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Brief history of the place
The Bagne was opened in 1748 and closed in 1873. It was created by the order of French king Louis XV to house the convicts who had previously been sentenced to row the galleys of the French Mediterranean fleet.
Bagne of Toulon in Les Misérables
The main protagonist of the book, Jean Valjean, was sent to the Toulon for 5 years for stealing a loaf of bread (however the law believed him to have robbed a house). He had stolen this bread to save his sister, her children and himself, who were almost starved to death. His sentence was extended to 19 years due to several failed attempts to escape. At the end of his sentence he was under the watch of Javert, although in the 2012 film and the musical Javert watches Valjean throughout 19 years.
Later on, in 1823, after surrendering himself to Javert and honestly admitting to being Jean Valjean, Monsieur Madeleine (Valjean in disguise) was returned to the Toulon, however he successfully escaped by faking his death and saving a guard on a ship. This event appears neither in the musical nor in 2012 film, though.