When King Louis XVI dismissed Jacques Necker, the Finance Minsiter who was sympathetic to the Third Estate, or the middle/working class, citizens were enraged. It was a move of apparent favoritism toward nobility. The people of Paris stormed the Bastille, fearful that they would be attacked by the royal army. The Bastille was a fortress-prison that held people for very arbitrary crimes that could not be appealed. Usually those people were working class. The Bastille was a symbol of absolutism of the monarchy.
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At the time of the storming, there were only 7 inmates, and none of them were particularly relevant political figures. The crowd was eventually met by French guards, and eventually the gates of the Bastille were opened to avoid a mutual mutiny. One year later, a festival called the Fête de la Fédération was held to celebrate the unity of the French nation.
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Modern Bastille Day celebrations look much like America's Fourth of July. There is usually a military parade in the morning, which has been a tradition since 1880. The celebration has taken place on the Champs-Élysées since 1918.