Why Nations Fail: The Origins of Power, Prosperity, and Poverty

country of Queen Marie Antoinette and where most of the émigrés had fled. As many in the streets started to see an imminent threat against the achievements of the revolution over the past two years, radicalization gathered pace. The National Constituent Assembly passed the final version of the constitution on September 29, 1791, turning France into a constitutional monarchy, with equality of rightsfor all men, no feudal obligations or dues, and an end to all trading restrictions imposed by guilds. France was still a monarchy, but the king now had little role and, in fact, not even his freedom.
    But the dynamics of the revolution were then irreversibly altered by the war that broke out in 1792 between France and the “first coalition,” led by Austria. The war increased the resolve and radicalism of the revolutionaries and of the masses (the so-called
sans-culottes
, which translates as “without knee breeches,” because they could not afford to wear the style of trousers then fashionable). The outcome of this process was the period known as the Terror, under the command of the Jacobin faction led by Robespierre and Saint-Just, unleashed after the executions of Louis XVI and Marie Antoinette. It led to the executions of not only scores of aristocrats and counterrevolutionaries but also several major figures of the revolution, including the former popular leaders Brissot, Danton, and Desmoulins.
    But the Terror soon spun out of control and ultimately came to an end in July 1794 with the execution of its own leaders, including Robespierre and Saint-Just. There followed a phase of relative stability, first under the somewhat ineffective Directory, between 1795 and 1799, and then with more concentrated power in the form of a three-person Consulate, consisting of Ducos, Sieyès, and Napoleon Bonaparte. Already during the Directory, the young general Napoleon Bonaparte had become famous for his military successes, and his influence was only to grow after 1799. The Consulate soon became Napoleon’s personal rule.
    The years between 1799 and the end of Napoleon’s reign, 1815, witnessed a series of great military victories for France, including those at Austerlitz, Jena-Auerstadt, and Wagram, bringing continental Europe to its knees. They also allowed Napoleon to impose his will, his reforms, and his legal code across a wide swath of territory. The fall of Napoleon after his final defeat in 1815 would also bring a period of retrenchment, more restricted political rights, and the restoration of the French monarchy under Louis XVII. But all these were simply slowing the ultimate emergence of inclusive political institutions.
    The forces unleashed by the revolution of 1789 ended French absolutismand would inevitably, even if slowly, lead to the emergence of inclusive institutions. France, and those parts of Europe where the revolutionary reforms had been exported, would thus take part in the industrialization process already under way in the nineteenth century.
E XPORTING THE R EVOLUTION
    On the eve of the French Revolution in 1789, there were severe restrictions placed on Jews throughout Europe. In the German city of Frankfurt, for example, their lives were regulated by orders set out in a statute dating from the Middle Ages. There could be no more than five hundred Jewish families in Frankfurt, and they all had to live in a small, walled part of town, the Judengasse, the Jewish ghetto. They could not leave the ghetto at night, on Sundays, or during any Christian festival.
    The Judengasse was incredibly cramped. It was a quarter of a mile long but no more than twelve feet wide and in some places less than ten feet wide. Jews lived under constant repression and regulation. Each year, at most two new families could be admitted to the ghetto, and at most twelve Jewish couples could get married, and only if they were both above the age of twenty-five. Jews could not farm; they could also not trade in weapons, spices, wine, or grain. Until 1726 they had to wear specific markers, two concentric yellow rings for men and a striped veil for women. All Jews had to pay a special poll tax.
    As the French Revolution erupted, a successful young businessman, Mayer Amschel Rothschild, lived in the Frankfurt Judengasse. By the early 1780s, Rothschild had established himself as the leading dealer in coins, metals, and antiques in Frankfurt. But like all Jews in the city, he could not open a business outside the ghetto or even live