Fiat Money Inflation in France

elled to take this loan found for an assignat of one hundred francs only one franc was allowed. Next a National Bank was proposed; but capitalists were loath to embark in banking while the

nfederation; lastly, by the "Southern Confederacy" and here, as elsewhere, always in vain. But experience yielded to theory-plain b

ublic real estate was set apart to an amount fully equal to the nominal value of the issue, and any one offering any amount of the mandats could at once take possession of government lands; the price of t

of assignats in circulation, so that the value of each assignat should be raised to one-thirtieth of the value of gold, then to make mandats legal tender and to substitute them for assignats at the rate of one for thirty. Never were great expectations more cruelly disappointed. Even before the mandats could be issued from the press they fell to thirty-five per cent

ed "Marchant" and dedicated to "People of Good Faith" was widely circulated, in which Marchant took pains to show the great advantage of the mandats as compared with assignats,-how land could be more easily acquired with them; how their se

thousand francs or more than ten thousand; and in case of a repetition of the offence, to four years in irons." It was also decreed that those who refused to receive the mandats should be fined,-the first time, the exact sum which they refuse; the second time, ten times as much; and the third time, punished with two years in prison. But here, too, came in the

existing currency and it was decreed that all paper, whether mandats or assignats, should be taken at its real value, and that bargains might be made in whatever currency people chose. The real value of the mandats speedily sank to about two per cent of their nominal value and the only effect of this legislation seemed to be that both assignats and mandats went still lower. Then from February 4 to February 14, 1797, came decrees and orders that the engraving apparatus for the mandats should be destroyed as that for the assignats had been, that neither assignats nor mandats should longer be a legal tender and that old debts to the state might be

n to three per cent of their value. As to the "Consolidated Third," that was largely paid, until the coming of Bonaparte, in paper money

to the common heap of refuse with the previous forty-five thousand millions of assignats: the na

use light is thrown by extracts from a table

0 1

of flour 40 c

of oats 18 ce

of wood 4 dol

of coal 7 c

sugar 18 cent

of soap 18 c

f candles 18

age 8 cents

shoes 1 doll

ve eggs 24 ce

those which were reached before the close of that year and during the

of bread

f potatoes

f candles

of wood 2

ntioned a manufacturer of hardware who, having retired from business in 17

ien, of the heartless, debauched, luxurious, speculator, contractor and stock-gambler class, had risen above the ruins of the multitudes of smaller fortunes. Tallien, one of the worst dema

their families form one of the most significant features

ead of society stood Madame Tallien and others like her, wild in extravagance, daily seeking new refinements in luxury, and demanding of their husbands and lovers vast sums to array them and to feed their whims. If such sums c

cities, underwent yet greater distress. These were found, as a rule, to subsist mainly on daily government rations of bread at the rate of one pound per person. This was frequently unfit for food and was distributed to long lines of people, men, women and children, who were at times obliged to wait their tur

in counterfeits by criminals and by the enemies of France. These came not only from various parts of the French Republic but from nearly all the surrounding nations, the main source being London. Thence it was that Count Joseph de Puisaye sent off cargoes of false paper, excellently engraved and printed, through po

bearing the Bourbon arms,-the fleur-de-lis, the portrait of the Dauphin (as Louis XVII) with the magic legend "De Par le Roi," and larg

with paper money, specie began to reappear-first in sufficient sums to do the small amount of business which remained after the collapse. Then as the busin

to a want of circulating medium between the time when paper should go out and coin should co

of one of the most shrewd of modern stat

n process of repudiation lasted nearly ten years, but the period of recovery lasted longer than the generation which followed. It required fully forty years to bring capital, industry, commerce and credit up to their condition when t

s, and, for a standard of value recognized throughout the world, a national standard devised by theorists and manipulated by schemers. Every other attempt of the same kind in human history, under whate

r-the order of events: let me, in conclusion, sum it up, br

; but, the dyke once broken, the current of irredeemable currency poured through; and, the breach thus enlarging, this currency was soon swollen beyond control. It was urged on by speculators for a rise in values; by demagogues who persuaded the mob that a na

ommerce was at first stimulated by the difference in exchange; but this cause soon

of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at

the general stimulus, lagged behind. Under the universal doubt and discouragement, commerce and manufactures were checked or destroyed. As a consequence the demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law

upon their shelves. But they soon found that, as they increased prices to cover the inflation of currency and the risk from fluctuation and uncertainty, pu

ulted save a momentary stimulus, which aggravated the disease. The most ingenious evasions of natural laws in finance which the most subtle theorists could contrive were tried-all in vain; the most brilliant substitutes for those laws were tried; "self-regulating" schemes, "interconverting" schemes-all equally vain. 86 All t

came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashi

ording to the whim or interest of legislative assemblies rather than based upon standards of value permanent in their nature and agreed upon throughout the entire world. Such, w

actice which all this history records: my subject has been Fiat

itely more dangerous. To cure a disease temporary in its character, a corro

d depreciation." It was comparatively easy to refrain from the first issue; it was exceedingly difficu

gricultural interest, to ruin. It brought on these the same destruction which would co

d political prostration of France-a prostrat

for a sum hardly meeting the expenses of the government for a single day. At the first cabinet council Bonaparte was asked what he intended to do. He replied, "I will pay cash or pay nothing." From this time he conducted all his operations on this basis. He arranged the assessments, funded the debt, and made payments in cash; and from this time-during all the campaigns of Marengo, Austerlitz, Jena, Eylau, Friedland, down to the Peace of Tilsit in 1807-there was but one suspension of specie payment, and this only for a few days. When the

finance, and yet with no national stagnation or distress, but with a steady progress in prosperity, we shall see still more clearly the advantage of meeting a financial crisis in an honest and straightforward way, and by meth

this which it behooves ev

O

l University library mentioned in many o

ornell.edu/collectio

only Bank in existence in the city of New York at

as in its beginning a sincere effort on the part of intelligent members of the National Assembly to stem the tide of misery and wretchedness which had brought about the Revolution in 1789. But the article also shows clearly that once started on a small scale, it became utterly impossible to control t

t; his description of the events in France that followed the experiment with fiat money is intens

TNO

ret

atives of both political parties, at Washington, April 12th, and before the Union

ret

nce at that time was by no means hopeless, see

ret

, sitting of A

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ting of Apri

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this whole history, see the full set of his "L'ami du peuple" in the President White Collection of the Cornell University. For Bergasse's pamphlet and a mass of similar publicatio

mates, sets the total value of church property at two thousand millions; other authorities put it as high as twice that sum. See especially Taine, liv. ii, ch. I., who gives the valuation as "about four milliards." S

ret

, "Histoire de France"; also Blanqui, "Histoire de l'économie politique," vol. ii, pp. 65-87; also Senior on "Paper Money," sec. iii, Pt. I, also Thiers, "Histoire de Law"; also Levasseur, o

ret

r an argument to prove that the assignats were, after all, not so well secu

ret

e the extensive collection of originals in the Cornell University Library. For a virtually complete

ret

e nationals sur lea emissions

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d., p

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s, April 19, 1790. As to the sermon referre

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volution," vol. i, p. 252; also Levass

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ading article of the "Moniteur"; also "Mèmoires do Mirabeau," vol. vii, pp. 23, 24 and

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teur," Augu

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1790; also Levasseur, a

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oniteur." The whole sounds curiously like the proposals of the

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r," August

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écle," vol. viii, pp. 84-8

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e de la Presse en Fr

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r," Sept. 5, 6

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seur, vol.

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so in Appendix to Thiers' "His

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asses ouvrières," et

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amples of these "confidence bills" are to b

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eur, vol. i,

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olution," vol. i, p. 265; also Levas

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A. D. White, "Seven Great Statesmen in the Warfare of Hum

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Révolution"; Senior, "On Some Effects of Paper Money," p. 82; Buchez and Roux, "Histoire Parlementaire," etc., vol. x, p. 216; Aulard, "Paris

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on of this law, see Sumner, "History of American Curr

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t, "Société Fran

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of the French Revolutio

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olitique," vol. iv, p. 223, note; and for the same effect produced by the same causes in Russia, see ibid., end of vol. iv. For the same effects in America

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stoire de la Révolutio

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ibérations de la section de la bib

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el, vol.

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he prices paid him, see Reeve, "Democracy and Monarchy in France," vol. i, pp. 213-220. For a very striking caricature published after the iron chest in the Tuileries was opened and the evidences of bribe

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rs, ch

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purchasing power of the assignats, see Caron, "Tableaux

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5, 1793; also Prudhomme's "Révolutions de Paris." For arguments of much the same tenor, see vast numbers of pamphlets, newspa

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aux de Dépréciation

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also Villeneuve Bargemont, "Histoire de

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ng it, see Challamel, "Les fran?ais sous la Révolution," pp. 307, 308. See also Mercier, "Le Nouveau Paris," edition of 1800, chapter ccv., entitled "Parchemin Monnaie." A series of these petty notes will be fou

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seur, vol.

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reasons for the decline see Thiers, Shoberl's tr

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ations, see Caron,

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will be found in the White Collection

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notes, bearing the portrait of Louis XVI will be found in the Cornell University Library (White Collection) and for the whol

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der that forced the Convention to establish the

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as above, vol.

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ckets in the White Collecti

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and also the lists of the condemned, in the White Collection, also the lists g

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potic tendencies, see Von Sybel's "History of the French Revolution," vol. iii, pp. 11, 12. For general statements of theories underlying the "Maximum," see Thi

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l'Economie Politique," vol. ii, pp. 213-239; also Levasseur, as above. For curious examples of severe penalties for very slight infringements on the law on the sub

power became simply confiscation of all private property in Fra

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arguments, as gi

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iority of the French assignats to the old American Continental curre

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er, as abo

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r, as above, v

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f Aug. 24, 1793," sec. 31, chapters XCVI-CIII. Also, "Tableaux de

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other authorities, see Levasse

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ybel, vol.

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taken to compel farmers and merchants, see Senior,

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ybel, vol.

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epreciation in "Moniteur"; also official reports i

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uable property went on at periods of the rapid depreciation of paper, see Challa

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arket prices of the louis d'or at the first of every month, as the collapse approached, see Montgaillard. See also "Official Lists" in the White Coll

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90; for curious example of the scales of depreciation see the White Collection. See also exten

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our own country, see Sumner, "His

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"Histoire de l'économie po

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ol. ii, p. 179. For a thoughtful statement of the reasons why such paper was not invested in lan

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ybel, vol.

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De Nervo, "Finance fran?aise," p. 280; also Stourm, as already cited. The exact amount of assignats in circu

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nats and mandats at the same time, see Dewarmin, vol. i, p. 136; also Levasseur, vol. i, pp. 230-257. For an account of "new tenor bills" in America and their failure in

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"Lettre aux gens

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lso De Nervo, "Finance

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an?aises," p. 282; also Leva

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e" and extracts from other sources

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, pp. 32-36. For similar effect, produced by the same cause in our own country in 1819, see statement from Niles' "Register," in Sumner, p. 80. For the jum

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us la Révolution," pp. 30, 33; also De Goncourt, "Les fran?ais sous le Directoire." Regarding

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ur, Vol. i, p

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of many varieties of them, and for the history of their Issue, see especially Dewarmin, vol. i, pp. 152-161. For photographic copies of Royalist assignats, etc., see also Dewarmin, ibid., pp. 192-197, etc. For a photograp

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ccur, at the resumption of specie payments in Massachus

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e Th

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seur, vol.

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and Banking in the United States," also Summer, "History of American Currency." For working out of the same principles in England, depicted in a masterly way, see Macaulay,

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y history of our own country, se

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eloquent statement of their evil results, see

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nufactures and morals in our own country, see Daniel Webster, cited in Sumner, pp. 45-50. Fo

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ells. For more recent triumphs of financial commonsense in France, see Bonnet's arti