of which differed about the pace and extent of democratization. With the provisional French government lacking legitimacy and even facing bankruptcy, a state bailout seemed unlikely.
This B case discusses d'Argout's actions and offers an overview of the economic and political events that followed.