TL;DR
The figured bass notation indicates to me that the bass note should be the seventh of a 7 chord.
Not quite. The figured bass means that one of the upper voices will be a seventh above the bass note. Specifically, the B is a seventh above the bass's C.
The literal chord progression is
C7 F/C Bdim/C C
The situation is similar to Case 2, below; the bass is suspended while the upper voices shift higher.
Full explanation
The figure 7-4-2 is indicative of a suspension and can arise in a couple of ways.
- The 7 occurs in a suspended voice in a move to a third inversion (6-4-2) seventh chord.
- The upper voices move over a suspended bass.
Case 2 is most similar to the chord progression in the OP.
Case 1: Upper voice suspension1
We begin with a root position I
chord. The destination is a third inversion V7
chord, but initially the I
chord's third is suspended, forming a 7 against the bass, before resolving downward to complete a 6-4-2 chord.
Case 2: Bass suspension2
Now beginning with a root position V
triad, the three upper voices rise to form a 7-4-2 chord before the bass drops a step to form a root position IV
chord.
1. The example is from Figured Harmony at the Keyboard: Part 1 by R. O. Morris (Oxford University Press, 1933), page 27, exercise 4. I have transposed from the original.
2. As in note 1, but from page 26, example 4, mm. 4–5, transposed and with my own realization.